Retail has gone through enormous stresses in the past decade, with more to come. Just the normal ups and downs of local and global economies, supply chains and personal taste are a huge challenge. Add to that mix the increasing maturation of concepts like e-Commerce, Big Data, RFID and mobile.
Each of these would be a whopper to digest and together are changing the foundation of an ancient industry.
New ways to sell
Traditional in-store sales are combining with web, mobile and social. While the social channel may not be ‘here’, it is expected to become viable within a few years. This combination of channels can’t be managed as silos, as branding and look and feel need to be consistent for the customer (ie. mobile can’t just be dumbed-down Web) and for internal maintenance cost.
In the store or kiosk, Near Field Communication (contactless communication between devices) is the simple way to speed purchasing and is used extensively already at Starbucks in combination with their loyalty app.
How much does speed of checkout matter? Studies show it makes a huge difference. I know my wife and I choose ‘self-checkout’ even if it’s slower simply because we feel don’t like standing in a line, dependent on someone else. We only have ourselves to blame and that’s fine.
Selling needs to take place at the time, place and pace that a customer desires.
New forms of loyalty
It was always a great idea to attract a customer once and sell to them many times. Loyalty programs were a way to lower the cost of customer acquisition. Today, loyalty programs offer something even more meaningful…contextual information about the customer.
Not just what they buy, but when they shop, demographics, product preferences and more. If you think Safeway gives discounts because you’re a loyal customer, think again. There’s a transaction going on when you give information that is just as valuable for them as when you buy.
What do they do with that information? They create a context for commercial transaction that has several benefits:
- Manages customer satisfaction more closely with direct (experience surveys, requests for feedback) and indirect (purchase patterns) measurements
- Understands and confirms your loyalty patterns
- Cross-sells and up-sells other products to increase revenue per transaction. This goal depends on getting the right offer to you in the right moment and through the proper channel to make your buying easy and natural/non-clumsy.
- Reduces the cost of luring you back for future transactions by knowing what ‘works’ for you
- Balances inventory by knowing when to discount and for whom.
The net effect of this pattern is a virtuous cycle of increasing business, increasing loyalty and better inventory management. This reflects a contextual, long-term view of the customer that builds in value over time as an ongoing dialogue.
New view from above (and below)
It is very old school for management to understand what happened. The new pattern is to dig into data to discover why it happened and what can be done to make it happen (or not happen) again. Rather than just putting that information in management’s hands, why not provide this context to sales staff so that everyone can make better decisions?
Decision management involves:
- Knowing what’s selling in the moment
- Jump starting sales of distressed inventory through intelligent discounting
- Margin and pricing awareness that includes ‘carrying cost’
- Movement of inventory to the most likely place for it to sell, increase loyalty, provide better customer service
- Flexible price structures, allocations and adjustments by channel, stores, geographies
- Managing campaigns and promotional pricing with integrated supply chain services.
It isn’t about knowledge, but actionable knowledge available in the moment.
What does it take?
Some, like Macy’s, are already well on their way. There’s a mindset that has to be established, goals that need to be set and an infrastructure to create before you can get the components to work together. Those capabilities look like this:
- Segmentation of customers and markets on-the-fly to allow targeting and integration of offers/promotions
- Mobile platforms in the stores and in the hands of employees to make service and cross-sell/up-sell instantaneous
- Information constantly updated and available 24x7x365 when all channels are ‘open’
- Fast deployments of incremental functionality — not the traditional ‘one year project’
- Powerful pattern capabilities so that data can be ‘good enough’ to act on opportunities that are only in a moment of time
- In-memory processing that doesn’t rely on slow, traditional databases that ‘break’ at high speeds
- Security of all data so that customers and managers can rest easy
- A view of each sale as an ‘event‘ that has combinational triggers and a ripple effect through inventory, revenue and loyalty
This represents a two-way street of expectation. We’ve trained people to expect sales on holidays and to wait for their coupons to arrive in the mail. We can be trained to look for pricing signals and information from our retailers as well.
A colleague of mine puts it this way, “Every retailers dream should be to have individual ‘conversations’ via multiple channels in real time/right time on Black Friday with 25 million customers.”