At the end of 2014 the report titled Digital Shopper Relevancy, investigating online shopping behavior, was presented. One of the results the report presented was that 44% of the 18.000 respondents believes in the potential of the Internet of Things for shopping experiences. It also showed that 42% feel the same way about wearables. We can expect these numbers to rise. Research firm Gartner has predicted the consumerization of IoT in the next 5 years resulting in a striking 26 billion smart and connected products by 2020. That number boils down to 3,3 devices per person, smartphones and tablets not included.
In my previous article here on the Salesforce blog I presented my vision on what this means for retailers. Retail is moving into the cloud and brick-and-mortar stores will finally catch up with digital analytics and e-commerce. The physical world will become programmable and the ability to manage data efficiently and effectively has never been so critical for success. The new reality for retailers will increasingly be one of asynchronous and non-linear customer journeys.
It’s time for retailers to start experimenting with the new technological opportunities that the Internet of Things offers and see how these opportunities can be translated into new customer experiences. In this second article on the future of retail I will present 5 steps to jumpstart your efforts.
If the digital economy has made one thing very clear, it is the marketplace has become more transparent and customers have way more options to fill in a need than ever before. A long-term relationship with customers is no longer a natural thing. Your competitor who might offer a better product, a better service or a cheaper price is only one click away. The main question for all new offerings is therefore simple: what’s in it for your customer?
A few helpful questions to come up with an answer are:
1. What problem are we trying to solve or what part of the customer journey are we improving?
The key to answering this question is often contextual data; data that creates situational awareness about a customer. For instance launching a product video that starts playing after a touchpoint interaction (like scanning a QR-code) to connect a digital interaction to an offline experience.
Taco Bell lets customers order food from an app at any given moment or location. Whenever the customer enters a restaurant, the app sends out the order to the kitchen and the food will be served within minutes. Easy and fast, just what a customer likes.
2. How can we increase our relevancy?
Customers are willing to pay for services, a long as they are based on their preferences, like ordering online and picking the order up at a nearby location or reserve something online, to try it out later at a store. But there needs to be a real reason to visit a store, a real addition to the experience. Retailers should think about how to differentiate from online experiences. This could be a discount, a special offer, talking to an expert, trying out a combination of related products. The customer value is in the relevancy you are able to offer. Personalized services are key.
The Dutch retailer Coolblue is a great example. Coolblue manages over 300 webshops and 7 brick-and-mortar ones. They are extremely service-driven and use new technologies to maximize ease of use and relevancy. Coolblue is a great example of a company that spots trends and is able to translate these trends into customer-centric solutions. With success: the company reported revenue was 360 million euros for 2014, an increase of 45% from 2013. They expect a double-digit increase for 2015 as well.
Retailers should also change their attitudes towards their shops and think of them as experience centers. There’s no added value in only focusing on product differentiation and protecting margins. Brick-and-mortar stores are usually located at prime locations in a city. There is no better place for a brand to be ‘displayed’ and brands should be willing to pay for that as well.
Integrating a digital layer into a physical experience could support several goals. It is important to decide on this early on, since this will be your main point of reference to decide the success of your pilot. Your pilot should at least support one of these goals:
1. Improving customer experience: Tesco is working with an opt-in strategy for their app based on a service that helps customers find products in a Tesco store. The app serves as a personal assistant that recognizes products and uses beacons to guide customers trough the store and work their way down their grocery list.
2. Higher in-store conversion: Macy’s uses beacons to support their offering- and loyalty program. Store visitors are rewarded points for visiting a store and buying products. Beacons that are installed throughout the store also send special discount offers to shoppers while they are shopping, based on their customer purchase history. McDonalds is leveraging beacons to offer coupons. In the first four weeks of doing so, 18.000 coupons were redeemed and McDonalds saw a 7,5% increase of McNuggets sales and an 8% sales increase of the McChicken.
3. Improving customer profiling and personalization: the Dutch department store De Bijenkorf has installed 140 beacons in their Rotterdam location to recognize customers at the check out. An employeeasks if the customer wants to join the new Privilege Membership-program after which a CRM-system registers the email address. From there on the customer can use a homepage or an app with all sorts of personalized offerings and an option to manage the profile.
The preferences and interests of the consumer should be leading in everything you do. Permission-based profiling gives retailers the opportunity to continue to provide relevance and even improve over time. Requesting customers for input is often seen as a burden, but on the contrary it is a must. However, the payoff should always be clear. The payoff should therefore always be about better offers, services and personal products. A better customer experience will always have a positive effect on your business.
New retail technologies go beyond beacons. Think of NFC, sound, QR codes and lighting as widely available and affordable options that each have their own advantages and disadvantages. The key question is of course whether the potential of the technology connects to the intended purpose and value proposition for the customer.
Analyze the available technology on features such as availability and compatibility. Customers need a QR code scanner app on their phone to scan something, but with NFC-enabled smartphones the customer only needs to hold the smartphone near an NFC chip without the need for a specific app. iPhones are better compatible with new Bluetooth standards, Android prefers NFC.
For beacons, though, newer versions of mobile operating systems (iOS7 and Android 4.3) are required than for NFC and QR codes. See if your website analytics or CRM has data on what type of devices your customer base is using to interact with your business.
"The power of data is changing marketing as we know it," -Ubbo Maagdenberg. Ubbo is a Managing Director for Emark out of the Netherlands. Emark is a part of the Marketing Cloud Partner Community in the Channel Partner Program.
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