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Harnessing mobility in retail: 5 challenges to overcome

Retailers have a number of digital sales channels and a plethora of mobile marketing technologies to choose from. That said, when building a mobile marketing strategy, start with the basics: your customer, your brand and your business model.

Photo source: istock.com

January 26, 2017

By Jay Sunny Bajaj, CEO and founder, DMI

The Department of Commerce reported e-commerce sales in the first quarter of 2016 accounted for 7.7 percent of total retail sales. So, although more than 90 percent of retail transactions are still done in stores, mobile devices are affecting how shopping is done in brick-and-mortar locations.

Consumers are now conducting product research, comparing prices and accessing coupons inside the store, instead of at home on a computer. This creates a wealth of marketing opportunities for retailers who invest in data collection for optimizing the customer experience and mobile technology as the delivery vehicle. However, there are five main challenges to overcome in order to realize these opportunities.

CHALLENGE 1: Building a Mobile Marketing Strategy

YOUR CUSTOMER

Every retailer has a slightly different customer than the next. Understanding and segmenting your customer base will be critical when building a mobile marketing strategy, because of the personalized nature of smartphones themselves and because of the way they are used by consumers. Retailers should look closely at customer buying habits, frequency of shopping and distribution of shopping across channels. You need to understand how comfortable your customers are to receive marketing messages on their mobile devices. Strategies must be put in place to help consumers adopt and leverage the mobile technology. Also, policies and privacy should be clearly spelled out to the consumer so they know what they are opting in for.

YOUR BRAND

A mobile marketing strategy must take the uniqueness of the retailers’ brand into account or it could erode the brand image. Just as a poor in-store or online experience can erode a brand, mobile marketing implemented incorrectly can quickly do the same. All mobile marketing initiatives should be tailored to the customer base and be in line with all brand values and standards.

YOUR BUSINESS MODEL

Develop a mobile marketing strategy that is true to your business model. Consider differentiators like loyalty-based, promotional and large product assortment-based retailers. Also, make sure this momentum can be sustained by staff after the technology launch.

CHALLENGE 2: Consumers Demand Great Customer Experiences

According to a recent survey by DMI, about 86 percent of customers are willing to pay more for a better customer experience. Nearly 78 percent of millennials surveyed indicated they’d purchase more from retail stores that offer great mobile in-store shopping tools, and more than 80 percent of high-income shoppers ($100K income) believe such tools would improve the overall in-store shopping experience. This means that a strong way to attract customers is by offering them information that is highly relevant. So, how do you do this?

A. The first step is to collect and consolidate your marketing data. Without a true understanding of your customer buying habits, it will be difficult to personalize the experience. Arrange the customer data based on customer segments derived from the data, which will in turn optimize your marketing and promotional impact. Build a strategy of pairing offers and marketing messages based on the consolidated data from your CRM, e-commerce platform, loyalty programs and marketing systems.

B. Next, build a mobile website or native application to use as your customer interaction interface and make it location-aware for in-store relevance. Look into developing a mobile cross-sell or up-sell strategy to drive incremental sales.

C. Lastly, actively promote the availability of the mobile website or native app in-store to inspire adoption. The end result will be a better shopping experience for consumers and higher revenue for you.

CHALLENGE 3: Consumers Demand Integrated Marketing & Offers

A channel-specific approach to marketing leads to inconsistency of not only the shopping experience but also of the brand experience in general. Having consistent offers and promotions across your marketing materials, digital properties and in-store operations requires collaboration and cooperation with a number of departments. For this reason, centralized marketing and merchandising efforts have become critical for omnichannel success.

Even with the growing emphasis on digital marketing, the physical store is still incredibly important. According to the TimeTrade Retail Survey, store traffic was forecast to be strong in 2016, with 72 percent of respondents planning to shop in-store as much as last year and 18 percent expecting to shop in-store even more than last year. The problem is that a significant number of purchases and shopping trips occur anonymously. So, an investment must be made to track consumer preferences inside the store. Adding mobile marketing technology is a crucial cross-channel initiative that should be considered with any omnichannel reorganization.

CHALLENGE 4: Moving Quickly Enough to Take Advantage of Mobile Technology in the Store

Retailers that have already implemented mobile websites and apps are seeing traffic numbers continue to rise. The Demandware Shopping Index found that, in Q2 2016, 49 percent of all traffic to retail sites in the U.S. came from smartphones. For those that haven’t, mobile offers an untapped vehicle for personalizing offers and marketing messages both online and in-store. Technologies such as GPS, beacons and notifications are now being used successfully inside the store to deliver marketing messages aimed at creating awareness and informing the consumer on discounts that will ultimately inspire a purchase.

Using GPS technologies, retailers can target customers with marketing messages and offers as they approach a store to inspire a visit. Beacon and Wi-Fi technology can be used to pinpoint where a consumer is in the store to provide offers when the product is within arm’s reach. Retailers are now developing native apps that offer convenience for delivering and storing coupons (physical coupons can be entered using the camera to scan QR or barcodes). Finally, retailers that have accumulated big data using physical loyalty programs can use native apps to leverage this information to make personalized offers based on previous in-store purchases.

CHALLENGE 5: Making Shelf Space Digital

Shelf space is a valuable commodity. Retailers are now looking at ways to digitize the shelf space by using native apps on a consumer’s phone as the delivery vehicle. Since most competing products are grouped together in stores, this provides an opportunity for consumer brands to steal sales while the consumer is in the aisle making product comparisons. Retailers can charge the brands for this privilege (most likely a percentage of the sale).

There are several ways to approach digital shelf space:

BEACONS

Beacons can be strategically placed around the store to detect where a consumer is via their mobile phone’s Bluetooth. When a consumer walks by a beacon, promotions, coupons and cross-sells can be delivered through notifications on the consumer’s mobile device. It is a very effective marketing medium, but it is costly to purchase and maintain the beacons. It also requires the build-out and maintenance of a mobile app for the delivery vehicle of promotions and coupons.

PRODUCT SCANNING

Product scanning requires a native app and the consumer’s mobile phone camera as the input device. When a barcode is scanned using the camera to acquire more product information, a competing product can be displayed, offering a discount or some other promotion. This is the most accurate way of telling what products a customer is looking at and where they are in the store. It is a relatively inexpensive implementation and offers lower maintenance costs since there are no hardware requirements. The drawback is that the consumer must scan the product – an extra step that will limit the number of people a retailer can target in the store with offers.

WI-FI

Wi-Fi allows you to triangulate a consumer’s location in the store using the store’s available wireless network. If the store already has Wi-Fi, this can be a cheaper implementation than using beacons. Offers can be sent to consumers when they open the app in the aisle. The drawback is that the technology today is only accurate up to 10 feet. As this technology is perfected, it should be the most prevalent marketing vehicle.