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Breaking Through Customer Engagement Barriers

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In Q4 of 2013, we surveyed over 100 retail marketing executives across the United States on what technologies, data, and innovative ideas were most important to them. Not only that, we asked them …

In Q4 of 2013, we surveyed over 100 retail marketing executives across the United States on what technologies, data, and innovative ideas were most important to them. Not only that, we asked them what there current budgets and planned budgets were for all these strategies over the next 5 years. The results were surprising!

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  • 1. Survey Report Sponsored by
  • 2. Survey Report: Breaking Through Customer Engagement Barriers 2 Introduction................................................................................................................. 3 Key Findings................................................................................................................ 3 Marketing Budgets Span Channels.............................................................................. 5 Facilitating Marketing Efforts Across Channels..............................................................7 Striving For Real-Time Marketing................................................................................. 9 Effective Use of Data: The Power Behind Relevant Campaigns...................................11 Different Types Of Data Impact Promotional Strategies.............................................. 12 Mobile POS: The Near Frontier.................................................................................. 14 Advancing The Overall Benefits Of Mobile Technology .............................................. 15 In-Store Wi-Fi Trends................................................................................................. 16 Embracing The Future With New Technology Investments......................................... 17 Conclusion................................................................................................................ 18 Respondent Demographics....................................................................................... 19 About Yes Lifecycle Marketing...................................................................................20 About Retail TouchPoints...........................................................................................20 Table of Contents
  • 3. Survey Report: Breaking Through Customer Engagement Barriers 3 Introduction Retailers emphasize that providing the best possible experience for customers is a top priority. But are they implementing the strategies and technologies to deliver on that promise? Innovative marketing technologies designed to articulate customer relevancy, trigger engagement, excite shoppers and elicit cross-channel sales are becoming more sophisticated and often more affordable by the day. Please rank these factors regarding the importance when it comes to obtaining approval for investments in sales and marketing technologies. Ranked 1 on a scale of 1-5 We want to provide the best possible experience for customers with our brand 65% We need to constantly be experimenting to learn what works the best to serve our customers 14% We need to make investments to lower our cost of doing business 7% We need to keep up with what our competitors are doing 14% Key Findings A recent survey of 100 retail executives, conducted by Yes Lifecycle Marketing, collected candid responses to marketing and technology questions. Among the key fidings: • Retailers are lagging in their adoption of technology. For example, less than one third of retailers have implemented tools such as: in-store Wi-Fi (32%), mPOS (26%), and purchasing through social channels (24%). • Retailers are struggling to combine multiple sources of data. Leveraging customer data was the greatest concern for 84% of retailers. • A small percentage of retailers are integrating campaigns across channels. Just 37% said they are providing a consistent multichannel marketing message across all channels.
  • 4. Survey Report: Breaking Through Customer Engagement Barriers 4 Though marketers are inundated with consumer information, much of it is fragmented across channels and internal/external silos, according to a recent study from Yesmail Interactive, in conjunction with Gleanster Research. Lack of alignment constrains marketers as they seek to meld customer data with marketing strategies, program creativity and results measurement. However, “7 out of 10 organizations easily could boost customer profitability, capture more revenue and increase customer satisfaction if they had access to a more robust and sophisticated view of customer behavior, purchase history, socio-demographic data, household information and propensity to purchase data,” said Ian Michiels, Principal and Managing Director of Gleanster Research. Following is a summary of the 9 key marketing, data and technology issues retailers face most often and how they plan to tackle them. Please rank these marketing issues, in order of greatest concern. Ranked 1 on a scale of 1-5 Effectively utilizing the data we already have Integrating new data Finding the right technology Obtaining buy-in from senior management 47% Using analytics 11% Integrating social/mobile 18% 8% 8% 8%
  • 5. Survey Report: Breaking Through Customer Engagement Barriers 5 I. Marketing Budgets Span Channels To best reach the goal of providing stellar customer experiences, retailers are committed to marketing across all channels, with brick-and-mortar stores receiving the greatest percentage (72%) of funding. Retailers anticipate that by 2018, brick-and-mortar stores still will receive the greatest share (50%) of the marketing budget. They also revealed that some marketing dollars would shift from brick- and-mortar to other channels. This move seems to underscore retailers’ ongoing commitment to marketing across all channels. Please rank the following channels in terms of percentage of annual marketing budget dedicated to each in 2013. Brick and mortar stores Online (brand website) Mobile (smartphones) Social channels Mobile (tablets) 72% 22% 2% 2% 1% Please rank the following channels in terms of percentage of anticipated annual marketing budget dedicated to each by 2018. Ranked 1 on a scale of 1-5 Brick and mortar stores Online (brand website) Mobile (smartphones) Social channels Mobile (tablets) 50% 31% 9% 5% 4%
  • 6. Survey Report: Breaking Through Customer Engagement Barriers 6 Continued support of brick-and-mortar makes sense, since this channel generated in the greatest amount (76%) of annual revenue in 2013, and is expected to continue on that trend. More specifically, retailers anticipate that by 2018, the brick-and-mortar store would still generate as much as 70% of annual revenue. This report also identifies which technologies retailers believe will be most effective in the next five years, along with some surprises. The overarching question for retailers is: Where does your company stand in the commitment to new technologies, customer relevancy marketing and exceptional customer experiences, compared to 100 of your surveyed peers? Please rank the following channels in terms of percentage of annual revenue in 2013. Ranked 1 on a scale of 1-5 Brick and mortar stores Online (brand website) Mobile (smartphones) Social channels Mobile (tablets) 76% 18% 2% 2% 2% Please rank the following channels in terms of percentage of anticipated annual revenue by 2018. Ranked 1 on a scale of 1-5 Brick and mortar stores Online (brand website) 70% 24% Mobile (smartphones) 0% Social channels Mobile (tablets) 3% 3%
  • 7. Survey Report: Breaking Through Customer Engagement Barriers 7 II. Facilitating Marketing Efforts Across Channels Multi-source customer data accessed before, after or during a retail transaction can assist marketers in a multitude of cross-channel initiatives, such as message continuity. Yet 63% of survey respondents said they are not providing consistent marketing messages across all channels. Half of marketers said they coordinate marketing campaigns across some channels, and 13% admitted that their marketing efforts are isolated within individual channels. Please describe your current marketing strategy. We provide a consistent multichannel marketing message across all channels We market within each channel separately We coordinate marketing messaging across some, but not all, channels 50% 37% 13% This means that today, when the industry is more intent on multichannel consistency, just one third of marketers are integrating campaigns across all channels.
  • 8. Survey Report: Breaking Through Customer Engagement Barriers 8 To succeed, retailers must become more deliberate about consolidating cross- channel marketing efforts, said Ian Michiels, Principal and Managing Director of Gleanster Research: “The future of brand marketing is about building relationships through relevant and timely communications delivered across the channels each customer prefers. Companies need to start thinking in terms of the customer lifecycle and relying more on the data and insights that inform and develop the applicable lifecycle strategy.” Moving The Needle On Social Commerce Consolidation becomes more vital as changing customer behaviors alter retailers’ demands for channel technologies. For example, Facebook and other social channels initially failed to develop as direct sources of revenue: only 24% of retailers surveyed deploy social purchasing today. But by 2018, almost half (46%) plan to leverage social as a way to facilitate direct purchasing. Please indicate if you have deployed purchasing through social channels or plan to by 2018. 24% 46% 30% Planned by 2018 Not planned Deployed today
  • 9. Survey Report: Breaking Through Customer Engagement Barriers 9 Real-time isn’t yet ready for prime time: Only 23% of marketers reported using real-time data to generate customer offers on a regular basis; 30% said they use real-time data, but infrequently; and 36% would like to leverage it. Another 11% said they are not able to use up-to-the-moment data to generate customer offers. Of the offers generated by the 53% of retailers who utilize real-time data, most (38%) are triggered by website purchases, followed by in-store visits (37%) and in-store purchases (36%). Are you able to use real-time data to generate customer offers? Yes, but we do so No No, but we would like to 36% 30% 11% 23% Yes, and we do so frequently Which of these events trigger real-time offers to your customers? Website purchase In-store visit In-store purchase Website visit Email response activity/ Shopping cart abandonment Customer location (geo- Life event (birthday, move, Not applicable 38% 37% 36% 35% 34% 30% 29% 24% 24%
  • 10. Survey Report: Breaking Through Customer Engagement Barriers 10 To confirm these statistics, a 2013 IBM survey of more than 500 companies worldwide segmented the top performers in terms of cross-channel integration and the use of technology for customer outreach. Among this subset, 40% actively provided real-time customer offers based on customer context — a “relatively sophisticated process,” according to a June 2013 eMarketer article. Among the remainder of companies surveyed, only 15% had generated real-time offers based on context during 2013. The key to real-time marketing, eMarketer indicated, is to “use data and analysis to deliver real-time messaging through automated technology, which can rapidly respond to customer actions by pushing out ads, marketing collateral and other content to the appropriate channels.” In addition, “retailers can leverage apps that customize offers individually, in real time, based on a customer engagement event and/or what retailers already know is in a customer’s closet, locker, garage or pantry,” said Boston Retail Partner’s Morris. “As more store offers become real-time, back-office processes will change considerably. In fact, real-time retail has the broad potential to impact everything from the store to workforce management, loss prevention, merchandising, the home office and more.” The reality is that many retail marketers struggle with real-time offers because available customer data is difficult to align and centralize. Extracting and leveraging non-integrated customer data makes most marketing programs ineffective, as do the fragmented legacy technologies often supporting the data. This especially is true for retailers that engage multiple agencies, marketing service providers and technology vendors. However, the retail industry can now access next-generation customer lifecycle engagement solutions capable of addressing the real-time marketing challenge. More powerful digital technologies; faster transmission speeds; the ability to access centralized, core systems of customer data; and more affordable pricing have helped create this shift. In addition, the essential, always- on smartphone — a prime avenue for delivering real-time offers — has become a ubiquitous touch point. Combined, these developments are moving real-time marketing to the forefront of advanced customer engagement and relevancy marketing techniques. The shift is great news for the 89% of surveyed retailers who are or would like to leverage real-time marketing practices. “Real-time retail has the broad potential to impact everything from the store to workforce management, loss prevention, merchandising, the home office and more.” -Ken Morris Boston Retail Partners
  • 11. Survey Report: Breaking Through Customer Engagement Barriers 11 IV. Effective Use of Data: The Power Behind Relevant Campaigns Retail marketers strive to capture, analyze and utilize the right amount of customer data in order to maximize the relevancy and impact of marketing offers and campaigns. Today thousands of data points deliver information about customers’ personal interests, family make-up, products last purchased, age, residence, at what hour they are most likely to open and click through an email, and much more. Marrying all or parts of this data treasure trove with innovative marketing technologies creates the power that pierces through customer engagement barriers. As noted in the chart on page 4, almost half (47%) of surveyed executives ranked utilizing existing customer data as their primary marketing challenge. Integrating social/mobile data (18%) and new data (8%) as well as using analytics to explore data (11%) also topped the list of greatest concerns. In total, leveraging customer data was the greatest concern for 84% of surveyed retailers. Findings underscore marketers’ ongoing struggle to combine multiple sources of data to deliver the customer relevancy and personalization required for improving the experience for customers across channels. Do You Want Fries With That? Some retailers do an excellent job of increasing basket size based on customer profiles and previous behaviors. But for most retailers the act of capturing, cleaning, processing and updating cross-channel data is difficult to manage. But today, retailers that find the right partners can blend multi-source customer data to target, personalize, cross-sell, up-sell — more thoroughly, quickly, effectively and affordably than ever before. Retail marketing partners specializing in customer intelligence are ready to share synchronized databases of extensive customer information — available in real time. For example, mobile sales associates equipped with a customer email address or portion of a mailing address can tap into contextual customer data that many retailers never knew existed. Consumers interacting with their smartphones, tablets, laptops and desktops can access real-time marketing offers triggered by an in-store visit, website purchase or other event. Leveraging customer data was the greatest concern for 84% of surveyed retailers.
  • 12. Survey Report: Breaking Through Customer Engagement Barriers 12 V. Different Types Of Data Impact Promotional Strategies The majority (58%) of surveyed retailers indicated that transactional and purchase history data are the most valuable types of customer information. Only 5% said social media data was the most valuable, and only 2% valued web browsing history data above all other types. What type of customer data do you think would be most valuable to you, regardless of whether you currently collect it? Ranked 1 on a scale of 1-5 Transactional/purchase history Behavioral/attitudinal data Demographic information Campaign response history Social media data Web browsing history 58% 14% 14% 7% 5% 2% Marketers may be wedded to transactional information because it is easily accessible and offers explicit customer data, ideal for segmentation and offer optimization. Social media and web browsing data is more difficult to embrace because it reflects a shopper’s inferred intent only. “Social data provides a valuable and unique opportunity for retailers to determine what people are saying about their products and customer service as well as determining where there is “buzz” that may be relevant,” reported Michael Penney, Managing Director of Agency Services for Yes Lifecycle Marketing. “But the value of that data is limited because its impact is not as actionable and measurable to retailers.”
  • 13. Survey Report: Breaking Through Customer Engagement Barriers 13 However, “just because you know what your customer purchased doesn’t mean you know your customer,” stated Michiels. “Marketers need to layer on third-party data, as well as online and offline data, to really engage customers on an intimate level. Unfortunately, that is not happening very well today, even at the largest and most innovative B2C organizations.” Most consumer-facing companies have an undeveloped understanding of their customers beyond basic demographics and purchase history, Michiels said. In fact, “many executive level marketers think they know their customers well, and consider their customer engagement strategies — including optimal messaging, channels and timing — to be effective. In reality, they lack the deep data insights that would enable them to send personalized, targeted campaigns based on relationship-oriented customer data. This suggests that most retailers are limited by what they perceive to be successful albeit legacy marketing tactics.” “Just because you know what your customer purchased doesn’t mean you know your customer. Marketers need to layer on third- party data, as well as online and offline data, to really engage customers on an intimate level.” -Ian Michiels Gleanster Research
  • 14. Survey Report: Breaking Through Customer Engagement Barriers 14 VI. Mobile POS: The Near Frontier The majority (51%) of retailers acknowledge that mobile POS (mPOS) is a must-have by 2018. However, almost one quarter (23%) have no plans for this strategy, possibly waiting to determine which companies/facilitators and technologies will rise to the top. In the meantime, Best Buy Canada, Home Depot, Nordstrom, Perry Ellis and Urban Outfitter are just some of the retailers currently embracing mPOS. Perry Ellis pursued mPOS primarily for clienteling, said Luis Paez, CIO of Perry Ellis International, in an article published by Retail TouchPoints. “Being able to approach and work with the customer more effectively was very important. Employees and store managers now are equipped with the tools to build that relationship with shoppers and create more interactive experiences.” At Best Buy Canada, mPOS “is just one part of our multichannel offering that allows for a flawless experience, in-store and online,” said Robert Pearson, VP of E-Commerce for Best Buy Canada, in another Retail TouchPoints article. “Our focus is on creating a seamless shopping experience for our customers and we have invested in building out both our multichannel and fulfillment capabilities to support this vision.” Please indicate if you have deployed Mobile POS or plan to by 2018. 26% 51% 23% Planned by 2018 Not planned Deployed today
  • 15. Survey Report: Breaking Through Customer Engagement Barriers 15 VII. Advancing The Overall Benefits Of Mobile Technology There’s no question that as mobile technology continues to improve, retailers will have an increasingly powerful and flexible vehicle for capturing customer data and triggering increased sales. Mobile tools facilitate more intimate discussions with customers and therefore better relationships. Equipped with mobile devices, sales associates can glean valuable information as they help customers browse and buy — then use that knowledge to generate synchronized, cross-channel customer data for new and developing sales strategies. Based on the breadth of customer data collected, with mobile technology in- hand, associates can improve the brand’s value proposition. For example, they can provide more relevant offers or adjust offers in real time — change a $5- off proposal to $50 off — to capture a sale. Developing a more personalized approach, store associates could snap a photo of a customer; determine the size and color of jeans previously bought in-store or online; produce an image of the customer wearing a matching top or jacket; then click to order it in the size, color and delivery method the buyer prefers. This “guided selling” technique is the future of retailing, said Ken Morris, Principal of Boston Retail Partners. The next step in mobile “will create a true customer- centric omnichannel shopping experience where a sales associate can be empowered to interact with customers in new and innovative ways. Retail is never going to be the same.”
  • 16. Survey Report: Breaking Through Customer Engagement Barriers 16 VIII. In-Store Wi-Fi Trends Surprisingly, almost 40% of retailers had no plans to deploy free in-store Wi-Fi, despite the rise in mobile. Wi-Fi deployment trends could depend on how a retailer perceives the customer experience: For smaller retailers that can deliver effective engagement strategies over cellular networks, investments in in-store Wi-Fi may not be imperative. But for retailers intent on delivering sophisticated customer experience apps that necessitate extensive bandwidth, free in-store Wi-Fi is highly valued. Personalized offers made by sales associates equipped with mPOS, delivered directly to shoppers’ mobile devices, or available from tablets affixed to store shelves, for example — all streamlined by access to centralized customer data — require robust Wi-Fi implementations. “Retailers want technologies that give their customers a reason to come to their stores,” said Penney “and for many consumers, in-store Wi-Fi will enable those reasons.” Going forward, Penney sees retailers taking one of two approaches: “Some marketers will advance the quality of customer engagement execution by developing sophisticated personalization strategies that demand the capacity of in-store Wi-Fi. Other marketers either won’t require the bandwidth provided by Wi-Fi — or believe that in a few years, communications carriers will provide adequate bandwidth to power sophisticated apps to mobile devices.” Please indicate if you have deployed free in-store Wi-Fi or plan to by 2018. 32% 29% 39% Planned by 2018 Not planned Deployed today
  • 17. Survey Report: Breaking Through Customer Engagement Barriers 17 IX. Embracing The Future With New Technology Investments Retailers are lagging in their adoption of technology: less than one third of retailers have implemented tools such as free in-store Wi-Fi (32%), mPOS (26%) and purchasing through social channels (24%). Only easy-to-implement QR codes are close to being widely adopted, with 45% of On a macro level, the recent recession challenged most retailers in terms of technology investments. In addition, many solutions require adjunct expenses, such as upgrades to legacy hardware, further slowing technology adoption. Some retailers still are focused on the most fundamental applications, such as capturing contact information. Others concentrate on investments that lower the cost of doing business or mirror competitors’ next operational moves, rather than on technologies that can enhance the customer experience. Please indicate if you have deployed the following technologies or plan to by 2018. In-app purchasing Geo-targeting/ localization Shoppable videos QR codes RFID tags 29% 45% 26% 30% 46% 24% 21% 40% 39% 45% 33% 22% 18% 33% 49% Deployed today Planned by 2018 Not planned
  • 18. Survey Report: Breaking Through Customer Engagement Barriers 18 As noted, providing the best customer experience was the No. 1 factor for most (65%) of retailers seeking approval for sales and marketing investments. “The lion’s share of technology investment, therefore, should be going to solutions that enrich the customer experience and break through engagement barriers,” said Penney. “The most compelling, integrated personalization marketing campaigns rely on a cohesive repository of customer knowledge. Brands that don’t invest in providing the relevancy will falter as consumers seek competitive brands that do.” Conclusion The battle for market share now rests on building and leveraging intimate customer relationships. “Winners are embracing cross-channel marketing techniques that create and communicate true customer relevancy, trigger engagement and lift sales, said Penney. “The gap between retailers utilizing these techniques and those that don’t is growing wider.” Penney continued: “Catching up will require significant realignment and investment in technologies that deliver relevant data-driven customer marketing. Meanwhile, retailers already focused on leveraging customer data to provide relevancy are developing distinct advantages in the marketplace.” With advanced business intelligence (BI) tools in hand, retailers will be able to collect actionable data that identifies the right customers at the right time in order to implement more effective marketing strategies. The best BI solution partner will deliver a custom mix of products and services tailored specifically to your business and customer. “The gap between retailers utilizing these techniques and those that don’t is growing wider.” - Michael Penney
  • 19. Survey Report: Breaking Through Customer Engagement Barriers 19 Respondent Demographics Of the 100 retail executive respondents, most (30%) represented specialty hard goods, big box (20%), grocery (12%) and specialty soft goods (12%). The remainder represented electronics, pharmacy/convenience and office supplies. Please describe your retail vertical. Specialty hard goods 30% Specialty soft goods 12% Big Box 20% Pharmacy/convenience store 8% Grocery 16% Electronics 9% Office supplies 5%
  • 20. Survey Report: Breaking Through Customer Engagement Barriers 20 About Yes Lifecycle Marketing Yes Lifecycle Marketing is a solution provider that brings together multichannel marketing platforms and data, with creative and strategy services honed on the optimization of delivering relevant marketing messages. This gives marketers the ability to source best-of-breed technology and creative and strategy services from a single vendor at a cost-effective price point. For more information, visit: www.yeslifecyclemarketing.com About Retail TouchPoints Retail TouchPoints is an online publishing network for retail executives, with content focused on optimizing the customer experience across all channels. The Retail TouchPoints network is comprised of a weekly newsletter, special reports, web seminars, exclusive benchmark research, an insightful editorial blog, and a content-rich website featuring daily news updates and multi-media interviews at www.retailtouchpoints.com. The Retail TouchPoints team also interacts with social media communities via Facebook, Twitter and LinkedIn. 200 W Adams, Suite 1400 Chicago, IL 60606 P: 877.937.6245 sales@yeslifecyclemarketing.com 411 State Route 17 South Suite 410 Hasbrouck Heights, NJ 07604 P: 201.257.8528 F: 201.426.0181 info@retailtouchpoints.com

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