22nd Apr 2013
Simon Bowker looks at how High Street retailers can enrich the customer journey, including examples from Halfords and Homebase.
The digital customer is killing the High Street. If you look at the recent downfalls of Blockbusters, Comet, HMV and Jessops, each of them have to some extent be crippled by their failure to invest in developing a digital business model and embrace changing consumer behaviours.
According to Ofcom, UK smartphone penetration has now hit 58%, whilst almost a fifth of the population now own a tablet. With customers more connected than ever before, mobile data requests and consumers ability to shop online has undoubtedly intensified. In fact ecommerce spending per-head now exceeds £100 per year.
With customers increasingly seeking and using their connected devices, whilst in-store, or on the move to browse and purchase goods, retailers need to think more creatively about their on-and offline customer experience to avoid becoming a victim of the current fatal trend of “showrooming”.
So what can retailers do to safeguard against this? One key way to combat this problem is refining the customer/retailer relationship. Email is just one of many tools in the digital marketing mix which can be enhanced to facilitate this. Not only is it a great relationship building tool, it is also a key sales influencer. According to a survey we carried out in December last year, 40% of senior marketers cited email as a “very important” channel for generating additional sales revenue during the festive season, with 93% stating that email will increase overall consumer spending. So, whilst it’s clear it has a vital role to play, in order to reap these benefits retailers need to use it to its full potential. To do so, they need to identify their customers “trigger points” and “moments of truth” with close attention on how they can be leveraged to influence the sales process, drive engagement and ultimately ROI.
These two elements are vital to enriching the customer journey. Retailers, who can identify, why their customers behave in a certain way, and respond by delivering personalised, relevant content to them, which is specific to their needs and interests, whilst also responsive to their live actions, will be well placed to secure a long-term future. Ultimately, retailers need to build conversations, which transcend both their online and offline retail outlets, whilst demonstrating that they have listened and responded to their customers’ needs.
If your messages, whether they are daily, weekly, fortnightly or monthly are generic and somebody does something that implies they are interested in a specific category, you have to listen and follow up with that person, by sending an email about the specific area they are interested in.
When you map your customers’ journey, it can cross all the different touch points of your business. Therefore, you can’t afford to operate in silos; you have to adopt an integrated approach which unites all your marketing activities/channels into a single entity. Your customers don’t think of themselves as a telesales customer, a website customer or a retail customer when you interact with them, so all your communication with them has to be integrated, and provide a consistent experience.
Halfords was keen to move away from a blanket email marketing strategy – sending generic emails to every contact in its database – to a highly targeted approach with personalised messages with greater relevancy to specific segments of customers and prospects. The central aim was to drive footfall to Halfords’ online store with a specific focus on identifying and acting upon “moments of truth” within the customer life cycle. These “moments of truth” were pinpointed as crucial decision points in the buying process. What makes the customer go through/not go through with purchasing an item? Is there a way or securing the sale? What is the most effective approach to do so?
Key to this was gaining an understanding of why their customers were abandoning their online shopping baskets at various stages of the purchase process. They were interested in whether a targeted email campaign could help to re-engage those ‘lost customers’, through relevant offers which would result in increased sales.
Since Halfords upgraded its email strategy to include web analytics software, open rates have risen to over 25%, with click through rates jumping to 8.5%. In terms of sales and overall return on investment, weekly sales revenues typically vary from 80% to 150% of the cost of the initial deployment.
The consideration phase for a big purchase is a key and vital opportunity for any retailer. In the current wave of cross-channel shopping that can be a finite amount of time, which unless you are at the forefront of your customers mind, you might fail to capitalise on. If you can identity these opportunities you can respond to your customers with relevant content that highlights your key services just when the customer needs it.
Homebase provides a specialist kitchen offering in terms of range, design and installation services and wanted to be able to highlight this via email. Their email marketing channel previously encouraged kitchen conversions with voucher code offers, however Homebase recognised a need to do more to make people consider Homebase, prior to making a purchase decision. Key to this was using email to identify newsletter subscribers who had specifically shown an interest in kitchen products and once identified, effectively target them.
By targeting “kitchen clickers” with a triggered, personalised follow up email, metrics showed engagement with kitchen services content. Homebase generated a huge surge in engagement, with 48% of recipients booking hundreds of in-store appointments to meet Homebase design consultants. With an average conversion from appointment to final purchase of approximately 40%, Homebase were able to achieve a total project ROI of 45x initial investment over a short time frame and additional annual revenue of £1m+. On top of the success of the main objectives of the programme, Homebase also saw the benefit of 18% of the “kitchen trigger” email recipients go on to make a direct purchase online and 12% make a reserve and collect purchase.
So what can Britain’s ailing retailers learn from Halfords and Homebase? If we look at the retailers that have fallen into administration in recent months the majority of them are specialist, so they all clearly have a core customer base with a specific need or requirement. These retailers therefore need to be clever and utilise their customer data effectively to convert their customers’ interests and online behaviour into future sales.
By segmenting their customer data and targeting people on an individual basis, retailers can pool valuable insight, which can be used for creative, targeted, strategically positioned communication. This data, which may come from their preference centre or customer behavioural data - whether at various stages of the purchase lifecycle, or their general online habits - can provide valuable insight. By identifying their customers buying intentions before they are at the point of decision and capturing potential lost sales from the online shopping cart, retailers will be able to maximise their potential sales, and prevent their customers deflecting to their competitors. Ultimately, retailers need to invest in a fully integrated marketing strategy, with their customers at its heart.
Simon Bowker, Country Manager UK&I, Teradata eCircle..