Leveraging Existing Business Data to Build Effective and Lucrative Omnichannel Retail Experiences

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1 Most retailers have seen the need to create omnichannel customer experiences. Leveraging Existing Business Data to Build Effective and Lucrative Omnichannel Retail Experiences TECHBLOCKS WHITEPAPER

2 Leveraging Existing Business Data to Build Effective and Lucrative Omnichannel Retail Experiences The world of retail has changed: today's customers have more channels than ever to connect with their favorite brands. As the same time, customers are given a greater number of choices and brands they can buy from. Where the inability to provide a consistent, and relevant customer experience could easily result in a dissatisfied frustrated customer and customer loyalty can diminish at the click of a mouse. Unfortunately, in today s marketplace, a single poor experience can not only cost you the loss of potential revenues, but with the power and reach of social media, could potentially cause great harm to your brand. At this point, most retailers have seen the need to create omnichannel customer experiences. However, recognizing a need and filling the gap are not always easily aligned. Many retailers today are still challenged to design and build positive omnichannel experiences. 2 TECHBLOCKS WHITEPAPER

3 The Omnichannel Challenge Retailers have been struggling with fragmented channels and platforms for years. Bricks and mortar retailers maintain separate Internet and mobile platforms that don t share a common view of customers with their physical stores. How could they? After all, online buying behavior and in-store buying behaviour patterns for the same consumer would vary greatly based on their customer experience. Further complicating this situation is the backend fulfillment process: retailers must be able to integrate their omnichannel platform with other systems to ensure they are able to meet customer requirements in a timely manner. The need to manage product availability by channel complicates the inventory management issue that retailers struggle with. Retailers want to keep inventories lean to eliminate costly markdowns, but stock outs cause lost revenue and threaten the customer relationship. How can retailers create the omnichannel customer experience they need to compete in the modern retail environment while also making sure that the initiative is profitable? Read on to learn how. Most interestingly even Amazon, the web pioneer to an online marketplace, recently opened its first store Amazon at Purdue. While it is still unknown how its venture into the physical world will impact Amazon s legendary customer intimacy, most other retail companies are struggling with entering the e-commerce and mobile presence arenas. Unfortunately these late movers are only catching up to the competition now and have lost any competitive advantage, and having an online and mobile channel is almost considered a mandatory for any successful retail company. Product pricing is also more complicated than ever, since consumers can check your competitor s price on mobile devices even while standing in your retail store. Ensuring that pricing is competitive is a complex undertaking that requires knowledge of the buyer s personal data as well as current and future market conditions. Although economists claim that the economy is strong consumers are still slow to spend, making sales and top-line growth elusive. Today, pricing is almost as personalized to the consumer as the product. 3 TECHBLOCKS WHITEPAPER

4 Eliminating Customer Silos As new retail channels such as e-commerce sites and mobile apps were introduced, it was only naturalthat these channels developed into individual silos that treated customers differently than many other channels. To create an onmichannel customer experience, retailers must be able to overcome this natural inclination by removing these individual silos and creating a single holistic retail experience that transcends individual channels. A CRM solution may be helpful in this regard, allowing a retailer to track a customer's different interactions with the brand across different channels. This will allow the company to ensure that each channel interaction is consistent, but unique enough to move the customer forward in the buying cycle. Product pricing is also more complicated than ever, since consumers can check your competitor s price on mobile devices even while standing in your retail store. 4 TECHBLOCKS WHITEPAPER

5 Build Customer Intimacy with Deep Analytics In a world where more business data is available than ever before, the importance of this data when it comes to building an omnichannel retail experience can not be emphasized enough. The truth is that your customers are sending you many different clues about how they prefer to interact with your brand. Whether these clues are subtle (such as a customer's behavior) or more straightforward (such as a post about your brand on social media), business intelligence and data visualization solutions are the key to unlocking valuable insights and using them to support your omnichannel sales efforts. Having the right BI solution in place can help you gain the insight needed to enable successful omnichannel experiences going forward. With abundant amounts of data hitting the system based on interactions across multiple channels retailers must clearly define and plan their KPI s to be successful. Increasing Share of Wallet The result of data-driven customer insights is the ability to present attractive offers and prices on in-stock items likely to be of interest to a specific customer at a specific time and at that specific location. The best way to convince consumers to open their wallets is to reach them with targeted messages and offers designed to appeal to their unique interests and delivered in their preferred format, but aggregating the data from all forms of customer interaction is a difficult feat. Using the data quickly and cost-effectively enough to increase sales is even more of a challenge. One way to approach this is the retail associate might also ask the customer how they liked the last product they purchased, or make suggestions for similar items predicted by next likely purchase algorithms. The trick is to demonstrate customer intimacy without coming cross as predatory or intrusive. 5 TECHBLOCKS WHITEPAPER

6 More Effective Inventory Management With the more complete knowledge of the customer and insight into demand trends and any outside factors that are likely to affect demand, the retailer can also use analytics to ensure that there is sufficient inventory in the right locations to satisfy demands. This enables the company to maximize pricing and to initiate promotions or sales to help balance inventory or to sell stock that they might otherwise be forced to mark down. Price Optimization Fine tuning the merchandise assortment to closely track customer demand helps ensure maximum sales while minimizing markdowns, transfers and also helps ensure pricing leadership while still maximizing profits. The retailer can draw on social media, local market reports and POS data, as well as traditional demographics to refine and even personalize the merchandise at each node in the channel. This proactive approach is in stark contrast to the recent retail climate in which sellers were focused on cost cutting as a way to shore up profitability. In addition to optimizing pricing and minimizing markdowns on excess merchandise, advanced analytics enables the retail company to build more efficient and effective supply chains with the insight provided through predictive analysis of product trends. By sharing this insight with suppliers, the entire supply chain becomes more efficient, helping to hold the line on costs and creating another driver of improved profits. Closing the Inventory Gap Fine tuning the merchandise assortment to closely track customer demand helps ensure maximum sales. Inventory gaps not only result in a loss sale but can also by providing store associates with mobile apps so they can be more efficient and address customer needs more effectively. For example, when a product is not in stock, the associate can locate it in another store or at a distribution center and have it routed to the customer s home quickly to prevent lost sales. 6 TECHBLOCKS WHITEPAPER

7 Integrating online and offline channels For many retailers, the divide between online and offline channels is the most difficult part of creating an omnichannel user experience. However, while online and offline channels are fundamentally different, there's no reason that retailers can't tie them together into an integrated whole. For many retailers, the divide between online and offline channels is the most difficult part of creatingan omnichannel user experience. One way to do this is by arming sales associates in brick-and-mortar stores with mobile apps, in effect making them a living, breathing extension of the online user experience. With their mobile device in hand, they'll be able to find information they need quickly, keeping customers informed about products that the store offers, while also tracking inventory and reporting sales activity in real time. By integrating these sales associates into the online channel like this, retailers can make them more efficient and capable of serving customers better. 7 TECHBLOCKS WHITEPAPER

8 Defining channel roles One misconception about omnichannel is that it means using all channels in the same way. In fact, the opposite is true: different channels have different advantages that make them better suited for different kinds of customer interactions. An omnichannel experience initiative is most likely to be successful when it recognizes these differences and builds off of them appropriately. For instance, many customers prefer to purchase certain products in stores because they feel more comfortable being able to hold the product in their hands before making a purchase. For these customers, just because the sale takes place in a store does not mean that online channels didn't play an important role in the sale. For instance, the customer may have used the e-commerce site to educate themselves or get ideas, before coming to the store to make a purchase. For other customers, retail stores are more useful as an opportunity to showroom: trying out products before buying them through another channel. Most likely, different customers will use different channels in different ways. Each channel must offer a distinct and unique value while still functioning as a cohesive whole in the eyes of the consumer. Retailers must be able to find the data that shows how your customers are using those channels, and make sure the channels are set up to meet their needs, whether they're looking for a showroom, a transaction center, a return center, a source of inspiration, or a source for research. Most importantly retailers must ensure all channels must work together, not only must they have consistent messaging, branding and pricing, they must also have a complete view of the customers to prevent pricing conflict or potentially different fulfillment information. Conclusion For many retailers, a sale is a sale, and the activities and actions leading to that sale is not relevant to the bottom line. However, in the world we live in today, there is no such thing as a sale that takes place in a vacuum. All sales are different, and rely on different channels to progress consumers through the buying cycle. Retailers must develop closer relationships with their customers, and these relationships must span all channels to deliver a single view of a customer. Having this relationship not only improves customer loyalty, it also provides data to increase your customer share of wallet. Applying customer buying behavior data when coupled with other data such as market trends, location and POS data helps ensure the optimum product SKU, inventory and pricing balance for maximum revenue and profitability for the retailer. An omnichannel retail experience recognizes that all channels are set up to support customers however they might choose to use them. In order to be successful, today's retailers must focus on implementing the technologies and strategies that support the customer omnichannel experience. 8 TECHBLOCKS WHITEPAPER