To Double Profits, Be Experience Driven
Recent research backs up what many retailers already knew in their hearts to be true: investing in customer experience pays off. In fact, based on the findings in the new Forrester report that was commissioned by Adobe, “The Business Impact of Investing in Experience for Retailers,” their hearts might’ve underestimated the potential return on investing in customer experience.
According to the report, the companies that met the criteria for being an “experience-driven retailer” had year-over-year revenue growth, nearly 50 percent higher than the average across all other retailers. As if that weren’t impressive enough, their bottom-line profitability was nearly double the average.
When you dig deeper into the numbers, it’s clear why these experience-driven retailers are realizing so much growth and profitability. First off, they have substantially higher customer retention with more repeat purchases. They also have more customer advocates, which contributes to their superiority in new customer acquisition and brand equity. In other words, they’re winning with the customer, and that’s translating into winning business for them — a win-win all around.
Source: A commissioned study conducted by Forrester Consulting on behalf of Adobe, February 2018.
So it’s no surprise that the vast majority of retailers want in. In fact, 81 percent of the global retailers surveyed said improving customer experience is a critical or high priority. Unfortunately, just making it a priority doesn’t make it real — only 30 percent of the companies met Forrester’s criteria to be an experience-driven retailer. This means that, if you don’t yet meet the requirements to be an experience-driven retailer, you’re far from alone.
What it takes to be experience-driven
Creating organizational structures centered around customers, putting in place processes that drive continuous improvement through customer feedback, having technology that enables strong experiences across all channels — in their quest to become experience-driven, retailers have to be willing to invest in transformation. At least that’s the advice from Forrester, based on their research findings.
They also state that retailers must dedicate budget to experience. Eighty percent of experience-driven retailers have a specific budget for customer feedback management, more than 30 percent higher than that of less-mature retailers. Even more important than budget, however, is a culture that reinforces customer-centric behaviors companywide. While a Zappos-level “customer obsessed” company culture may have seemed extreme in years past, it’s increasingly becoming essential to the bottom line.
Steps forward, from inspirational vision to daily tactics
But budget and culture alone aren’t enough to become an experience-driven retailer. You have to know where you’re going — and how to get there. To help with that, the report provides recommendations that address everything from executive direction to day-to-day execution. Here’s a quick synopsis:
- Get full-throated executive support immediately. There’s a tendency for retailers to favor short-term tactics such as price cuts over strategic initiatives. That’s why it’s critical to get firm commitment and backing for experience-centric transformation from senior leaders.
- Create an experience vision that stands out for customers. You need to know what you’re aspiring to achieve — which is the right positive experience for both your organization and your customer. The experience vision should point in a direction that resonates with your customers, elevates your brand above the competition, is authentic to the brand, and inspires your employees.
- Design new experiences from the outside in. It’s necessary for your experience vision to be realized in the final real-life experience — which is where customer-centric design comes in. There are a number of techniques associated with customer-centric design, from initial research, to journey mapping, to iterative design processes involving customer testing. The more you employ these techniques, the more likely the experience design will meet the needs of your customers.
- Enable employees with the right resources. Experience has to be a central rallying cry across your entire organization, right down to the assistant in the store and the shipping clerk in the warehouse. Beyond that, they have to be empowered to improve the experience every opportunity they get. That’s why it’s critical that your employees have what they need to deliver experiences effectively and consistently. That includes education on the vision, training, and tools they need to execute their part of the experience.
Retail leads the way for customer experience innovation
Throughout history, retailers have known the customer is central to business success. Understanding customers and their desires, connecting with them, making the experience as important as the products they sell — these are all key traits of effective retail craft. So as the business world looks to shift to experience-driven models across every customer touchpoint, they’re looking to retailers to lead the way.
And many are. Experience-driven retailers are creating new possibilities in both physical and digital experiences, with everything from machine-learning-powered personalization to in-store interaction informed by data. As a result, they’re meeting and even exceeding customer expectations — expectations that continue to grow.
Plus, as the report shows, experience might be the key factor between roaring success and struggling to stay relevant. Experience-driven retailers are winning new customers, increasing loyalty, adding revenue, and even improving shareholder returns. But those who aren’t experience-driven tend to face challenges across all those dimensions. It’s not too late for retailers to get on the winning side of this divide, but the clock is ticking loudly.