NETTING IT OUT

The vast majority of consumers still make the bulk of their purchases in physical retail stores, and most of us will continue to do so for the foreseeable future. Yet our analysis ¹ has shown that consumers’ non-store experiences in dealing with retailers and with manufacturers of consumer products have a definite influence on consumers’ perception of the total brand experience. When consumers research, shop, get help, return, replenish, and/or upgrade or replace products through other channels (by phone, online, via email, using handhelds, using kiosks, etc.), the quality of the experiences they have—both within those channels and across those channels—impacts how they feel about the retailers’ brand, and the suppliers’ brand.

Fragmented Experience Hurts the Brand. Most retailers and consumer products’ manufacturers do not yet provide a seamless cross-channel customer experience. Consumers who research online are unlikely to be able to find information about which specific products, styles, and sizes are available in specific store locations. Consumers who purchase online are often not able to handle returns and exchanges in a nearby store. Consumers who purchase items in a store are often not encouraged to return or to exchange goods by mail. And, consumers who have purchased from a catalog find that the store associates can’t help them with catalog returns or exchanges. It’s a tall order for suppliers and retailers to smooth out these seams, because doing so requires good information flow—both about customers and products—across functional and organizational boundaries and across computer systems.

We believe that retailers and retail product suppliers who focus on continuously improving shoppers’ and buyers’ cross-channel experiences, will pull ahead of the pack in customer loyalty, repeat buying behavior, wallet share, and referral rates.

Here are some tips for retailers and for manufacturers of consumer products who want to provide a better brand experience to channel-hopping consumers.

CONSUMERS HOP ACROSS CHANNELS

Today’s consumers—particularly those in North America—have become cross-channel consumers. We do our research online, then we call to check availability and/or to place orders; sometimes we purchase online, sometimes we purchase in the store; we get after-sales support online, we handle returns and exchanges thru the mail, and we replenish and re-purchase online, by phone, and in the store.

Retailers, and the suppliers who sell their wares through retailers, are finding consumers’ channel-hopping behavior to be challenging. In the past, retailers could divide their customers into neat channel-specific customer segments, each segment was typically “managed” by a channel-specific marketing manager—one for e-customers, one for catalog/phone shoppers, one for in-store shoppers, and so on. For example, office supplies’ retailer Staples used to track customer behavior, revenues, and profits by channel: in-store, catalog/phone, or Web. Today, the lines between those segments have blurred. If the weather is bad, the customer will stay in the office and purchase by phone or online. If it’s a pleasant day, the same customer will stroll down to the store. Staples now tracks customer behavior across channels.

Because of its customers’ cross-channel shopping behavior, Staples also had to rationalize its product SKUs and inventory management across channels, so that consumers can find the identical products through the identical SKUs online, in the store, and in the catalog (See Illustration 1). Whether customers purchase file folders in the store and bring them back to their office, purchase by phone or buy online, and have the file folders shipped direct, the product SKUs and pricing for file folders on the invoices need to be identical across channels. If the SKUs are not identical, the clients’ purchasing departments will have difficulty reconciling the products received with the products purchased.

Cross-Channel Shopping at Staples.com

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© 2004 Staples, Inc.

Illustration 1. Customers used to have difficulty locating items on the Staples.com Web site using the product item numbers in their catalogs. Now, Staples correlates the item numbers in its catalogs with those found on its Web site. You can enter the catalog item number in the search field and you’ll be shown the equivalent product on the Web site. Or, you can “order by catalog number” and simply type in a set of catalog numbers.

So, the keys to success in cross-channel retail include having a single view of the customer who shops across channels and a single view of product information across channels. Consumers’ cross-channel shopping behavior is causing many retailers, and the suppliers whose products they sell, to rationalize their business operations, to integrate their customer relationship management systems, and to rethink their organizational structures.

MOMENTS OF TRUTH IN CROSS-CHANNEL SHOPPING SCENARIOS

Over the past few years, we’ve facilitated dozens of Customer Scenario® mapping sessions with consumers around shopping for and buying a variety of items ranging from groceries, apparel, hardware, and gifts, to appliances, high-end electronics (like home theater systems), and staples, like office supplies, dog food and paper towels. The consumer audiences have been middle-to upper class, and primarily adults (as opposed to teen-agers). The kinds of scenarios we’ve mapped out with customers include:

• Buying a week’s worth of lunch-makings for kids and husband

• Buying apparel online and purchasing a similar product in the store

• Shopping for a gift for a relative

• Buying clothing for children

• Selecting and buying consumer electronics—TVs, home computers, audio equipment, etc.

• Doing the weekly grocery shopping

• Shopping for a special event like a party

• Finding the right solution to a problem—backing up large files on a home computer

• Buying a replacement car

• Planning a vacation and booking travel

• Selecting appliances for a new kitchen

Shopping and buying behaviors differ by audience and by context, yet the “moments of truth” in consumers’ shopping scenarios—the points at which they will abandon the shopping and/or switch retailers—are fairly consistent. These moments of truth tend to cluster around three different areas in the scenarios ...

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1) We analyze the results of the Customer Scenario® maps we do with customers, retailers, and suppliers, looking for common patterns. Customers’ scenarios rarely stay within a single channel—online, store, phone, email; most scenarios straddle one or more channels.

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