Secrets to Success: How Retailers Can Improve Customer Experience
Since the industrial revolution, retailers have occupied physical storefronts, the hub of traditional consumer engagement. But with today’s integration of the digital experience, online customer experience is the differentiating factor that encourages brand loyalty.
New research by NTT DATA Services analyzed the digital and physical customer experience of 15 enterprise retailers to determine where friction exists and how businesses can reduce or eliminate it.
Friction is any aspect of interaction — digital or physical — between an organization and a consumer that has a negative impact on consumer experience. To understand the customer journey, organizations should measure customer friction and reduce it proactively through a quantitative, objective method. An accurate process will allow retailers to generate the data needed to drive transformation and realign applications and processes with the needs of consumers in mind.
When the customer experience is poor, consumers are more likely to abandon not just specific transactions, but also their loyalty to the brand. On the other hand, strong experiences that meet customer needs, including seamless digital integration, personalization and convenience, can have a lasting positive impact.
As retailers strive to deliver on the promise of a seamless customer experience, they should concentrate on three key areas of improvement:
Across the study, leaders had simple ordering and product pickup processes. However, laggards’ sites were cluttered and more complex. For example, some forced the customer to take 25 percent more steps, including requiring the same processing information multiple times. Laggards simply asked the customer to do more to accomplish the same task. Consistency was also an issue, with 26 percent of stores providing varying overall experiences from online to physical stores.
Expectations and Communication
The best performing organizations maintained active communication throughout the transaction, from online ordering to in-store pickup. This positive connection originated at the start of the transaction, with 50 percent of retailers setting time and fulfillment expectations up front, allowing customers to make a more informed purchasing decision. However, when setting expectations, it's important to meet them. Friction increased when customers could not determine how to pick up their order once they arrived at a physical location.
The best performing sites had processes in place to ensure shoppers weren't disappointed, such as ensuring they were not able to order a product that wasn't in stock for pickup. However, only 33 percent of organizations had a product ready for pick up within one hour of the order, and 50 percent could not fulfill an order the same day it was placed. In some cases, customers could have had their products shipped directly to their homes more quickly.
Retailers must optimize the customer journey from end-to-end to create an engaging and efficient customer experience. Not doing so opens the risk of losing customers and, ultimately, revenue. To stay competitive, retailers must understand customer goals and create metrics that determine the success of unified retail transactions.
To transform the customer experience, retailers should focus on these five secrets to success:
- Customer needs: Understand customer needs and goals throughout the purchasing journey.
- Knowledge and personalization: Create deep relationships through meaningful, personalized engagement on the customer's terms and through their preferred channels.
- Automation and tools: Find opportunities to refocus time and energy on customer service.
- Communication: Increase communication frequency when engaging customers.
- Partnership: Work with a trusted partner with retail-specific knowledge, consulting capability and technology expertise.
In our research, the retail leaders had taken steps to reduce customer friction, helping them to achieve a 48 percent improvement in revenue growth and 45 percent improvement in net income compared to competitors with poor friction scores. Through thoughtful data collection and analysis, retailers can uncover where friction exists and create a strategic plan designed to enhance the customer experience.
More shopping today is done online than ever before, yet customer experience is thought of to only take place in brick-and-mortar stores. In the future, digital will be the epicenter of the customer experience. To gain and retain customer loyalty, retailers must focus efforts on the digital customer experience to in turn increase revenue.
Matthew Leach is vice president of business analysis and project management practice at NTT DATA Services, a global IT innovator delivering technology-enabled services and solutions to clients around the world.
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