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How to Use Customer Experience as a Competitive Advantage During Retail Disruption

Turning Retail Disruption into a Competitive Advantage

All aspects of retail are being disrupted today. The industry is seeing dramatic gains or losses across channels and, ultimately, brands. Digital has become the epicenter of activity and the disruption is leading to unprecedented opportunity to use customer experience as a competitive advantage.

If you think about pre-COVID-19, the majority of retail sales were in-store. Depending on the go-to-market model, on average about 85% of revenue came from in-store purchases. Thriving retailers were investing in in-store services, events, and activities that drove higher foot traffic and more sales.

In the first half of 2020, the model for success has been flipped on its head. Foot traffic is still down significantly overall, while ecommerce; buy online, pickup in-store (BOPIS); and curbside continue to see robust gains. Couple that with a recent McKinsey study that identified 46% of U.S. consumers switching retailers or brands in the past few months, and these trends continue to spell disruption for retail. Traditionally loyal customers will find and repeat experiences that fit their buying preferences.

What does this mean for most retailers? Simply put, you need to re-win your loyal customer base, while also attracting and retaining new customers. Delivering great experiences during uncertain times requires focus and agility. 

5 ways industry leaders are embracing customer experience as a competitive advantage to tackle market disruption

  • All customers are new customers: Shopping today is a new experience for nearly everyone. Long-time in-store shoppers are moving to digital purchasing. Digital shoppers are experiencing more out-of-stock or delivery delays and might now be calling your contact center. Many shoppers are using BOPIS or curbside for the first time. Find opportunities to connect with them and get their feedback fast with tools, workflows and escalation paths to learn what’s working, and what’s not. 

For example, a discount code may have enticed a first time digital buyer to purchase. However, if the code doesn’t work or is confusing, do you really want consumers to be blocked from buying at these critical times? This is the fast path to an unconverted basket and a possible negative pattern deterring other first-time digital buyers. Successful retailers have created digital command centers leveraging customer experience as a competitive advantage to identify digital shoppers encountering issues, escalating purchase blockers to the contact center as well as to a rapid response web team to remedy the issue. This helps increase conversion and an elevated experience. (Check out our Reopening Playbook for more ideas like this.)

  • Stay connected through the customer journey: With so much shopping today relying on delivery — often third party — a retailer can lose control of the experience during that “last mile.” From a missed delivery window to missing or damaged goods to rude behaviors, this is where the experience can break down. The good news is that you don’t have to lose control even if you are contracting delivery to a third-party provider. Staying connected with the customer using AI-powered SMS technology helps bridge this gap across the entire journey.

A reactive approach is to engage with them following delivery to ensure everything went well. Asking for feedback after delivery is better than not asking at all, but it can create a significant recovery hole. An always-on approach is starting a two-way dialogue during the purchase process, then allowing the customer to reach out should a specific need or concern arise during or after the delivery process. In the customers’ eyes, the retailer is responsible for all aspects of the transaction, not just the purchase and the product. Staying connected through SMS across the entire experience can provide you with more signals and can also make for easy recovery and cross-sell efforts.

  • Engage with your employees for input and ideas: The value of in-store associates is growing considerably during these ever changing times. Success or failure during this upcoming holiday season will be heavily tied to how well frontline employees engage with customers. Investing in your employees will pay dividends. 

Continuously listening to employees through pulse surveys will help you keep issues and obstacles manageable during uncertain times, increasing the chances for shopper success. Crowdsourcing ideas from top performers both increases their engagement while helping the company solve more problems via agile innovation. For example, we have seen retailers crowdsource ideas from store employees to help successfully launch curbside pickup in less than 48 hours. Many of your employees have great ideas that can be quickly surfaced, tested and rolled out. (Check out our Employee Experience Playbook for more tips like this.)

  • Agile innovation: It seems like more change and innovation have occurred in the past six months than many retailers have experienced in the past six years. Waiting for a return to normalcy is essentially a path to nowhere. Your customers’ needs and expectations are changing rapidly, so must your approach. We’ve seen major changes such as personal shopper experiences, virtual showrooming, contactless payment and delivery, and more. We’ve also seen micro changes like handwritten signs, tape on the floor, mask handouts and more. 

Retail leaders are acting on small and large innovations at a more rapid pace today than ever before. To maximize output, the best retailers are testing every innovation rapidly with immediate customer feedback and linking it to things like NPS improvement. For instance, some retailers have experimented with store-front greeters to help customers navigate changes in the store. Since they already have a continuous feedback system, they simply need to pilot innovations in those stores soliciting targeted feedback for greater contextual understanding. From there, they can then assess impact to the shopping experience and the behavioral outcomes like increased basket size. Targeted customer feedback for each test increases success probability dramatically.

  • Next level personalization: Retail disruption is forcing customers to interact with you in new and uncharted ways. Web and mobile traffic is exploding and ecommerce sales are up for nearly every retailer. Personalization typically accounts for a customer’s preferences and expected needs. However, personalization fails when an offer is surfaced just after a customer has had a bad experience, which is occurring more frequently today with an influx of new digital or omnichannel buyers.  

Personalization that incorporates sentiment instantaneously pulled from feedback can create a unique one-to-one experience that can turn a detractor into a promoter. Dick’s Sportings Goods is a great example of how you can act on real-time feedback to engage ecommerce customers and improve the digital experience.

What lies ahead for retail is adaptation. What we have seen are successful retailers doubling down on always-on feedback to drive fast innovation. The climate for retail continues to rapidly change and so must the retailers. By staying focused and agile, this disruption can become a competitive advantage.

Schedule a strategy session with Medallia Experts on Demand to learn more about using customer experience as a competitive advantage.
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