Will Online CRM Satisfy the Customer?

Most retailers still struggle to make Web technologies a key part of how they interact with customers. Though the perceived threat of being killed by a pure-play online retailer has subsided, the potential value in better leveraging the online channel to build closer customer relationships has never been stronger.

But many retailers have retreated from their online strategies almost as quickly as they forged them. By doing so, they leave significant revenue, cost savings and customer loyalty on the table. Retailers should re-evaluate their online strategies and recommit to leveraging Web technologies as a core component of their cross-channel interaction strategy.

In the past few years, the business press has written repeatedly of higher customer expectations. In practice, however, many retailers fail at the basics of customer service and the staging of the customer experience.

Though not the panacea promised by the New Economy, Web technologies give retailers the chance to provide a more simplified, consistent and relevant customer experience within and across channels.

By simplifying the experience and eliminating the friction points in the customer shopping process, retailers can satisfy the customer. And though retailers ultimately should strive for more than just satisfying the customer, they first must fix the basics.

Web technologies, properly deployed, provide a vehicle through which retailers can alleviate many friction points in the shopping process such as stock-outs, long waits, poor product and service information at the point of sale and complex interactions for routine service requests.

Once retailers consistently excel in the fundamentals, they can focus on moving beyond customer satisfaction to customer delight, the Holy Grail of the retail experience.

Though retailers have spent much money and human capital on Web technology initiatives in the past few years, many still struggle with the basics. Success with online CRM initiatives lies in assembling the right team and focusing on the fundamentals of the shopping experience. Based on our experience, we recommend the following:

Build a shopping process SWAT team. Bring together a select group of business managers, direct marketers, call center managers, Web channel managers and store managers to identify the friction points in the retail experience and develop creative solutions to address them. The Web is a very technical channel, and having both IT and marketing at the table on an equal footing is critical.

Understand your customers. Develop a thorough understanding of your retail customer segments – who they are, how they shop and what they value most in the shopping experience. Many retailers continue to define their Web strategies for the generic customer, failing to understand the different needs of each of their primary and secondary audiences at each step of the shopping process and how Web technologies can help fulfill those needs.

Fix the easy stuff. Too many retailers do not share consistent return and purchase policies across channels. Customers should be treated consistently and be allowed to move quickly from channel to channel.

Companies such as Best Buy recognize the importance of simplifying the customer experience, allowing customers who bought through BestBuy.com to return or exchange items at their local stores. This flexibility engenders greater customer loyalty by letting customers avoid costly shipping charges and provides Best Buy with a chance to save the sale and cross-sell additional products and services.

Perform regular usability testing. Most retailers have spent millions of dollars building and maintaining sites over the past few years. But few have conducted formal usability tests to evaluate the sites’ efficiency in meeting user needs. Usability expert Jacob Nielsen estimates that at least 90 percent of commercial Web site experience problems result from usability, not technical issues.

By incorporating robust usability testing into site development and maintenance, online gift retailer RedEnvelope has improved its site performance metrics. Through its work with user experience testing firm Vividence, RedEnvelope has:

• Reduced shopping cart abandonment from 81 percent to 63 percent.

• Reduced site-related calls to the customer service center by 45 percent.

• Increased sales revenues by 95 percent.

Measure everything. Retailers should adopt a core set of customer experience metrics to satisfy the customer. By continuously measuring and refining the customer experience, retailers can ensure they are adding tangible value for the customer. Measurement strategies should incorporate satisfaction measures gathered at the point of sale and through formal usability studies and intercept surveys as well as through Web log analyses.

Leverage each channel as a lead generation tool for the other channels. The online channel can drive store sales. For example, Sears estimates that 80 percent of appliance sales start on the Web. In-store kiosks let customers buy out-of-stock items as well as items they are uncomfortable carrying with them.

Putting the Web in the store also can provide customers with rich product content. Office Depot found that both customers and sales associates used in-store kiosks to complete different components of the shopping process.

Help customers find inventory. Most Web sites do not provide customers with access to store inventory. Most stores still use the smile-and-dial approach to find out-of-stock items. Retailers can see quick improvements in sales and customer satisfaction by providing customers a view into their inventory for products they are ready to buy.

Finish Line, a 450-store sporting goods retailer, is implementing Found, an application service provider-based technology, to give Web users and store employees complete visibility into its store inventories.

Web technologies will not eliminate store and catalog operations as many predicted during the dot-com boom. However, they will continue to revolutionize the shopping experience within and across channels. Retailers seeking to unlock the value of the online channel must first build a solid foundation rooted in the fundamentals and then leverage their excellence in the basics as a platform to innovate and evolve toward customer delight.

By staying focused, online CRM initiatives can satisfy the retail customer.

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