With consumers putting more and more effort into researching their purchases online, retailers must turn that browsing into sales.
Kirsten is shopping for a dress. She sits down at her computer, clicks through a few of her favourite sites and checks out some recommendations her friends have emailed her. A few days later she is on the high street. She knows the style and price she is looking for and just wants to check the quality and fit. She’s got her smartphone and can use it to check if she can get a cheaper deal or a snappier outfit elsewhere. She could even buy the dress using her phone to be delivered to her home the next day.
This is your new shopper. With so much information at their fingertips there has been a dramatic shift in the balance of power between consumers and retailers. Shoppers are now easily able to compare prices and offers between stores not just at home via their PC but in store using mobile phones and handy apps such as barcode scanners.
Research from accountancy firm PricewaterhouseCoopers (PwC) suggests 20% of shoppers are now spending more than half of their disposable income online and 28% of shoppers are spending online at least once a week. More than 90% of those surveyed by PwC said they had shopped across more than one channel with at least one retailer.
Customers want to be able to shop wherever and whenever is most convenient, whether that is via their mobile on the train on the way home from work or in a store on a Saturday afternoon.
In this new world, knowing your customers is more important than ever.
If you don’t know what products and services they want and can’t communicate with them in their preferred way, your rivals may gain the upper hand.
What’s more, with so much information available, shoppers will dismiss messages that aren’t relevant and can easily be tempted by new brands and more appealing product. “Customers have got to trust you that you are not going to bombard them with communications,” says Marie Myles, director of consulting at marketing information services group Experian.
The prevalence of loyalty cards and online shopping means retailers know more about their customers than ever. But PwC found much of this information was going to waste. “Many retailers still have opportunities to turn customer data into useful knowledge that can make them money,” the report said.
In a bid to tackle that problem, many larger retailers are investing millions of pounds in systems that can link up historic databases, EPoS data and internet accounts to give a single customer view. John Lewis, for example, has spent the past 18 months combining its store EPoS data and information from its website so it can see how shoppers behave across its various channels.
Emma McLaughlin, head of digital marketing at John Lewis, says: “It’s so much more effective from a marketing point of view if we can see that a shopper goes into a store to buy regular purchases like shampoo but uses the website for an occasion like a wedding or buying furniture.”
She says that knowing the customer better means John Lewis can send more relevant information. Marketing costs can also be cut, for example, by realising a business has been contacting the same customer with paper catalogues or leaflets as well as emails.
John Lewis is also now more aware of the gaps in its knowledge. At the moment it has 14 million contact details for customers, including those for its partner business Waitrose, but less than half of those include an email address, potentially one of the most useful bits of information in terms of marketing.
Myles at Experian says that engaging a shopper via email makes them worth 140% to 150% more to the business than someone not engaged in that way.
So getting an email address is now vitally important for retailers, but there’s no point in holding that contact if you send out the wrong messages.
Aurora Fashions, the owner of Warehouse, Karen Millen and Oasis, is also investing in a system to give it a single customer view. It plans to use the system so it knows how shoppers want to be contacted and to tailor its communications more accurately. Hash Ladha, multichannel director at Aurora, says: “It’s about understanding which groups of customers contribute to profit and looking after them to engender loyalty. It’s about giving customers what they want and winning hearts and minds.”
Of course, these major projects are out of reach for many retailers. But most already have a database of clients, and making email messages more personalised, based on the shopping behaviour you are aware of, is a straightforward
and rewarding first step. Mark Newton-Jones, chief executive of Shop Direct, which owns multichannel retailers Littlewoods and Very, says it is now sorting customers into smaller and smaller groups using information including their buying history and the history of similar shoppers.
He says that two years ago 95% of the emails Shop Direct sent out were generic, but now 40% are personalised. An email which reflects the interests of a customer is 30% more likely to be responded to.
Littlewoods now even makes its general emails more personalised. When sending out a message about a Sale, the company will change the pictures at the top of the email to reflect the interests of different groups. Even this slight adaptation can lead to between a 10% and 30% uplift in sales, says Newton-Jones.
Choose your targets
Customer databases may help retailers know what a customer is buying but may lack further insight, leading to some miscommunication and missed opportunities. If someone has already bought a red summer dress they are unlikely to need another one, and may not want one for a couple of years, so constant offers on red dresses, and even the accessories to go with them, are only going to irritate.
The good news is that tech-savvy shoppers are able to tell you much more about themselves than those that walk into your high street store. Ecommerce software like Speed Trap can use information like customer searches and products viewed to suggest what customers are looking for but have yet to buy.
The virtual world is also bringing once-private conversations into the public realm, with social networking sites such as Twitter and Facebook providing a rich seam of marketing information.
Social listening tools such as Jive and Lithium help to build and monitor online communities where shoppers talk about products. Retailers can then potentially break into those conversations with information or offers that can lead to a sale. If everyone on a particular site is discussing how terrible the weather is going to be at the weekend, for example, then a retailer might be able to offer them all 10% off a funky pair of wellies or send a link to a range of macs.
Shop Direct’s Very business has a full-time team watching how its brand is being discussed online and responding to customer praise and criticism.
The latest social networking services provide the potential to link online and physical stores more closely than ever. Websites such as Foursquare and Facebook Places, where people can register that they have visited a particular venue, can provide valuable information to retailers on their biggest fans and how often they are visiting stores. That may offer opportunities to provide them with offers or services when they register they are in a store, giving them treats to act as an advocate.
But getting it right in the social networking space requires sensitivity. Deborah Womack, head of customer relationship marketing in the UK for digital marketing agency Lost Boys International, says: “The technology on its own doesn’t work if you are not thinking about what your customers feel and what your customers want from you.”