If the industry is to improve its fortunes and get more customers in-store, the process needs to involve everyone and at a much earlier stage, says Graham Reed, director of Varia Solutions
Varia has been working with the consumer electronics sector for two years now and what a baptism of fire it has been! We are now fully immersed in the views, politics and thinking of the people, brands and retailers within this space.
When we attended the recent ERT Turning Point Summit at techUK HQ in London, we were also left wondering, where did the consumer figure in all this?
It was almost 90 minutes in before the customer was mentioned – by Robert Hughes, as it happened, discussing how, as an industry, there needs to be a closer relationship and that retailers need to stay relevant to the consumer.
There were some great success stories from retailers who had focused on improving the customer experience in-store, and initiatives such as supporting consumers who want to live in a smarter, more connected environment will certainly attract new sales.
As an objective observer, I saw first-hand how some retailers – almost through gritted teeth – place the responsibility firmly at the feet of the manufacturers for helping them to improve their business model and bring footfall in-store. There was criticism of manufacturers’ e-commerce sites, complaints about lack of investment and a complete focus on cost.
Now, I can understand why, of course, when the independent retailers’ share of the CE market has dropped from 20 per cent to nine per cent. This puts pressure on everyone. However, there’s only so much success cost-cutting will give you. This is where the industry needs to start questioning itself. A change of heart, where there is a focus on growth and sales, instead of just costs, will yield more positive outcomes.
The real work in attracting consumers to your store, and driving more loyalty and repeat purchases, has got to start way upstream, if the industry really wants to turn around its fortune.
This is a new world, where the whole consumer electronics environment is focused on engagement, acquisition and retention [see boxout] of customers to the retailer and the manufacturer. Although it is alien to current thinking, the whole industry has to trust each other more, and everyone can win.
I have no doubt that putting in a nice rug with some swish curtains and a great in-store coffee experience will give customers a nice environment in which to buy products, but without knowing who they are, or what drives their purchasing decisions, the process is fundamentally flawed.
Three steps to success
Stage One: Data
Let’s embrace the model where manufacturers want to know who is buying their product in-store. Now remember you are in a new world here, so put down the pitchfork. Do the manufacturers want to be in the B2C sector? Nope, that’s what they have retail partners for.
In the new world, this mutual desire to ‘know’ the customer is a big opportunity for both the retailer (own the customer) and the manufacturer (influence the customer).
Same goal, different outcome. Joint, multichannel campaigns yield a shared data set that can be ring-fenced and used by the manufacturer only to drive traffic back in-store. Post-purchase engagement then uses this data to build loyalty to both parties.
This strategic approach to data, dividing activities into engaging, acquiring and retaining customers, gives you a lovely structure of usable data that delivers a whole lot of value.
Stage Two: Customer experience
If you think this is fluffy-speak, think again. There are real financial benefits to the collaborative working practices that deliver a pleasurable experience during the qualifying and purchasing stage.
According to management consultants McKinsey, 77 per cent of shoppers prefer in-store shopping, but like to browse online, with 72 per cent doing it on a mobile device. So if either experience is poor, chances are you’re losing sales to other retailers, and not because they are cheaper.
Still with me? Forty-one per cent of smartphone users want to use it to pay for items in-store, 55 per cent want to be able to instantly order items that are out of stock when they visit a store, and the same percentage look up a product on their mobile and ultimately make the purchase in-store.
Digital retailing is a reality and retailers need to make sure they’re not losing out by not competing. You don’t have to be a big retailer to compete effectively in this area. In fact, specialists tend to win out, and can often charge more against generalist retailers.
Other successful customer experience improvements include ‘on-floor’, product-led sales assistants, or valuable online training that assist existing sales staff with key product knowledge. All of this drives an improved and more robust relationship between the consumer and retailer, vital for driving long-term consumer loyalty.
Stage Three: Post-consumer engagement
Engagement with the customer beyond the retail experience, I believe, is where the real work starts. Giving a customer a reason to give you more details about themselves, their wider interests and purchases, brings the process through 360 degrees – engage, acquire, retain. This drip-feed of communication delivers excellent loyalty rates and can triple customer lifetime value.