Connected Consumers Are Willing to Spend More
Despite the traditional retail industry being beset by online competitors and margin pressure, here’s a bit of good news from a recent Capgemini report: More than 80 percent of consumers are willing to pay more for a better experience. However, that same study found that while 75 percent of organizations believe themselves to be customer centric, only 30 percent of consumers agreed with this assessment.
A positive digital customer experience can make the difference between a good brand and a great one — not just in consumers’ minds, either. According to a recent Capgemini study, there's a clear link between a positive digital customer experience and value returned to the bottom line.
Our research set out to assess what industry leaders can teach us about reconnecting with customers. To identify the leaders, we created a digital customer experience (DCX) index
The DCX Index
To calculate our DCX index, companies were scored on their use of digital practices, weighted based on the difficulty of implementing them, plus customers’ views on how well the company was delivering on the experience. The DCX index correlates extremely well in predicting customer satisfaction and spending. In addition, there's a positive link between an organization’s DCX index and its Net Promoter Score (NPS).
Yet across all industries, the disconnect between most companies and their customers was also startlingly clear as noted earlier. This is a potentially costly difference of opinion. Consumers want to be heard. They have strong feelings about the experience they desire in-store. One in five consumers stopped purchasing from a company after a poor experience. Fewer than half of the customers believe their company rewards them for loyalty, and only 48 percent believe their company provides a better customer experience than the competition.
On a positive note, the research suggests that existing customers would spend an average of 24 percent more for a better customer experience. For consumers who already rank their companies favorably vis-à-vis the competition, there's even more to gain, with an estimated increase in spending of 36 percent.
What Retail Leaders Do Differently
In the retail space, three practices distinguish the DCX index leaders. First is the ability to personalize products and services online or via a mobile device. (More than just a “hello, FirstName” in the corner of the screen.) Next is being able to use customer data to predict changes in consumer behavior and tailor offerings. They don’t simply look back at where they’ve been, but are instead are actively trying to figure out where their businesses need to go. It’s no surprise, then, that the third best practice is regularly launching new IT initiatives to improve the customer experience in digital channels.
Consider that Domino’s Pizza now accepts orders through eight different channels: in-store, phone, web form, emoji, Twitter, text message, smart TV, and Alexa, the Amazon Echo assistant. Chili’s restaurants saw an increase in dessert sales when it placed tablets on tables for guest use in ordering and paying their bills. More than 17 million people have downloaded and used Starbucks’ app to place and pay for orders, skip in-store lines, and manage their loyalty rewards. Nordstrom offers a host of digital services, from mobile checkout to a personalized digital clothing service.
In these and other examples, retailers have invested in digital not to simply keep up with competitors, but to redefine their value exchange with customers.
Instead of leaving money on the table, there are steps retailers can take today to start closing the gap with customers.
Shannon Warner leads Capgemini Consulting’s North American retail practice. Capgemini Consulting is the center of digital and innovation in the Capgemini Group.
