the Future of Retail is, well, interesting. Retailers today face an increasingly fierce competition. This competition is both, between brick-and-mortar retailers as well as between online-retailers and brick-and-mortar. Amazon, for example, is eating an increasing share of department stores’ lunch. It already now is the second largest apparel retailer in the US. According to Morgan Stanley research, quoted in a recent business insider article:

“Internet retailers (led by Amazon) have added $27.8 billion to their apparel revenue since 2005, while dept stores have lost $29.6 billion,” … “This share loss appears at risk of accelerating given 1) Amazon’s bigger push into fashion, and 2) consumer willingness/acceptance to shop fashion through Amazon.”

Additionally, customers are increasingly demanding, which is fuelled by being better informed and by the willingness to leverage this information. As a result of both of these trends retailers are losing relevance. One of the main challenges facing retailers (and brands, btw) is that big scale online retailers can very strongly compete on price. They also have a strong edge in data, which fuels their online experience. But here is also the chief weakness of online retailers like Amazon: They are online retailers, which confines the experience that they can offer to, well, online. Consumers used and use stores for showrooming to get a physical experience of the product and/or service. This is a clear indication that online is not everything! Which is one of the reasons why Amazon experiments with Internet of Things devices like their Dash button, which they recently enhanced with an SDK; it does also explain why Amazon is experimenting with kiosks and retail stores. The chief differentiator of a brick-and-mortar retailer is that they have physical presences, retail stores. In these stores it is possible to interact with product and with people. This is something that an online retailer has a hard time to offer, and something that still matters. It is also an asset that needs to be tightly integrated into the customers’ experiences. This asset can also prove to be a treasure trove of data on customer behaviour and –intention. Given this it can be argued that the ability to gather and work with data is nothing that sets an online retailer apart from their offline competition. On the contrary, in an app, AI, and Internet of Things world retailers can get an edge over online behemoths again – by providing a superior and holistic customer experience and a customer engagement, across touch points that online retailers cannot offer. Traditional retailers have far more possibilities, click and collect and personal service only being the simplest ones. Here we are back to the triple play of CRM, CEX, and CEM that I wrote about in a guest post for friend Paul Greenberg a short while ago. What does it take? Apart from making sure that store employees can dedicate quality time to their customers? What it takes is as a first step is using the data that is readily available in every retail company, data that is provided by the PoS, that is provided by the membership/loyalty program that might exist, by reactions to marketing campaigns, etc. And to analyse and use it. Even without predictive analytics and other advanced technologies it is possible to derive valuable data from it. Add a few simple survey questions, at relevant times, e.g. directly after the customer did a checkout, and improve experience and engagement from there. Especially smaller retailers can benefit from platforms like Epikonic, that provide an easy integration of loyalty system, PoS, CRM, campaigns and analytics, even beacon support, with experience and superior engagement. Key to getting, analysing and using this data are the concepts of value (to the customer) and, more importantly, relevance. Relevance is always in a context of needs, time, place. Let me use an example, a NZ men’s fashion retail chain. Ask me for a homewares retail chain or a department store I worked with, if you wish. The fashion retail chain is fairly upscale but not top end. I will not name it but rest assured that I bought quite some shirts there. They are doing well with varieties in good quality, an interesting web site and very forthcoming staff. They also have fairly upmarket store locations. And they know about me, should know what I bought where and when. They have my phone number and my e-mail address. I consequently regularly get an e-mail with the shirt of the week or another campaign which, frankly, goes away unread. They even recently did a survey that indicates a desire to find out where they could do better. Now, what could they do better?

• The e-mails are not personalized but very product centric. Which also means that the offers are not personalized. So, in essence, they are doing mass marketing
• I am passing by via one of their stores fairly regularly. After all there is a supermarket as well, where I often get some groceries

It is about offering value and being relevant. With the data that they have about me they do know that here is a person who seems to prefer not overly formal business wear. Fine. You know the style, colour, and size of shirts that I purchased. How about offering matching trousers, blazers, shoes? Or offering me a new seasonally adjusted combination, addressing me with my name, ideally along with a personal greeting of the store manager. This is not that difficult. A personalised offering would have far more potential to draw me into the store. This would be a start. Going on from there we can add simple technologies. The first two that come into mind are my mobile phone and beacons. Offer an app or, better, hook into an existing one that offers wallet functionality – maybe even payment functionality. This can be used for proximity- and hyper-real-time marketing. Make me a compelling, personalised, offer when I am nearby. With a PoS integration I could easily redeem it. Send me the receipt to the app along with a brief thank you note, or a very brief survey about my experience. Value, relevance, and convenience for me, valuable data for the retailer. Without a big cost outlay! Step the game up a notch. Add a beacon at the store entrance. Now you know who is entering, preferences, size, name. These are valuable information for the store personnel. Who does not want to be greeted by name? Add a few more beacons around the store and you easily know where customers walk, and where they stay. From here on we can get fancy. Offer some more information on the merchandise, e.g. by providing a QR code that I could scan or by directly scanning the product. Make me virtually wear a shirt using an electronic mirror – that might even help my wife giving her opinion fast. Marketing messages can get personalised by showing the clothes on my own shape, with my own face, given that I gave permission for it. This might even extend to the web site. Fancy? Yes! Possible? Of course! Necessary? Not yet, but likely soon.

Customer Loyalty A few days ago I was asked for my top 5 tips for retailers on how to connect with their customers, limited to 100 words. For a topic that one could write a novel on … Well, here is my answer: -       Help customers solving their problem. This distinguishes and makes you found by the customer -       Marketing/loyalty programs offer your customers value and are not mere vehicles to gather more data points -       Simplify your customers’ life, e.g. with a card wallet instead of own app that directly integrates with your CRM and POS -       Relevant communications at the right time, place with the right content – without appearing intrusive. For this you need to know your customer -       Consistent communications across channels and interactions, optimized for used touch point They probably need some more elaboration, especially the last one. First and foremost, the reason for any business to exist is making profit for its owners. This is not equal to producing and selling things (or providing a service) with a margin. The business will succeed only if it focuses on identifying its customers needs and then delivering solutions for these needs. It is not about pushing a product into the market (mostly, consider that needs can be created by smart businesses). This thought is well in the domain of Service Dominant Logic although I am not a strong proponent. Marketing and loyalty programs are important interaction vehicles between businesses and their customers. Both, especially loyalty programs, need to be set up to be mutually beneficial. It is not only about gathering more customer data that can be used by the company. Still good data, voluntarily given by customers, is needed to be better able to serve to customers’ needs. It is also not about offering a better price to loyalty members. We all want a good price, but what does this help if the product does not work, as it should with no help being around? Similarly, marketing is not a one-way talking machine for businesses but a bi-directional interaction channel between businesses and (prospective) customers. In this sense good support can be considered marketing, too; the absence of a NEED for support is even more beneficial. At the same time it is a good idea to already simplify customers’ life at an early stage of their interaction with the business. This does not only apply to the solution for your customers’ requirements that a company provides, but also to services around. A simple example is a loyalty app that a company provides. Mostly one still needs a plastic cards to leverage any offer. On the other hand smart phones will get overloaded with apps if every business insists in having an own app. So, why not offering or participating in a card wallet system that is capable of holding multiple cards and integrates into the existing CRM- and POS systems? This immediately also addresses another point: Connecting these systems with the location awareness of a smart phone can provide instant benefit for all involved parties. It creates more relevance because only the information is sent to a customer that has a relation to current intentions at the current time and place. The customer does no more get bombarded with unsolicited e-mails or text messages that come at the time that is given by the businesses’ campaign plans but when they can take more advantage of the offers, they do not need to sift through a variety of applications, and they maintain control by just switching off communications of businesses, if they are not interested at a time – and switch it on again when there is more interest. This brings me to the last point of the list: Businesses communicate and interact with customers using a huge variety of channels; each of these have a number of “touch points". Every interaction between a business and a customer happens at a “touch point”. These touch points have been more limited in number and mostly less interactive some years before, but have become increasingly interactive now. Every single interaction with a customer influences brand perception and after all customer loyalty. Examples of touch points are: Store staff talking to me, a TV ad, a Facebook or Twitter ad, the layout of the loyalty card; the web site and its user interaction design offers many touch points, even the look and feel of the goods displayed for sales are touch points, not to talk of a customer using a purchased product to add value to the own life, or service interactions. As you can see from this list, possible interactions are very different in nature. It is fairly easy to convey different messages through different channels and different touch points. Some examples again to illustrate this point: Advertisements position a brand as a high end brand with the goods displayed in the shop in a careless manner, or having unresponsive in-store staff; or getting different or even contradicting information using different channels (calling, web site, Facebook, …). Lastly, all these channels with their touch points have different capabilities: Look at a web site vs. mobile web site vs. mobile app vs. representation on Facebook, Twitter, or Pinterest vs. the possibility of direct interaction with in-store personnel or service personnel. Because communication that happens across various channels and touch points is so diverse it needs to be consistent AND it needs to be optimised for the different touch points. picture courtesy of Jeanne Claire Maarbes / FreeDigitalPhotos.net

SocialMeetsCRM is happy to announce our presence at the retail australasia Expo & Summit that takes place on May 21 and 22. Together with our partner AdvanceRetail we will exhibit our integrated loyalty and coupon solution for Retail. Offer your customers the ease and convenience of a mobile loyalty card and coupons sent directly to their smartphones and their redemption with a simple scan directly at the POS. Expand your reach and have direct communications with your customers on important social networks and smartphones leveraging our Social-Mobile Collaboration Platform and our toha app. toha is available for iOS and Android.

A while ago I blogged about threats and solutions in the retail industry that have their origin in rise of social media; with this post I would like to continue on this topic, focusing on possible solutions for retail companies. This blog also ties in to a recent article by Mark Tamis on Social CRM in Retail. In his article Mark describes an interesting and elaborate scenario that showcases a technology enabled, consumer and network driven decision process, using the example of buying a party dress. This example is interesting because, although the process is entirely consumer driven, the involved companies use the technology to add value to the customer, thus achieving a win-win situation. What the involved companies (a retailer and a hairdresser) are doing is establishing customer loyalty by

• Engaging the customer
• Providing a superior shopping experience, combining online and offline aspects
• Enabling the customer to get immediate feedback from their network

With this the two involved companies manage to align their interests with the customer’s interests. In other words, they are distinguishing themselves through service, instead of price. Trying to achieve loyalty through the offer of “least price” is a surefire way to death. To quote the 1986 Highlander movie: There can be only one. Although the scenario described by Mark sounds very advanced it isn’t. The enabling technologies exist and “just” need to be tied together. We are not talking Star Trek here. I really like this scenario as it depicts what could be. Still, integration is a hard business. Because of this I would like to come forward with another scenario that is definitely less sexy, that involves me, my wife, and our three kids, and the fulfillment of a very basic requirement: Food. I also put some emphasis on integration into a back end CRM system (now this one may be an ERP system, but I happen to be a CRM guy). It starts off very simple and gets additional bells and whistles, which I included into the scenario using some of Marks thoughts that he came up with during our continued discussion. Assume a food retail chain is running a CRM system and has its product catalogue online on their transactional web site and on Facebook, probably also transactional there. Their CRM strategy includes a seamless brand experience and the provision of additional value to customers. This leads them to providing a commented catalogue of receipts with user comment options and a news section about food relevant topics on their sites and on Facebook. As part of their technology strategy the retail chain also provides downloadable apps for e.g., iPad, iPhone and some Android devices, which are data-fed from their CRM system. The retailer also offers a shopping list application - on Facebook, on their web site, and as apps for the same devices. The shopping list can be shared between me and my wife and stays synchronized between the channels, because it is hosted on the retailer’s CRM system that drives the whole system, or on a system that is connected to the CRM system. My wife and I, whatever device we use, wherever we are, and whenever we think about it, can add items to our shopping list. We can add products and just product categories like bread, joghurt, ... from the catalogue or from the catalogue of receipts that give us inspiration. In store we get presented with matching products, promotions and cross-/upselling opportunities. These are generated based upon the shopping list, our previous shopping, explicitly stated preferences, our choice of meals, and derivations from our reactions to cross- and upselling attempts. Products that are maintained as categories only receive suggestions with real products based upon information that the company has about us. Unavailable products are substituted according to our profiles. We would use our iPhones rather than iPads in the shop as it is somewhat cumbersome to handle an iPad while pushing the cart and also handling our three little kids – although the iPad is so easy to use that we could have our 4 year old manage the shopping list in store. This is the bread-and-butter scenario that only needs me to check in to the store. How about making it even more interesting? The retailer’s stated goal is to distinguish itself by providing value to customers. To accomplish this they provide the ability to build nutritional plans for families. To support this the shopping list app offers the creation of the shopping list based upon the nutritional plan, taking preferential criteria, like “Italian”, “Rice”, “healthy”, “low calories”, … into account. As we are currently pursuing a low fat, low carb diet the system builds us the week’s menu for the family and builds our shopping list, considering our previous shopping behavior and other stated preferences. Of course, both of us, my wife and I, do some changes to this generated list. It also offers a dashboard that allows us to monitor our weight objectives against our plan. For a further phase the retail chain is considering to team up with a fitness studio chain to plan and support a diet that supports our overall physical fitness goals and and regularly establishes a fitness status using the data that gets collected at the fitness studio’s machines. Still not enough? So let’s also use the advanced location services of today’s smart phones. As the store "knows" that we are there, where we are in the store, and what we want to purchase, the in-store system can guide us the shortest way through the shelves (would be the right thing for me) or take some detours to lure me into buying some other groceries (works well for my wife). At the checkout we pay using the phone. Since the store is also offering Fuel Dockets (fuel vouchers giving a discount on the fuel price at a cooperating brand of stations) the docket gets loaded onto my phone for later usage at the filling station. As we are members of the store chain's loyalty club my account gets updated immediately and I get my new account balance displayed on my device, which is far more convenient and offers more privacy than using the customer facing screen of the checkout. The checkout process is powered using near field technology. This could be added upon further, just consider the groceries being delivered to my gym, so that I can pick them up after my training, if I wished so ... Why would a retail store that usually is short on margin go through these lengths, even the investment that is necessary for the bread-and-butter scenario? The answers are loyalty and identification of the customer. An implementation like this would greatly improve upon the shopping experience, and the perceived service level of the retailer. The chance of customers continuing to buy at “their” retailer instead of another one is greatly improving. Secondly: Retailers generally correlate purchases to target customer groups. Using the described scenario they can do this even better – they actually could identify their customers without a formal registration (e.g. using the phone identity). With this cross- and upselling attempts will be more successful, which adds to revenue and margin. The fitness studio’s benefits would lie in increased sign-up rates, getting a better insight into their customers’ lifestyles and possibly in a more attractive supply contract for food items and drinks sold in studio.

Brick-and-mortar retail businesses face a combination of ever-increasing customer expectations, customers being “educated” to expect and receive promotions, and of course an ever increasing competition in the market place for their customers’ share of mind and share of wallet. On top of all this they need to realize that they do not control the communication to their customers anymore, let alone being capable of controlling the communication in between their customers. As many bloggers, including myself, and analysts already stated, the advent of extremely user friendly and ubiquitous mobile devices and web applications essentially decoupled retailers from communications between their customers and even led to their marketing messages becoming part of the “background noise” for lots of consumers – just something one filters out when it comes to getting serious information. Of course there are exceptions, especially considering that retail businesses reacted to this threat. For retailers it is about being where the customers are. This started with setting up transactional web sites (web shops) to drive additional sales, using more and different ways to address customers, e.g. setting up and participating in communities, building fan pages on Facebook, Twitter streams, keeping in touch with exciting new services like Groupon, building capabilities to monitor and participate in discussions in forums, creating loyalty programs, and so on. Quite some of the challenges facing retailers have the potential of being disruptive to their business models. Take Groupon as an example: Groupon is the successful implementation of a scheme that shifts the power balance drastically to the buyer (consumer) side; the scheme is similar to the earlier development of retailer purchase organizations that intended to counter the power of their suppliers (e.g. the expert group). Another example is yourbus, a German startup company that organizes long distance bus services, if the demand is high enough. Yourbus has the potential to really hurt the German railway. Another main challenge is that fending off possibly disruptive attacks and staying in the minds of customers is a costly exercise – and retailers often run on slim margins. This means that activities need to be organized and efficient while making sure that the customer experience is consistent across all channels or touch points, like radio, TV, store, point of sale, web site, general marketing collateral, and, yes, of course, Facebook, blog sites, Twitter, and so on and so forth. The key word here is consistent; the experience does not need to be the same, actually cannot be the same; just imagine the differences between radio and TV, or between Facebook and Twitter. The current buzzword for achieving and maintaining this consistency is customer experience management. There are a lot of good approaches towards keeping in the minds of customers. There are interesting reactions to Groupon, e.g. Wal-Mart’s CrowdSaver on Facebook or Uniqlo’s Lucky Counter that does the same via tweets on Twitter – offering a discount if enough positive voices are there. Social commerce and F-Commerce (e-commerce via Facebook) are definitely on the current hip list. The need to integrate topics like CRM, loyalty, mobile, e-commerce is definitely there. What currently inhibits retailers (and other companies) from more effectively pursuing this necessary integration is lacking integration into back end systems. Gartner identified more than 100 vendors with Social CRM offerings in their first Magic Quadrant on Social CRM that dates June 2010. In the same research they assessed that only in 2011 social CRM suites will emerge, which then will be rapidly evolving. I do not say that there is nothing out there – that would not be true. Salesforce.com, Oracle, SAP, Microsoft, Sage, RightNow technologies and Netsuite, also SugarCRM, they all have some or the other functionality, but there is no real breadth yet. Of course this list of vendors is not complete. Let us focus in on SAP as an example. I do not single out SAP here; it is just that I know SAP a little more. SAP has all the necessary technologies, including an engine that is capable of measuring sentiments and StreamWork, a highly interesting tool. But neither SAP nor its partners do have a compelling integrated social CRM solution yet. There is SAP consulting themselves with their Social Media Cockpit, which effectively does some integration of CRM and Twitter as a marketing and service support tool. SAP consulting, too, has an add-on to CRM that extends loyalty management to Facebook. Then there is movento who have a Social CRM add-on that provides information about business partners from online communities directly in CRM. And CIBER is one of few companies bringing an integrated solution to organizations managing consumer marketing across multiple websites, having more a process than a product view. So, what are avid retailers doing in these times? The market even now offers tools and technologies to support most important business processes that involve the social web, from (community) platforms via monitoring and listening tools, towards more business process orientated tools that support marketing, sales and service processes. Today retailers pick and choose the tools that best support their social CRM strategies. They implement them as spot solutions, in silos, and increasingly also with custom integration into business systems. Tomorrow we will see that they also have the option to choose pre-integrated software. This post is a re-post of the original post on blog.ciber.com with the permission of the author.

Inspired by a blog post by Dr. Harish Kotadia I started to rethink about what the real key success factors for a social CRM strategy are. Harish used Walmart as an example, based upon their introduction of the “local” Walmart on Facebook. Walmart, being a retailer with more than 3,500 stores is surely a company for which the concept of (physical) proximity is important. From the outset I contradicted him (how dare I ;-) ). My point was, and is, that companies like Amazon, Dell, even Apple, arguably have a social CRM strategy but are not exactly local (there is not even a single Apple Retail Store in NZ …). They all manage without being physically local. Some brick and mortar retailers are even able and willing to bring their store to their customers by various technical means (e.g. Tesco but also others). So, I argue that proximity is more defined by ease of access, availability, interaction, rather than physical distance. This, in turn, means that physical proximity is not necessarily a key concept. This is especially true as being close, physically or otherwise, but irrelevant doesn’t bring a company anywhere, except into bankruptcy. So, relevance seems to be key.

What is relevance?

Relevance is the ability and willingness of companies to create value together with their customers. This goes beyond the mere transaction – giving money in exchange for a product or a service. Value for the company is not created by a single transaction, nor does the product itself create value for a customer. Value for the company is created by sustainable business. Sustainable business is not achieved by hitting a customer but by placing and keeping the customer’s interest at the core of the business i.e., by creating value together with the customer. The customer participates in the creation of value by using the products/services to fulfill her needs. The value comes out of the usage, not the product itself.

Now, what is correct?

To get to a result we need to be clear about what social CRM is. For this I will use Paul Greenberg’s definition as it is the most widely accepted one. Social “CRM is a philosophy and a business strategy, supported by a technology platform, business rules, workflow, processes and social characteristics, designed to engage the customer in a collaborative conversation in order to provide mutually beneficial value in a trusted and transparent business environment. It’s the company’s response to the customer’s ownership of the conversation.” Personally, I currently define social CRM as an extension to CRM that leverages the power of social media to continually engage in a mutually beneficial conversation with customers and prospects. I am aware that this is a little short but I also do not want to stretch the current limits of companies as well. What is ultimately behind this definition is an ability to create value for customers with customers, using an environment in which they are willing to invest limited efforts to get better value from companies. Wikipedia describes the term “social” as referring “to a characteristic of living organisms that always refers to their interaction and to their collective coexistence, irrespective of whether they are aware of it or not, and irrespective of whether the interaction is voluntary or involuntary. It refers to attitudes, orientations, or behaviors, which take the interests, intentions, or needs of other people into account. Combining these two definitions we are not anywhere close to a concept of “being local”. But, on the other hand, making an offer to us Christchurch people that is available in Auckland doesn’t make much sense either. But then: This is not exactly social CRM but plain ole segmentation with - non-deniably - an aspect of locality.

So, where does this leave us?

As I have stated before, implementing a CRM – and a social CRM - is predominantly about people and strategy. Repeat: (Social) CRM is a strategy, not a technology! It is key to have the right people and the right (business) strategy. Technology (and channel) comes at the very end of implementation; and is often also depending on an IT strategy (I mean, there is no point in implementing an SAP system if the corporate strategy relies on Oracle – or vice versa. SFDC is of course an interesting phenomenon rewarding an own blog as they are trying to disrupt corporate strategies). Well, back to the topic: Technology and channel are consequences of the chosen strategy. I actually would consider both as being tactics rather than strategies. These consequences (technology, channel) are of increasing importance but still not sufficient if they are not used with an end in mind. And this end is serving customer interests. So, the key is centering all activities of the company around customer interests. Proximity then comes as a necessary conclusion. Am I off the mark here? What do you think?