The CEOs new mandate:
Own the customer experience
By Chris Donnelly and Oskar Ebbinghaus
Enabled by the digital revolution, shoppers have taken
control across the purchasing journey. In response,
retail CEOs need to take charge of delivering a
compelling end-to-end customer experience.
Why retail excellence never goes out of style
The retail revolution has one clear winner so far: The customer, who has gained
increasing control over when, where and how he or she makes a purchase.
And while many companies view the consumers growing influence
as just another marketing challenge, we believe they should instead
make it a key part of the CEOs agenda, given the significant
strategic damage that failure in this area could cause. This power
shift has retailers scrambling to differentiate themselves on the
traditional elements of the retail value proposition (e.g., product
range, price, value and customer service). However, in addition
to fortifying their traditional retail value propositions, we believe
retail leaders must find ways to achieve a truly seamless customer
experience across all physical and digital channels, and learn how to
make money doing it. That means zeroing in on the levels of service
consumers demand today, and working to understand what shoppers
will want and how they would like to shop for it in the future.
While new digital disruptions seem to appear almost daily, at
its core, the retail equation remains essentially the same: the
bedrock ways that companies build successful value propositions
have not changed. They include providing the right products
and services, offering good value for the money, and focusing
on convenience by offering flexible shopping hours, nearby
stores and popular product assortments. Accentures Global
Seamless Retail Study confirms that these key propositions
remain true even in todays connected worlddigital technology
should enhance the value proposition, not replace it.
But no retailer can simply rely on historic success formulas to
win in the digital age. Thats a lesson a number of now-defunct
retailers from Woolworths to Circuit City learned the hard way.
In contrast, Walmart has successfully reinvented itself many
times in the past and is attempting to do so now in response
to digital retailing. To compete effectively with Amazon, it is
making large investments in its website, apps and supply chain.
Whats new: Developing a
compelling customer experience
When transactional power shifts to shoppers, meeting their needs
becomes more important than any other strategic priority, which
is why we believe the CEO must own this job. However, storebased retailers usually have difficulties differentiating themselves
based on the traditional value proposition alone. Take product
range: online retailers have larger assortments than any brick
and mortar storeAmazon has over 100 million products listed
across all of its sites, while physical stores stock far fewer.
Consequently, successful retailers understand they have to
differentiate themselves in the minds of their customers as
reflected in the experiences that consumers associate with
the brand. Research shows that a good shopping experience
improves customer satisfaction, drives repeat purchases, builds
customer loyalty, increases customer referrals, boosts revenues
and builds stronger customer relationships. It also pays off at
the bottom-line. Accentures analysis of Forresters US Customer
Experience Index Q1, 2015 reveals a direct positive correlation
between retailers 2014 rankings and their earnings before
interest, taxes, depreciation and amortization (EBITDA).1
Given the benefits, industry leaders are
focusing strongly on customer experience:
Over half of companies plan to expand their centralized customer
experience teams in 2014, while only 3% will cut them.2
However, while many firms are investing heavily, very
few are moving the customer experience needle. Take
the retailer that spent big on store technology to boost
customer experience. Because it sourced the technology
from multiple vendors, it ended up creating overwhelming
complexity instead of increasing customer satisfaction.
No silver-bullet solutions exist
Unfortunately, no single template for success in this area exists
because customer experience represents a journey not a single
interaction and customers assess retailers from a combination
of perspectives. Viewed holistically, however, four parameters
can help retailers produce a winning customer experience:
1. The context (the retail category and the retailers value proposition)
2. The type of customer
3. The shopping mission
4. The path to purchase over several touch-points
Accentures framework for a compelling customer experience
(Figure 1) provides a structured way to address and define
what this level of customer interaction looks like, given
the right context, shopper profile and mission.
Sixty-three percent of companies expect to spend more
on boosting customer experience in 2014 than they did
in 2013, up from 54% in 2012 and 46% in 2011.2
Figure 1: Accentures Customer Experience Definition Framework
The context (retail category and retailer value proposition)
Customer segment
Customer shopping mission
Customer path to purchase
Store
People
etc.
etc.
Discover
Select and buy
Receive
Engage
Compelling customer experience content
Digital
Forresters US Customer Experience Index Q1, 2015: https://www.forrester.com/The+US+Customer+Experience+Index+Q1+2015/fulltext/-/E-RES117482
Temkin Group CX Expectations and Plans for 2014:
Explore
http://experiencematters.wordpress.com/2014/01/31/data-snapshot-cx-expectations-and-plans-for-2014/
Exploring the components of a compelling customer experience
Consumers typically take a series of steps when making a
retail purchase, and companies need to understand how
to surprise and delight them at each stage of this journey.
The following example offers several recommended practice
suggestions on what a compelling customer experience could
look like when delivered via an integrated approach.
1. The context: The retailer is a grocery discount chain carrying a
good selection of brands and private label products. Its value
proposition offers customers ways to save money and time
2. The type of customer: The middle-class family has
three kids living in a suburb of a medium-sized city.
The family seeks the lowest prices, ecologically friendly
products and premium food at good prices
3. The shopping mission: Mom typically shops biweekly after work to stock up on non-perishables,
fresh food, and cleaning and hygiene products
4. The path to purchase: Mom begins her purchasing journey on
her personal computer the evening before, exploring options
and planning the shopping list. During the day, she adds other
items suggested by family members. She then places the
order for in-store pick-up. At the store, she uses her mobile
phone to explore and discover new products she also needs
and adds them to the total. When done, she picks up the
pre-ordered items and pays automatically by logging out
These innovations can reduce customers shopping time and help
them to save money by highlighting discounts, tracking the family
budget in real time, and offering rewards. Retailers benefit as well,
since these approaches can boost sales, strengthen the brands value
proposition and prompt the recommendations of satisfied customers.
Recommended practices in a specific customer journey
Discover
Explore
Offer a pre-populated
digital shopping list based
on the shoppers purchase
history, old shopping lists
and added products the
shopper likely needs
Generate suggested
alternative options,
which feature equivalent
products with lower
prices or ones currently
promoted by store
Provide a weekly menu
planner with meal
suggestions based on
the customers profile and
tastes, along with
opportunities to
personalise and add
his or her own meals
and new recipes
Coach assistants to
approach shoppers who
may be studying cereal
ingredients listsa
probable sign they
could use some help.
The assistant can
recommend the best
choices for children
with different allergies
Based on his or her
purchase history,
give reminders of
non-perishables and
non-recurrent items that
the shopper might soon
need to purchase again
Provide extended
product information
regarding origin,
environmental footprint,
and so on that shoppers
can access by scanning
goods on the shelf
Select and buy
Offer a smart shopping
list that organises
products according to
the store layout and alerts
the shopper who passes
but does not scan a
product on the list
Provide a summary of
the total amount in the
shopping bag versus the
stated budget and amount
of saved money
Enable automatic
payments based on
details already logged
into a shoppers profile
Receive
Ensure that staff pre-pack
products on order so that
shoppers can pick them
up when they arrive at
the store.
Pack products in the store
directly into the shopping
cart after scanning
instead of conducting
the transaction at the
cashiers desk and then
repacking them
Explore the possibility
of offering refunds
for damaged products
discovered at home by
having the shopper take
a photo and submit it
via smartphone
Engage
Make it easy for shoppers
to recommend meals,
recipes, product
recommendations and
share the shopping
experience with other
customers
Enable consumers to
receive loyalty rewards
from shopping, making
recommendations or
influencing other
customers
Offer individual
follow-ups on personal
targets such as budget,
share of ecological food,
or calorie content
How its done
A number of companies have found unique ways to combine traditional retail excellence with
customer experience innovations to satisfy customers, achieve profitable growth, and set themselves
apart from the competition. The following examples illustrate how two organizations made it happen.
ARGOS: Reinventing an outmoded channel
DISNEY: Investing in the MyMagic+ experience
While catalogue retailers are largely outdated in the US, British
company Argos has kept the format alive in the UK by reinventing
it. Doing so required the firm to develop a three-part transformation
plan. First, it repositioned key sales channels, replacing yesterdays
laminated catalogues with new digital shopping hubs. Second, it
gave customers more choices faster by improving distribution and
offering a wider array of fulfillment options. Third, it created greater
universal customer appeal by focusing on key brands, building
the companys reputation and introducing competitive pricing.
Disney consistently delivers an amazing customer experience
for millions of guests every year. However, about 6 years ago,
the company began to change the way its amusement parks
operate. With customer expectations changing and competition
for entertainment dollars fierce, Disney took steps to boost
guest engagement levels in order to increase spending. To
that end, the company created the MyMagic+ experience.
Success required it to create a lean and flexible cost base driven
by the ongoing reinvestment of catalogue-related savings
as well as aggressive cost reduction programs. The retailer is
experimenting with an increasing number of new shops where
tablet computers replace its trademark laminated catalogues. The
Internet currently generates 45% of Argos sales, roughly twothirds of which (32% of its total sales) involve customers using the
firms online Check & Reserve program for in-store collection.
Argos designed the new digital stores to separate its two
core segments: Customers who want to browse, check
product reviews and order using in-store iPads, and those
who pre-order online or via mobile devices and then use
the firms 60-second fast-track collection service.
The MyMagic+ experience begins as soon as consumers enter the
amusement park. Guests touch their MagicBands on their wrists to
enter the parkno more turnstiles, which makes entering the park
up to 25% quicker. To buy something, visitors simply touch the
MagicBand to pay, and the system immediately bills the amount
to their rooms. A companion mobile app reports the length of the
lines in real time for all rides and helps users plot the most efficient
path through the park. Visitors can even reserve popular rides up
to 60 days before they arrive. Personal touches abound when
a young girl spots Cinderella, shes delighted when the character
says hello to her by name. With permission, Disney characters
have access to personalized guest data, which increases the
realism of character interactions. Any photo taken by the Disney
photographer automatically links to the subjects account, as do ride
videos, providing a key component of the post trip experience.
Disney has created a digital overlay for the entire experience,
seamlessly weaving the digital and the physical together to make
it larger than life. This represented a huge change for over 60,000
cast members and millions of guests at Disneys theme parks, but
the results are positive. Over 75% of Disney hotel guests use the
system and the company has been able to increase park capacity by
thousands, earning it better returns from its real estate investments.
Customer service and service design Two sides of the same coin
Compelling customer experiences help generate real benefits
for both customers and retailers, but even the most spectacular
shopping session can quickly sour if the services or solutions
making up the customer experience dont deliver from the users
perspective. If customer experience is all about understanding
what specific shopper segments really noticed and valued during
their purchasing journeys and using that insight for investment
purposes, service design is all about designing and developing how
the service and the associated solutions deliver that experience.
Research from Fjord, part of Accenture Interactive, shows that
excellent design drives innovation and business growth. A 2014
Fjord analysis of the S&P 500 reveals that design-driven companies
routinely see returns nearly 230% greater than those of their less
design-focused peers when making other comparable investments.
Consumers will probably view a great customer experience
without a similarly fantastic user experience as an offer that
ultimately promises far more than it delivers. This is the larger
opportunity, which can turn customers into collaborators and
brand advocates over time. Service design takes a customer-centric
perspective, and helps retailers design the customer experience
in a complex digital world with multiple services and solutions
across several touch-points. The goal is to design for seamless and
genuinely personal experiences for each customer in real time.
Where to begin: Focus aggressively on
customers and value
We believe that offering a compelling
customer experience matters. It
represents a critical way for retailers
to set themselves apart in the minds
of customers, providing them with a
sustainable strategy for future profitable
growth. Because retailers lack silver
bullet solutions, the best way to start
this journey is with CEO ownership of
the Customer Experience and by asking
the right questions. For example, what
customer experience should we deliver,
which moments of truth will make it
happen, and how do we create value for
customers (and ourselves)? The answers
will reveal what the organization
needs to do differently, and hence
where to invest their limited funds.
It is important to note that the stance
a retailer assumes in this pursuit turns
out to be as important as the actions
it takes: Companies that aggressively
play to win usually do, while those that
defensively try to avoid losing often fail.
Contact the authors
Chris Donnelly
[email protected]Oskar Ebbinghaus
[email protected]Contributors
Caroline Holm
[email protected]
Special thanks to Julian Allen and Johanna Masket
Join the Conversation
@AccentureStrat
@AccentureRetail
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