Is it really discovery shopping if Amazon found it for you?

Effects of data-driven curation on discovery experiences

 

 

Remember when a trip to the store could yield a new discovery -- an unplanned purchase but one that delighted the customer?

Ecommerce handles specific shopping needs seamlessly and efficiently: Search for “motorized pedal exerciser” and buy it in less than three minutes.

But so-called "discovery" shopping — such as figuring out what to get your hard-to-shop-for great aunt for her 90th birthday — is much easier to do through brick and mortar browsing.

 

Selling discovery experiences

The world of in-store commerce offers shoppers an experience, an interaction with others that can't be replicated online.

In the best-case scenario, the experience is enjoyable and memorable, one that a shopper wants to repeat with that retailer and emulate at others.

No matter how good a recommendation engine or a chatbot is, the feeling a shopper gets from finding a perfect product can only come from shopping in a physical store.

That is, until an online retailer aggregates its collected data and presents it in a physical store as a curated collection to reach a specific audience.

If an online behemoth parlayed all the knowledge it has gleaned from the data it has gathered about its ecommerce shoppers, that retailer could be very well positioned against its competitors, online as well as brick and mortar.

 

Peer-based discoveries

Amazon has recently opened a handful of Amazon 4-Star physical locations, which are designed with discovery in mind. All the items are top-rated, and the selection will change frequently, depending on their customers' ratings.

The first, in the SoHo section of New York City, offers at-a-glance products that are "popular in SoHo," "frequently bought together" and "most wished for," among other categories.

Amazon can easily put these displays together due to the data it collects on its online shoppers. And that data collection continues to grow offline.

Amazon-exclusive products are also available, and Prime members get the Amazon price, while non-members pay MSRP. Signing up for Prime in the store not only provides customers lower pricing, but also adds to Amazon's information database.

Shoppers can see how many ratings a product has received and what the average rating is. Others have reviews displayed nearby.

The combination of a physical location and all that aggregated data is a fierce combination.

 

Personal discoveries

However, "discovery shopping" is more than simply sorting through trends and selecting from the most popular items.

If that were the case, small, specialized shops and boutiques would not be frequented, shunned for larger, on-trend department stores.

But the opposite is largely the case.

Discoverers aim to find the one-of-a-kind for a more personal gift or to satisfy their own personal taste. That's more likely to be found in a shop on Main Street than online, because it is not mass produced, so it therefore can't have hundreds of reviews.

 

In the end, Amazon's strategy for its physical stores, and any others like it, will mirror that of large department stores that have built a decent ecommerce channel.

Those stores, such as Macy's, Target and Kohl's, can also look at their data, slice it up regionally and offer only those products based on that data.

While not quite as personal as the local shop on the corner, there's a huge opportunity for larger companies to meet their customer needs more precisely.

 

How retailers are actually spending their customer service dollars

 

 

When companies describe themselves as having "excellent" customer service, the claim sounds user-centered but too often it's actually just a company-centered focus trying to position themselves as user-centered.

Those companies are generally concerned with efficiency and reducing costs first and foremost, and are just hoping to improve customer relations by osmosis, without actually doing the work to get there.

 

Questioning ROI on CX investments

Some retailers resist customer experience investments, believing they do not provide a significant return on investment.

However, Gartner reports that when it comes to making a purchase, 64% of people find customer experience more important than price.

Constantly trying to be the lowest-price provider of goods is futile: Competition is steep and low price is not an effective means of cultivating loyal customers, who are the foundation of success.

According to a Walker study, by 2020, customer experience will overtake price and product as the key brand differentiator.

Customers are loyal to a retailer because they believe they are getting a better experience, higher value and benefits than they would get from other brands.

In addition, a recent study from RetailNext found 57% of respondents said customer service is the only reason they go to a retail store.

Not selection, not price, but service.

Here are 4 pairs of categories in which retailers invest their customer service dollars. You decide which ones will actually create better customer experiences.

 

1: Self-service tools vs well-trained sales associates

Shoppers like that expect to find associates equipped with the information and training necessary to assist shoppers and close sales.

Too many retailers do not have that staff, so customers are frustrated and disappointed.

Today's shoppers want knowledgeable associates in the stores they frequent, as well as convenience. They also want to build a relationship with the retailer.

Retail management misreads customers’ disdain for associates as a desire for self-service.

But customers are happy to be served by well-trained, engaged salespeople. The frustration comes when the associate knows little about the product or has no enthusiasm.

Training goes a long way to fix that problem and helps build a sales team that is a contributing factor to customer loyalty.

 

2: Market saturation with new locations vs pop-up stores

While some brands focus investment toward market saturation via geographical expansion, others use pop-ups to build excitement about their brand.

Event-and experience-driven retail is becoming more popular, as department stores create pop-up locations or marketplaces in their stores and in hip shopping meccas.

Such temporary installations are smaller and more focused with their offerings and are replenished much more frequently, creating the impression of a “fresh” experience at every visit.

 

3: Promos to attract new shoppers vs rewarding repeat customers

Newvoicemedia.com reports that the top reason customers switch away from products and services is that they feel unappreciated.

Once customers have demonstrated their loyalty, it's important to reward them.

Too many retailers use incentives only to attract new customers. That, in effect, "ignores" loyal customers, leaving them frustrated and unappreciated.

 

4: Advertising costs vs experiences that drive WOM marketing

Nurturing existing customers and improving customer service can cost considerably less than launching advertising and marketing campaigns, but can have just as powerful an impact.

As Tony Hsieh, Founder and CEO of Zappos has said, “We take most of the money that we could have spent on paid advertising and instead put it back into the customer experience. Then we let the customers be our marketing.”

75% of Zappos' sales come from returning customers, and the company earns more than $2 billion in sales annually.

The Zappos's commitment to having happy customers and employees ends up being good for business.

 

Walking the customer service walk means more than just talking the talk.

Strong training, with an emphasis on earning customer loyalty, will result in a truly user-oriented business.

 

Attracting and retaining the elusive Millennial shopper

 

 

Loyal customers — the Holy Grail for retailers.

Repeat shoppers are a source of recurring revenue. Smart businesspeople know that success lies in cultivating loyalty, and that means more than creating programs that simply collect customer information.

Today's educated customers understand loyalty programs are often of more value to retailers than to customers.

Millennials in particular are sensitive to that value proposition, and retailers are starting to serve up programs targeted toward the specific desires of this demographic.

A quarter of millennials and 19% of Gen Xers like to shop with family and friends. It's a social activity that's enjoyed at a brick-and-mortar storefront.

But, while Gen Xers value the relationship with a store, Millennials value experience and don't have the same brand loyalty as the older generation.

It's easier to get a millennial to try a competing brand, so it's more difficult to retain millennials as customers.

Retailers have to work at providing customers perceived value consistently to earn their loyalty.

3 things Millennials look for:

 

1. Technological "wins"

 
How does a retailer make it easy for customers?

Millennials are dependent on their phones; 84% of them in a recent study said their mobile devices were the most important thing in their lives.

Retailers can use that knowledge to their benefit by, for example, offering mobile apps that are easy-to-use and relevant.

Many say that shopping is easier through an app than through a web site; by offering a digital experience that reduces purchasing friction and makes shopping easier, a brand can improve its relationship with millennials.

 

2. Shared value system

 

What matters to a brand, matters to Millennials.

For example, Patagonia has supported grassroots activists working to find solutions to the environmental crisis.

Shake Shack's ethos is "We stand for something good," which is reflected in its carefully sourced premium ingredients from like-minded purveyors as well as in its community support.

Customers feel good purchasing from companies that align with their world views.

 

3. Personalization

 
Yes, for customers, it's all about "me."

That doesn't mean obsequious associates greeting customers they don't personally know by their first name or creepily sending birthday cards to clients they've barely served.

Rather, it means positioning the company in a way that feels customized.

That includes having Instagram-worthy products, immediate customer service response and marketing that focuses on word-of-mouth.

Influencers — high-profile customers whose style is "gospel" — can be more powerful brand advocates than any type of advertising.

But it's not all about celebrity: For example, Carter's apparel encourages Millennial parents who want to share photos of their Carter's-clad babies to use its hashtag #lovecarters.

Retailers can have paying customers, or they can have loyal customers.

High quality products and experiences encourage loyalty in Millennials, who tend to be more easily swayed by special promotions and lower cost than previous generations.

However, loyalty can be earned: Retailers with compelling brand stories and experiences that regularly exceed expectations are positioning themselves to welcome the elusive repeat millennial customer.

Gesture recognition helps retailers gauge shoppers’ real interest

 

 

Artificial intelligence can help even the fussiest customer find just the right product, in a fraction of the time it would take without any technological assistance.

While AI has been used in various businesses, including retail, to improve efficiencies, the technology has also been employed to help stores improve the customer experience by providing more personalized service.

Through advanced gesture recognition, retailers can determine the popularity of an item by analyzing shoppers' facial and hand gestures.

Software analyzes the way shoppers react to a certain item and determines whether the item is a potential sales buster — or a dud.

Just as an online recommendation engine analyzes a shopper’s movement within a site, gesture recognition software "learns" how an item affects a shopper, and can assist the retailer in finding an item that is perfect for a particular user.

 

Understanding shopping patterns

 
The ability to know what merchandise has been viewed and ultimately rejected is crucial if traditional retailers want to compete against the likes of Amazon.

Digitally native retailers understand customers’ purchase and shopping habits, because their machine learning models see all the data.

Brick and mortar retailers are far behind in understanding customers' shopping patterns.

Gesture recognition can arm retailers with predictive power.

By analyzing customer data created by interpreting human gestures using mathematical algorithms, retailers can discover which customers are most likely to buy certain products.

 

Prescriptive intelligence

 
As AI advances, businesses will shift from gathering predictive data to prescriptive intelligence.

Once retailers understand why customers buy a product — or why they do not — the next step is to gather intelligence so marketers can illustrate the reasons why shoppers should buy a product.

 

Sales help

 
AI has the potential to amplify and augment retailers' creativity, by providing not only necessary data, but also freedom from time-consuming, mundane tasks.

The key for brick and mortars is to employ AI in ways that provide in-store assistance to human retail associates.

For example, AI that is integrated into inventory systems can quickly and accurately answer repetitive questions such as stock requests, store hours and directions.

Sales associates can then focus on helping and closing deals with customers.

Such tasks can accumulate and chip away at salespeople's time, leaving them little time to create customer relationships.

Gesture recognition is no different in terms of its potential to enhance customer service.

Salespeople receive accurate insights quickly, providing them with the opportunity to react appropriately.

"AI assistants" can help provide associates freedom from mundane, routine tasks so associates can work on improving personalized customer experiences.

By making appointments, sifting through and prioritizing email and scheduling various tasks, an AI assistant allows the retail associate to shine in pursuit of customer satisfaction.

How do you get from unified data to better CX?

 

 

What’s the goal of unified commerce?

Ultimately, as in everything else you do in retail, unifying commerce should improve customer experience.

But how do you get from the technicalities of unifying data and technologies on the backend to better CX?

A foundational step in transforming data visibility into better CX is to take greater control over performance and operations.

When your retail data is unified in one platform, you’re in a better position to uncover and address bottlenecks that perpetuate frustrating, inefficient customer experiences.

Here are a few ways centralized data visibility in the Retail Pro POS platform helps you do that.

 

Enterprise-wide management

With data unified in Retail Pro, you can see and centrally manage your whole business – including subsidiaries, even in the most remote areas of global trade.

That means you keep your finger on the pulse of every store you run, so you can spot downward trends early.

Then, take corrective action to make sure customers' experience of your brand stays consistent.

 

Real-time updates

You can more accurately track KPIs and performance with real-time, centralized communications capabilities, so managers can keep up with changing sales trends.

You can also control what data each store location will see to keep reporting fast at the store level.

That means managers can act fast to replenish hot items and ensure customers get what they want every time.

 

Reliable replenishment

With all your inventory data unified in one software, you can improve performance and keep stock availability dependable.

It's one small -- but crucial -- way to put shoppers’ needs first and deliver the goods for which they rely on you.

 

Whether you’re retailing across regions, channels or international borders (or all of the above!), you can create a unified, reliable customer experience with Retail Pro.

Request a demo or talk to your Retail Pro Business Partner today to see how you can get unified data visibility with Retail Pro.

 

NRF 2019: Traditional retail needs more of this to delight customers

 

 

Note to retailers: Be willing to disrupt the ways you sell products to customers.

That was one of the key messages at the National Retail Federation Big Show 2019 in New York City earlier this month.

How can disruption work to a retailer's advantage, when common sense says customers appreciate stability and a sense of continuity when shopping at their favorite stores?

Sometimes, familiarity breeds contempt, as the old saying goes.

Don't be afraid to try something new, particularly if research backs up your instinct for change is correct.

Here are three ways retailers can use disruption to their advantage to delight the customer.

 

1: Be human

 
Many retailers have adopted technology that helps them respond more efficiently to business needs, but they should also be meeting customer needs effectively.

Break away from a technology for technology's sake mindset.

Every store's competitive advantage is its staff.

From founder to sales associate, those are the people who set the tone and the sale environment.

The customer wants to be uniquely known in a way that is meaningful to him or her, said Lindsey Roy, chief marketing officer of Hallmark Greetings, during her closing keynote for the NRF's Student Program.

Customers are sensitive to a brand’s authenticity and they notice its in-person interactions as well as those through social media.

While technology can fulfill some vital company tasks such as inventory requests, point-of-sale needs and logistical information, providing a meaningful human contact is crucial to nurturing a customer connection.

Customers should feel as though a retailer values their business enough to provide an associate to assist when necessary.

 

2: Get physical

 
Brick and mortar stores are becoming important as a way for retailers to combine online and in-store experiences to engage meaningfully with today's consumers.

Digital brands are now opening physical locations; offering an in-store experience is a key retail differentiator.

Despite some very convincing chatbots in the e-commerce world, shoppers enjoy the rush of adrenaline they feel when they find the just-right product in a physical store.

Even Amazon, the creator of the ultimate product recommendation engine, is acknowledging the importance of having a physical presence with its launch of Amazon 4-star retail stores.

So far, the Amazon 4-Star locations offer top-rated products, curated for each specific location.

They are designed with the "discovery shopper" in mind.

Encouraging that sense of wonder in shoppers strengthens the bond between retailer and customer and fundamentally promotes loyalty.

 

3: Use your data

 
Today's retail needs technology, but it should largely be implemented to improve how associates interact with customers.

By collecting and aggregating customer information, stores can provide richer experiences for shoppers.

Retailers that don't correctly identify customer pain points run the risk of rolling out expensive technology that doesn't enhance the shopping experience.

Technology is not a substitute for the human touch.

A recent survey by PWC found the payoffs for valued, great experiences are significant: up to a 16% price premium on products and services, in addition to increased loyalty.

Artificial intelligence can gather data using chatbots, for instance, and then use that information to assist employees who are busy working to satisfy customers' needs.

 

 

 

 

The rise of subscription e-commerce

 

 

Shoppers want personalized experiences that are convenient and easy. Subscription commerce fulfills that need.

Of course, for retailers, that one, seemingly simple desire can be filled in a multitude of ways, which can sometimes be at odds with each other.

For example, a personal shopping experience may mean going to a neighborhood store, being greeted by name and engaging with an associate who knows your shopping history by heart.

It can also mean logging onto a favorite online store, also being greeted by name, but then interacting with a recommendation engine and having a package shipped directly to you.

When customers want certain items on a regular basis, subscription commerce is bridging the gap, letting customers feel a personal connection without having to expend the effort of a physical visit or performing endless online searches.

With subscription commerce, or "subcom," retailers can delight customers while simultaneously benefitting from a source of recurring revenue.

Subscriptions have exploded in popularity, growing from $57 million in sales in 2010 to more than $2.6 billion by 2016.

McKinsey & Company reported that 15 percent of online consumers signed up for subscription services in 2017.

Retailers offering such services report having a much closer idea of warehouse staff and stock requirements, delivery destinations, shipping costs and likely future income.

Retailers generally have a greater sense of predictability, but in the most popular programs, what is delivered often includes a surprise—a carefully curated amalgam of products that the retailer has determined the customer will want.

The concept is popular because it's fun and customers believe they are getting good value.

While shoppers can order specific items for delivery at specific times by subscription, (e.g., Harry's Razors), samplings and curation are two common types of subscription services.

 

Samplings

Birchbox (cosmetics), Graze (snacks), and BarkBox (dog supplies) are among the most popular sampling services that consumers can sign up for by subscription.

Birchbox, which launched the curated sample subscription box trend in 2010, mails subscribers four to five new beauty samples and lifestyle items to try for a $10 monthly fee.

Curation is based on shopper profiles submitted by users on the Birchbox website.

Retailers earn recurring income on these subscriptions of sample products; they pay little or nothing for the products they ship on a regular schedule.

Customers join the service and understand it's typically a sampling of trial-size products; those that aren't desired are simply discarded rather than returned.

For example, Birchboxes can't be returned. By offering trials of popular products, retailers hope to increase product interest that will carry over to their online stores.

The boxes offer retailers opportunities to delight customers, with curation, personalization, and pricing strategy being crucial factors.

 

Curation

Curated services are personalized with the shopper's profile in mind.

For example, customers of the higher-end clothing subscription Stitch Fix, benefit from a personal stylist who selects several pieces of clothing based on the shopper's style profile.

Upon receipt of the shipment, the customer has three days to decide what to buy and what to send back.

By sending the stylist feedback, shoppers can receive more personalized selections the next time.

Subscription services answer customers' calls for more personalized offerings.

Shoppers are willing to pay for convenience and subscription services provide that as well as an element of surprise.

Successful retailers understand that subscriptions aren't simply fulfilling a request — that can be accomplished with any sales transaction.

The surprise element of curation and sample subscriptions makes shoppers feel as though they're getting gifts from close friends who understand the recipients' taste — despite the recipients having placed the orders themselves.

The experience delights the customer, and therefore, the trend is likely to continue to be popular well into 2019.

 

 

 

A little data-driven loyalty goes a long way

 

 

Retaining existing customers by keeping them satisfied and engaged is far less costly than identifying and appealing to new customers, yet too often retailers let their regulars drift away.

Why do retailers allow that to happen, especially when the costs of customer acquisition are so high?

Many retailers are primarily focused on expanding their customer bases: More customers equal more revenue.

However, if current customers aren't nurtured, they begin to feel taken for granted.

Once a customer feels unappreciated, the separation from the retailer begins.

For example, stores will offer introductory rates, special financing, free shipping or percent-off savings to new customers — while leaving loyal customers to feel left out in the cold.

Savvy retailers understand that to win against all the competition out there — online as well as brick and mortar — new customers shouldn't be favored over the current ones.

Loyalty programs can help show "the regulars" just how appreciated they are.

 

Reward all paying customers.

Cash-paying customers can't take advantage of certain loyalty programs; some merchants require customers to download an app or link to a credit card in order to get loyalty points.

Retailers are recognizing the problem and are starting to look for solutions.

For example, the AppCard loyalty and personalized marketing platform is a multi-tender solution, which means customers can pay how they want, and still reap member benefits.

In addition, retailers such as Target, which offer rewards through its credit card offerings, are launching a more neutral system in order to reward more customers through its loyalty program.

Being flexible — or payment agnostic —is a smart business strategy, because cash payments make up over a third of all transactions.

 

Understand how customers want to be rewarded.

Customers enjoy earning — and spending — rewards.

A recent survey of approximately 1,000 online shoppers conducted by Bizrate Insights for Internet Retailer found that 70% of respondents wanted free shipping in exchange for their loyalty.

An impressive 61% also enjoyed receiving reward points they could redeem for discounts.

Unpopular perks: early notification of sales (11%) and exclusive access to products or store events (9%).

 

Develop personalized loyalty programs.

Successful loyalty programs "speak to" your customers' tastes.

Shopper identities can be tied with SKU-level purchase information from POS like Retail Pro, and this data is used to automatically deliver personalized offers that see increased conversion rates and provide a better shopper experience, which in turn gains shopper loyalty.

Deep learning uses that historical transaction data in your POS to provide loyalty programs with customer preferences and anticipates a shopper's next move, delivering recommendations to increase engagement and prevent churn.

AI built into solutions such as AppCard, help you "learn" your customers’ unique buying cycles and anticipate customers' desires, delivering the right message, to the right customer, at the right time.

Every retailer should understand what its best customers want and design a loyalty program for those shoppers, based on data analysis.

One loyalty program does not fit all customers, so understanding the differences and how to best reach them is imperative to preventing shopper "drift."

Using insights generated from unified data, you can build a loyalty program and overall retail experience that helps you put shoppers first.

Book your NRF 2019 meeting with us to start the conversation on how you can unify commerce with Retail Pro.

 

 

 

 

6 Essential Elements of a Winning Independent Retail Strategy

 

 

Looking to improve inventory productivity and control?

Watch this final part of our 3-part Retailer Success webinar series to see principles and tactics that will help you manage inventory better and compete profitably.

Part 3: Six Essential Elements of a Winning Independent Retail Strategy

  • See how high-achieving independent retailers differentiate themselves to compete successfully in the changing world of Amazon retail
  • Learn the major factors you can implement immediately to differentiate your business in this 6-point plan from Management One

 

Customer-sourced innovation: How retailers leverage direct customer insight to drive innovation ROI

 

 

86% of shoppers will pay more for a better customer experience.

Your team can brainstorm and implement ways to innovate CX… but when you implement changes, how do you know which factors help or hinder improvement?

And how do you know what really is a “better” customer experience?

Watch this webinar to see how customer-sourced innovation can help you close the gap between what retailers think shoppers want, and what shoppers actually want – because innovation really shouldn't hurt the bottom line.

You'll see:

  • Real stories of customer-sourced innovation
  • How to set and improve on your Customer Experience Baseline
  • Tactics to reduce guessing in your innovation initiatives