Something Old is Something New in Retail Shopping Experience

I am part of the back end of the Baby Boomer generation; because of that I missed out for the most part on a nostalgic era of customer service: home delivery. I recall a dairy in my hometown making home milk deliveries, but that service stopped before I was old enough to remember it. The dry cleaners delivered completed orders, the TV repairman came to our house (probably because the TV was too heavy and bulky to take to a store), and the pharmacy brought prescriptions to our door. It was a convenience that was not necessarily driven by shoppers’ hectic lifestyles. Instead, it was an amenity a service providers offered because it fit with their customer service philosophy.

Unfortunately, home delivery gave way to mega shopping malls and later, find-it-yourself e-commerce. Delivery was no longer viewed as a benefit for customers as much as it was an expense that could be controlled and ultimately eliminated. After all, if the Walker household needed milk, they needed milk. The absence of a home delivery option would not eliminate product demand. But, just when it seemed that home delivery was little more than something one stumbled across while walking down Memory Lane, online retailers and their brick-and-mortar competitors are rediscovering delivery as a tactic for enhancing customer experience.

Recently, Amazon, Ebay and Google have experimented with same-day delivery of purchases. Walmart has considered a unique twist to delivery- asking for “volunteers” to drop off purchases to family or friends. Online shopping already owns a convenience advantage, and same-day delivery removes the number one drawback to buying online: delayed gratification. Brick-and-mortar stores can give in to e-commerce merchants on this amenity or negate it by offering delivery, too. While store-to-door delivery is the exception and not the rule, some retailers are experimenting with delivering purchases. Sport Chalet, a 53-store sporting goods chain based in California, began delivery from store in all markets earlier this month. Delivery is a means for Sport Chalet to differentiate itself in the highly competitive sporting goods market.

Traditional retailers have been getting squeezed by competition and technology for years. Before we marginalize brick-and-mortar stores, they may opt to return to the past to deliver (pun intended) the next big thing in creating value through the customer experience. The costs of offering delivery to customers must be wrapped into a more comprehensive calculation of revenues attributable to delivery and the impact of delivery on brand loyalty.

Shade Pulled over Many Virtual Storefronts

Imagine owning a store in which you diligently opened for business daily but opted to leave the lights turned off and the door covered. Safe to say, such practices would lead to certain failure and defeat the purpose of being in business. Unfortunately, this analogy is reality for the online presence of many small- and medium-sized businesses (SMBs). A recent audit by digital marketing firm vSplash of nearly 4 million SMB websites found that a startling percentage of them were not fully prepared to conduct business online.

Some of the most surprising findings in the vSplash study include:

  • 26% of SMB websites cannot be found on a Google search because their Google page rank is zero (or has no rank)
  • 49% have no contact phone number on their homepage
  • 94% have no contact email address and are not mobile optimized
  • 95% do not have an e-commerce shopping cart

To say the least, these findings represent significant opportunities for digital marketing service providers to help SMBs strengthen their online presence. The lack of an apparent digital strategy and the absence of essential online marketing elements like contact channels and e-commerce capabilities are surprising, but we should not chastise SMBs. Many SMBs are good at the product or service that they provide but lack marketing expertise or resources of their larger corporate counterparts. It is not that they do not care; they do not know how.

Results of the vSplash study also serve as a call to my chosen profession, marketing education. The low frequencies of use for basic digital marketing tactics can be traced to SMB managers lacking knowledge. For some, the issue is that the rapidly changing world of digital marketing makes it difficult for them to keep up with the latest best practices (although the statistics cited above relate to basics that are hardly cutting edge). For other managers, they were failed by business schools that have been slow to adapt to the rapid rate of change in marketing. I see more job descriptions seeking new graduates with search engine optimization and blogging skills; it is further evidence to me that B-schools must be nimble with curriculum in response to the pace of change in digital marketing to better serve employers and students.

"C" is for Consistency in Customer Experience

More than a few eyebrows were raised when a recent study by ForeSee revealed that consumers believe Apple is losing its polish when it comes to a great customer experience. In an annual survey of customer satisfaction with online retailers, Amazon maintained its hold on the number one spot among the top 100 e-retailers with a score of 88. Apple’s score dropped from 84 to 80, changing the website’s ranking from top 5 status in 2011 to top 15. In general, pure online retailers fared better than their brick-and-mortar counterparts. Two examples include Barnes and Noble losing two points to 79 and JC Penney falling five points to 78.

It is suggested that one reason why e-retailers may fare better than their multichannel competitors is they have honed a more consistent online customer experience. Companies like Amazon, LL Bean, and QVC serve their customers through direct channels. The customer experience is well scripted and because it is driven by technology, there is little variation in the interaction we have with online sellers. In contrast, brick-and-mortar stores are challenged during the holiday season to balance larger inventories, increased store traffic, and temporary employees in addition to striving to deliver a great customer experience. Moreover, it is challenging to create consistency in the customer experience to the point that shopping in-store and on the store’s website have a similar feel.

E-commerce offers the “wow” factor to buyers. E-tailers like Amazon have tremendous merchandise assortments. Also, the convenience of shopping on your computer, tablet, or smartphone makes fighting crowds in stores less appealing. Free and expedited shipping is another way online sellers add value to the shopping experience. These factors combined give e-tailers a significant advantage over brick-and-mortar stores. And, the factors listed here can be offered consistently. Whenever a person logs on to an e-commerce site these factors will be present. In contrast, brick-and-mortar stores may be short-staffed, too busy to deliver the best possible merchandise presentation, or run out of merchandise in individual stores. But, regardless of the channel used to sell products, striving for consistency in the customer experience must be a priority. Add value by “wowing” customers in 2013.

ForeSee Holiday Customer Satisfaction Study: Amazon Sets Standard; JC Penney, Apple, Dell Drop

Think Beyond Transactions for Mobile Marketing

Creating mobile apps for your business today bears some similarity to developing a website circa 2000. It is still novel, all of the “cool” brands are doing it, and there are potential business benefits… you just may not be sure what they are. Perhaps you have come to the conclusion that the amount of revenue that a mobile app would generate does not justify the time and expense of going mobile. However, findings from a recent study by Deloitte Consulting on mobile shopping may change your thinking.

According to the study’s results, mobile marketing influences 5.1% of all retail sales in the U.S. That means 95% of sales are coming through other channels, so if mobile is not pursued right now that’s OK, right? Nope. You must look beyond direct sales to find the influence of mobile apps. Some of the most interesting findings included:

  • 50% of consumers surveyed owned a smartphone (and penetration will continue to increase over time)
  • Conversion of shoppers using a retailer’s mobile app is 21% higher than those not using the app
  • The influence rate is expected to reach 17-21% by 2016, translating to more than $600 billion in retail sales

These figures are impressive, but long-term forecasts of emerging technology adoption often are overstated. So, let’s take a look at the influence mobile apps have on shopping behavior as evidence of their value:

  • 25% of shoppers use a retailer’s mobile app the day before a planned visit to the store
  • 52% use a retailer’s app on their way to the store (let’s hope they are not driving!)
  • 61% use a retailer’s app while in store

 These statistics reveal the true influence of mobile apps today – they are a valuable information source before and during a shopping trip. Tech-savvy shoppers that know what they are looking for or prefer not to seek out help from a salesperson are using mobile apps as a resource to assist in making buying decisions. Mobile apps represent an opportunity to persuade buyers at a very critical place – in front of merchandise. And, apps do not call in sick or expect raises like salespeople (coming from the former retail manager in me).

Consider what a mobile app could do for your business. Informing customers, engaging them with your brand, and of course, facilitating transactions are appealing incentives for going mobile.

MediaPost Research Brief – “Mobile Shopping Growing Exponentially”

Showrooming: Threat or Opportunity?

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. – Can Retailers Halt ‘Showrooming’?

Online Coupons Can Reward Sellers, Too

Consumers have increased their use of coupons as a way to stretch buying power. The use of coupons has been aided in part by the ease of distributing coupon offers through digital channels. Yes, coupons benefit buyers by enabling them to save money, but payoffs from coupons extend to the sellers that offer them according to the Online Shopper Intelligence study. Findings from the recent study revealed that 57% of online shoppers that made a purchase online would not have made the purchase had they not had a coupon they received online.

It is not surprising that coupons might influence consumers’ decision to buy. A rather unexpected outcome from online coupons is that consumers apparently are willing to spend more money when they use a coupon. In the same study, the average amount spent by consumers with a coupon was $216 compared to $122 for shoppers that did not have a coupon. The upside of the expense a marketer incurs to offer an incentive to buyers may be rewards that come in the form of a higher dollar transaction.

The potential payoffs of online coupons suggest three situations to leverage through digital coupon distribution:

1. Attract new customers – Buyers conducting searches using general product category keywords may be unaware of individual brands. Reaching first-time buyers with online offers is a way to introduce them to your brand with reduced risk to them.

2. Gain competitive advantage – Placing coupons online is a wise strategy given their importance to many buyers. Make access to coupons easier for buyers and more rewarding for you by PPC and SEO strategies that bring attention to online coupon offers. Connecting couponing with search marketing strategies is a way to set a brand apart from competitors that have a less integrated approach to their digital marketing campaigns.

3. Influence product sales – Whether the aim is to introduce new products, sell complementary products, or achieve a higher average transaction, results from the recent Online Shopper Intelligence study suggest coupons empower consumers to spend. A strategic approach to couponing should be adopted. Rather than simply giving consumers a price break in the hopes they will buy, structure coupon offers to achieve broader marketing objectives. Some examples: a) offering a discount for buying multiple items can influence unit sales, b) offering a discount on an item when a complementary item is bought at regular price stimulates sales of both items, and c) mining your customer database to appeal to customers who have not bought in a specified time period can be done efficiently in an attempt to bring them back into the fold.

Adoption of online coupons has a long way to go to match the impact of coupons delivered through traditional media. But, many online shoppers seek coupons when making purchases; why not meet their need and possibly be rewarded by higher spending and brand loyalty? – “Coupons Are Good for the Bottom Line”

The App Store: Fad or Fixture in E-Commerce?

Apple has made the app store a seemingly must have addition to the business model of firms that sell software via online channels. It is believed that Apple has gained more than $1 billion in revenues from its apps store. Now, Amazon will try to replicate Apple’s success by marketing apps for the Kindle e-reader. It is a dream scenario: software with low price points, no physical inventory, and no shipping costs. Do the success of Apple and the launch by Amazon signal a significant shift toward app stores sprouting across the Internet?

According to an article by Farhad Manjoo in February’s Fast Company magazine, software developers and brand marketers should probably refrain from looking to app sales as a prime revenue source in the future. The reason? The history of software development for interactive communications has been based on the idea of open development. That philosophy has clashed with the tight control Apple has exercised over the content created by developers of apps for the iPhone. Apple is obliged to control content associated with its brand, but it comes at a price- creating a disincentive for some programmers to innovate.

Certain brands will likely thrive selling apps. Apple has already proven that it can succeed. Amazon seems to be a good candidate given the success of Kindle. Adding more capability to the product via apps should make it even more attractive to current and prospective users. Otherwise, apps revenue will be a modestly small part of revenues for most firms. But, as the long tail of the Internet has shown, revenues will not always come from “home run” products. Niche markets exist; its is up to software developers to create apps that meet the needs of small customer segments.

Fast Company – “Why App Stores Are Not the Business Model for the 21st Century”

The Power of Customer Reviews: It’s Not What They Say That Matters

Customers shopping online increasingly look to product reviews written by customers when making buying decisions. These unfiltered comments give a balanced view of a product or retailer’s strengths and weaknesses. Such information would make a retailer cringe, one might think. But, that is not the case. Product reviews allow shoppers to make a more complete assessment about different brands before making a purchase. Shoppers are too savvy to think that a web site that has nothing but positive remarks reflects the views of every customer. Likewise, if a small number of customers have negative comments or views about a product, most shoppers recognize if negative ratings are outweighed by positive comments.

The value of giving customers a voice may be understood, but smaller businesses could be reluctant to add a review feature to their web site out concerns over costs. In the article linked below, the company featured in the piece added a user review feature to its web site for about $80 a month. The benefits of implementing a reviews feature are numerous. It gives prospective customers information to help make a decision while on your web site, the importance of which cannot be overstated. It encourages customers to talk about your brand. If they will write a review on your web site, will they engage in similar conversations in other places, both online and offline?

Perhaps most important is that giving customers a voice through a reviews feature is an excellent marketing research tool. What do customers like about your products? What negative experiences are they having? Equipped with feedback from a user review page, marketers can manage customer satisfaction efforts and address problems they may have never known existed otherwise. – “Even Bad Reviews Boost Sales”

Online Retailers Giving Consumers a Voice with User Reviews

Word-of-mouth communication about one’s experiences with companies and brands has been around as long as companies and brands have been around. Now, word-of-mouth meets Web 2.0 as more companies are giving customers a voice to rate products on their web sites. According to a survey sponsored by Internet Retailer, retailers’ number one spending priority in the coming months is to add user reviews to their web sites. Interestingly, it is the top priority of all three types of retailers surveyed: store based firms, web based firms, and catalog firms.

User reviews, coupled with the number two priority of integrating blogs or forums to web sites, shows that retailers want to engage their customers in meaningful exchanges of communication. The days of marketers “talking down” to their customers are history! Greater flow of communication from retailer to customer and customer to customer will add value to the shopping experience and serve as a means for nurturing relationships.

Link: eMarketer – “Web Stores Score with Customer Ratings”

Online Retailers the Exception for Bleak Holiday Shopping Season?

A follow up to a post about the challenges facing retailers in the coming months. Traditional brick-and-mortar retailers may have more to worry about than consumers with less money to spend. It appears that more consumers are going to spend their money online, which would come at the expense of traditional retailers. Shopping online is a viable alternative to spending money on gas to drive to stores. If I can save gas money AND avoid the crowds in December, I am all for that! However, if predictions about retail sales this holiday season come to fruition, there may be smaller crowds at the mall!

Link: DM News – “Happy Holidays Forecast for E-Commerce”