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Retailers need to rethink KPIs in the face of digital shopping

Customer experience is becoming of increasing importance in an omni-channel world, but technology adoption has stores cornered, forcing them to rethink what value stores bring to an organisation and the customer journey

With online shopping becoming the norm, customers are not necessarily making purchases in stores, even if they are still buying goods from a retailer and visiting its physical spaces.

But stores are still an important part of an enhanced customer experience, and retailers should rethink store key performance indicators (KPIs) to properly measure how a physical location may be contributing to a brand’s overall performance in a digital age, according to an expert panel.

During Retail Expo in London, a panel of experts moderated by Essential Retail said that more traditional KPIs, such as footfall and sales, aren’t always a great indicator of how that space is affecting overall performance, especially as shops are becoming locations for experiences and re-enforcement of brand loyalty rather than purchases.

Dave Abbott, head of IT service delivery at Dune, said stores are no longer solely about purchases: “It doesn’t matter how much you sell, it matters how much you engage with someone.”

Assessing whether or not a retailer has engaged with a customer isn’t easy. Abbott said customers may have visited a store, made some decisions, but bought a product later online.

In light of this, stores are increasingly becoming centres for a fun experience, and in some cases customers like to be recognised and given special treatment, all as part of that experience.

But the challenge here is that personalisation can have its drawbacks, with Abbott saying it is a “balancing act” between giving a consumer the custom experience they want and being creepy and over-familiar.

While different customers will have different reasons for visiting a store, the trend towards stores becoming places for experiences – destination shopping – is ever growing.

Abbott said “small touches”, such as giving people water in stores, can make the experience so much better for some people, while others aren’t interested in face-to-face interaction at all. He added that the “high street will just evolve” to cater to these differing customer needs.

The online retail challenge

While online retailers may appear to have it easier, that may not necessarily be the case – online comes with its own challenges when it comes to customers experience and personalisation.

Technology adoption and online shopping has increased customers’ expectations of what a good shopping experience means to them.

Jim Buckle, chief operating officer of Feelunique, said a good customer experience is making the shopping journey as easy and convenient as possible.

But what’s easy and convenient now is different to what was easy and convenient 10 years ago, he said, even for online retailers.

For example, 10 years ago a customer would probably have been “pleased” if something they ordered online arrived within a week, but technology now allows customers to order anywhere at any time from their phones, pay by Apple Pay, click and collect or make a same-day order.

While personalisation – which is a huge expectation of customers in the modern day – may be easier for online retailers than bricks-and-mortar or multi-channel businesses, the expectation of online retailers is higher.

And while physical stores face challenges with customer engagement, customer experience and loyalty, so do the online giants.

“One of the challenges of personalisation is if you look at a customer’s past behaviour, it’s not always an indication of their future behaviour,” said Buckle.

To help address this, Buckle said customers should have the chance to “edit” any recommendations, as there are “multiple different journeys” people navigate when shopping online – for example, they may be looking for inspiration or a gift for someone else.

“Shopping doesn’t always have to end in a transaction. What you have to increase is your sales over time and your customer loyalty,” added Buckle.

While providing a good customer experience can be the gateway to building customer loyalty, a retailer’s position in the market can also affect whether or not a customer returns, according to Peter Donlon, chief technology officer of Moonpig.

Even if a customer receives an amazing experience in a supermarket, they won’t necessarily go to the same one every day, depending on how convenient the location is for them, he said.

While Moonpig has a more niche market offering, eliminating some of the likelihood of a customer choosing another retailer, there is still the danger of being too convenient, he added.

“Our challenge is that every product we sell is personalised, so how do you find the balance between being super convenient, but not taking away the emotional aspect?” he said.

The fine loyalty line

In the internet age, customer loyalty can be hard to win – both on and offline – and depends on factors such as personalisation, experience and convenience.

Donlon warned against innovations that can distract retailers from their core offering, and Steve Mader, director of global e-commerce strategy in the consulting division at Kantar Retail, said the entire industry of customer loyalty needs to be realigned, in some cases moving away from loyalty cards.

In a multi-channel space, Mader said some firms already have a “robust club card offer”, while others use apps, but either way the goal is to “seamlessly connect” online and offline.

He added that brands should offer the “experience and exclusivity that the loyal shopper base really enjoys”, such as access to sample sales, exclusive member-only events or sneak peeks.

But much like store or online sales, these tactics are not always embedded in traditional KPIs, but in building customer affinity with a brand and making them feel “part of the club”.

No matter how a brand eventually decides to measure the success of a store, site or campaign, Mader said whatever is adopted needs to be backed by the business as a whole, from top to bottom.

“Really good retailers are playing around with this non-stop,” he said. “It needs to be constantly evolving.”

Read more about retail technology

  • Online fashion retailer Boohoo.com has seen a spike in revenue over the past year across all of its operating brands, and has announced the completion of several digital projects.
  • A shift towards online shopping and digital retail technologies has led to a decrease in investment in retail employment.

Read more on IT for retail and logistics

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