A while ago I blogged about threats and solutions in the retail industry that have their origin in rise of social media; with this post I would like to continue on this topic, focusing on possible solutions for retail companies.
This blog also ties in to a recent article by Mark Tamis on Social CRM in Retail. In his article Mark describes an interesting and elaborate scenario that showcases a technology enabled, consumer and network driven decision process, using the example of buying a party dress. This example is interesting because, although the process is entirely consumer driven, the involved companies use the technology to add value to the customer, thus achieving a win-win situation.
What the involved companies (a retailer and a hairdresser) are doing is establishing customer loyalty by
- Engaging the customer
- Providing a superior shopping experience, combining online- and offline aspects
- Enabling the customer to get immediate feedback from their network
With this the two involved companies manage to align their interests with the customer’s interests.
In other words, they are distinguishing themselves through service, instead of price. Trying to achieve loyalty through the offer of “least price” is a surefire way to death. To quote the 1986 Highlander movie: There can be only one.
Although the scenario described by Mark sounds very advanced it isn’t. The enabling technologies exist and “just” need to be tied together. We are not talking Star Trek here. I really like this scenario as it depicts what could be. Still, integration is a hard business.
Because of this I would like to come forward with another scenario that is definitely less sexy, that involves me, my wife, and our three kids, and the fulfillment of a very basic requirement: Food. I also put some emphasis on integration into a back end CRM system (now this one may be an ERP system, but I happen to be a CRM guy). It starts off very simple and gets additional bells and whistles, which I included into the scenario using some of Marks thoughts that he came up with during our continued discussion.
Assume a food retail chain is running a CRM system and has its product catalogue online on their transactional web site and on Facebook, probably also transactional there. Their CRM strategy includes a seamless brand experience and the provision of additional value to customers. This leads them to providing a commented catalogue of receipts with user comment options and a news section about food relevant topics on their sites and on Facebook. As part of their technology strategy the retail chain also provides downloadable apps for e.g., iPad, iPhone and some Android devices, which are data-fed from their CRM system.
The retailer also offers a shopping list application - on Facebook, on their web site, and as apps for the same devices. The shopping list can be shared between me and my wife and stays synchronized between the channels, because it is hosted on the retailer’s CRM system that drives the whole system, or on a system that is connected to the CRM system. My wife and I, whatever device we use, wherever we are, and whenever we think about it, can add items to our shopping list. We can add products and just product categories like bread, joghurt, ... from the catalogue or from the catalogue of receipts that give us inspiration.
In store we get presented with matching products, promotions and cross-/upselling opportunities. These are generated based upon the shopping list, our previous shopping, explicitly stated preferences, our choice of meals, and derivations from our reactions to cross- and upselling attempts. Products that are maintained as categories only receive suggestions with real products based upon information that the company has about us. Unavailable products are substituted according to our profiles.
We would use our iPhones rather than iPads in the shop as it is somewhat cumbersome to handle an iPad while pushing the cart and also handling our three little kids – although the iPad is so easy to use that we could have our 4 year old manage the shopping list in store.
This is the bread-and-butter scenario that only needs me to check in to the store. How about making it even more interesting?
The retailer’s stated goal is to distinguish itself by providing value to customers. To accomplish this they provide the ability to build nutritional plans for families. To support this the shopping list app offers the creation of the shopping list based upon the nutritional plan, taking preferential criteria, like “Italian”, “Rice”, “healthy”, “low calories”, … into account. As we are currently pursuing a low fat, low carb diet the system builds us the week’s menu for the family and builds our shopping list, considering our previous shopping behavior and other stated preferences. Of course, both of us, my wife and I, do some changes to this generated list. It also offers a dashboard that allows us to monitor our weight objectives against our plan.
For a further phase the retail chain is considering to team up with a fitness studio chain to plan and support a diet that supports our overall physical fitness goals and and regularly establishes a fitness status using the data that gets collected at the fitness studio’s machines.
Still not enough? So let’s also use the advanced location services of today’s smart phones.
As the store "knows" that we are there, where we are in the store, and what we want to purchase, the in-store system can guide us the shortest way through the shelves (would be the right thing for me) or take some detours to lure me into buying some other groceries (works well for my wife).
At the checkout we pay using the phone. Since the store is also offering Fuel Dockets (fuel vouchers giving a discount on the fuel price at a cooperating brand of stations) the docket gets loaded onto my phone for later usage at the filling station. As we are members of the store chain's loyalty club my account gets updated immediately and I get my new account balance displayed on my device, which is far more convenient and offers more privacy than using the customer facing screen of the checkout.
The checkout process is powered using near field technology.
This could be added upon further, just consider the groceries being delivered to my gym, so that I can pick them up after my training, if I wished so …
Why would a retail store that usually is short on margin go through these lengths, even the investment that is necessary for the bread-and-butter scenario? The answers are loyalty and identification of the customer. An implementation like this would greatly improve upon the shopping experience, and the perceived service level of the retailer. The chance of customers continuing to buy at “their” retailer instead of another one is greatly improving. Secondly: Retailers generally correlate purchases to target customer groups. Using the described scenario they can do this even better – they actually could identify their customers without a formal registration (e.g. using the phone identity). With this cross- and upselling attempts will be more successful, which adds to revenue and margin.
The fitness studio’s benefits would lie in increased sign-up rates, getting a better insight into their customers’ lifestyles and possibly in a more attractive supply contract for food items and drinks sold in studio.