4 Reasons You’re Really Losing Customers In Store

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by Kristin Harripaul

Competition is heating up and the noise is getting worse.

Ecommerce is growing—sales grew at a CAGR of 16% last year (U.S. Census Bureau).

Store traffic is falling—7.7% decline across the U.S. retail market (RetailNext).

The customer’s attention span is now less
than a goldfish—8 seconds (U.S. National Library of Medicine).

You know the list…

It can be easy to explain away lost customers and disappointing sales with today’s very difficult marketing conditions…

But then, what about pure-play online retailers like: Bonobos, Warby Parker, Rent-the-Runway, Birchbox… who are now moving in store and growing faster than ever?
What’s their secret? Or better yet, where did you go wrong?
Here are the 4 Reasons You’re Really Losing Customers In Store…
1) You’ve Focused on “the Purchase” & Forgotten the Journey

In the last decade customers have fractured the traditional path to purchase, creating over 800 unique shopping-journey options and counting (Cisco). And, the heralded “omnichannel” hasn’t actually had a positive effect on some strategies. Why? Because it’s placed a focus on driving customers to “the purchase” across channels and blurred sight of the big picture: how customers got there, i.e. the path to purchase. In doing so, it’s become all about the sale with little focus on understanding customer behavior or their digital behaviors along the path to purchase, ultimately leading to a series of missed opportunities to influence customer decisions before and after a purchase. And, now all the focus is on discounts and savings (once again focused exclusively on “the purchase”), because how else can you lure or keep a customer, if you’ve lost a pulse on what’s really going on inside their heads? But, is a race to the bottom really one you want to win?

Ever since, customers started whipping out their phones in store and clicking “checkout” online there’s been an ill-considered rush to push the sale everywhere, overlooking the real need to start understanding and adapting to customers’ new, digitally-enhanced behavior. Ideally, you should be helping customers during the entire shopping experience, not just with the purchase. For example, customers are using their mobile devices in store to get price, comparisons, read reviews and access social media. How are you helping them with this need?
2) You’ve Figured out the Customer’s Name, But You Don’t Know Who They Are

Perhaps, you’ve already started collecting information on your customers. If so, awesome! Getting insights directly from the source is a huge step in the right direction. But, have you moved beyond simple age- and income-based customer segmentation? The reality is only 20% of customers feel that the average brand understands them as individuals (IBM). Why is that? Because of the fast-moving nature of digital behavior along the path to purchase, your customers are now learning more, engaging faster and expecting greater value, convenience, and hyper-relevant offers catered specifically to their needs. To offer this kind of value, you need a window into the shopping behaviors of your individual customers so you can take action at the appropriate time, place, and situation in which the shopping journeys occur. Your goal should be to guide customers along their path, rather than simply react to their journey choices.

Mobile ResearchIdeally, you need to start closing the gap between online and offline customer behavior so you can start delivering highly-individualized and hyper-relevant experiences. The best way to do that is to go back to the source and start using a tool that is already ingrained in customers’ daily lives: mobile. Mobile research lets you get in front of customers when it matters most—while they are actually in their path to purchase (online, on mobile and in store). And, with enhanced in-the-moment mobile journaling features like audio, video and pictures—you can see firsthand what customers experience with your brand. And, it’s all quick, inexpensive and easy, so you can start feeding your marketing strategy more regularly with invaluable customer insights. You’ll can get answer questions like: What are customers’ pain points with your brand/store? At which decision points are customers using digital, and how? Which competitor (traditional or not) is providing components of a highly desirable experience? Which points of influence are most effective in influencing customer decisions or purchases? Learn more about mobile research here.
3) You’re In-Store Experience is a “Digital Dead Zone”

The path to purchase, mobile research… this all brings us to another critical issue—digital, or the lack thereof of success digital integrations in store. Since an overwhelming majority (nearly 80%) of customers interact with brands or products before entering the store (Deloitte), they don’t expect to walk into a store and encounter a “digital dead zone”. What do they expect? Call it the “Netflix” experience if you may, seamlessly moving from one interface to the next and picking up right where they left off. Understanding this, many brands and retailers have begun experimenting to keep their in-store experience relevant through mobile websites and apps, mobile POS systems, self-help kiosks, in-store pickup, beacons, sensors and smart mirrors to name a few. And, many are starting to reengineer the traditional store model, but others have remained stuck in neutral—waiting to see what happens and what goes mainstream. If this is you, you’re making a fatal error. Last year digital influenced $1.7 trillion of in-store sales compared to just $0.33 trillion only a couple of years ago. And, mobile’s influence on in-store sales jumped to nearly $1 trillion from just $0.16 trillion in 2012 (Deloitte). The reality is there is no online-offline battle, ecommerce isn’t going anywhere and customer adoption of technology will only continue to contort the retail landscape at a rapid speed that will only continue to accelerate. That said, the time for waiting is over and the time for testing is now—you don’t want to isolate your brand from the market.

So, are we recommending that you need to start plastering the world with digital screens and looping videos that do little to enhance the customer’s experience or move the needle on sales. Definitely not. Digital for digital’s sake is never a good solution. Again, it’s about starting with an understanding of the customer’s path to purchase and using digital to enhance their experience and connect the online and offline worlds. Each brand’s category and customer set is unique—digital solutions will have to be just as unique.
4) You’ve Lost Sight of the True Opportunity in Your Most Valuable Asset

So we’ve touched on digital and customer insights, but what is your most valuable asset? Why the ability to have a physical presence of course! More specifically, it’s ability to reclaim some control over how customers experience your brand, while capturing data to fill the holes in your understanding of your customers. If there’s one thing everyone can agree on, it’s that the basic act of touching products and seeing products up close still matters. These experiences breathe life into a brand and have the potential to grow it exponentially.

For example, let’s look at Bonobos, a once pure-play online retailer that opened it’s first store in 2011, after 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 estimate $100 million annual revenue—the sales per square foot yardstick, typically used to measure retail performance, is the highest in their category (Inc). So how did Bonobos do it? They figured out what the appealing value proposition for their physical locations was and used it to build, strengthen and put a face to the brand to offer customers a unique experience that could not be replicated online. They essentially opened up a showroom, focused on service and the experience not selling—offering a full selection of product for testing, but not holding any inventory. The role of these stores wasn’t to directly generate sales and act as a distribution center, it was merely to bring visibility to brand and give their customers what they wanted most: excellent service/assistance and the ability to touch, feel and test product.

So, does that mean you need to immediately copy this business model to harness the true opportunity of stores? No. Bonobos is one of many success stories where a brand has rediscovered the “why”, “how” and “wow” of the physical experience—why the physical store positively impacts their specific customers, how it helps move them along the path to purchase and what the unique “wow” is that cannot be replicated in an online world. To be successfully, you need to figure the “why”, “how” and “wow” for your specific customers and brand. However, is important to note that 70% of customers are now leading their own shopping journeys—becoming aware of products through means outside of brand and retailer advertising (Deloitte). So, like Bonobos, it may be time to start shifting some of that ad spend back inside the store, and start considering the as store more than a distribution center, but as the heart of a brand and a critical marketing tool moving forward.

Despite predictions of brick-and-mortar’s death, the reality is brick-and-mortar is still alive and kicking, and can be source of huge growth, if you do it right and start by focusing on the customer and their path to purchase. Last year brick-and-mortar represented 94.1% of all U.S. retail sales (U.S. Census Bureau), and it is forecasted to still represent over 91% of all U.S. retail sales in 2018 (eMarketer). What’s more, growth in ecommerce and mobile technologies don’t pose a threat—they offer a huge opportunity to be a part of customers’ increasingly digital lifestyles. How you respond and how quickly you respond will either isolate or accelerate your brand/store’s position in the market, as we all continue to reinvent what it means to be a retail brand today. It’s your move…

Image Credit: ©iStock.com/skynesher

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