In my last blog I spoke to the DSA accomplishments of 2010 and how the DSA is “creating ground cover and air support” for our members and industry, especially in light of the increase emphasis of buyers to implement converging screenmedia technologies such as e-commerce, kiosk, digital signage, mobile and social media.
Therefore I thought it would be appropriate to now focus on why these technologies are quickly and dramatically changing the consumer and shopping landscape.
When Amazon launched 15 years ago, one of the things that grabbed peoples’ attention was their recommendation engine. When you logged on you were greeted with your name and got a storefront designed especially for you – based on your past shopping experience, likes and dislikes. And it worked. People bought more, and it created more loyalty so people bought even more, and a virtuous circle was born.
Since then the large branded 'bricks and mortar' retailers have been wondering how to recreate this experience in store. For example, when millions of shoppers walk through a brand name retailer such as Macy’s, can that retailer identify an individual when they walk into their store in Herald Square on one day and perhaps their store in Chicago in three months time? Can they tailor an offer for this shopper? Can they really differentiate themselves on more than the quality of their clothes, price or service?
Not so long ago a retailer would persuade their customers through a combination of TV, radio, coupons, print and in-store merchandising. There was no real thought of two-way communication - the only feedback loop from customers tended to be the returns desk in the store. Now a retailer has to think about reaching customers through dozens of means including:
Low Engagement
• Newspapers
• TV and Radio
• Coupons and Inserts
• Web Site
• Mobile site
• YouTube
• RSS Feeds
• Podcasts
• Blogs
• Digital signage in venues
• Streaming services
• Search optimization and marketing
• Email marketing
• E-Commerce booking services and shops
• Social networking sites (Facebook, Myspace etc)
• Twitter
• In-game broadcasts and transactions
• Downloadable mobile apps (eg Shopkick)
• Location Services (FourSquare, Facebook Places)
• Loyalty programs
• Interactive mobile sites (e.g. bar code readers, etc.)
• Active CRM (customer relationship management)
High Engagement
It's no wonder that many retailers are scratching their heads and wondering how to do this. The best ones are beginning this engagement and are realizing that attracting and keeping customers is now about having a conversation with them and not speaking to them through a megaphone about price and product features.
Most retailers remain at the top of this list with very few running the gamut of all these services (or frankly needing to). However the scale of the problem becomes apparent, as the most effective organizations will understand what these technologies mean and will also be able to deploy them effectively to build audiences and market to them thus becoming true multi-platform, multi-channel retailers.
Finally, the Holy Grail is to connect the offline to the online worlds. Retailers need to start thinking about who their customers are, what they like, what they dislike and tracking them on and offline. Thus, if Macy’s can track me as being on their catalogue list, their e-mail list, when I visit their Web site, when I visit their Facebook page and also, crucially, know when I have actually visited the shop in person, allowing them to make specific offers to me, it allows them to start a conversation with me that will build loyalty and get them to know me.
This is all expensive to do well. Organizations that want to do this will have to commit the resources, people and thought leadership if they want to succeed. Merely dipping their toes into these areas is unlikely to lead to any meaningful success.
So how does this become a reality? The answer lies in the clever deployment of integrated customer-facing technologies. Retailers have spent the last two decades upgrading their back-office technologies - ordering systems, inventory systems, EPOS systems, scanners, etc. This has created great efficiencies and increased profitability.
In the last decade retailers have begun to think about customer loyalty systems – mainly around card loyalty plans – and have started tracking customer behavior and buying patterns to make personalized offers. Where this has been done well - Tesco in the U.K. is a great example - it has lead to increased sales and loyalty.
In the last five years retailers have started putting in place Web sites with e-commerce capability and are moving toward being multi-platform. Finally in the last two years retailers have been moving into the social networking sphere with Facebook pages and Twitter accounts.
However there still remains a disconnect between the online and offline worlds. The link between these worlds - the mobile phone - is something that retailers are only beginning to grapple with today.
Many leading software solutions are currently pioneering the way in integrated retail digital signage. The platform should link into retail inventory systems to ensure what is being promoted is in stock and into POS systems to ensure correct pricing and to measure the impact of the promotions to allow a clear measurement of ROI. In addition, the assets used for digital signage can be reused on the Web and on mobile where appropriate, thus ensuring that retailers are providing one consistent branded face to their customers.
However, it is in the links with mobile where the platform becomes really interesting. Leading suppliers should be prepared to work with retailers in creating apps for smartphones that can be downloaded from the retailer's Web site or social networking site. The user enters a store and can use the smartphone app to interact with a digital sign in-store (by using the smartphone app to scan a barcode on the digital sign, for instance). This now allows personalized offers to be sent to the customer while they are in-store, creating stickiness and increasing sales.
These personalized offers have redemption rates of 20 percent to 30 percent, versus the two percent to three percent of traditional coupons, and can have a dramatic effect on sales. This proximity marketing in store works, and it is here now.
So how might it work? A store puts in place an advanced digital signage system. They run a signage network linked to their POS and inventory and can track the effects of promotions. A customer goes to the store's Facebook page and downloads an iPhone app. When they come into the store, the app prompts them to scan a barcode on the digital sign - thus creating a physical link between the customer and store. The customer can now get special offers in-store, see where products are located, fulfill shopping lists and so on. In addition, they can see products, photograph them and post them back to their Facebook wall to ask their friends for comments - a true conversation with the customer that will result in increased sales.
If you get a chance, check out the upcoming webinar on Customer Engagement Convergence.
