The Customer Experience
Dispelling the Myths in Today's Retail Environmentby Courtney Albert
CUSTOMER EXPERIENCE is defined as "the sum of all interactions a customer has with a company throughout the consumption of that company's goods or services." Or, in other words, it is how your customer perceives you after he or she recognizes your brand and includes every step in the retailer-customer relationship: discovery, awareness, attraction, interaction, transaction, use of product or service, cultivation, retention and advocacy.
Years ago, the customer experience existed primarily inside physical stores and through printed catalogs or call centers. Today, it has evolved to also incorporate a variety of online and mobile formats, as well as imaginative marketing initiatives. As the lines blur between physical and virtual showrooms, retailers must utilize an omnichannel approach to retailing, ensuring that customers are provided with consistent service, expectations and experiences, regardless of the channel. If you are looking to improve existing processes, then you are probably asking:
The customer experience rules of the past are now the myths that are suppressing retailers from remaining relevant in the customer's eyes. As a retailer, the first place you should look is towards your customers' complete omnichannel experience. Customers have taken the reigns by defining their own shopping experiences, and they should have the ability to consume your brand seamlessly across all channels. That is, if you want to meet them where they are and allow them to purchase your product. This brings us to the preeminent myth for retailers seeking to improve customer experience.
MYTH #1: Customer Experience is just Customer Service.
While customer experience is influenced by a company's ability to deliver customer service, the two are not interchangeable. Customer service is very important and can be tested in the store, by phone to the company's customer service center, online directly to the company, and online indirectly by customers on review sites or on social networks. Customer experience incorporates these events along every touch point in the sales and marketing funnel. If you are focused only on service, then you are missing out on enhancing the many experiences before and after the need for customer service.
When appropriately anticipated and delivered, positive customer experiences can lead to new customers, more sales, higher margins and higher retention rates. As you evaluate your omnichannel offering, you must think strategically and consider how assortment and price transparency, social environments, mobile connections and customer insights influence the entire customer experience.
Assortment & Price Transparency
If you are a retailer operating in multiple channels, then you cannot assume customers are relegated to one or the other. Is your pricing and/or inventory strategy different online? If so, then how do you communicate the difference to your customers and how do you manage their expectations across channels? Additionally, your store staff must be knowledgeable about these strategies and understand how to handle customer questions and issues appropriately.
First, you must consider your customers' behaviors across channels. For example, let's say that you are an apparel retailer operating in three channels: brick-and-mortar store, catalog call center and website eCommerce. If we take a look at one of your customer profiles, we might find a profile called Jackie. Jackie is a petite size, so she typically does not find the in-store selection to be adequate. She is loyal to your company and utilizes all of your available channels in different ways. Jackie views your catalog as her 'trend guide' to help plan her upcoming expenditures not only at your store, but also your competitors. She will visit your brick-and-mortar stores frequently to examine colors and styles as well as try on articles to determine fit. She notes the items that she will order online later. At home, she accesses your eCommerce platform where she finds better availability of petite sizes and perceives that she will also receive a better price through online promotions. It is online where she will make the majority of her transactions. In our example, Jackie is a very strategic and methodical shopper.
MYTH #2:Online and in-store assortments must be exactly the same.
Your assortment across channels does not have to be exactly the same. Instead, you can leverage distribution efficiencies to your advantage and vary assortment based on the demand in each channel. For some retailers, a very different customer seeks to purchase online and, therefore, warrants a customized strategy. For instance, you may not have enough demand to carry specialty sizes, such as tall or petite, locally in your stores, and it may be cost-prohibitive to do so as that merchandise ages on your showroom floor. However, if you open up to the global demand of the Internet, then you have the ability to reach new, and loyal, customers like Jackie. In this situation, it may be ideal to offer specialty sizes or exclusive, limited products available only online. It would be important to communicate both in-store and on your website that these items are offered. It is important to note that the problem with differences between channels is that customers may begin to push back and expect the same offering in all channels. It is up to you to appropriately handle customer service in those situations. In Jackie's case, even though she is 'forced' to purchase predominantly online this is a trade-off she readily accepts.
MYTH #3: Price transparency means you have to offer the same price online and in-store.
In the case of our illustrative customer profile, Jackie perceives the better price to be online and is willing to forgo immediate gratification in order to obtain the best price, style and fit. This customer becomes less elastic when inside the store, which can allow for a higher in-store price. When offering multiple price points across channels, you must consider your store policies and in-store sales cannibalization.
Think about your store's policy for managing the different prices across channels. Some customers will attempt to purchase merchandise in-store requesting to use the online price. Are the frontline sales people expected to make the decision on whether or not to allow the online price? Some retailers in this situation will have a store policy to price match. This allows the sales associate to appease the in-store customer, thereby defusing any irritation. The choice is yours; just be sure that you know the consequences.
An alternative concern is the potential for in-store customers to move their in-store purchases online when they realize the better pricing it offers. To ensure that your pricing strategy is not pushing customers to your lower prices, you should measure and compare your customer's spending behavior in each channel. If you experience decreasing in-store purchases along with increasing online purchases, then you may be a target of in-store purchase cannibalization and can benefit from reviewing your pricing strategy.
It is also important to make sure that you are capturing customer data in-store, in addition to online, to better understand spending patterns. Online customers typically have to create a profile before checking out, but you can also begin building these profiles for in-store customers by asking for simple information such as zip code, phone number and email address. If you offer to send coupons in return, then more customers may be obliged to give you their private (and accurate) information. Be careful not to ask for too much personal information or you will risk offending customers and losing the opportunity to build your databases. Proceeding correctly, you will over time be able to understand the customers patronizing your stores.
Regardless of the pricing strategy you use, you should understand that your pricing is transparent and visible across channels. When choosing customized strategies for each channel, ensure that you have defined and communicated a policy for managing those differences and that you are currently tracking and measuring sales patterns.
This does not just mean social networking or social media anymore; it is your entire social environment including visual marketing, such as Pinterest; media-sharing, such as YouTube; and content marketing, such as website articles and blogs. The conversation about your company is currently taking place – with or without you. At the very least, you need be present and listening. As the conversation changes, you will be in a better position to adopt and enter the right social networks before competitors. Strategy and Content should be your main areas of focus in the social environment.
Let's say you have another customer profile: Francis. He is a periodic customer of yours who is online…on everything. He frequently posts comments to Yelp, a site that lists reviews of local businesses; he writes a Tumblr blog about his travels and life experiences; and maintains a Vimeo channel as an video-based extension of his blog. He is also active on other social networks such as Facebook, Twitter and Google+, with several hundred followers or friends on each. As a result, he has sizeable social influence.
MYTH #4: You must set up social network pages on every social site.
As social media has become omnipresent, companies in vast numbers have jumped on the bandwagon of Facebook, Twitter, YouTube, and more. The biggest myth in social media is that you have to join every site available. Too many companies used that strategy, and now there are thousands of company fan pages with few followers and little to no interaction. Not all social media platforms are right for your company. You should conduct a thorough analysis of your customers in order to find out where they are. Using our example: In addition to Francis, where are your other customers talking? Remember, just because your customers maintain an account on multiple social platforms does not mean they are willing to interact with businesses on every single platform. It may be Facebook and Pinterest, but not Twitter. The key is to do your research. Once you have identified the areas, build social communities with your customers where they are and where they are willing to connect. This leads us to the next myth.
MYTH #5: Social Media is only used to reach new customers.
Good luck creating a Facebook page that will attract people who have never heard of your company and encourage them to purchase your product or service. Why would they have any interest in following you and reading your updates? Instead, think of social media as your community of existing followers, your tribe, and an indirect method of reaching new customers.
As you assign strategy to your online efforts, social media should be based on the premise of offering customer service to your existing customers. These customers are talking about your company – both on your page and externally; it is your turn to listen and engage in a two-way conversation, such as offering help if they have a problem or thanking them when they commend you for a product or service done right. In time, you will cultivate and grow customers into brand ambassadors who will bring new customers to you indirectly by telling their experiences to their friends.
Additionally, new social media "listening" tools can help retailers derive meaning from social media conversations that happen external to their own sites. Used correctly, this information can be used to proactively respond to customer experience issues or take advantage of trends and competitive intelligence. In our Francis example, he (and other active social media influencers) may post a negative comment about one of your products or an experience at your store on his Facebook wall that gets a lot of attention. While this comment was not posted directly to your page, if you are listening you can understand the implications and quickly remediate the situation before it spreads and causes further damage.
MYTH #6: There is no need to get up close and personal.
Since we know that customers often first approach your business online before ever setting foot in your store, you must pay attention to the content you are providing in your social environment. As explained earlier, social media is about dialogue and provides an opportunity to tell your brand's story and display its personality. You want to avoid publishing just facts, i.e. talking at your followers and ignoring negative comments. Instead, talk to them by responding to comments and publishing content that is helpful, interesting and engaging. Content such as sale information, new product line introductions, competitions, customer photos and product-in-use media are all helpful and interesting. In doing so, you will provide a positive customer experience and incentivize them to follow you and read your updates.
In order to ensure positive customer experience for all in your social environment, a company must be prepared to address any negative comments immediately. If the comment is within appropriate standards, then the company should respond immediately and offer the follower a phone number and email address to speak further offline. This type of response is both for that follower and anyone else who happens upon the comment. This serves two purposes: The follower needs to feel like his or her comment was taken seriously. And other followers just need to see that it was addressed.
A comment handled poorly or not handled at all can impact the customer experience for all followers and can encourage a firestorm of negative comments when ignored. The sample customer profile, Francis, is a classic example of a follower who would likely take his negative comments to multiple review sites if you did not respond to him quickly. His social influence has the capability to snowball a small comment into an online public relations nightmare. So, address it quickly and move the conversation offline.
Mobility presents significant transformational opportunities for both retailers and consumers. Retailers now have the ability to offer immediate value to consumers from the moment the consumer accesses the mobile app or mobile site or even enters the store. Social, context-aware capabilities and geo-location or geo-fencing (technology that enables delivery of tailored messages to a mobile phone based on the user's location), coupled with customer history and profile information can provide huge opportunities to increase conversions at any time during the path to purchase. For the consumer, having immediate, detailed information about items, such as pricing, reviews, peer feedback, availability, usage, and more is a huge benefit. The challenge for the retailer, of course, is to be able to capture and quickly respond to this information – i.e., matching or beating a competitor's better pricing or offering next day shipping to avoid losing a sale.
MYTH #7: Customers only shop one channel at a time.
In fact, technology has made it possible for us to shop multiple channels at one time. Smartphones and barcode-scanning applications are now ubiquitous, allowing in-store customers to scan the physical barcode to browse online reviews, to see if there is a better offer available online or to inspect products in-person, while purchasing the same product through their device. Called showrooming, this can be detrimental to in-store sales. According to a 2013 report by Foresee, seventy percent of customers are in-store while also using a mobile device, 37% of which are in your store viewing a competitor's site. With these numbers climbing every year, you can either try to battle showrooming in your stores or find a way to bridge the gap between your channels.
Your customers are connected to multiple channels at any given time, so use this as an opportunity to engage them further and enhance their customer experience. You need to focus on ways to bring the online experience in-store while also linking the in-store experience to online mediums. Some retailers are turning their brick-and-mortar stores into part-time online fulfillment centers; this means using existing in-store inventory to fulfill online or mobile commerce orders and getting these orders to the customer faster. Other retailers are taking additional steps to communicate with customers through their mobile devices while in-store.
With the cost advantages of regional distribution centers, you can view your online assortment as virtual inventory and infinite inventory. Some retailers call it their "endless aisle," because you can add whatever, whenever to your assortment. The key is communicating to the customers in your brick-and-mortar store that there is more inventory available online while encouraging the purchase in-store to continue in that moment. One method would be to display an iPad near the merchandise with signage explaining the inventory levels online and path to purchase options. You could allow them to choose to ship to the store for free or ship direct to their home for a shipping charge. Shipping to the store should be free to incentivize them to complete their transaction at your store as opposed to a competitor online or across the street; this would also befit you since it would bring them back into the store for perhaps another transaction. On the other hand, shipping to their home provides a convenience, a service many are willing to pay for if they do not mind waiting for the purchase.
Let's use a different illustrative customer profile – Mattie. She is an extreme coupon-clipper. She is only interested in finding the best deal before she makes her purchases. She is different from Jackie, because Jackie is brand motivated and compelled to shop online due to her specialty size. However, Mattie shares some characteristics with Francis in that she is very vocal online (and offline) about her customer experiences. Mattie will search online prior to entering the store and can often be found in-store using her phone to scan product barcodes for local price comparisons. She frequently posts to her Facebook page to 'show-off' her newest deal or to complain about an experience. In this example, price is more important than style or availability. So how you focus Mattie's attention?
If seven out of ten customers are already on their phones while in your store – including Mattie, then communicate with them where they are. Geo-fencing and augmented reality come into play here. Augmented reality enables the retailer to enhance customer engagement using mobile scanning, and launches content on the customer's phone. This can include promotions, as well as product information, celebrity use, demonstrations and more. The North Face began using a geo-fencing strategy in 2010 to communicate promotions and new product arrivals to stores. The company went a step farther by sending branded messages of weather updates when users approached popular hiking trailheads. Tesco, in the UK has implemented augmented reality, enabling customers to actually preview, rotate and even "play" with some items without actually touching them – online and in-store. Their objective is not only to increase customer engagement, but also to reduce the use of in-store shelf space to stock products and also reduce the number of returns.
These are both great examples of delivering the customer experience in innovative ways where your customers are. This strategy would work well for Mattie who is on her phone in-store and driven by sales.
With the increasing proliferation of emerging technologies, social media and "big data" – large amounts of structured (defined and transactional) and unstructured (undefined and conversational) data – retailers have more resources than ever to understand their existing and potential customers. Those retailers who can effectively harness customer information from these sources, gain deeper insights and make it actionable will be positioned well to increase their competitive position and deliver exceptional customer experiences.
MYTH #8: You should only focus on your VIPs.
Often true, the Pareto principle or the 80-20 rule, can be applied to nearly any business or situation. Undoubtedly, a large portion of your revenues comes from a small percentage of customers. However, that does not mean that you should only focus on those customers. What is the cost to serve those customers, as well as each of your other customer segments? The next step is determining the related net profit from each segment; you may find that unlikely segments may be more expensive than you thought.
The next level in customer segmentation is customer profiling. You need to know who your profitable target customers are as well as your least profitable customers. Many companies have developed customer profiles that are easily understood by all levels within the company.
Note the sample profiles in Figure 1 below. You will see five sample customer profiles, three of which were previously discussed. It is important to compare and contrast the behaviors of each profile and the related impact to net profit. For example, Francis may not represent high revenues, but he has significant social influence. Mattie represents the same revenue level as Francis, but she is utilizing both channels, purchasing at the lowest prices and costing the company more than Francis. When you know your customers well enough to create behavioral profiles, you can create strategies tailored to each target customer and enable frontline salespeople to better assist those customers in-store, leading to better overall customer experiences for each.
MYTH #9: What works here, will also work there and there and there...
Another step in knowing your customer exists in recognizing how customer behaviors vary geographically with local customs and norms. In our International Retailing Study: Going 'Glocal', we learned that 83% of top global retailers believe that understanding local markets and customer preferences is vital to the success of their international businesses. Our research showed that most retailers are investing first in strategic capabilities such as understanding local customers and tailoring assortment to match local preferences before developing talent or building more stores. As a result, more than half of retailers maintain a separate inventory for each country.
As our study revealed, retailers should not assume that all customers behave in the same way. When operating in different countries, a local team should definitely be incorporated. Additionally, assortment and marketing strategies must be customized to match local preferences and tastes.
– Evaluate your customer's entire omnichannel experience first. Think about the impact your corporate strategy has on price transparency and assortment, and decide how you will manage any differences across channels.
– If you have vastly different customers online versus in-store, perhaps differences with price, operations and logistics are advantageous. In other instances, complete consistency is preferred. You will know which is correct when your sales show a positive correlation. The opposite will signal further review and possible modification.
– When choosing customized strategies for each channel, ensure that you have defined and communicated a policy for managing those differences and that you are currently tracking and measuring sales patterns.
– Start by finding out where your customers are talking online. Then, develop a plan to meet your customers where they are and engage them.
– You will need to identify one or more persons to manage your company's online voice. You also will need to have a social media communication policy for all employees at your company that explains who can speak on behalf of the company and how employees can interact on social media when at work.
– Address negative comments immediately. Respond and move offline by providing an email address and phone number where someone can be reached directly.
– Set up a taskforce to review all of your online touch points.
– Look for ways to bridge your channels. For example, use technology in-store that connects to your online channels, and offer the in-store experience online through live events like fashion shows for apparel retailers.
– Segment your customers if you have not already.
– Develop profiles of customers that are linked to best practices for interacting with those profiles. Think about the customer's impact to merchandising and product design and how to use the insight to aid planning and sourcing.
– In foreign countries, utilize a local team to include local preferences and behaviors in your strategy.
Always stay close to your customer and take opportunities to walk in your customer's footsteps. Think about who your customers are, how they operate and what each segment means to your bottom line. Before entering social media or mobile, develop a strategy and research how you can meet your customer where he or she is.
If you’d like to learn more about our vision or understand how you might take advantage of this strategy, contact us or call 770.882.2205.
Courtney has worked with an array of retail and consumer packaged goods companies. Her experience covers a wide variety of issues including brand strategy, pricing, sales and marketing and e-commerce. She can be reached at email@example.com