The retailing industry is going through a period of significant change in terms of how customers interact with retailers. The days of the in-store experience being the dominant customer touchpoint are over. The advent of the World Wide Web gave shoppers a virtual shopping option. Despite predictions to the contrary, brick-and-mortar stores have not disappeared due to the emergence of e-commerce. Now, the evolution of mobile communication leads many retailers to again predict a revolution in shopper behavior.
According to a recent study by Motorola Solutions, 74% of retailers surveyed believe creating a more engaging in-store experience will be critical to business success over the next five years. Technology-assisted interactions are expected to play a significant role in shoppers’ behavior. Among key findings pointing to a more significant role for technology in retailing:
- 56% of all transactions will occur via mobile point of sale, self-service checkout, or a shopper’s mobile device
- 42% of sales will come from online, mobile, and social commerce sites
Exciting news – shoppers are embracing technology to make purchases… or is it exciting news? These trends should serve as a wake-up call for retailers that have resisted enhancing their interactive experiences for shoppers. It is understandable why retailers might be reluctant to quickly react to the forecasts – we have heard similar proclamations before. The Web did not make traditional stores obsolete, and while smartphone capabilities have definitely changed how we shop, brick-and-mortar stores are not going away anytime soon.
Regardless of whether the forecast for mobile commerce over the next five years comes to fruition, the survey’s findings should serve as a call for retailers to step up their m-commerce game. It is evident that retailers know the stakes are higher to meet shoppers where they are and deliver value by providing information, coupon offers, and transaction convenience. The key for retailers will be make understanding the customer shopping experience a priority – not what they think shoppers will want but committing resources to learn and understand what customers expect from retailers.
Marketing Charts – “3 in 4 Retailers See Improved In-Store Experience as Critical”
A great deal of emphasis is given to creating great customer experiences today. Marketers recognize that total consumption experiences influence satisfaction judgments. Also, a focus on delivering an exceptional experience can differentiate a brand from competition. But, there can be another reason for building a remarkable customer experience: Compassion for the less fortunate. That is what Panera Bread
has done with a concept called Panera Cares Community Café.
Panera Bread can attribute much of its success to the experience created daily in its more than 1,500 locations. And, like many respected organizations, Panera Bread takes on social responsibility obligations as a way to give back to the communities the company serves. The Panera Cares Community Café is an innovative approach to aligning company values with social responsibilities. The company operates four of these “pay-as-you-can” restaurants. Menus feature suggested prices, and donation boxes are set up to collect money to allow customers to provide funds to help buy a meal for someone who cannot afford to pay. People can pay suggested price, less if they cannot afford the full amount, or volunteer for one hour to eat for free. Panera Bread just opened the fourth café, in Chicago. It should be noted that the other three locations in the St. Louis, Detroit, and Portland areas each has been profitable.
As unique as the Panera Cares Community Café concept is, what really struck me as remarkable was the CEO’s perspective on why these locations are important. Ron Shaich, who is the company’s founder as well as CEO, wanted to give less fortunate people a good dining experience. He contrasts eating at Panera Bread to receiving a meal at a soup kitchen. He calls that experience as “institutional” and giving off negative energy. Shaich believes the less fortunate should be able to enjoy the same experience that anyone else dining at Panera Bread has.
Creating great customer experiences is a priority for marketers. Panera Bread has taken experiential marketing to another level, incorporating experiences into its strategic philanthropy. Donations of money and human resources are admirable, but creating experiences that touch others who are not in your target market demonstrates more than social responsibility. Showing compassion for your fellow man meets what is perhaps the ultimate social responsibility.
Much is being made of a trend in retailing known as “showrooming.” Department stores and big box specialty stores have become product galleries. Shoppers come into the showroom, browse available options, gather information from salespeople (if they can), and often begin their online research on the spot. Smartphones with Internet access and apps that deliver instant price comparisons by scanning a product’s bar code have taken “just looking” to another level.
This trend does not bode well for brick and mortar retailers. Even historically strong retailers like Best Buy cite showrooming as a factor in their struggling performance. E-commerce giants Amazon and Walmart have the ability to beat most retailers (online and offline) on price. And, online specialty retailers can beat brick and mortar stores on assortments because they do not have to carry inventory for store locations. Given all of these reasons, it appears that showrooming is a threat to the viability of traditional retailers… or is it?
Is opportunity available in the trend toward showrooming? If you subscribe to the belief that when you are given lemons you make lemonade, the answer is “yes.” Granted, a segment of shoppers are influenced heavily by price in their buying decisions. For other shoppers, serving them can be accomplished by transforming the product showroom to a brand showcase. For example, when you walk through the doors at an Apple store, it is a playground for hands-on experimentation with Apple products. And, knowledgeable employees are available to answer questions and provide assistance. The atmosphere is electric; you want to go into an Apple store even if you are not in the market to buy a product. Apple stores provide an outlet for us to be immersed in the Apple brand.
Unfortunately, most brands do not stir passion like Apple. The challenge is how to take advantage of the trend of showrooming instead of falling victim to it. Yes, certain defensive responses can be taken like downsizing square footage and increasing product assortments online. But, play offense, too. Three areas of focus for retailers should be:
1. Define your brand – Understand why people would want to do business with you, and it does not have to be about price! What are the values that guide your business?
2. Create the culture – Once the brand is defined it has to be spread through the organization. One knock on brick and mortar stores is that employees are indifferent and unknowledgeable. They must know their critical role in customer satisfaction and the store’s success.
3. Build an experience – Transform shopping from something one has to do to something one wants to do. Think about retailers you enjoy visiting – what is the attraction? It rarely has anything to do with price. It is the experience of being in that environment that draws you in and brings you back.
Do not write the obituary for brick and mortar retailers yet. Yes, the showrooming trend requires retailers to rethink the role of the physical store in their marketing strategy. But, opportunity exists for retailers that use their stores as the connector between their brand and customers.
WSJ.com – Can Retailers Halt ‘Showrooming’?
If Bill Clinton were asked to give advice to Best Buy on how to energize its business, he may very well dust off a line from the 1992 Presidential campaign. The famous line chided George H.W. Bush for being out of touch with voters’ needs when Clinton said “it’s the economy, stupid.” In the case of Best Buy, Clinton’s suggestion would likely be “it’s the experience, stupid.” Best Buy announced this week that it was closing 50 big box stores and opening 100 smaller locations. I hope the strategy works for Best Buy, but the problem is much deeper.
My trips to Best Buy in recent months and accounts of others’ current perceptions that I have heard and read reveal great dissatisfaction with the shopping experience. Need help from a knowledgeable salesperson? Good luck with that. For that matter, good luck getting help at all unless you are fortunate that salespeople will take a timeout from their personal conversations to acknowledge you. Product knowledge for the typical salesperson is limited to basic features and benefits. However, they are well schooled in pitching service plans and product coverage plans. One is left with the feeling that the aim is to extract as much money as possible from customers’ wallets.
The above commentary on Best Buy and its employees is painted with broad strokes. I know that there are many dedicated, exceptional employees working for the company. But, there are too many instances in which the experience does not add value for customers. Personally, I have gone from looking forward to going to a Best Buy store to it being an option of last resort.
Perhaps a shift toward smaller stores will create a more interactive environment. The quality of employees on the sales floor may be higher if smaller stores mean fewer positions, creating more competition. Take Bill’s advice, fix the experience, and make Best Buy an awesome shopping environment again.
NPR – “Best Buy Rethinks the Big Box Model”
I had a refresher in the importance of thinking like a customer yesterday courtesy of my 22-year-old son, Chris. The inspiration for his lesson came from an unlikely location: the motor vehicle inspection station. We took his car for emission testing that is required before license plate renewal. Our arrival found that about 20 other people had the same idea. The wait itself was not unbearable, but it did give Chris time to pose a very valid question: Why is the emission testing location and tag renewal office not located together?
I had never given this any thought- the tag renewal office is downtown with other county services, while the emission testing center is a few miles away in an industrial area. Completing the two-step process is inconvenient, but I suppose that I have always tolerated it because it is a government agency, not a for-profit business. My son’s question came back to the forefront later in the day when I arrived at the County Clerk’s office at 4:01, or 1 minute after it closed. A return trip today would not have been necessary if tag renewal was a one-stop experience.
It goes without saying, or so it seems, that to be a good marketer means to be able to put yourself in your customer’s shoes. But, as the process of license plate renewal reminds us, a well-designed customer experience is often lacking. What are your customers’ needs? What are their problems? What challenges do they face? If you can answer these questions, could you not have the capability to better serve them?
It is tempting sometimes to think we know what is best for customers- after all, we are the “experts” at what we do. The true expert is your customer; learn from the experts and you will have an advantage over competitors that do not have the same mindset.
Last Saturday, my family made a trek from Nashville to Cincinnati. While planning for the trip, I realized that there would be a NASCAR Sprint Cup Series race at Kentucky Speedway that day. The track is located just off I-71 about 40 miles south of Cincinnati. With a 7:30 pm start, I knew that there would likely be traffic near the exits for the track that would delay us for a while. Well, “a while” took on a whole new meaning as it took us more than 4 hours to move approximately 18 miles past the track.
As the length of time increased sitting in what became a parking lot on I-71, my thoughts turned from our travel schedule to the plight of thousands of racing fans. It became evident that many people stranded on the interstate would be late for the race. For many people, the delay turned into completely missing the race. Investments of time and money had gone down the drain. For those who did manage to get to the track for the race, many of them had to endure another traffic nightmare after the race. On top of the major traffic problems, fans voiced complaints with many aspects of the customer experience such as inadequate parking, insufficient toilet facilities, rude employees, and a chaotic situation overall.
What made the epic service failure at Kentucky Speedway surprising were the struggles the track went through to get a NASCAR Sprint Cup Series race in the first place. For more than 10 years, Kentucky Speedway lobbied, begged, and even sued NASCAR in an effort to get a race on the schedule. Finally, persistence was rewarded with the inaugural Quaker State 400. Time for Kentucky Speedway to shine and put on a show that would show NASCAR that it should have been awarded a race a long time ago… didn’t happen! Poor planning and execution left Kentucky Speedway unable to deliver the promised experience of a NASCAR Sprint Cup Series race.
The lesson for marketers from this unpleasant experience is: Be careful what you ask for because if you get it, you may not be able to handle it. If you are looking to stimulate demand, boost sales, or draw an audience, are you prepared for a scenario of tremendous customer response? Kentucky Speedway is not the first business to fall on its face when trying to make a good impression. Some businesses that have made offers via Groupon have struggled to meet surges in customer demand. Thus, quality suffers and the aim of initiating relationships with new customers by drawing them in with a coupon incentive is negated. If you are planning a unique event or promotion, are you prepared to handle the spike in business it may bring? Is there a recovery plan in place in case service failure occurs?
The customer chaos that transpired at Kentucky Speedway was more than service failure- it was a service disaster. It was inexcusable and should have never happened. Protect the most valuable asset you have: customer trust in your brand.
I returned recently from another memorable family vacation in Canada. We visited Niagara Falls and Toronto as well as made our first trip to Ottawa. All three cities offered fun and entertainment, but those stops were merely warm-ups for the highlight of the trip: a visit with my 87-year-old aunt in Granby, Quebec, located 50 miles southeast of Montreal. Aunt Marcelle truly is inspirational- she possesses a combination of beauty, grace, charm, and intellect that makes her one of a kind.
Aunt Marcelle has something else that is unique: A toaster that gives a refresher course in designing customer experience. It is not just any toaster; it is a shiny, silver 50-year-old Sunbeam model that I am pretty sure could be used as an anchor for a small boat when its toasting days are over. Yes, I said a 50-year-old toaster. Marcelle said it has needed only one repair during that time which cost $20. Each morning, I found myself marveling at the toaster as it performed its sole function. What made the toaster even more remarkable was its simplicity- there were no buttons, levers, or switches. Plug it in, drop in bread, and let the magic begin! The finished product was nearly perfect toast- browned but not burned.
The toaster did more than make breakfast; it was a reminder about the importance of simplicity when designing customer experience. Inclusion of features in a product or service often occurs because the capability exists to develop them along with a belief that customers would value the features. The result sometimes is over-engineered products that may be less convenient to use and more prone to failure compared to a product with a more simplistic design. Also, a trend toward developing products that multi-task leads to the possibility of negatively impacting customer experience if customers perceive that tradeoffs in quality or ease of use exist.
The familiar KISS method (Keep It Simple, Stupid!) comes to mind as I reflect on Aunt Marcelle’s classic toaster. Customers do not want to be dazzled with the capability of a product or service as much as they want to enjoy the benefits of how it adds value to their lives. For some people, simplicity has a connotation with being unsophisticated. If that is the case, I am content to have unsophisticated interactions with companies and brands that can simplify the experience of using their products or services.
As the new NFL season debuted, several media outlets ran stories about the challenges some NFL teams are encountering selling tickets. A surprising 22 games were blacked out in 2009, thanks in large part to a dreadful economy. And, the prognosis for 2010 is no better; attendance league-wide is expected to decrease for the third straight year. But it is too convenient to blame attendance woes solely on the economy. Many NFL fans have found that watching games in the comfort of their homes in high definition with access to replays and multiple games is a suitable substitute for attending the game in person. Throw in money saved on tickets, parking, and concessions as well as not missing dealing with traffic and drunken fans, and watching games on TV at home becomes a more attractive alternative.
Some sports industry observers wonder if the fact that football is a great sport for television will ultimately lead to a decline in game attendance. It will happen… if the NFL treats live games as a product. The reason is that products can be duplicated, at least the benefit products provide are relatively easy to copy. In this case, technology enhancements have made watching NFL games on TV an acceptable substitute for watching a game in person. Compelling arguments can be made that the TV product has some advantages such as different camera angles and replay capability, not to mention the convenience and cost savings mentioned previously.
Before the NFL is declared in a state of emergency, let us not forget that the brand is still very strong. It commands premium prices for tickets, sponsors, and media coverage. The key for the NFL to sustain its position as the premier sports property in the U.S. is to focus more on the experience offered by the live event. Steps have been taken already by addressing the problem of unruly fan behavior with a fan code of conduct. Further enhancements can be made by introducing more technology in stadiums to give fans options for consuming content beyond what is transpiring before their eyes. Sponsors can play a role, too, in adding value to the game experience. Interactive exhibits, games, and spaces give sponsors opportunities to have “quality time” with attendees.
Products can be mimicked to offer similar benefits at lower costs. Experiences can be unique encounters between brand and consumer that substitute products simply cannot match. This contrast does not apply just to the NFL. Whatever you sell, there are likely substitutes available. What can you do to move from selling a product to offering an experience? Remember the old adage: people don’t buy products, they buy benefits. Today, that adage can be modified to read “people don’t buy experiences, they seek meaning from the experiences they have.” Add meaning, and you add value.
US Airways has retreated from a new pricing policy that charged passengers $2 for sodas and juices and $1 for coffee. The airline implemented an a la carte pricing strategy to charge customers fees for refreshments, services like checking baggage, and choice seat locations. The visions of dollar signs danced in the heads of US Airways management as it was projected that $500 million could be realized from implementing the additional charges.
It seems US Airways overlooked two important matters. First and foremost, it did not seem to think through what customer reaction to the perception of being nickeled and dimed (or in this case dollared) for drinks that were complimentary previously. Management saw revenues; what it should have seen was customer resentment. Second, US Airways should have realized it would stand out for all the wrong reasons if competitors did not follow suit. Years of fare wars should have been enough for US Airways to know that competitors that do not match price increases leave the one airline that did in a unfavorable position.
So, if you are on a US Airways flight soon, be sure to enjoy your complimentary beverage. You can take comfort in knowing that US Airways really wanted to charge you for your drink, but at least for the time being it does not have the competitive leverage to do it.
Link: Bloomberg.com – “US Airways to Stop Charging for Onboard Sodas, Coffee”target=”blank”