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[23 comments]

Flipping the perspective on in-store technology

June 2, 2014

Through a special arrangement, what follows is a summary of an article from Retail Paradox, RSR Research's weekly analysis on emerging issues facing retailers, presented here for discussion.

At a freewheeling session at last month's Retail Connections in Dallas, one executive said (paraphrasing slightly): "I don't want to invest in in-store technology in order to make my store associates more efficient or more knowledgeable. I want to use technology to make it possible to deliver the same experience that I provide to my top one percent of customers — to ALL of my customers."

This is the exact opposite of the way I see most retailers thinking about in-store technology. They talk about "parity" or "an arms race with customers," — in other words, helping their store associates keep up with the information that customers already have, either because they did their research online before coming to the store, or because they're carrying easy access to that information in their pockets.

This approach to in-store technology will always lose. Even armed with more information than shoppers can gather for themselves (inventory coming in on the next truck, for example), store employees will still find themselves racing to catch up to their customers' interests. The product or brand information that is valuable to one customer will be meaningless to the next and even a lifetime as a sales associate probably won't be enough to learn them all.

But the concept of "the one percent customer service experience, available to all" implies a lot — that the sales associate has a legitimate (as in, encouraged by the customer), long-term relationship with the customer; that the retailer is willing to invest in that relationship in order to create delight and, ultimately, loyalty.

But what is a retailer's "one percent customer experience"? The truth is, every retailer has a group of extremely loyal and extremely valuable customers. For some, that group is loved and valued and treated very well. Theoretically, technology isn't just about transparency (the concern of the parity-seekers). It's about creating scale — a way to deliver more value to a greater number of people.

In-store technology today has many of the same challenges as the first time retailers tried to put handhelds or kiosks into stores — training, ROI, etc. In the parity model, that ROI will be hard to find. In the one percent model, though, things could be very different

Discussion Questions:

Should stores think more about extending elite customer service through in-store technology and less about associate/customer parity? What do you see as the pros and cons of the "one percent customer experience" technology-leveraging model?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Should in-store technology be viewed more about associate/customer parity or leveraging customer service?

Comments:

Seems like parity is meant to yield improved service. Why is it either/or? Store technology is not about amusement and amazement.

Separately, we've just discovered in our store benchmark results that retailers have a general sense that "We need in-store technology to maintain success" but when asked about specific technologies of all sorts, they're pretty lukewarm.

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Paula Rosenblum, Managing Partner, RSR Research

Bottom-line: In the store space, technology will never replace the value of face to face people time. Try all the tech of today and tomorrow - but the people are the key to the retail relationship and return visits.

Retail is a people business that is supported by tech - not a tech business supported by people.

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Tom Redd, Vice President, Strategic Communications, SAP Global Retail Business Unit

The premise behind customer loyalty programs is that a retailer's best customers should be treated in a manner that differs from the treatment accorded the general customer population. This does not mean that the general population of customers should be treated poorly, but it recognizes the fact that the highest-value customers will respond to special offers and programs differently than does the general population of customers.

Providing the same type of offers and programs to the entire population of customers that are provided to the highest-value customers will either result in (1) discounts costly to the retailer that will not elicit the desired behavior or (2) diluting the offers provided to the highest-value customer segment so that the retailer can afford to extend such offers to all customers. Either outcome is not to the retailers advantage.

The retailer should be thinking about using technology to better differentiate between customer segments; to better understand how to more effectively tailor offers to different customer segments. With that said, of course it is true that technology should be used to enhance for all customers certain aspects of the customer experience, such as reductions of out-of-stock and shortening of check-out lines.

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Dr. Paul Helman, Chief Science Officer, KSS Retail

But what is a retailer's "one percent customer experience"?

That's the rub. While many might say it is personal customer service, for many the 1% could be the people who frequently use their coupons.

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Bob Phibbs, President/CEO, The Retail Doctor

The first thing stores should do is learn and understand who their top one percent customers actually are! I suspect most stores don't know who those individuals actually are! They might know what their credit card numbers are on a spreadsheet or dashboard, but they most likely don't KNOW these people.

Stores, like the Jon Lovitz Saturday Night Live character, should "get to know" who those individuals actually are! Take them out to lunch, get to know why and what they like about your store. Document their story and share it with everyone else. There are wonderful and emotional stories out there that will resonate no only the other 99% but others. Imagine if you could leverage your one percent of customers and get another 4% into the same purchasing category! I suspect it would make a notable difference in the monthly revenue numbers!

Once you truly understand your 1%, you can leverage those insights and using technologies and human skills in innovative ways to further enhance their experience. Don't count on technology alone to address the interests. You may find that simply human gestures will go a long way. Doing that will certainly have value to the remaining 99% of your customer base and you'll enhance the performance of your employees along the way.

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Adrian Weidmann, Principal, StoreStream Metrics, LLC

Yikes! That quote about yearning for parity is about as backwards as it gets. The vast majority of your customers will never become "one-percenters" no matter how well you treat them. A yearning for parity is a yearning for mediocrity.

Instead, firms should use in-store technology to figure out what behavioral aspects distinguish the one-percenters from other customers and then do three things: (1) figure out new tactics to create and extract more value from those customers, (2) let those tactics "trickle down" to (presumably) less valuable customers to better "sort themselves" into customers that show meaningful potential to be transformed into high-value customers, and (3) actively seek out new customers who seem to share relevant characteristics and propensities as the one-percenters. Run lots of smart experiments to do so. That's where growth can be found — not in trying to use red-carpet treatment for existing customers who will never fully appreciate it.

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Peter Fader, Professor of Marketing, The Wharton School of the Univ. of Pennsylvania

Years ago when Walmart was killing every small retailer in the country I set in on a session where the speaker made the statement, "don't be against Walmart, be for the customer."

When I read this, I think anything that can make the customer experience better is going to be a major leg up for the retailer who implements that approach.

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Mel Kleiman, President, Humetrics

On the one hand, there are admirable aspirations for retail leaders. On the other hand, there are some ugly realities (think out-of-stocks, merchandise on the floor, messy fitting rooms, etc.).

Nearly all the CIOs I know want to ditch clunky legacy technologies in favor of more agile technologies, but don't have the budget to do it. Retail winners will balance the need to execute with the need to get current.

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Cathy Hotka, Principal, Cathy Hotka & Associates

In-store technology is about access for anyone seeking (fill in the blank - information, coupons, recipes, the ad circular). One consistent finding comes through loud and clear when analyzing reams of t-log data: The engaged shopper is a big basket shopper.

Shoppers using a kiosk in the aisle have an average basket size of $83.31 compared to the average shopper of $38.44. This is not suggesting causality, but confirmation that there are shoppers seeking interactive engagement, whether in-store, online, or mobile and those shoppers are serious, engaged, and spend more.

Frank Beurskens, CEO, ShoptoCook, Inc.

The bulk of any retailer's technology will be used for inventory management, transactions, purchasing and general accounting purposes. Bringing the convenience of a company application for customers through the internet is still new and confusing to most retailers, as we plainly see in this discussion.

The idea that a single perspective or market approach will suffice in the e-commerce market is what should be reconsidered by retailers. The internet offers a means to communicate to hundreds of millions of consumers all over the world with low cost and fast change in an instant. What is missing in and out of stores is software designed to address the e-commerce shopper's social demographics and styles.

Consumers in any level of income and/or education will have site preferences based on what they see as user friendly and productive. This is where the selection process for site and software application design is struggling and failing to address the need for options and continuing development. It would be far more valuable for stores to know what a store or e-commerce customer's favorite sites are and why they like them. This information could be expanded to include details for the purpose of creating categories and populations of design preferences from participants that for whatever reason or purpose are store customers at the present time.

Creating a single design application solution will only serve so long as there are no other options for the consumer.

'gjarnoldjr'

Once upon a time there was a concept that every customer was your best customer. Creating experience can be done with or without technology as a facilitator. And there are opportunities even with limited technology to create great experiences. Technology can't create them. People create them and have the potential of having technology assist and introduce new opportunities by the information available.

The basics aren't produced by or enhanced by technology. They are trained, coached, reinforced, and culturally required.

'Scanner'

Any attempt to stem the tide of online shopping and bring customers back in the store needs to start with improving the in store experience. Make it more interesting and exciting.

A recent article in USA Today discussed holograms to replace fitting rooms, in-store printing on demand, the experiences you don't get on the internet.

Use the technology dollars to excite the customer, and that will be rewarded with more traffic and more spending.

Lewis Olishansky, Principal, Retailmatics

Dr. Paul Helman got it right when he said you have to concentrate on using technology to better differentiate and understand your prime audience. And serve that audience. Combine that with what Adrian Weidmann wrote: "The first thing stores should do is learn and understand who their top one percent customers actually are ... and ... "Once you truly understand your 1%, you can leverage those insights and using technologies and human skills in innovative ways to further enhance their experience."

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Naomi K. Shapiro, Strategic Market Communications, Upstream Commerce

I'm not so sure I'd want to frame this issue as a tradeoff between service and parity. Enabling customer-facing employees with product, store and customer information is one of several means for delivering great service, but hardly a total answer.

"Elite" service is not appropriate for every customer. One of the tenets of customer relationship marketing is that higher value customers and customers with higher potential merit greater allocations of investment and attention.

Through automation, well-designed technology solutions can extend some service standards to all customers without discriminating by relative value. Systems that work well and intuitively can reduce the burden on store employees and free them to be more attentive in fewer service encounters.

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James Tenser, Principal, VSN Strategies

There must be an app to enhance empathy and being proactive - or do we still need to rely on people to have those attributes?

Vahe Katros, Consultant, Plan B

I don't think it's one or the other, both are key. The best retailers out there now, like Apple, Starbucks, Whole Foods, all do both really well. Although I will say this: the customer service piece goes WAY beyond keeping up with customers' knowledge of product and has more to do with simply being good with people. A lost art.

And FWIW, I'm not sure I fully get what "1% Service" is. I think the belle curve should be much, much flatter. Maybe that was the anonymous commentator's problem in the first place.

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Lee Peterson, EVP Creative Services, WD Partners

Trying to extend the 1% service level to all customers assumes that all customers are worth the same to the organization and should get the same treatment.

The truth is, all customers are not created equal, and some have the potential for higher levels of engagement and higher revenue for the organization than others. The goal should be to identify that 10-20% of customers and provide them with outstanding customer experiences that benefit them and the organization as well.

BTW -- customer service at the basic level is so lacking in most retail organizations that a goal of equipping associates to meet that level is not a bad one at all.

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Mark Price, Managing Partner, LiftPoint Consulting, Inc.

Yes, Nikki, it was indeed a freewheeling session! Wasn't that fun? One additional thing I would add here is that the retailer who made this remark was from a high-end brand. The bottom line is that, when a consumer goes to the trouble to come into your store, they have certain expectations in mind.

In the case of the high-end brand, it's high-end treatment. What better way to provide this than to treat every consumer like you treat your top 1%?

For other retail brand categories it comes down to knowing what your customer wants from you when they make the trip. If you're in the electronics business, they may want to understand how to integrate a product with other products they have in their home.

If you want to win this consumer, it's not about arming associates with the same information that the consumer found on the internet before they came in. It's about arming the associates with the tools that will help them meet the consumer's expectations. Voila! And that's my 2 cents....

Lee Kent, Let's meet share and succeed in Retail, YourRetailAuthority

This discussion doesn't need to be limited to technologies serving the best consumers, it also concerns the processes in-store. For example, when I was a supermarket store manager a hundred years ago, we set up a "Super Team" checkout line for large orders. We are all familiar with express lanes, however this was to feature catering to the best consumers. We actually staffed three people on the lanes to help unload, scan and bag the large orders.

How many other processes could be customized to cater to the 1% (or so)... and then take that process and the associated technologies to the majority of shoppers? I think we can leverage processes and technologies to cater to the majority of our shoppers by taking some simple steps in execution. This will help create a unique shopping experience that becomes a true differentiator.

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Ralph Jacobson, Global Consumer Products Industry Marketing Executive, IBM

Hard to argue with better service all around, and let's not forget the 99% who will benefit from some of the improved service aspects that may be extended to the cherished few. Some customer service aspects include localized/broad assortments selections, good presentations, and in stock positions.

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Peter J. Charness, SVP America, Global CMO, TXT Group

The democratization of technology is reshaping the retail landscape for both retailers and consumers, but it still holds true that when a customer enters a brick and mortar store, calls to place an order or interacts in an online sales chat, they are looking for a polite, intelligent and respectful sales associate who can guide them through their questions and along the path of purchase.

Retailers that make the investment in exceptional customer service and training for sales associates already understand the value of the relationship they are building and that, no matter how much a customer shops through a device, they will always value a helpful and meaningful personal interaction. And, they will remember to return and shop again.

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Karen S. Herman, Founder & Design Director, Gustie Creative LLC

If we can make every customer feel special - like they are in the top 1% - every time they do business with us, that would be amazing. What does it take? It doesn't matter if it's direct interactions with our employees/associates or it is technology that drives it. The bottom line is that the customer is taken care of and feels special. Every interaction, be it in-person, online, etc., is an opportunity to create a positive experience.

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Shep Hyken, Chief Amazement Officer, Shepard Presentations, LLC

Yes. Why would you ever consider NOT offering your best customer service to everyone? The price of offering anything less than the best customer service in today's environment, using all means possible that technology affords us.

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Kai Clarke, CEO, American Retail Consultants

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