3 Red Flags to Avoid with Digital Adoption

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Oct 09 2015, Posted by Kristin Harripaul

This week retail professionals gathered together at the 2015 conference to discuss the latest trends impacting retail. Many conversations focused on one particularly large elephant in the room: coping with the explosion of digital channels and technologies.

According to presenter Salim Ismail, executive director of Singularity University, and former vice president of Yahoo: “We have never seen so many technologies moving so fast. Never in the history of humanity have so many technologies been moving at this doubling pattern, at this accelerated pace.”

With his list of I-didn’t-know-we-could-already-do-that technologies, Salim further demonstrated just how fast, fast really is with examples of self-driving cars, 3-D printing and even drones all already being used in the field.
So, where does that leave us? What can brands and retailers do to ensure they are making wise investments in digital adoption? By combining what we heard from many of the retailers and analysts with our 20 years of experience in retail, we compiled a list of 3 red flags you definitely want to avoid with digital adoption.
1) Never Buy in for the “Cool Factor”

Far too often, we’ve seen digital fail in retail… looping video screens pointlessly plastered on brick-and-mortar walls… poorly designed ecommerce sites… or, in the case of QVC, mobile just for the “cool factor”. This is the definition of digital for digital’s sake, i.e. solutions all ultimately doing little to really improve the customer experience, increase engagement or move the needle on sales.

According to keynote speaker and QVC CEO, Mike George, “We thought mobile would just be a cool factor. We couldn’t imagine that anyone wanted to engage in the QVC experience on this little screen.” George then went on to explain that as a result QVC’s mobile conversion turned out to be “terrible”.

So what did they do? QVC went back to the drawing board to start by putting their customer first, rethinking their customer journey and then embracing a more responsive design conducive to multiple platforms. As a result, digital has taken on a more profitable role at QVC, with $3.5 billion of QVC’s $8.8 billion in 2014 revenue attributed to ecommerce. And, 41% of its ecommerce revenue attributed to mobile.
2) Don’t Think Every Digital Channel Has to Be the Same

When marketer’s hatched the omnichannel strategy, the goal was to keep consumers shopping, from channel to channel. And, while the concept was a definite step in the right direction at the time, its translation ended in something very channel-centric rather than customer-centric.

For the most part, we started by jumping to replicate each digital channel everywhere, failing to identify the unique “why, how and wow” of these digital channels for our consumers, if any, that is:

  • Why this channel is relevant and impacts consumers positively,
  • How it helps move them along their path and eliminates friction,
  • What the unique “wow” is that cannot be easily replicated on other channels and can be used to amplify the incredible in their experience

A great example of a brand that embraced the unique value of their channels for consumers is online pure-play, Bonobos. After seeing their little showroom at their New York headquarters being used a lot like a store, Bonobos decided to rethink the traditional store model and officially open its first store: a place where customers could try on clothes and order them online, for home delivery later. And, while physical and digital channels don’t all deliver the same exact functions and experiences here, guess what? In 2011, their first store was doing about $1 million in sales annually—roughly 7% of the company’s overall revenue. Today, there are 17 Bonobos stores (with 3 more to come this year) and they account for somewhere around 20% of the company’s estimated $100 million in annual revenue—the sales per square foot yardstick, typically used to measure retail performance, is the highest in their category (Inc).
3) Don’t Forget Digital’s Bigger Picture

According to Kasey Lobaugh, chief innovation officer for retail and distribution at Deloitte, digital interactions impact 50 cents of every dollar of in-store sales. But, we know that over 91 percent of all retail sales in the U.S. are spent inside brick-and-mortar stores (U.S. Census Bureau).

So, it’s not all about pouring your investments into digital channels and digital advertising. The biggest opportunity with digital is the opportunity to further align online and traditional channels and get extremely accurate analytics into marketing performance and consumer behavior not just online, but in store as well.

According to Cisco consumers now have over 800 possible journeys and counting, thanks to wearables and the IoT. But, trying to conquer every new digital channel is not the answer. That’s why in-store analytics is so critical. With this missing information, a real 360 view of the customer will finally be a reality, along with more unified digital and physical channels and increased ability to determine a high-performing marketing mix for your brand, including which digital channels will have the most ROI.
Moving forward, digital should never lead your strategy for fear of falling behind—that won’t solve anything. Instead, it’s important to start by understanding your consumer’s path to purchase, their customer experience pain points and how they’re using digital tools during their journey. Then, work backwards to define what and how digital would be the most scalable with changing technology and the most beneficial for your unique brand and consumers. “Smarter” brick-and-mortar retailing will likely become a big part of this kind of customer understanding, as it will be critical in taming an explosion of consumer technology and decrypting a seriously complicated path to purchase.
Image Copyright: robwilson39 / 123RF Stock Photo

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