Omnichannel Operations Need to Focus on Customer Experience

Stephen DeAngelis

June 5, 2018

Today’s consumers expect to be connected all the time and everywhere they go. In order to provide the kind of customer experience this all-the-time/everywhere mindset requires, retailers need to master omnichannel operations. Business consultant Ronald van Loon (@Ronald_vanLoon) observes, “In today’s digital age where customers are as likely to buy a product from an eCommerce website as from a brick and mortar store, delivering a seamless and value-adding shopping experience has become more important than ever before.”[1] He adds, “The multiple shopping channels available to customers and the competition posed by other retailers have made it an absolute necessity for a retail business to integrate data inputs from different channels and use to it define an omni-channel shopping experience.”

 

Omnichannel Operations are Data Driven

 

Providing a great customer experience requires retailers to understand their customers. As van Loon observes, integrating data from different channels is an absolute necessity to gain this understanding. Danny Asling explains, “Predicting trends, optimizing pricing and forecasting demand, are just some of the ways that ecommerce businesses are using data to gain a competitive advantage. The guesswork has been removed, and now ecommerce businesses can accurately make strategic decisions on how to operate their online empires. Big data is proving to be a game-changer when it comes to retail and ecommerce. If businesses can successfully implement effective big data strategies then they will reap the rewards of better customer experiences and bigger profits.”[2] Linnworks identifies six ways big data can be used in omnichannel settings “to create better shopping experiences, boost customer satisfaction and generate more sales.”[3] Those ways are:

 

1. Predicting trends. Retailers want to make sure they stock hot selling items. Linnworks notes, “Trend forecasting algorithms comb data from social media posts and web browsing habits to identify what’s causing a buzz. Ad-buying data is analyzed to see what marketing departments are currently pushing. [And] sentiment analysis determines the context in which a product is discussed online.”

 

2. Optimizing Price. Retailers are always looking for the pricing sweet spot that increases sales and maximizes profits. According to Linnworks, “A 1% price increase translates into an 8.7% increase in operating profits. [Yet,] 30% of pricing decisions businesses make every year fail to deliver the best price. Big data enables retailers to identify the best price for goods by tracking transactions, competitors, cost of goods, and other variables. … With data and analytics, retailers can map the rise and fall of demand and match pricing accordingly.”

 

3. Forecasting Demand. Good forecasts can help retailers avoid the bullwhip effect. Linnworks notes, “Accurate demand forecasts are valued because inventory is expensive to keep on shelves.” On the other hand, lack of inventory can result in loss of sales. With click-and-collect business models on the rise, demand forecasting is becoming essential for omnichannel operations.

 

4. Creating Personalized Stores. Consumers now expect personalized experiences on the digital path to purchase. Linnworks observes, “With big data and fast web server technologies, businesses can generate dynamic websites that are filled with relevant products based on historic behavior of a consumer and their personal preferences. … Automated recommendations have a huge impact on sales conversion.”

 

5. Optimizing Customer Service. Poor customer service can result in lost customers and a bad reputation. According to Linnworks, “89% of consumers refuse to deal with brands after experiencing poor customer service.” The company adds, “Big data allows businesses to optimize their customer service. By compiling data from previous online interactions, social media information, and purchase history, the business can create a 360 view of the customer. Big data makes it possible to create this enriched view and empowers customer service teams to provide an enhanced customer experience.”

 

6. Generating More Sales. Retail is all about making the sale. As retailers know, it’s very easy for consumers to depart the digital path to purchase at any time during their journey. Linnworks notes, “Cart abandonment is a widely-discussed pain point for ecommerce retailers. … Retailers can use big data to offer a personalized experience and prevent potential abandonment.”

 

Linnworks concludes, “Big data is a game-changer when it comes to retail and eCommerce. Retailers and eCommerce brands are using more analytics to drive strategic action and offer better customer experiences.

 

Focus on Customer Experience rather than Technology

 

Clearly, technology is critical in this digital age; but, as Banafsheh Ghassemi, CEO and co-founder of Tangerine Lab, reminds us, “Companies miss the boat in building an omnichannel customer experience if they focus first on technology.”[4] She continues:

“Today, companies have to be everywhere at once. Customers have more avenues to connect with them, and their preferences have moved to the forefront of business strategy. Customers are now accustomed to using multiple devices and online sources to buy products and interact with companies. They may use a company’s website, but may also use social media platforms, mobile devices or mobile apps. These communication channels are proliferating and, for companies, they’re becoming central to serving customers where they are. However, as a result, companies’ missions have gotten only more complex.”

Ghassemi believes retailers need to tailor service and interactions specifically to each channel. To do this, she recommends retailers follow these four steps:

 

1. Determine desired business outcomes. “Companies need to clearly articulate why they want to buy technology to solve the problem. … Companies need to explore whether a technology investment has ROI — and specifically ROI for customers — such as whether it will increase revenue or your margins because they can offer services more efficiently or can expand market reach. They also need to establish a business case that quantifiably and qualitatively forecasts these outcomes.”

 

2. Determine appropriate levels of service to achieve both customers’ and company’s objectives. “Here is one truism of customer experience. All customers are great but they are not all equal. If you refer back to your desired business outcomes and business cases, you’ll notice that not all your customers contribute to your intended outcomes in the same way, and no two customers have the same needs, desires and motivations for engaging with you. Similarly, no two customers use a technology consistently — in the same way or for the same reasons. It’s common for companies to view customers in segments; but another, more recent truism of customer experience is that cataloging them in faceless demographics or their relationships with the brand as either business-to-business or business-to-consumer is practically meaningless. Even business customers are represented by decision makers and influencers who are people, and each is different in motives, expectations and actions. These days, whether a company acknowledges it or not, the business-to-person model most accurately captures relationships with customers. This is why some companies are starting to explore customers as ‘segments of one’ instead of customer segments, and are developing their customer experience strategy — digital or physical — for individuals.”

 

3. Develop knowledge of customer journeys. “Customer experience involves delivering value where, when and how the customer needs it. Sometimes the where, when and hows happen in the virtual world: a company website, an app or social media channels. Sometimes they occur in the physical world through a company’s physical stores or contact centers. They also touch upon various departments within the company — from marketing to sales to support — and not necessarily in a linear manner. As your company builds a customer technology roadmap and digital strategy, understand your customer’s journeys across these domains. One thing is for certain: customer behaviors across interaction channels are constantly evolving, and so your digital strategy has to be guided by customer behavior.”

 

4. Explore the capabilities needed to ensure customer’s expectations are met and business objectives can be fulfilled. “Finally, after settling on the desired business outcomes; identifying customer personas a company should target, as well as understanding targeted customers’ current journeys and helping to shape their desired journeys, a company arrives at a place where it can identify the enablers, including products, channels, employee competencies and customer insights and technologies that can help attain these goals.”

 

Omnichannel operations are complex but technology can help retailers deal with that complexity. The most important thing to keep in mind, however, is that technology needs to enhance consumer experience. Unhappy customers are generally lost customers.

 

Footnotes
[1] Ronald van Loon, “How to Become an Omni-Channel Data-Driven Retailer,” Datafloq, 18 April 2017.
[2] Danny Asling, “6 Ways to Use Big Data in Ecommerce,” Dataconomy, 14 July 2017.
[3] Ibid.
[4] Banafsheh Ghassemi, “Omnichannel customer experience doomed without clear goals,” TechTarget, May 2015.