The swift changes necessary to adapt in 2020 brought to light the growing need to pivot from an omnichannel back to a customer-centric approach. Retail leaders are already calling for a shift from the omnichannel perspective. Instead, they are considering the customer as the channel. In doing so, retail companies are looking to “embrace the blur.”
The convergence of digital natives with brick-and-mortar
The ethos of omnichannel at the start was simple — find more ways to adapt to customer searching and shopping habits by opening new and creative ways to get the brand and product in front of buyers.
Digitally native companies like Warby Parker, Casper, and Bonobos built branded storefronts or inked partnerships with brick-and-mortar retailers to meet more of their customers where they were and offer a full spectrum of channel options aligned with the brand. In contrast, brick-and-mortar retailers extended their brands through new online channels to keep pace with the growing number of digital retailers.
These moves followed the perceived and now proven ROI of making products available in multiple channels. Data shows that customers using multiple shipping and shopping channels tend to spend 4% more in brick-and-mortar locations and 10% more at online stores.
There can be too much of a good thing
Following the initial success of taking an omnichannel approach, companies enhanced their channel strategy to get in front of as many eyes, and in as many ways, as possible.
Yet as customers became more digitally savvy, expectations of high-quality, differentiated experiences across channels soared. In response, the number of Marketing Technology vendors (currently over 8,000 MarTech solutions) promising to collect, connect, and activate customer data, soared. Efforts in big data and the concept of a “Customer 360” has rarely provided any utility to the consumer at all. In fact, these efforts commonly led to a focus on processing high volumes of transactional data across channels and were often managed in silos. In other words, while there were many early wins, today’s omnichannel approach causes strain on retailers’ data collection-to-activation journey in many areas, including:
- The lengthy, iterative, ‘test and learn’ mentality required for success;
- Unnecessary silos resulting in slow response to changes in buying behavior, supply chain, and operations;
- Digital fatigue and the changing customer desire for differentiated in-person and on-line experiences;
- Lower than expected marketing performance from loyalty programs;
- Adaptation to new and ever-changing privacy laws.
This leaves many retailers looking for answers about evolving their customer journeys and investing time, effort, and resources accordingly.
Putting the customer back at the center of retail
Retailers are increasingly blurring the lines between physical and digital and working toward letting the customer own their journey. This change to the “customer as the channel” approach will require a monumental shift in how the organization thinks about and uses customer data and how the organization is structured.
Key areas of attention to create customer focus
Rethinking performance metrics: A company’s culture is often dictated by the metrics that they use to run their days. Earlier omnichannel initiatives created performance-focused cultures, driven by clicks, conversions, and ROI. The new customer-focused model requires a shift to Return on Experience (RoX), bringing in data across the entire experience to monitor how other touch points drive outcomes. These data sources may include support data, digital behavioral data, social and review data, traditional Voice of Customer (VoC) data and customer support data.
Focusing on different outcome metrics will be critical for shifting the way companies think about performance. Adding or increasing attention on metrics such as customer retention, customer lifetime value, referrals, issue incidence, and time to resolution can transform how internal teams work together and focus on delivering for the customer.
Creating a customer-centered data unification strategy and taking an agile approach to data modeling: Shifting to an RoX model requires understanding customer personas, the customer journey, and the associated data collection points currently available. These data sources are critical to understanding behaviors, attitudes, or outcomes that drive RoX calculations.
The good news: many retailers already have much of the required customer data needed to build out a customer-centered model. Shifting to an experience-led strategy does not mean retailers have to rebuild their data models completely before transitioning to an RoX focus. Instead, retailers must focus on building a flexible model that starts to align existing data to the customer journeys so they can mobilize around the customer while they create backlogs for future data enrichment through integrations and other collection channels.
Building a flexible data infrastructure as agile as your customer’s behavior: Looking at the customer as the channel requires a more detailed and dynamic view of that customer, supported by holistic, unified, and democratized data. As digital channels took root, the data problem quickly shifted from one of scarcity to one of quality and accuracy, all while being efficient, real-time, and aligned with global/local privacy law. To meet all these criteria, organizations looked to technology to solve the problem before streamlining the underlying data collection-to-activation process. By taking a step back, identifying data sources, integration requirements, and the activation vision, a robust data strategy can be created and often unify the, historically, siloed organizations.
Operationalizing the customer through your people, process, and technology strategies: Companies can re-adjust technology, data models, and measurement, but the channel mindset will likely be challenging to abandon after a decade of working within these bounds. Business model and organizational transformation are critical components to successfully implementing updated data and cloud technologies. Defining the vision and gaining senior leader alignment and advocacy before telling the organization “what’s in it for them” are precursors to unlocking the potential benefits of such a change. To ensure success, it is as important to focus on change management and sufficient education and training of those responsible for implementation and execution as it is to focus on the technology needed.
Business transformation is needed to embrace customer as a channel
Strategic Execution: Leaders need to focus on building a Modern Culture of Data, where data guides every person at every level of your organization. Leading with experience-focused outcomes will be critical. Even more critical will be making data easily available and aligning these outcomes into employee KPIs to create data literacy and help employees connect their work to the overall outcomes.
People & Culture: Retailers need to rethink the channel focus of their organization structure to “embrace the blur” and focus teams on understanding the full journey experience of their customers versus a single marketing channel or domain of the journey. This requires a shift away from channel conversion rates, and more to metrics that monitor ease, relevance, trust, loyalty, and experience outcomes. It also means more horizontal organizational structures, rather than the traditional verticals.
Process: A shift towards a customer-focused retail model requires changes in supply chain strategies, delivery and warehousing, product planning, sales strategies — and all teams need to be looking at the same data story for this change to work. It is critical to ensure that the people, processes, and training are well thought out during implementation to ensure the success of the new technology and data approach.
Technology: Organizations will likely need to take a multi-pronged approach to implementing technology in order to make the most of the investment today and build on it in the future. Depending on where a company is in its data maturity, it might start with migrating data to the cloud and retiring outdated on-premises machines or creating new applications to utilize the data and technology available fully. When making these critical investments, organizations must ensure the return is directly connected to, and in support of, the strategy of putting the customer first, not solely concentrating on the technology.
The value of Google Cloud for retailers
When we think about our online experience, Google is ubiquitous with researching, discovering, and interacting with brands. Many of us start our journey with a Google Search, move over to Google Shopping to compare prices or perhaps turn to Google Maps to find the nearest store to make a purchase. When it comes to our online experience, Google’s broader ecosystem influences many of our decisions.
Google has invested heavily in its products and services to make it easier for retailers to drive tangible results. Of particular note, through Google Cloud Platform, the organization democratizes the ability of retailers to leverage the industry-leading technology that underpins many of Google’s leading consumer products.
If this wasn’t compelling enough — Google recently made accessible their top Search data as a new dataset in BigQuery. This data can be drilled down to the city-level. Now, more than before, retailers of all shapes and sizes can leverage Google’s streaming data analytics offerings to drive business insights in real time from in-store displays to refining campaigns in response to what customers are looking for. As Slalom has demonstrated with DSW, this can translate to informing real-time interaction with their 26 million loyalty customers.
Our experience has shown that customers need to partner with vendors who can future proof their technical investments. This constant focus on innovation is a key reason why Google Cloud was assessed to be the top cloud vendor for retail worldwide and we believe they represent an industry leader, particularly when it comes to industry solutions for retail.
In today’s environment, the promises of customer-centric, data-driven retailing are more of a reality than ever before. Still, they are reliant on a relentless effort to make an organization’s vision come true. From data collection to team organization and the technology required for execution, putting the customer first by leveraging rich insights is a journey and must be treated as such. Retailers can become savvy technology companies but cannot do it alone. Teaming with partners such as Google Cloud and Slalom can put your company one step ahead of the rest and ensure swift and successful adoption and lasting results.
To find out more, download our article on customer data strategy.
About the authors:
Heather is a Director in Slalom’s Global Customer & Digital Strategy team, with over a decade of experience in customer data strategy, marketing analytics, and experience technology transformation.
Logan is a Director in Slalom’s Global Customer & Digital Strategy team, a subject matter expert in Retail & Consumer Products, and has over a decade of experience in marketing, sales, and digital strategy & transformation.