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Oracle Retail Blog helps retailers stay current on customer successes, hot retail trends and industry best practices.

Frightfully Delightful Ways to Optimize the Omnichannel CX

Antony Wildey
Vice President of Global Sales Consulting

What happens to the customer experience when an omnichannel journey goes bad or ugly? In a recent webcast, I highlighted some of the key challenges our global retail customers are sharing with us regarding the omnichannel customer experience. By breaking down these challenges we can isolate where the potential value and financial outcome for excellence exists, as well as look at what happens when the CX is suboptimal. 

One of the most pressing challenges for today’s retailer is prioritizing the 70-plus customer journeys that may be offered. This requires a complete pivot to the customer—a shift to a business model that puts the customer at the center of every business decision and process. Let’s look at the opportunity to deliver omnichannel excellence and understand the potential cost of a badly executed customer journey.

Key Challenges in the Pursuit of an Optimal Omnichannel CX:

  • Flawless Execution: Retailers can’t deliver the omnichannel journeys their customers expect and are struggling with the execution of complex omnichannel journeys. 
  • Associate Experience: There’s a war for talent and retailers need every possible tactical advantage. The associate experience is as important as the customer experience. Happy associates make happy customers, but there's a war for talent in the store, as well as other touch points such as the contact center.
  • Customer Experience: It's never been easier to lose a customer from a bad experience and at the same time, unfortunately, the cost of acquiring a new customer is at an all-time high. 

Flawless Execution: Delivering the Omnichannel Journeys Customers Expect

We need to cultivate omnichannel shoppers, as they drive the most traffic, but they are also the hardest ones to please. 75% of buy online, pick-up in store (BOPIS) customers are likely to make an additional purchase and 49% go on to make an unintended purchase while they're picking up in store, driving additional topline sales (Invesp). These customers are also at least two times more profitable to a retailer. They're more loyal, they purchase more frequently, and we know more about them. This allows us to market and target them more effectively. In fact, a McKinsey survey found that where a brand improves the customer journey, revenue impact can be as much as a 10-15% increase and the cost of serving that journey can fall by 15-20%. 

Your Best Brand Ambassador: Winning the Store Associate Talent War

Your employee is your best brand ambassador. Consumers are empowered with their smartphones in hand and equipped with more information than many store and contact center associates. Retailers must arm store and contact center associates with tools, data and knowledge to create a superior experience. Not only does this improve the customer experience, but it also increases employees' motivation, job satisfaction, and retention rates.

According to one report it costs $3,300 USD to find, hire, replace and train a minimum wage employee. Of all retail positions, part-time hourly store employees have the highest turnover rate, with about 81% on average in 2018. This churn rate is a major drain on resources but companies that make a concerted effort to improve their customer experience are seeing employee engagement rates go up on average by 20%. 

Customer Experience: Real-time Relevance 

There's never been a time when the cost of new customer acquisition has been higher, and it's equally never been easier to lose a customer from a bad experience. Consumers expect a consistent and seamless experience across all touch points. They also want their experience to be individualized—they don't want to see irrelevant offers, they expect offers that are both targeted to their preferences and relevant to what they're doing now. Real-time relevance for a retailer can result in positive business impacts—from being able to rescue an abandoned basket online in a store to converting additional sales from identified traffic.

Show Me the Money 

According to a recent article, 86% of customers will pay more for a better experience, and keeping an existing customer happy is 14 times more profitable than landing a new customer. Maintaining and cultivating loyal customers is the best way to improve the bottom line. Harvard Business Review reports that if you can improve your retention rate by just 5%, you'll see a multiplier effect that will increase profitability by 25-95%.

The Potential Impact of a Poor Omnichannel CX 

Digital exposes every single one of a retailers’ business processes to their customers, and frankly, digital exposes mediocrity in an organization. Every seam, every bit of friction, every inefficiency in your business process is on view to your customers. Every customer, every guest, has a voice and digital gives those voices a platform. After just a single negative experience, 51% of customers reported that they would leave a brand forever (Newvoicemedia.com). In addition, $1.6 trillion is lost by companies in the United States due to customers switching because of poor customer service (Accenture).

The Road to Modern Retail

With digital exposing mediocrity in the world of modern retail, there are a few key strategies we are helping retailers adopt:

  1. Pivot to customer. Retail is traditionally focused on product, price, and place. Now it needs to focus on acquiring the right customer, activating that customer, and retaining them. Pivot to customer is the most common conversation we are having with our global retail community, and it's a board-level conversation that's taking place every day. Retailers need to put the customer at the core of their operations, adapt to fluid customer journeys and constantly changing customer demand, better equip and engage the customer in an individualized manner and create unique experiences that keep customers intrigued and coming back. Without putting the customer at the core of retail business operations, this is not possible. 
  2.  Invest with intent. Many retailers are supporting business processes and IT architectures that were designed 20 years ago. 80% of IT spend is on maintenance and legacy support integration. There are very few dollars available for true innovation. The challenge is investments. Our recommendation is to optimize and prioritize investments that deliver the best possible experience to the customer.
  3.  Shift from best practice to next practice. Our community of retailers asks how they can generate disruptive financial outcomes. Our advice is, if you are currently working to achieve best practice you’re late. With a technology platform strategy that enables a meaningful pivot to customer we see some significant opportunities to up level omnichannel operations.

We've been working with several retailers to prove out these potential wins:

  • Upselling at the POS: We've seen more than a $75 million increase in revenue at a medium-sized retailer turning over between 500 million and a billion dollars, just by optimizing targeted offers at the point of pickup. We worked with a retailer that had around 45% of their orders picked up in-store from known customers. This gave them real clarity on who was in their stores and when, and we can combine this identified traffic with transactions to predict with high precision what offers are most likely to generate additional purchases. 
  • Avoiding Markdowns: Markdowns are generally accepted as a given in retail, much like returns but by getting the assortment right, placing inventory with intent and building targeted offers, we've seen up to a 6% increase in gross margin dollars, and up to a 3% increase in revenue. 
  • Cultivating Loyalty: With these improvements to omnichannel execution, delivering the journeys customers want, and targeting them with offers and rewards that are relevant and real-time can have a marked impact on essential KPIs like net promoter score. In fact, we’ve seen NPS improve by as much as 20% in some cases. 
     

We have a methodology and a team that can help you assess your current omnichannel capability, maturity and readiness. We can help you look for areas where you're being exposed by digital and help you drive your business to next practice.

Request a Complimentary Review of Your Omnichannel Business Processes.


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