enhancing the retail omnichannel customer experience

Enhancing the Retail Omnichannel Customer Experience

Today’s Speakers

Peter Zaballos Vice President, Marketing & Product SPS Commerce

Todd Kozan Principal Consultant, eBusiness and Channel Strategy Forrester Research

© 2014 SPS Commerce 2

•  The power of the consumer •  Omnichannel readiness •  Forrester study findings and insights •  Q&A

Agenda


SPS Commerce – the cloud retail leader


1 55K trading partners

Membership

1.3M products

Sourcing

7K companies 35M

UPCs

Item Management

Support all models

Fulfillment

300K

retail locations

Analysis

$1+T orders annually

Volume

The perfect order ‒ 2009 © 2014 SPS Commerce 5

retailer vendor

On time Complete

Damage-free Complete & accurate

documentation

Consumer

The omnichannel perfect order - 2014 © 2014 SPS Commerce 6

Product Informa.on Social valida.on

Inventory informa.on

Compe..ve pricing Convenient fulfillment

Convenient returns

retailer

vendor

3PL

Consumers are driving change

Source: 2014 Annual SPS Commerce Retail Benchmark Survey

65%

Expect more product variety 82%

Expect to buy online and return in-store

The rise of the omnichannel consumer

$300B e-commerce sales

$1.4T web-influenced sales

Omnichannel execution is lagging demand

Source: 2014 Annual SPS Commerce Retail Benchmark Survey

52% “Other priorities” ahead of omnichannel

34% “Legacy systems” holding back change

43% “Don’t know what percent of sales originate via mobile”

4% of retailers and suppliers have executed an omnichannel strategy

10 © 2015 Forrester Research, Inc. Reproduction Prohibited

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SPS Webinar: Enhancing The Retail Omnichannel Customer Experience January 22, 2015


Agenda

› Why are we here? › How do we define omnichannel? › Consumer trends › The market potential › The digital and physical worlds collide › The new shopping experience - it’s mobile guided › Q&A


Why are we here?

›  SPS Commerce commissioned Forrester Consulting to examine the hypothesis that retailers must provide a seamless, omnichannel user experience, increasingly driven by mobile, to achieve success.

›  This study evaluates how consumers are currently engaging with retailers and explores the current capabilities of retailers to meet consumers’ growing expectations.

›  Existing consumer data from Forrester’s Consumer Technographics was used, as well as data from a custom survey of 50 retail decision-makers responsible for merchandising, purchasing, operations, supply chain or IT.


Source - http://en.wikipedia.org/wiki/Omni-channel_Retailing

What do we mean when we say omnichannel?

Omnichannel refers to a seamless approach to the consumer experience

through all available shopping channels, i.e., mobile devices,

computers, brick-and-mortar, television, catalog and so on


The Age of the Customer: A new era led by empowered customers

Age of manufacturing Mass manufacturing makes industrial powerhouses successful

•  Ford •  Boeing •  GE •  RCA

Age of distribution Global connections and transportation systems make distribution key

•  Wal-Mart •  Toyota •  P&G •  UPS

Age of information Connected PCs and supply chains mean those that control information flow dominate •  Amazon •  Google •  Comcast •  Capital One

Age of the customer Empowered buyers demand a new level of customer obsession

•  Macy’s •  Nike •  Beats Headphones •  Amazon


The Age of the Customer: A new era led by empowered customers

Age of manufacturing Mass manufacturing makes industrial powerhouses successful

•  Ford •  Boeing •  GE •  RCA

Age of distribution Global connections and transportation systems make distribution key

•  Wal-Mart •  Toyota •  P&G •  UPS

Age of information Connected PCs and supply chains mean those that control information flow dominate •  Amazon •  Google •  Comcast •  Capital One

Age of the customer Empowered buyers demand a new level of customer obsession

•  Macy’s •  Nike •  Beats Headphones •  Amazon

The age of the customer is a 20-year business cycle in which the most successful enterprises will reinvent themselves to systematically understand and serve increasingly powerful customers.


Turn big data into business

insights

Transform the customer experience

Accelerate your digital business

Age of the Customer

Embrace the mobile mind shift

In the Age of the Customer, organizations need to focus on four market imperatives


Innovative businesses continuously exploit digital technologies to create both new sources of value for customers and increase operational agility in servicing their customers.


For consumers, as digital engagement increases the influence of traditional touchpoints declines

Source: April 2014 “Understand The Digital Business Landscape” report

Customers are relying less on traditional touchpoints

!


Your sales force is also being impacted by digital disruption

Customers expect sales people to have access to key content and information

!


You must become a digital business… But why?


Your customers are digital

By 2018…

85% of US adults will own mobile phones

82% of EU adults will own mobile phones

64% of metropolitan APAC adults will own mobile phones

70% of metropolitan Latin American adults will own mobile phones

Source: Forrester Research Online Retail Forecasts 2013 – 2018; Note: figures represent specific markets (see notes for more detail)


Your customers are digital

Empowered customers and employees will

expect experiences that are device agnostic…

…and will support them in their moment of need

Sources: Forrester Research World Smartphone Adoption Forecast, 2012 to 2017 (Global); Forrester Research World Tablet Adoption Forecast, 2012 to 2017 (Global); Forrester’s US Mobile Mind Shift Online Survey, Q3 2013


Source: North American Consumer Technographics Online Benchmark Survey (Part 1), 2014

And your customers are digital from many locations

“Where do you use each of the following devices to access the internet?”

Base: US online adults 18+ (online weekly or more) who access the internet on a cell phone


Your channels are digital

Annually by 2018…

$294B will be spent online in North America

€224B will be spent online in Europe

$858B will be spent online in APAC

$47B will be spent online in Latin America

Source: Forrester Research Online Retail Forecasts 2013 – 2018; Note: figures represent specific markets (see notes for more detail)


Source: April 16, 2014 “Understand The Digital Business Landscape” report

Digital businesses are different


The businesses that survive will master two critical aspects of digital – digital customer experience and digital operational excellence

Source: April 2014 “The Digital Business Imperative” report


Source: A commissioned study conducted by Forrester Consulting on behalf of SPS Commerce, July 2014

Which are the top 3 priorities to which your company is planning to apply, or have already applied, resources to advance your omnichannel strategy?

10%

12%

14%

14%

22%

8%

10%

2%

8%

22%

8%

10%

14%

10%

16%

Monitoring social media

Adding items/SKUs

Providing cross-channel inventory visibility

Equipping in-store employees with mobile apps

Enhancing e-commerce site(s)

Rank 1 Rank 2 Rank 3

Base: 50 retail decision makers responsible for merchandising, purchasing, operations, supply chain, or IT

Those that are mastering both the digital customer experience and operational excellence are focused in a few key areas


2% 2%

8% 12%

22% 28% 28%

32% 58% 60%

Other BLE/proximity systems

ERP systems Sourcing communities

Search functionality Fulfillment automation

Mobile apps Item management / catalogs

Point-of-Sale solutions Customer analytics


What technologies

are most critical to your omnichannel

initiative?


Based on their priorities retailers are focused on several key technologies


Why are retailers focused on these initiatives and what’s the long term view?

›  It’s clear that digital and physical stores are colliding and unlocking new value for retailers and their customers

›  Customers are beginning to expect a higher level of digital engagement while shopping in the store

›  Retailers are figuring out how to use analytics to deliver a more personalized and relevant experience for their customers

›  For retailers, this means Marketing and eBusiness teams need to partner tightly with IT to win, serve and retain customers


Which of the following, if any, have you used your mobile phone for in the PAST 3 MONTHS?

8% 9% 9% 10%

13% 13% 13%

17% 18% 18%

20% 20%

22% 24%

33%

To reserve items at a store for pickup To store/save a receipt

To store my membership card/loyalty To store gift cards

To scan 2-D barcodes To learn about an in-store promotion

To access my loyalty rewards account To check in-store availability of a

To compare physical store prices with To check availability of a product in an

To find or redeem a coupon/coupon To look up product information while

To purchase a product To read customer reviews of a product

To research a product

Base: 4814 US Online Adults 18+ (Online Weekly or More) MOBILE PHONE USERS Source: North American Technographics Retail Survey, 2013 (US), Forrester Research, Inc.

The early adopters have focused on this for good reason - mobile usage when shopping is strong across a number of use cases

Customers are not only researching products but also

buying and looking up product

information while shopping in stores


Find What I Need

The app lets you know early in the browsing process that the product is available in-store

Home Depot’s native app is excellent at addressing many of these key mobile uses cases and makes a real connection with their stores

Search for a Product Launch the App


Not only does the Home Depot app tell you what’s available but it also tells you where in store it’s located

Home Depot provides the exact

amount in stock and location in-store.

Home Depot provides inventory visibility across the browsing experience and allows a user to look

at other stores


Target’s retail app also provides clear inventory visibility and tells you which store has availability


Once you add an item to your cart Target tells you the exact location of the item via a pinch and zoom store map


Understand buying and inventory trends will enable a more personalized experience for users in-store and online

Deliver targeted mobile experiences Make use of customer

shared profile information and past purchase history

to help improve the relevancy of offers that are shared with the end user which, in turn, will drive

better engagement.

Despite having the user connect

through Facebook and allowing

access to personal

information, Target failed to

recommend relevant coupons

for the user.

Source: Target Cartwheel app


16%

16%

16%

17%

10%

32%

32%

30%

29%

26%

36%

44%

47%

39%

41%

13%

7%

8%

11%

20%

Find/redeem a coupon/coupon code

Look up product information

Compare physical store prices with online prices

Read product reviews

Scan 2-D barcodes

Every time Most of the time Sometimes Rarely Never

Base: Varied counts of US Online Adults 18+ (Online Weekly or More) MOBILE PHONE USERS WHO HAVE DONE THE MENTIONED ACTIVITES ON THEIR MOBILE PHONE IN THE PAST 3 MONTHS Source: North American Technographics Retail Survey, 2013 (US), Forrester Research, Inc

How often do you do each of the following activities on your mobile phone while shopping in a physical store?

It’s clear customers are using their phone while in a store but what are they doing?

Across three in store use cases,

48% of customers are using their phone most of

the time or all the time


Walmart addresses mobile in-store shopping needs by offering a “smart shopping list” when the app is in “store mode”

Shopping lists can be set before a visit to the store. Items can be easily added from “Favorites” and “Basket History.” Once at the store, the application switches to “Store Mode” a guided break down of in-store product

locations, offers, and pricing is available.

Unfortunately, shopping lists are

not synced between mobile

and desktop/tablet:


Target uses text messaging to deliver offers to customers in the store that can be instantly redeemed at checkout

Target prompts users to text in to receive extra discounts while in a store. After texting in “extra4,” the user will then receive a link response with a barcode that can

be scanned at checkout.


Walgreen’s mobile app automatically switches to store mode when in a store and prompts the users with their balance reward card and coupons



How effective are the following applications/technologies at driving sales?

6%

6%

14%

18%

26%

28%

46%

26%

14%

30%

16%

16%

32%

22%

22%

30%

20%

22%

12%

18%

14%

12%

16%

14%

12%

8%

6%

16%

16%

22%

14%

18%

6%

6%

8%

12%

6%

6%

12%

10%

6%

10%

Multi-retailer apps

BLE/proximity-based promotions

In-store QR code promotions

Multi-retailer coupon apps

Flash sale opportunities

Retailer app

Loyalty/rewards programs

Significant effect on driving sales (5) 4 3 2 No effect on sales (1) Don't know NA


In an omnichannel world retailers are finding several key tactics have a significant effect on sales


Starbucks’ loyalty profiles for customers display key

information, including current card balance, the number of

stars a customer has unlocked, the amount of stars

to achieve the next free reward, and a month by month history of rewards

earned.

Companies like Starbucks have capitalized by building robust loyalty and rewards programs that have been well embraced by consumers


7-Eleven offers locations based coupons and rewards to drive consumers to their stores

Instructional

content effectively

communicates the value of

using the app.


Using analytics to understand buying trends is critical ›  Most companies and retailers struggle with mobile analytics in the context of an omnichannel experience

›  Most focus on key metrics such as engagement, customer satisfaction and revenue

›  Instead of solely focusing on engagement and revenue glean insights from the analytics to improve the overall customer experience by making it relevant and contextual

›  This focus will yield longer term outcomes around engagement and revenue Source: December 2014, “Digital Business Pros Must Use Analytics to Deliver Simplified, Relevant Experiences” report


The omnichannel experience is here to stay and mobile is a key component ›  IF you’re just embarking on the omnichannel journey

•  Understand your customers behaviors online and in-store •  Understand how they are using mobile •  Assess your maturity when it comes to key omnichannel use cases such as buy online and pick up

in store •  Conduct a rigorous technology assessment to identify gaps

›  IF you’re further along: •  Continue to optimize mobile to deliver personalized experiences while in-store •  Choose the right assortment for store pickup •  Deliver on customer SLAs that meet or exceed standard market offerings •  Market in-store pickup as a competitive value proposition •  Incentivize customers to add items to in-store pickup orders

Questions

46

enhancing the retail omnichannel customer experience

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