Designing retail services from the customer’s point of view makes it more likely that shoppers will buy once, then return in the future. Chloe Rigby shares some practical approaches from Top500 retailers
1 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.”
2 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”.
3 Join up the data
New insights into customer behaviour, from how customers buy, to what they have bought, to what they might want to buy in future, are powered by data. By gaining a single view of the customer, retailers are able to give them the most relevant deals and offers. By adding a single view of stock to that, they are able to show customers the item that will reach them most quickly.
House of Fraser [IRDX RHOF] recently outlined how it was using a data visualisation approach based on MicroStrategy 10 to understand data from disparate sources including the Internet of Things. “By visualising data from IoT and other sources, we can optimise these dimensions, improve the customer journey and ultimately drive growth,” said Julian Burnett, CIO and executive director of the department store. However, as the date approaches for GDPR legislation to come into force in the UK in spring 2018, retailers will need to ensure that they have explicit permission from each customer to use their information.
4 Show the customer the most relevant items
Joined-up data enables personalisation, as retailers look to show shoppers the most relevant items on their website, or to flag them up in marketing emails. But what financial difference does such an approach make to the business? Fashion retailer Next [IRDX RNXT] recently set out some of the benefits from its work on personalisation, in half-year results to July 2017. It said that 40% of its customers at that point saw home pages tailored to their broad areas of interest – and that results had been encouraging, with “those customers viewing personalised home pages increasing their sales by about 1%”. It had also had success promoting other items that customers might like at the point when they see a selected item.
Other related functionality includes allowing customers to see their shopping bags across devices and saving abandoned baskets on site, promoting them via email and social media. However, it said there was much more to do: “Over the next 18 months we plan to deliver progressively more comprehensive segmentation of our customer base and increase the variety of website experiences depending on customer profile.”
5 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.”
6 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.”
7 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 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 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.
8 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.
9 Bring ideas to life
The gap between the idea and the reality has proved a common stumbling block for online shoppers over the years. Retailers have deployed a range of technologies, from virtual wardrobes to room visualisers. Topps Tiles, Ikea [IRDX RIKE] and John Lewis [IRDX RJLW] are among Top500 retailers that have provided room visualisation functionality. Beauty brand Sephora [IRDX RSEP] has also enabled customers using its app to see how make up might look on them using augmented reality Virtual Artist technology from ModiFace.
10 New ways of searching
Retailers are giving their customers new ways to find the item they’re looking for. Rather than relying on words to search, voice-controlled assistants are now processing spoken commands in order to find a retail product, while some traders are enabling image search.
Very offers a camera in its app to enable shoppers to take a picture of an item they’d like to buy and find a match in the fashion retailer’s range, while Amazon’s app also features image search.
When Asos also added visual search to its app, it enabled its customers to narrow down a range of more than 85,000 items. The move recognises the way its customers behave: 80% of Asos’ UK traffic is via mobile, as are 70% of its UK orders. “Inspiration can strike you anywhere and at any time – whether it’s a photo in a magazine, scrolling through an Instagram feed or even on a local street corner,” said Andy Berks, Asos’ digital product director, at the time of the feature’s launch. “Now, with just a couple of taps of their mobile device, Asos customers can capture that fleeting moment and instantly search our 85,000 product lines to find the item that’s inspired them – or similar – at just the right time.”
11 Enable the customer to subscribe
Subscription-based services are becoming very popular in the UK. By signing-up, the customer can ensure they always have the item they need at the moment they need it. The retailer can often offer a discount in exchange for the certainty of future sales.
Top50 retailer Pets At Home offers a subscribe-and-save flea treatment for dog and cat owners who are members of its VIP club. “The convenience of this plan has proved very popular with customers,” said the retailer in full-year results, “with subscription sales now representing 16% of our total licensed medicine revenues.” Pets at Home is planning to develop its subscription platform and offer more animal medicines in the future.
12 Track using KPIs
How do you know when it’s working? As well as tracking more obvious metrics such as average order value, lifetime customer value and repeat purchases, leading retailers track their customer-centricity specifically using KPIs such as Net Promoter Score and star-ratings from their reviews and providers. Thus, AO.com [IRDX RAOC] could announce this year that its UK website had a net promoter score of more than 80 and was rated 9.5 on Trustpilot.
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