The Time Has Finally Arrived! Top Five Retail Technology Predictions for 2014

Item level RFID

Where I see the real driver of need for RFID item level tagging is with serving the demanding omni-channel requirements. How are you going to be customer focused providing great experiences with an inventory accuracy of 60 to 80%? I see many opportunities for retailers to turn well-meaning customer serving initiatives into customer satisfaction issues. You must have near 100% accuracy of your inventory if you are expecting to source from your stores for your omni-channel experience. If you say you have it in the store and I drive over to get it and you do not have it in your hand waiting for me you are toast! Even more if you offer same day delivery to combat online competition you must deliver and on time. This need for knowing real-time what you have and very specifically where it is may be one of the biggest underpinnings of being a successful retailer in this new customer-centric world. The technology is here and has been proven.

In-store tracking

The idea is that tracking in a store is no different than what happens when you are on the internet and using Google analytics. Your IP address is exposed, used and analyzed for all sorts of things that you know and don’t know about. What if a retailer could connect you and all of your personal shopping data? You could opt-in or out at your convenience. You now become a valuable customer walking around the store not a series of numbers. What if you had a trusted relationship with this retailer allowing the retailer to offer you direct promotions based on your particular wants and desires? The retailer could even begin to map your travels in their store and better understand where and what you spend your time doing. Apple and a number of other retailers are doing this very successfully using a number of different technologies.

Customer analytics

We have all talked about CRM and “big data” ad nauseam. What I believe most will agree it is not size of the data it is the quality of the data and what you do with it. What if as a customer you could also share your likes and dislikes with a trusted retailer that cooperatively helps the retailer provide the best service and offers. It is the combination of many different kinds of data, but ultimately providing relevant and valuable experiences that makes all the difference. Retailers will stop stocking the items they think customers might want and start stocking the items customers do want. This can only happen if they are armed with as much information as possible about those customers. This view of the customer can only come from merging the buying and selling processes into a single, fully integrated cycle. By collecting customer data at multiple touch points and including salespeople, demographics, and POS figures in that collection process, everything from what initially captures a customer’s attention to what prompts them to make the final transaction can be discovered if you have that trusted relationship. This technology is also ready and you will see lots of it a NRF 2014.

Mobile – personal offers

Now that you have the mechanisms to know what you have and where, stocking what customers want to buy and knowing where your customers are in your store you can unleash the customer analytics to provide the right offer at the right time and at the right place. This is where the smartphone will shine as a selling tool if done well. Many companies are now making offers on smartphones, but doing it so you make significant improvements in customer retention and basket size has been a problem. Having all these pieces will enable the retailer to finally measure their marketing investments much more precisely giving insight to making the appropriate investments. These systems are in place and we will see solid results from progressive retailers in 2014.

Replacement of the Mag Stripe

As we have seen recently at Target our credit card technology in the US is out of step with the rest of the world. We are too vulnerable to theft and I believe real actions will be taken either because of liability or force by the government. There are many different approaches out there, but this will be significantly pared down in 2014. This will be a hot one to watch!

We Need More Customer Surveys!

I am joking of course, sort of. Customer surveys do not work as they are deployed today. That is a generalization that I am sure a bunch of people will challenge, but when you are presented with an opportunity to participate in a survey what is your first response? Mine is to hit the delete key unless I had a really great or terrible experience. Even then after I answer the sixteenth question with a next button at the bottom of the screen, I bail. Does this resonate? Why are these retailers surveying me anyway? I have never seen feedback from any of them on the isolated few survey’s I have completed or any substantiated change of behavior that came from my input.

First I don't see how the data could be representative statistically of the retailer’s customer base. I received a survey today (which drove me to write this) from Overstock.com. I actually had a great online experience with Overstock and wanted to share that with them, but after fifteen to twenty questions I hit the bail button. So there will be no data for Overstock.com. I was only motivated by the great deal I got and would not normally have answered. Howto.gov - “Online survey response rates vary greatly, with a carefully targeted email survey typically getting a 10-15% response rate. Pop-up surveys response rates tend to be significantly lower”. If you do a great job with targeted email surveys you will only be lucky to get 10-15% and these will most likely be your best and worst customer responses and I assert without real value as to how you can improve? Is this useful information to take action against better yet make strategic investment decisions on?

So let’s back up for a second. Why do retailers want to do surveys? The answer is you do surveys to measure your effectiveness against the execution of a vision and strategy. So if you are on a strategic path to become a customer-centric company with a vision that all of your channels look and feel the same a customer survey may be a good measuring stick. The problem is you do not want to make it a “rat hole” for complaints without statistical and generally holistic data.

There are a number of companies out there like Qualtrics, Loop and now Urgent Insights who claim to have a system that customers will use as a quantitative mechanism for feedback. The concept is with the ubiquity of the smartphone and only having a few very precise easy to answer questions (like 1 minute or less)  with a very friendly UI, people will use this survey tool in a more objective way providing real-time feedback to retailers on how they are doing against their vision and strategy. A word of caution here, you better be prepared to handle problems quickly, provide feedback to your customers and generally show how this information is helping the customer experience.

What do you think? Can you handle another survey and on your smartphone?

Is Item Level RFID The Joke That Won't End?

I was directly involved with RFID in my early days at Microsoft in 2003. We were convinced RFID was going to take off in retail and in short order and so much so we invested in an RFID server built on BizTalk. I wonder what happened with that server?  Wal-Mart was mandating RFID tagging from their suppliers which would then make RFID ubiquitous in only a few years and life would be beautiful.  I lost track of RFID for a number of years after that simply because none of what was envisioned ever happened, at least not on the projected scale. I moved on to this concept of customer-centric retailing with the focus on clienteling and analytics. That was the next big thing, the customer! I have always believed in the concept of item level RFID, but unfortunately the ROI must not have been there or more retailers would have implemented.

Let’s take a look at where we are today. Yes item level RFID still has a pulse mostly in high valued goods and items requiring traceability, but short of that “I don't see the dogs eating the dog food”!  So why has item level RFID adoption been so slow? To quote Patrick Javick, vice president of industry engagement at GS1 US, “Many of the benefits are now quantifiable: up to 99 percent inventory accuracy, inventory labor productivity increases by 96 percent, out-of-stock reductions of as much as 50 percent, and sales increases have been documented from 2 percent to 20 percent.” In the summer of 2013 “within a span of six weeks, two of North America’s three largest mid-market department store chains made big announcements regarding the pace of their chain-wide rollouts of RFID. And the aftershocks are still being felt, both domestically and abroad.” John-Pierre Kamel, Principal at retail consultancy RFID Sherpas LLC. Aftershocks, really? I guess it is not slow after all with aftershocks and tsunami's happening all around us.. Larry Arnstein, vice president of business development for Impinj states, “it is well established that store inventory accuracy typically hovers between 60 percent and 80 percent.

Okay so for me it is starting to make sense depending on how all the quantifiable and non-quantifiable costs/benefits add up. First it appears that apparel and high fashion is the best suited retail market for this solution. American Apparel has deployed and even touted their results in their 2012 SEC filing, “..RFID (solution).. Increase sales, reduce costs and increase liquidity.. also RFID (deployments)..have allowed us to reduce our unit inventory levels..”! In 2013 American Apparel CEO, publicly stated. “June represents our 25^th consecutive month of positive store sales growth. I am excited with the 7% increase in comparable store sales in June particularly since it is on top of the 19% increase achieved in June of 2012. Others are apparently implementing item level RFID like Macy’s, Kohl’s, Lord and Taylor who have been identified in the press.

There is a case for simple math to take over and help guide this decision or is there? After you add up all the RFID costs and then subtract them from current sales (I conservatively assume flat revenue) and  projected savings in inventory  from better planning, logistics,  and store level stocking you end up with a number either positive or negative. Alright I did discount the notion of increased sales by not having out of stocks, so add that too if you like. 

Where I see the real driver of need for RFID item level tagging is with serving the demanding omni-channel requirements. How are you going to be customer focused providing great experiences with an inventory accuracy of 60 to 80%? I see many opportunities for retailers to turn well-meaning customer serving initiatives into customer satisfaction issues. You must have near 100% accuracy of your inventory if you are expecting to source from your stores for your omni-channel experience. If you say you have it in the store and I drive over to get it and you do not have it in your hand waiting for me you are toast! This need for knowing real-time what you have and very specifically where it is may be one of the biggest underpinnings of being a successful retailer in this new customer-centric world.

One more point, I know that item level RFID is a very complex discussion starting from source and through consumption. I hope to receive much dialog and feedback! This is customer-centric retailing. 

Are We Ready For Virtual Dressing Rooms?

This is yet another technology which I am seeing more and more, but I am still not clear on the appetite of the consumer to use. The concept is for you to input (manually or automatic) your detailed body measurements into one of these systems and you can then see how you will look virtually when a certain garment, style and size is mapped to your body. Wikipedia states, a fit technology may be categorized according to the problem that it resolves (size, fit or styling) or according to the technological approach. There are many different types of technological approaches, of which the most established and credible are:

- Size recommendation services

- Body scanners

- 3D solutions

- 3D customer's model

- Fitting room with real 3D simulation

- Dress-up mannequins/mix-and-match

- Photo-accurate virtual fitting room

- Augmented reality

- Real models

Wow! As you can see there are all sorts of approaches being presented to retailers as an answer to shopping online or even for in-store customer experience? Here are a few solutions you might want to check out, Fits.me, Facecake“Swivel”, TryLive and  Styku. I find this all pretty neat except what results does it drive? Based on non-verified market data, results are pretty awesome! Conversion rates by overcoming customer hesitation show an increase of 57% with reduction in garment return rates of 35%. – InternetRetailer This is huge increases in revenue and cut in costs. The reduction in returns must be more than worth the investment alone! Wait, what does it cost? “On average, data compiled from about 50 clients of retail consulting firm Kurt Salmon show that online consumers return 20% to 30% of orders of apparel and other soft goods.” -Internet Retailer

So is everyone out there jumping on the bandwagon? Is it too early to decide which technology and solution is best? How hard is it to implement and more importantly manage? Will online companies like Amazon just now getting into apparel “wipe the floor” with brick and mortar apparel retailers? Is there a play for this technology as part of the customer experience helping in fact to drive consumers to stores to try on clothing in front of these new “magic mirrors” like Bloomingdales is doing?

I have a question that puzzles me? I remember an old statement when we planned for MIS internal budgets back at IBM, “first we will measure with a micrometer and then we slice with an ax after we see what choices we are given from above” we would joke. What does this mean? Well we can enter in all of these measurements  and with tools like Microsoft’s Kinect and get it down to a micrometer, but you still only have a few buying choices like small, medium and large? Companies like Levi’s who make as many sizes and styles that you can think of might do well with this technology but for the most part it is the manufacturer of the garment that is the problem. Size medium in one style or manufacturer is different than the other. So each garment has to be cataloged and then precisely mapped to an individual's style and measurements by some algorithm.  This is where the “secret sauce” resides! If I could have garments made on demand like some men and women suits are done with a tailor, but augmented with this virtual world that would be something!

Bottom line is this is going to happen and apparel retailers you need to start figuring out which of these technologies and solutions you will use. 

Ready To Purchase New Customer-Centric Technology? Press The Pause Button!

The Yin and Yang of 21st Century Retail

The Customer Experience Answer Is Simple And Intuitive!

Have You Checked The Culture of Your Company Lately?

My Top Three Posts on Customer Think

In-Store Tracking is it the Same Thing as the Internet?

Are you missing the Art of Customer Engagement?

A Retailer's Reputation

Customer-Centric is Simple and Intuitive

The Operation was Successful, but the Patient Died!

This is a story of what should have been a fantastic retail customer experience but failed. Everything was perfect and more until the last and most important step in this sales experience with a very large auto parts retailer. I have a 12 year old Jeep Cherokee Classic that sits parked most of the time. It is our work horse carrying DIY stuff, plants, bicycles and our dog. The battery was not holding a charge and needed replacement. I went online to this auto parts store located very close to my home. No other reason. I got on their website quickly found my battery with supporting great reviews. While on the website I used their online chat to confirm they would install this battery at their store. Can you see it coming? The answer in the chat box was absolutely they would install for free and that if I bought right now online I could get an instant $50 off coupon. BAM, I will buy now please give me the coupon. The battery was $125 so my cost was $75 dollars with a 3 year guarantee.

I got the coupon number and applied to the order for pickup at my local store and quickly received an email that the battery was there awaiting my arrival. I did not go to the store the next day, but surprisingly received another email politely reminding me to come to the store for my battery. I was stoked about the experience and the follow-up!  I arrived at the store that Saturday morning with two folks behind the counter serving customers but traffic seemed light. They quickly served me and re-affirmed the battery was ready for my pickup. I said wait, "I need you to install this", my Jeep and dog are waiting in the parking lot. I could tell at that point the young man was not excited at the thought of working on my car and for free. He even joked that there was a service charge, but then saying he was just kidding. What he really meant is he expected a tip. It took at least 20 minutes with me going in and out of the store bugging this young man to get him out into the parking lot to change my battery. He did a great job in a very quick amount of time. I shook his hand and handed him a twenty dollar bill. He was all of a sudden smiling again and I was off.

After what I thought was a great experience on the web including the logistics of having my battery picked and waiting on me this retailer almost turned this transaction into another one of those stories of dissatisfaction. I was not upset because this is what I expected for service and the $50 made it worth the extra hassle. Operationally using their technology the experience was flawless but the patient (being the experience) unfortunately died in the recovery room. The human factor or that point of contact with the employee made my experience less than great and I will probably go to another auto parts retailer the next time the need arises. Do what you say you are going to do in an excellent manner! This is customer-centric retailing. What are you doing?

RocheonRetail - Top Three Blogs for September

Is Traditional Advertising Soon to Be Dead for Retailers?

Why do People Hired to Serve Customers Oftentimes Neglect Those Customers?

“Loyalty? If you want loyalty buy a dog!” Part ll

In-Store Tracking is it the Same Thing as the Internet?

I have become very intrigued about the latest technology which tracks your smart phone in a store without you knowing it. This technology captures your phones MAC address off the wireless network and then with specialized devices keeps track of that MAC address (you!). This is not just on this occasion but any occasion there after it knows it is you or at least your phone. All of this information is then consolidated and analyzed to provide very interesting information like:

•         Number of visitors per day
•          Avg. time spent per visit
•          Number new visitors
•          Number repeating visitors
•          Number of visits
•          Avg. time spent by area (zone)
•          Number of days from last visit
•          Walk by traffic vs. walk in traffic

The idea is that this tracking is no different than what happens when you are on the internet and using Google analytics. Your IP address is exposed, used and analyzed for all sorts of things that you know and don’t know about. So is your reaction to this technology that it is a good thing, a bad thing or just another version of what is already being captured about your movements? My first reaction was that this is intrusive and I should be told this tracking is happening! Really, that would mean all of these video cameras placed everywhere now including retail stores should notify me and give me a choice as to whether they can record me. I am actually only giving my MAC address without any personal information like my IP address on my computer. What if a retailer could connect you and all of your personal shopping data to this MAC address? You then become a person walking around the store not a series of numbers. What if you had a trusted relationship with this retailer and could opt in allowing the retailer to offer you direct promotions based on your particular wants and desires? The retailer could even begin to map your travels in their store and better understand where and what you spend your time doing. Is this something you would opt in to receive or do you believe it is just too creepy?

Amazon does this on the internet and is forever refining what they offer or suggest for me to purchase. They have now gone so far as to ask me to give them additional information about the what and why of the items I purchased. BTW, I really like Amazon and the value they bring me! So is this location based tracking with real-time offers in the store significantly different than what Amazon is doing today on the internet?  Is this in fact the “next turn of the crank” in technology to significantly improve the customer experience? I think these sorts of technologies ride on a slippery slope, but as I stated earlier we are all ready “pregnant”.  As long as the retailer uses your information to provide you with better product offers and services while never betraying your trust, I believe it might be just the thing to bridge the omni-channel world. Please give me your thoughts.

The Yin and Yang of 21st Century Retail

“In Chinese philosophy, the concept of yin-yang which is often called "yin and yang” is used to describe how seemingly opposite or contrary forces are interconnected and interdependent in the natural world; and, how they give rise to each other as they interrelate to one another.” Wikipedia. The “yin and yang” in retail today are the forces of technology driven to automate everything pitted against the need for the human touch and relationship. Both are much interconnected and absolutely required in this staggering logistical and operational quagmire of ecommerce married with hundreds maybe even thousands of brick and mortar stores flying the same flag.  In fact you cannot expect to succeed and grow as a retailer if you don't completely understand both of these forces and learn how to make them “give rise” by their interconnectedness.

This is where many retailers are challenged because of their conventional organizational structure trying to accomplish something unconventional. Most retail companies are siloed by how they operate organizationally. Traditionally, you have The CEO, CIO, CMO, VP of this and that all looking at their world with a lens focused on their point of view and goals. There is a lot of talk these days about the CMO becoming more of a quarterback than the traditional “advertising” role paid to promote the brand. I have even recently been seeing this new title, Chief Customer Officer.  “A chief customer officer (CCO) is the executive responsible in customer-centric companies for the total relationship with an organization’s customers. This position is relatively new addition in the CxO hallway, and was developed to provide a single vision across all methods of customer contact. The CCO is often responsible for influencing corporate activities of customer relations in the call center, sales, marketing, user interface, finance (billing), fulfillment and post-sale support. The CCO typically reports to the chief executive officer, and is potentially a member of the board of directors.”  Wikipedia. So things are in motion to evolve the traditional hierarchical organization creating a new “thread” that runs through the entire company focused on the customer experience. This is a very important step forward if you desire to be a leading brand.

This new role can provide the leadership, vision and change in culture required to bring together these potentially opposing forces of technology and humanness. Technology is so much more than it was just a few years ago where your primary goal was to reduce cost in the supply chain so you could maximize profit. That was the world of product retailing. The customer in many ways was an inanimate object that you marketed to and competed on price for growth of your business. Today in this new era of the customer, traditional organizations and business strategies built on domination through getting the lowest price does not hold much favor for long term success. You must as in Chinese philosophy learn to use the “yin and yang” of technology and humanness to work in an interconnected and complimentary fashion. This is customer-centric retailing! What are you doing?

Is Traditional Advertising Soon to Be Dead for Retailers?

“A tradition is a belief or behavior passed down within a group or society with symbolic meaning or special significance with origins in the past.” Wikipedia.  “When asked to identify how they are funding their digital marketing activities, two in five marketers said they realized savings from digital marketing compared with traditional techniques, and they are taking that money and reinvesting it into their programs. On average, 28 percent of marketers say they have reduced their traditional advertising budget to fund digital marketing activities.” Gartner, March 2013. Only 28 percent have reduced their traditional advertising spend? Does that mean the other 72% are continuing to do the same old thing? Maybe the other 72% are plowing money from traditional advertising into store operations like training, tools and increased compensation for their “top shelf” frontline employees?

 How exactly does a retailer today reach their target audience and motivate these customers to spend money with them? Is it a well thought out strategy or just doing the same thing with a few extra twists like Facebook and Twitter and hope it all works out? According to another Garter study in 2012, retailers projected spend for 2013 was 10.6% of their total revenue on marketing operations. That is a lot of money and for what? Traditional advertising is very hard to measure ROI and 10.6%? Yikes! I would like to suggest as others have astutely pointed out that the world of the customer is upon us and people want to be treated special and feel they are getting a deal of some kind. I realize many retailers are diverting traditional marketing budgets to this thing called digital marketing in their quest to keep up, but what is digital marketing anyway? Is that marketing on social networks, large video monitors in the store, email campaigns, and mobile coupons? What does that do to drive retention and spend? I think there is a balance needed with a thoughtful understanding of exactly how you win and keep customers in this dizzying world of ever advancing technology.

Let’s start with people, which would be the employees and the customers. Technology, specifically real-time information about your customers and your inventory is absolute. But are we putting too much into “digital” and not enough into the “human factor”. I also believe as others that customer service is becoming the new marketing. Spending more of the massive 10.6% on ensuring you know your customers while treating them special will create the marketing buzz much better than the Sunday paper or an email campaign.

I believe there is a movement that is growing like a tsunami towards serving and creating a great experience for the customer. You can call it omni-channel or whatever the buzzword is next week, but it is all about treating your customer special and making them feel like they just won first prize! This is customer-centric retailing. What are you doing?

Why do People Hired to Serve Customers Oftentimes Neglect Those Customers?

First there are many awesome customer service stories out there that prove delivering a great customer experience is not dead. I have my thoughts about why people providing customer service become calloused to their job of delighting the customer. The reasons are always found in the boardroom.

It is all about motivation! I believe we can all agree that money is a poor motivator however it has been proven that until you reach a base point money does effect attitude. There are raging debates currently going on about increasing the minimum wage to reach that estimated base point or somewhere at least in the neighborhood. I have seen statistics stating 89% of consumers say they will pay more for better service (RightNow Technology 2010 Customer Services Report). Does that mean getting a McDonald's hamburger too? So if your employees have that base point salary how do you then get them motivated to focus on great customer experiences? People generally do what they get measured against. Are you measuring your people on how delighted your customers are or attainment of your weekly sales goals? Do you even go farther to demonstrate through a recognition program the best employees based on customer feedback? Rewarding employees for the behavior you want to see is how a culture is created. It first starts however with leadership demonstrating by doing not just mandating the desired behavior. Remember the saying, “Do as I say not as I do”? “Lead by example” is the proven way to get your people to behave the way you want. The first place to look as leaders is in the mirror and then to ensure everyone in the company is on the same page.

Which brings me to the next point, what page are we on exactly? Having a vision and charter are absolutely necessary, but having a way to train and constantly reinforce how you deliver that vision is even more critical. Having the vision on a poster in headquarters is of no value if everyone is not bought into the passion of delivering that vision. With all the advances in today’s technology I personally believe the tools you need to hire, train and communicate with your frontline people is THE most important investment you need to be making. Having order on the web and pick up at the store capabilities do you no good if your people do not have the education and tools to make sure when that customer comes into the store all is ready.

When employees are properly led, compensated, educated and rewarded they will be motivated and passionate. They will also feel that magic of helping people and making them feel special! All of these things then begin to feed on themselves perpetuating the culture of delivering great customer experiences.

RocheonRetail - Top Three Blogs for August

There is an Elephant in the room!

Have you checked the Culture of your company lately?

Is it the Carrot or the Stick for Customer Retention?

Awesome Customer Experience at Home Depot!

It is Sunday afternoon and as usual a run to a DIY was required. I decided to go to Home Depot because it was closer than Lowe's. I went to get a refill on our propane tank for an evening barbecue, but being the compulsive person I am I decided to first walk the store to see if I could find anything interesting. Do any of you do this? I ended up purchasing a number of items including light bulbs, cleaning solutions, a double package of this citrus air freshener made from real citrus oils and my propane refill. I also encountered a number of Home Depot employees who were very engaging and going out of their way to help me. Strange I thought, most of the time I cannot find anyone and when I do they are looking at their feet as to not make eye contact with me. I wondered if this was a new mandate from headquarters focusing on customer service. 

As I got close to the checkout all of the lanes had people in them so I started to calculate which one I should go to for the fastest exit. I still needed to exchange my propane tank which was in my car. Just then a smiling woman stuck her head out from the self-checkout area and waved for me to come to her. Great but can she transact the propane exchange I thought? I asked right up front if she could do a propane exchange at self-checkout. “Of course we can” and she started scanning my items. When she scanned the double pack of citrus air freshener she seemed dumb founded and went to the center sales desk to confer with two of her associates. It seems she got a message that stated “DO NOT SELL THIS ITEM”. Sir I am sorry but we cannot sell this to you. I am sorry. I then said to the three sales associates, “you mean to tell me Home Depot will not sell this product”? I was ready to get a little upset when, Linsey (that is how she spelled it) the front checkout manager said “sir we cannot sell you this as there might be an unsafe reason for us not selling and this product could be in the process of recall”. I hope you can understand.

Here comes the amazing thing Linsey did. She asked one of the other sales associates to go back to the place I got this and get two other similar citrus air fresheners. I thought this will be interesting and what will she charge me? To my surprise Linsey gave me the two bottles of citrus air fresheners which I knew were more than double what I would have originally paid. Please take these for your inconvenience and drive your car up front so we can exchange your propane tank. Needless to say I complimented Linsey and the other two sales associates for making my Home Depot excursion awesome.

I have always used Home Depot as an example of poor customer service these past few years. When something like this happens I feel compelled to SHOUT about it. Home Depot please keep doing what you’re doing and I will always go to Home Depot for my DIY needs!

It is ALL About the Customer!

My favorite subject is the customer. I have spent many years in the retail IT business, but most of what I talk about is my observations about retail from a consumer point of view. What makes me qualified to blog and consult isn't my 30 years in retail IT; it is my passion to look beyond the hype questioning fact from speculation.

My belief is you do not need tons of supporting statistics which I also question as much as you need a realistic and common sense approach to what is going on in retail and looking pragmatically at where things can be improved. For example, I state the ability to win and retain customers is actually a very simple concept based on human behavior. Customers all want to feel special and get a great deal. Think about what great customer service is after all? Making you feel good! Feeling like you got a great deal is icing on the cake and is generally derived from thinking you have some inside track.

Things like mobile payments are now being seriously questioned as valuable. It has always been something I thought was a solution looking for a problem. What problem are mobile payments solving? In many ways I like the fact that I have this plastic card with a mag stripe (now with my picture on it). I think that it works great, holding and controlling this piece of plastic works well for me especially since I am able to do debit and credit. What would I benefit from having a phone with NFC (near field communication) I could wave over a device instead of swiping a card? It seems to do the same thing except by using my phone you now take away my plastic card. I am sure this can be hotly debated but that is how I see it. Price checking in a store maybe a good idea with all the talk of show rooming, but I believe most people do their research online first if they are after a particular product solution. I know I rely on those reviews and ratings on the internet and that has worked very well for me. Is show rooming really the problem or is it the lack of service you get typically in a store that makes the perceived extra cost of buying not worth it? I do my price checking on the web at home! RFID for retail has been another great way retailers were going to solve the shrinkage (theft) problem and also improve the management of their inventory while at the same time removing out of stock situations. I am still waiting. Some retailers are using RFID for clothing, but I am not sure there is a mass run by the apparel industry to put RFID tags on all garments coming from manufacturing.

There are many more examples of these creative solutions trying to find a problem. This is not wrong or right and actually is a very good thing. In the final analysis the market will sort this out with their wallets. It has always been that way and always will. It is looking at this innovation and really thinking about how it solves or enhances how a customer feels special and thinks they just got in on a great deal is what is important. Will mobile payments on the phone do that? There are in fact many solutions out there that will help to significantly improve that customer feeling. Believe it or not, cloud based technology that provides solutions for hiring great people, training those people and even giving them tools to cooperatively schedule their time on a mobile phone are great examples of innovations that work. You see your people are still your greatest asset!

Is it the Carrot or the Stick for Customer Retention?

I love to hate airlines. I feel like an indentured servant always working off my rewards and benefits. Airlines are all the same to me and I have clawed my way to gold or platinum on every one of the major airlines over the last twenty five years. I know people that rather than taking a direct flight with a non-affiliated airline for one hour, will take four hours with a connection just to get the points from “their” airline. I believe airlines tend to stay away from the word loyalty and use ambiguous names like Medallion or Advantage. I don’t feel like I am being rewarded because I flew with their airline. I feel like I had to pay penance to get the service everyone should get, or should they? I guess everyone cannot get on the plane at the same time?

Retailers generally do not have the luxury of treating their customers badly and then making them earn the right for good service by the spending of more money. Do you think they would if they could? Fortunately retailers must earn your retention by doing the many things that make you feel special and have you believe you got a deal. Retailers pretty much have to use the carrot and not the stick as in the case of the airlines to grow their business. Even though Amazon or Wal-Mart are huge,they know they can be displaced tomorrow by some new comer or competitor. This is healthy and important. No matter how much we believe a retailer has a hold on us, there are always multiple choices. In the case of airlines you do not have that many choices and those choices are getting less. Think about the upcoming American and US Airways merger?
Will that make services better and prices go down?  Because of this carrot or stick approach which is created by the economic theory of scarcity, we can look forward to a future of ever increasing better experiences in our daily shopping.

There is a clear financial motivation for a retailer to provide you with great service! The great services come in many flavors and are the primary differentiators of their business. This is why the omni-channel, mobile, customer-centric initiatives are so critical to a retailers future. Besides having highly trained and passionate employees (all employees not just sales associates) technology can also be used to remove much of the friction in the sales process. Why is it important that I can find a product on your website and find out if my local store has it in stock? Because if you don’t your competitor will! There are numerous examples like this that a few years ago were rare, but now are expected. These new expectations will continue to grow and it will be great for the consumer.

Now comes the hard part. As a retailer how do you do all of this exciting stuff and still make a profit? No simple answer here and the answer is some retailers will fail. This is the cycle! As a retailer you must go back to your core and first make sure you have a solid foundation with your leadership, vision and culture along with your products and services. This is a continual re-examination which requires commitment. The foundational part of your retail business which is dependent on the carrot and not the stick is what you build all of this technological innovation on not the technology itself.

Lastly seek outside help with technology. You are not in the business of creating technology solutions and if you are you should look hard as to why.   Amazon and Wal-Mart might be able to pull it off, but certainly not a mid-market retailer. Your leadership team must have an objective perspective and proven advice when considering the purchase of technology to advance your retail business. You cannot do it alone!