Thoughts for Retail

Retail Convergence

noreply@blogger.com (Anonymous) — Thu, 27 Jul 2017 15:30:00 +0000

Retail Convergence - A Changing Landscape

There is a large movement in retail toward what is now being called Convergence. Convergence is the blending of channels into a single concept that leverages components from all consumer touch-points into a single set of processes and procedures that act the same, regardless of the consumer touch-point.

While one could argue that this is simply Omni-channel, this would not extend the vision far enough. Convergence is not just about the unification of channels, it is about the unification of activities and interactions across all touch-points, including what have been perceived as channels in the past, but are becoming increasingly difficult to link to a specific system or business unit. An example of this convergence is the use of mobile devices while in a retail store, either through third-party solutions such as a Google search, or through mobile applications residing on the consumer phone itself.

Convergence comes in the form of data, commerce, and interaction. Data being a natural progression of the movement toward a single version of the truth for unified data, with commerce coming in the form of the endless aisle and DOM capabilities, while interaction imbues the benefits of engagement and messaging across all touch-points in a centralized process and vision.

As a recent Forrester article pointed out, a majority of sales today happen in the world of a blended on-line and in-store interactions. Sales begin on-line through eCommerce or social engagement, move to the store, and sometimes back to eCommerce again before a purchase is made. While Omni-Commerce is a portion of this customer lifecycle, not all interactions with a brand come in the form of purchases, or even as a lead-up to a purchase. Interactions may be related to brand awareness, service or follow-up, ratings or comments on-line, recommendations to friends, and a host of other aspects of a customer journey that are largely out of the control of the retailer or brand.

Convergence is an attempt to unify processes and procedures, as well as technologies to combine all channels into a single concept rather than a recognition that channels even exist. It is to Omni-Channel what Omni-Channel was to Cross-Channel. The movement form Cross-Channel to Omni-Channel was to break down the walls barriers of the channels, so they could function in tandem, whereas Convergence is the breaking down of the silos of channels themselves.

How will this impact retail and retail technology? It will impact overall retail in a very dramatic fashion, in that the lines between channels will no longer exist. Commerce online and in the store will be seamless, with orders being placed on mobile devices while in a store, and baskets being shared between customers and associates to build the perfect outfit. Marketing will provide a queue of consumer messaging which can be delivered by any touch-point, and when performed can trigger the next communication, which is also oblivious and uncaring as to the next customer touch-point.

Influencing the customer journey will become the primary goal of a retailer, and providing tools to assist retailers in influencing the journey will become the principal purpose of retail technology companies.

The next few years will fundamentally change how system and process are managed in retail, and for those not progressive in their thinking, there is a serious risk to success on the horizon.

The Male Apparel Shopper

noreply@blogger.com (Anonymous) — Tue, 04 Aug 2015 14:54:00 +0000

What Motivates Men to Buy

Men traditionally shop less often than women, and when they do shop it is often to replace existing items, or to address a new need. In the case of menswear it is most often to replace existing items in order to refresh their closet.

While this varies per customer, in the menswear industry there are five primary motivations for a man to buy, they are fit, style, selection, quality, and service. There is of course one other factor, namely price, but this is typically taken into consideration as it relates to the other items. Price is more a function of determining value, and not in and of itself a motivator to buy. Men will buy if they believe something is of good value, and value is derived from the benefits they receive from a product less the price. If in their mind an item provides value of $1000 and the price is $900, then the price is justified and the product is a good value. On the other hand, if the same item is viewed as providing only $800 of value, then the price is too high, and the product is viewed as not being of good value.

So, if we were to put this concept into a simple formula, we arrive at the following:

Value = Benefits - Price

If this is the case, there are then two ways to increase the value of a product. The first is to lower the price and the second is to increase the benefits – or at least the perceived benefits.
So if a customer’s primary focus is on Style, it is imperative that style becomes a main talking point, but then also including discussions that highlight other areas of interest can also help to increase perceived benefits. For example, speaking of the style in addition to the fit and quality will increase the perceived benefits.

As a final note, it is important to understand that customers do not buy features. In my many years selling custom clothing I often had sales people who focused on horn buttons, silk threads, Bemberg linings, and the like. While it is good to discuss these items in describing quality, it is critical that you don’t stop with the feature. You must then describe the advantage and ultimate benefit to the customer, it is this benefit that is ultimately what the customer buys. Benefits like looking good, feeling more comfortable, attracting others, etc., is what product presentation is all about. Benefit selling can in fact build a price objection, as expensive sounding features with no defined benefit simply sound like unneeded extras.

Clienteling and the Male Shopper

noreply@blogger.com (Anonymous) — Tue, 04 Aug 2015 14:51:00 +0000

Clienteling in Menswear

While clienteling is an applicable skill in most service-focused retail, with my 15 years in retail management in the men’s apparel industry I thought I would write a little bit about how to apply capabilities of clienteling to the menswear business in particular.

As I have discussed in previous articles, clienteling is a colloquial term that came about to describe the activities a sales staff might take with their clientele. As such, it is a verb which describes the actions an associate takes to better service their customers, and to establish long lasting relationships. In practice these activities can be grouped into two buckets: collection of information that establishes a learning relationship, and the personalized actions one takes based on this information.

While the menswear business is not unique, the shopping habits of men and women are often different. In fact, according to an article by Jay H. Baker Retail Initiative and the Verde Group titled “Men Buy, Women Shop” the differences are significant. Women enjoy the shopping experience, and more often look at shopping as an experience, while men look at is as a necessity, something to accomplish quickly and with little interaction. For men shopping is a means to an end, while for women it is in fact often the primary goal.

This can be a critical distinction in how to service male shoppers in nearly any retail environment. The quicker you can assist the customer in locating a product, the more likely you are to make a sale. So how is this relevant to clienteling? Isn’t Clienteling about regular interaction with the hopes of bringing the customer into the store more regularly, providing them recommendations of add-on items, and providing targeted personalized communications? Yes, that is precisely what clienteling is designed to do, and in fact what it is highly effective at doing entirely because of the male shopping habits. If a retailer embraces these tendencies, they can in fact become even more effective in clienteling.

Here are a few simple rules:

Help men to shop. While this sounds common sense, it is not the act of helping the male shopper when he is in the store that is particularly effective, it is helping him before he arrives in the store. Schedule appointments if possible, but even if not possible, at least plan in advance. Put outfits together that are specifically aimed at what you know about the customer, and do your cross-selling in the form of coordinating items prior to the visit. Check for wish list items, notes and preferences to be sure you have all information that is relevant.
Understand what motivates the customer by asking questions and making note of their propensities. This is covered more as a sidebar to this article called “What Motivates Men to Buy”. Use these primary motivators when selecting products, and don’t be afraid to remind the customer of the added benefits they may not have considered. With each interaction, engage customers so you are equipped with more knowledge the next time. Note sizes, preferences, lifestyle, and add items to wish lists.
Facilitate the customer’s ability to get in and out as quickly as possible. Have a fitting room ready, get a fitter queued up in advance. Use look book tools to find where a product might be in the enterprise if not in stock, and work with the customer so items can be shipped directly to the customer.
Schedule the next follow-up. As men like to visit stores less often than women, they typically are less likely to come back if they have an issue. Set a follow-up a week out to be sure the customer is satisfied. Also schedule an outreach 3 or six months out to remind you to reach out to the customer and get into a scheduled routine. For products with limited lifespans such as dress shirts, set a replenishment – even if its two years out. Knowing when a customer needs to replace their wardrobe enables you to get ahead of the customer, so that they don’t shop the competition to replace these items
Contact the spouse. Women do a disproportionate amount of apparel shopping, so working with the wife or significant other can pay dividends in the form of more frequent visits, both from the customer and the spouse. While there is still often a need for the customer to enter the store (clothing that needs alterations for example), having the spouse as an ally can pay dividends in bringing the customer into the store, and women are far more loyal to their sales associates, so this also helps to solidify relationships.

By understanding the shopping habits of the male menswear shopper can help to increase sales through effective clienteling. Leveraging your knowledge of these habits can help to increase frequency, increase units per transaction, and most importantly, increase customer loyalty and satisfaction.

Effective Principles of Clienteling

noreply@blogger.com (Anonymous) — Tue, 14 Oct 2014 23:23:00 +0000

Clienteling

The word clienteling came about as a rhetorical use of the noun clientele. It was used to describe activities one might take when working with their clientele, and is used now primarily as a verb to describe those activities. The word Clienteling now also describes initiatives or programs (manual or software-based) which revolve around these activities, much like CRM describes solutions for managing customer relationships.

Looking at the broader definition of Clienteling, I often define it as a philosophical approach to better serving ones customers (clientele). An approach focused on highly personalized service that is established over time through a learning relationship.

While the verb clienteling might describe most activities associated with the sales process, the more common activities can be summed into three key elements:

Access to information to assist the customer while in the store
Customer profile enhancement (likes, preferences, wish lists, etc.)
Personalized customer communication (outreach)

While personalized communications finds itself last on the list, it is in actuality the primary goal of a long-term Clienteling program. It is through the successful completion of the other two items, however, that this communication becomes meaningful and effective.

The Customer Life-cycle

As described above, relationships are established over time. Selling is like any other relationship in that the more you know someone, the more you understand their needs and wishes. You don’t learn everything about a person in a single encounter. But over time, as the relationship matures, your understanding of them improves, and your ability to relate to them and to guide them improves as well. It is through the enhancement of the profile over time, that the communications can be more targeted and meaningful for each and every customer.

The following graphic highlights how a customer/associate life-cycle can change over time. From the first time encounter, whereby the associate needs to identify the immediate need, to a long-term relationship, where they are able to anticipate needs, make personalized suggestions, and follow-up regularly.

The Pareto Principle

Any Clienteling initiative should be designed in such a way as to get the most benefit for the least cost. The Pareto Principle states that roughly 80 percent of the effects of an activity are derived by 20 percent of your efforts. This principle holds true for retail as well, where for most retailers roughly 80 percent of all sales come from 20 percent of the customers. This 20 percent are the most loyal customers, and most often shop the most categories of merchandise.

With this general understanding in mind, many clienteling activities focus almost exclusively on the Top 20% of customers. The logic being that an increase in sales of 10% with this segment represents an increase of 8% for the enterprise as a whole. It would take an increase of 40% in sales for the remaining customers to equal this same 8%. Obviously the cost to reach 80% of your customers is also significantly higher than for the 20%, so this approach makes sense on a number of levels.

There are three items to consider, however, with using this approach exclusively:

Over time customers attrite, albeit at a much slower rate with the 20 percent, so a focus solely on this group of customers at the exclusion of other will see your pool of customers diminish
First-time customers may take some time to qualify as a top customer, and without appropriate guidance from the store associate the relationship may never mature to this point
These customers are most often already your loyal customers, and may already be benefiting from some form of Clienteling, so the gains might not be as immediate as with customers previously ignored in these efforts

So, while there is tremendous benefit to focusing on these top customers, you can see that this effort alone will have diminishing returns over time. For this reason, it is important to also nurture elements of the 80 percent, but to do so in a highly targeted and strategic manner. The most effective approach is to focus most energies on the top tier of customers, but to design targeted in-store “campaigns” around segments of the remaining customers. These in-store campaigns for non-clients might include one year follow-ups, replenishment items, birthday/anniversary wishes, in-store events tied to past purchases or noted wish lists and preferences, etc.

The below graphic demonstrates these principles. In this diagram the word Customer defines a consumer that may not be in an associates “book”, while the word Client defines consumer that belongs to an associate’s book (or multiple associates’ books).

Note:To a large degree the success of clienteling activities, and most specifically outreach, is tied to basic math. The more of your clientele you work with, the more successful you will be. While the old manual process only supported a limited book, and therefore the same customers were contacted over and over; this has changed dramatically with clienteling applications. If we assume the average associate has 125 customers in their client book, and reached out to each customer every 2 months, that will consist of 750 interactions. While that number sounds good at first, if you break this down to the workday it is far less impressive. This 750 communications averages only three a day. By augmenting this list of clients with targeted customers, an associate can double their outreach without losing focus on their best customers.

Putting It All Together

The typical customer life-cycle goes from a first-time buyer, to a repeat customer, ultimately to a long-term client. It is the goal of every retailer to move customers from point A to Point B, and eventually to Point C. Working exclusively with customers who have reached Point C in the life-cycle has immediate value, but diminishing returns if new customers are not brought through their own journeys. So the question becomes, how do you focus most efforts where they have immediate benefits, but not at the expense of those efforts that will pay off in the future?

This is accomplished by designing a program that enables the associate to keep their primary focus on their top customers (their Client Book), but to augment this activity with pre-defined scheduled and automate campaign types that support the nurturing of a larger segment of customers based on customer needs, life events, interests, and other relevant and personalized outreach.

Quantifying Clienteling

noreply@blogger.com (Anonymous) — Wed, 08 Oct 2014 21:40:00 +0000

Quantifying Clienteling

I have been involved in dozens of Clienteling projects over the years, and am quite actively engaged in consulting on the topic with retailer to this day. One question that invariably arises is how do you go about quantifying the results of clienteling efforts? If we are going to commit to a broad-sweeping change, how can I know if the efforts will work, or are working?

While it is a simple question, the answer is a bit more complex. This is the case for a number of reasons.

First, many retailers that have previously implement Clienteling did so with the intent of using this heightened service as a competitive advantage over their competition. As such, they are hesitant to discuss real-world successes, as they are content to be among the few who reap the benefits for as long as possible. So while there are clear benefits, you are unlikely to get much detail on them.

Second, many of the retailers that undertake a new software-based clienteling initiative have already been practicing clienteling activities manually; so any measurable gain can really only reflects the incremental value of systematizing an already existing practices – not the entire gain of performing an activity versus not performing an activity. For retailer that are looking to implement clienteling for the first time (manual or software), the potential gains are even greater.

Third, many factors can impact the sales at a given point in time including staff, product, management, weather, Marketing efforts and events, seasons, etc. Isolating the value of one specific initiative if often fairly complex, especially as retail typically has numerous initiatives design to impact revenues.

So how then can we measure the effectiveness of clienteling?

The Scientific Method is the most accurate way to measure the success, or lack of success, of new methods, practices, or activities. Using this Scientific Method a retailer would identify “like” customers, associates, stores, etc. then divide these combinations into two groups – a study group and a control group. Using the study group they would then take the new actions, and in the control group continue to perform business as usual. Regrettably, as described above, there are so many factors that can impact sales that the combinations of these various factors make the Scientific Method impractical if not impossible.

There are, however, a number of useful measures that can be used which in their combination serve to be more scientific in their approach, and help to quantify the value of Clienteling.

Affiliated Sales – affiliated sales is a concept that tracks the sales as a percent of total sales which can be attributed to “Affiliated” clients. An affiliated client is one who belongs in a store associates book. A common measure for this ranges from 20-40% depending on the retailer. High-end luxury retailers tend to be on the higher side, while mid-priced retailers more toward the lower side of this range. What makes this number perhaps less valuable, however, is that simply affiliating with more customers can grow this number, even if no actual clienteling actions are implemented.
Outreach Sales % – whereas Affiliated Sales does not focus on the actions taken by an associate, Outreach Sales shifts the focus primarily to the impact of a very specific activity – outreach communication. Outreach Sales % is a measure of the percent of all business that happened in a defined time-frame as a direct result of a personalized communication from an associate. If an associate proactively reaches out to a customer, and the customer makes a purchase (within a defined time-frame such as 14 days), this is then considered to be a direct result of the outreach. This is then expressed as a percent of total sales for the time period (most often 1 month). This is a common metric I suggest tracking, as it is rewarding measuring the effect of the efforts, and not just the activity. This Outreach Sales number most typically ranges from 15% to over 25%, meaning that as much as 1 in 4 dollars can be a result of associate outreach activity. An interesting point of note on the topic of outreach is that one to one personalized communications coming from the store associate are far more effective than those coming from the Marketing department. In fact, a very typical response rate (making a purchase) to a personalized communication falls in the range of 12-20% -- exponentially better than even the best marketing campaigns.
Affiliated Outreach Sales – an argument can be made that many of the customers who received an outreach communication may have wished to shop regardless, and therefore even this number is not 100% proof of the effectiveness of personal outreach to a customer. Affiliated Outreach Sales attempts to address this issue head-on. It is a measure of only those customers who are affiliated, and then looks at the percent of business derived from the affiliated customers who received an outreach communication in comparison to the percent of business for those who had not received a communication. A recent 1 month analysis showed that associates had communicated with approximately 1/3 of their affiliated customers, and this third represented 2/3 of all sales to affiliated customers. Literally ½ the number of customers generated twice the sales for the given month demonstrating the clear value to associate outreach communications.

While the above metrics help to prove the viability of Clienteling, they are not always the only metrics tracked in a clienteling initiative. In fact, the most common measures used to gauge the success of Clienteling are much more common statistics most often already in use. It is the impact on these metrics that helps to demonstrate the benefits of the initiative. Some of these include:

Total Sales
Average Transaction Value
Items/Units per Transaction
Margin
Sales Per Hour
Customer Frequency

Looking at these measures on the whole provides the most value in gauging the success of a program, but looking at these metrics as they relate to a specific set of customers (for example affiliated customers, prospect lists, targeted segments used for outreach tasks, etc.) can provide even more insight, and can help to prove the value of the efforts being performed.

Over the years I have been involved in a number of Clienteling deployments, and have had the pleasure of monitoring their success through most of these performance metrics. By focusing efforts in the store toward a specific measure, all of the above metrics can and have been impacted by clienteling activities with great success.

Is Apple the Sony of the 21st Century?

noreply@blogger.com (Anonymous) — Fri, 01 Nov 2013 02:37:00 +0000

I just completed a webinar on the ROI of in-store mobility for retail, and focused a portion of the discussion on the platform to deliver the experience, and the devices which retailers were considering for their in-store mobility strategies. We performed a poll on the attendees for the event, asking which device was being considered. Not surprising, Apple came in first with the Apple iPad, and second with the iPhone/iPod. Android and Windows represented a fairly small segment. So why am I asking if Apple may be the next Sony? My response is a single word “proprietary”.

How many of you can recall the advent of the Walkman, and the tremendous almost life-changing impact the product had on society as a whole? Talk about disruptive technologies!! The Walkman was the perfect answer to the boom-box of the generation, and not only provided the mobility required to take your music with you, but also the ability to listen via high fidelity without disrupting those around you. Sony captured the hearts, minds, and wallets of a huge share of the market as a result.

How many of you recall the MiniDisc player? Oddly enough, it wasn't until 2013 that Sony announced the demise of the MiniDisc from their suite of products, although the company has struggled since the 1990’s to gain any momentum in the space at all. Why? Primarily due to the proprietary nature of the discs and the corresponding players (and also the price, as a MiniDisc player might run you $750 back in 1992). A great technology was ultimately marginalized.

How about the Sony Betamax? Back in the 1970’s the Betamax was all the rage (at least for a couple of years – in a couple of markets). Sony had developed a consumer-level analog videocassette recorder format, but competitor JVC was worried about how they wanted to structure the deal, and decided to develop a competing technology known as VHS. While Sony was not trying to be entirely proprietary in their approach, there had been a history of prior deal relate to the U-matic format that made JVC nervous. While the VHS format came to market later, JVC was quick to license their technology to nearly every consumer electronics company, which then set the standard. Some have argued that this happened even though Betamax was the better quality picture (although in reality this may not have been entirely the case). Regardless, it ultimately became about the shared standard, and cost of getting products to market based on the corresponding competitive pricing. Sony once again lost out.

So how about the Sony Memory stick? Remember whenever you bought (or buy to this day) a Sony digital camera, or some other electronic device from Sony, that you needed their proprietary memory card? While there were standards for storage devices such as the SD card, Sony insisted on continuing with their proprietary format, to the frustration of many users.

Then there was the ATRAC Audio Compression technology of 1993, where Sony insisted on selling their solid-state Walkman using this proprietary compression, rather than the rapidly growing MP3 open standard.

Is any of this sounding familiar with the Apple products?

Not only is Apple proprietary with its iOS software, but it is also proprietary with its hardware devices and peripherals (has Apple not heard of mini USB or SD cards?). It is also proprietary with its delivery mechanisms, all centered on the iTunes hub (and yes, I know about corporate provisioning files, but focusing on the overall Apple ecosystem). While there is no doubt Apple has seen incredible growth due in large part to their almost maniacal control over the user experience, one which is best managed through proprietary measures, the return on this approach has diminished significantly as competing technologies (Android and Windows on the OS software side, and Samsung, HTC, Motorola, and others on the hardware side) have begun introducing improvements and/or specialized devices and capabilities for specific targeted consumers or industries. The Samsung Galaxy, with its oversize screen, and even new waterproof and dustproof version, provides a great example of creativity not yet provided by Apple. While the iPad mini may be hugely successful, the competition will be introducing even more looks and form factors to compete.

If the Apple ecosystem had a true Network Effect, where the value was derived in some form by the network of all others using it, then I think the story would be different (yes, FaceTime is a step in this direction, but there are many alternatives). For example, Facebook provides value in and of itself by the quantity of users on the platform. I’ve been able to connect with dozens of friends from college whom I might never had found without Facebook. While the quantity of apps and music provided by Apple is a motivation, even this gap has closed dramatically. Ultimately, much of what Apple provides is in the long run simply a set of commodities.

In Q2 of 2013, Android tablet sales surpassed Apple’s iPad for the first time ever. The Android operating system for smartphones has been outpacing Apple now for a couple years (although this bounces back and for a little depending on new devices arriving into the marketplace). And this is just Android. While admittedly these are the two most important operating systems on mobile devices today, it is likely ill advised to count Microsoft out of the picture too quickly – especially in the retail industry.

The reason for this is competition. I am speaking perhaps less about the competition related to the operating system, and more about the competition related to the hardware vendors that have traditionally played in the retail space. Powerhouses like NCR, Motorola, HP, and even Dell have each carved out a niche in retail over the last decades, and none of them are complacent in their approach to competing for in-store and back-office technologies. These same manufacturers are responsible for a very large part of the software and hardware that runs the retail organization today, from shipping and receiving, to POS, to back-office solutions. As many of them cannot deliver customized versions of Apple product, they have shifted their attention to Android and Microsoft.

I’ll be perfectly honest here – Microsoft stubbed its toe badly; not just in the consumer market, but in Retail as well. While their attempts to introduce more user-friendly software has been a step in the right direction (first with Windows Mobile 7, and now with Windows 8), the existing technologies in retail could not migrate to the new technologies; and in fact even applications written for Windows Mobile 7, will not easily migrate to Windows 8. So while retailers were using Windows devices heavily only five years ago, Microsoft opened the door to other operating systems by not providing a migration strategy for legacy software solutions. Most can now argue, if my software needs to be re-written anyway, why not write it for iOS, or Android? And the vision of one common experience on the PC and tablet still hasn't materialized in the way most would have hoped, even with Windows 8.1.

That being said, most POS solutions are still operated via a PC, with mobile solutions still representing a small portion of devices used in the typical retail store. I don’t see this changing anytime soon. That is not to say I don’t see it changing in the future, however, as I do believe it is somewhat inevitable. The ultimate question becomes when, and what will the state of the software landscape be at that time?

In addition, those software vendors that also deliver hardware are certainly not inclined to rewrite their software on a hardware platform that is not their own. So while many vendors that sell only software have quickly retooled their development to the Apple iOS, this is not the case with the big players in the market.

In addition, POS terminals typically perform many more tasks than simply ringing a transaction, and Manager Workstations even more than POS terminals. While mobile capabilities for these other solutions are likely desirable in the long-run, I am still left wondering how quickly this conversion will take. And once it does, does it not make sense that a common operating system still has validity? One that can run on a PC as well as a mobile device? If not a common OS, then certainly a common technology capable of running on both devices (think HTML5 web applications). Under this last scenario, Apple then carries less value, but perhaps also less risk. If solutions don’t care what platform they run on, then Apple is as valid a choice as any, and due to the current adoption rate perhaps a strong contender. But this presupposes many solutions providers are writing applications that are OS agnostic, which unfortunately has not been the case.

Retailers do have specific hardware needs as well. Today’s POS register still needs a receipt printer, a scanner, and a card-swipe. And while there are many components available as add-ons to the Apple products, these are not nearly as “built-in” to the design as certain offerings soon to come out by competing vendors. And with the competitive nature of retail technology over the years, you can bet this only gets more heated.

So do I believe Apple will fail in the retail industry? No, at least not any time in the near future. Do I believe they will dominate retail? Let me think about it while listening to my MiniDisc player or relaxing to a good movie on my BetaMax while transferring my digital content to my iPad from my Sony memory stick.

OK, I’ll admit most of these technologies would likely have been supplanted by now anyway. But perhaps that is my exact point – why isn't it Sony that did just that?

Customer Centricity is Social

noreply@blogger.com (Anonymous) — Mon, 26 Aug 2013 22:39:00 +0000

Customer Centricity - How to Leverage Social Media

Social networking has been an area of focus for many retailers, yet few have a handle on precisely how to fully capitalize on the burgeoning trend of social sites and social users. While these Social Media sites often offer a new delivery channel for advertising, there is far more potential to the Social infrastructure when taken into the context of Customer Centricity.

Customer Centricity is a paradigm shift where the retailers view their customers as the organizations Core Asset - and find products that match the individual; as opposed to viewing the product as the Core Asset, and the role of the organization to be finding customers to which they can sell their products. I blogged about this recently here.

In the context of a Customer-centric philosophy, the more I know about my customer the more I can intelligently meet their needs. Existing Retail data can only take us so far, as I can make assumptions about past purchases, but I am not often aware of enough about a given individual to be truly personal in my communication. For this reason, many Marketing departments have leveraged third party sources to augment their data in meaningful ways, such as gaining demographic information, and in some cases psychographic data. These exercises have been meaningful in segmenting groups of customers, but typically not leveraged in highly personalized communications.

I often say that it is the in-store associate that is the most customer-centric part of any retail environment. This is due to the open dialogue with the customer, and the ability to ask targeted questions about needs, lifestyle, life events, etc. This is a fairly typical part of any mid to high-service environment.

With the advent of Social Networking, and open API’s, however, there is a wealth of information available to retail organizations that answer many of the questions an associate might ask, and can in fact provide details well beyond the capability of an associate to ascertain. There is a wide variety available for most Social sites which can provide a wealth of information unique to a very specific customer. Likes, friends, favorite sites, comments and more are available through the many Social APIs. From this data retailers can now get a true 360 ° view of a customer – related to the retail brand, but also in a more social environment.

The immediate challenge for retailers is in linking Social customers with in-store and on-line customers. This requires technologies capable of storing the data consumed across these new channels, as well as incentives for customers to share this data with the retail organization. While these are clearly not small obstacles, many retailers are coming up with creative ways to do gain access to data, and top technology vendors are providing solutions that can leverage this data (more on this topic in an upcoming blog).

The future of Customer-centric solutions is one where there is a view of the customer as an individual – inside the store, online, and in social engagements. Armed with this true Omni-channel data, retailers are then equipped to provide highly personalized and unique value to each customer through real-time recommendations, offers, promotions and more.

Retail Mobility – Today’s Technical Challenges

noreply@blogger.com (Anonymous) — Tue, 20 Aug 2013 01:05:00 +0000

Retail Mobility – Today’s Technical Challenges

For any Retail CIO, the rapid changing technology landscape is making it difficult to deploy in-store mobile solutions. There are a number of implications to deploying mobile technology on the store floor, ranging from the selection of the device, to the solutions available by device platform, to security and potential privacy concerns. And while all of these issues exist, it is clear that a large number of retail organizations feel it is imperative to get technology on the floors, so as not to be left behind.

The technology landscape has changed dramatically in the last 5+ years. Consider the following:

New Channels – Consumer Mobile, Social Media, Publically available API’s
New Devices – iPhone, iPod, iPad, Android Phones and Tablets, Windows 8 PCs, phones and Tablets; each with different screen resolutions and screen sizes
New Operating Systems – iOS, Windows 8, Android; each with a different development environment for native application deployment.
New Data Access Requirements – Cloud, On-Premise, Hybrid deployments. Social and Public APIs. Omni-channel real-time connectivity.

Most retailers have been caught a bit off-guard with all of these changes. Not that they didn’t see any of them coming (we have all known the potential of mobility for some time), but the speed of the changes, and the urgency to deploy technologies now has come as a bit of a surprise.

Let’s be honest. Retail is often not the most up-to-date in the technology department – at least not on the store floor. There are certainly legitimate reasons for this – cost and risk to name the two most obvious. Putting new hardware and software into every store, adding wireless infrastructure, bumping up bandwidth, etc. all come with a cost associated with them. Then there is the risk. Take POS as an example. POS is mission critical, and having registers down for any period of time can have dramatic impact on the sales of the organization. This is true of most in-store solutions, as issues at the store can have dramatic impact at the head office. As a result, retailers have most often followed the adage that slow and steady wins the race – or at least it was until a few years ago.

Then along came Mobility. Mobility impacted customer perception in three important ways:

Consumer adoption of mobile smartphones became ubiquitous, and the ease of use of the devices, on the go, became commonplace. In fact, combined with the always connected Internet at home, consumers were beginning to enter the store with as much knowledge as their associates working for the retail store. Expectations began to rise.
Apple Stores came out with a new way of ringing up customers on the iOS devices, which was seen as a far better user experience (although forms of mobile POS have existed for many years). Mobility was suddenly seen as sexy and not just practical for line-busting.
New form factors began to arrive, creating the potential for a joint Associate/Consumer experience. While tablets have been around for over a decade (I was personally involved in a Clienteling deployment using Windows Tablets over a decade ago), the ease of use of the iPad and Android tablets made it far more feasible to deploy applications that were easy to use, with little training. And these solutions could actually augment the relationship with the in-store associate.

As Executive Management began to understand the impact of mobility (if not just from the point of view of consumer perception), more and more initiatives were created to leverage these new capabilities. The obvious low hanging fruit was POS, but without some other technologies also being supported on the same device, the ROI was sometimes hard to justify. For this reason, many retailers looked for deploying in-store solutions other than POS in parallel with their mobile POS initiatives.

This is when the real challenges began. First, the easy approach to mobile POS was to “bolt on” the mobile solution provided by the existing POS vendor. The challenge here was that not all vendors had a mobile solution; or those that did may not have had a solution on the device type of choice by the retailer. The iOS platform was gaining the largest acceptance (particularly in the US), and many vendors committed to creating solution on the iOS (iPod, and now iPad). Unfortunately this created additional issues for retailers in the form of security and privacy, as well as internal expertise. In addition, most PC-based solutions remained on the Windows platform, as this has been the hardware of choice for a number of years in the retail stores. As a result, IT now needed to support multiple hardware platforms.

Globally the device of choice was not always the iPod or iPad, as Android began to gain momentum. While Windows was clearly late to the game (unfortunate due to the more robust security in the platform by nature), even Windows Mobile platforms were no longer supporting past application development (such as Windows Mobile 6.5), so now vendors were faced with a new set of Operating Systems for which to design, and retailers new devices (and corresponding OSs) to deploy. Add to this that fact that traditional hardware vendors such as HP, NCR, Motorola, etc., were unable to deliver iOS hardware solutions due to the proprietary nature of the Apple platform. As each of these vendors looked for ways to compete in the mobile device space, they looked to Windows or Android for their solutions; which has ultimately led to more competition, and even less clarity.

Making Sense of It All

So what is a retailer supposed to do in the midst of all of these changes? What follows are my thoughts on how many of these challenges might be addressed.

In order to handle the problems associated with the above issues, retailers should be looking for solutions that provide the following four capabilities. The solutions should be:

Platform Agnostic – solutions should be able to be deployed on myriad devices and Operating Systems - natively. While not 100% standardized today, HTML5 solutions provide the best cross-platform capabilities, and with the use of cross-platform development tools, these solutions can now be installed on devices natively, which provides for a much richer user experience. While there may be issues in the myriad screen resolutions and dimensions, these tools offer the promise of building code once and running it on existing PC hardware and on various mobile devices.

Data Agnostic – solutions should be able to access data from a variety of existing data sources real-time, and operate as though the data exists within the particular solution itself. While Web Services (SOAP and Restful) are clearly meaningful, a complete Data Access Layer that can draw data from a variety of sources into a logical data model, and then operate on this logical model can be even more significant. With the availability of data providers, this can now be a reality. Such a full extraction and separation of concerns allows a software solution to integrate in a variety of ways based on the retailer’s specific environment and data availability.

Deployment Agnostic – while retailers were cautious about storing data in the Cloud due to security risks, more and more retailers are seeing the benefits of doing just that. Hosted solutions, or Software as a Service (SaaS) has become commonplace in most industries, and retail is beginning to follow. Some information, however, does currently reside in-house, so a migration to the cloud is not practical, so solutions that allow for a hybrid deployment is a perfect compromise. This provides the benefits of the Cloud (cost savings, distributed data access, scalability, etc.) and the gradual migration of prior investments. Of course for those retailers with large IT organizations, the on premise model should also be available.

Flexible and Extensible - solutions deployed in retail must be flexible and extensible through SDKs and configurable capabilities whereby a retailer does not have to rely on the solutions vendor to add new features, or modify the way the solution works today. While there are clearly advantages to certain features being incorporated into a base solution, there are times where a retailer may wish to leverage prior development efforts, or to create a unique set of features which provide a degree of competitive advantage they may not wish to share. This extensibility is critical to future-proofing a solution to allow for the lowest total cost of ownership.

Conclusion

Advancements in technology and in consumer expectations have made deploying mobile solutions a high priority for many retailers; however the range of solutions, platforms and devices has made the choice of the ideal solutions increasingly challenging.

By leveraging technology and software development advancements, however, retailers can now begin to address these challenges with little risk. Solutions that can run on any device platform, can access data from a variety of sources, can be deployed in the Cloud or on-premise, and are fully extensible, are now not only a possibility, but a reality. Such solutions provide the retailer the flexibility needed to leverage existing systems, and the comfort in making decisions on their future hardware and environmental platforms.

In-Store Retail Solutions - Managing Culture

noreply@blogger.com (Anonymous) — Thu, 08 Aug 2013 15:16:00 +0000

The Importance of Cultural Change Management

I have been involved in in-store solution deployments for over a decade; and if there is one thing that is consistently underestimated it is need to manage cultural change through a formalized process. I refer to this as a Cultural Change Management program, and insist on a minimum block of services in any engagement for which I am involved.

In-store technology, and specifically Clienteling, is all about changing behavior. The goal is to change the behavior of the associate, of the store management, and even the customer. The associate is expected to perform new tasks (or the same tasks in a different way), management is expected to manage through a different process and perhaps use different metrics and KPIs, and of course the end goal is to influence customer behavior before, during, and after a sale. Ultimately, this can only be done through effective Cultural Change Management.

Without exception, the new initiatives that have the greatest success have been rooted in a commitment to improve the behaviors and specific activities of the sales associates and in-store managers in a managed and controlled fashion – and from the top down. Simply deploying a new technology is not enough. However, deploying technology with the appropriate foresight, planning and monitoring can pay tremendous dividends. These dividends come in the form of increased organizational commitment, improved service levels, increased associate productivity and increased sales and margin.

The following highlights what I believe to be the ideal phases (and steps within each phase) in any change management program. I must admit that few retailers will go through every one of the steps, but I encourage them to do so, as each provides incremental value.

The six most important phases are:

Business Impact Analysis
Change Management Assessment
Change Management Strategy
Program Design
Execution/Training
Monitoring and Review

Business Impact Analysis

Goal: to assist the retailer in articulating the anticipated Return on Investment and the desired impact to the business of a full roll-out. The Business Impact Analysis provides very meaningful numbers that can serve as the foundation for an effective program. It includes the following:

Baseline Analysis – The Baseline Analysis should provide valuable insight as to what is influencing customer behavior today and therefore what activities should be encouraged tomorrow. For example, most retailers are quite familiar with basic metrics such as average transaction value, average items per transaction, and customer frequency. However, they likely do not know how these are impacted by the customer/associate relationships. In other words, what is the average transaction, items per transaction and customer frequency when a customer shops with the same associate? In most instances this relationship significantly impacts these numbers – often more than doubling each of the metrics listed. A Baseline Analysis identifies this sort of direct correlation which can then spotlight the activities required in the store, as well as provide a baseline for modeling future impact.

Business Impact Model - The Business Impact Model is designed to model the likely benefits of an in-store initiative, and the future benefits. It can be used for ROI purposes, as well as for a compass for success. While a number of metrics may be considered, a typical Business Impact Model will include assumptions related to such things as increase in Traffic, Conversion, Average Transaction Value, Margin, Frequency, etc. As described above, the Baseline Analysis will often provide real-world numbers which can be extrapolated across a larger set of customers to provide very realistic, and often enlightening, business impact.

Change Management Assessment

Goals: to discover the overall goals and vision of an in-store initiative, as well as to define the business activities and best practices that are to become institutionalized. To design and manage the process and implementation of the application in the store, in order to assure the greatest success.

Visioning – A Visioning session is designed to allow key stakeholders at the corporate level (typically not store level) to fully articulate the goals and vision of an in-store program. A critical element of any such initiative is total alignment to a common set of goals and long-term vision. As part of this Visioning session, the retailer should establish a set of Key Performance Indicators (KPIs) that will be the primary focus of the program, as well as articulate how the business will be different in six months, one year and beyond (customer engagement, associate management, internal communications, etc.) By understanding the specific goals and metrics that will be tracked to validate successful execution, the retailer is in a much stronger position to design a program that targets a specific end result, and keeps focus on very specific long-range goals.

Discovery and Assessment - The Discovery and Assessment process is performed in order to assess the current capabilities within the organization, and to identify any gaps that should be filled for optimal success. This is a critical review of technology capabilities, data availability, systems functionality, as well as existing engagement models (Campaign, Credit Marketing, Loyalty, etc.), and to look for opportunities to leverage or shore up these capabilities through the new in-store program. This discovery and assessment process will also highlight potential risks to a successful implementation.

Best Practices Session – The Best Practices Session is a review of current in-store practices. This review will result in a summary of current store-based operating practices gained primarily from observations in-store. While existing corporate policy may define certain activities, it is extremely common to find that what actually happens in the store is quite different – sometimes much better, and sometimes worse. This is an assessment of what happens in the stores today that works, what does not work, and what should be happening but is not today. One-to-one interviews with top associates can be quite helpful in understanding the process they follow, gaps in existing system capabilities, and wish list items for the future. The end goal is to define four to five “best practices” that can be standardized and institutionalized across the organization.

Training Capability Assessment - The Training Capability Assessment is performed in order to define the current training capabilities and resources within the organization. Training methods, approaches and materials should be discussed, with an end goal of identifying the likely training methods, internal training strengths, and areas of weakness that can be shored up. Areas to include are associate training, store management training, regional management training, and IT and Administrator training.

Change Management Strategy

Goal: after a complete analysis and assessment of current needs and goals, it is important to define the following three strategies:

Communication Strategy - A key element to any effective change management program is the Communication Strategy. The Communication Strategy sessions should focus on the who, what, when, where, and why of communicating throughout an in-store implementation and subsequent roll-out. The focus is on what is communicated to key stakeholders including executive management, regional and store management, as well as the critical communications with the sales associate. Topic should include:

Awareness – is everyone aware of the goal, and why a specific action is required?
Desire – how do we motivate the individual to participate in the change (goals, contests, rewards, etc.)?
Knowledge – how do we assure the individual possesses the knowledge needed to make the change (selling skills, computer skills, solution training, etc.)?
Ability – are all of the tools in place that will enable the individual to complete the task at hand (solutions properly configured, appropriate letter templates created, etc.)?
Reinforcement – is there specific monitoring needed to provide valid and consistent reinforcement?

Monitoring Strategy - Effective change management can only take place through monitoring and feedback. As such, the monitoring strategy is critical to providing the information that is to be used to evaluate success and compliance, as well as to give the feedback needed to make minor course corrections if results are not what is anticipated. The monitoring strategy focuses on identifying the key metrics (KPIs) to be tracked, how they are to be communicated, as well as how to most effectively use the feedback at all levels of the organization.

Training Strategy – Tied closely to the communication strategy, the training defines the specifics of how associates are to be trained both in reinforcing of sales processes as well as on the software solution itself. It may include the types of associates to be trained based on selling skills and technology proficiency, as well as the most optimal approach to getting associate engagement. Additional strategy should be formed that focuses on how to engage managers and others (i.e. Champions and training personnel) to become the most effective in their roles as well – ultimately empowering associates through use of the solution.

Program Design

Goal: to assist the retailer in designing very specific programs to be used in supporting an in-store technology initiative from the communication, training and monitoring perspectives. Program design may include such things as naming the initiative, identifying the appropriate mission statement, developing key messages and media to be used, as well as a host of other material preparation.

Training Program Design – Training Program Design includes the creation of specific training materials and processes for all user types (admin, manager, associate, etc.) and all training phases (phase 1, phase 2 and follow-up). The program design will consist of defining and creating specialized programs for step by step training (such as Seven Steps to Success), as well as materials to be used for pre-live, go-live and follow-up sessions.

Communication Design – Communication Design includes development of communication documents, reports and dashboard elements to be used by each of the levels within the organization. Communication design may include such items as dashboard or report views for Executive Management, exception reports for Store or Regional Managers, as well as core messaging for associates. The primary deliverables for associates include pre-launch communications (with appropriate message and branding considerations), Go-live communication documents, as well as updates, monitoring and feedback documents or reports.

Monitoring Program Design – Monitoring Program Design includes the creation of key reports, metrics and dashboard that provide the feedback required for each level of the organization. Tied directly to the Communication Strategy and Design, the Monitoring Program makes sure that all key metrics are available in the appropriate format for the specific user. The Monitoring Program Design assures the appropriate data elements are available and articulates the reports and dashboards required to deliver them.

Execution / Training

Goal: to execute on the previously defined strategies. To provide training to the store associates, managers, and administrative staff. The training for the store associates should consist of basic sales training intended to support articulated best practices as well as application training. Training for managers should consist of methods and tools used to support best practices, coaching of associates, and application training. Administration training typically consists of environmental overview, application configuration, and Admin application training. Training may often come in phases, with pre go-live training as well as phase 2 follow-up sessions. Training methods may include CBT, Train the Trainer, Classroom training, WebEx training, etc.

Application Training – The in-store training performed in this phase focuses on the identified best practices the retailer wishes to implement. This training covers a refresher on the basics of selling (i.e. customer contact, needs identification, presentation of merchandise, close of sale) as well as more advanced selling concepts designed for up-selling, cross-selling and suggestion selling. This training may also cover the general best practices of selling including such things as outbound communications, follow-up, proactive selling, appointment / tickler practices, etc.

Admin Training – The training for management and administrators will allow them to become proficient at basic setup and configuration of the technology solutions. This would include setting up associate data, permissions and security settings, creation of custom form list data, etc. In addition, this training also helps to define how the identified sales practices can be further automated, or how messaging technology might provide assistance through prompting or recommendations.

Manager Training – The training provides the skills required for gaining compliance, identifying opportunities, augmenting best practices, identifying coaching opportunities, coaching, and feedback. It also typically includes training on the use of the application, use of “team” functionality and an overview of monitoring, coaching and opportunity assessment.

Follow-Up Training – Follow-up training provides additional training for subsequent phases or refresher training. These sessions are typically on-site with either in-store associates or with the training department (particularly relevant with a phased training approach). Follow-up training can be a critical element to the entire change management approach, as problem areas or specific individual strengths can highlight the most important areas to train.

Monitoring and Review

Goal: To monitor compliance and success relative to pre-defined KPIs, and to locate training and coaching opportunities. Monitoring also provides the ability to highlight areas of great success, or areas with lack of success, which can then provide incremental course corrections or new strategic initiatives.

Monitoring and Review –The establishment of Key Performance Indicators (KPI’s) is crucial at the outset, as it provides measurable benchmarks needed to gauge success. In addition to setting the benchmark and goals, monitoring behavior and usage from the beginning of the application roll-out identifies knowledge areas or desired practices that need additional focus. This may include mentoring individuals that are not completing the tasks assigned to them, individuals that are less effective than the average, or even practices that are not producing the desired results. By refining the processes in a scientific manner, the retailer is in a better position to act quickly and respond appropriately once an issue has been identified. New standards and benchmarks may be established as the organization improves, and as new practices are implemented over time.

Conclusion

Implementing new processes and procedures at the store level can have less than desired results, if not effectively managed. Day to day activities are typically rooted in the culture of the organization, and without planning for changing this culture, most organizations fail to see the full benefits of any new initiative. And the more people who are relied on to implement a change, the more challenging this becomes. With in-store technologies, a retailer is hoping to affect change with what is most typically the largest group of employees in the company. As a result, effective Cultural Change Management is a must.

Without exception, the new initiatives that have the greatest success have been effectively managed from the top down. Without a clear mandate from Executive Management, most initiatives will fall short of expectations. An effective Cultural Change Management program should consist of a set of progressive phases, each building off of the prior. These phases must define where you are today, where you wish to be, a strategy to get there, an execution plan, and the appropriate monitoring and review. Without a comprehensive approach, retailers will fail to see the full potential of any in-store initiative.

Clienteling - A New Clienteling Platform

noreply@blogger.com (Anonymous) — Tue, 06 Aug 2013 13:42:00 +0000

A New Clienteling Platform

You might enjoy this video on the new Raymark Clienteling solution. It's an impressive solution capable of running on iPads, Android, and Windows devices, and accessing data from within a retail organization.

Expect to hear more about it in the coming months.

#Clienteling has never been better.

Learn more here...

Customer Centricity is Still in its Infancy

noreply@blogger.com (Anonymous) — Fri, 02 Aug 2013 18:46:00 +0000

Customer Centricity is Still in its Infancy

I ran across an interesting a article, and thread of comments on the topic of Customer Centricity. The post is an assessment of a Whitepaper that declares Customer Centricity to be all but dead, and wondering what's next. I found the author of the post to be fairly on target with his assessment, but couldn't help but notice the impassioned discussion as well.

You can follow the thread here.

I believe much of the discussion, and much of the potential confusion comes from the fact that there is no real definition of Customer Centricity. As such, interpretations become overly broad, and the true meaning is lost. I recently published an article myself on the topic called 1:1 Customer-Centric Retailing.

While I did not go into how such a strategy might ultimately be executed, I will state that I believe technology will allows us to finally accomplish our goals, but we are very much still in the infant stage of life. I see a future where each and every communication done by a retailer (other than the 1:1 interactions with in-store associates which already do this) can be personalized down to the "segment of one". Furthermore, this communication can be timed based on a customers preference, taking into account their past purchases, needs, lifestyle, stage in the customer life cycle, social interests, etc.

My years in the Clienteling and CRM business have proven to me that customers want to have relationships with the retailers with whom they do business; and once a relationship is forged, they are more than willing to provide more information if they believe it will provide benefit to them. By then leveraging this information on a customer by customer basis, a retailer can finally see the true benefits of Customer Centricity.

While CRM is not yet capable of this true 1:1 relationship management today, it is most definitely heading in that direction.

Clienteling Pilots - Avoiding Six Potential Pitfalls

noreply@blogger.com (Anonymous) — Fri, 02 Aug 2013 13:46:00 +0000

Clienteling Pilots

Avoiding Six Potential Pitfalls

Executive Summary

Today’s economic challenges have more and more retail companies looking for opportunities to increase top-line revenue with in-store initiatives. The promise of increased sales through Clienteling is extremely attractive in attaining these goals. However, capital is more constrained than ever, inducing senior managers to look for early proof that projected returns for any new technology or process improvement are in fact achievable. These cash starved organizations are equally concerned with the up-front costs associated with any new revenue-enhancing investment. As a result, more companies are looking to start small and pilot technology initiatives in order to justify the expense of moving to a company-wide roll-out. They are in essence “buying an option” against the total cost of this large scale investment.Pilots typically have a few important advantages:

Lower initial investment
Knowledge and Feedback (KPI’s, Business Process, Training Requirements)
Subject to specific conditions, a way “out” if the pilot is not successful

However, pilots often have distinct disadvantages – not the least of which is gaining adequate corporate focus and alignment with core organizational objectives. Since pilots necessarily have a smaller initial investment, often they do not gain appropriate levels of visibility across key areas of the enterprise. Similarly, because many pilots are approached as a “test” of a solution’s capabilities or usefulness, the initiative can be marginalized suffering from inadequate organizational priority, resources, focus or planning. If corporate goals, measurements and success-based accountability are not put into place early and consistently communicated to all constituents regularly, pilot initiatives often wander aimlessly. This results in many solutions never being given a real opportunity to provide their potential corporate value.

Pilots require specific goals and a well defined path that the “rank and file” can follow to achieve success. Defining, communicating, measuring and managing your team will require a well designed change management processes. While the final roll-out of an implementation may be designed differently than a Pilot program, the Pilot must have a comprehensive multi-disciplined program as its foundation, which includes appropriate caveats, goals, rewards and risk identification.

The objective of a pilot needs to be exactly the same as the objective of the future broader full roll-out, albeit on a smaller scale. As a result, a significant percentage of the work needed to ensure long-term enterprise success must be performed early in the pilot initiative. To do anything less undermines the validity of the test, and can actually negatively impact the likely success of a subsequent roll-out.The six pitfalls to avoid during a Clienteling pilot include:

Lack of Executive Sponsorship / Involvement
Lack of Defined Goals and Measurements of Success
Inadequate Resources, or Authority/Accountability Disconnect
No Mitigation Strategy for Potential Impediments
Lack of Full System Integration
Unmanaged Cultural Change / Lack of Program Design

By recognizing these potential pitfalls in advance and by developing a plan accordingly, retailers can be assured of seeing the true benefits of a pilot, and can feel confident that their results are truly indicative of an enterprise wide roll-out.

Six Pitfalls to Avoid

What follows is a discussion of six common pitfalls to pilot initiatives that may limit the success of a pilot, and negatively impact the desired results. The common theme throughout pertains to effective planning and execution of a cultural change management program. Unfortunately, well-intentioned retail decision makers often embark on a pilot, inspired by the promise of dramatic business improvement without a clear understanding of what it will take to change the established cultural norms and behavioral patterns to make the project a success. All too often the amount of preparation and oversight required to deploy a pilot is deeply underestimated. Failing to recognize and address these pitfalls will lead to less than optimal pilot results or, in extreme cases, failure of the pilot to succeed in any meaningful feedback for a subsequent rollout.

1. Lack of Executive Sponsorship / Involvement

Executive sponsorship, and the specific understanding of this sponsorship to all constituents at the store level and above, is imperative to pilot success. The pilot initiative must be elevated as a top agenda item for senior management. Without top-down ownership of the initiative, other store priorities (i.e. floor moves, markdowns, staffing issues and other operational tasks) will inevitably supersede the extra effort of learning and using a new tool. While these other operational tasks are important, they don’t generate incremental revenue. Simply put, Clienteling is just too important to growth to be vying for leftover mindshare. Once store personnel understand that senior management is fully invested in the outcome of the pilot, in-store commitment and willingness to strive toward success increase exponentially.

Keeping the team aligned and committed requires consistent down-stream communication from Executive Management that highlights pilot objectives and projected business benefits. As with any new initiative, results are ensured by instituting accountability down the chain of command.

2. Lack of Defined Goals & Measurements of Success

Without clearly defined goals and a means to measure progress your pilot initiative is likely to wander aimlessly. If you want an associate to get from point A to point B, it is imperative that you tell them precisely where point B is, and that you ensure that they have the tools and abilities needed to reach that destination.

In order to determine the specific Clienteling activities that will provide the greatest benefit, start by articulating your corporate goals, and extrapolate that into specific in-store goals. It is important that the number of initial goals is limited to that of top objectives that can be reasonably achieved; usually 2-4 goals are best. Once the goals have been established, determine how the success of these goals is to be measured and how these Key Performance Indicators (KPI) will be communicated. In-store goals should map directly to a corporate goal.

Example
Corporate Goal = Increased Frequency
In-store Goal = Outreach results related to Potential Lapsed Customers

After appropriate measurements are determined, the method to deliver ongoing feedback must be instituted for each level of the organization. Corporate and store level KPIs should be visible to executive management, while individual associate and store level metrics are available to the associate, store manager and regional managers.

3. Inadequate Resources or Misaligned Accountability

Constrained capital often plays a major role in choosing to implement a pilot prior to committing to a full roll-out. When resources are tight it is common to staff a pilot with resources borrowed from other projects, and on a part time basis. While appropriate for some roles, it is important to note that there are two critical roles where this will have a significant negative impact. The two roles that require dedicated resources are the IT/Technology Project Owner, and the Business Owner.

Typically, there are an array of technology skills and resources that must come together to implement a Clienteling initiative, but ultimately there is one individual that must own the technical success of the project. This person’s role is to manage all technology aspects of the project, to test and validate all aspects of the project, and to act as the liaison between the stores, IT and the vendor. While this role is not likely to be a full time job for the entire life cycle of the engagement, there are times when the initiative will take up the majority of this person’s workday or workweek. Coordinating the internal efforts involved in integration, implementation, testing, validating, etc., require time and a single minded focus.

The business owner is perhaps the most critical individual resource in most in-store initiatives, pilot or otherwise. This person acts as the coordinator, helping to finalize the overall project as it relates to KPIs, Best Practices, Training Strategy, Communication Strategy, Monitoring Strategy and total program execution. This individual also needs to coordinate the efforts of the Users for application configuration, data validation and User Acceptance Testing.

While it is not uncommon for this person to fall outside of the direct store chain of command, this can create significant issues if not managed properly. This is true for two reasons:

Accountability – If the stores do not feel they report to this person, the individual has no authority to hold the stores accountable.

Priorities – While this initiative may be a major priority for the company, without direct involvement from the appropriate chain of command, other day to day tasks, always seem to be of higher priority.

For these reasons, it is recommended that the business owner is either from the store chain of command, or that Executive Management communicates very explicitly how important the initiative is, and remain fully engaged from the goal setting, training and accountability aspects throughout the life of the pilot. Ideally the Business Owner should report directly to Executive Management related to the initiative. Division/Region managers must also be involved in the planning and execution, and held accountable the actions of their stores, and the prioritization of the initiative.

4. No Mitigation Strategy for Potential Impediments

There are an array of potential impediments to a project that range from overcoming existing cultural issues, to technology shortcomings, to process conflicts, to available resources. Every corporate culture is different, and each retail organization is supported by existing processes and tools. For this reason, there is no easy cookie cutter approach to identifying impediments. Instead prior to moving forward, the business must undergo a thorough analysis of existing processes, technologies and current culture to identify such issues.

Once the potential issues are identified, a mitigation strategy must be defined for each of the key elements. This strategy can then be put into practice and communicated throughout the entire lifecycle of the project.

The following is a brief list of potential impediments:

1. Competing agendas and processes

2. Unique technology restrictions (lack of access to data, etc.)

3. Resources

4. Culture and Attitude

Competing Agendas

Of the four potential impediments, competing agendas is the most common, and has the greatest risk of negative impact. When there are competing agendas, associates will tend to gravitate to what is comfortable, or known. This can create unspoken resistance, which is often difficult to identify. If an old technology or manual process delivers some of what is the scope of the pilot, or associates are rewarded for using different methods, or DMs or RMs stress different priorities, there is immediate ambiguity and resulting risks to the project. For this reason, all potential competing agendas should be identified and addressed prior to the pilot initiative.

Features of the application currently available through other technology
Features of the application currently available through manual processes
Reports or key metrics where associates, managers, GMs DMs and/or RMs are being held accountable that may be inconsistent.
Areas where the current incentive plan may conflict with the initiative
Cultural issues related to client interactions

Unique Technology Restrictions

While not often a critical impediment, there are certain technology restrictions that should be identified and addressed in the overall strategy and program design. Examples of such restrictions might include the absence of wireless infrastructure or dead-spots in the stores (mobile only), poor data integrity between existing systems, or legacy POS incapable of running web or third party applications. While some of these restrictions may continue to exist during the pilot (i.e. duplicate customers in the database), they must be managed to eliminate negative feedback or pilot performance. In some cases, simply acknowledging an issue and describing the future roadmap is all that is needed.

Resources

The number of resources in the store is rarely an issue with a pilot (or at least not beyond the constraints with which the store is already faced), however getting IT and Head Office mindshare can be a major problem. As discussed above, the alignment and accountability of resources is critical.

While the above discussion focused primarily on those that will effectively manage and motivate the in-store staff, there are a few other key stakeholders where lack of involvement will hinder a project’s success. Continued involvement from resources in the following functional areas is typically required in a Clienteling initiative:

Marketing
Loyalty / Rewards
Training
Merchandising

Each of these business areas has a vested interest in the success of most in-store pilots, and each should engage early in the process, and remain engaged through the life of the initiative.

Culture

Cultural issues abound in many retail environments. Some retailers have a very strong sales culture, while others do not. In some environments the “Rock Star” associate is left to do what they wish, while in other environments associate behavior is quite regimented. Ultimately the retailer knows their business best; so a review of strengths and weaknesses must be done using an “introspective lens”. While existing cultural issues should never prevent a successful initiative, they must be recognized and addressed as part of the overall strategy of engagement to assure the appropriate level of buy-in from the associates and management.

5. Lack of Full System Integration

With pilot initiatives there is often a desire to go live with as little capital outlay as possible, attempting to identify business benefit for the least cost. After all, this is a pilot. One element that is often stricken from the pilot budget is fees related to full system integration.

Examples include:

Direct tie into POS to launch the application
Direct 2-way access between pilot initiative and other systems – (i.e. POS for client add, client search, etc.)
Push task capabilities from current Loyalty or CRM system
Real-time access to product quantities, or product price per store
Access to data from external sources such as Alterations, Sends,UPS, FedEx, etc.

While lack of integration is unlikely to prevent achieving some level of success for the pilot, there are significant shortcomings inherent in not performing this work, and this should be recognized as a potential impediment to seeing all of the benefits. While it is often not possible to give the associates everything they want on the first day, it is critical that associates understand the long-term intent for the clienteling application and to have some visibility into the roadmap for the future. These system-related issues cannot become excuses for associate to not use the solution.

Perhaps more importantly, lack of full system integration does not provide a completely valid test in comparison to the solution that will be rolled out. Since in most cases, the final solution is to be fully integrated, such a pilot initiative is not reflective of this end state. While it is true that a partially integrated pilot solution should show even greater results once fully integrated, there is a risk of less than optimal pilot results without approximating a final roll-out environment whenever possible.

6. Unmanaged Change / Lack of Program Design

While listed as the sixth potential pitfall, unmanaged change can be the most important item on the list. It is last only as it encompasses aspects of nearly every other item mentioned before it.

Possibly more than any other initiative in retail, successful Clienteling is rooted in cultural change. The change required comes in the form of what is done, how it is done, and how it is managed. While many top associates understand the benefits to clienteling, and likely perform certain best practices today, Clienteling is about institutionalizing core best practices in a manner that is manageable and measurable. It is a combination of process and practice re-engineering.

Without proper change management in place, any pilot is likely to meander; producing less than the desired tangible results. In a worst case scenario, resistance and/or complacency from the stores may become so great that the pilot never truly gets off of the ground. In this situation the retailer is left with very difficult decisions about how to proceed – knowing the benefits of Clienteling, but not being able to prove the results.

While the above five potential pitfalls will impede successful cultural change, even if all five of these have been sufficiently addressed, change will not happen without effective execution.

In general, any change management program must answer three fundamental questions:

What are the specific goals?
What activities will accomplish these goals?
What are potential impediments, and how do we address them?
How will associates be engaged, and buy-in accomplished?

Without first answering these questions, the retail organization is failing to lay down the appropriate foundation to develop a plan. Without a planned, measured approach, execution will be ineffective and change will not happen.

Inadequate cultural change management is most frequently a result of insufficient planning and execution of one or more of the following:

Communication – what is to be communicated, to whom, when and how?
Training – what will be trained to which segments of associates, at what time, by whom, and how?
Monitoring / Feedback – what will be measured, by which method, provided to whom and in what time intervals? What are follow-up measures based on various metrics? How are people recognized, rewarded or held accountable?

Clienteling is all about change management. A complete change management program must be created before attempting to go live in the stores.

Conclusion

Pilot initiatives have very valid business goals and are based on sound business reasons. Unfortunately they are also faced with unique challenges, and if not managed properly are likely to generate less than desired results. Avoiding the six most common pitfalls can assure a successful pilot that generates significant, tangible results. The six pitfalls to avoid include:

Lack of Executive Sponsorship / Involvement
Lack of Defined Goals and Measurements of Success
Inadequate Resources, or Authority/Accountability Disconnect
No Mitigation Strategy for Potential Impediments
Lack of Full System Integration
Unmanaged Cultural Change / Lack of Program Design

By avoiding these pitfalls through effective change management program design, a retailer can effective manage the activities of the associate, and attain the final end results they desire.

Retail Mobility - Potential Impediments to Success

noreply@blogger.com (Anonymous) — Tue, 30 Jul 2013 18:25:00 +0000

Retail Mobility

Potential Impediments to Success

by: Scott Pearson

A general discussion document on the direction of mobility in retail and the potential barriers to rapid adoption of point-of-decision solutions.

Author's note: This was originally written in 2005, but in revisiting it recently I couldn't help but compare it to the state of the world in 2013. While serious progress has been made, it is surprising to see that we are faced with many of the same problems today - although perhaps to a much lesser degree.

Introduction

Stages of Information Technology

Point-of-contact Solutions

Real Benefits and Impediments

Initial investment

Need to prove a defensible ROI

Infrastructure issues

Fear of Customer Reaction

Inability to analyze data real-time

Conclusion

Introduction

With the advent of wireless mobility in retail, the knowledge of the enterprise can now be leveraged at the point of decision in real time. With real-time information on the sales floor, retailers can now assist in increasing service to customers as well as in raising the productivity of associates, one of the most difficult costs to control in retail.

Retail is at a point of flux as many retailers are only now preparing for the logical adoption of these sales floor technologies. It may be years before all retailers see the true advantages of enterprise mobility, and many will be caught playing catch up just to align themselves with their changing strategic direction.

Stages of Information Technology

Information Technology management has gone through a series of stages. Richard Nolan describes the stages as initiation, contagion, control, integration and ultimately mastery of a dominant design.[1] He further describes these stages as having followed an “S-shaped” curve where broad acceptance, competition and efficiencies ultimately reduce the benefits over time. This sets the stage for the next stage, which ultimately supplants the previous. The dominant designs in this process have included mainframes, minicomputers, microcomputers, and network client servers. These dominant designs are further defined as the Data Processing Era, the Micro Era and the Network Era.[2]

In a similar fashion Bill Nuti of Symbol Technology speaks of five Ages of technology: The age of centralized computing, the age of distributed computing, the age of personal computing, the age of networked computing, and ultimately the age of mobility. It is his belief that the impact of mobility will usher in a new age that will harnesses the technological developments of previous ages in productivity and advances them to all areas of an organization, including factories, warehouses, distribution centers and in the field. [3]

As described by Nolan, “the fundamental difference between Industrial Age companies and Information Age companies was the formal recognition of information as an important resource, and the incorporation of new management principles to manage information effectively and explicitly as a resource.” It is this realization that has allowed IT-enabled network organizations to begin to focus on their surroundings, and react and respond to the outside worlds, rather than simply make and sell products.[4] With the ability to provide this information at the point of contact, even on the move, mobility is the next logical extension of the Information Age.

Nearly every technology demonstrates spillover effects – new ways of using the technology that had not been anticipated. Early stages of spillover tend to be improvements in how things are currently done, but later stages can often change environments in fundamental ways. As highlighted in a review from the Boston Consulting Group titled Competitive Advantage from Mobile Applications, “As consumer companies embrace wireless applications three significant stages will occur. First, communication between organizations and their employees, customers, and suppliers will be radically enhanced, in effect mobilizing business operations. Second, companies will use new data from consumers and equipment to reshape business models. And third, previously untapped data will be processed in ways that will change the rules of competition and even redefine industries.”[5]

The above effects are fully anticipated, and are in fact what has been seen by the adoption of each of the various stages of IT development. What is ultimately unknown is exactly what changes in business models will occur, as well as what rules of competition will prevail. It is a safe bet to assume that technology at the point of decision will help to increase retail productivity on the sales floor, and quite likely help to increase productivity of the shopper as well.

Point-of-contact Solutions

With new standards of CDMA, GPRS and 802.XX, distributed computing and the Internet have converged to provide the necessary foundation to support enterprise mobility. Enterprises are now capable of moving the knowledge and power of the organization to the point of contact. The standard of choice for retail is currently Wi-Fi however the specific standard is less important than the ability of the technology in bringing information to the sales floor.

The lack of information at the point of decision is extremely prevalent in retail. In fact, the retail sales floor has remained largely unchanged through the entire Information Age with the one exception of the cash register evolving into the point-of-sale terminal. The productivity of a vast majority of retail personnel has been virtually unchanged by technology. As retailers continue to focus on ways to keep sales staff on the selling floor and away from inventory stocking duties, the productivity of the associate becomes even more critical.

With the advent of the Internet backbone, and wireless technologies, retailers are now able to implement solutions that put information at the point of contact. These point-of-contact solutions are all designed to increase the productivity of the associate, manager or customer. The solutions range in functionality from mobile POS for queue busting, to merchandise location systems designed to ease the process on the floor and stockroom, to manager’s dashboards designed to keep the manager on the selling floor and out of the back office and finally to clienteling, where customer information is leveraged to enhance the relationship between the customer and deliver unique value propositions to each customer. It is a logical step toward a customer-centric organization that is highlighted in the implementation of these service oriented applications.

An additional benefit of point-of-contact applications is the ability to promote a two-way communication with the enterprise. There is now a structured way to gather additional information, as well as feed information. By allowing an associate to gather previously unavailable information about a customer, the organization begins to learn. If handled correctly, this learning becomes the beginning of a relationship where the customer has trained the retailer in how to best service their needs, and the switching costs associated with re-training a new retailer become very high. Additionally, best practices of the organization may be driven to associates guaranteeing a consistent experience, and a possible reduction of associate training. Training is a critical issue with retailers, as the turnover rate for most retailers is quite high.

A recent Gartner study concluded that “increasingly, retailers in this century want to replicate the personalized customer buying experience of years past, so they need to develop a more personalized relationship with the customer. It was the technology that initially took the retailer away from the customer because the information was digitized, thereby breaking the personalized relationship between the retailer and customer. In the future, it is the technology that will be used to reconstruct this personalized retailer/customer relationship.” [6]

Real Benefits and Impediments

Enterprise mobility may well become the mantra of the decade, promising to empower users with more information than ever before, at the most critical time—the point of decision. Providers of mobility solutions cite myriad advantages, and amazing ROI potential. They paint a picture of a world where every employee has access to all of their information in real-time, when they need it.

It is often assumed that the ultimate value of mobility is a given. The following quote form Puneet Gupta of CNETAsia highlights the sentiment “The value that mobility brings to an enterprise is well known. It’s difficult to imagine how an enterprise can not benefit from real-time or near real-time access to information. The question is not whether enterprise mobility is desired, but when, where, and how it should be rolled out. Using a mobile strategy, an enterprise can expect regular and significant benefits in terms of productivity, response time, and accuracy of operation.”[7]

It is assumed that enterprise mobility will help to increase human productivity, as well as hardware productivity. Human productivity includes the gains seen by the associate or customer by using the technology. Hardware productivity refers to the previous dollars invested in data centers and networks. Enterprise mobility makes this information available to a new set of people, extending the investment – increasing the ROI on the dollars spent yesterday.

While both of these productivity gains would prove beneficial to any retail organization, the real picture cannot be painted so easily. Retail is faced with a number of issues that are assured to slow down the acceptance of wireless applications, and the subsequent benefits derived from those that are implemented.

Initial investment

Perhaps most daunting to many retailers is the initial cost of the needed applications, hardware and infrastructure. While investment in technology is never inexpensive, it is multiplied many times over for the typical retail enterprise. While a retailer may have multiple distribution centers that require infrastructure, they pale in comparison to the number of stores the retailer has. A retailer with 200 outlets would need to consider the additional cost of infrastructure, hardware and software for 200 doorways, and multiple touch-points within each doorway. This can prove to be extremely costly to an enterprise. For many retailers this has been sufficient justification to hold off on updating for as long as possible. Because of slim margins, retail has historically been slow to adopt most technologies. The added pressures of a slow economy further exacerbate this issue.

Despite these concerns, retail is beginning to show signs that many realize a need to update infrastructure. In a recent Gartner study 54% of respondents said they had begun or completed efforts to improve network infrastructure, and an additional 27% said they would do so within the next two years. In addition 55% of respondents had begun broadband initiatives, with an additional 21% hoping to complete these efforts inside of two years. Perhaps most telling, 35% have begun or completed wireless access to the stores with an additional 33% hoping to complete access in two years.[8] While the shift is significant, it is clear that the retail industry has a tremendous way to go. While 80% of retailers are adding, or will have added, network infrastructure a marked 20% have no intention of doing so in the near future.

Need to prove a defensible ROI

Because of the financial pressures of the economic downturn, and what might be characterized as a general disregard for IT in the retail sector, most IT spending must now go through a rigorous approval process. By holding investments to a higher standard retailers believe they can reduce the investment dollars needed for IT initiatives, and guarantee positive benefits from each. Through the 1980’s and 1990’s, most retail technology was aimed at reducing costs in the supply chain, or in optimizing the flow and quantities of merchandise to the stores. While having the right merchandise at the right store can increase sales, these initiatives have largely been viewed as cost reductions. Applying ROI models to cost reduction can be fairly straight forward, so these technologies were somewhat easy to justify for many retail organizations.

As retailers begin a more customer-centric focus the assessment of solutions begins to shift from cost reductions to increasing top-line sales growth. Applying ROI models to these solutions has proven to be more difficult. It can be rather tricky to quantify customer intimacy. As described in 6 Steps to a Customer Intelligence Advantage by Mark Frantz with Jim Dion, “It takes a leap of faith by the CEO and CFO to believe that knowing customers better in stores can be tied to a sales increase. Moreover, public companies look for quarterly payback periods, and much of this involves paybacks that are 2-3 years out. Customer intelligence is a strategic move to create a compelling value proposition. It entails lots of detailed grunt work, but it will eventually become the price of admission into the retail game.”[9]

This has put a lot of authority for IT spending in the hands of the CFO, as it is often difficult to defend an ROI on a service related initiative. Even in a situation where a pilot rollout has been used, it is often difficult to point directly to the initiative as being responsible for any improvement. While most retailers may define Key Performance Indicators to study as metrics to support an ROI, it is still nearly impossible to isolate a store to a level that can guarantee the results are from the initiative. If sales increase, it could be due to an early cold spell, a new collection that arrived in the store, a recent sale, or a new marketing campaign.

All hope is not lost in this arena however. With the recent acceptance of CRM across the industry, there is a renewed focus on customer-centric initiatives and a template of sorts. CRM has brought about a shift from a transaction based approach toward a customer view, where the focus ultimately becomes lifetime value of the customer, and a share of their wallet, rather than a share of the market. By leveraging the success of many of these CRM initiatives, retailers have begun to loosen the purse strings regarding some of these initiatives. As described below, however, this can often create larger problems than many retailers imagined.

Infrastructure issues

Many retail organizations have begun to see the need to redefine their value proposition, and are looking for technology to help align them with their chosen strategic approach. With a realization that not all retailers can be low-cost leaders, retailers are looking at a variety of differentiating activities. As described by Joe Skorupa in Wal-Mart Nation, retailers must “focus on refining their business models and carving out profitable niches in the multi-trillion dollar retail pie. Wal-Mart may be the business leader of our time, but retailers who follow its lead do so at their own peril.”[10] For these reasons, many retail enterprises have shifted their focus to the customer, and toward solutions aimed at increasing service at various levels. In a recent Gartner study, over 70% of retailers responded that in two years they will have completed work in centralizing customer intelligence, while 64% will have increased efforts to segment customers based on needs, behaviors or economic value.[11] While this concept may seem obvious, it requires a monumental shift in how retail technology is applied.

The current mix of technologies in the typical retail environment is comprised of a tremendous number of legacy systems. The primary form of technology in the store, the POS system, is typically some of the oldest technology in the enterprise, and is usually based on old and sometimes proprietary platforms. In addition to old systems, there are numerous databases storing information in the typical retail enterprise. POS systems generate a transaction log file which stores the transaction data, while merchandising systems track the SKU and UPC information. CRM systems contain personal customer data on some customers and additional databases, such as proprietary credit cards, may contain still other pieces of personal data. When there is a common view of the customer, the data is still often unclean as the initial data entry is often duplicated between stores, and often within stores. Since scrubbing data can be a very tedious and time-consuming process, it can prove to be a decision point whether to move forward on initiatives.

The realization that retailers have to get a handle on their data is perhaps best highlighted by the statistic that 52% of retailers have begun or completed initiatives in creating data warehouses or data marts. In addition, 23% plan to update their data storage procedures in the next two years.[12] A quote from this Gartner study describes the situation aptly “Business experts believe no industry stores and tracks more data than retailing, so it’s not surprising that the data warehouse figures tell a strong story in the study.”[13]

While it is clear that retailers recognize the need to move toward an integrated system, most face an uphill battle with the disparate systems throughout the enterprise. With the advent of Web Services enterprises are more able to pass information from one system to the next, however it is a daunting task to determine the appropriate data, protocols to follow and read/write permissions for the various data. With a lack of a basic foundation, many retail organizations are just taking their first steps in the direction of a fully integrated enterprise.

Fear of Customer Reaction

Many retailers have found themselves questioning the premise of customer data on the floor out of fear of what the customer reaction might be. With the backlash of various initiatives such as DoubleClick[14], an increase in advocacy groups and a general growth of customer awareness of data privacy, many retailers fear the customer’s wrath if they perceive privacy threats. To complicate the point even further, there is a real issue of how to identify the customer in the first place. Clearly the POS terminal is too late to use data in a meaningful fashion. With the fear of how customers might react at the forefront, it can clearly be an uphill battle to gather the information in a meaningful manner. Mark Franz said it quite succinctly in a recent RED brief “As retailers discovered the value of customer data, consumers discovered the witness protection program.” [15]

While these concerns are as real as any impediment mentioned above, they are perhaps the easiest to address for the retailer moving toward service. Retailers that offer compelling reasons for the customer to participate and identify themselves will typically allay fears and receive consumer acceptance. In fact, while consumers and advocacy groups may make noise about these issues, their actions contradict their protests. Seventy-nine percent of consumers responding to a Forrester survey had responded to none of the opt-out notices they received from financial companies.[16] Furthermore, most demonstrated that privacy was for sale, for the right price.

Most consider the record of their technology behaviors – like what they watch on TV, which sites they visit online, and where they use their mobile phones – to be private. Yet between one-third and one-half are willing to share this data with providers for a $5 discount off their monthly service fee. [17]

While drawing the conclusion that customers don’t really care that much about their data could be dangerous, it is clear that they are willing to give data when they feel they will receive some real benefit in doing so. Many high-end retail sales associates have been doing just that in the form of a client book since the inception of retail, and the recent surge in loyalty programs supports the premise equally well. By allowing the retail organization to now control this data, there is actually a greater level of security, where customer data doesn't walk out of the door when a sales associate leaves a retailer. When customers are aware of the benefits, they have shown a broad acceptance. One lesson learned is that the benefits and policies should be clearly explained to a customer up front.

Inability to analyze data real-time

One final impediment to the effective use of point-of-contact solutions in the retail environment is the lack of processes capable of analyzing and delivering meaningful data real-time. While CRM applications have helped to slice and dice customer data to a point where customers can be segmented in myriad forms, it still approaches the task from a “one to many” perspective in that it identifies a condition (or set of conditions) and finds a group of customers that meet the search criteria. A customer-centric model needs to approach the interaction from a “one to one” or “one to many” perspective. A customer must be identified and an offer, or offers, must be determined based on unique customer data at or near real-time.

The ability to do this sort of analysis does not exist in the typical retail environment. As discussed by Mark Franz, “This is hard to do with 24,000 SKUs and 120,000 customers. Normal systems don’t do it well.”[18]

While present in some form on the web, the ability to apply extensive intelligent agents against the various retail data sources poses a real issue of real-time functionality. Basic functionality, similar to what has become popular on the web, will likely be the retailers first foray into real-time intelligence and suggestion engines, however most of the current applications rely heavily on inference engines. While inference works well for general merchandise and hard goods, it does not work well for fashion or soft goods. While it would be easy to infer that a customer buying baby formula may also need diapers it is less easy to infer that a customer that bought a blue shirt needs tan chino pleated pants. It is far more likely that a merchandiser might wish to suggest coordinating items, or group collections for this sort of detailed suggestive selling.

Conclusion

Mobility is the next logical step in the Information Age. Retail enterprises are ideal candidates to take advantage of this new platform as it finally moves information onto the sales floor, where it can best increase productivity. The retail organizations that realize the potential of this power have begun to build their organizations around this business model. They are looking at the various solutions and integrating applications that help them to provide a unique value proposition to each customer.

Unfortunately, many retailers are faced with some form of impediment to the immediate acceptance and success of these initiatives. With concerns involving the initial investment and a need to prove a defensible ROI, retail decision makers are somewhat reluctant to place their necks on the cutting block, although the need to generate top-line increases is beginning to change this environment. With additional

complex infrastructure issues and lack of technology capable of performing real-time data analysis and delivery, there are limitations to the types of solutions retailers will look to deliver short-term. Quick wins are critical for proving the need to move in this direction strategically. For some retail organizations the fear of the customer reaction to privacy serves as just one more excuse to not move forward. While it is rarely the primary reason, it helps to support decisions based on other criteria.

Each of these arguments can be answered on an individual basis yet the sum of the total may cause pause with many retailers. It is clear that technology is moving in this direction, so the real question becomes how long they can afford to not respond.

[1] Richard Nolan, ” Information Technology Management from 1960-2000”, Harvard Business School, June 7, 2001

[2] Nolan, 2001

[3] Bill Nutti, President Symbol Technologies, “The Enterprise Mobility Company / Keynote Speech”, January 2004

[4] Nolan , 2001

[5] Competitive Advantage from Mobile Applications, Opportunities for Action in Consumer Markets / The Boston Consulting Group, Feb 2002

[6] Quoted from a Gartner Study in internal Symbol Technology document Dec 2003

[7]Puneet Gupta, Make the move with an enterprise mobility strategy, Techrepublic / CNETAsia 10/16/2003

[8] “Networks and Infrastructure – Laying the groundwork for the real-time, multi-channel store of the future”, Retail Technology Study, Gartner Research, June 2004

[9] Mark Frantz with Jim Dion , “6Steps to a Customer Intelligence Advantage”, Retail Executive Digest, October 2003

[10] Joe Skorupa, “Wal-Mart Nation”, 14^th Annual Retail Technologies Trends Study, Gartner Research June 2004

[11] “Customer-Centric Retailing, 14^th Annual Retail Technologies Trends Study, Gartner Research June 2004

[12] “Building the Smart Enterprise”, 14^th Annual Retail Technologies Trends Study, Gartner Research June 2004

[13] Ibid.

[14] Ken Mark and Prof. Scott Schneberger, “DoubleClick Inc.: Gathering Customer Intellegence”, Ivey Management Services, 2001

[15]Mark Frantz with Jim Dion , “6 Steps to a Customer Intelligence Advantage”, Retail Executive Digest, October 2003

[16] Jed Kolko, “Privacy For Sale: Just Pennies a Day”, Forrester WholeView Technographics Research, June 11, 2002

[17] Jed Kolko, “Privacy For Sale: Just Pennies a Day”, Forrester WholeView Technographics Research, June 11, 2002

[18] Mark Frantz with Jim Dion , “6 Steps to a Customer Intelligence Advantage”, Retail Executive Digest, October 2003

1:1 Customer-Centric Retailing

noreply@blogger.com (Anonymous) — Tue, 30 Jul 2013 01:23:00 +0000

1:1 Customer-Centric Retailing

Customer Centricity has become a prevalent buzzword in the retail industry over the last several years. There is hardly a retail executive today that is not touting the virtues of a customer-centric corporate strategy. Is Customer Centricity simply a platitude or retail jargon expressing business as usual, or is this truly a fundamental change in the way retail is being performed today?

The unfortunate answer is both. In many instances this Customer-Centric rhetoric serves little purpose other than to allow retail executives to paint the picture of a new and improved corporate direction; while little has changed in the actual operation or strategic direction in the enterprise. In other organizations, however, executives are looking for ways to truly reshape their business through targeted customer centric strategies designed to foster and maintain long-term loyal relationships with their customers. These executives recognize the true value of approaching their business from an alternate perspective, and are investing heavily in efforts to restructure their organizations around a new paradigm known as Customer Centricity.

Business jargon serves a useful purpose in condensing what is often a large idea or concept into an easily expressed and easily digested word or phrase. The jargon aids in the coalescence of ideas into a singular form that serves as a common language to a given target audience as a branding mechanism. This branding helps to differentiate an idea or concept from others, thus allowing it to gain greater recognition and critical mass.

Unfortunately, this branding of an idea can often have negative implications as well. The most common shortcoming is the lack of a thorough understanding of the entire scope of the topic. This can occurs for two reasons. First, the use is quite often very industry specific, and does not always translate to other industries easily or consistently. Second, the extraction of this “condensed” expression of an idea is subject to personal interpretation. Without prior understanding of the scope of the initial idea or concept, the individual is left to infer as to the larger meaning – leading to varying definitions.

A perfect case in point is the use of the acronym CRM (Customer Relationship Management). While those in Sales or Marketing are quick to derive Customer Relationship Management for the acronym CRM, the larger meaning is still subject to varying interpretations. In one industry CRM may be thought of as the activities around managing prospects, accounts, and sales pipeline; while in another it may be about segmentation, campaign management, and call center activities. In fact, to many people, CRM is interpreted to mean the computer software solution used to support any or all of the activities described above. Overall, the meaning is quite broad, while the individual definitions are often quite narrow.

One reason for this confusion is that CRM is actually not intended to define activities or software solutions, but is in fact intended to convey a strategy. CRM is a strategy designed to foster, maintain and enhance relationships through a set of repeatable processes. It is accomplished through the development of operational practices which manage activities related to the customer interactions. While the typical implementation of a CRM strategy involves using technology to organize, automate and synchronize the desired business processes and activities; these same activities could be performed manually (albeit far less effectively).

Customer Centricity

The term Customer Centricity shares a similar fate as CRM. It would be hard to find a CEO today who would tell you that his or her company is not already customer-centric. But ask what makes them so and you would likely get very different answers. The reason for this is once again the individual interpretation of the meaning of Customer Centricity. At a very high level, the meaning is easy to define (putting the customer at the center of the business), but detailing exactly what this means is another thing entirely.

Ultimately, the reason for this is that Customer Centricity is at its heart not a strategy. It is first and foremost a philosophy. Customer Centricity is a belief system whereby a business shifts their business model away from a focus where products and services are perceived as the core asset, to a focus where the customers are the core asset of the business. It is no longer about finding customers for an organization’s products, but about finding products for an organization’s customers. This is a fundamental paradigm shift for most retail organizations.

A customer-centric strategy is borne out this customer- centric philosophy. It is defined by the goal of building long-term loyal relationships through providing solutions to customer problems – owning those problems, and the resolution to those problems. By taking on the responsibility of solving customer problems, the retail organization builds a lasting relationship with their customers; one where the customer wouldn't think of shopping anywhere else.

While the application of a customer centric strategy may be different depending on the retail vertical (for example, a designer driven apparel retailer’s brand is driven primarily by the vision of the designer, while an electronics retailer may have more flexibility related to the products and services they offer), The primary tenet is the same --- the customer is at the center.

An effective Customer-centric strategy is accomplished through a better understanding of the customer’s needs. Not just as they pertain to the retailer’s current products and/or services, but as they pertain to the customers overall lifestyle, and day-to-day activities. There is a requirement to understand the customer at a new level – a much broader level. It is not sufficient to focus only on a customer’s past purchases or basic demographic information. There is a need to expand the knowledge and insight related to of each individual customer in such a way as to tailor each interaction in order to solve problems that are unique to that individual. Understanding a customer’s shopping habits, on-line habits (both related and unrelated to your brand), social habits, lifestyle, sports and recreational activities, travel, aspirational goals, preferences, etc. can all come into play while executing a customer-centric strategy.

There are a number of articles and a few books on the topic of Customer Centricity; each with accounts of retail organizations use of a customer-centric strategy. While many of these examples of customer-centric retailing point to transformative changes created through the implementation of such a strategy, these examples most often focus on the customer as a group or segment. The analysis is most often done at the aggregate, not an individual. It is achieved through the combination of viewing their business through the eyes of the customer, combined with new input parameters that shed a new light on their business model.

One such example is highlighted in the book by Ranjay Gulati, called “Reorganize for Resilience: Putting Customers at the Center of Your Business”. He details a situation where grocery stores began offering pre-bagged salads through the realization that many consumers were trying to eat healthy, however grocery stores were not selling a proportionate amount of salad ingredients. By viewing the shopping experience from the “outside in” and by identifying the issues consumers were having related to the inconvenience of washing and chopping ingredients, they made a logical leap and solved the problem for the customer by pre-mixing and bagging salads.

This type of innovative thinking can help organizations to transform their business over time, and can be a key ingredient in a customer-centric strategy. It is important to note, however, that this “macro” view of Customer Centricity tends to be less operational in nature, and more tied to strategic initiatives such as new product lines, innovative service offerings, etc. On the other hand, a “micro” view of Customer Centricity can see gains in very short order, with the existing business framework – but a new perspective.

The “micro” view of Customer Centricity is even more about the individual, not about the group of similar individuals. In marketing terms, it is the segment of one. This is referred to as 1:1 Customer Centricity. Ultimately, the benefits at the 1:1 level can be seen much more rapidly, and can impact every single interaction.

1:1 Customer Centricity

Perhaps surprising to some (although it really shouldn't be), the in-store sales associate is most often the individual in a retail environment that is the most customer-centric in their day to day dealings with a customer. This is particularly true in a high service business, but is also true to varying degrees in virtually all retail. While more and more customers are shopping on-line, bricks and mortar retail still represents the vast majority of sales today. Online shopping provides a convenient medium, and an easy shopping experience. It also provides very simple price comparison across retail brands, so price becomes a more important factor in the buying decision.

What e-commerce still fails to provide, however, is the personal interaction; someone to provide counsel, answer questions, look for and recommend alternatives, investigate issues. It is this one-to-one relationship that strengthens loyalty and fosters long-term relationships. The interaction is most often enhanced through the gathering of information by the sales associate.

o What is the item’s intended use?

o When will it be used?

o Is there a particular look or brand you were interested in?

o Is this for use while traveling?

o How often do you travel?

o Where?

o Oh, and based on what I now know, may I suggest the following three coordinated items that will enhance this purchase?

o I’m also expecting a new shipment of product in a week that I think would address this other need you mentioned, do you mind if I contact you when they arrive?

o By what method?

It is through this 1:1 relationship that the associate is able to interpret the problems, and to take responsibility for fulfilling the customer’s needs. It is also an opportunity to identify other needs that the customer may not have been thinking about at the time they came into the store. If done well, the customer is delighted and a relationship is born.

The best sales associates are masters at capturing the appropriate level of customer information in order to identify needs, and then using this information to personalize their recommendations. Unfortunately, there are a finite number of “best” associates. More often than not, the average associate in an organization falls short in some critical areas, which negatively impact the relationship with the individual and with the brand.

Imagine, however, if a retailer had the capacity to learn more about their customers. To record all of the information gathered during the in-store exchange, as well as on-line interactions with their own e-commerce site and that of their competitors, know of comments being made about them on social media sites, or blogs? Imagine if they could replicate the “best practices” of their top associates, and provide personalized service to each customer across all channels, and through the contact medium preferred by the customer.

This is what 1:1 Customer Centricity is all about.