Omnichannel customers are the most lucrative. But physical stores are often 'digital black holes' preventing retailers from identifying and interacting with their most valuable and frequent customers when they are instore.
Relevance has become one of the most important differentiators in retail today. Purpose comes a close second. But the sheer scale of choice consumers have means retailers must work extra hard to win them over.
Thinking back to the pre-internet, non-digital era not so long ago, the store was the best proxy for relevance because it offered immediacy. Retailers simply had to make sure they were located close to their customers.
So, not surprisingly, the most successful retailers became the ones with a presence on every High Street or in every shopping mall. Fast forward to today, and some have even built out successful businesses online too.
But it is those digital-first businesses that are known for their ability to deliver more a personalised experience. They use the digital cues from customers by virtue of them interacting and shopping with them online.
Even a one-time customer can give off signals about who they are and their preferences thanks to the digital path to purchase they use to search, browse and discover products and services to buy online.
How to know your best customers
This is why, when the Amazons of this world convert prospective consumers into customers, they can tailor their experience even more using personally identifiable data, and billing and delivery location information.
This has also put those retailers that operate both online and brick-and-mortar stores in a position that is both as promising as it is challenging. They must bring customer data to bear both online and in physical stores.
But retailers’ digital capability significantly lags the opportunity. In spite of continued ecommerce growth, research has shown that customers that shop across both digital and physical channels are the most valuable.
Harvard Business Review research found these so-called ‘omnichannel’ customers spent an average of 4% more on every shopping occasion in the store and 10% more online than single-channel customers.
Yet how many of these retailers that customers shop with across channels can successfully identify and interact with their most valuable and frequent customers when they are instore? Very few, I would think.
First, retailers have to fill the ‘digital black hole’ that their stores represent. They must incentivise customers to identify themselves instore, just as digital-first businesses like Amazon get to know their customers online.
How to identify customers in the store
Doing this by deploying a ‘mobile makeover’ to build digital connections instore via mobile enables retailers to use these connections and the data they generate to understand customer preferences and purchase intent.
Digitally augmenting the store experience with mobile can enable operators of any physical sales outlet or showroom to continue any engagement established before and during the visit afterwards too, all via digital.
By analysing the data to understand what known customers want and like instore and online, the retailer can use this insight to improve its total offer for all customers. It can use digital connections to test and learn.
Retailers are doing this by offering secure public Wi-Fi instore. They are then connecting this to their online presence via mobile through offers, rewards, promotions and apps for loyalty, gift and subscriptions.
Tesco, where I was marketing director when Clubcard was launched in 1995, recently migrated the loyalty scheme to mobile. Research by Eagle Eye, where I am now CEO, also confirms this is what customers want - see The Digital Imperative: Harnessing the Power of ‘Now’ with Performance-driven Marketing.
Over two-thirds (78%) of consumers said they would be ‘likely’ or ‘very likely’ to make a spontaneous or unplanned purchase if rewarded for purchasing frequency, or if the reward was personalised to them (70%).
Relevancy, e.g. whether it is something they want or would like, ranked higher (94%) than even cost-saving (92%) in deciding whether to use a promotion. Utility, i.e. something that would be useful, was third (90%).
How to build data-driven digital connections
So mobile services, such as payments or wayfinding, can complement marketing content and promotions that enhance the store experience. It also gives customers a reason to identify themselves each time they visit.
Promoting social Wi-Fi logins can provide quick access for a customer via social channels for the price of some bandwidth. They may also share more information about their habits and preferences in the process.
Data generated by establishing relevant, timely and useful digital connections with customers should be used to drive insight which, in turn, prompts action that is designed to foster loyalty, using the D.I.A.L methodology.
Apply the data they share to understand, ‘what’s the next best message or offer to send?’ Is it money-off or points? When should I send it? On the day your AI-driven CRM systems predicts they’ll visit, or the day before?
Know when and where they are in a store. Then work out what’s the most relevant way to engage and thank them for their custom. Or is it more appropriate to try and stretch their basket spend? The data can guide you.
I discuss the growing importance of “marketing in the now” and the development of digital, mobile and AI technologies to enable it in my new book. Retailers must use the data to personalise the customer experience.
Omnichannel Retail: How to Build Winning Stores in a Digital World by Tim Mason with Miya Knights, is published by Kogan Page and priced £19.99.