In times of great economic uncertainty, customer loyalty is critical to survival and success.
By Bill Gonzalez - Managing Director, Worldwide Distribution & Services, Microsoft Corp
The retail industry faces unprecedented challenges in these turbulent times.
One of the most significant outcomes of these times of unprecedented economic uncertainty has been a dramatic change in consumer and customer behavior. Customers everywhere demand brand, quality, service and, above all, compelling prices. Value is what keeps customers loyal to a store, a brand or a company, and value is what keeps them coming back. The value-driven consumer creates challenges and great opportunities for distribution and services companies everywhere. More than ever before, retailers must observe and serve their customers to build loyalty.
Additionally, faced with the need for cost-cutting and information technology (IT) consolidation propelled by today’s global economic contraction, retail companies will benefit from the opportunity to integrate disparate ‘silos’ and unlock value by connecting systems that drive new efficiencies and accelerate innovation across global retail networks. This will enable them to better connect with employees, partners and customers worldwide through web-based communities, for example, and to respond more flexibly to rapidly changing market conditions across the global enterprise.
Many retail companies will take advantage of today’s economic climate to implement these kinds of innovation initiatives to generate savings and retain customers in a number of different ways: by improving the usability of their current IT environment; by providing ‘virtualization’ and management tools as critical components of their data centers; and by incorporating metrics for business intelligence/business insight in their business units and throughout the entire enterprise.
Innovation in retailing involves transforming new ideas into products and services that drive profits through a process built on the knowledge, experience and insight of people. Retail companies will be looking for strategic ways to create new business models and for improving their long-term competitive position.
THE PERSONALIZATION OF THE SHOPPING EXPERIENCE
As they revise their business models and restructure to respond to today’s global economic crisis, retail companies must adjust to the major trends and drivers reshaping their industry on a worldwide basis.
Digital lifestyle and work style will continue to converge in today’s retail industry. As a result, the connected customer is increasingly in control.
In recent years, for example, retail customers have begun to spend more time shopping online, researching products and even comparing retailers online before they buy. As a result, customers know more about products, prices, stock availability and the overall marketplace than ever before.
Retail customers increasingly base their loyalty on the personalization of the shopping experience and the sense of empowerment that comes from their use of familiar technologies that they already use at home and at work. This personalization leads to increased revenue streams by leveraging observed trends from customer loyalty and preferences data.
Retailers today, for example, are more capable of collecting information about customers and products from the high online transaction volumes generated by their interactions on the Internet. All too often, however, they primarily rely on point-of-sale (POS) data to sense trends.
GROWING INTEREST IN BUSINESS INSIGHT
In the future, retail companies must expand their connected customer capabilities beyond the checkout line to encompass the full lifecycle of the customer relationship.
Today’s customers know more about products, prices, stock availability and the overall marketplace than ever before. At the same time, retailers are more capable of collecting information about customers and products from the high online transaction volumes generated by the interaction. Retailers must track and manage this massive amount of information to derive insights that help deliver the most engaging shopping experience across all channels.
In the case of high-service retailers such as department stores, for example, the organization needs to know as much as possible about their customer’s demographic and psychographic data, products, employees, and historical trends. Organizations must process massive amounts of data from a variety of sources and quickly convert that raw data into information to meet customer information needs. Sales people and cashiers, store managers and corporate leaders need to be able to use all of this information to make business decisions supported by actual information quickly.
Those retailers that can make the best use of customer interaction information to refine their strategy have a competitive edge over retailers who use more traditional approaches. Gaining business insight provides comprehensive knowledge of all of the factors that affect the retail business such as customers, competitors, business partners, economic environment, and internal operations and enables effective business decisions.
RETAIL BUSINESS INSIGHT IN A GLOBAL ECONOMIC CRISIS
As described above, in times of great economic uncertainty, customer loyalty is critical to survival and success. Business intelligence, for example, makes use of real-time analytics to increase consumer insight and satisfaction by analyzing the volumes of data associated with operations to streamline key performance indicators for faster, more informed decision making and better customer service. By leveraging observed trends from loyalty and preferences data, retail companies can accelerate the pace of innovation to meet rapidly shifting consumer demand with new products and services.
All retail organizations should strive to automate decision making processes where possible to improve customer interactions and allow sales people to focus on selling and providing good customer service.