Channel Hopping: Back To The Future Proofing Of Your eCommerce Strategy
Over the last decade eCommerce has proved it is capable of adding value to the retailer’s bottom line – and in a more directly measurable fashion than many kinds of offline activity.
In fact eCommerce is the only part of British retail that’s growing consistently. Latest IMRG/Cap Gemini figures showed UK online sales up by 11.5% in July 2011 compared to the previous year – and this was the lowest growth for 18 months. If this doesn’t sound particularly exciting news it should be remembered that UK retail sales as a whole grew at only 0.6% in July compared to the previous year according to the British Retail Consortium.
One of the results of the on-going recession seems to be that more customers are shifting their habits to online purchasing for a variety of reasons. Many of these “late adopters” have very different expectations about levels of support and customer service whilst having little or no interest in “how eCommerce works” or what is technically involved or possible. At the other end of the scale younger “net native” users are already equipped with multiple internet capable devices, are comfortable with asynchronous communication, and expect continuity of experience no matter how, where and when they log on.
Consistently figures show that cross channel retailers benefit from higher levels of online growth than pure plays do – so it’s likely that more retailers will be looking at the kind of technology they need to offer fully integrated multichannel services.
Customers are expecting changes in retail service where companies focused on customer engagement strive to become trusted advisors and develop two way relationships. However, the flip side to this is that a bad experience in any one channel, such as a temporary site outage, will adversely affect perception on a much wider scale. As more and more companies turn to shared hosting, cloud hosting, complete solutions providers and managed services organisations are finding there are trading some valuable brand control for the other benefits brought by these approaches.
It is now well established that customers who buy with companies across different channels spend 3 times as much on average. While this can present great opportunities for retailers (and for customers who increasingly expect to flick between channels at will) it can also place systems under great strain. Shiny new websites may be plugged into grimy old legacy databases, and mCommerce is still only tagged on as a after thought in many cases. While the result may pass a cursory examination in a review meeting it is unlikely to offer a truly seamless experience.
So where does this leave organisations looking to develop strategies for the future?
Moving forward retailers should concentrate on:
- Developing a flexible strategy that put USPs at the core and always focused on them to inform decisions
- Having realistic timelines for what needs to be achieved. It is no good setting a target to become a world beating cross channel retail by next quarter if you do not even have the fundamentals in place.
- Choosing partners carefully and consider the “cultural fit” as much as cost and technology – if you want to succeed you will need to work together.
- Accurate monitoring, reporting, testing and analytics to ensure delivery of the best user experience possible while understanding the impact on strategic goals, brand, ROI and the bottom line.
A single customer view has been the goal for years but always remained tantalisingly out of reach but as monitoring and measurement improve this is growing closer. Ecommerce platform vendors are also consolidating and looking to provide a “one stop shop”to support and manage customer interaction across all channels. thinkTRIBE has been working closely with many of our clients to develop integration with analytics / trouble ticket packages, and to understand how we might add data to this valuable “single customer view” with our end to end loadtesting, testing and monitoring services and how this can be used throughout organisations, no matter how diverse and distributed their teams and systems, to provide a common language and a “single point of truth” for understand performance and user experience.
A key change that is sweeping across the industry is the concept that the future of eCommerce platforms is not just “online sales”, used intelligently they can be used for extending reach through social and mobile, to enhance overall service delivery and to close the customer sales loop. The retail world of the very near future could include a sales assistant who could, for example, identify customer who has “checked in”, help them with their shopping, offer personalised promotions, allow the customer to compare prices, check stock, provide immediate reviews/ratings on experience, share notes, use NFC (near field technology) to load a mobile basket with items to be picked up later at the checkout or paid for remotely and delivered to a specified address. People already stand in stores using phones to comparison shop and read reviews – this blurs the boundary between “online and offline” in a very interesting way.
Data Provides Understanding
The only way to get a great multi channel deployment is to understand what your company does and where it’s going – but unless you understand what your customers want and whether it is being delivered you cannot build up a strategy for the macro vision. Collaboration and understanding between departments is imperative. It’s not good enough any more to be happy work in isolation and believe it’s “not your job” to understand the bigger picture or say “that’s the X department’s thing”.
It has always been the case that good marketing relies on good data – but now all marketing will rely on good data as a minimum. Increasingly experts are advising that the eCommerce system sits at the centre of everything. Rather than a CRM system providing an additional link the chain the eCommerce platform can hold everything together and if the till system of the physical shops can be linked in then the richness of information available to the retailer increases hugely.
Customer centricity such as making dynamic recommendations, works across other digital channels, too, so retailers must ensure their ecommerce platforms can deliver across websites, mobile apps. Facebook sites etc. To be at the cutting edge of digital merchandising you need to be integrated into so many aspects of an individual’s life for marketing communication, product presentation, and for gathering data on their behaviour at all these touchpoints.
Ideally seamless retail is not just about digital devices but needs to extend to the physical store as well. Customers expect/assume that the retail systems are “connected” even though this is probably just some vague idea with no idea how. From a customer perspective if they can buy online and get a present delivered to a specified address why should they not be able to do that in store.
Intelligent merchandising (personalisation, tailored content) is becoming expected in online retailing today . Many large online retailers have shown that behaviour merchandising significantly increases revenue way beyond basic “best sellers”, related products and “also bought” features. Realtime visitor profiling, behavioural statistical analysis, collaborative filtering and business rule filtering are no longer “nice to have” components, but essentials.
As with everything, though, retailers need to be sure that more information will provide a richer, more rewarding experience – not just more layers of bureaucracy and annoyance to customers. The system does not only have to be intelligent – it has to be used intelligently.
Understanding how to prioritize will be key over the next few years to stop retailers rushing madly off in all directions with no real understanding of what will be effective in ROI terms as we saw with the early days of social and mobile commerce.
Fundamental priorities for most multichannel retailers seem to be
1) maximising stock availability
2) managing the cost of delivery
3) managing user expectations.
With no idea when the current recession will end so cutting held stock to release working capital is often an urgent requirement. IT applications which can help do that without impacting perceived service levels are currently far more important than “nice to have” options.
“Stock” can no longer be considered to be items in one storeroom or warehouse. The concept is much wider, the items maybe distributed or not even be created until ordered, they may be digital items, they may be in another warehouse belonging to another company etc
Choosing a system
You have to know what sort of business you are to know what sort of system will meet your needs:
Tier one retailers are typically spending £100k on mobile development alone and multi-channel investment runs into the millions. As with all potential new and untested directions the big question is where to invest, how to invest, and what is the expected ROI.
200-300 million turnover would need IBM Websphere or ATG. The kind of cost and customisation needed to make websphere work would be needed to get the most out of these systems means you would need to be doing that kind of business to make it worthwhile. This kind of organisation will likely have it’s own internal specialist eCommerce team to manage and maintain the system.
Mid tier businesses tend to use hosted solutions such as BT Fresca or Venda such solutions can provide a rich experience “out of the box” which is necessary for an organisation with no dedicated ecommerce team, although issues with any shared hosting/supplier space in terms of capacity, load balancing, monitoring and business continuity planning need to be clearly defined, agreed upon and signed into SLAs.
When looking to develop a multichannel strategy there are 6 key areas that retailers need to consider as they plan technology requirements for the future:
- Web interface,
- cross channel experience,
- logistics and
- customer engagement.
There is an underlying point behind all of the above, though, and that is that eCommerce must become flexible and agile so that it can easily cope with whatever the next device, technology or customer engagement point is without massive new investment and reworking of all processes and systems.
It’s not just about throwing resources at problems any more. It’s not just about buying the latest, most expensive piece of kit – it’s about having the right information to work most effectively. Processes and workflow should not be tied to legacy technology.
No eCommerce system should be considered in isolation. There will always be legacy systems it will need to interface with, and there will be other functions it needs to plug into directly or indirectly such as marketing, promotions and CRM. With the pace that eCommerce is still moving the system needs to be open to development and not keep users locked in to a particular way to doing things and can adapt to new add ons – whatever they might be. Nobody knows what is just over the horizon, and what users will respond to and what they will dislike, so the old idea of an “in scope / out of scope” spec list that last for any longer than a particular project iteration is no longer useful.
When considering international strategy business may be better not to try and find a “one size fits all” solution and instead mix and match depending on the level of activities in each territory. For example, in places where you have your largest markets you may want an installed solution on the premises that you directly control, but for smaller markets a hosted or managed solution, or even a cloud based service, may be fine. It is now possible to have ultimate flexibility on a global scale.
Corporate culture should be a consideration when choosing an ecommerce platform. It is no use having a system that will not suit the way you work. When choosing a hosted/managed solution this extends to the culture of the team that will supply and support you. The best system in the world will not magically make your eCommerce successful if you are unable to work with it effectively.
Of course one of the key things to work out when considering if a particular system is right for an organisation is total profitability. That is orders coming in against the cost of the system of course, but this needs to be looked at in the wider sense of issues such as number of returns and cost of processing if there are often errors, the cost of staff needed to run and support the system, retention and the cost of keeping vs acquiring customers. It is imperative that the boards of companies start to understand and consider web analytics and performance monitoring. This does not have to mean that they become hands on experts, but they should be aware of how to read those figures and what they mean just as well as they can budget results and forecasts. A lack of understanding here will adversely affect strategic decisions that impact many areas of the business.
Understanding User Behaviour
The key to successful multi-channel is to understand customer behaviour not just in a single channel but over multiple channels – and that they may fall into different “user types” or personae for different channels, creating a matrix of needs and behaviours that all need to be successfully addressed.
The most successful retailers do not just try sell to a demographic mailing list, they do not even just try CRM based personalised and targeted marketing, they look to become “trusted advisors” and even “friends” of their customers. Retail, especial eCommerce, is being driven more and more by customer needs, so development of trust and loyalty needs sophisticated understanding – and that means lots of information. In fact it specifically means “useful information” that you can interrogate, the days of the CRM system full of rich customer data that cannot be mined or queried in any way are (or should be) thankfully behind us.
It is no longer enough just to have basic server monitoring on the technical side, traditional static URL monitoring for the service delivery and support teams and simple KPI web analytics metrics for the marketing and eCommerce side. To understand how a customer interacts with the site you need to “do what the customer does, and see what the customer sees” in all sorts of situations, for all possible combinations of channel, content and inventory variables.
Users don’t type in single URLs to move around your site! They see and follow links and choices in your pages in real time. They behave like people, people who browse, consider, check, select, re-select, which is all to to say that they don’t behave like ‘just a list of URLs’ monitoring software. They click buttons in a sequence of pages, or use multiple interactive components within the same page , and the flow of pages is important They do these things for different reasons on different platforms, in different channels, and thresholds or KPIs for “success” maybe different between them.
Mystery shopping has long been a technique used by retailers and service providers. The opportunity to understand the genuine customer experience has always been highly prized. Knowing how your organisation performs on its best behaviour, on its best day, is all very well, but means very little unless it can be measured against what the level of what constitutes bad performance so that you can raise the latter and narrow the gap between the two.
Dynamic User Journey Monitoring is the next evolution of Mystery Shopping. It’s online mystery shopping, takes places 24/7, and gives insight as if you were sitting on the shoulders, standing in the trolley or, with the session replay function, viewing the actual screen of the customer.
thinkTRIBE can provide all teams within an organisation with a uniquely in-depth analysis of how their code and systems are performing across all end to end aspects of multichannel, enabling the Business and Marketing managers to take control of the ongoing customer experience on the portals. thinkTRIBE’s success is the result of the combination of its in-house developed test engine, which provides flexible and fast scripting for complex Dynamic User Journey monitoring and testing, together with the experience of expert staff and our customer centred approach to software and as a managed service.
thinkTRIBE does not build or host web systems, and is thus able to offer fully independent test and audit services and consultancy across any platform.