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Digital has become a way to not only recognise your most valued customers, but to also run your business better

Miya Knights | Author, consultant and publisher

If a retailer had a crystal ball today, they would probably most want to know what lasting impact the pandemic is likely to have on their customers’ expectations in future.

They already know the use and influence of digital has had an increasingly important role to play in today’s average consumer’s shopping journey. In fact, online retailers were the preferred research source among 64% of shoppers surveyed by Deloitte only late last year.

But, while the impact of COVID-19 has been seismic, its catalytic effect has only confirmed digital as the single most irrefutable change accelerating already present socio-economic trends. Put simply for retailers, digital has now become a definitive strategic imperative.

As we have already seen, if further proof were needed, it’s most likely that only the fittest will survive, and they will redouble process automation efforts to build on recent gains. Those already winning with consumers will continue to thrive by harnessing digital to do so.

Analysing digital shifts

Pre-pandemic, it was a common retailer refrain that they were “drowning in data”. But, we also heard that, “data is the new oil”. This disconnect in understanding between the value of data (as a by-product of digital automation and interaction) and realising its worth persists.

Consider, for example, that commerce sales in Western Europe jumped 26.3% in 2020 driven by digital buying during lockdowns, where grocery emerged a major winner.

In fact, over 80% of European consumers who started buying groceries online during the pandemic plan to continue doing so. Yet, a Kantar CX+ study revealed that only 24% of customers were actually impressed with their grocery retailer’s omnichannel presence.

Why does such digitally enabled and data-driven customer interaction still appear so difficult? Certainly, its growing importance has been placed in stark relief to urban centres turned into ghost towns and High Streets that may never look and feel the same again.

So, for those store-based retailers still left standing, how should they translate online gains into more profitable customer relationships that offer consistent levels of convenience, availability and personalised service across both online and offline channels?

Understanding customer value

They should ensure their entire commercial strategy revolves around using digital and the data it generates to get to know their customers much better. It’s a worthwhile pursuit because the likelihood is that those customers who shop with a retailer or brand both online and instore are most valuable over their lifetime.

The value of knowing a customer in this way comes from applying insight gained from the analysis of what they actually do when they shop a brand or retailer. Taking this insight and applying it to actions mitigate risk and build resilience in order to maximize any recovery is what will differentiate the winners from the losers going forward.

With increased competition from ecommerce, reduced foot traffic and low consumer confidence, the need to build digital capabilities is “now or never” for traditional retailers, including in physical retail stores. This translates to digitising the entire shopping journey.

Embracing digital technologies that can help navigate the crisis and bridge the physical distance should be a no-brainer. Virtual queuing and appointment booking and mobile scan and pay, for example, can help mitigate safety concerns. Wayfinding, using augmented reality, and product look-up via a digitised shelf-edge can also engage, as well as inform.

Following digital cues

One benefit is that such technologies provide a view on how customers shop stores, just as their clickstream and cookie data can online. Retailers can use this view and the fact that consumers are using their digital devices to provide it when in the store to their advantage.

Giving your best customers a reason to engage, identify themselves and interact when they pay a visit, in the same way they would to get the best experience when shopping with that retailer or brand online, can unlock invaluable insight to guide strategic decision-making.

Beyond safety, speed and convenience, retailers are reporting that customers are returning to stores better informed and with higher purchase intent, conversion rates and basket sizes. But the first step on that shopping journey towards engaging instore was likely taken online.

So, it will also pay to equip store associates with the same level of access to the information and services the retailer makes available to customers online. Use digital to inform every touch point in the store, alongside digitally enabled human interaction, so the store experience gives people a reason to visit that can be tied back to each customer’s identity.

Owning the relationship

While stores have been closed, retailers and brands have also been forced to turn to service providers to bridge their digital transformation gaps. These include the likes of Amazon, Deliveroo and Just Eat, as well as advertisers, such as Google and Facebook.

However, too heavy a reliance on such digital intermediaries will only serve to disintermediate the customer relationship in the longer term. Taken with Google phasing out the third-party cookie and Apple’s upcoming iOS 14.5 IDFA privacy and tracking changes, maintaining a first-party relationship with customers will become more important than ever.

Apart from the best way of engendering trust and loyalty among your most valuable customers, it’s also the best way to mitigate the rising cost of customer acquisition. Owning the relationship enables the retailer to use their knowledge of what they want to find more like them.

It also opens up the possibility of moving beyond mass advertising, marketing and promotions towards true personalisation, where AI-based analytics and decision engines can infer the next-best way to engage a customer based on their mission and purchase intent.

Making better decisions

Knowing your customer and being able to interact with them in a more context-aware way — in real time and in place, via mobile — can also unlock the potential savings to be made from giving away only what is essential. Moreover, these are probably activities they’re already engaged in.

Exclusive access, dynamic promotions, personalised pricing and subscriptions (as a paid-for proxy for traditional loyalty schemes) are just another few ways to build in digitally-enabled and data-driven resilience for incentivising your customers to let you get to know them better.

By gaining customers’ trust and getting to know their preferences, habits and expectations, digitally transformed retailers are looking to drive further value from this intimate knowledge by using it to run their business better, with enhanced merchandise lifecycle management and supply chain resilience.

Optimise business models to deliver digitally enabled, data driven customer-centric products and services. Amazon recently launched a new Kickstarter-style ‘Built It’ concept letting shoppers vote on which products it will build, for example.

Maximising the recovery

Another advantage of end-to-end shopping journey visibility and customer ownership is the opportunity it affords brands and retailers, traditionally seen as advertisers, to become publishers. Delivering a curated experience means customers are more likely to trust them.

This then allows them to monetise their owned-first party data, as Amazon and Walmart are doing with their growing advertising businesses, or through trade-funded marketing and the establishment of new marketplace-like models, which is in Kroger’s plans.

So, post-pandemic, those retailers looking for ways to continue to steal a march on, or catch up to, digital-first competitors must go digital by design and adopt a mobile-first approach to customer engagement in order to better tie the store experience to online.

For only one thing can be certain and that is, even today’s winners must be prepared for uncertain times. The trends likely to inform the ‘new normal’ demand higher levels of resiliency and risk mitigation that only digital transformation can harness for recovery.