building customer loyalty in an omnichannel world

R o a D M a P

BUILDING CUSTOMER LOYALTY IN AN OMNICHANNEL WORLD 1

As the old adage goes, it is cheaper to retain an existing customer than to acquire a new one. However, as the omnichannel retailing model conditions consumers to shop across a consistent brand — not fragmented channels — retailers are struggling to build lifelong loyalty among increasingly fi ckle customers. As conventional loyalty strategies continue to fall short in a digitally-infl uenced marketplace, retailers are adopting new, agile platforms and solutions to build a personalized shopping journey.

Charting the Path That Links Technology and Business Goals

SPONSORED BY

Building Customer Loyalty in an Omnichannel World

R o a D M a P

RIS_RoadMap_1215.indd 1 12/23/15 7:31 AM


R o a D M a P

Omnichannel shoppers’ expectations are fairly simple: they want full transparency when shopping their favorite brands, from merchandise and inventory information to effi cient service and personalized offers. Within a decade, the online shopping journey has transitioned away from a fragmented channel experience — all operating independently of one another, and all with different levels of service — to a deeply integrated journey that allows shoppers to move between channels as simply as they may fl ow between a store’s aisles.

Retailers must tailor the experience to individual shoppers if they want to build long-term customer loyalty. The more personalized the experience and the more relevant the messages, the better the chance retailers have to break through the noise and clutter in a competitive landscape.

To ensure that they can create a highly personal relationship, retailers need to deliver offers and experiences that are completely relevant to their shoppers’ known interests and buying habits. Those retailers that can deliver an excellent, personalized customer experience often fi nd these increasingly loyal shoppers are willing to pay a 31% premium, according to “State of the Industry Research Series Q4 2014: 2nd Annual Stores Benchmark,” a report from EKN Research.

However, using traditional methods to understand fi ckle omnichannel shoppers’ preferences are no longer adequate — relying solely on loyalty program data will cause more harm than good. What once rewarded loyal shoppers for their patronage now merely uses price to drive the value of a shopper’s market basket. The average U.S. household belongs to more than 29 loyalty programs, but are active in just 12 of them, according to Colloquy’s “2015 Loyalty Census.”

31% Premium loyal shoppers

are willing to pay.

Source: EKN Research, “State of the Industry Research Series Q4 2014: 2nd Annual Stores Benchmark”



R o a D M a P

Where the opportunity lies is in the retailer’s ability to transition away from a “card” that merely distributes discounted prices (and collects data solely based on this redemption) to a clear understanding of a shopper’s preferences, demand, and the correlation to past purchases — a move that empowers a brand to deliver consistent, effi cient yet tailored experiences to specifi c shoppers. Of course, executing on a strategy of this magnitude is often easier said than done.

To create a valuable, truly personalized shopping experience — one designed to drive long-term loyalty — retailers need a consolidated view of their shoppers’ preferences, as well as enterprise-level operations that respond to these preferences. This includes insight into the supply chain and logistics, as well as inventory levels.

Too often however, retailers fail to make this visibility a reality, and struggle to synchronize the many channels across their omnichannel strategy. The biggest hurdle for retailers is blending the online experience in offl ine, store-level channels.

In addition, even the most tech-savvy retailers often struggle with achieving a consolidated view of their best shoppers. This task is exacerbated by the new — and robust — data sources fi ltering into retail enterprises. For example, data entering organizations is moving far beyond syndicated sources, such as Nielsen and IRI, and tired loyalty program databases. Retailers are tapping into internal data sources, including information from point-of-sale (POS) and customer relationship management (CRM) systems, as well as evolving systems, including digital signs, brand-specifi c mobile apps, social media and mobile payments.

Retailers know that insights garnered from this data will help drive consumer-centric decisions across retail business functions, such as marketing,

Source: Colloquy, “2015 Loyalty Census”

Average number of loyalty programs the typical U.S.

household belongs to.

29


I N D U S T R Y I N S I G H T S

Q: Customer loyalty has clearly moved beyond “a card program,” how would you defi ne customer loyalty today?SaRaH BaRRoN: Building customer loyalty now has far less to do with offering points and other rewards; instead, it’s about being able to meet the customer’s expectations for a great shopping experience, whenever and however she shops.

To understand why, just look in your wallet or purse. Chances are you have fi ve or 10 cards from as many retailers. That means you can get bonuses almost everywhere you choose to shop. It also means they’re not really what motivates you to choose one retailer over another. You expect the rewards, for sure, but the brands you shop with time and again will be the ones that consistently offer the products you want at the prices you want to pay, with great “no problem” service, plus systems and policies that let you shop on your own terms. Any retailer that can do all of that well will be top of mind with their customers every time, and build loyalty for life.

Q: How has omnichannel changed the role — or importance — of loyalty?BaRRoN: Omnichannel has altered the practice of building loyalty in three key ways. One is fairly straightforward: Since customers still very much expect to be rewarded every time they shop, retailers must be willing and able to offer those rewards and let customers redeem them in all channels. This is now basic — it’s “loyalty 101.”

The second new challenge is to build and apply rich, 360-degree customer profi les from the customer’s activity in all channels. Retailers must be able to continually track and manage customers across the enterprise, and to use that information to create highly personalized and relevant offers and marketing campaigns — as if every customer was your only customer.

The third and most important shift goes back to the link between loyalty and experience. Customers want and expect easy, consistent and seamless experiences throughout their complex shopping journeys, from research and browsing to buying and receiving (and back again, as they may choose). Here too, retailers must deliver.

Q: We know that retailers need a different strategy and different solutions in their tool kit than in years past. one is a desire for singular commerce. What does this mean and look like?BaRRoN: The kind of experience-based loyalty we’re talking about depends on being able to manage every part of the enterprise holistically, with systems that fully integrate processes on both the back and front end. Gaining one view of the customer across the enterprise is essential, of course, but so is enabling her to engage the brand consistently in all channels and locations; to always fi nd the right merchandise; and to buy, obtain and even return that merchandise on her own terms. To do that, the retailer must be able to direct all those processes as one: One interaction, one order and one product, based on one version of the truth and one view of the entire enterprise. That’s what we mean by singular commerce, and why it’s vital to the future not just of loyalty but of retailing as a whole.

Q: How does this impact the role of customer relationship marketing solutions? BaRRoN: The new approach to loyalty demands not only a singular commerce platform, but also new and higher levels of functionality and performance within the CRM solution itself, supported by a singular commerce platform. It needs to be able to track and support customers fl uidly. It requires a unifi ed database that captures and consolidates all customer information from every channel and touchpoint. The solution must enable sophisticated segmentation analyses to identify customer performance and value at a more granular level,

Singular Commerce and Seamless Experiences Matter More than Rewards

Aptos engages customers differently with a singular commerce platform that delivers seamless experiences to shoppers within and across ev-ery touch point and optimizes re-tail performance enterprise-wide. Aptos.com

“Experience-based loyalty depends on being able to manage every part of the enterprise holistically, with systems that fully integrate processes on both the back and front end.”

SaRaH BaRRoN, PRoDUCT MaNaGER, CRM, aPToS


INSIGHTSI N D U S T R Y I N S I G H T S

and to empower planners to develop localized assortments that are closely aligned to the preferences and behaviors of high value segments. And it must be able to deliver highly personalized, compelling engagement in all forms: from instant messaging and prompts for associates in stores, to cross-selling suggestions and offers online, to content for e-mail and direct marketing that mirrors each recipient and showcases exactly what they want.

Q: Where does the industry stand on achieving this, and what continues to trip up retailers in their customer loyalty journey?BaRRoN: Although the advanced platform and CRM solutions are available today, the industry as a whole still has quite a way to go to properly execute the singular commerce vision in which loyalty is now framed. A recent NRF study showed that only 9% of retailers are actually up and running on a unified commerce platform, while another 13% were preparing to implement.

We consistently see retailers struggle to deliver the types of seamless, personalized experiences that drive loyalty when they fail to integrate the aforementioned “one view of the customer” into every aspect of their operation. Too often, customer segmentation and behavior insights are isolated within marketing. Unfortunately, merchants, planners, allocators, and even store operations personnel must make decisions with little or no visibility into the insights that are now required to develop seamless brand experiences, and to reflect the preferences and desires of high value customers.

But this shift to singular commerce for seamless experiences and deep CRM is a real and transformative trend: The NRF study indicated that 53% of retailers plan to implement a unified commerce platform in the near term and that 86% expect to leverage one within a decade. Other surveys suggest that retailers will direct more than $30 billion in new software investments in this area over the next few years — especially for advanced POS systems that share logic between physical and online stores, enterprise order management systems, centralized merchandising systems and enterprise-wide analytics. Q: What role is cloud computing playing in driving customer loyalty in an omnichannel business model?BaRRoN: All the requirements of omnichannel loyalty are ideally supported by cloud deployments. In addition to delivering familiar advantages such as superior cost management and minimizing on-site IT infrastructure and resources, cloud solutions are scalable and agile to a degree that traditional solutions can’t match. They make it much easier for retailers to add functionality and grow the business in response to the evolving expectations of their customers to build and maintain loyalty for the long term.

Q: Can you lay out the top three or four tools needed to support an omnichannel customer loyalty program?BaRRoN: Before considering which tools are best suited to drive successful loyalty programs, we believe (and the NRF data supports) that retailers first must acquire the essential building blocks to seamless experiences:· A single view of the customer, made actionable to decision makers across the entire enterprise· A single view of every interaction and order· A holistic, trusted and real-time view of inventory in every channel and location· An integrated analytics platform

Without these building blocks to seamless experiences, loyalty programs have little chance at achieving anything more than reinforcing behaviors that lead to discounts.

“Although the singular commerce platform and advanced CRM solutions are available today, the industry as a whole still has quite a way to go to properly execute the singular commerce vision in which loyalty is now framed.”

SaRaH BaRRoN

Singular Commerce and Seamless Experiences Matter More than Rewards

(continued)


R o a D M a P


merchandising, stores, e-commerce and supply chain. However, with data volume, variety and velocity increasing exponentially, the world’s data volume is forecasted to double every 18 months — which further overwhelms retailer efforts, as summarized in “State of the Industry Research Series 2014: 3rd Annual Analytics in Retail Study,” a report from EKN Resarch.

There is no question that retailers recognize the value of a seamless, consumer-centric experience designed to deliver value, bolster loyalty, and create a competitive advantage. By following an actionable plan that can help retailers understand how their consumers truly interact with the brand across all channels, retailers will create a solid engagement strategy that will drive long-term loyalty and associated profi tability.

Transition From a “Shopping Experience” to a “Brand Experience”As consumers demand more digital customer-

facing tools across their shopping journeys, retailers are forced to rethink how they connect with their omnichannel shoppers. Part of the challenge is that so few companies actually operate a true omnichannel operation. For example, many companies still support individual channels, cobbled together with fulfi llment options. This doesn’t allow shoppers to seamlessly “channel hop” between touch points and continue their shopping journey regardless of which channel they used last.

Consumers no longer shop “a retailer’s online channel,” or “at their store.” They want a brand experience. More importantly, as they transition between channels, brand consistency is a must from a messaging, navigation and service perspective. And those that fi nd the right formula are sure to reap the benefi ts. For example, more than 63% of shoppers reported that brand consistency plays a

18Source: EKN Research, “State of the Industry Research Series 2014: 3rd Annual Analytics in Retail Study”

Rate at which the world’s data volume is forecasted

to double.

MONTHS


R o a D M a P


role in their spending, while a lack of consistency reduces spend for 39% of consumers, according to Retail TouchPoints’ “Building Omnichannel Retail From the Back End Up,” report.

Integrate Systems to Deliver a Unifi ed, Singular Commerce PlatformAs retailers begin to evaluate how to revamp

omnichannel strategies, they are allocating 6% more of their budgets on omnichannel functions than they did last year, according to “The 12th Annual Store Systems Study 2015,” from RIS News. One of the top priorities is to deliver the brand consistency that shoppers crave, as well as the promise of a seamless shopping experience — one that supports consumers interchangeably using any or all channels when purchasing, procuring or even returning merchandise.

The key to making this happen is the adoption of unifi ed transaction platforms. Gone are the days when retailers supported individual business channels all in the name of grabbing wallet share. Instead, they need to integrate all channels — and support mission-critical backend operations — if they want to create a consumer-centric omnichannel strategy. They can achieve this with a unifi ed commerce platform, or a centralized transaction engine that supports ordering and fulfi llment, integrated holistic marketing, and advanced customer service that recognizes omnichannel behavior — all from any channel, as summarized in RIS News’ and EKN’s “The First Annual Customer Engagement Tech Trends Study: The Personalization Imperative” report.

While this is still an evolving tool, 57% of retailers do plan to adopt a common commerce platform across the store and online in the next 24 months, according to EKN’s “State of the Industry Research Series Q4 2014: 2nd Annual Stores Benchmark.”

63%Source: Retail TouchPoints, “Building Omnichannel Retail From the Back End Up”

Shoppers that reported that brand

consistency plays a role in their spending.

MORE THAN



Make the Move to MobileRetailers are evaluating ways to connect with shoppers in real-time, as a means of driving

more personalized messages during their many paths to purchase. Mobility fi ts the bill perfectly. Whether enabling shoppers to access information via a web browser, allowing them to download a brand-specifi c app, using proprietary solutions in-store, or working directly with store associates empowered with their own smart devices, mobility is another way to merge a brand’s e-commerce sites, in-store ordering applications, and other back-end operations in an effort to integrate a brand’s physical and digital channels.

Currently, 76% of companies are investing in mobile-enabled processes and apps as a means of enhancing the omnichannel customer experience, according to the EKN report, “State of the Industry Research Series Q4 2014: A Step-By-Step Approach to Improving OmniChannel Customer Profi tability.”

For example, specialty retailer Hointer’s Seattle-based beta store features a mobile app that allows customers to scan merchandise QR codes to build a personalized virtual cart. The app also enables users to request a fi tting room, purchase merchandise, view their activity and even rate their apparel choices — all details that enable the trendy retailer to personalize the shopping experience, and drive loyalty. While Hointer is demonstrating an innovative and aggressive mobile strategy, another 40% of companies consider mobile-enabled processes and apps key components of their omnichannel strategy, according to the EKN Research’s report, “State of the Industry Research Series Q4 2014: A Step-By-Step Approach to Improving Omni-Channel Customer Profi tability.”

R o a D M a P

Source: RIS News, “The 12th An-nual Store Systems Study 2015”

Increase in retailer’s omnichannel functionality

investments in 2015.

6%


R o a D M a P


Embrace Intergrated Order ManagementIt is no secret that the increasingly digitally-

infl uenced, real-time nature of omnichannel retailing makes it diffi cult for retailers to consistently meet their shoppers’ availability and fulfi llment needs. However, if they fail, they are jeopardizing long-term customer loyalty. That said, an integrated order management system is becoming a prerequisite to supporting a successful omnichannel operation. What was once simply defi ned as software that managed order processing, order management systems have evolved into the liaison between customer demand and fulfi llment across an all-channel shopping journey. More specifi cally, order management unifi es order placement, delivery, fulfi llment and when needed, returns, regardless of where these services occur. And at the heart of a successful order management solution is ease of use.

Already a strong omnichannel competitor, True Religion recently announced plans to integrate an order management system designed to support fl exible fulfi llment options, such as BOPIS, to maximize convenience for shoppers. Specifi cally, the solution supports True Religion’s enterprise-wide omnichannel order capture, order orchestration and order management processes.

“[The solution] will help us achieve our vision of supporting ‘one version of the truth’ across all our distribution channels,” Eric Bauer, COO and CFO of True Religion said. “The solution will support streamlined operations and internal decision making, enhanced customer engagement, and the ability to fully leverage enterprise-wide data to gain actionable insights to further optimize all elements of True Religion’s operations — from the supply chain to multi-channel points of purchase.”

57% Retailers that plan to adopt a common commerce platform

across the store and online in the next 24 months.



R o a D M a P


Reaching for the CloudThe ability to add the above enhancements requires a fl exible foundation — one that gives

retailers the agility to scale in an effi cient, cost-effective manner. Enter the value of cloud computing. Described as an open, scalable infrastructure that can be accessed on a “pay-as-you-go,” license model, the hosted environment enables retailers to access dedicated applications over the web — a confi guration that delivers more agility and lower investments than traditional IT software. An “on demand” computing model also enables retailers to ramp-up their online capabilities, network bandwidth and storage whenever peak times arise, or scale back when additions are unnecessary, as summarized in Accenture’s report, “Seamless Technology: Unleashing an Integrated Shopping Experience.”

Between a lower total cost of ownership, improved agility and increased speed to market, approximately 74% of retailers plan to move some services to the cloud over the next fi ve years, according to “Methods and Practices: Cloud in Retail,” a report from International Data Corp. (IDC). DSW is illustrating how cloud computing can bolster a BOPIS program.

DSW began its omnichannel journey in 2011 with the creation of Shoephoria, the company’s proprietary stock locator tool that allocated warehouse-based inventory to fulfi ll orders originated at the store level. Two years later, the company introduced ship-from-store and drop-ship capabilities. While these were groundbreaking at that time, existing disparate channels kept a truly seamless operation at bay.

By implementing a cloud-based in-store pickup and ship-to store integrated platform to support operations in 467 stores, DSW is primed to achieve its customer-centric goal to deliver any shoe, anywhere,

Source: International Data Corp., “Methods and Practices: Cloud in Retail”

74%Retailers that plan

to move some services to the cloud over the

next fi ve years.


R o a D M a P


any time. A cloud-based system ensures speed-to-market and ease-of-use. Without cloud, “we would not have been able to get these initiatives live as quickly on our own,” Carrie McDermott, DSW’s COO said. “Plus, our associates have found the application incredibly easy-to-use, which enables them to focus on servicing our customers’ needs,” a move that drives loyalty.

Conclusion In an omnichannel world, consumers expect to shop by brand, not channel. Retailers that

can create the right formula of a seamless shopping experience, one that doesn’t separate or manage individual channels, are on their way to driving customer loyalty.

By adopting fl exible platforms that break down the silos between channels, drive a single view of customer activity, and enable more customer-centric options at a brand-level, retailers can produce brand consistency and better satisfy customer expectations — factors that will foster loyalty, and help them emerge as leaders in the omnichannel game.

Retailers are adopting new, agile platforms and solutions

to build a personalized shopping journey in an

omnichannel world.


Requirements for

Building Omnichannel Loyalty Strategy• Evaluate omnichannel goals from an enterprise perspective, and begin

defi ning how to transition away from disparate channels and toward a “brand experience.”

• Learn how an all-channel experience infl uences customer shopping patterns, demand and expectations.

• Institute customer-centric retailing, versus a product-centric model.• Understand customer preferences, across inventory, channel, payment and

fulfi llment perspectives.

Technology• Adopt unifi ed commerce platforms that integrate missing critical systems,

and deliver a common view of digital touch points, consumer preferences and inventory levels.

• Adopt a mobile platform that enables shoppers to connect with a brand via mobile optimized websites or brand-specifi c apps.

• Arm store-level associates with mobile solutions that allow them to engage with shoppers, a move that drives loyalty and helps convert browsers into buyers.

• Adopt cloud-based platforms that give retailers the speed and nimbleness needed to adopt more fl exible operations designed to drive loyalty.

• Integrate order management systems that give associates insight into inventory, order placement and returns across the brand.

Personnel• Teach IT executives to hand over the reigns, and train associates to use

automated, fl exible omnichannel systems, such as customer history profi les, inventory management and clientelling tools.

• Educate store-level associates on the services that differentiate the store experience and drive loyalty, including buy online, pick up in-store; order in-store, ship to home; and clientelling operations.

• Arm associates with mobile solutions that keep them aligned with shopper preferences, order status, and the ability to deliver guided or assisted selling strategies in real-time.

Requirements Every major business initiative requires a detailed assessment that examines the proj-ect’s impact on internal processes, technologies, personnel, strategic alignment and costs. One goal of the assessment is to identify granular and high-level requirements that are essential elements in the project’s game plan. Managing and addressing these requirements is critical to success.

Charting the Path That Links Technology and Business GoalsCharting the Path That Links Technology and Business GoalsR o a D M a P


R o a D M a P Charting the Path That Links Technology and Business Goals

● Transition From a “Shopping Experience” to a “Brand Experience”

● Integrate Systems to Deliver a Unifi ed, Singular Commerce Platform

● Make the Move to Mobile

● Embrace Intergrated Order Management

● Reaching for the Cloud

Roadmap KPIs InfographicBuilding Omnichannel Loyalty

31% Premium loyal shoppers are willing to pay.

Source: EKN Research, “State of the Indus-try Research Series Q4 2014: 2nd Annual Stores Benchmark”

Source: Colloquy, “2015 Loyalty Census”

Average number of loyalty programs the typical U.S. household

belongs to.

29

18Source: EKN Research, “State of the Industry Research Series 2014: 3rd Annual Analytics in Retail Study”

Rate at which the world’s data volume is forecasted to double.

Rate at which the MONTHS

63%Source: Retail TouchPoints, “Building Omnichannel Retail From the Back End Up”

Shoppers that reported that brand

consistency plays a role in their spending.

63%MORE THAN

Source: RIS News, “The 12th Annual Store Systems Study 2015”

Increase in retailer’s omnichannel

functionality investments in 2015.

6%

57% Retailers that plan to

adopt a common commerce platform

across the store and online in the next 24 months.


Source: International Data Corp., “Methods and Practices: Cloud in Retail”

74%Retailers that plan

to move some services to the cloud over the

next fi ve years.


building customer loyalty in an omnichannel world

Documents