Clienteling: Brick-and-Mortar Retailers’ Last Stand?

Clienteling

If we believe what we read, brick-and-mortar retailers may soon be added to the endangered species list. Traditional stores cannot match the vast breadth of merchandise offered by e-commerce retailers. And, most small retailers are incapable of matching prices with online behemoths like Amazon. The desire for convenient, open anytime access to shopping makes online retailing an attractive option for consumers. Physical stores have become known as showrooms for shoppers wanting to “kick the tires” before going online to make purchases. “Showrooming” as it is known has become a significant threat to retailers, with the end result being brick-and-mortar stores that do not have a strong online presence are left scrambling to figure out how they can compete and survive.

Play to Your Strengths

Before we shutter the brick-and-mortar model, retailers have one significant asset with which to work in the battle to maintain relevance: Face-to-face contact with shoppers. For all the disadvantages of brick-and-mortar stores compared to their e-commerce competitors, a major advantage traditional retailers enjoy is the ability to build relationships one customer at a time through the in-store experience. We have all heard the standard “may I help you?” when shopping; that is only a notch above totally ignoring shoppers as a customer service practice. Instead, brick-and-mortar stores must capitalize on their proximity to shoppers to demonstrate concern, answer questions, and offer solutions. A recent article by Sarah Mahoney referred to brick-and-mortar stores’ opportunity to build relationships as “clienteling,” a positive play off of the term showrooming.

What is Old is New

If the description of clienteling sounds familiar, it should. The quest to create a personal, meaningful shopping experience can be traced back to the general store. Store owners knew almost all of their customers by name as well as had intimate knowledge of their preferences and buying patterns. In turn, the merchant could deliver value to customers by maintaining a stock of items that customers wanted and being empathetic to their personal situations. Clienteling is the high tech equivalent of the all knowing shopkeeper. Technology infused into the shopping experience assists in painting a more complete picture of customers and enables employees to tap inventory information and other data to help customers find the products they desire.

The stakes have been raised to deliver exceptional shopping experiences. It is no longer enough to ensure the retail sales floor is adequately staffed to process transactions. Salespeople should be looked to more like a concierge than a clerk- their role is to add value by tapping technology while delivering service with a personal touch. Websites simply cannot match brick-and-mortar stores when it comes to customer interaction, but that advantage is often not utilized fully. Combat showrooming by delivering a personalized experience that is reminiscent of a bygone era.

Seizing Big Opportunities in Small Business Saturday

The weekend after Thanksgiving shopping period has evolved into distinctly branded days that are crucial to retailers’ success, not only during the holiday season but impacting their profitability for the year. Of course, Black Friday started it all, a frenzy of sales and deals that have many shoppers standing in lines for hours and rolling out of bed in the wee hours of Friday morning to begin Christmas shopping in earnest. Black Friday is creeping into Thursday as retailers battle for customers and attention. For those of us who find Black Friday shopping too crowded and stressful, we have a safe haven: Cyber Monday. Online retailers found the cure to the shopping hangover that is Black Friday- more deals that can be had conveniently via computer, tablet, or phone.

The newest branded entrant into the Thanksgiving weekend shopping fest is Small Business Saturday. American Express established this event in 2010 to support local, independent merchants upon whom shoppers relied long before the days of big box retailers. Small Business Saturday is not a publicity gimmick; it has the marketing muscle of American Express and other firms with a stake in small business success including USPS, Constant Contact, Twitter, Foursquare, and FedEx. In 2012, it was estimated that $5.5 billion in spending occurred on Small Business Saturday.

Not All Buy In
One might think that participation in Small Business Saturday would be a no-brainer for merchants. After all, there are no costs and marketing of the event is being done largely by American Express and its Small Business Saturday partners. While many small businesses have aligned their marketing with Small Business Saturday, a surprising number of local businesses have not. According to a study sponsored by Constant Contact, just over one-third of small businesses surveyed indicated they had participated in one of the three previous Small Business Saturdays. What about the other two-thirds of business that have not participated?

  • 52% of businesses that have not participated in the past do not plan to participate this year
  • 36% said they would not get new business from the event
The majority of small business have not bought into Small Business Saturday. What will it take to win some of the skeptics over?
Sales Now, Customers Later
Among the B2C small businesses planning to participate in Small Business Saturday, the benefits expected have immediate payoff:
The greatest benefit for small businesses of participating in Small Business Saturday is that it is a rare occasion in which they can ride the coattails of the marketing resources of American Express and its partners. Individual businesses will undoubtedly devise marketing efforts of their own in concert with the Small Business Saturday theme, but awareness for the event will be funded by someone else.

The short run benefits of increased awareness, new customers, and a sales boost are strong motivators to participate. But, perhaps the greatest payoff will not be felt during the busy shopping season. One of the most significant findings in the Constant Contact survey was that among businesses participating in Small Business Saturday, 52% indicated that some of their new customers acquired through the event went on to become loyal, repeat buyers. If there is a 50-50 chance that I could gain new customers by aligning with someone else’s promotion, I would be inclined to take that chance.

Let’s be realistic- Small Business Saturday will not permanently alter the shopping behavior of large numbers of consumers conditioned to “think big” and who look to chain retailers to meet their needs. However, American Express is to be commended for establishing Small Business Saturday to take a stand for the independent businesses that operate in our local communities.

Shipping Seals the Customer Experience

A great deal of emphasis is placed on the customer journey in creating experiences that add value and influence satisfaction judgments. The customer journey refers to the different steps and touch points that go into a consumption experience. Design of physical spaces, employee staffing and training, and  consistency across offline, online, and mobile channels are three considerations that can determine the quality of the customer experience. However, there is one other touch point that occurs post-purchase that can make or break a positive evaluation of a consumption experience: Shipping.

Segmented Market for Shipping
Recent studies of 750 consumers and 62 major retailers by Exolevel revealed different segments in terms of how shipping is valued by consumers. Among the findings that suggest shipping can be marketed differently to various segments are that:

  • 81% of consumers said it is important for retailers to give shoppers choice of of customer pick-up or delivery regardless of payment form
  • 56% of retailers offer different fulfillment options (e.g., ship or pick-up)
  • 24% of consumers said it was important for retailers to offer same-day delivery. Among those who value same-day delivery, 30% were willing to pay $5-10 and 19% would pay $11-20 for the service.
  • 26% of retailers currently offer same-day delivery
  • 25% of consumers would be willing to wait up to two weeks for a product if there is no delivery fee.

Three customer segments emerge from these results:

  • Any way fulfillment – These buyers want the same flexibility for delivery that they enjoy in the shopping process (can shop in-store, online, or via an app). They want similar leeway in the final step of the customer journey.
  • Immediate fulfillment – Nearly one-fourth of shoppers value same-day delivery, and many of them are willing to pay a premium for that service. Marketing same-day delivery as value added convenience or offering free same-day delivery for purchases over a certain amount are two tactics that could support offering this amenity to the segment of customers interested in it.
  • Value fulfillment -Evidence points to existence of a segment whose value judgments can be perceived by free shipping given that 25% of shoppers surveyed are willing to wait for up to two weeks for a shipment if it meant paying no shipping costs. This segment prefers to put dollar expenditures into product purchase and accepts a trade off between price paid and speed of delivery.
Wrap Up the Customer Experience
Considerations for shipping strategies often key on two factors: 1) Costs and 2) Competition. While these variables are important and should not be ignored, what is missing from consideration? Or, should I say who is missing? The customer. Findings from the Exolevel consumer survey reveals that buyers are not homogeneous when it comes to their desires and expectations for shipping. Just as customers have different motivations and needs for the products they buy from you, they also differ in how they evaluate shipping in their overall experience with your business. Use shipping strategically to effectively wrap up a positive customer experience. Don’t let a satisfactory customer journey be derailed at the end because shipping options are inflexible or inconvenient.

 

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.

Mobile Marketing Can Add Value, Build Loyalty

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It is very exciting to be part of an industry that navigates change regularly. The current growth in mobile marketing bears some resemblance to the evolution of Internet marketing that began in the late 1990s. Firms are trying to figure out: a) should they have a dedicated mobile marketing strategy and b) what the heck to do if they decide to go mobile. Here is some good news for companies weighing their mobile marketing options: Not only can a mobile strategy be used to remain competitive, but it can be used to enhance customer value and increase customer loyalty.

The promise of mobile marketing is particularly powerful for retailers and other B2C marketers that rely on customer transactions to fuel growth. Access to a retailer’s products via a mobile device is one way to add value by making shopping more convenient. But, being an alternative to bricks-and-mortar shopping is not experience is not the only potential payoff of a mobile marketing strategy. Integrating mobile options into the payment or checkout process adds value by increasing the efficiency of serving customers. When shoppers pay via mobile devices, it reduces the amount of time spent completing the transaction (e.g., swiping credit card or making change). Thus, all customers are served faster… even the ones not paying with mobile devices.

An even more exciting potential benefit of implementing a mobile marketing strategy is that it can have a positive impact on customer loyalty. This benefit has been the experience of The Bean,  a three-store coffee house in New York City. The Bean implemented a mobile payment system offered by LevelUp. Shoppers with the LevelUp app installed on their mobile devices can pay from their devices and at the same time earn rewards through repeat purchases. The impact on customer loyalty is noticeable as evidenced by:

  • 30% of customers using LevelUp app return in less than two weeks
  • Most LevelUp users have visited The Bean five or more times.

    In a highly competitive B2C environment, mobile marketing can be used to set a brand apart from competition. Customers will value the convenience of technology-assisted transactions and be inclined to be repeat customers because of the relationship facilitated by mobile apps.But, before investing in hardware or software to implement a mobile marketing program a strategy is needed to outline the objectives to achieve and how it meshes with existing marketing programs. The mobile frontier is still relatively unsettled; explore opportunities to build a competitive advantage and customer loyalty through mobile channels.

    Mobile Commerce Daily – “The Bean Leverages Mobile Payments to Drive Repeat Visits”

    "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

    The Changing Role of Black Friday

     It’s showtime for retailers – the financial performance for the year will be influenced heavily by store sales occurring from now until Christmas. When I worked as a manager for McRae’s, a department store chain that is now part of Belk, our efforts focused on the “9 Weeks of Christmas.” It was the period from the first week of November through the end of December. Of course, the centerpiece of that key period was Black Friday, the day after Thanksgiving. The event was marked by great deals throughout the store and special promotions designed to bring shoppers through our doors.Fast forward to today and the intensity of Black Friday has increased substantially with many stores not waiting for Friday to get in the swing of low prices.

    The role of Black Friday in retailers’ marketing plans is undergoing a change… or at least it should be. According to research reported by eMarketer, more people plan to shop on Cyber Monday (the Monday following Black Friday) than on Black Friday. Only 41% of persons surveyed said they intend to shop on Black Friday compared with 57% planning on Cyber Monday shopping. Many factors have contributed to the shift in consumer behavior when it comes to post-Thanksgiving shopping including:

    • Fuel prices – As the cost of gas increases, consumers weigh venturing out on Black Friday against shopping from their computer. Many retailers offer free shipping on e-commerce purchases, removing a cost of shopping online and enjoy shopping with geographic restrictions.
    • Convenience – It seems that there are more stories every year about unruly customer behavior at stores on Black Friday as shoppers vie to snag products that are available in limited quantities. Or, if you want an item that is on sale at a store you may be forced to stand in line waiting for a store to open at an odd time like 4:00 am. Or, you can shop online when you want minus the crowd and traffic.
    • Assortment – Shopping online overcomes the limitation of brick-and-mortar stores’ merchandise assortments. What you see is what you get in a store; e-commerce expands assortments significantly.

    Instead of writing an obituary for Black Friday as an American cultural and business event, let’s rethink the role it plays for retailers. Two ways come to mind in which Black Friday continues to be relevant. First, many shoppers loathe Christmas decorations and merchandise hitting stores prior to Thanksgiving. Black Friday can continue to be the traditional start of our Christmas shopping season. Second, advertising and promotions around Black Friday are effective for sparking interest in Christmas shopping (even though 59% of us are not planning to do shopping that day). Consumers still need to be nudged or persuaded to get busy with Christmas shopping. Black Friday deals and promotions are an established event capable of putting people in the shopping spirit.

    I, for one, plan to be part of the 59% sitting on the sidelines for Black Friday. However, I will eagerly look at retailers’ Black Friday advertising inserts and watch their Black Friday TV commercials. And, stores create a physical environment that can entice shopping. Retailers should embrace their experiential marketing capabilities and use Black Friday to build excitement, all the while complementing the store experience with a user friendly online shopping environment.

    Price for the Tie, Experience for the Win

    Optimism abounds for the upcoming holiday shopping season as retailing industry analysts predict sales gains in the neighborhood of 4 percent. Christmas sales are key to a successful year for retailers, so they are preparing to be very competitive this year. One area in which many retailers are focusing is pricing, specifically being price competitive with online sellers like Amazon. Brick-and-mortar retailers are fully aware of savvy shoppers roaming their stores armed with mobile apps that enable foster price comparisons with a quick swipe of a bar code as well as the ability to search the Internet for information and reviews. Fearful that shoppers will walk out of their stores to buy online, many retailers are touting their willingness to match price.

    Meeting competitors’ prices is hardly a new practice in retailing. During my four years spent in retail management in the late 1980s, competitive shopping trips were a regular item on my to-do list. Technology has made price shopping easier for retailers and of course, customers. While a retailer does not want to lose a customer just because a competitor down the road (or online) is selling the same product for $5 less, a sole focus on price as a competitive tool is not productive long-term.

    Matching competitors’ prices should be used as a move to negate any advantage competitors might realize from charging less. Communicating a price matching policy is wise, particularly for a retailer like Target that is proactively promoting price matching to inform potential customers that lower prices found elsewhere, including online, can be matched by Target. However, a long-term view should be taken with regards to what will keep a customer coming back to a store.

    As a consumer, I am grateful when a store is willing to meet a lower price offered by a competitor. I will gladly take them up on their offer. But, meeting competitors’ prices does not inspire me to visit a store again in the future. The total experience of doing business with a retailer is much more influential – merchandise presentation, customer service, and feeling like my business is valued matter to me. Meeting price is a cost of doing business, not a customer relationship strategy.

    Retailers should adopt a price matching policy but realize that it only gets them a tie with competitors. If parity is the goal, then playing for a tie is acceptable. But, if you are playing for the win the total customer experience still cannot be beaten.

    Marketing Daily – “It’s Beginning to Look Like an Appy Holiday”

    Death of the Supercenter?

    Big has been in for the retailing industry for much of the past three decades. Mega shopping malls, enormous supercenter stores, and big box specialty stores fit with the portrayal of American excess. Big retailing fit shoppers’ desires for selection and convenience. But, a shift taking place in how we shop will lead to significant changes in retailing in coming years.

    According to a study by PwC, the emergence of social media and mobile commerce will alter the retail landscape by 2020. The concept of a store as the shopper’s destination will be replaced by what the study calls an “omnichannel” shopper. We will expect retailers to be able to serve equally well in-store, via the Internet, on social network sites, and through our mobile devices. The experience should be the same regardless of channel used. That expectation is a major departure from where most retailers are today in their ability to deliver seamless multichannel experiences for shoppers.

    Will the supercenter be a retailing concept that has run its course by 2020? New store trends already reflect the shift as stores like Best Buy, Target, Wal-Mart, and Whole Foods are opening smaller stores. From a operations standpoint, it is logical to open stores that cost less to staff, stock, and operate. But, the customer experience must be maintained, if not enhanced, at the same time. “Less is more” will work if retailers are able to align the various interactions points shoppers have with their stores.

    Presentation has always been important in retailing – the “5th P” of the marketing mix. Its importance does not diminish just because stores are downsizing. In fact, presentation may be more important than ever as we make judgments about a retailer’s presentation regardless of the channel in which we interact with the store – in-person, on the store’s web site, using a smartphone app, or on one of the store’s social media sites.

    Marketing Daily – “Goodbye, Supercenters: Retailers Will Become Focused, Adaptable”

    Showrooming: Be Resourceful, not Resistant

    E-commerce has represented a threat to brick-and-mortar retailers ever since online sellers began hanging out their virtual shingles in the late 1990s. However, the threat has intensified thanks in large part to smartphone capabilities. Shoppers scan bar codes to do comparison shopping, look up user reviews, and visit retailers’ web sites to gather information. Any of the above actions can come between a potential buyer and a making a sale. But, according to research sponsored by mobile marketing company Vibes, retailers should adopt a different outlook than the fear created by “showrooming” customers going online to make purchases.

    Findings of a survey of 1,000 phone users point to mobile marketing being a valuable information resource for shoppers as they make in-store purchases. Highlights from the survey include:

    • 84% said they used their phones to do research while shopping in a store
    • 48% of those who had used their phones to do research in-store said they felt better about their purchase
    • 6% abandoned a potential purchase in-store and bought from a competitor, even though 33% of those who had done research with a mobile device visited a store competitor’s website

     The main takeaway from the study is that consumers use mobile devices as a resource to aid in making buying decisions. It is not necessarily a competition to see which seller has the lowest price as much as it is which one delivers the best buying experience. Thus, retailers should embrace the mobile consumption habits of their customers, not loathe them.

    The key is to meet customers’ desires for information by creating relevant mobile resources. QR codes, mobile-device-friendly websites, and custom applications are three mobile experiences that can be developed. “Relevant” is the key word – how many times have you scanned a QR code that takes you nowhere in particular, maybe the brand’s website home page? In other words, there is often no strategy behind the technology.

    Shoppers want information. Retailers that act more like a friend and become a dependable resource for information via mobile marketing stand to benefit, both online and in their stores. Commit to being resourceful, not resistant, for customers showrooming in your stores.

    Data and Targeting Insider – “Showrooming is More about Confidence than Comparison”