Nov. 18, 2015
By Brandon Rael and Colin McGee
In today's fast-evolving business landscape, retailers face an increasingly competitive marketplace — buffeted continually by the need to evolve and adopt the newest technologies that have been introduced to the market. According to recent research by consulting company North Highland, 84 percent of business leaders understand digital innovation is important to their business, yet only 25 percent feel they are leading their industry when it comes to digital strategy. Because of the rapid rate of change, customers are the central key to remaining focused and goal oriented. Retailers must pause and examine the customers and their buying journey. Focusing on the customer first will single-handedly give retailers a list of priorities and a roadmap for addressing them.
There are four critical questions retailers must address to ensure success in evolving the customer experience:
- Do we understand what the experience is that our customers desire and the total investment needed to accomplish that?
- Have we evaluated customer perception of us and our ability to deliver on their needs?
- Have we prioritized our business initiatives according to ROI?
- If we are scoring high for customer experience, have we determined if we can improve the efficiency of those experiences by leveraging new technologies — either customer-facing or operational? Or, if we aren't scoring high, have we determined where the pain points are within the experiences and whether newer technologies can help drive the organization toward higher levels of satisfaction?
Focusing on these questions will transition the customer experience to the catalyst for change that it can and should be. Moving organizations from slow development cycles to more agile disciplines will help them keep up in the evolving digital world.
From an operational perspective, molding a business into an agile, fully digital organization requires a top-down approach to change. A champion in the C-suite can lead the transformation at a faster pace and a chief customer officer (CCO) can be the solution. The CCO has the right mindset, motivation and authority to take ownership of the customer experience — and lead a team to implement digital initiatives to benefit the customer experience. Understanding where customer experience sits in the retailer's organizational design will help operationalize initiatives across function. The two most common models for organizing the CCO's customer experience team are the shared service model and individual business unit, each with their advantages and disadvantages.
- The shared service model is rooted in long-term growth for the enterprise, leveraging the CX capabilities as part of the growth strategy, as well as future capability planning to support the ever dynamic customer environment. This approach primarily drives long-term, strategic, transformational change with fewer immediate enhancements to existing products, services or pains.
- As an individual business unit, the group focuses on enhancing the everyday convergence on attributes that drive immediate impact to the customer as they interact with the brand. This model has the CX team as a contributor to the performance goals of the products and services they support, but they aren't held accountable solely to their successes or failures.
In either model, the technological constraints in large matrix-oriented retail organizations are a constant challenge. Creating sustainable customer experiences across large footprints is extremely costly from both a cap-ex and op-ex perspective. For years, retailers have spent tens of millions of dollars building and maintaining robust infrastructures to manage the operations of physical stores. From supply chain to inventory controls to POS systems, they were developed without the mobile, omnichannel capabilities that customers expect in today's non-linear shopping journey. Many enterprises are now overwhelmed by the complex, costly networks of integrations and processes needed to meet customer expectations.
Savvy businesses will look for long-term solutions to become customer-centric omnichannel retailers with minimal expense. Rather than completely ripping out the plumbing that they have built, businesses should build newer capabilities while maintaining the legacy environment until they have the right enterprise solutions.
This two-pronged IT approach allows agile development of solutions that are more scalable and flexible, enabling the business to slowly and strategically migrate toward a new technical model that starts and ends with the customer need. Ultimately, it minimizes the technical debt thanks to the availability of newer technology vehicles — like leveraging the cloud or developing experiences that are activated through the management of customer devices as opposed to taking on infrastructure and hardware at the physical footprint.
As technology continues to disrupt business strategies, established retailers face competition from agile, digital natives. The solution is simple — either evolve quickly or risk extinction. The winners in this digital age are retailers who keep their eye on the customer experience, understand customer expectations and execute on smart plans to achieve success.
Brandon Rael is a New York-based retail strategy and operations principal and has led global delivery teams to help clients achieve operational efficiencies and sustainable profitability improvement. He has defined transformational strategies to leverage technology solutions that address complex omnichannel business challenges.
Colin McGee is a digital strategy and experience design consultant with strong roots in retail and ecommerce tied to fortune 100 and mid-market companies. He has developed and led teams responsible for digital marketing, product development, customer experience and organizational design.