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Here’s How Customer Service Will Kill Brick and Mortar Retail

Here’s How Customer Service Will Kill Brick and Mortar Retail

Customer Service

eCommerce baked-in customer service as a standard. Perhaps early innovators recognized its importance as a differentiator from in-store retail, or maybe it came naturally. Regardless, many traditional retail giants chose to ignore it altogether. In the stories that follow, we’ll explore vast disparities in customer service driving traditional retailers toward bankruptcy while simultaneously skyrocketing eCommerce sales.

Good CX Demands Good Customer Service

Major retailers now seemingly compete with airlines, telecoms and power companies for the worst customer service. The key difference, however, is the range of alternatives. Most regions of the U.S. don’t get to pick between more than two horribly aggravating cable providers, while anyone in the world can choose Amazon over local retailer. As a result, the need for retailers to optimize their customer experiences through customer service is paramount. However, those who only recently realized this may be too late.

Jura Live! A Customer Story:

Jura LIVE! allows customers shopping online to make live video appointments at their convenience, from the comfort of their own home. Customers can see the products in action in real time and leverage the knowledge of a sales rep. to help them make a purchasing decision. For a luxury product such as a super automatic coffee & espresso machine, this adds a significant amount of convenience to the customer’s experience while also dazzling them with high-end technology. These types of high-touch online experiences help the sites that have them dominate those without. Unfortunately, most brick & mortar stores don’t offer these experiences because they refuse to adapt.”

-Dave Gardner, Sr. Account Executive & Team Lead at Redstage

How Retail Heros Became CX Villains

Sears, JC Penney, and Toys “R” Us are known for major missteps that downgraded their in-store experiences and alienated customers. Sears simply stopped investing in its stores. Years ago, company leadership decided to introduce a poorly-managed customer loyalty program that caused much more harm than good. The “Shop Your Way” program caused extended checkout times; both for customers waiting in line behind someone signing up for rewards AND for loyalty members who facing constant discrepancies in “deal” prices at the checkout.

The Fall From Grace

Here's How Customer Service Will Kill Retail

When sales declined, products began to downgrade, the stores themselves fell to disarray, and customers naturally opted for other retailers like Macy’s and Home Depot. As a poorly planned remedy to decreasing sales, Sears chose to cut in-store staff in half across their locations, propelling worsening structural conditions that led to closures all over the U.S. To this day, the company continues to pump products into stores that no one will buy, without the necessary human capital to even unpack them.

A Sears Auto Story

Recenty, Redstage’s CEO Adam Morris had his own customer service blunder at Sears. He entered Sears Auto looking for a particular item, couldn’t find what he wanted, and exited the store only to discover his car had been towed. According to Morris, the towing company contracted by Sears was watching the security cameras while he was inside. Because he parked in a space for “Sears Auto Customers Only,” and hadn’t made a purchase, he wasn’t considered a customer, which allegedly gave the towing company license to tow his car.

In an attempt to get assistance from Sears, Morris spent hours on the phone with a “rude or unhelpful” customer service representatives. At the end of the ordeal, one rep told Morris to file a police report if he felt he was wronged. He had to pay to get his car back — more than the cost of the item he initially intended to buy.

Think he’ll be heading back to Sears anytime soon?

Alienating Your Audience

Here’s How Customer Service Will Kill Retail
JC Penney’s downfall came when it decided to switch to “low everyday prices” rather than focusing on their weekly coupon deals — something that created buzz from local customers and drove them to stores. At the same time, JC Penney switched focus from inexpensive products to more upscale merchandise, further alienating their customer base. As a result, shoppers decided to shop elsewhere. For a company founded on a middle class audience and low prices, this change was a signal for lifetime shoppers to exit, with seemingly no plan in place for attracting a higher-paying target audience.


Retail Giants’ Company Value Shift (2006 – 2018)

 
2006
2016
2018
06 – ’18
Company
Value ($B)
Value ($B)
Value ($B)
% Change
Sears
$14.3
$0.9
$0.3
-98%
JCPenney
$18.1
$1.7
$1.2
-94%
Source: Peter Diamandis, “The Future of Retail


Know Your Customers (or else)

Toys “R” Us CEO David Brandon mentioned in a recent SEC filing that the toy giant’s inability to invest in customer experiences in-store accelerated the death of the company. Last fall Brandon said the company’s mounting debt caused them to lose their competitive edge “on various fronts, including with regard to general upkeep and the condition of our stores.” In addition to the “general upkeep” Brandon mentions, if you’ve walked into a Toys “R” Us outside of the holidays, you’d understand. The massive store would appear as a moonscape, cold and nearly lifeless, save one or two employees and some barely audible music. Is that the environment that makes kids and parents think of fun?

This blog post does an excellent job of describing how Toys “R” Us could have boosted their customer experience through the roof, and honestly, it was probably within reach. “Special store events could include Nerf gun battles and dress up contests. Store representatives could excel at providing toy recommendations for particular age groups and interests (ever wondered, “What the heck do a get for my 8-year-old niece for Christmas?”).” These are the customer service based experiences consumers expect in our high-touch world. With eCommerce personalizing every customer interaction, it’s no wonder retail’s value continues to diminish.

Here’s Why Retail Will Die

As we can interpret from the examples above, traditional retail’s refusal to adapt (or perhaps retail’s lack of understanding about eCommerce) will be the industry’s ultimate downfall. One-time giants like Sears are ignoring systemic issues that directly impact in-store and over-the-phone customer experiences. Customer-minded marketing, store upkeep, and customer service — once staples of the retail experience — are being outsourced, downgraded or eliminated.

How To Bring The Magic Back

Here’s How Customer Service Will Kill Retail
In a last-ditch effort to get customer engagement, Toys “R” Us launched an AR app called “PlayChaser” to create gamified in-store experiences. There were a few issues with this, like parents who didn’t want their kids running around a massive store with their tablet — and also the fact that the company had already declared bankruptcy — but the intent was there. Toys “R” Us was ready to repent for decades of customer boredom, but it was too-little-too-late.

Retailers seeking a strong, successful revival need three things:

  1. A unified strategy that blends digital and physical experiences while thinking realistically about in-store capabilities (like employees, upkeep, and tech).
  2. A highly-tailored online experience that combines hardcore marketing tactics with artificial intelligence to boost customer retention & sales (watch video).
  3. Unrelenting customer service that makes everything easier for the customer (yes, we mean everything). Understand your customers and meet their demands.

Final Thoughts

Circuit City recently announced an ambitious plan to resurrect the company with an eCommerce focus and an impressively cool omnichannel strategy. The digital retailer relaunched February 15th and is moving forward rapidly. If Circuit City can make a comeback, maybe it’s time for other retailers to get with the program.

AI in eCommerce: Hype or Reality?

AI in eCommerce: Hype or Reality?

AI in eCommerce: Hype or Reality?

AI in eCommerce: Hype or Reality?

The whole business universe, eCommerce included, is buzzing about artificial intelligence, the capability of a machine to imitate intelligent human behavior.

Unfortunately there is no exact classification of what makes a solution an artificial intelligence solution. Any computer based system that is using data to make some decisions can be labeled as an artificial intelligence solution. Artificial intelligence means many different things for many different people.

This gives almost every software vendor a license to add an artificial intelligence ‘spin’ to the description of their product. This is counterproductive. Instead of attracting new buyers this just confuses the marketplace.

So, let us help you develop a pragmatic framework for understanding and use of AI in your eCommerce strategy.

Why AI in eCommerce?

Manufacturing, information systems and services are rapidly commoditized. The next industrial revolution is fueled by a need to deliver memorable customer experiences. It’s called the experience economy.

Remember Steve Jobs and his decision to recruit John Sculley as Apple’s CEO. People were confused about the logic of hiring Pepsi-Cola’s president who has nothing to do with technology to run the pioneering computer company. At the time only Steve had the vision and understanding that it is not about computers or cola but about the experience that customers have while using the computer or while drinking cola. That passion for memorable customer experiences is what eventually made Apple into one of the most successful companies in the history of mankind.

Delivering memorable customer experiences is a business of treating the right audiences with the right experiences at the right time.

 

Technically speaking this is a problem with many moving parts and infinite number of permutations. Each visitor to your site can be classified through use of hundreds of attributes. Buying journeys and consideration paths are different for different audiences. And, finally the business owners can act and treat visitors with a myriad of promotions, product recommendations, messages, content or layout changes.

To illustrate the size of the customer experience problem let’s compare it with a simple chess board.

Here is how. Let’s imagine that our problem is only to create the best customer experience on eight pages of your site. Let’s further assume that each page has only 8 elements, and that we have only one variation for each element. Visually this problem can be represented as 8×8 chess board where each column is a web apge with 8 elements and where each field can only have a black or white color (white is for old and black is for a new version of an element).

AI in eCommerce: Hype or Reality?

The total number of permutations of how the experience chess board can look like is equal to 264.

To help you visualize the size of this number let’s assume that each number is a kernel of wheat.

AI in eCommerce: Hype or Reality?

This number represents a huge pile of wheat. As a matter of fact this number is so big that it represents more grains of wheat than was ever farmed on our planet since the beginning of time.

This is precisely why we should use AI in eCommerce.

A problem of this magnitued can’t be solved through brute force. Conventional A/B split testing or if-this-do-that visitor personalization may sound nice but they are grossly inadequate solutions. To remain competitive you must arm yourself with much more powerful tools that are built on the foundation of big data analytics and machine learning algorithms.

Trust, but Verify

AI in eCommerce: Hype or Reality?
Product recommendation solution providers have done the most to apply advanced machine learning techniques and to deliver consistent results. But not all product recommendations are equal.

If you speak to the best of breed solution providers who invested tens of millions of dollars into research and development you will hear loud complaints about newcommers who are using open source packages to mimic their solutions. Unfortunately, many eCommerce brands are choosing a vendor on the basis of feature completeness of its offering rather than on the basis of the quality of the individual solution components.

If you listen to a vendor talk you will logically think that irrespective of the type of product recommendation solution you will get good value. The only difference between two products is how much revenue lift you will materialize. When a vendor tells you that ‘visitors who engage with recommended products are 10%-15% more likely to buy’ you are inclined to believe such a statement.

There is a small problem. The statement above could be true but at the same time you might be losing money with your product recommendation solution.

Here’s how. If you read the statement above more carefully you will realize that it does not compare results of those visitors who have seen product recommendations against those who were not presented with product recommendations. This would be the most accurate measurement. Instead, each visitor is presented with product recommendations which prevents you from knowing if the same visitors who enaged with recommended products would buy if there were no product recommendations at all.

That’s why we recommend you always test and verify the impact of each of the add-on solutions to your eCommerce site.

Start Small

AI in eCommerce: Hype or Reality?
In developing your business strategy do not view AI as a ‘silver bullet’ that will magically make your eCommerce business better. Instead, think of it as a new set of technologies that are dramatically changing the competitive landscape.

Over years the ability of your company to adapt and effectively use AI solutions will correlate with your ability to effectively compete and win in the marketplace.

The logical question is where to start and how to build a long term strategy.

We always like to be practical and recommend actions that are satisfying 20/80 rule: 20% of effort (cost) that provides 80% of benefit.

The list of such ideas includes:

  • Customer experience assessment: in addition to a quite common UX audit we also recommend use of visitor data to perform an experience health check (FYI: if you do not have resources or do not know how to do it we offer a free health check service)
  • Validate ROI of add-on applications: we see on a daily basis how brands are spending a lot of money on expasive user generated content applications, reviews, product recommendations – validate and make sure you are getting ROI from each one of them (FYI: we have advanced testing capabilites and we can assist you with this task).
  • Uncover persuadable audiences – a fatal flaw of conventional personalziation solutions is targeting of potential customers vs. persuadable audiences, those who will become a customer only if you do something for them.

 

As a final note…

Consider this perspective from innovator Adam Morris, CEO of Redstage Worldwide:

“For better or worse, humanity is witnessing ever-increasing evidence that AI provides profoundly better solutions to problems we as humans lack the cognitive processes to conceive. Over the past decade, what we consider ‘modern’ or ‘state-of-the-art’ UX for online shopping hasn’t changed all too drastically. Of course, we’ve experienced improvements in search, filtering, and personalization, but an eCommerce sitemap still looks remarkably similar to the sites of old. Since AIs lack any preconceptions regarding how things ‘should’ be done, I believe AI will work to our advantage, ushering in a fresh age of progress that we ourselves could not possibly create alone in the same scope of time.”