By Amy Klaris and Greg Ellis
Best Practices from Kurt Salmon
The Customer Experience Imperative In Kurt Salmon’s recent conversations with leading retailers, two topics come up repeatedly: customer experience and multichannel. Over the past decade, the two concepts have broadened in definition and become inextricably linked. More importantly, retailers increasingly understand that they must address both in order to win in today’s new retail environment.
Over the last century, the retail industry has experienced dramatic changes. In the beginning, consumer demand far outpaced producer supply. After World War II, the tide began to shift as manufacturing and distribution significantly expanded.
Now the consumer has the power.
Today a shopper can find essentially the same product in many different retail outlets. She can quickly find out where she can buy the product and where she can get the best price. She can have that product brought to her and taken away if it doesn’t work. Then she can easily tell all her friends about the great deal she found and the great experience she had.
To compete effectively in an age where information ubiquity has increased transparency and new selling channels have increased accessibility, retailers must seek new ways to differentiate themselves from competitors.
The winning retailers will create connections with consumers that go beyond just transactions. This connection is part of the imperative outlined in The New Rule of Retail. Coauthors Robin Lewis and Kurt Salmon’s Michael Dart assert that, going forward, retailers must create emotional ties to consumers, in addition to establishing preemptive distribution and controlling (but not necessarily owning) the supply chain.
Customer Experience Defined
Retail strategy has always encompassed two key elements: value proposition and target customers, i.e., what a retailer offers and to whom.
But the new retail paradigm requires a third element: a customer experience strategy. This component addresses what brand message a retailer will deliver to target customers and how and where retailers will interact with their customers.
Further, these three elements — value proposition, target customer and customer experience — should reinforce each other.
The right products must be sold to the right customers in the right environment.
In today’s world of ubiquitous product, this customer experience component will become a retailer’s key point of differentiation.
For example, recent Kurt Salmon research shows that consumers consider stores that they love to have similar personalities to them; and consumers are more likely to get excited when they think about shopping at the stores that they love. Given that net advocacy for loved retailers (64%) is nearly twice that of liked retailers (34%), the benefits of creating this connection are clear.
To be clear, customer experience is not just another way to say customer service.
While customer service is an integral part of the execution of a customer experience strategy, the broader definition now includes all touchpoints with a consumer.
Beyond the obvious — product assortment — consider the breadth of touchpoints retailers have with consumers today: in-store environments (e.g., customer engagement, design, customer-facing technology), out-of-store interactions (website, community forums, chat, email, mobile, call center), marketing (advertising, PR, social media, events) and product assortment.
The Multichannel World
Within the context of the customer experience imperative, retailers are also grappling with a multichannel reality.
It’s clear that consumers are interacting with retailers in many different ways across many different channels, and they expect integration across those channels.
Consider these findings from a recent Kurt Salmon study of interactions between consumers and their favorite retailers: • 22% belong to the loyalty program of their favorite retailer • 26% get the catalog • 34% report having ordered something online and picked it up in the store • 22% have been to the Facebook page of their favorite retailer Multichannel is often thought of as the different places a consumer can make a purchase: store, web and catalog.
But in the context of customer experience, we believe retailers need to think about a broader definition of channels, such as: • Places for transactions: store, website, mobile commerce, call center, retail partners • Channels for marketing messages: traditional media, Internet, social media, direct mail, email • Indirect channels: word of mouth, public relations, product placement Consumers use each of these channels differently, and each presents different opportunities for retailers. For example, only in the store can a consumer touch and feel apparel; only through mobile media can retailers send a consumer customized options exactly when they are entering the store; and only through the website can a retailer effectively present the widest variety of products.
Retailers must determine which channels they will use to reach which consumers in which ways. Although each channel plays a different role for consumers and offers unique capabilities, it is very important that retailers present their brands and messages in a consistent manner across all of the points of interaction.
A combination of long-term retail trends, technology innovations, and the shock of a severe recession have redefined retailing.
Armed with unprecedented levels of information and choice, the modern consumer expects more from retailers than product and price. She wants a broader experience, and she expects to engage across many different channels.
As retailers battle for an expanding share of this new consumer’s pocketbook, the winners will:
• Create closer and more compelling connections with their target customers throughout the entire interaction lifecycle
• Establish clear and integrated customer experience strategies, and develop the processes, organization and systems necessary to execute in a crosschannel environment
• Anoint chief customer officers to be the champion for customers and ensure the organization is delivering on its brand promise
The challenges inherent these actions are not insignificant, but they are surmountable.
With the world changing every day and competitors running the same race, the most important thing is that these changes start now.
Amy Klaris and Greg Ellis lead Kurt Salmon’s Customer Experience Practice and co-authored this article. Together they have more than 20 years of experience advising industry leaders. They can be reached at firstname.lastname@example.org and email@example.com. To learn more, visit www.kurtsalmon.com.