The retail landscape is evolving. Companies like Walmart, Sears, JC Penney and Macy’s are closing stores left and right. It’s alarming but it’s actually a good thing. They’re getting back to their roots by paying more attention to each and every store and to each and every customer. By doing things like making sure inventory isn’t picked over, the window displays are on point and the customer service reps are there to help, they are reviving themselves.
It’s not easy to get a net new customer, and in the past, retailers were so focused on expansion and store growth that they lost sight of the fact that it’s easy to lose a customer to a competitor. In fact, 79% of your customers will take their business to a competitor within a week of a bad customer experience. If you’re not meeting customers expectations, you’re losing them which is a big problem. So how do you prevent it?
So often we hear things from prospects like "We want a messaging solution" or “We’re trying to conceptualize what a published loyalty program would look like for us”. Sometimes we hear things like "We want to deliver a more personalized experience”. These are all sensible things that retailers should be doing -- some might even say they’re things that retailers must be doing. In these scenarios, the retailer has prescribed a solution to a perceived problem, and they are (you are) attempting to fix the wrong problem. However, the question that a lot of retailers forget to ask is: how? If you simplify the very complex beast that is utilizing personalized customer engagement to create a unique experience and drive incremental growth, you’ll find a few basic concepts. The first thing that you need to do is generate net new customers! Secondly, you need to understand your customers. Thirdly, you need to engage them without creating too much undo work for them.
Without being able to fully understand what a customer cares about or likes on an individual level, it’s impossible to engage with them in any meaningful way. Engagement could be via a loyalty program, email, text messages or in-app messages. A lot of times we see retailers take the easy way out by sending offers to very general groups of people i.e. females over 20 or everyone that signs up for your program. There are a few problems with this. The first is that it’s not very personalized to the individual. Take me for example; I’m a 27-year-old male, and I can tell you that I have very different interests than other 27-year-old males I know. In this day and age, consumers like me expect you to anticipate what they want before they know what they want. They want you to be in the right place at the right time via the right channel. Grouping me in with a bunch of people who may or may not like the same products, have the same behaviors or interests as me starts the relationship off on the wrong foot.
Another reason why this type of segmentation doesn’t benefit your business is that it doesn’t drive incremental spending. Think about this -- if you have a group of 27-year-old males, and you send a 15% off offer to them simply for the reason that they’re over 20 and male, chances are that some percentage of that group would have bought the product that you gave them a discount on at full price. You’re giving stuff away to the wrong people! Stop doing that! There are far better ways to engage customers via offers, content, and experiences that will drive incremental spending and create a seamless customer experience at the same time.
There is so much customer data out there, and if retailers can harness it correctly, they'll have one place to look in order to understand how their customers are interacting with their brand online, in-app and in-store. By understanding things like SKU level purchase data about specific customers both in-store and online, a customer’s propensity to churn, RFM scores, most frequently visited location etc. retailers can make informed decisions about what the next best engagement might be for a specific customer vs. a group. Think 1:1 vs. 1:Many. Start slowly, but the ideal state is a connected POS, website, app, CRM, data warehouse, customer service database, and any other systems that house customer data. Pull that information into one place, and then decide on customer journeys based on known and calculated data. If the idea of having a single, real-time view of each of your customers seems like a stretch, SessionM can help get you started.