The Constantly Connected Customer
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A dramatic change is sweeping across the retail landscape. Customers are adding smartphones and mobile devices to their shopping experience in your stores without your blessing. Your customers are using their own tools and apps to gather information about products, brands, pricing and availability — and this could be sending sales to your competition.
This change is more seismic than e-commerce. It introduces real-time digital interaction to the shopping experience. Customers like it. They feel in control. Yet, they have a set of expectations that go with it — expectations you need to meet. They are the Constantly Connected Customers, and right now they are unilaterally changing your relationship with them.
Today’s Constantly Connected Customers are equipped with smartphones, tablets and other mobile devices. They engage with Twitter, Facebook and other social networks. And they can quickly and easily comment online — and read the comments of others — about their favorite (and not-so-favorite) retail brands.
At stake is nothing less than control of the retailer-customer relationship. In the past, retailers held most of the cards, primarily controlling their relationship with the customer. Now, control of the relationship is quickly moving to the Constantly Connected Customer empowered by all of this technology.
For most of our history, customers engaged with retailers through one or two channels: the brick-and-mortar retail store and the catalog. Over the past 15 years, retailers have expanded to four channels by adding online and mobile channels. Retailers have typically operated each of these channels separately, and this approach met customers’ needs for a while.
But times are changing. Today, when Constantly Connected Customers enter a brick-and-mortar store, the retailer does not necessarily recognize them or the extent of their relationship with the retailer across all of its channels. Now a new challenge faces retailers: Offer a cross-channel view to customers, one that integrates mobile, online and the brick-and-mortar channels into a complete, consistent and seamless shopping experience that increases sales.
In social media and on your own e-commerce site, Constantly Connected Customers can now gather information to make purchase decisions regarding a brand without the brand’s involvement — a new and unprecedented situation.
For example, a customer could shop for a brand from his or her smartphone using nothing more sophisticated than a basic Web browser and common search engine. What’s more, the search results will likely be displayed without any of the brand’s carefully crafted messaging.
Retailers that cater successfully to the Constantly Connected Customer will reap significant competitive advantage. For one, Constantly Connected Customers purchase more than their less-wired counterparts. It’s all about basket size and lift — and these customers will respond to better information and relevant promotions, spending more. Additionally, these customers engage more strongly with their favored brands, translating into greater revenue over time.
In a new IDC Retail Insights case study1, UK department store retailer John Lewis is reportedly reaping the benefits of catering to multi-channel shoppers. Among the findings: Over 60% of their customers research online before going to the store, and 40% use their phones to interact with the brand when in the store. Plus, the study says these multi-channel shoppers spend 3.5 times more.
Moreover, these customers create streams of digital information about how they browse the Web — and because of location aware smartphones — how they browse the store and the very shopping mall that contains that store. Combined with point-of-sale (POS ) data, smart retailers can use this information to gain insights, improve operations, forecast demand and even create new products.
Finally, Constantly Connected Customers provide more feedback than do other customers, essentially acting as a virtual focus group that provides an ongoing stream of quick reactions and suggestions.
The emergence of the Constantly Connected Customer also presents retailers with several challenges. Connected Customers expect more from retailers. There is more to it than offering a mobile version of your e-commerce site. Certainly this is a good place to get started, but as soon as you do it, your customers move up the expectation curve.
Connected Customers expect personalized treatment, advantageous promotional pricing, more product and service information, and the ability to purchase online yet pick up and return at the store. Simply put, they want the ability to buy anywhere, anytime and have it fulfilled anywhere — at competitive prices.
Constantly Connected Customers also share their unfiltered, sometimes negative, opinions of retail brands and stores. And thanks to social media, they can share these views quickly and to a potentially large worldwide audience. Complaints, whether fair or not, can quickly go viral, dissuading thousands of other consumers from purchasing a brand. You can’t control this, but you can mitigate it with active awareness of comments about your brand.
On the upside, this same awareness can spot good comments about your products or brand that create new opportunity for your business. Good or bad, it’s there, and there is a gold mine of value in the information.
1 IDC-Insights-Community.com, analyst Christine Bardwell, John Lewis: Multichannel shoppers spend 3.5 times more, May 17, 2012.
JOHN GENTRY is managing director of CSC’s Global Consumer Products and Retail Group.