If I had to summarize 2014 for the retail industry, it would be the year of buzzwords. From omnichannel to big data, new “solutions” were being discussed every day and all of them were touted as the latest-and-greatest in the ongoing quest to meet customer demands and increase revenue.
That’s not to say that many of these solutions haven’t been successful in what they were intended to do. In fact, many retailers did succeed in making their mobile apps more customer-friendly or providing in-store and online experiences that catered to how individual consumers preferred to shop. But in the year ahead, I’m hopeful that retailers will strive for something even better than simply jumping on the buzzword bandwagon. I predict that 2015 will be the year of the customer.
How will they do that? Here are my top three predictions for the retail industry in the coming year:
Prediction 1: Retailers will start acting as a brand, not as channels
Over the past year, omnichannel has been one of the most used terms in retail strategy. It is meant to convey the idea that there needs to be full synchronization between all the selling channels a retailer has. It is a further evolution of the concept of multi-channel. But even though omnichannel is pointed in the right direction, I don’t think it goes far enough. The problem is that it is still focused on the retailer-centric concept of “channels.” But consumers don’t think about channels. Ask any consumer on the sidewalk which “sales channel” they prefer and you will be met with a puzzled stare because “channel” has no meaning. To them, they shop with a retail brand. Period. I shop at Staples. If I give my money to them, I expect that the brand of Staples will provide me with the service, products and value I expect. And it is irrelevant whether I do this via mobile app, website or store. I get frustrated at attempts to make me use one channel instead of another (e.g. coupons only good in-store!), or when retailers throw up artificial, channel-centric barriers that make my life harder (I can’t return an online purchase in store for a full refund? Are you joking?!…). These are supposedly “omnichannel” activities, but do this to me too many times and I quickly switch to another retailer who understands that they are serving me, not the other way around.
One customer. One retail brand. That is what omnichannel needs to evolve into to keep up with the demands of today’s consumer.
Prediction 2: The value of data will shift from strength in numbers, to strength in action
There is no doubt that the concept of “big data” has become an established concept over the past couple years. However, despite its acceptance as a valuable tool for business intelligence, many retailers still believe that its significance lies in simply how much data they can amass. The more data the better, right? Actually, no!
Of course it’s important to collect customer data across every touch point, but the real value is in the insight gleamed from the data and how you use that insight. Specifically, using data to improve every interaction you have with your consumers. As they say, “retail is detail,” so it is critical that data is used pervasively at the very tactical, execution level. This is where you can really move the needle.
Think about it: because the average customer will shop with you so infrequently, you need to nurture each individual in between their isolated transactions. Nurturing is not a single campaign. Instead, nurturing is a commitment to be that much more relevant and attractive to a customer with each and every interaction. The goal is that you can move customers from shopping one to two times a year to two to three times. That may not sound like much, but if you make that impact across your customer base then that is a 30 to 50 percent increase in your business!
At the end of the day, the power of data is not dependent on quantity, it’s dependent on how well you use it. And in 2015 I predict that retailers will move away from collecting data for the sake of collecting data, and adopt more tactical approaches that enable them to use the insight pulled from the data they already have to deliver the personalized experiences customers have come to expect.
Prediction 3: Retailers will leverage specialized partners to accomplish their customer-centric goals
So you’re collecting data and know you have to use it to deliver value. Now what? The key is being able to utilize the leading-edge data science to paint a complete picture of each and every customer, and finally move beyond the run-of-the-mill “Hi [insert first name]” personalization. The next generation of personalization requires predictive intelligence that doesn’t just react to a customer’s actions (e.g. an abandoned cart message), but proactively predicts what a customer wants before that customer even knows it.
Accomplishing this level of personalization isn’t easy, and the truth is that over the coming year, retailers will continue to run into road blocks such as lack of talent and poor internal infrastructure. Unfortunately, good data scientists are extremely challenging to hire for retailers, the retail IT infrastructure is not designed for big data and the investments a retailer needs to tackle big data themselves are large and long term. That’s the bad news.
The good news is that the in-house, do-it-yourself approach is not the only option. External, third-party providers of predictive intelligence solutions are becoming more established and are offering the triple-value of world class data science, modern cloud-based infrastructure and a SaaS pricing model that is far more affordable than DIY tactics. In 2015, I expect that retailers will start to realize that they don’t have to go after their goals for personalized, omni-channel messaging alone and that predictive intelligence is key to successfully engaging with and meeting the demands of consumers.
2015 is here. Will this finally be the “Year of the Customer?” While I don’t have a crystal ball and can’t say for sure, what I can guarantee is that the retailers that implement the necessary strategies and tactics to become truly customer-centric are the ones that are going to reap the benefits in the year ahead.