Navigating the Changing Retail Landscape
There is no doubt that the retail landscape is going through drastic changes fueled by customer interaction and expectations as well as readily available technology and actionable data points. I attended the Shoptalk 2016 event this past week to hear how retailers are navigating this new landscape and learned that while there are many retailers that are doing great things in one area, no one has truly cracked the code to figure it all out yet. But that’s okay. At this point, small changes can make a huge impact to your bottom line.
The Customer is in Control
One of my favorite quotes from Shoptalk 2016 came from Jonathan Alferness, Google’s VP of Product Management – Shopping. He said, “We don’t go online. We live online.” It’s true. Your customers are always connected, which provides a lot of opportunities but also a lot of challenges. You can’t abuse the access. You must carefully craft all interactions while letting the customer be in control.
Customers are now the Point of Sale, which means you have to meet them where and how they shop in order to remove all friction from the customer journey. Omnichannel and multichannel strategies have been replaced by a distributed commerce model as there can no longer be ANY divide between channels. Customers don’t shop in channels, they simply interact in a way that is most convenient at any given time and the distributed commerce model provides a way for them to purchase any product anywhere at any time.
This is a big win for retailers as it provides more opportunities to engage shoppers through carefully curated content and events that enhance the customer experience. This means retailers don’t have to rely on promotions to win business. The great experiences lead to longer lasting relationships and greater customer loyalty than a simple reward program or discount code ever could.
What does this mean for you?
- Customers don’t want, need or expect the same exact message in each channel. Messaging should remain consistent but should be complementary and targeted to each touchpoint.
- You shouldn’t care how products end up in your customers’ homes as long as they end up there! Remember, customers are now the Point of Sale, so make it easy for them to purchase online, in-store, on mobile devices, in social channels – and don’t forget about traditional channels like catalogs and call centers.
- You don’t have to rely on discounts and promotions to build loyalty. Great content and experiences are what customers are after these days.
- Before adding new technology, programs, events or even new content, ask yourself if it enhances the customer experience, reduces friction in the customer journey and streamlines the checkout process. If it doesn’t accomplish those three things, don’t do it. Don’t add technology just for the sake of it or customers and even your own employees won’t use it. Also, rethink how to acquire customer data in-store. Simply asking for an email address during checkout slows down the checkout process and doesn’t enhance the shopping experience for customers. Instead, offer an eReceipt as it adds value while accomplishing the same goal for acquisition.
- Give customers control over the way they interact with you. A simply way to do that is to add more triggered messages to your email strategy. This allows you to personalize messages on a true 1:1 level. You should also segment your list and send highly targeted messages to small groups instead of sending the same message and offer to everyone. Email is still the best way to reach your audience and it still provides the highest ROI, you just have to be a little savvier with your messaging.
- Conversational commerce is not just a trend. Millennials grew up online, which means they are informed. They are also extremely judicious when it comes to spending money. Millennials need the personal experiences and brand and product knowledge – not just a discount – in order to make a purchase decision. The right content will make it easier for them to shop.
Personalize the Experience for Each Customer
Many shoppers are turning to retailers’ sites for product information, not necessarily to transact. It’s not enough to just be online anymore. 90% of all retail revenue comes from in-store transactions and 34% of online revenue comes from mobile devices. What’s even more interesting is that at 45%, nearly half of all purchases – online or in-store – include mobile at some point. In most cases it is the first touchpoint with customers so you should think “mobile first”. Best in class mobile engagement drives traffic to stores, enhances experiences and provides data to personalize future messages.
If you don’t currently have a store, now it the time to think about adding a physical location. Real-time retail is still the most viable sales channel but it’s important to note that there are many business models, such as Bonobos, where the stores don’t carry any inventory. They exist as show rooms where customers can interact with sales associates and each other, try on or experience the merchandise firsthand, and then order products in the store or later on their mobile device or computer.
Stores are offering more entertainment options to increase loyalty – such as private gyms, parties, paint or yoga classes, live music, etc. In some extreme cases, retailers focus on these interactions while the transactions are automated, giving customers control as they can do everything from add items to their fittings room, request new sizes and checkout without needing to talk to a sales associate. Instead, the sales associate is there to enhance the experience without “selling”.
What does this mean for you?
- Personalization must be a big part of your messaging as promotional fatigue is evident in email and engagement metrics.
- Emotion, not price, drives loyalty. Connecting on a personal level with each shopper is the key.
- Personalization is much more than optimizing messages for the last click as the consideration process is much longer than that. Personalize messages using a number of customer data points, such as browse and purchase history. What a customer bought is the most predictive data point of what they’ll buy next.
- Personalization needs to go across all channels and isn’t just about the message, but the experience and interaction. That means that your stores should provide fun events, mobile messaging should be tailored to segments – like the power user or novice, display ads should contain images of previously browsed merchandise, emails should be triggered and relevant and your social channel should provide great content and shoppable buttons.
- Personalization doesn’t have to be 1:1 as timely and relevant messages sent to a shopping segment is typically enough to provide the personalized experience.
Distributed and Conversational Commerce Level the Playing Field
Nearly every retailer competes with Amazon. But this shift in consumer behavior helps to level the marketplace as it gives you the opportunity to connect in more personal and meaningful relationships with your customers than what Amazon can currently provide. While shoppers – especially Prime members – turn to Amazon because of the convenience, the relationship doesn’t go much deeper than that. There isn’t much of an emotional connection.
You just have to think creatively while listening to your core group of customers to deliver what they want, when they want it. And, when you do that, you will have cracked the code to distributed and conversation commerce.