To Survive the Digital Age, Retailers Must Watch These Three KPIs
Over the last five years ecommerce has been taking big bites out of the brick-and-mortar market, and the gap is more apparent this year than ever. Amazon—the biggest store in the world—recorded an e-commerce revenue of $82.7 billion. Walmart is Amazon’s nearest competitor in the ecommerce field, but its online earnings were a comparatively paltry $12.5 billion.
Retailers aren’t finding a whole lot of success when they foray into the ecommerce world—and their physical locations are losing money. Starting with the disappointing 2015 holiday season, traditional retailers have seen their revenue drop almost across the board. In order to defend their place in the market and keep pace with online-only sellers, retailers must closely examine these three indicators and react accordingly.
Does Your Advertising Work in the Digital Age?
Collectively, retail companies will spend $15.09 billion on digital advertising in the year 2016. A certain—large—percentage of this money will be wasted. A customer will see an online ad, and not only will they fail to go to a store and buy something, the ad will be completely inappropriate for their age, gender, and demographic.
How can retailers minimize ad wastage? It is incumbent upon retailers to create attribution models that can determine which marketing channels are responsible for what amount of income.
Who’s Buying What Things?
“Customer journey,” is a term that Customer Experience firms use a great deal. Making sure that customers can navigate a website, enjoy an experience catered to their preferences, and complete their orders without any issues is a huge deal for ecommerce companies. Retailers who operate both ecommerce sites and physical locations have a two-fold customer journey challenge.
How can you figure out why a customer visited either an ecommerce site or a physical store? Was it because of an online ad, or the email with a 40% off coupon? Did they see a commercial on television, or a circular tucked inside their newspaper? Here’s a clue—over 50% of US customers visit an app or website before making a purchase in-store. 31% of UK shoppers did the same. According to data from the Centre for Retail Search, online sales in the United Kingdom accounted for 10.7% of total retail sales in 2014. According to data from the Ecommerce Foundation, ecommerce in the UK was worth 157 billion euros in 2015.
Are Those Things in Stock?
Inventory control is more of an art than a science. Retailers often stock items whose popularity waxes and wanes due to unpredictable tides. Here’s an example of one reason why retailers had a less-than excellent holiday season: El Niño. Warmer winter temperatures meant that stores overstocked coats and boots, which subsequently failed to sell.
Understock goes hand-in-glove with overstock—too much of one thing usually means too little of something else. Both problems amount to lost sales and lost money, so this is a hugely important KPI to keep track of for retailers.
Using a CXA Solution for Much Greater Success
Customer Experience Analytics (CXA) delivers the revenue you have already earned by bringing customers to your site that have the intention of purchasing, but have a suboptimal customer experience and abandon the purchasing process. A CXA solution can uncover the segments of your customers who fail to convert and can then quantify and monetize these segments, and prioritize them for optimization.
CXA can be used to assist retailers who are trying to drive traffic to a brick and mortar stores. For example, many customers are driven out of the sales process when they see an “out-of-stock” message. If they’re trying to find an item in a particular physical store, this can cause them to cancel their visit. UserReplay’s Customer Experience Analytics solutions can flag this kind of interaction in order to help stores understand how to re-engage customers after one of these events. UserReplay is helping to manage customer engagement for The Container Store to ensure that no issues are encountered when consumers attempt to claim their loyalty rewards.
For more on how UserReplay can help retailers looking to defend their share of the market, get a live demo today.
John Thompson, CEO, UserReplay