Contextual commerce: Narrowing the gap from engagement to purchase

Imagine being stuck in a traffic jam, on the way home from a stressful day at work. There’s something nagging away at you. Something important. Your heart sinks as you realise – it’s your partner’s birthday tomorrow. You’ve forgotten to buy a present.          

Now imagine you can activate the voice control in your car, access the internet, get augmented reality in the corner of your windscreen and have your voice assistant guide you through a selection of relevant gifts; quickly narrowing down your choice to something you wish to purchase and have delivered to you by the time you get home.

For some this analogy seems like one for the distant future, but for a segment of technologists this is the natural evolution of retail, being coined as ‘contextual commerce’.

From engagement to purchase           

While buzz terms fly in and out of the sector quicker than an Amazon drone, contextual commerce appears to be a concept grounded in something far more attainable.

The idea is that brands should be trying to implement purchase opportunities “into everyday activities and natural environments”.

Far from anticipatory shipping (another 2014 patent from Amazon), contextual commerce isn’t about prediction, but about understanding customer behaviour in order to ensure you’re offering consumers the opportunity to buy anything, anytime, anywhere.

In some respects, we’re already seeing iterations of contextual commerce evolve, first through click-and-collect and, increasingly, tools like social media buy buttons and voice activation on mobile devices. But the next iteration of contextual is expected to incorporate augmented reality, virtual reality, chatbots and voice intelligence. And perhaps one day, delivery drones.   

“You want to shorten the cycle between engagement and purchase,” said Robert Enderle of the Enderle Group, explaining the concept to TechCrunch.

“Anyone that can figure out how to make it so that you look at a product, say you want it and [instantaneously] have it, will probably own the market.”

For many retailers, talk of augmented reality or drones is too prophetic. But the idea of shortening the gap between an initial engagement with a customer and their final purchase is one any business can relate to; and one every retailer undoubtedly already aspires. So the question is – what steps should retailers take to shorten this cycle further and initiate the shift towards becoming more ‘contextual’?

Lubin Hoque, sales director for marketing & commerce at SAP says many retailers have to adapt their thinking to better understanding customer behaviour much earlier in the buying cycle.   

“The challenge in today’s environment is it’s not just about the financial transaction for a product or a service. Before I get to that point I will want to have done research.

“By simply having a website you can buy from, or a mobile app you can buy from is only part of the solution. The other part is engaging you from the point you think you might want something to the point where you make a decision, and provide you with all the information that you need along that journey.” 

The idea of shortening the gap between an initial engagement with a customer and their final purchase is one any business can relate to.

And to be able to do this requires new thinking around managing data, especially real-time data.

“Traditionally, data was always thought of as information inside the organisation that we had about customers. How can we take our CRM data, connect that to information in our financial system and figure out what products you’ve bought.

“Nowadays data is vast. We have social data, third-party data that we bring in and augment information. Therefore one of the biggest challenges that we see [retailers] have to address is how to take all of that data available…and use it to target [effectively]. The technology is there to do that, the challenge is how we make that happen.”

Anthoula Madden, a partner for PwC’s retail and consumer division, says the only way of moving towards a more contextual offering is to hone in on relevance. Which starts with ensuring the right information is on your website and the right customer reviews exist online, and extends to being able to plot customer journeys in detail to establish how customers engage with you at every stage of a potential purchase.

“If you look at a customer journey across several touchpoints where a customer has researched online, come into a store, gone back online, has made purchases in the past, we have a whole bunch of information around what this customer is interested in, what products they’re researching, where they’ve bought from, what they’ve bought. It’s about piecing all of that together.

“When you look at data – what is that customer interested in? How can I make their experience relevant, compelling and real-time personalised? That’s one dimension. The second is around promise. It’s all well and good making promises but you need to be able to fulfill them. This is about the end-to-end supply chain. Unless your ecommerce platform is underpinned by a fully integrated data model which can tell you where products are in the supply chain or whether you can fulfill an order, you’re essentially offering empty promises.”

Increasingly this means having the right integration of technology in place on the back-end long before front-end developers can start incorporating virtual reality or drone delivery into the mix.     

Reducing effort

It’s no surprise that the retailers currently being associated with contextual commerce are some of the globe’s biggest players. Apple and Facebook have dominated headlines for their augmented and virtual reality acquisitions, while ecommerce behemoth, Baidu has recently been cited for its approach to speech recognition, designed to lower transactional effort (according to The Economist, one in 10 Baidu searches are made through voice recognition, with this expected to rise to half of all searches by 2020).

The idea of lowering customer effort – and the barriers to transaction – is very much a catalyst driving the premise of contextual commerce forwards. Whilst experience is still paramount, establishing exactly what routes customers are taking to purchase your products and then narrowing the effort ‘gap’ is arguably as important.

HSS Hire may not receive as the plaudits of the likes of Amazon and Baidu, but the UK-based equipment hire company is as good an example, given how assured it is in its own progress towards becoming more contextually relevant to its customers.

The idea of lowering customer effort – and the barriers to transaction – is very much a catalyst driving the premise of contextual commerce forwards.

“There is a fairly well known Harvard Business Review article that states satisfaction may not engender loyalty, particularly in industries where customers want to achieve a specific outcome, quickly with the least possible amount of effort a Customer Effort Score (CES) might be the best tool for measurement,” says HSS Hire’s marketing and ecommerce director, Julie Snape.   

“It sums up the approach we are taking in terms of measuring ‘effort’ quite nicely. I think many industries like banking, utilities and equipment hire could fall into this bracket due to the nature of the interaction with the customer. The interaction is less emotive and more clinical. That’s not to say we don’t want to delight out customers, we absolutely do, but perhaps this could be a bi-product of an effortless interaction. We feel that an effortless experience would engender loyalty, particularly in an industry where several suppliers are being engaged simultaneously.”

In HSS Hire’s case, a key iteration meant switching from being a catalogue-only operation to becoming an ecommerce provider – a significant development in an industry that is predominantly about more traditional channels of transaction.

But as the company’s customer base increasingly shifts its focus to mobile devices and expectations around speed of supply increases, the need to stay contextually relevant also has to be iteratively addressed.    

“By linking or threading every development or project around customer effort this helps prioritise and align the business,” Snape adds. “If internal systems, processes and rewards are also linked then this reinforces the alignment. This method or approach requires great communication and buy in from everyone involved.”

Integrated system

Of course, to be able to action this type of strategic vision requires more of a holistic view of customers, something Madden says can now only be achieved through an integrated technology platform.

“You need to have that as a foundation block…because that really drives not just the ecommerce experience in terms of the sale but the whole end-to-end experience. It links up your supply chain, it links up the information you have about both the consumers, and about products and the experiences.

“It’s about the end-to-end execution of the delivery of the product; the selling, the support, the billing, the ability to fulfill orders. Understanding each customer individually by pulling together all the insights you have about them. Building a complex picture – all of this needs to be synthosised. The way you create products, the way you innovate, the way you create a differentiating experience. That’s ultimately why you’re trying to pull together all of these insights.”

And regardless of whether that means investing in augmented reality, chatbots or updating your supply chain to improve delivery times, the fundamentals of contextual commerce – anything, anytime, anywhere – appear to be driving much of the innovation forwards.