Connecting Retail and E-tail
I found the perfect ski jacket.
I was in L.L. Bean. It was winter and I was eager to scour the store for cold-weather clothes. The jacket was black and fitted and I simply had to have it, except I needed it in a smaller size.
Approached by a friendly sales associate who was more than happy to look up the merchandise in-store, I had high hopes. Visions of braving the chilly New York air in style entranced me. It was back to reality, though, when I learned that the size I needed was out of stock. On a Post-it note, the sales associate jotted down a SKU number, which she explained could be used to find the item on the company's Web site. The only problem was that I did not have access to a computer and I did not feel like shopping on a smartphone. So I left.
As a customer, I was happy with the in-store L.L. Bean experience. The store itself is a charming scene straight out of the Pacific Northwest. I was also pleased with the in-store customer service.
But instead of asking customers to take an extra step for out-of-stock items, what if that step was eliminated by merging in-store and online channels?
"The problem with large retail is they treat online like an independent thing, when online really needs to cut across the whole business," explains Mitch Lieberman, founder and CEO of Comity Technology Advisors.
To its credit, in July 2011, L.L. Bean launched its mobile commerce site, a fairly progressive step, as only 44 percent of retailers have yet to do so, according to Forrester Research. But even though I could have accessed the store on my smartphone during my in-store visit, had I known about it, I still would have preferred to take advantage of an in-store kiosk.
But that's my preference. There are many customer channels, and retailers are trying to figure out which ones to use and how to best leverage them to create personalized and positive customer experiences for each customer. Read on to see what some of today's savvy retailers are doing.
According to audit, tax, and advisory firm KPMG's 2012 Retail Outlook Survey, 58 percent of retail executives plan to increase capital spending over the next year, with the highest investment priority being placed on information technology, including data analytics and digital marketing. When surveyed about digital marketing channels, 59 percent of the executives credit online shopping; 58 percent, social media platforms; and 49 percent, email campaigns, as having the most significant impact on their businesses.
One of the problems that plague retailers, however, is how to address the various customer interaction channels. "The fundamental issue in retail, still, is that most organizations don't really start with the customer experience and work backwards," observes David Conway, chief strategy officer for U.K.-based customer experience research firm and consultancy Nunwood. "They start with their own, internal perspective of a channel and they see the customer through individual customer lenses, which doesn't actually reflect how customers buy these days."
A top challenge for retail brands will be to connect the many dots that characterize their in-store, online, mobile, and social presence.
"There's a significant amount of consumer empowerment that results from new technologies, including social media and the smartphone that everybody has," explains Mark Larson, global head of retail at KPMG."Then there are cultural and social factors, in particular, how consumers interact with each other, the brand, and the stores themselves. That is changing significantly."
In the KPMG survey, 36 percent of retail executives said mobile shopping is having a significant impact on their business. About 28 percent expect that mobile promotions will be a priority, while only 21 percent said mobile payments will.
Luxury department store Neiman Marcus began testing its in-store iPhone app, NM Service, this spring to bring a mobile—and personalized—shopping experience to its high-end clientele. The app lets customers create wish lists around their favorite collections, receive alerts about exclusive in-store events, and communicate with their regular sales associates. The app gives the sales associates access to things like purchase history and Facebook photograph identifications when their most frequent, and loyal, customers enter the store.
"Neiman looks at the lifetime value of its customer, so when customers come in, they want them to have this wonderful experience that keeps them coming back again and again," explains David Hegarty, founder and CEO of Signature Labs, developer of the NM Service app for Neiman Marcus. "I think that genesis points to where CRM is going…where it used to be a tool for the retailer or salesperson to access, it's [now] becoming two-sided, where the customer can interface with that brand or retailer as well."
Bridging In-store and Online
Home furnishings retailer Pier 1 Imports is integrating its online and in-store presence to prepare for this shift in buying behavior.
In its fourth quarter earnings call, CEO Alex Smith called the "initial phase of our e-commerce initiative, Pier 1 To-Go, a big home run for Pier 1 Imports…. By summer 2013, we will begin to fully integrate POS with e-commerce to create a truly seamless shopping experience for our customer."
Pier 1 selected a number of vendors to help rewire its e-commerce and POS systems, including Demandware, Jagged Peak, Epicor, NCR, and Alliance Data Systems as the manager for its Pier 1 Imports Rewards card.
The premise of Pier 1 To-Go is site-to-store, so customers purchase products online and pick them up at a Pier 1 store. Pier 1 To-You enables customers to purchase online and ship an item to their home, which the company had not been able to do previously. If an item is not available for shipping, the customer will be referred to Pier 1 To-Go.
When it comes to e-commerce, even the best brick and mortar retailers can learn a thing or two from Amazon.com. Forrester Research finds that 30 percent of online shoppers now begin their research using Amazon.com, and that the online powerhouse now accounts for 19 percent of worldwide e-commerce revenues, more than doubling from 9 percent in 2001. It's no secret that Amazon.com's success is largely due to its creation of seamless and personalized commerce experiences. Now many brick and mortar retailers have caught on.
"In this world of information overload, every other retailer is trying to gain your customers' business as well, says Kim Lewis, CRM director at Charming Charlie, a Houston-based fashion jewelry and accessories retailer. The question is, "How can you go the extra mile and give customers a meaningful, one-to-one message that wins their attention?"
Progressive retailers are focusing on engagement strategies. To date, Charming Charlie has accumulated more than 260,000 Facebook fans and actively posts product shots to Pinterest and Instagram.
Because Charming Charlie sells fashion accessories, which change by season, week, and sometimes day, Pinterest and Instagram allow the retailer to showcase colorful assortments to reach its shoppers on social networks. Not only can customers comment on their favorite trends and items, but the retailer can have a conversation about those products and see which products create the most buzz.
"Pinterest is a perfect case in point of [the melding of] personal relationship, engagement, emotional connection, and content," says David Slavick, a vice president at Customer Communications Group. "Why are people all fired up about it? Because it becomes meaningful for them and, by the way, it has credibility."
Like Charming Charlie, ModCloth, an e-tailer with a cult following for its retro and indie-inspired women's fashion and "Be the Buyer" crowdsourced clothing collections, is highly active on Pinterest, Twitter, Facebook, and Tumblr.
"We…see ourselves as socially savvy and really emphatic in our view of fashion, so our Modgirl really dictates what she wants on the site," says Audrey Griffith, customer care manager for ModCloth. "We have a pretty active Tumblr account and several Facebook pages. We're actively social because our customers are there in those channels."
ModCloth also encourages highly interactive customer engagement on its own site using live chat as guided help for its FAQ pages. Thanks to software from LiveChat, site visitors can make an appointment with one of the company's "Modstylists," who offer personalized style tips and product recommendations. The company has about 8,000 to 10,000 chat sessions per month, according to Mariusz Cieply, CEO of LiveChat.
"We're finding that thirty to forty percent of our chat interactions are product-related," Griffith adds. "They're typically presales questions about measurement and cut, and we can give customers a general reassurance from a person who's actually seen the product."
A 15 percent conversion rate has allowed ModCloth to reach an additional 12 customers per day. But its engagement strategy doesn't end there. ModCloth also encourages customers to write product reviews. "We respond to every…review that's posted," Griffith asserts.
Customers are rewarded with a gift certificate for a "substantive product review, or if they're a frequent reviewer," Griffith says, adding that it's important to focus on "those little, personalized incentives or ways you engage the customer."
Create a Positive Experience
The future of retail will be all about the experience. As both Neiman Marcus and ModCloth demonstrate, the key to success is identifying your customers and catering to their needs.
More retail executives are acknowledging the importance of personalization across all channels. In the NRF Foundation and KPMG's Retail Horizons Benchmark report, 67 percent of companies ranked customer satisfaction as the top strategic initiative for 2012, with a push to increase brand awareness through cross-channel initiatives.
"There is an important distinction between retailers," Signature Labs' Hegarty states. "There's mass retail, which is very focused on the transaction and for the most part, they compete over price. Then there are the experiential retailers, where price is secondary to brand, the experience in-store, and the lifestyle I think I'm getting."
An experiential brand typically builds its flagship store as a destination to satisfy customers' appetites for experience when they're not visiting the brand across its other dimensions, be it online or on a social network, Hegarty explains.
As Customer Communications Group's Slavick sums it up, "Any time you can go and satisfy a particular customer segment's convenience needs, you should do so. It's no different than McDonald's doing a drive-through or a grocery store doing Peapod delivery service. You always want to protect the areas where you can lose a sale, and at the same time, optimize your margin."
With Black Friday and Cyber Monday just around the corner, retailers are gearing up for a frenzied holiday shopping season and even more frenzied post-holiday returns. Here is some holiday food for thought:
Mobile! Mobile! Mobile! Mobile commerce will be "absolutely critical" for a successful holiday season, says Jay Henderson, strategic director of cross-channel marketing for IBM. "We're actually projecting that mobile commerce will [account for] over twenty percent of all online commerce this holiday season, and tablets are certainly an area that retailers need to be looking at. What we'll see at the end of this holiday season is that a great mobile interface will become not only a way to differentiate [your brand] but will become table stakes in order to stay current."
Free shipping is a must. While free shipping used to be the exception, it's become a holiday norm. Expect more retailers to extend their grace period for holiday returns, which Apple, Best Buy, and Barnes & Noble all did last year.
Elongate your holiday email window. Epsilon, a multichannel marketing services company, reports that email conversion rates spiked the week of December 4 last year. Want more eyeballs for your holiday promotions? Epsilon says retailers should consider kicking off email campaigns earlier in November, and consider promoting biggest ticket items and best offers earlier in the season, while focusing on deep discounts after the holidays.
Associate Editor Kelly Liyakasa can be reached at kliyakasa@ infotoday.com.