May 2011 – Customer Experience

Strategy – We’re all customer-centric now

What does it take to put the customer first – and get them to put you top of their shopping list? Emma Herrod asks some of the experts.

MANY SHOPPERS travelling to a supermarket by car will get to a junction somewhere on their journey at which point they can decide to turn off one way to Sainsbury’s, for example,or the other to a competitor.So Sainsbury’s has to give shoppers a compelling reason to continue on their journey to its store by giving them a meaningful point of differentiation,according to the supermarket chain’s Chief Executive Justin King at a recent event on customer service. Of course, this sentiment is even more important when operating online, because switching to another retailer is much simpler on the internet.

Sainsbury’s has engineered a massive turnaround in its fortunes since King took the helm in 2004. In part, it has achieved this through its stance on ethical buying,which it uses as a key differentiator. For example, it sells Fair Trade bananas for the same price as regular bananas, at an annual cost to the supermarket of £4m; King says he can’t prove whether using bananas as a differentiator and picking up the cost works, but he claims to know it in his heart.And that seems to be where a lot of his customer service philosophy comes from – intuition.

It seems to be a Chief Executive’s prerogative to do things based on instinct and wait for the rest of the business to then prove them right. King says: “Qualitative data is easy to come by and understand.You have to trust it more and not spend money on quantitative data to prove it.”His philosophy is that you should always keep the customer in mind: how to create a great experience for them,how to understand and exceed their expectations.

Rebirth of service culture

His focus on putting the customers’ point of view first rather than the organisation’s is nothing new. In the 80s, the mantra was ‘the customer is king’; now, in the increasingly service-led UK economy,more retailers are adopting customer-focused service cultures.No doubt this move is being driven by customer satisfaction scores and the impact on the bottom line of retailers such as Zappos.com and the John Lewis Partnership.

We are now seeing a fundamental change in attitudes towards customer service and a reawakening in the boardroom of UK plc of the idea that more attention needs to be paid to consumer needs.The factor driving that renaissance is consumers themselves. Ultimately,however, that customer focus has to be driven from the top with full engagement from employees throughout the whole organisation.

“Customer service is being talked about as a driver of the business in the boardroom,”says Jo Causon, Chief Executive of the Institute of Customer Service (ICS). It is also being seen as a key driver of profit. Research by the ICS into customer satisfaction levels in the UK reveals that,on average,consumers are happier with suppliers than they were three years ago. If you read its list of companies that lead the UK in offering world class customer service it is easy to understand how and why.

  • John Lewis
  • Waitrose
  • BUPA
  • Marks & Spencer (food)
  • Lloyds pharmacy
  • Marriott
  • SAGA Holidays
  • Enterprise Rent-A-Car
  • Boots
  • P&O Cruises

All of these companies are marked by shoppers as part of the ICS’s annual Customer Satisfaction Index. They are rated in areas such as: Professionalism (for example, staff appearance and competence); Quality and Efficiency (reputation,product or service quality); Ease of Doing Business (continuity of staff, information/advice); Problem Solving (complaint handling and outcome);Timeliness (speed of service, delivery).

On a scale where companies have to score more than 80% to be classified as world class,UK food retailers averaged a customer satisfaction level of 80.8% and non-food retailers 80.3%. Utilities companies,which have historically trailed behind on satisfaction,came in at 71.9%.

Top 5 food retailers

  1. Waitrose – 88.9%
  2. Marks & Spencer (food) – 87%
  3. Iceland – 82%
  4. ASDA – 81.7%
  5. Morrisons – 81.1%

Top 5 non-food retailers

  1. John Lewis – 88.9%
  2. Lloyds Pharmacy – 86.5%
  3. Boots – 84.2%
  4. Marks & Spencer – 83%
  5. Argos – 81.2%

Source: ICS benchmarking report, January 2011

Mind the gap

Online retailers are also improving their customer satisfaction ratings, but the gap between the best retail ecommerce sites and the rest “is huge and possibly widening”, claims customer satisfaction analysis firm ForeSee Results.While the year-onyear increase in satisfaction is small in the aggregate (as measured by ForeSee Results’ annual study), individual retailers have seen big gains.The best and biggest online retailers are typically providing a much better online experience, and smaller retailers are falling further behind.

Top 10 ranking UK online retailers for customer satisfaction

  1. Amazon.com
  2. Amazon UK
  3. Play.com
  4. John Lewis
  5. Marks & Spencer
  6. Argos
  7. Asda
  8. HMV
  9. Lovefilm
  10. Apple

Source: ForeSee Results

“To the general public a small point increase [in customer satisfaction score] may seem insignificant. However, for the Top 100 American retailers a one-point change in website satisfaction was found to predict a 14% change in the log of revenues generated on the web,” says Larry Freed, President and CEO of ForeSee Results.

Improved customer satisfaction affects the bottom line, through positive behaviour such as increased loyalty, propensity to recommend a site and future purchasing patterns. Poor customer service has a similar – but negative – effect. In 2009, a Datamonitor/Genesys study estimated that the annual cost of poor customer service to the UK economy was £15.3bn.Across all companies, business abandoned and lost amounted to £5.2bn,with customer churn and defections racking up £10.1bn.

While shoppers are happy to switch to different energy providers, financial services suppliers or retailers, they are willing to pay more for a better customer experience.A survey by RightNow Technologies reported that 84% of respondents were willing to pay over the standard price for goods or services to ensure a superior customer experience.Of those consumers that said they would pay more: 88% would pay 5% or more; 62% would pay 10% or more, 25% would pay 15% or more and 11% would pay 25% or more.

“The figures show that despite recent economic challenges, consumers still value a better customer experience and are willing to pay more to guarantee it. Businesses should take note and spend less time and energy on product price wars that devalue their brand and concentrate more on providing a better experience,” says Greg Gianforte, CEO and Founder of RightNow Technologies.

Rewarding the right behaviour

Customer satisfaction levels are affected by the organisation’s internal culture.According to Professor Moira Clark,Director of the Henley Centre for Customer Management,companies operating in a truly customer-focused way need to have“systems, procedures and rewards in place”. If you reward staff for sales, then they will concentrate on sales, but if you reward customer-centric behaviour then that is what you’ll get. It may be that you reward them for good customer service, satisfaction or a net promoter score above a certain level.

It takes only one individual to promote a customerfocused culture in an organisation,but that person must be at the top and must lead with a top-down approach to customer service that engages all employees. Employee engagement is essential since,according to the Chartered Institute of Personnel and Development,70% of engaged employees have a good understanding of how to meet customer needs,whereas the figure for disengaged employees is only 17%. Furthermore, research by the Hay Group has revealed that engaged employees generate 43% more revenue.

Employee engagement is essential and it has to start at the recruitment level, believes Clark.Online and telephone bank First Direct, for example, is known for its good customer service, something it achieves by recruiting people with an aptitude for the job,and then training and helping them to develop the necessary skills. It gives them the tools to do their job properly and empowers them to do it. Importantly, the company has a culture in which the customer really matters.“Without such a culture,even the best service people would wither,”says Clark.

It’s interesting that at Sainsbury’s the same director is responsible for customer service and for the organisation’s employees,though the HR function.

This synchronisation of the organisation and its customers’ needs is echoed by Natalie Molina, Head of Customer Care Contact Centres at Sainsbury’s. She explains:“Customer satisfaction is the lifeblood of Sainsbury’s online groceries and non-food services,but it is virtually impossible to formalise procedures to cover every eventuality, because no two customers are alike.That’s why we rely on Teleperformance’s customer service advisers [to whom contact centre functionality is outsourced] to provide a personalised response and determine the optimum solution for our customers – and our business.”

Thus every Sainsbury’s employee is considered to be frontline in terms of customer service, whether a shopper interacts via a self-service mechanism such as online or personally with a member of staff. Wherever the touchpoint occurs, the right message and experience must be ensured,every time.Sainsbury’s says its ethos is that each customer is an individual and needs to be treated as such, wherever and however they decide to interact with the organisation. Indeed,self-service is a form of customer service since the customer has chosen to use that method of interaction.“With self-service it comes down to how well it works,” says Clark.

Going the extra mile

When it comes to exceeding customer expectations, examples are usually based around an individual being empowered to do something outside of what would be deemed normal processes.“There are moments of exceeding customer expectations in all companies,” says Causon.She gives the example of a frantic traveller who had left a bag,containing their passport,on a bus while travelling to an airport. The bus company sent a bike to meet the bus and take the passenger’s bag to the airport so they wouldn’t miss their flight.

Another example, given by NickWheeler, founder of Charles Tyrwhitt Shirts,was the customer service agent who dispatched someone’s shirt on a £320 motorcycle courier journey because the company had failed to get it to him as promised by the normal delivery channels and it was needed the following day for his wedding.

However, as Clark points out:“When you are continually meeting customer needs, customer expectations naturally rise.” Customer expectations overall are getting higher; shoppers can see what retailers such as John Lewis are achieving, so they believe that all companies should be able to deliver the same level of service.As far as exceeding expectations go, she says:“We’d all be grateful if companies just met expectations and did so consistently.”

So,while retailers are busy pushing forward, innovating and evolving online, via mobile and in the high street, they still have to get the basics right and put the customer first.Consumers want to be treated as individuals – but not in a way that requires intrusive data gathering.They want to be helped when they need it and left alone to browse or buy when they choose to shop in that way.

Consequently, retailers need the empathy to understand individual consumer’s requirements at every single touchpoint while taking into account the behaviour and needs of the ‘customer’as a totality of their shoppers.Can that be achieved by technology alone,or through processes or systems? These methods certainly have a lot to bring to the customer service table, but for those times when something that bit extra is required,when expectations can be exceeded,a human touch is required and this means one individual interacting with another.


Marketing – Standardising ECommerce

Seven out of the ten top retail sites in the UK have opted for the same type of navigation – mega-menu drop-downs from a top navigation bar. A different list of seven also have large image rotators occupying all or most of the top section of the home page. Conversion optimisation expert Dr Mike Baxter asks whether the era of standardisation is finally arriving for ecommerce.

MEGA-MENUS, as named by Jakob Nielsen, are different from ordinary drop-down menus since they have multiple lists of links, clustered by subcategory or theme. Hovering over the ‘Baby & Child’ category in the John Lewis mega-menu example reveals lists of links to ‘Baby & Nursery’, ‘Clothing’ and ‘Footwear’ sub-categories, as well as a ‘Highlights’ theme.

The advantages are clear for large sites.Argos, for example, is able to provide links to 285 subcategories/ themes on every single page of its website via 14 top-level navigation tabs. Each of these sub-categories/themes still contains an average of 210 products, so mega-menus don’t, on their own, solve the problem of navigation through a large site. But, then again, there isn’t a simple way of organising 59,712 links to products as the Argos product range requires.

The value of mega-menus is not, however, limited to large sites – there are advantages for small sites as well.The example from worm.co.uk shows how mega-menus can be used to give customers different routes by which to explore a more modest product range – shop-by-category, shop-by-price, shop-by-location, shop-by-brand and shop-by recipient.

Mega-menus offer three additional customer experience benefits. Firstly, they are a great way to guide the customer’s search. Having links grouped into relevant clusters with a descriptive header above each draws the eye to content of interest.

Secondly, mega-menus give customers a deeper understanding of the range of products on offer throughout the site – the greater number of navigational links and the better organisation and presentation of those links make it more likely that customers will decide correctly whether or not the product they are looking for is available from the site.

Thirdly, the content of the drop-down menu provides an instant way to find out what the retailer actually means by the category label they used in the top navigation bar.Without this context, the customer can be left uncertain and confused by category labels.Where do I find digital cameras – Sport and Leisure, Entertainment or Electricals? Therefore, mega-menus guide and contextualise customer journeys more effectively as well as making them shorter by exposing more links on every page.

Mega-menu-let downs

Mega-menus seem, therefore, to be genuinely advantageous for customers, in several different ways. (Although I doubt the benefits of megamenus for customers unable to navigate visually – I suspect they might hinder rather than help nonvisual browsers.) Mega-menus are a little more difficult for retailers to manage, although this simply takes more effort. It’s not rocket science. Where those advantages risk being lost is in the details of implementation – many retailers continue to make elementary mistakes with the execution of mega-menus.Whilst there are too many to describe in detail, here are three of the commonest mistakes:

Having too many links within a list: more than half a dozen links in a list will force customers to scan the list repeatedly to work out what they need to click on.As an example, Marks & Spencer have 23 links in Shop by Category under the Women navigation tab. Handbags, purses and jewellery all feature within this list, whereas scarves, gloves and belts are nowhere to be seen – unless you think to click on Accessories.An exception to this rule is where the categories have mutually exclusive content, such as lists of brands.

Having drop-down lists respond instantly to mouse-over: A brief delay, of between 0.2 and 0.5 of a second, in showing and hiding the drop-down panels prevents the annoying flickering on and off of panels when the mouse is moved across the navigation bar. It also avoids the ‘diagonal effect’ – the inadvertent hiding of the target drop-down panel when a customer moves diagonally to a link and, in that movement,moves their mouse over the corner of the adjacent navigation tab.

Having headers above each list of links that either is not a link or does not look like it is a link: Giving customers direct access to deep-linked sub-categories is good in most circumstances, but sometimes the customer will not know which of these sub-categories they are interested in. Instead they will want to browse the parent category – e.g. all small electrical appliances, not just toasters.

Justifying image rotators

Image rotators, on the other hand are a lot more difficult to justify. The obvious advantage is that they enable more content to be shown on the home page without the need for scrolling. This, however, assumes that customers stay on the home page long enough to see the images rotate – rotate at all, that is, far less rotate through all the available images.

Analysis of the top 7 sites with image rotators (Argos, B&Q, Currys, John Lewis,M&S, Play, Tesco) reveals that they have between 2 and 5 images on rotation, each being displayed for between 5 and 8 seconds each. Currys has the longest full cycle – customers would need to remain on the home page for 24 seconds before the final image in the rotation was shown. Home pages with lots of content (e.g.many different products or offers) can persuade customers to remain on them for over a minute. This, however, is the exception. In my experience customers remaining 10 to 20 seconds on a home landing page is more typical.

Are image rotators, then, primarily about serving the interests of the customer? Or, could they be more to do with the interests of the web marketing team that wants to show more than one of its shiniest toys on the home page? Could they possibly be accommodating the needs of the marketing team that cannot agree on the single product or lifestyle image that best captures the essence of the brand or proposition? Or, could they even be a canny way of offering home page real estate to a greater number of suppliers?

All of which raise some fascinating questions about the apparent surge in standardisation of ecommerce. At a time when web analytics is almost universal and split-testing is becoming more widespread,we might wistfully imagine that the voice of the customer is finally being heard. Perhaps it is only a matter of time before the financial justification is found for everything that is good for customer experience – before the principle is proven that happy customers are indeed the most profitable customers.This was the economist’s dream for ecommerce.A world of infinite choice, serviced through a frictionless supply chain and leading to all economic needs being met at the minimum possible price.

So, is this what standardisation of ecommerce heralds – the path to the promised land of economic optimisation? No, of course it doesn’t! If we were on that path, we would not only have chosen mega-menus for navigation, but we would also have implemented the details better so they caused fewer customer experience problems.And, whilst there is no way of knowing whether image rotators are more about convenience for the marketing team than delight for the customer, they remind us that no matter how good our measurement and optimisation processes become, they remain an imperfect mirror upon the actual experience of our customers.


Operations – Neuroscience and the online purchase

Guy Redwood, Managing Director, SimpleUsability, explains why it pays to get emotional about your online brand.

WHEN WE TALK about emotional engagement,we don’t mean ordering an‘I heart [insert your brand logo here]’ t-shirt and giving the CEO a bear hug,we’re referring to the scientific study of emotions and how they have the starring role in the purchase decisions made by your customers.

Have you ever asked yourself how your users feel while they are using your product or your website?

It makes intuitive sense that if your users have a positive emotional experience on your site they’re more likely to convert from browsers into buyers.Do you know exactly what on you site is converting using emotional equity,and what is failing?

We are irrational beings,and nowhere more so than when we are online and (believe it or not) when we are parting with cash.In fact neuroscientists argue that emotions drive between 90-99% of all decisions we ever make.We have evolved a highly sophisticated subconscious brain that effortlessly deals with the millions of inputs we perceive every second before delivering it to the attention of our conscious brains, via ‘gut’emotions.Yet the most widely used methods in usability testing often involve asking a user’s conscious brain why it did something. The truth is it simply doesn’t know.

Why Egg?

The problem with traditional research techniques is that they rely on our conscious minds, the parts that are subject to cognitive biases and social influences. To find out what is really pushing your customers’ buttons you need to be able to access their raw, unfiltered emotional reactions to your product.

What is Egg?

Electroencephalography (EEG) is the science of measuring brainwave patterns produced by the brain in response to internal or external stimuli. Every event, behaviour or feeling, from hearing your name called, being immersed in a video game to growing frustrated with a tin opener produces millions of tiny electrical impulses as brain cells communicate with each other. This activity is picked up by electrodes placed directly on the scalp. It is then amplified and processed into measures of real-time emotional states and reactions that can be visually graphed and mapped.

Traditionally, usability testing has been employed as a conversion rate optimisation tool by etailers, helping them iron out pitfalls and craft better user journeys. In recent years the addition of eye tracking technology has allowed us to go further by observing what users naturally do as opposed to what they think they do, revealing further opportunities to capitalise on.Whilst eye tracking alone lets us observe what a user actually does we cannot infer what was felt by a user.

Retrospective interviews with the user (where their own eye tracking is played back to them as a reminder) go some way to revealing what they were trying to achieve at that time.Whilst they can give us an overall expletive as to how they felt when a payment form wiped their billing details for the fourth time,what no human can recall is the granular detail of emotions as they were building,and what exact part of the site or journey triggered them.

EEG – The new kid on the usability block

So, how do you know your site is pushing the right emotional buttons? The sophisticated measurement system offered by Electroencephalography (EEG) taps directly into electrical activity arising from the brain. Using complex algorithms and models of human behaviour from modern neuropsychology, key emotional markers of mood and emotional experience can be extracted.This represents a previously unavailable opportunity for marketers, advertisers,developers and more to see the actual emotional impact of their product,promotion or design and,as a technique it’s set to join up the subconscious dots.

Until recently, most EEG solutions have been the preserve of academic or medical institutions,being prohibitively expensive and too inflexible for commercial use.Also they haven’t allowed for a particularly comfortable or natural experience for the participant.Recent gains in this technology mean that EEG can now be conducted quickly and cost effectively using the very latest in unobtrusive, wireless hardware.

Users no longer have to wear cumbersome contraptions with dangling wires hooking them to machinery,nor sit rigidly in an electrically soundproofed room.SimpleUsability’s system uses a wireless headset that is light and easy to calibrate and lets the user move around freely.Sixteen individual raw signals are synthesised in real time into the useful indicators of frustration,excitement,long term excitement and engagement.This allows users to complete a task without being constantly asked how they are feeling and provides a crucial extra layer of data to traditional usability studies conducted with eye tracking.

It’s all very well tracking a person’s emotion along a period of time,but what caused that emotion? The only way to remedy a negative emotion or capitalise on a positive one is to understand where they were looking at that moment,or the processes building up to that point. Eye tracking is a natural wing-man for EEG technology and the complimentary way the two fit together means that what eye tracking with retrospective interviews can indicate, EEG can now document.

Engagement: Having a smooth and non-eventful experience isn’t going to be enough to embed memory of your product in the minds of consumers; for this you need genuine engagement,meaningful (not just passive) interaction.This measure relates to stimulation and interest and can indicate periods of concentration or novel experiences that recruit more mental resources to process.

Excitement: This is a measure that relates to psychophysical arousal with a positive value,much the same as is related to heart rate increase,pupil dilation and sweat gland stimulation.This can be measured in two ways; tied to specific events (short term), or indicative of a more stable emotional state (long term).

Frustration: Having a gauge of your customers’ levels of frustration when engaging with your product or service is invaluable in guarding against those negative states and experiences that will devalue your brand,or stick stubbornly in long term memory. This measure can often correlate with anger, giving you a useful yardstick to avoid potential pitfalls.

Big Bathroom shop

On behalf of the Big Bathroom Shop (bigbathroomshop.co.uk) SimpleUsability invited users who were looking to install a new bathroom in the near future to take part in usability sessions including Emotion Response Analysis with eye tracking.We used natural tasks that allowed users to browse freely for their requirements of a bathroom so that a true reflection of the emotions found in a typical user journey could be observed.

There were three key emotions that we were interested in observing on the Big Bathroom Shop. These are charted in real-time graphs allowing observers an instant view into the users’ experience as it unfolds. Each emotion is listed below with the main findings from the research:

Engagement

Users became more engaged within the process of browsing multiple products when there were bold colours within the room view. This could be from strong wall colours to accessory colours keeping users’ attention.

When different types of photography, particularly the use of a plan view, users often hesitated and engaged with the layout.

We saw users become increasingly engaged when moving towards choosing their bathroom. Users started to look closer at the detail and were looking for clues related to their requirements such as their perception of how easy a shower enclosure may be to clean.

Excitement (Short or Long Term)

When users first discovered the relevant product that they were looking for there was a peak of excitement. This can help to identify when the user realised that the company catered for what they were looking for.

There was a drop in excitement when actual photographs were replaced with black and white generated images. This affected the experience of browsing for this user and narrowed her choice.

Frustration

Users generally reacted positively to the website but became frustrated when loading times were slow.

Users were often making choices between products and frustration peaks could be seen here. Tools to help users compare, contrast and choose can keep frustration to a minimum.

Conversion rate optimisation

The technology has the flexibility of allowing site owners to quickly benchmark a sites’overall emotional performance (e.g.compared to the experience on a competitor site) but also to focus in on the emotional impact of individual parts of the user journey (e.g.checkout,browsing photography etc). Emotional Response Analysis (ERA) allows you to pinpoint exactly what’s working and what isn’t so that you can focus time and spend A/B testing more efficiently. Ultimately reaping the rewards of crafting an experience that helps you stick in customers’ subconscious, in the right way.


IT – Optimising the customer experience

Low conversion rates suggest that even the smartest websites lose customers at crucial points throughout the purchase journey. Is the answer more technology, or optimising what you have? Alison Clements explores the options.

WE’RE STILL learning how to deliver salesdriving customer service on websites,and even measuring success or failure is a new science. Recent research from web agency House of Kaizen found that nearly 40% of marketing directors and MDs responsible for online businesses measured success by the number of visitors who arrived on the website,while only 30% looked into conversion rates, and only 9% measured and tackled‘bounce’rates – pinpointing where people were dropping off the site. “Marketers seem comfortable with dealing with the beginning and the end of a user journey but are out of their zone regarding the crucial middle bit,” says House of Kaizen managing director, Ivan Imhoff.He says the average bounce rate is 50%,“which amounts to wasting 50% of your marketing budget”.

The research also revealed a propensity to prioritise website aesthetics over relevancy to the customer when it comes to spending to improve the business.“Nearly 65% of marketers believed that to increase sales revenue they would alter the creative design of their websites,with only 37% choosing conversion optimisation,” Imhoff explains.He advocates taking the scientific approach to reducing bounce and optimising sales, in particular with ‘split testing’ to validate the worth and effectiveness of website technology.

“Even big name etailers seem to make it as complicated as possible for customers to understand delivery and return policies,and search results can be nonsensical and frustrating,” says Imhoff.“Retailers like Asos and Amazon get it right because they simplify and facilitate the user journey and keep the additional features relevant.Amazon’s 1-click purchase option is brilliant, for example,and if you look at Asos the pictures are in context, there are good search filters to find products,and best of all is how they take the anxiety out of the shopping experience with free delivery and free returns clearly communicated.”Many retailers believe that related item functionality is crucial, to the point that they put it everywhere on the website including the checkout process, notes Imhoff.

Aesthetics or Performance

There’s a huge gravitational pull for etailers towards more and more rich content,and the danger is that this undermines functionality, possibly even reducing conversion rates if performance slows.“Etailers have to consider the trade-off between the aesthetics they want to offer and the performance functionality,” says Larry Haig, retail sector manager for web performance specialist Gomez.“You’ve got to start out by offering what your particular audience wants and needs, testing ongoing user behaviour,but also constantly measuring your site’s performance to spot problems.”An increase in page response time from 2 to 10 seconds increases page abandonment rates by 38%.

Slow page-loading speeds are disastrous, while glitches such as a small displacement of an image obscuring a search menu can lose you customers instantly.“With increased use of mobile devices the ability for etailers to deliver consistently good performance and usability across all channels will be a massive challenge,” says Haig.“As websites become more complex, featuring richer applications, reaching a wider audience in newer ways, the need for deeper,more insightful metrics will continue to expand”.

Highly successful websites achieve around 14% conversion rates,while thousands of others are stuck around the 2% mark,so the industry rule of thumb goes. It seems success is coming from engagementenhancing features,but only when the overall site is robustly executed and constantly tested for customer relevancy, reliability and ease-of-use.

“There are so many innovations in ecommerce,but the fundamental thing to get right is the ease of the user experience,” says Chris Gorell Barnes,chief executive of web video specialist Adjust Your Set.He says that the costs involved in web video – such as that produced for Marks & Spencer, Lastminute.com and Thomas Pink by Adjust Your Set – are justified if conversion and other performance measures improve.M&S recently revealed that customers who watch M&STV view three times as many products on the website and spend 30% more on average compared to those who don’t.Also the returns rate is 30% lower when customers have purchased after watching the footage.

Additional design features must not clutter or distract from the purchase journey either.Gorell Barnes explains that usability has been carefully managed for M&STV, with the content hosted remotely by Adjust Your Set, so it does not add extra weight to the existing web pages.“Our system also ‘sniffs’what kind of bandwidth the customer has on their PC so if they have a slow connection they are sent smaller files that won’t undermine the experience,”he says.“It’s important that we measure what elements of the video work best,and who is watching what and for how long.Because the service now displays featured products for sale alongside the video footage people can click through to buy,making it very easy to track conversion rates.”

Video has proved itself as a powerful platform to engage customers in a relevant way, said Simon Wood,M&S head of operations.“Building on the 6 million minutes of content already viewed since we launched the online TV channel, the refreshed look and feel of M&S TV will continue to drive consumer engagement in the brand,”he says.“The fashion shoots and celebrity interviews featured on the channel allow customers to see how our clothes would look and move in real life.”

Some would argue that cash spent on features that boost customer acquisition will lead to higher conversion rates in the long-term.“Lots of sites are turning to social media – building an online community – to drive traffic their way,and get people signed up to special online services,”says Craig Hubbell, EVP of media services,at PlayNetwork which provides entertainment media for brands.By facilitating web radio and other mixed media services,PlayNetwork is helping brands like Hollister build customer engagement and promote themselves in the web space.“If you offer free radio on your site, or free music downloads you can create an emotional connection that will boost the brand, and also generate regular repeat visits, providing opportunities over time to generate sales.” Hubbell feels that with the ascent of mobile, localised offers and marketing communication around entertainment media will be a big driver of traffic, signing like-minded people up to become regular users.

But vast numbers of web shoppers who click banner ads,or respond to emails to investigate greatsounding offers are instantly disappointed,and bounce.“They get frustrated when links don’t work or page downloads are painfully slow,” says Haig at Gomez.“If customers can’t immediately see their way to the discount or the ‘just in’ products they’ve been alerted to, they’ll disappear.You have to avoid getting them there on false pretences. Focus on delivering on promises.”

Can having avatars – or real assistants help? Software company Vee24,is working with clients including Land’s End,Thomson Holidays and Toyota to provide the web equivalent of a human shop assistant,where customers click on a link for live video conversation with a customer services agent if they get stuck on the purchase journey.The assistant’s face simply appears in a corner of the screen and deals with the customer on a one-to-one basis,guiding them through the site. Andy Henshaw, founder of Vee24 says:“We’re not haranguing people and there’s no pressure, it’s just the next generation of customer service.”He says video chat makes customers eight times more likely to buy,and 97% give it a five star rating.

Reducing the chances of customers getting stuck in the first place is what conversion optimisation aims to do.House of Kaizen’s calculation is that only 13% of online budgets are spent on improving conversion rates,compared to 40% being spent on driving more traffic. If etailers did look more closely at the middle point in the web funnel – discovering where customers tend to bounce away from a site – they might lift sales.“Often it’s not a question of needing more technology,” says Imhoff.“It is about thinking like a consumer and addressing the questions a consumer has in his mind on that purchase journey.”


Logistics – Zero disappointment retail

Emma Herrod takes a tour up and down the supply chain to check out its effects on customer expectations.

AN INCREASING amount of choice is being brought into the delivery mechanism for online retailing. From next-day deliveries with later cut-off times to the 90-minute delivery times offered by Argos and other Shutl users, through using SMS to confirm or alter delivery times, to payment upfront for a year’s worth of delivery options offered by Prime-style services,choice is ever-expanding.

Delivery is becoming a differentiator for customers when they make their purchasing decisions and for retailers it’s becoming a key value of ecommerce rather than a commodity. But, for retailers delivering the service promise involves far more than simply choosing which carrier to use since there is more to the fulfilment process than the final mile.

For retailers offering store pickup, the product journey starts further back in warehouse management,stock view systems and the supply chain.They need to consider issues such as whether customers reserving products online for store pickup should be able to carry away store stock or whether a number of items should be ring-fenced in each store specifically to fulfil this method of delivery.By ring-fencing items, for example, this could resolve the problem of store staff being left to manage a situation where there’s an as yet unpaid for item reserved for pickup and another customer standing in the store wanting to buy it.

Other areas that need to be considered include the stock holding at the warehouse and order fulfilment.Should stores be replenished from the same warehouse and stock from which online orders are fulfilled or held in different distribution centres (DCs)? How should orders for multiple items for delivery to multiple addresses and to store be handled and how do you ensure you deliver the same customer experience through all channels? How do you manage the supplier and the goods-in process,moving stock between DCs and stores,and single-pick customer orders? Plus how do you ensure you have the right staffing levels at peak order times?

According to Mark Mearns, head of multichannel retailing at DHL Supply Chain:“The supply chain is the engine that delivers the customer service vehicle.”

I visited a DHL Supply Chain-managed DC to see how it works with House of Fraser (HoF) to fulfil the department store chain’s customer deliveries.

HoF operates 63 stores in the UK and Ireland as well as a growing online business,m-commerce site and wedding list service with a cross-channel capability through which customers can order items for collection in store.Stock holding and distribution for store replenishment and fulfilment of customers’ ecommerce orders is all handled through one location in Milton Keynes,Bedfordshire.Some 40 million units, ranging from fashion,beauty, homewares,perfume, linen and jewellery,pass through its 16,723 sq m multi-mezzanine National Distribution Centre each year.

Historically, the warehouse has concentrated on store logistics,with deliveries being made by HoF’s own fleet; ecommerce fulfilment was handled separately. In March 2009, the online and store fulfilment functions were brought together under one roof enabling HoF to move closer to a common stock model; currently stock for online order fulfilment and collect in store are held in a separate area of the warehouse. If ecommerce stock runs out, items can be moved from the store allocation area and for processing purposes handled as an interbranch transfer.

HoF worked closely with DHL,which advised on logistics,and warehouse management specialist Manhattan Associates on the warehouse integration project,which saw a MetaPack home delivery system installed.At the same time, the retailer carried out a review of carriers,choosing between four operators to deliver to the UK and the rest of the world.HoF also uses MetaPack to send despatch confirmation emails to customers, track shipments and arrange collections.

There are 24 packing stations to handle fluctuations in order demand with next-day delivery and Buy & Collect being busy at different times throughout the day as the respective cut-off times near. For example, the busiest time for Buy & Collect pick and pack is between 8pm and 9pm.

Warehouse staff are multi-skilled so can be moved around the operation as tasks and demand dictate. Peak times see 700 people working around the clock.

Pick, Pack, Deliver

The HoF website releases an order every three seconds.While there is a trend amongst e-retailers for later cut-off times for next-day delivery, it can take around an hour for the order to go from HoF’s website to the picking station.This dwell time is necessary to enable card payment processing, fraud checks and order cancellation.

Pick tickets are issued in waves by order type, i.e. premium,standard etc, with the waves varying across the day depending upon carrier collection times. Picking is done manually,with multi-order pick trolleys, enabling operators to pick multiple orders across one pick route.Stock is labelled alphanumerically in rows with some items hanging on rails and others stored in boxes as appropriate for the range of fashion and homewares HoF sells.This means that a customer’s order is not split.

The packer scans and checks each order again at the packing desk and checks each pick against the despatch note and ticket.Buy & Collect orders are scanned when they arrive in the store; the customer is then sent an SMS notifying them that it has arrived. While this service,which was introduced in September 2010, is free to customers there is, of course,a cost to DHL and HoF, something which needs to be taken into account when developing cross-channel capabilities.By the end of November,a further 3 pack benches had to be allocated as Buy & Collect orders went from accounting for 25% of ecommerce orders to 50%.

The integration of the two warehouses and the implementation of new systems and processes delivered immediate results and helped HoF to fulfil 99.8% of first-time customer deliveries.The faster fulfilment and response to customer enquiries it enabled led to a drop in operational costs and an improvement in customer service,and allowed the retailer to have real-time visibility of inventory across both parts of its business.

SimonWaine,head of logistics (multi-channel) at HoF comments:“Further developments going forward include increasing the width of skus online; improved easy to carry/environmentally-friendly packaging and improving cut-off times.Other improvements include NDC sortation changes to maximise order accuracy and integrated scan points.”

Cross-Channel Future

One option for the next-stage of cross-channel supply chains is offered by Brian Kinsella, senior director,product management,at Manhattan Associates,who says:“There is a clear trend away from siloed distribution models.”He explains that while the most efficient way of fulfilling orders is via a distribution centre, in some cases shipping from store delivers better margins. Using fashion clothing as an example,he says that rather than end-of-line store stock being marked down for quick sale, they could be moved off sale in store but left at full price on the website but with the orders fulfilled from store. This would effectively put an end to end-of-season sales and stock wouldn’t be taking up space that could be better used to store new, high-margin items.The aim,he says, is to“collapse those operations together”.

Having a single view of stock is a must for crosschannel retailing.You need to connect to suppliers (so you know when an out-of-stock item will be replenished for back orders), the warehouse system and in-store so you knowhowmuch stock you have and where it is being held, including the number of returns and whether they are available for resale.

Once you know an item is in stock and where, you can give the customer the choice of where they would like it delivered: their home,place of work, local outlet or another store.

As far as the supply chain and its ability to improve customer satisfaction is concerned,it sounds simple; pick,pack and deliver the right item,on time, in good condition, in packaging that matches the brand expectations. But for retailers with cross-channel operations it’s not so simple.

“From a cross-channel retail perspective, it’s all about speed and accuracy,”says Mark Hewitt,CEO, iForce.“Cross-channel retailing is a lot newer [than single channel fulfilment] and people are still getting their heads around what tools they want to put in place,”he says.

An extra issue is the returns process with supply chain solutions now having to focus on both the outbound and the inbound channels equally to support the overall customer service proposition and protect the brand.

Ultimately, though,as Mark Mearns,warns:“Deliver what you promise. If you can’t deliver everything, don’t try.”A sentiment with which I’m sure all your customers will agree.