We’ve rounded up some effective approaches to the customer experience and to logistics, looking at Top500 retailers for examples of best practice.
1. Get to know your customers
Retailers that want to meet their shoppers’ needs are going to great lengths to learn more about how they can do that.
Sainsbury’s [IRDX RSBR] aims to gain a better understanding of its customers through its recently-launched Living Well Index. It questioned 8,000 people for the index, which covers ground from health and the home to finances and work. Its findings explored further in the strategic overview, are set to influence the supermarket’s strategy in its mission to serve customers wherever, whenever and however they want to shop. “The results of this,” said Sainsbury’s, “combined with our customer data, will influence some of the choices we make around how we best serve our colleagues, customers and communities in the future.”
Halfords [IRDX RHAL] too is setting out to learn about its shoppers. It questions 10,000 customers a week in its Give us a steer survey. The aim, said Halfords in half-year results to 29 September 2017, is to give “a more complete view of our customers, so we can become more relevant in their lives”.
2. Encourage loyalty
Loyal customers are more likely to buy, and never more so than when they’ve already paid for unlimited delivery. Amazon Prime introduced the concept of a subscription membership scheme whose benefits include free next-day delivery. Now retailers from groceries to fashion, from Ocado and Tesco through to Next and Asos [IRDX RASO], offer paid-for subscriptions. Benefits of these clubs typically include early access to sales and special discounts as well.
Game Digital [IRDX RGME], however, has taken its own gamified approach to the loyalty card. Its long-standing Game Reward loyalty scheme has been operating for 20 years and in its latest financial year, 4.5m Game Reward members shopped with the retailer, with 65% of transactions linked to the loyalty scheme in the UK and 78% in Spain. In May, Game added an upgrade with the launch of Game Elite, a subscription-based membership scheme for UK customers, which offers higher numbers of points on purchases. So far more than 60,000 memberships have been bought and the retailer says it has“helped recruit new customers and increase the frequency and spend of previous loyalty scheme members”.
Pets at Home [IRDX RPAT] said in full-year results, to 30 March 1917, that building a VIP App had increased the swipe rate of the card to 68% of store revenues, from 64% the previous year.
3. Offer the options your customers want
Delivery choices used to be limited to ‘standard’ – up to a week – or ‘express’ – within a day or so. Today, delivery information pages on many websites require significant scrolling, with the options from top retailers extending to evening, nominated day, nominated time, next-day, same-day, Saturday or Sunday. Prices vary, with premium delivery options understandably proving quite expensive. Currys [IRDX RCUR], for example, goes from free for standard delivery (within five working days) up to £29.99 for a four-hour timed slot next day for large items. At Argos [IRDX RARG], which stands out for its speed of service, timed next-day delivery for large items is £24.99, while at Halfords [IRDX RHAL], ‘bulky items’ are £39.99. Accessorize [IRDX RMNS] has fewer options, with a standard at £3.95 (free on orders over £40) or £5.95 for next day or weekend deliveries.
Customers are often satisfied with more basic services, as highlighted in the recent eDelivery white paper, Are you delivering what your customers want? While 31% of consumers surveyed cited next-day delivery as their most popular option, 26% were happy with delivery within three days and 22% content with delivery between three and five days. Take-up for Sunday or evening delivery may be low but if carriers are happy to provide such services, then there’s no reason not to offer them to customers – at a price.
4. Use new technology to improve the customer experience
Chatbots came into their own during the course of 2017, as more retailers used them to talk to customers. The machine learning-based technology enables traders to serve their customers out of staff hours – when many shoppers are looking to buy – and to handle routine enquiries, leaving staff free to handle more complicated issues.
Very [IRDX RVER], part of the Shop Direct Group [IRDX RSDG], claimed first mover position when it unveiled the Very Assistant a year ago. This chatbot, developed in-house at Shop Direct, sits within the Very app to respond to customers’ enquiries about orders, delivery and payment. More recently The Entertainer [IRDX RENT], a Top150 retailer in IRUK Top500 research, teamed up with the Hong Kong office of Red Ant [IRDX VRAN] to add Santa Chat to its website for Christmas 2017. Shoppers of all ages can have a live chat with The Entertainer mascot Jack, decked out as Santa, about the toys and games they might give this Christmas. They can also share a Christmas joke, ask Santa a question or even get some tips for Christmas dinner.
Santa Chat starts by asking two profiling questions about age and price range, then uses natural language processing to answer incoming questions using the most relevant response from a fixed database of questions. Human helpers also help train the response. Rob Wood, head of online and digital at The Entertainer, said: “We wanted something that was fun, relevant and genuinely useful, and Santa Chat is all three. It also paves the way for future connected retail initiatives.”
5. How quickly do your customers really need their stuff?
There has been much talk of ‘one-hour’ deliveries in recent years, with the likes of Shutl [IRDX VSHT] offering a 90-minute service in urban areas. Sometimes, this kind of service adds value. River Island [IRDX RIVR], for example, offers Shutl as an option for customers using click-and-collect, which is a good tactic since unexpected last minute problems can occasionally prevent a shopper from collecting a vital item.
A study by McKinsey & Company, Parcel delivery: the future of the last mile, found last year that while around 23% of global consumers questioned would pay a premium for same-day delivery (€3 or US$3), only 2% were willing to pay much more than this, while around 70% would still opt for the cheapest delivery option. As McKinsey says: “This is somewhat surprising, as many startups and some large e-commerce players target precisely this small niche with their offering.”
If instant delivery is seen as a key differentiator, then it is likely that those offering such services will have to bear the bulk of the cost – rather like Schuh with its free Shutl option. ‘Losing’ the cost of delivery within your cost structure may be viable for small numbers of deliveries but McKinsey predicts that same-day and instant delivery will probably reach a combined share of 15% of online sales by 2020 and “significantly grow further beyond this date”. Is instant delivery really such a vital key differentiator? Or is it just an option that’s nice to have?
6. Enable shoppers to speak their orders
Shoppers are now getting used to the idea of ordering by voice, using assistant devices such as Amazon’s Alexa [IRDX RAMZ] and Google Home [IRDX VGOO]. Amazon has pioneered the use of voice ordering and is fast-expanding Alexa’s capabilities. When Amazon unveiled 2017 third-quarter results in October, founder and chief executive Jeff Bezos outlined new functionalities, including integration with BMW. That shoppers are enthusiastic about this approach is clear. Bezos said: “Customers have purchased tens of millions of Alexa-enabled devices, given Echo devices over 100,000 five-star reviews, and active customers are up more than five times since the same time last year.”
Other retailers have also enabled voice ordering.
Tesco [IRDX RTSC] has teamed up with Google Home to enable users to add things to their Tesco basket using voice, while Ocado [IRDX ROCA] has its own app for Amazon Alexa. Lawrence Hene, marketing and commercial director at Ocado, said at the time of the app’s launch: “Grocery shopping should be quick, easy and convenient. Using voice technology, we’ve made it even easier by developing our new app that will enable our customers to add to their Ocado baskets without lifting a finger. Consumer demand for increasingly convenient ways to shop is growing rapidly and we’re excited to be the first UK supermarket to offer this, making customers’ lives ever easier.”
7. Streamline click-and-collect
Four out of 10 (43%) shoppers experience problems with their click-and-collect orders, according to a recent report, JDA & Centiro Customer Pulse 2017. Long waiting times due to a lack of staff is the biggest pain point, followed by staff unable to locate items in a store and the lack of any dedicated area for collecting goods, which leaves shoppers queueing at checkouts or trying to find an assistant. The study also suggests that 26% of click-and-collect customers made an additional purchase – either planned or an impulse buy – while in the store.
Click and collect is popular but it can also be an expensive option for retailers to manage since it is one of the fastest-growing areas for carriers, who must collect individual items from distribution depots and deliver them overnight to the relevant store for next-day collection. It would all be a great deal easier if store fulfilment were possible but that requires real-time stock data, by store, to be available on the website so that a shopper knows exactly where and when an item is available for collection.
This is possible though and a few retailers – around 16% of the Top 500 – do this. At Halfords, for example, you can check availability in your local store online and be told that collection will be available within the hour. You can pay in-store as well: a quick, easy and attractive option for shoppers.
8. Customer-centric logistics
A single view of stock powers logistics that are fast becoming more convenient for the customer. Shoe retailer Schuh [IRDX RSCH] uses its single view of stock to show shoppers whether the item they’re looking at is available at their local store in their size, can be picked up through fast click and collect, or how quickly it will arrive by post or at a local pick-up point. It also offers long return periods, with shoppers having up to a year to return their unworn, unwanted shoes in a move that must inspire trust in shoppers when they are considering where to buy.
Luxury retailer Burberry [IRDX RBUR] set out in its 2016-17 annual report how it expanded its single pool of inventory programme during the year. This, it said, “allows us to fulfil customer orders from stock in both hubs and stores and underpins improvements such as quicker delivery times, improved delivery information for shoppers buying online, as well as a new returns process.”
9. Make returns easy
Returns are the bane of any e-tailer’s business model. They’re expensive to process, often result in damaged goods and tie up stock in transit which might otherwise be sold to new customers. According to a JDA study, CEO Viewpoint 2017: The Transformation of Retail, 74% of retail CEOs believe that the cost of customer returns is eroding profits to at least some extent.
InternetRetailing researchers found that almost 75% of the Top500 will accept returns by post, although only 25% offer drop-off at a third-party location (such as Doddle or Collect+) as an option and just 40% allow returns to store. Even fewer (15%) provide some means of prepaid return and 23% will arrange to pick up unwanted goods from a home address.
For clothing retailers, good sizing charts or tools such as Fits Me and Virtusize can help, yet many shoppers will still order three of each item and return two once they’ve tried them all on. Debenhams [IRDX RDEB] has a neat idea as it moves to integrate mobile and store operations. In future, shoppers may be encouraged to use their smartphones to reserve a fitting room when they collect their ordered garments from a store. In this way, they can quickly try all items on there and then and choose which they want to keep. This saves shoppers the hassle of returning them later and ensures that unwanted items are quickly returned to stock.
10. Make it trackable
Customers like to know where their parcels are in the delivery cycle and, even better, roughly when they will arrive. It’s information that can also help reduce all those WIsMO – where is my order – calls to contact centres. Research by NetDespatch published last year found that when asked to identify key aspects of their delivery experiences, 33% of those surveyed put the ability to track their order online first, while 32% gave it as their second key factor; 25% put being notified of the steps in the delivery journey in pole position while for 27%, being given an exact time window for the delivery was the most important factor.
Many delivery companies have already taken such views on board and customers are regularly now emailed on the morning of the delivery day with a time window. Not that it always goes according to plan though. An hour after the previously emailed time window of a recent UK Mail delivery, all this shopper could find on the tracking information was “sorry we appear to be running late.” The parcel eventually arrived the following day. If you are going to provide tracking data, it really does need to be accurate and up to date.
11. Think global
A recent study from ReBound looking at the returns policies for some 200 fashion retailers, The Great Returns Race, found that only 18 of them tailored their policies to more than five geographic markets. Asos and Matchesfashion.com had policies appropriate to every market while Paul Smith covered 71 countries, but 86% of the 118 others who provided only one version of their returns model, tailored this message to the UK alone. Since, according to ReBound, almost two-thirds of fashion shoppers check the returns policy before buying, this lack of country-specific information could clearly be impacting cross-border sales. A significant number of these retailers also only accepted returns within the mandatory 14 day period – another deterrent to overseas shoppers who may need rather longer to return their goods.
12. Offer customers choice over how to get in touch
Every customer has their preferred channel for contacting a retailer with a question or complaint or simply engaging with them and today, leading retailers offer a wide variety of channels for them to use. InternetRetailing research shows that Top500 retailers offer a median eight channels, while Top100 traders offer nine. Facebook [IRDX VFAC], Twitter and the telephone are the most commonly offered channels but, the research suggests, retailers can stand out by offering a channel where few of their competitors do. Only 22% of Top100 retailers offer their customers the chance to engage via Snapchat, while 16% of the Top500 do. Retailers that offer the channels their shoppers want to use should see the benefit.
This feature first appeared in the IRUK Top500 The Customer Report and IRUK Top500 Operations & Logistics Report. To explore the reports further, and to find out more about Top500 series of reports, click here.
Photo credit: photon_photo (Fotolia)