With visitor-to-sale website conversion rates currently averaging 2 to 3 percent for most ecommerce sites, and in-store conversion rates of only 20 to 40 percent, retailers clearly have their work cut out to increase sales, and the focus is on the power of personalisation to drive this uplift.
But how can a personalised offer be achieved? It all starts with data. Part one looked at lessons learned in the UK, Europe and the USA. In part two we explore how retailers can turn search into sales by collating data to gain actionable insight into their businesses.
From search to sales
Forrester reports that internet retailers spend three times as much (as a percentage of revenue) on technology than their bricks-and-mortar counterparts. When you consider the growing share of pure-play ecommerce sales is growing rapidly and is projected to surpass offline sales in dollar value by 2020, it is important that retailers look to invest wisely in technology to help them gain actionable insight.
Most retailers are not organised currently in a manner that facilitates collating data for such an outcome. Retailers have a plethora of available data sets, but this is all currently sitting in siloed trenches within their businesses.
Simplifying a complex systems environment is a significant challenge as retailers still often have a plethora of legacy systems that coexist alongside new channel technologies. This creates not only more silos of data but also duplication of business information, redundancy in operations and opportunities for errors. Retailers now hold data on search and recommendations, sales, transactions, inventory, promotions, customer preferences and loyalty, and price, alongside the mass of data on financial, HR, planning, supply chain, ecommerce; the list grows each minute of operations.
If retailers own their own data and know how to work it, then they have more chance of encouraging shoppers to part with their money. Take Tommy Hilfiger as an example. The iconic fashion brand deployed a web commerce platform with automated recommendations and merchandising to deliver a personalised, relevant shopping experience to each customer, more than tripling sales in its first year. Early results reveal that more than 30 percent of online sales are influenced by recommendations.
Another approach to consider is that of Ikea France using online chat capabilities to support customers engaged with its ecommerce operations. By enabling more personalised, interactive assistance to visitors of Ikea.fr, this is helping to generate higher conversion rates, increase average basket sizes and reduce drop out rates on the website.
Turning affiliation into actionable business insights
At this point, it would be wrong to ignore the popularity of social sites and user-generated content and how they are affecting the way consumers research and shop--and shifting the way companies market to them. WalMart’s Shopycat and GiveEmThis.com are two examples where information provided on Facebook is used to provide friends with suggestions for gifts.
Facebook and Google have become data-driven businesses. The data they hold about customers preferences is hugely valuable. Facebook in particular is a green field for launching promotions with new and returning customers, many of whom use Facebook to look for coupons, promotions and special offers from retailers.
Returning to the E-retailing Group survey mentioned in the previous article, responses reveal that 81 percent rate and review purchases, and are embracing newer social tools such as “liking” a retailer and “sharing” products they are considering or have purchased. The influence of such recommendations on potential and existing customers will continue to flourish and retailers need to leverage this information and use myriad strategies when developing offers.
However, it’s not just about peer recommendations. A recent IMRG study revealed that 12 percent of social-media users have been encouraged to buy an item from a Facebook store thanks to site advertising. Placement-based advertising offers yet another channel for retailers looking to target consumers and although the finding above suggests that more work needs to be done in personalisation, these are an easy hit for retailers who can manage this process effectively without the need to purchase additional technologies. Search-based recommendations on the other hand are based on complex scientific algorithms provided in the form of predictive recommendation engines that automate and personalise the process. Although an investment needs to be made, implementation has delivered staggering financial benefits around larger order sizes and online conversion rates.
Delivering connected personalised multichannel sales
As we have alluded to in part one of this article, delivering a connected cross-channel experience is a subject that is gaining momentum in retail boardrooms across the world. Empowered by anytime, anywhere access to information, consumers are now blending retail touchpoints. In part one we stated that our digital natives want differentiated interactions based on how and when they want to interact.
The provision of a cross-channel retail model is no longer enough. If consumers are using a mix of store, online and mobile channels to search, compare and buy products at a time that is convenient to them, then retailers must ensure they focus on personalising each touchpoint with each shopper to maximise the outcome of that interaction. Not only does this have the potential to convert browsers into buyers and dramatically improve conversion rates but it can also increase order values and drive repeat purchases and customer loyalty.
Retailers must transcend retail channels ensuring that every aspect of their business is aligned in support of that customer’s priority, wherever and whenever that consumer chooses to interact. If consumers are not yet receiving the personalised experience at every touchpoint, retailers are clearly missing opportunities around personalisation and recommendations.
Our perspective is that retailers need to align all of their operations and connect multiple silos of data in order to move to an “omnichannel” approach that leads to a thoroughly connected experience. By that we mean both a consistent customer experience, and a consistent business experience that aligns the planning process with merchandising execution, the supply chain, store operations, marketing operations and all customer touchpoints.
The objective is to create what we term as “your experience platform”. By connecting customer interactions seamlessly across all channels and each lifecycle phase, by enabling smarter decisions from connecting siloed sources of data and embedding these with science and business intelligence to drive actionable insight, and by optimising operations to align every aspect of the business to gain efficiencies and economies, retailers can achieve this experience platform tuned to their specific business strategy.
It takes all three goals working in unison to create this new customer experience. Personalisation offers huge opportunities for those retailers who can engineer their businesses not only to identify the most profitable and accurate recommendations but also in closing the loop and fulfilling on the customer demand.
Sarah Taylor is senior industry director at Oracle Retail.
*Mandatory fields your email address will not be published. All comments are moderated and may be edited. Comments do not necessarily reflect the views of the Catalogue Development Centre Ltd.