9 Automated Retail Technologies To Surge Revenue
The Most Powerful Automated Retail Technologies
Consumer purchase behaviors are incurring a titanic shift. Consumers are more informed, connected and empowered than ever. And they know they have options as alternatives are only a click away.
Unfortunately, too many retailers are sluggish in adopting the automated retail technologies to meet and accommodate consumers. They fail to understand that these needed technologies are not fads and will eventually be adopted if they expect to compete. Every day that passes without adoption contributes to lost sales and customer churn.
Using technology to meet consumers where they search, communicate, evaluate and buy, and using data to foster and grow customer relationships is an undeniable mandate to survive and thrive.
However, it's also a daunting challenge to understand which technologies offer the biggest payback. It's a multifaceted challenge because none of them are fully exploited autonomously. Research and market leaders clearly show that only when an integrated mix of technologies are orchestrated in an end to end fashion will brands effectively respond to customer preferences, outperform their competitors, and grow company revenues.
This post will share the 9 automated retail technologies that drive the biggest improvements to the 3 key metrics of customer conversions, RFM, and customer lifetime value.
Customer Loyalty Systems
Loyalty systems are a powerful tool to advance consumers from browsers to buyers to repeat customers to advocates. The downside is that research from Forrester shows that about two-thirds of retail loyalty programs don't work. That's why we’ve written a lot about how to create loyalty programs that do work. The upside is that if you do the right things, the loyalty program will achieve its revenue objectives and become something you cannot be without.
Loyalty members are 4 times more likely to be repeat customers than non-loyalty members. But everybody knows that. What you may not know is the financial impact. Returning customers spend on average 67% more than first-time customers (source: Bain and company) and in several retail industries up to 15% of a brands most loyal customers account for 55-70% of the company's total revenues (source: The Center for Retail Management at Northwestern University).
Successful loyalty programs also increase customer acquisition, retention, Customer Lifetime Value (CLV) and advocacy. For most brands, improving any one of these four metrics by as little as one or two points will deliver a corresponding improvement to top line revenues and an even bigger impact to margins and profits.
Mobile Retail Programs
Consumers are tethered to their mobile devices and increasingly using them as shopping tools. According to a Goldman Sachs retail research report, mobile-commerce represents nearly half of all global e-commerce. Mobility has passed the tipping point and this trend warrants more than a lukewarm response if you are to capitalize on the revenue opportunity.
For example, stores are using mobile engagement as a concierge service once consumers pass through their doors. Offering WiFi access, inviting shoppers to join the loyalty program with their mobile devices or using beacon technology to detect when a loyalty member enters the store permits the staff to offer greetings, incentives or specials on the consumer's mobile device.
Once merchandise is found or an item is under consideration, the consumer can scan the QR code with their smart phone and be offered supporting links to information, rich media or even entertainment – all of which are effective at improving conversions at the point of purchase.
Mobile or tablet-based clienteling is particularly effective for most big box, white goods, electronics, apparel, luxury goods and all forms of full-service and specialty stores. Equipping your store associates with tablets and positioning them on the floor to interact with consumers is quite possibly the single best method to merge the benefits of etail and retail shopping.
The one big caveat with any consumer social media program is to listen before you talk or engage. Each social network and social circle has its own norms and protocols and violating those customs for blatant self-serving interests will turn a retail revenue opportunity into a brand nightmare.
Word of mouth advertising is the most effective form of advertising. Social media offers a scalable opportunity to engage a single consumer online or in-store and see that consumer then advocate the brand in his or her social circles. That delivers an immediate, unbiased and exponential reach that could never be matched with paid advertising.
Social ads by themselves deliver disappointing results — generally achieving conversions of .05-1% as compared to 2-3% for search and 3.5-4.5% for email. However, when targeting social ads to known prospects, loyalty members, social networks or anonymous visitors that have previously perused your website, the conversion rates rise exponentially.
When delivering relevant, targeted and contextual ads social media conversion rates rise by a factor of 3.6X.
Consumers expect that a conversation that starts on one channel can be continued on another, with all communication and context preserved across channels.
Omnichannel engagement empowers brands to communicate with consumers over any channel and connect those conversations across channels – without losing data or context.
There are a number of sales, marketing, service omnichannel scenarios that are increasingly important to consumers and offer retailers more opportunities to engage and profit.
Consumers don't think in channels. They think in terms of simple interactions that get them want they want quickly. To a consumer, omnichannel looks like a single, channel agnostic communication hub with just different conduits or touch points. Or put another way, you have achieved omnichannel when the consumer doesn't notice any difference in service between channels.
In a research report titled Satisfying the Omni-channel Consumers Whenever and Wherever They Shop, IDC Retail Insights reported that multi-channel shoppers spend, on average, 15% to 30% more than consumers who use only one channel. But omnichannel shoppers spend 15% to 30% more than multi-channel consumers and exhibit stronger brand loyalty, often swaying others to patronize the brand. The IDC research also found that consumers provided a seamless experience across multiple channels shop more frequently and make more purchases across a broad number of product categories.
Competitive advantages of the past are no longer enough to win and retain customers. Accelerated commoditization coupled with more informed, connected and empowered consumers requires retailers to step up their game. Customer Experience (CX) Management is becoming the go-to strategy to create what may be the most strategic and sustainable competitive differentiation.
CX technologies facilitate end-to-end consumer engagement journeys over physical, digital, social and mobile channels. They apply consumer preferences, personas and purchase histories in a way that delivers relevant, personalized and contextual consumer experiences.
By using CX technologies to streamline customer facing processes and reduce friction, achieve consistency and deliver rewarding customer experiences, the brand achieves several strategic benefits including increased brand loyalty, spend, customer share and customer lifetime value (CLV).
But how do these Customer Experience benefits translate to hard numbers?
According to a Tempkin Group Insight report titled, The ROI of Customer Experience, the research firm found that CX leaders enjoyed a 18.4% advantage over CX laggards in consumers willingness to buy more, a 19.2% advantage in terms of reluctance to switch brands and a 19.5% increased likelihood to recommend.
Ask your CFO to apply those increases to customer share, customer longevity and customer referrals and show the cascading effects to both top line revenues and bottom line profits. You will probably find the revenue impact to be more substantive than any other program.
Digital marketing may be the most trending of all automated retail technologies. According to Gartner, digital marketing will influence more than 85% of B2C commerce this year.
The highest performing retail marketing methods integrate innovative marketing campaigns with data in the CRM system to understand which consumers will embrace a contextual email promotion, a social network message, an SMS text receipt or any other brand communication, and which will find these interactions annoying.
There are many innovate marketing programs delivering big conversions. For example, proximity Marketing uses a blend of mobile messaging and engagement techniques such as QR codes, beacon technology, LED light technology, SMS marketing, mobile marketing and more to achieve low double digit conversions.
Or SoLoMo brings the convergence of the three mega trends Social, Local and Mobile (SoLoMo). Some retail marketers are taking this a step further with increased personalization and calling it SoLoMoMe. While this type of campaign is not yet mainstream, it is producing some of the highest conversions we've ever seen.
With more consumer intelligence, retailers are also applying improved customer segmentation to step up performance with programs such as win-back campaigns. However, this still remains an under-utilized opportunity for most retailers. Which is unfortunate as win-back campaigns generally deliver 18-20% reactivation, which is four times the performance compared to net new consumer acquisition rates of 4-5%.
The most successful retailers are data driven and fact-based decision makers. They harness vast amounts of data to better align products with market demand, improve consumer engagement, develop better customer relationships and make better business decisions.
Most retailers have reasonable information reporting in the forms of real-time dashboards and historical reports. However, this information leaves them stuck in the past. The future of retail clearly looks forward, and the two tools that most empower retailers to proactively create their futures include predictive analytics and big data.
Retail big data offers some big payback. The McKinsey Global Institute estimates that big data can grow profits in the retail industry by a whopping 60%.
Big data in retail is all about mining the volume, variety and velocity of consumer data streams. The data generates insights which lead to quick recognition of shopping patterns and demand trends, more personalized marketing, more successful product launches, optimized assortment and merchandising, improved shopping experiences and better consumer relationships.
Or you can go further and leverage big data such as social media trending and customer sentiment to influence demand planning, determine price elasticity or recommend merchandising and inventory optimization by channel. The point here is that big data use cases are as varied as the consumer data itself.
In Store Immersion Technologies
According to Gartner, retailers that use in store technology such as targeted audio, video or proximity messaging with internal positioning systems will see a 20 percent increase in customer visits.
Entertainment also contributes to the in-store shopping experience and digital signage is increasingly contributing to an integrated mix of targeted messaging and entertainment value.
Digital signage is being effectively used for giant screen displays broadcasting high adrenalin video or social settings most consumers would like to find themselves. Similarly, displaying video use cases for products or curated social media content to isle monitors for nearby merchandise will most assuredly increase product engagement.
Integrating digital signage with branded social networks, entertainment channels, online communities or even better, with individual shoppers based on their loyalty ID or check-in can personalize the display content. It can also show how new merchandise compliments prior purchases, raise the endorphin level and deliver a more rewarding and memorable shopping experience.
The Future of Retail
It's important to recognize that while each of these automated retail technologies are often discussed individually, they are actually quite intertwined and symbiotic. For example, mobility is both a consumer strategy and a channel.
Planning any individual retail strategy or technology without consideration for the holistic customer relationship will most likely disappoint. That said, it may make business sense to get started with a single retail application that then leads to a stepping stone journey.
These automated retail technologies are the business mandate for the retailer of the future; and the future is now.
Cyberspace and real space have morphed. Consumers have taken control of their purchase decisions. Retail has irreversibly changed. Brands must apply automated retail technologies to accommodate these consumer driven changes or risk becoming irrelevant.
Yesterday’s practices of products, pricing and promotion have been commoditized and irrevocably replaced by strategies designed to meet customers where they reside and communicate with customers where they converse.
In the most recent PWC Annual Global CEO Survey, 86% of US CEOs said that advancing technologies are going to transform their businesses over the next five years. In the words of one CEO, Ken Hicks of Foot Locker, new technologies will be the "game changers in what we do and how we do it."