Bryan Pearson's Blog, page 25

Online to Umlauts: 3 Ways Ikea’s Digital Assets Entice In-Store Experiences (Part 3)

More than 70 percent of consumers prefer to buy their furniture in a physical store, but what about their frihetens?

This is a challenge Ikea has been tackling as it tests a variety of approaches to bridging online and in-store experiences. The Scandinavian furniture chain, known for fashionable and functional products including the friheten sofa, launched an entire catalog on Instagram; offers a live-stream, virtual wedding planner; and is now featuring an interior-design video series, called Make Small Spaces Big 360°, on its website.

These efforts all serve as apt examples of how the combination of physical and digital purchasing is changing the nature of physical shopping. And, more importantly, how retailers can identify the features that make for compelling experiences as shoppers migrate back and forth from physical stores to digital sites.

Important to Ikea’s digital shopping endeavors is that they complement both the in-store experience and its famous catalogs, largely by showcasing Ikea products in layouts reminiscent of its stores. But vital to its digital-to-physical success is Ikea’s attention to aligning the experiences with its overall brand personality. The sites are fun, approachable and slightly irreverent, yet authoritative where it matters most – as an expert in interior design.

This is the third in a series that examines how digital technology and its rapid adaptation, across all age groups, is challenging retailers to identify and serve desired customer experiences in a fluid economy. Last week we looked at how Warby Parker is creating digital environments that emulate the shared, relationship-based shopping experience many people still savor with family and friends.

This week, I’d like to look at how Ikea designs its digital assets to reflect its in-store experience and, in doing so, the brand.

Couching furniture preferences

Ikea, which prints about 200 million catalogs in 38 countries, is evidently clear on which furnishings consumers want to touch before buying and which they are happy to order on sight. The answer: Big-ticket and high-touch often means in-store.

While roughly 80 percent of consumers have purchased home furnishings online, roughly 73 percent prefer to shop in-store, according to a 2014 report in Furniture/Today. Almost half (47 percent) said they’d never buy a sofa online (that means you, friheten), while half said they have used a smartphone both before and during a physical furniture shopping trip.

This is generally good news for Ikea’s stores, which are fed customers through its various entertaining online efforts. But Ikea does not have a store in every city, and so it is tasked with converting online window shoppers into actual customers, either through digital purchases or by inspiring them to road-trip to the nearest location.

This is where Ikea’s many clever digital adventures can pay off.

Wardrobes to Weddings

Ikea introduced its first U.S. catalog 30 years ago this summer, when it simultaneously entered the North American market by way of Philadelphia. Straightforward, beautifully photographed and full of umlauts, the catalog captured the style and practicality of the brand, but back then it did not quite portray the playfulness for which Ikea is better known today.

That took bytes, and pluck. Here is how three of Ikea’s efforts are redefining its online-to-in-store experience:

Make Small Space Big: This online video takes the user through a variety of tiny home spaces, from kitchens to closets, and gives advice on how to best maximize the space (with Ikea products, of course). The consumer can use her cursor to view the room at 360 degrees – floor to ceiling and all around. After walking through each room, the video host gives the user a chance to browse the virtual space and learn individual problem-solving tips by clicking on prompts, each of which leads to product information.

Wedding Online: Consider it the least expensive option for tying the knot – and planning the home. Ikea’s virtual nuptial site invites virtual brides and grooms to choose a theme and setting, from beach to forest to circus, and then carry on with the nuptials, via webcam, by live-streaming their own heads and the heads of guests onto bodies portrayed in the setting. Brides and grooms can actually get married this way (with a legit official). According to Adweek, Ikea even offers the paperwork in Sweden! But most of all, the site sets up another opportunity to display a digital showroom to a hot market – one in which potential brides and grooms can explore the IKEA experience in a fun and novel way.

Installations via Instagram: In 2014, Ikea Russia launched a digital catalog via Instagram in a bid to capture the attention (and dollars) of young adults. The mobile-friendly catalog allows users to search for, tag and recall specific products, working pretty much like a regular website. Tap a particular lamp, for example, and the user can navigate to additional photos, video demonstrations and product information. Though limited to Russia, Ikea’s Instagram catalog could feasibly extend to other markets.

Ikea’s history is rich with innovation, risks and occasional missteps; a willingness to do the same digitally is refreshing in an industry that still functions largely on traditional, in-store transactions. Ikea is evidently learning from its experiments, and I hope other retailers do as well.

Next week, let’s evaluate the evolution from mega-mall to power center to online shopping, and what the future will hold in terms of shopping formats.

This article originally appeared on Forbes.com, where Bryan serves as a retail contributor. You can view the original story here.

Framing the In-Store Vision Online: What Warby Parker Can Teach Digital Merchants (Part 2)

If online retailers are expected to see the world through the frames of experience-seeking consumers, then they would benefit from doing so through those of Warby Parker.

The competitively priced online eyeglass-frame maker, launched in 2010, has transformed what was an essentially physical, and often colorless, shopping experience into a highly engaging digital one. Five years after launching, Warby Parker is a beloved brand valued at an estimated $1.2 billion.

Today physical stores are a critical part of Warby Parker’s growth strategy, but that does not alter the foundation upon which its online success is built. Warby Parker’s brand loyalty is owed to its strategy of dressing up the process of trying on glasses with an element of sociability that does not exist at the traditional eyeglass store. By sending customers a selection of frames to try on at home, at the office or wherever, Warby Parker gives them the chance to share and get feedback from family and friends before they buy.

In a variety of ways, Warby Parker answers an increasingly urgent question today: How can online merchants create a digital environment that emulates the shared, relationship-based shopping experience many people still savor with family and friends?

Last week I opened up this topic by examining the migration of shopping patterns from physical stores to digital sites (and back). This of course required an examination of demographic influence, along with the now-obligatory scrutiny of the millennial influence.

The conclusion: With technology accelerating at a pace faster than that of birth years, we cannot simply package vast age groups and label them as single-acting cohorts. Variations In technology use can exist even within five-year age spans, and they can disproportionately shape the preferred shopping experience. The challenge for retailers is identifying those desired experiences.

Which is where visionary brands such as Warby Parker enter.

Seeing Triple: 3 Essentials to Online Success

To identify preferred customer experiences, all retailers – including Warby Parker – are tasked with breathing life into analytics. That means decoding the data, teasing out aspirations from actions, and drawing understanding, the lifeblood of customer relations, from their insights.

For online merchants, the next step of parlaying this understanding into rewarding customer experiences can be a lulu.

The Warby Parker shopper experience is based on a desire to offer stylish glasses at a low price, and the direct-to-consumer website enabled it to do that. And while the brand is making headlines today because of its expanding brick-and-mortar presence, the news stories should not undermine the strategic principles that made Warby Parker a fantastic online brand story. These fundamentals would well serve any online merchant striving to be seen among the pack of rivals, because they mirror the shared, relationship-based shopping experiences consumers crave in-store:

Shared experiences: Warby Parker is best known for uniquely morphing the convenience of online shopping with the social satisfaction of trying on frames before family and friends. It did this through its Home Try-On program, through which customers can order a sample box of five frames. Warby Parker also found a way to fold the expertise of a retail associate into the site by providing expert-level product information. Each eyeglass frame is described in terms of how it fits different faces, and a model wearing the frames follows the user’s curser so they can be viewed from different angles. The site also offers a live chat feature for shoppers seeking additional information.

Customized customer understanding: Warby Parker’s customer understanding is based on careful planning. Its intelligence team has created an in-house data book the full company adheres to, ensuring a common, unambiguous vocabulary and approach, according to Warby Parker’s blog. To better understand the relationship between online and offline purchasing, it overlays resources such as clickstreams, transactional history, in-store analytics and social media, according to a story in Data Science Weekly. And while purchases are generally small, its Home Try-On program generates relatively large data sets through which it can build recommendations. The unexpectedly high sales of monocles, for example, cause it to modify its analysis algorithm.

Brand discipline: Warby Parker has excelled at adding social elements to online shopping, through its Home Try-On program. As it expands from online ordering to physical formats, it is tasked with maintaining those online customer expectations, seamlessly. It helps that the founders, David Gilboaand Neil Blumenthal, have said they never thought of Warby Parker as an online-only merchant, and they do not see stores as profit centers as much as “marketing collateral” that serves the overall brand. Regardless of purchase channel, all employees, from service reps to data analysts to designers, serve as brand marshals, relying on a style guide that includes advice on how to converse with customers in a likeable, compelling way.

These three essentials combine to form a clear perspective of how online shopping can deliver experiences that are communal in nature, while blurring the division between in-store and online.

It also dovetails neatly into my next column, in which I will address how physical and digital purchasing – using one to complement the other – should change the nature of physical shopping.

This article originally appeared on Forbes.com, where Bryan serves as a retail contributor. You can view the original story here.

Magic Mirror vs. the Human Experience: Using Technology to Woo Millennials, Centennials (Part 1)

Regardless of when we were born, whether we are 35-year-old mothers or 12-year-old daughters, we all have one thing in common: We like to be bowled over, and not necessarily in the aisles.

This very human quirk stretches back from the days of the Greek Agoras to the ribbon cutting at the Mall of America to the launch of Birchbox.com. It also exists across pretty much all geographies and age groups. Boomer, millennial, centennial; it doesn’t matter. Retail’s most lucrative market segment today cannot be neatly packaged and then targeted under a catchy name.

Not as long as technology sets the pace, and it is, rapidly.

Many of us have read the recent headlines declaring that the ballyhooed millennials (18 to 34 year olds) have overtaken the venerated baby boomer population in size. That makes for good headlines, but it does not change the fact that those who make purchase decisions extend beyond the millennial age range in both directions. Technology influences how and where every segment of this broader age group shops – in a store, through a smartphone or via social media app – and that influence is fluid because of adaptation.

To resonate with these shoppers, regardless of age, retailers will likely need to locate the nexus where online and physical shopping connect, and it can be a moving target. But one factor is clear: it involves happiness.

From 10 to 40, a Hair-Raising Venture

Let’s, for the sake of keeping mothers and daughters together, consider 10- to 35-year-olds, as recently described by cultural and marketing expert Max Valiquette at a recent presentation to Canadian marketers.

Roughly 105 million Americans, or one-third the population, fall within this 25-year range, he said. (Add 36 to 40 year olds and you’ve got 40 percent, according to U.S. Census estimates.) Each five-year segment within the group represents roughly 6.5 percent to 7 percent of the population. And while many key differences reside within the broader group regarding shopping preferences, these differences shift even within these fiver-year age spans.

For example, the favored forms of communications among 10- to 35-year-olds has fluctuated over the years from email to text to social media, but even among 15- to 19-year- olds, those preferences can shift. Maybe the rapid changes in technology have a role to play in this – that even within five-year cohorts we can see differences in how these groups use and adopt technology.

In short, to assume the boomers, millennials or centennials (those up to age 18, according to The Futures Company) each represents one segment or “cohort” is a mistake.

Yet these unmistakably minor variations can disproportionately shape individual shopping experiences. The challenge for retailers is trying to identify these desired experiences when big sister and little sister have different preferences, but little sister and mom have the same.

The juncture of online and physical shopping is a moving target. However, I believe that target follows one focal point, and that is whatever defines a productive, social experience. Again, we return to happiness.

Magic Mirrors on the Wall

The question for many, then, is whether the road to happiness is lined with shopping malls or digital devices. We’ve pretty much established it is both, but how do retailers stitch together the pieces? How can they combine their vast elements of data from across age groups into a fabric of information that promotes fluid customer understanding?

We start by examining the qualities of the very successful retail environments, both physical and digital. While certain brands come to mind – Nordstrom, Apple and Warby Parker – we should not limit the examination to company. We should dial out our focus to include features, functions and even mood.

As described in a recent Philadelphia Inquirer story, a preferred shopping experience among Millennials can be a four-hour, mother-daughter trip to the mall. However, a 17-year-old may prefer to buy her clothes online and then show off her purchases via a YouTube “haul” video. Very different experiences, but they both serve a common desire – to share the conquest. Let’s not overlook that shopping is a descendant of hunting and gathering.

Technology has enabled many entertaining functions for shopping digitally, especially for those time-strapped, double-income families – it is hard to resist the Magic Mirror technology that projects a clothing image on a user’s own mirror so she virtually try the item on. However, I suspect these gizmos, like “shopbots,” are novelties that simply punctuate the broader conversation around what defines shopping as a human experience.

To determine that, we’ll have to address a few questions:

Q: How can online merchants create a digital environment that emulates the shared, relationship-based shopping experience many people still savor with family and friends?

Q: How should the combination of physical and digital purchasing – using one to complement the other – change the nature of physical shopping?

Q: We have evolved from mega mall to power center to online shopping. What will the future hold in terms of shopping formats?

In the coming weeks I will address each of these questions and attempt to peel away the misconceptions.

This article originally appeared on Forbes.com, where Bryan serves as a retail contributor. You can view the original story here.

Injecting Rx Into Target: The Positive Side Effects of CVS Deal

What CVS Health knows about prescriptions could fill a few Target superstores. And what Target owns in real estate could remedy many of CVS’ expansion issues. So like bacon and doughnuts, they’ve made what at first seemed an unlikely pairing – until you think about it.

As the analysts have made clear, Target’s agreement to sell its pharmacies to CVS Health can resolve several competitive challenges for both brands. That said, they’ll each need to take analytical precautions to avoid certain side effects.

Essential to the partnership working is its ability to mutually benefit both companies, and achieving that balance will take much work rolling forward. No doubt the advantages are there on face: Transitioning the pharmacy brand from Target to CVS enhances the opportunity to attract more customers and foot traffic through Target stores, while unloading what is for Target a highly regulated distraction. Target’s pharmacy business generates less than 5 percent of its nearly $73 billion in revenue, according to a report in Forbes. Prescription drugs at the $140 billion CVS, meanwhile, represent almost 71% of revenue.

However, such efficiencies, not to mention the power of the two brands’ halo effect, do not on their own guarantee a sustained mutual gain. For that, a series of data sets would serve well to evaluate the full nature of any business combination. In the case of CVS and Target, I’d suggest three key data sets to start:

Location, location, relations: The first logical consideration for both retailers would be whether the 1,600 Target locations are highly complementary to the CVS network. To be sure, Target would carry CVS into new markets, particularly in the Northwest, but location opportunities extend beyond physical  geography. Rather, a location’s worth hinges on the brand’s ability to engage with that immediate customer base through culture, values or basic needs.

Retailers have performed store network optimization for years, but the days of taking down license plates or using statistical data are well past their “best before” date. Thanks to data assets based on loyalty insights or even digital data (Target customers can refill prescriptions online, for instance) it is possible to identify unique customer characteristics that would shape each brand’s regional activity.

Customer quality: Retailers have relied on several standard performance measures for years – sales per square foot, traffic patterns, basket size, same-store sales, etc. But I am not sure these methods cut the clutter enough. Unless retailers understand their individual performances at the customer level, they cannot determine whether a partnership will change the nature of who is coming into their stores.

In the case of the CVS and Target, the partnership should enhance the brand offerings to the extent of attracting a new type of customer, as well as enrich the offerings to those customers most important to each brand’s strategy. Let’s imagine that CVS and Target compared notes on their retail performances at this level. It is far easier to make such a bold move if Target is confident the CVS team will bring a platform of business, and new customers, which will be mutually beneficial over time.

Additive merchandising: In today’s fluid retail landscape (in fact, we might as well consider it tomorrow’s landscape), one of the certainties among high-frequency retailers is that everyone is eating everyone else’s lunch. In other words, each retail class is selling more products that cross into other retail classes. Grocers have moved into pharmacy, general merchandise merchants are into grocery, and at my local Staples I can buy a selection of office snacks.

Perhaps the highest-potential data opportunity here, for partnering companies, exists in a critical evaluation of where product overlaps exist and whether it makes sense to create a model to clarify which merchant sells what. In the case when there is limited control of aisle-by-aisle inventory, as is likely for national chains like Target and CVS, the conversation may instead address how the two brands can maximize sales in certain categories cooperatively, by understanding the specific shopping dynamics of customers in their respective stores. Is there a real 1+1=3 equation in these kinds of relationships?

Now that CVS and Target have announced what many consider a common-sense pairing (again, doughnuts and bacon), retailers should expect to see more such brand partnerships and roll-ups. American Express’ Plenti deal and Canada’s AIR MILES Reward Program, for example, marry several brands in a way that benefits all involved, because they can leverage each other’s customer relationships.

But make no mistake, the success of such partnerships will hinge, largely, on how data factors in to the deal.

This article originally appeared on Forbes.com, where Bryan serves as a retail contributor. You can view the original story here.

Happy Worker, Happy Walmart? 3 Steps to Turn Employee Perks into Customer Loyalty

Can 2.2 million pairs of jeans make Walmart a happier place to shop? Perhaps we should ask the greeter.

Jeans, or at least a more comfortable dress code, are among the new employee perks Walmart is easing into its stores. The world’s largest private employer also is adjusting its air conditioning to be less chilly, changing up its piped-in music (good riddance, Celine Dion) and allowing workers to wear team jerseys during big sporting events.

These low-cost shifts follow Walmart’s announcement that it would increase the hourly wages of its managers, the second wage increase this year. The retailer also said it is looking into more flexible work schedules. These changes are being implemented with one big cost-savings in mind – reduced worker turnover. But will it translate to customer loyalty?

Like the old saying, “happy spouse, happy house,” Walmart appears to be betting that happy workers will translate to a happy Walmart, meaning higher sales and performance. Research shows publicly traded companies that are rated as best places to work realize annual share returns that are almost double those of the S&P 500.

The wrinkle for Walmart is not so much whether happy employees will stay longer, but whether its cost-conscious customers will be moved by such shifts. The answer may depend on whether Walmart’s efforts get new shoppers through the doors.

Taking stock of change

Past efforts by Walmart to be more customer-friendly did not deliver such smiley-faced results.

Recall back in 2009 when the retailer lost substantial sales after dramatically reducing or “rationalizing” its shelf stock. Walmart did this in part based on customer surveys that indicated its shoppers wanted cleaner stores (like its archrival, Target). However, while the aisles were less cluttered, they also were clean of specific items that Walmart shoppers, conditioned to navigate its sea of aisles like sharks honing in on household prey, came for. Walmart theorized its shoppers would just stay and switch brands; instead, they switched stores. Walmart added 11% of its product back.

Employee engagement is a far safer territory in which to experiment, fortunately, and research backs it up. A 2014 report by online software provider Cvent found that customer retention rates are 18% greater on average when employees are highly engaged. Further, one-third of the companies surveyed for the report recorded a significant improvement to profit margins when customers were engaged.

It brings to mind the “service-profit chain” model described by James Heskett, Harvard professor emeritus, and other business and academic leaders. The model establishes the relationship between profitability, customer loyalty and employee satisfaction as such: profit is fueled by customer loyalty; loyalty results from customer satisfaction; satisfaction is influenced by the value of the product or service; and product value is created by happy, loyal and productive employees.

Lastly, employee satisfaction results from support services and policies that enable workers to deliver results that foster pride.

At what price loyalty?

The challenge then, for Walmart, will be linking happy employees to the customer experience. This begs the question of whether Walmart’s best shoppers come to its stores for the experience, or simply for the low prices and convenience. The answer is important because it dictates Walmart’s capacity, as a low-priced competitor, to generate and foster genuine customer loyalty.

I recently read a statement from Warren Kornblum, chief strategy officer at Rooms to Go, that a brand can only capture a customer’s share of heart if it can get that shopper to like it, much as she would like another person. Can Walmart make that claim?

There is no question that people like low prices, but achieving the milestone of liking a company is accomplished through personalized, living-in-the-moment experiences. As long as Walmart’s prices are low, its regular shoppers will likely keep coming. Whether a happier greeter in a Cubs jersey will get her to spend more money is dubious, unless of course it inspires her to purchase some Cubs gear.

Worker beams

However, if happier workers result in better product knowledge, staffing levels and willingness to help out the customer (even when not asked), some regular shoppers could be pleasantly surprised, and spread the word. A few small efforts could help get that word out:

1. Endear with data: While Walmart does not have a traditional loyalty program, it employs many methods of compiling customer data, and one way is through its staff. Beyond simply asking shoppers if they found all they needed, workers can ask if there are any particular products or services they’d like to see, and then record those requests in a system. Employees who enter winning suggestions, or reach certain feedback milestones, can be rewarded.

2. Get literal likes: A number of social campaigns can encourage shoppers to give a shout-out to their favorite Walmart employees, or to simply recognize a kind act. However, one should be realistic – shoppers can turn such efforts into opportunities to vent frustrations. Twitter campaigns can be especially difficult to keep pace of.

3. Humanize: Employees prefer happy experiences as much as the rest of us, so why not share their mission and dedication? Air carrier JetBlue, for example, recently made headlines, and video social shares, by lightheartedly addressing unpleasant on-board activities, such as eating stinky food midflight. Enterprise Rent-A-Car’s “We Played” television ad campaign honors Enterprise employees who were once competitive NCAA college athletes. Walmart carries lots and lots of TVs in its stores; is this not an opportunity to air employee-made videos highlighting their own blunders, pie-eating contests and fundraising activities?

It is widely documented that Walmart founder Sam Walton asked questions of and listened to his employees at all levels. “The more they know, the more they’ll understand,” he reportedly said. “The more they understand, the more they’ll care. Once they care, there’s no stopping them.”

What he meant, essentially, is that success hinges on trust. Perhaps then the key to gaining customer loyalty is for Walmart’s happy employees to first gain their trust.

This article originally appeared on Forbes.com, where Bryan serves as a retail contributor. You can view the original story here.

Shopping for Data Deals: 5 Steps to Improving the Retail Relationship

Potential shopping transactions may look promising based on window displays, but without a little shared control behind the racks, the virtual data cycle is at risk of becoming a vicious one.

This thought occurred to me while reading a recent New York Times story that explores customer data use. Citing Apple CEO Tim Cook and recent survey results by the Annenberg School for Communication, the story reports that many Americans believe the trade-off of their data for personalized services, offers or discounts is a lopsided deal. More than half of those surveyed – 55% – disagreed or strongly disagreed that “it’s O.K. if a store where I shop uses information it has about me to create a picture of me that improves the services they provide for me.”

Which brings to mind both virtuous and vicious circles. I long believed that data well used – meaning responsibly used – would produce for retailers and consumers a virtuous cycle. This is a pattern in which both parties mutually benefit from the information: consumers receive relevant offers they want and can use, and retailers are rewarded with the sales.

But too many companies are failing to deliver, and that shortcoming is winding us back to that same point in the road where many merchants, and consumers, are forced to reconsider the data-for-reward value equation. Blame it on new technologies, hand-grafted smartphones and/or social media; it doesn’t matter. What matters is that we are at this same fork in the road.

People are as familiar with the ways in which companies collect their data as they are with the patterns of seasonal sales. The practice is a given. The onus is on retailers and marketers to continually provide their shoppers with credible reasons to share, or risk them walking by the window.

Some of the simplest tactics can be compelling. Clarity, for example, is an increasingly rare commodity in the data value equation, as evidenced in the Annenberg survey results. At the risk of sounding self-promotional, I would point out that loyalty programs are a proven method for being transparent, because the consumer sees the transactional value directly. The more straightforward the program, the better the customer will operate the advantage of participating: 10 points for every $5 spent, for example, or five points for sharing a link on Facebook.

I am not alone in this thinking. Mike Zaneis, the chief counsel for the Interactive Advertising Bureau, told the Times, “People are always willing to trade privacy and information when they see the direct value of sharing that information.”

Whether that value is delivered through a loyalty program or other means, once a company agrees to use a customer’s information, it is responsible for treating that data with respect and care. Getting that trust requires a disarmingly straightforward promise and a proven record. I break down the responsible use of data as such:

1. Be transparent and reasonable: The younger the target consumer, the more important it is for an organization to be direct, clear and genuine in terms of what data it collects and why. But even mature consumers view tiny type as suspicious type, so companies should avoid it. Instead, they should explain their intentions for the data in straightforward language and spell out what’s to be gained by the customer. (“We collect your name, age and address. We combine what we know with what you buy to send offers we hope you like. If you do not like them, tell us and we will try to fix it.”) People are more likely to engage with companies that speak their language.

2. Give consumers a choice: This gets to the opt-in argument many advocates, including Apple’s Cook, support. Permission is a crucial component of any honored contract and a retail strategy that is built on the value-based exchange of data is essentially just that – a contract. More important, it is elemental to establishing long-term customer trust. Companies should give their customers the opportunity to choose how to share their personal information. LoyaltyOne’s AIR MILES Reward Program is permission based, and less than 1% members have opted out to receiving marketing communications since the program began in 1992.

3. Don’t be a pest: Consumers are overwhelmed by too much information, usually because their name, contact information and permission for use have been abused by others. By making sure its texts, emails and other communications are not too frequent and that they are relevant to the customer’s needs, a company can stand apart from its competitors. If the company does not know what resonates, it can run a series of A/B tests to determine which promotional communications resonate most with consumers, and then be more selective about what to roll out to the entire base

4. Give to get: Smart companies are dedicated to creating real value for their customers as well as for themselves, across all transactional touch points. However, value should not be limited to merely the product, cash, points or coupons. It is derived from creating something more powerful, which is relevance, because consumers are more likely to respond to communications with which they could relate. The more a company’s communications and offers resonate, the better the customer experience and thus, customer engagement. With this powerful duo, a brand is positioned to enchant the customer with offers.

5. Respect, protect the data: It’s pretty simple: Retailers should use the data they collect only as promised and retain it only as long as needed. This means never crossing the creepy line into very personal areas such as health, sex, personal finances or questions about children. Once the data is deemed unnecessary for its agreed-up purpose, it should be destroyed with care – always.

If retailers continue to fall short on the need to deliver, with interest, on the value of the data provided them, they’ll be facing worse than a vicious cycle. They could be circling the drain.

This article originally appeared on Forbes.com, where Bryan serves as a retail contributor. You can view the original story here.

June 10: Loyalty Links & Likes

Tweak These 5 Programs to Jumpstart Customer Loyalty – Forbes

Forbes contributor John Rampton offers five company engagement strategies that nurture existing customer relationships to create meaningful emotional connections.

What Makes A Loyal Consumer: Experiences, Not Points – MediaPost

This story covers Epsilon Vice President Dino Michetti’s presentation at the Email Marketing Insider Summit, where he told a “beyond the coupon” panel that it’s important for loyalty programs to go beyond points and create meaningful customer experiences. He went on to say that loyalty programs should not only be measured in dollars, but in brand engagement.

Front-End Alignment: 4 Tips for Finding, Fixing Management Misunderstanding – COLLOQUY



When creating a loyalty strategy, it’s important for marketers to make sure business leaders from various departments are aligned, or risk running a program that is unable to meet objectives. LoyaltyOne Consulting’s JR Slubowski identifies misalignment hotspots and how to straighten them out.

Improving Customer Loyalty with Relationship Marketing – The Wise Marketer

According to Princeton University psychology professor Dr. Uri Hasson, empathy is at the heart of human relationships and human relationships are at the heart of marketing. So what can marketers do to make sure they apply empathy in their marketing tactics? The Wise Marketer makes some suggestions backed up by science.

CXplained: What’s a Multimodal Customer Experience? – Business 2 Community

In today’s technology-driven business atmosphere, there are a menagerie of terms used to describe commonly similar things. Business 2 Community explains the difference between multichannel, multimodal and omnichannel marketing in regards to the customer experience in its CXplained series.

The New Force at Old Navy: Four Loyalty Lessons from a Retail Revival

Like a smattering of rhinestones on a pair of skinny jeans, Old Navy has emerged as the unexpected sparkle in Gap Inc.’s performance these days. And while the low-cost retailer’s turnaround story is rich in messaging about merchandising, it is equally stocked with lessons in loyalty marketing.

Sales at Old Navy rose to $1.4 billion in the fiscal first quarter, from $1.35 billion in the same period a year before. That compares with $735 million at Gap and $515 million at the higher-priced Banana Republic, each of which posted declining year-over-year sales. In 2014, the low-cost Old Navy rang up almost $6 billion in sales, nearly as much as Gap and Banana Republic combined.

“It’s a thing of beauty when Old Navy is firing on all cylinders and has now for several seasons running,” Gap CEO Art Peck said in a recent conference call. In a press release, Peck called Old Navy a top priority “as we focus on reestablishing the brand’s aesthetic to bring to life an optimistic and elevated sense of American style.”

Key to Old Navy’s elevation is the addition of retail executive Stefan Larsson, who had headed global sales at H&M before joining Old Navy three years ago. In a recent New York Times interview, he said that he saw in Old Navy an “unpolished diamond.”

The polish it needed came not only in the form of Old Navy’s new pixie pants and boldly patterned shift dresses; it came in the form of internal strategies that easily apply to marketing and brand loyalty. Below are four loyalty lessons I’ve learned from Old Navy’s turn:

Dress for the role you want

Perhaps his single-most important decision, Larsson aims for what Old Navy’s customers aspire to, not what they will settle for. This can be a dramatic change of philosophy for a low-cost brand, but as Larsson put it, the “clothes by the pound” approach snubs the desires of its shoppers. It’s akin to marketing sweaters as if they are potatoes.

When the customer is instead viewed in the context of her friends, family, job and activities (in other words, as something beyond a consumer), what she wears assumes a significantly different purpose. Most retailers have access to the kinds of information to help inform these decisions, though it does take an investment in talent to analyze and understand the data. Lots of schools are adding data analytics programs, and the experts they turn out may determine a company’s future.

Work the outfit, and outfit the workers

New recruits should come not only in the form of freshly educated data analysts, however. All employees, regardless of function, should be dedicated to the company’s mission, and that often requires pouring a new foundation. Fresh talent should be considered for all traditional functions, and all traditional functions should be reconsidered.

At Old Navy, this meant creating workspaces that are more inspirational and work approaches that ignored convention. In addition to having the office remodeled, Larsson refreshed the team, recruiting chief marketing officer Ivan Wicksteed, formerly of Coca-Cola, Converse and Cole Haan. He also brought in designers from Coach, North Face and Nike to usher in a sense of new style and ambition. The marketing takeaway is to ensure all staff, especially customer-facing members, are notified of change and encouraged to be an integral part of it. In this case, for example, employees can submit their own apparel ideas, or ask shoppers to share theirs.

Don’t hem us in

Old Navy is considered the low-priced sister in the Gap Inc. family, but no reason it should not borrow from the others. Larsson tapped into the Gap’s supply chain so his designers could more nimbly test different fabrics, prints and styles, even sizes. After trialing these new concepts in limited runs to determine their appeal, the most promising fashions are rolled out more broadly.

In marketing, we have a similar approach to leveraging an asset across multiple parts of a business to benefit the whole. Called enterprise loyalty, it entails sharing customer insights across all organizational departments (even finance, even HR) so each team can fashion the information to better serve its role, which ultimately is to create enhanced customer experiences.

Risk is the new black

In addition to switching from predictable pullovers and blue jeans to glossier, embellished fashions, Old Navy is investing in performance fabrics for active wear, serving the emerging proclivity among consumers to don athletic apparel for everyday tasks. These changes may not be what shoppers expect from Old Navy, and it may turn some off, but risk is a natural element of evolution.

We gain customer loyalty when we prove we are willing to dive in the deep end for them, and occasionally that may mean shaking up what we are known for. The key is shifting in step with our best customers, sometimes even suggesting the way, and using the information they share to keep in time with their preferences and aspirations.

Shoppers expect this today. They are intensely aware of their capacity in the retail relationship, and just how intimate – yet public, thanks to social media – their role has become. Like rhinestones in a bin at a clothing manufacturer, each person has the power to make the ordinary brand sparkle, but it is up to the retailer to provide the inspiration.

This article originally appeared on Forbes.com, where Bryan serves as a retail contributor. You can view the original story here.

Taking Orders From Consumer Behavior: How Restaurants, Grocers Can Come to the Table

A couple of trends registering in the food industry should have merchants shaking in their booths.

Consumers are trading grocery carts for combo meals, directing larger portions of their food dollars to restaurants and bars over supermarkets. The trend began to surface about a year ago, culminating with dine-out sales overtaking grocery sales for the first time in recorded history in either December or March. (The National Restaurant Association puts it in December; the Commerce Department in March.)

First, let’s look at the shift toward restaurant spending. Sales in restaurants exceeded grocery sales by $1.5 billion in April, according to the National Restaurant Association. Many reports credit younger consumers for the change, though even among restaurants this population’s tastes are specific. “They tend to favor fast food, deli food and pizza restaurants over coffee shops, high-end dining and casual dining,” the National Restaurant Association advises on its website. “Their diversity and interest in new things draw them to more ethnic restaurants, too.”

What is not addressed is the durability of this trend. Once a large share of this young consumer group marries and settles down, how will its members shift their spending? Will they venture to take the baby out for Korean bibimbap? Or will they have to fire up the stove?

Such considerations clear the way for the next course in emerging food trends – the movement toward more fresh ingredients.

Basket cases: Target, Whole Foods make changes

Traditional supermarkets such as Kroger have been upping their investments in organics and fresh foods for years. Now untraditional supermarket chain Target is pulling back on what some call “big food”: processed meals by the likes of General Mills, Kraft Foods and Kellogg’s. Instead of canned, bagged and boxed meals, Target will focus on healthier items such as yogurt and cooking oils.

Meanwhile, as Target aims at healthful ingredients, competitor Whole Foods has announced plans to open a lower-priced chain, also targeted to younger shoppers.

Consumer purchase data clearly plays a role in these decisions – Target is commissioning its own research to determine what will grace its shelves, and I am sure Whole Foods is relying on its insights to shape its low-priced format. But I am more interested in knowing the extent to which each will use today’s insights to determine tomorrow’s behaviors, because if these changes are driven by margin alone, that could be a mistake.

Here’s why: With their respective changes, Target and competitor Whole Foods are both migrating toward the same space. There will be practical reasons younger consumers, once they have a family, will begin to eat more at home. However, as retailers begin to tap this fruitful well, and begin making new offerings that address this growing market, they risk becoming exactly what they are strategizing against – looking the same.

Making change with data

Grocery retailers, armed with unprecedented levels of insights and technology, have an uncommon opportunity to prepare their own future at this high-potential juncture in consumer marketing. They can allow their assortments to be further shaped by a combination of health concerns and consumer demand for ease – as evidenced in increased restaurant sales – or they can lead the charge by changing the opportunity for what consumers can experience, and buy.

This could mean in-store restaurants, as recently introduced by the innovative supermarket chain H-E-B, which included a fast-casual eatery at its new Houston store. It could mean more freshly prepared and ready-to-eat foods to meet the demand for easy meal preparation – a trend we have seen for many years but one that may be poised for an explosion. And it may mean partnering with restaurants, as many supermarkets do with fuel stations, to add new rewards or incentives for loyal shoppers whose behaviors indicate they often eat at home. Imagine receiving a coupon for a free appetizer at a local restaurant for every fill-up worth more than $50.

Or perhaps food retailers should use their insights to literally change behavior at home. Call it the final course in food trends of this decade: The creation of cooking schools in the grocery aisle.

This article originally appeared on Forbes.com, where Bryan serves as a retail contributor. You can view the original story here.

Craft Cocktails to Glass Cubes: How Apple, Nordstrom Put Rad in Traditional

In today’s retail, the cost of failure may be success.

There simply are too many stores out there – too many concepts and strategies in a fast-paced environment in which methodically working toward perfection does not guarantee success. Last week I wrote about the stream of online merchants and manufacturers opening “traditional” stores. Yet as evidenced by their innovations, little about these locations is traditional, or perfected.

Stores are migrating from hunks of building material to fluid beings, and the retailers willing to direct the flow – rather than go with it – are those that will determine retail’s future. They are doing away with the cookie cutter in favor of the free-form rollout, willing to try less-than-perfect concepts to create buzz.

The status quo certainly isn’t cutting it anymore. U.S. retailers are planning to close more than 6,000 locations in 2015, according to Investing.com. These closures, ranging from 180 Abercrombie & Fitch to 400 Walgreens locations, in part emphasize a decline in discretionary spending. They also underscore the need to constantly evolve the retail network and make the  shopping experience compelling – worth the cost of entry.

This shortcoming is not lost on merchants; roughly 80 percent of retailers plan to increase their customer experience budgets in 2015, according to a survey of 225 senior marketers by the consultancy SDL.

That spending could translate to billions of dollars in new investments in retail and with it, ideally, a new direction for the industry. Pointing the course for some of the best brands is the expanding collection of customer information gleaned from digital apps, loyalty programs, iBeacons and online transactions.

Let’s look at three examples across retail sectors.

Well-heeled Nordstrom

Nordstrom started in 1901 as a small shoe store, but its expanding footprint over the following 114 years is due to its willingness to take feedback and walk the customer talk.

Most recently, the Seattle-based chain is transforming a handful of high-traffic stores into international destinations, catering to out-of-town visitors who are increasingly important to domestic merchants. (Roughly 40 percent of sales on Chicago’s Michigan Avenue, for example, derive from visitors to the city, Neil Stern, senior partner at McMillan Doolittle, a retail consultancy, told The Seattle Times.)

The amenities, inspired by European shopping destinations, include craft cocktail bars, natural lighting via windows (a curiously rare feature in modern retail) and curbside pickup – a feature that would appeal to online shoppers.

These investments, part of $1.2 billion in capital expenditures in 2015, signal “the changing role of the brick-and-mortar retail store as a place for entertainment and awe, in addition to shopping,” the Times stated.

They also complement Nordstrom’s ongoing technological investments. On May 20, the chain launched a shop-via-text service, TextStyle, at all its stores. With it, consumers or sales staff can send product images and descriptions via text, and consumers can purchase those products by simply replying “buy.”

The in-store innovations at Nordstrom may lack the shiny-object sheen of its emerging technologies, but they answer to nuanced preferences that encourage shoppers to stay longer. Nordstrom does not draw a direct correlation between the store upgrades and the data collected through its Nordstrom Rewards loyalty program, but the program is clearly integral to strategy. In its annual report, Nordstrom said it signed more than 1 million new accounts for three consecutive years through 2014. Sales from members represented about 40 percent of its total 2014 revenue of $13 billion.

H-E-B, deep in the heart of Texans

Described in one story as operating on a culture of “restless dissatisfaction,” the Texas-based supermarket chain H-E-B is a case study of reinvention, assigning the same shelf life to its strategies as it does its perishable products. Changes range from completely new formats, such as its Mi Tienda chain of Hispanic grocery stores, to an app that pinpoints an item’s specific location in the store.

The chain is not afraid to test. In 2013, it trialed “Fast Scan” checkout aisles with 360-degree scanners that automatically registered items as they traveled down the conveyor belt. Its recently launched app enables members to check product availability, create shopping lists via bar scans and then sequence those lists by store layout.

With these insights, and combined with its Points Club Rewards information, H-E-B can send digital coupons relevant to specific shoppers while gaining a better sense of what is in high demand (or not) at individual locations – particularly among high-spenders.

Which bring us to what may be H-E-B’s most important strategy – to innovate to its identity. This is a Texas chain, and it is Texas-proud. Its stores feature roving tamale carts and fresh-made guacamole, and its private-label products are rich with Texas references. Add an abundance of free samples, tear-off coupons and wine-tasting, and you’ve got a basketful of perks that persist beyond any technology.

Apple puts “i” in innovation

It’s been 14 years since Apple redefined traditional retail, and it continues to do so, spooling out locations with every new product. However, while its gleaming Genius bars and interactive displays make it incredibly easy to test and understand Apple products, what makes some of its more than 450 locations radical is they are space-agnostic.

If Apple products can improve lives everywhere, then why not sell them anywhere? From its Edwardian location in London (complete with modern glass staircase) to its glass cube store on New York’s Fifth Avenue, Apple does not hem itself in.

It is curious that a company whose products are so easily identifiable builds stores in locations so completely different, but these wide-ranging locations are what make for compelling, iPhone-selfie-ing experiences. Apple moves beyond the simple idea of a 20,000-square-foot, cookie-cutter box and instead looks to the classic importance of location, location, location. Then it takes what it has and makes it a wow experience. Think: Would you visit the Shanghai store if it looked just like the Cincinnati store? But what if it were built underground and provided access via a glass spiral staircase?

These merchants excel at innovation because they invest in the means to understand their customers and then deliver on their fundamental needs. This does not always require jaw-dropping technology; in fact, I’d submit that it takes a mix of newfangled innovation and adherence to basic principles of execution, insight and an appreciation of the human condition.

Regardless of the mix, the commonality of these merchants is agility. They are willing to take creative risks via pilot stores or simply testing and then nimbly rolling out the success. There will be failures, and they shouldn’t be a surprise. Once a retailer accepts loss as part of the win equation, it has taken the most important step toward innovation.

This article originally appeared on Forbes.com, where Bryan serves as a retail contributor. You can view the original story here.