Omni Channel CRM Strategy for Retail Stores
1 Introduction to an Omni Channel CRM Strategy
An in-store digital strategy can be deployed with immediate a benefits for nearly all bricks and mortar retailers and is at the center of an Omni Channel CRM strategy.
Influencing retail customers by getting inside their minds during their buying journey represents an ongoing challenge for marketers. However, as technology evolves, retail marketers who take advantage of sophisticated data mining on consumer preferences, timing and other key buying factors are making progress in the way they engage consumers.
1.1 Business Needs
Mobile is clearly a disruptive force in the retail market as shoppers are tied to their smartphones 24/7, and research shows them actively using their devices while shopping onsite at brick-and-mortar retail stores (Deloitte, the New Digital Divide):
1.2 Omni Channel CRM Methodology
How do you measure the relationship between digital usage, traffic, sales and customer experience in your store? How significant is it? The Deloitte survey indicates that 84 percent of shoppers used some type of digital device for shopping-related activities before or during their most recent store trip.
Measuring the impact of tactics deployed should therefore encompass a number of areas from merchandising to sales and to loyalty.
Measuring increased traffic includes an accurate, before and after picture of marketing activities and how it affects the shopping journey, for example:
- Number of visitors per day per store/zone
- dwell time per visit per store/zone
- Number new visitors per store/zone
- Number repeating visitors per store/zone
- Number of days from last visit per store/zone
- Bounce rate per store/zone
- Cross shopping: frequency of visits to associated zones (e.g. men’s clothing zones)
- Path Visitor Share %: % of visitors in path beginning and ending to another zone
A great digital experience has the biggest impact when used both before and during the shopping experience. It can make all the difference between converting to a sale or not. In fact, conversions increase 40 percent when customers use digital before and during shopping in-store.
An effective digital experience has to be pertinent to the moment – whether at home or in the shopping aisle. The more the digital experience and information match the shopper’s needs at a given moment, the more likely she is to buy and the higher the conversion rate.
Measuring increased sales conversions includes an accurate, before and after picture of marketing activities and how it affects purchase decisions, for example:
Purchase Journey Decision metrics
- Purchase Decision Frequency: number of times a combination of specific zones ended in visit to cash desk
- Store Sales per Minute: the number of visits to cash desk by the avg. amount of dwell time in minutes
- Zone Sales per Minute: number of visits to cash desk from a zone by the avg. amount of dwell time in minutes
- Purchase Time: shopping time across zones prior to going to cash desk
- Sales Conversions: number of times a zone is included in a shopping journey resulting in visit to cash desk
- Sales Conversions %: % of Sales Conversions for a zone / by total number of visits to the zone
- Dwell Time Impact: positive correlation between high or low avg dwell time in a zone and visits to cash desk
- Ad Impressions: number of Ad Impressions by delivery channels
- Redemption Rate: number of coupon redemptions
- Redemption Amount: amount of coupon redemptions
- Redemption %: % of coupons redeemed from ad impressions
- Attribute Purchase Frequency: attributes contributing to a purchase as a frequency score e.g. Brand, Product, Location, Segment
- Attribute Purchase Influence Ratio: attributes contributing to a purchase as a ratio to other attributes in a Purchase Decision Tree
- Basket Share Score: % of times categories and products occur in a basket
- Basket Repeat Rate: avg. number of times categories and products repeat in a basket
- Product Preference Score: weighted avg. for products purchased over time
- Linked Product Frequency (in Basket) number of times a combination of products are found in basket
- Basket Avg. Amount: avg. customer basket amount
- Basket Avg. Count: avg. number of baskets per customer
- Basket Count Total: total number of baskets per customer
- Basket Total Amount: total Basket Amount per Customer
- Spend Segment Count: number of customers in each spend segment
- Spend Segment Share: % of customers in each spend segment
- Churn Count: number of customers stopped spending (Gone Away) over determined time period
- Churn Rate: % of customers stopped spending (Gone Away) over determined time period
- Lost Churn Revenues: amount lost revenues from churn
- Migration to (other store) number of customers lost at 1 store but gained at other store
- Customer Lifetime Value (CLV) CLV calculation for expected spend amount of customer in lifetime of purchasing
- New/Lost Count: net difference between new acquired vs. lost customers
- New/Lost %: % difference between new acquired vs. lost customers
- Total Upgrade (Migration Count): number of customers migrating upwards to higher value segments
- Total Downgrade (Migration Count): number of customers migrating downwards to lower value segments
- Net Migration (Count): net difference between customers migrating up or down between segments
- Migration % net difference % of customers migrating up or down between segments
Shopper Experience Metrics
- Satisfaction Score: satisfaction score from existing zones dropped from journey or increase in frequency
- Number of Engagements: number of times a store employee engaged a customer
- Engagement Time: avg. time a store employee engaged a customer in a zone
- Engagement Conversion Rate: number of times a customer engaged by employee visited cash desk after engagement
- Engagement Conversion %: % of customer engaged by employee that visited cash desk after engagement
- Engagement Redemption Amount: amount of coupons redeemed after an employee engagement
2 Delivering on Digital
The goal is to deliver a consistent experience across devices, before, during and after the shopping journey.
Different platforms, content and lack of targeting will only serve to increase the divide between digital and in-store customer experience. Additionally, measuring the investment in digital only on the basis of incremental sales often results in using digital channels as a promo vehicle and in ‘cannibalization’.
The need is for providing a personalized shopping experience with greater impact across all touch points, with a special focus on bridging the digital world with the in-store physical experience by breaking down the communication barriers.
In order to realize this, the physical store must be integrated into the digital experience with tactics that are deployed to on-board customers in an effortless and seamless manner.
2.1 Omni Channel CRM Tactics
On-boarding customers starts with identifying customers during the shopper journey, otherwise the divide between the digital world and physical worlds remains or even widens.
For the purposes of this paper, we proceed with the assumption that WIFI penetration is significantly higher than customers downloading and using a client app. Recent studies show that US retailers have over 40% of their customers using their WIFI network, a percentage 5 to 10 times greater than customers who download and actively use the retailer’s client app.
On-boarding customers by registering them on the WIFI network is the easiest of all the possible alternatives and will further accelerate as IPV6 gets penetration and enables to automatically match a customer online with the same customer in the store.
2.1.1 Registering the customer
Creating an interactive digital environment in a retail store requires signing up customers to the retailer’s Free WIFI network, which includes opt-in and accepting to receive messages from the retailer.
Once the customer is registered on the network, then it becomes easy to connect the customer to a variety of valuable information sources (e.g. loyalty data) and to communicate across multiple channels (e.g. Facebook). The more data sources about the customer get consolidated, the more we are able to identify the customer’s interests and shopping patterns and deliver highly relevant and contextual communications.
There is a range of proven tactics that are utilized in combination to get customers to register on the retailer’s Free WIFI.
Using Free WIFI and multiple SSID’s
In certain locations such as shopping malls, providing Free WIFI access to shoppers who have a high dwell time is a known tactic that captures customers both in the store and nearby the store. By setting up multiple SSID’s (networks), the retailer increases the chance of shoppers using one of their networks instead of competitor networks and is in a position to offer deals to shoppers who register.
There is a variety of registration options that appear on the retailer’s splash pages to make it easy for customers to sign up, for example:
- By providing a simple registration form with First/Last Name and phone number or email
- By clicking on Facebook to log in, enabling the retailer to retrieve he customer’s contact details such as his email address
- By showing a digital coupon (QR code) that appears on the splash page and that the customer can present at the cash terminal (see more on this coupon registrations below)
POS material at points where purchase decisions are made
POS material announcing digital deals plays an important role when placed at strategic locations in the store where purchase decisions are made.
For example, in an apparel store, POS material promoting digital deals in changing rooms will obtain a greater number of log ins than when displayed in a walk through area. Other examples such digital deal signage at cash terminals and POS on the product shelf that indicating a deal, all have impact when customers see they can receive a discount on a purchase.
POS material have high impact and log-ins if positioned where purchase decisions are made.
Using digital coupons to register existing loyalty members
High tech marketing applications such as SMI can send out digital coupons to mobile phones (e.g. QR codes, Bar Codes) that are unique to each customer.
When a customer obtains the coupon, it is embedded with both the product code and a unique identifier that associated to the phone’s MAC address. As a result, after the cash terminal scanner has read the coupon, the basket and customer ID (if a loyalty card was used) gets linked to the device where the coupon was placed.
In the above example, a customer was registered on the network without having to enter his information in a form.
Employee interactions with customers during purchase journeys
Shopping journey analytics can reveal which journeys are the ones that are most likely to end up in a purchase.For example, the highest probability for a purchase may start with a visit to Women’s footwear followed by the Children’s department and then the Discounted goods area. As another example, cashiers inform customers that there are digital deals if they log into the network.
Having employees interact with customers on a purchase journey at targeted locations and then inviting them to connect to the network in order to get a deal, is an effective way to register customers.
Using Social Media to register via personalized deals
Communications that start on a digital medium is a very natural way to get customers to think digital on an upcoming store visit. Using Facebook and other social media to deliver personalized and relevant deals that can be used on the next store visit is another way to register customers on the retailer’s network.
One of the best methods to do this is to provide a coupon on Facebook that can be downloaded to the customer’s phone and swiped at the cash terminal to identify the customer (as previously described).
Using the retailer’s loyalty program member list
Using the current member list and communication channels to message members, the retailer announces the new digital channel and sends a link to download a coupon that is used on the next store visit. As previously described, the coupon serves as the mean to link the device ID (MAC address) to the loyalty ID when the coupon is scanned at the cash terminal.
Using the retailer’s ecommerce site for online couponing
Using the retailer’s e-Shop web pages, a digital coupon is embedded for selected products with a discount offer when redeemed at the store on the next store visit. In addition to serving as a means to register customers when at the store, the online coupon is valuable for driving online business to the physical environment and as part of a designed strategy that prevents the eShop from cannibalizing store sales.
2.2 Omni Channel CRM In-Store Communications
2.2.1 Targeted communications
By using targeted communications to the customer’s interests, ads are personalized and relevant to the customer.
A different set of engagements scenarios are possible when real time marketing capabilities exist. To illustrate, here are a few scenarios for the ad below that is triggered when Jane is located in the Louis Vuitton handbag department:
- Employee interaction: a sales person on the floor in the handbag department receives a message to locate Jane in the department and offer her a coupon
- POS material: the display area for Louis Vuitton handbags has a sale sign that says ‘LVMH Digital Deals – Log into the Store Network’ and when Jane connects to the network, the personalized offer appears
- SMS: Jane receives an SMS with a link to the Louis Vuitton special that includes a coupon
- Facebook: Jane previously Liked our Facebook page and a post on their Facebook wall shows the ad with a link to the coupon
2.2.2 Customer Reach
A retailer marketing department will limit the number of messages sent to customers in order to not risk negative feedback. In a typical example of an SMS or Email campaign, a Click Through Rate is typically around 2%, due to a low relevancy score.
When messages are delivered during the shopper journey and by location to products,the relevance score is much higher as can be seen in the table below where a CTR rate can reach 25%.
Lets take an example of how customer reach is boosted when messages have a high relevance score, as is the case when they are delivered during the shopper journey
- a grocery store has 125,000 registered customer
- the average customer visit is 2 times per month
- non-location based ad campaigns are run 1 time per month
- location based ad campaigns trigger 1 ad per visit, based on the customer’s proximity to the products shopped
Therefore, shopper journey ads can have a 4 times greater customer reach factor than a traditional media channel approach for reaching customers.
Conversion Rates are seen as having 2-5 times higher rates in test cases, depending on factors such as the retail sector (e.g. grocery, apparel, electronics), the frequency of visits, whether a CRM/loyalty program already exists and the retailer’s current marketing capabilities.
The most significant factor however is relevancy based on the shopper journey and proximity to products that are regularly shopped.
In the above example of a grocery store, the number of conversions are significantly boosted when ads are delivered during the shopping journey:
Therefore, shopper journey ads can have a 4-5 times greater number of conversions over a traditional media channel approach.
2.2.4 Media Cost
A significant factor in cost of communications is that the in-store channel belongs to the retailer and there is no need to buy media from a 3rd party at the highest bid price. Another factor, as already mentioned, is the higher rate of conversions that reduces the overall cost of conversion.
For example, vendors on AdWords may have a Cost Per Click of $1.50 or more, with a low conversion of 3-4% https://www.hochmanconsultants.com/cost-of-ppc-advertising
In contrast, an in-store digital media channel doesn’t compete with other media buyers and has a cost of $.24 per CPC, approx. 6 times less.
By converting at a higher rate of 5% and in some cases as high as 10%, the overall cost of conversion becomes significantly less expensive – as low as 10% of the cost of 3rd party media channels.
For a retailer, developing its own in-store digital channel has enormous direct benefits:
- Connects the physical store to the retailer’s other digital assets (e.g. E-shop, Social Media etc.), enabling real Omni-Channel capabilities
- Enables a digital experience for customers during the shopper journey, with real time, relevant and personal communication
- Provides 4 times greater conversion rates at 10% of the cost of other media channels
Additional benefits of an indirect type include:
- Lower churn rate by applying retention tactics and customer rewards while shopping
- Increased shopping visits and basket sizes by improving cross-shopping and the number of engagements with store personnel
- Increased Customer Lifetime Value and customer satisfaction by personalizing the shopping experience
A retailer’s investment into developing an in-store digital strategy produces tangible results in only 3 to 6 months and can be deployed in a test environment to validate results before rolling out further.
In summary, immediate and long term benefits are within reach of nearly all bricks and mortar retailers and should be at the center of any Omni Channel CRM strategy.