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How Highly Effective Retailers Succeed and Why Others Were Flat

No doubt your team knows how to optimize product pages, how to make checkout easier, and other holiday best practices. But perhaps your holiday sales numbers weren’t as attractive as you’d wanted, even after you followed all the day-to-day best practices...

What the Best Retailers Do Differently

As part of a proper holiday postmortem, don’t just focus on campaign effectiveness and operational challenges. Expand the process and evaluate your internal and external capabilities in light of your strategic priorities such as brand advocacy, customer experience, and LTV. In other words, explicitly link your capabilities with customer value.

The best retailers in the world succeed because they do things differently. They typically have strong brand loyalty, are known for a seamless customer experience, and maintain meaningful relationships with customers. Linking value to customer experience or brand loyalty can be difficult, but this should be attempted on a regular basis.

Customer Experience

  • Do you know what a 10-point increase in customer satisfaction is worth to your company?
  • Do you know what moving 5% of your NPS detractors to a neutral status would do for revenue?
  • Do you know what’s important to your customers?  
  • Do you know how much a poor experience costs you?

The most successful brands know the answers to these questions.

Rather than wholesale transformation of the customer experience, the best businesses will prioritize solutions with the biggest and broadest impact on customer break points. Here’s an example: What costs your brand more money—not having free shipping or having products out of stock?

While both of these problems are frustrating, there’s a solution that addresses both while also increasing customer satisfaction: in-store inventory visibility.

If a consumer doesn’t want to pay for shipping, he may be willing to get the product the same day by going to one of your stores. Similarly, if a store (online or physical) runs out of a product, it could ship directly from another store with inventory or point the shopper to the nearest location.

The best brands are self-aware. They know their customers and can identify all the ways they let them down. Then they fix those problems. The effect of prioritizing by impact and focusing on moments of truth is that you’re continually making the largest jumps toward better customer satisfaction, which should lead to a higher NPS and more revenue.

Brand Loyalty

Brand loyalty is strongly correlated with a great customer experience. Brands that have the most respect in the marketplace tend to do things other brands don’t. Namely, they cultivate the elements of value more broadly than others. They don’t just provide good value for money (which is highly important), they also link their brand to lifestyles through strong branding, selective channel partners, and quality of service.

The effect is that consumers aren’t just buying a product but, consciously or unconsciously, participating in something bigger than the transaction. There is an emotional connection tied to the brand that is based on customers’ preferences and the brands perceived values. According to Boston Consulting, the best companies “develop a clear vision on the basis of insight about customer preferences.”  

The key to developing better brand loyalty is becoming focused on the right customer segment. It’s difficult to develop core values and innovative offerings when you’re aiming at too wide an audience. By focusing on well-defined customer segments, you begin to see a clear picture of what values are shared between your brand and your most loyal customer segment. Aligning marketing and sales goals becomes much easier once this group is identified. 

Financially, brand loyalty has a tremendous impact on your success. Brand advocates or promoters (that is, consumers who have a NPS of >8 ) have a churn rate between 3% and 6%, while brand critics (that is, a NPS < 7) churn an order of magnitude more (between 35% and 45%).

While many brands execute their business operations well, very few are able to build a truly customer-centric organization with strong brand advocacy. The reasons differ by business model and industry, but most brands would benefit from a thorough evaluation of whether customer experience capabilities match up with customer experience goals. The difference between poor and fantastic customer experience may not fundamentally be a different service offering but how effortlessly you deliver it.

Here’s an example. Online self-service can reduce cost to serve clients by up to 90%. To that end many online retailers are deploying chat bots, knowledge centers, and revamping user account functionality. Two companies could take these same steps but the company that integrates the services more naturally into the shopping flow will have significantly higher customer satisfaction.

In a recent series of focus groups, Oracle conducted 10 hours of customer conversations. Nearly 80% of participants said they preferred utilizing a suite or platform for customer experience-related activities. Most cited integration, UX consistency, and financial benefits as the main reasons. If you take on the integration and UI rationalization with multiple vendors you are taking on excessive risk.

Consider the following:

  • Do you have a customer experience platform designed will all your needs in mind or cobbled together as needs arose?
  • Do your tools and technology engage and support your most loyal customers?
  • Are you able to easily alter major pieces of your customer experience as customer preferences shift?

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