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Drive Customer Loyalty With Physical Retail Post-COVID-19 The retail store’s role in omnichannel strategy
Loose Threads THE VOICE OF REASON ACROSS THE CONSUMER ECONOMY
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POST-COVID-19, PHYSICAL RETAIL WILL CONTINUE TO DRIVE HIGH LTV FOR OMNICHANNEL SHOPPERS (p.4)
• OmnichannelmeanshigherLTV
• Physicalcommerceisalreadyrebounding
THE THREE MOST IMPORTANT THINGS TO START, AND KEEP, GENERATING RETAIL SALES (p.6)
RETAIL VALUE PROPOSITIONS NEED TO FOCUS ON WHITE GLOVE SERVICE (p.7)
• TestDriveValueProp
• UniqueExperienceValueProp
• WhiteGloveServiceValueProp
• Post-Covid-19,WhiteGloveServiceistheonlyviableRetailValueProposition
CASE STUDY: APPLE’S REOPENING PLAN (p. 9)
TRANSFORMING INTO A WHITE GLOVE SERVICE PROVIDER (p.10)
• Customerneeds:pre-crisis
• Customerneeds:post-crisis
• Anticipatecustomerneedswithclienteling
• InAction:JenniKayne
• Enhanceclientelingwithmultiplechannels
• InAction:WarbyParker
• Seamlesstechnologyandcommunications
• InAction:Lacoste
RETAIL KPIS FUELING OMNICHANNEL SUCCESS (p. 14)
• CustomerLifetimeValue
• TrafficandCross-ChannelConversion
• CustomerSatisfaction
• BlendedRevenue
Contents
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About this WhitepaperThe COVID-19 pandemic has expedited shifts in the way customers shop, both online and in stores. Customers now view physical retail through an omnichannel lens, which requires brands to adapt to a new set of expectations.Inthiswhitepaper,LooseThreadsRetailPartnerRebekahKondratoutlines:
1. Howphysicalretail’sroleinomnichannelstrategiesisshiftingandwhyitwillstilldrivehighLTV
customers.
2. WhatyouneedtodotomaximizeROIonretailefforts:
• Ensuresafetyandestablishclearcommunicationpatterns
• ImplementWhiteGloveService
• RedefineKPIs
About Loose ThreadsLooseThreadsisaretailconsultancyproducingomnichannelstrategiesthatdrivecustomerloyalty.Weareaninterdisciplinaryteamofproblemsolversthatchallengeleaderstothinkdifferentlyandstayaheadofthecurvebydeliveringpositivevaluealongeverytouchpointwithintheirbusinesses.
LearnmoreatLooseThreads.com
ABOUT REBEKAH KONDRAT
Kondrat’sexpertisecomesfromworkingaticonssuchasApple,startupslikeWarbyParkerandFortune500companiesincludingStarbucks.Physicalretailisinastateofupheaval—butKondratseesopportunityamidstthechaosandoutlinesareasoffocusforbrandsthatarereopeningpost-COVID-19.
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OMNICHANNEL MEANS HIGHER LTV
Customerswhoshopinmultiplechannelshaveahigherlifetimevaluethanthosewhoonlyshopinasinglechannel.
Whenabusinessprovidesanomnichannel experience—an equivalent customer experience across all channels—customersaremoresatisfied,purchasemore,andbecomemoreloyaltothebrand.Buildinganomnichannelcustomerexperienceallowsbrandstolearnabouttheircustomersneedsandhowtheywanttoencounterthebrand.
PHYSICAL COMMERCE IS ALREADY REBOUNDING
Customersarealreadyeagertoreturntoshoppinginphysicalstores.
Notsurprisingly,theU.S.sawaninitialpopoftrafficwhenstoresfirstreopened,followedbyaleveling-offperiod.Fromhere,thereshouldbeasteadyincrease,inlinewiththedatacomingoutofSouthKorea,whichisalreadyreporting85%ofpre-COVID-19traffic.IntheU.S.,week-over-weektrafficdatashowspositivegrowthacrossthemajorityofindustriesandshouldstabilizeovertime.
Consumersentimentdataalsosuggestthatcustomersarealreadypurchasingnon-essentialitems,whichwilllikelytranslateintosimilartrendsinbrick-and-mortarsalesasthecountryreopens.
Post-COVID-19, physical retail will continue to drive high LTV for omnichannel shoppers
“[We] know our omnichannel customer who shops at the store and on ecommerce has like a six-times higher customer lifetime value.” — Julia Hunter, CEO Jenni Kayne
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• 53%ofrespondentsarepurchasingnon-essentialitems
• 22%ofrespondentsarewindowshopping,whichimpliesthereisintenttobuywhentheyfeelthingsaremorestable
Customersareopentoswitchingbrandsastheretaillandscapechanges
• Ofthe21%whoswitchedtoastorebrand,61%intendtocontinuewiththatbrand
• Ofthe16%whoswitchedforbasics,44%intendtocontinuewiththatbrand
• Ofthe14%whoswitchedfornon-basics,56%intendtocontinuewiththatbrand
“[More] than half of the people are planning on sticking now with the new brands. And so this is an incredible opportunity for us to have penetration with a set of customers that otherwise would have been very difficult for us to penetrate.” — Sarah Paiji Yoo, CEO and Co-founder Blueland
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The three most important things to start—and keep—generating retail sales Retail as we know it will look, act, and feel drastically different than it did pre-crisis.
Decreased capacity and super-charged sanitation are a given, but to retain loyal customers, attract new ones and ultimately drive revenue, physical retail strategies need to:
• Evolve the Retail Value Proposition and serve a new purpose
• Transform into a White Glove Service
• Update metrics to drive success
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Retail Value Propositions need to focus on White Glove ServiceTheprimaryreasonforcustomerstovisitphysicalstoreshasshifted.Therefore,theRetail Value Proposition—the unique purpose for a store’s existence—shouldaccountfornewbehaviorsandexpectations.
ThemostcommonRetailValuePropositionspriortothepandemicwere:
TEST DRIVE VALUE PROP
Thestoreservesasawayforcustomerstophysicallysee,feelandtouchhigher-valueitemsbeforepurchasing.ExamplesincludeCasper’snaproomsandIKEA’sfamousmaze.
UNIQUE EXPERIENCE VALUE PROP
Storesaredesignedtobeinspiringdestinationsthatallowcustomerstoimmersethemselvesinthebrand.AnexampleistheNYCNikeSohoStore’sbasketballandsoccercourts.
WHITE GLOVE SERVICE VALUE PROP
ThestoreoffersahighlevelofservicewherecustomersaretreatedlikeVIPguests.Partoftheexperienceistobepampered,getspecialattentionandhaveexpectationsexceededateveryturn.Thesecompanieskeepdetailedfilesonalloftheircustomerssotheycananticipateneeds,employpersonaloutreach,andofferservicessuchasstylingappointmentsandearlyaccesstonewmerchandise.Customersareoftenofferednicetiessuchaschampagneandgourmettreats.ExamplesincludebrandslikeChanelor“newluxury”playerssuchasRebag.
Post-COVID-19, White Glove Service is the only viable Retail Value PropositionInordertokeepcustomersanddriveloyalty,eachandeverypersonmustfeelasthoughtheyarereceivingelementsofahigh-touchservice.Ataminimum,thecustomerneedstofeelthatmeasuresforsafetyexceedtheirexpectations.Communicationsbetweenthebrand,employeesandthecustomermustbeexceptionallyclearandthoughtful.
“New”servicessuchascurbsidepickupandbuy-online,pick-up-in-store(BOPIS)offeradditionalinteractionsforWhiteGloveService.Brandsandretailersmustadoptthesepracticesinordertomeetbaselineexpectations,giventherestrictionsimposedonretailunderCOVID-19.
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Case Study: Apple’s reopening planApple exemplifies the White Glove Service value proposition (pre- and during COVID-19). It has always valued the concept that retail stores are destinations that inspire and fulfill needs. Great service drives life-long customers, drastically contributes to brand lift, and increases brand equity.
Apple’s Approach
Inalettertocustomersandemployees,thebrandclearlycommunicatesthestricthealthandsafetymeasuresimplementedatphysicalstores.Italsoemphasizesthe“focusonone-on-one,personalizedserviceattheGeniusBarandthroughoutthestore.”
Informativeandhelpful,theircommunications:
• Highlightcurbsidedrop-offandpick-up
• Remindcustomerstheycanreceivesupportonlineandviaphone
• Requestthatcustomerspurchaseonlineandonlycometothestoreforsupport
Pre-COVID-19,Apple’sretailstoresgeneratedrevenue—buttheywerealsoservicecenters.Fromthestart,thebrandhasdedicatedalargepercentageofsellingspacetonon-sellingactivitiesstartingwiththeGeniusBarandlatermovingintoworkshopsandone-on-onetrainingsessions.Theseservicesarenotaboutattractingnewcustomers,they’reaboutretainingexistingcustomers—forlife.
Appleunderstandswhattherestofretailneedstorealize:Itsstoresaretheretomeetitscustomers’needsandtheneedfortheforeseeablefutureisanewlevelofservice.
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Transforming into a White Glove Service providerHighlypersonalizedcustomerserviceisnolongerreservedforluxuryplayers,andbrandsandretailers—regardlessofwhatproducttheysell—shouldmakeadjustmentstoaddWhiteGloveServiceelementstotheircustomerjourney.White Glove Service is a combination of communication, tech-enabled touchpoints and actions that go beyond transactionary gestures.
Thislevelofserviceensuresacustomerhaseverythingsheneedstoconverttoalifetimebrandfan.
Customer needs, pre- and post-crisis
CUSTOMER NEEDS PRE-CRISIS
BeforeCOVID-19,manycustomersviewedshoppingasaleisureandentertainmentactivity.Inordertobecomealoyalcustomer,theyneededtobelievethreethings:
1. Thebrand story—theinspiringnarrativesurroundingthebrandthatgarnerscustomerloyalty.
2. Thattheproduct wouldhelpthemachievetheirgoalsorenhancetheirlifestyle.
3. Thattherewasa personal trust betweenthecustomerandthebrandtouchpointsthey
frequented.
CUSTOMER NEEDS POST-CRISIS
Forastorethatisreopening,thebaselineisupdatinghealthproceduresandphysicalstoreenvironmentstoensuresafesocialdistancingforcustomers.Butinordertogainloyalcustomers,brandsneedtogofurthertorelievestressandworry.Customersnowmustbelieve:
1. Thebrand story.
2. Thattheproductwillstillhelpthemachievetheirgoalsorenhancetheirlifestylepost-crisis.
3. Thatthereisapersonal trust betweenthemandthebrandthat adds value by relieving stress and worry.
4. Theshoppingenvironmentisclean and safe.
Brandsaregoingtohavetoworkhardertoaccountfortheadditionalsetofexpectations.However,ifdonecorrectly,theyhaveachancetodeveloplong-lastingrelationshipswithcustomers.
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Anticipate customer needs with clienteling
Clienteling is the practice of anticipating individual shopper needs and proactively reaching out as new products arrive or new services are introduced.
Doingthisrelievesthecustomerofthestressofseekinginformation,andoffersopportunitiesforconnectionandevendelight.
IN ACTION: JENNI KAYNE
Atselectstoreswhererestrictionsallow,aJenniKaynestylistwilltakeyouthroughthestoreandtalkaboutstyle,sizeandfit.Ifacustomerhassomethingspecificinmind,theirstylistswillpullpiecesandcreatelooksforthecustomerviavideochat.Preferencesarekeptonfilesothatassociatescanreachoutasnewstylesarriveandcontinuetherelationship.JenniKaynestoresoffer:
• In-storepickup
• Privatevirtualstylingappointments
• Privatein-storeshoppingappointments
Enhance clienteling with multiple channels
Untilrecently,thereweretwodifferentcustomerserviceteams—onethathelpedonlinecustomersviachat,emailandtextandonethathelpedcustomersinthestore.Combining
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theseroles,orrotatingthem,nowmakessensefromacustomerrelationshipandapayrollperspective.Customerscanchatortextwithastoreassociateandcanlaterbehelpedbythatsameassociateinthephysicalstore,whichwillbuildtrustandcustomerloyalty.
Brandsandretailersmustfirstensuretheyhavethesystemsinplacetofacilitatethislevelofcustomeroutreach.
IN ACTION: WARBY PARKER
Glassesarebothafashionaccessoryandamedicaldevice(forsome),soensuringitscustomerscanquicklygettheirquestionsansweredisamustforWarbyParker.Hereareallofthewaysyoucangetintouch:
• Call,Email,TextandChat
• Hometry-on
• Virtualtry-on
Allcustomerserviceassociates(bothin-storeandonline)aretrainedonhowtoreadaprescriptionandonhowtodetermineifglassesareagoodfit,toowide,ortoonarrow.
Seamless technology and communications
Curbsidepickupandnext-daydeliveryarenowthenormandtheseprocessesmustbeseamlessinorderforcustomerstokeepcomingback.Inventoryshouldbevisibleacrossallchannelsandsystemsshouldbenimbleenoughtomeetcustomerswheretheyareatthemomenttheyarereadytobuy.
Customersdon’twanttowaitforbrandstosendanemailanymore,theywanttheabilitytogetinformationforthemselves.Nowisthetimetoinvestintechnologythatgivesthecustomergreatercontrolandvisibility.
IN ACTION: LACOSTE
AsLacostereopeneditsretailstores,ittookintoaccountthecustomer’sdesiretoseeinventorybeforeentering,aswellasotherimportantinformationsuchascleaningschedulesandstorecapacity.ByscanningQRcodesthroughoutthestore,customerscan:
• Browsecurrentstoreinventory
• Seethelasttimethestorewasprofessionallycleaned
• Seereal-timeoccupancylevels
• Getinformationonwheretoobtainmasksandhandsanitizer
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Retail KPIs fueling omnichannel success AOV,UPTandconversion,alongwithrevenue,arethemostcommonlyusedmetricstodetermineaphysicalstore’ssuccess.However,remainingsiloed,thesemetricsdonottaketheentirebrandecosystemintoaccount.Ascustomersincreasinglyuseamixofpurchasingchannels,newKPIsmustbedevelopedinordertomeasureefficacy.
Brands and retailers must adopt market-level KPIs to truly understand the impacts of an omnichannel strategy, focusing on geographies—not channels.
Themostimportantmetricsshouldtrackcustomerbehavioracrossmultiplechannels:
CUSTOMER LIFETIME VALUE
Brandsnowmorethaneverneedtohaveunifiedcustomeraccountsthatcansystematicallytrackallpurchases.
TRAFFIC AND CROSS-CHANNEL CONVERSION
Trafficisameasurementofpotentialandsingle-channelconversiononlytellspartofthestory.Itisnoweasierthanevertorecordcustomerinformationevenifshedoesn’tmakeapurchase.Thisinformationcanthenbeusedtotrackwhetherornottheyconvert,thetimetoconvertandinwhichchannels.
CUSTOMER SATISFACTION
Notonlyshouldcompaniestrytounderstandtheircustomers’thoughtsandattitudestowardsthebrand,buttheyshouldalsoremembertodiscerngeneralcustomersentimenttowardshoppingasawhole.Withgreatuncertaintyahead,brandsshouldlookforwaystostayabreastofshiftsincustomerbehavior.
BLENDED REVENUE
Asaforementioned,brandsandretailersshoulddevelopawaytotrackandreportonblendedrevenuebygeography.Eachtimeanewsaleschannelisintroduced—beitdigitalorphysical—theimpactonoverallmetricsshouldbeobservedclosely.Throughthisexercise,brandswillbetterdiscernthemostoptimalchannelmixforeachgeographicregion.
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Omnichannel strategies are the only way to scale and stay ahead of the curveConsumershaverapidlybecomeaccustomedtodiscoveringnewbrandsandmakingpurchasesinpreviouslyunfamiliarways.Ratherthanabandoningtheirphysicalretailshops,brandsandretailersthatsurvivewilladoptastrongeromnichannelapproach.Thereisunderstandablyamajorfocusondigitalrightnow,butphysicalretailisnottobeignored—thecustomerisnotignoringitandneithershouldbrands.