“A customer is really just a little bundle of future cash flow with a memory” – this line in a recent blog(1) caught my eye. We have always known this in retail – customer experience drives loyalty and revenue. But this one line tied it very simply and explicitly to a metric that your CFO can understand – customer experience today is a good predictor of future cash flow - and when discounted to present determines the current value of your business. The imperative for retailers therefore is clear – create memorable experiences to increase shareholder value and to create a long-term sustainable business.
Personalization of interaction is an important ingredient to crafting a memorable customer experience. There are 2 key aspects that help deliver a personalized experience – technology and people.
Technology has come a long way in recent years to make real-time personalization a reality. Solutions like SAP Precision Retailing can combine a customer’s shopping context with their profile and history to provide personalized information and offers at the right time. Recommendation engines can suggest products based upon customer’s history and buying preferences. Web pages can be configured “on the fly” to match customer’s recent online activity. Social media intelligence tools can help understand customers on a more personal level than has ever been possible. Solutions such as the new SAP Audience Discovery and Targeting can help slice and dice customer information into highly relevant and predictive target groups by analyzing both structured and unstructured sources in real-time. Location based targeting is common-place and Apple’s recent acquisition of WifiSLAM provides evidence that it is soon going to get even more precise even inside buildings.
Personalization technology by itself however does not guarantee a good customer experience. Retailers need to watch out that it’s not uncomfortably intrusive and that it’s not so isolating that it takes fun out of shopping. The promise of the internet is to connect us to the whole wide world out there – to help us experience what we could not in our narrow corners of the world. Personalization taken to an extreme, runs the risk of isolating us again within our own bubble – leaving us trapped in a “web of one” – making online activity, including shopping, dull and mundane.
The opportunity then – especially for brick and mortar retailers - is to personalize but with a human touch. Research from multiple sources (e.g. RIS(2) 2012 Shopper Experience Study) has shown that customers prefer in-store personalization and special treatment (still enabled by technology) over technology-delivered personalization.
People - that is the secret weapon that traditional retailers have lots of - and retailers therefore need to do much more to effectively unleash that weapon. There is no reason store associates cannot be armed with the kind of information that customers have about products, pricing, and promotions or a website has about potential customers. Solutions like upcoming SAP CAR (Customer Activity Repository) can provide the foundation to arm store associates with a comprehensive real-time view of products, customer and loyalty information, sales, and inventory across channels. Mobile technologies and applications such as SAP Store Ops Associate can ensure that sales associates have that information where and when they need it on the shop floor.
The power of ‘person’ behind technology is not lost even on internet retailers. Take Gilt(3) for example, a pure internet retailer that employs 100’s of people to focus on design, storytelling, and visual merchandising. It recognizes that no amount of ‘algorithmic curation’ can evoke the feeling of surprise, discovery, desire, and excitement that a highly curated merchandise with a narrative created by a human being can.
So are you the kind of retailer that wants to be around and to grow? Then you have to engage your customers at a more personal level using your most important assets – your people, your stores, and your data. You have to stop looking at technology that enables great customer experience as a cost. In the medium to long term it’s a necessary investment – an investment in your customers' memories so that they are compelled to come back again and again and again.
3. 3. http://www.gilt.com