I recently did an online retail course and one of the first things that our teacher Ian Jindal said was: “forget thinking about retail in terms of the classic ‘awareness to conversion’ funnel, consumers don’t think that way!”. He went on to explain that consumers nowadays come to a purchasing decision through a multitude of – online and offline – channels, and that they might well skip any customer journeys or experiences carefully designed by a brand or retailer.
As Agile Architect Jason Bloomberg explained in a recent Forbes article: “Omni-channel represents more than simply adding mobile and social media to the mix. It heralds an interconnectedness among touchpoints that from the perspective of the consumer, blurs the distinction among channels.”
It means that even if the traditional sales funnel with its classic four stages – awareness, consideration, intent and decision – still exists, its inputs are likely to come from a variety of online and offline sources. These sources are typically hard for marketeers to fully control or influence. I like how back in 2009, McKinsey described how consumers are shifting from a funnel to narrowing down their purchase options through more of a ‘loop’ (see Fig. 1 below).
These are some of the things that I learned about how to best cater for the changed ways in which consumers make purchasing decisions:
- Zero Moment of Truth – Google’s so-called Zero Moment of Truth is all about people making purchasing decisions at the “Zero Moment”; the precise moment when they have a need, intent or question they want answered online. These questions can be as diverse as “Which family car has got the most boot space” or “Which jeans do make my bottom look small?”. The point for brands is to be able to answer these questions at the right time and for the right customer and to be at the consumer’s front of mind when she looks for answers.
- Deliver on your promises – In our course, the instructor Ian Jindal stressed the importance of brands delivering on their promises to the consumer. For example, if a retailer promises to deliver within a certain time period, it can’t afford to fall short on this promise. Companies like Amazon and Ocado are all about delivery, so they have to make sure thy get this capability absolutely spot on. A recent MCA report mentions the growing need for omni-channel retailers to increase the number of choices of service offerings available to customers. This inevitably increases operational complexity, which means that back-end systems need to be deliver on the promises made at the ‘front-end’.
- The importance of in-store – Don’t think that because there’s mobile and online consumers have stopped caring about stores and their in-store experiences. People are likely to check online first before buying in store and vice versa. It seems that particularly for product categories such as furniture and fashion, bricks and mortar stores still have a significant role to play. A recent AT Kearney study among 3,200 UK and US consumers shows that about 40% of their shopping time is spent online and on mobile, leaving about 60% of shopping time spent in-store. It’s things like iBeacons, QR codes and in-store scanning that help retailers in linking the different channels that consumers interact with. A great example is John Lewis StyleMe, an in-store virtual mirror that lets consumers try on clothes from its online catalogue without people having to undress.
In tandem with having the aforementioned basic elements in place, it’s important to have a clear proposition and to implement this proposition consistently across all your channels. In the course, Ian Jindal talked about the following three perspectives to selling, and which impact on the content and execution of one’s proposition:
- Customer segment – Your proposition can be all about your customer; demonstrating customer needs, what makes them tick (and why), etc. A good example is House of Fraser who state that impact on customer satisfaction is a key driver for their development roadmap.
- Product or service – You offer an excellent product or service, delivering the value for money that your (target) customers are looking for. For example, Aldi – who historically focused more on on price than product – has been growing its product assortment over the last few years to meet its customer needs.
- Operational capability – Your proposition is all about your operational excellence. A good example of this are Amazon who clearly don’t have the most beautifully designed product pages but rely for a large part on their great service and delivery times.
I guess these are the main two things that I learned about having a retail proposition:
- Your proposition is always there – A proposition is something which, as a retailer, you don’t shout about all the time but which should underpin everything you do. As Ian Jindal put it: “proposition isn’t something you market, it’s something that you hear behind your back”. He mentioned Pret A Manger as a good example of a company that has a clear proposition and which is reflected in a lot of the things that it does, both in-store and in its communications (see Fig. 2 below).
- Build your proposition on at least 2 out of 3 elements – To build a successful and sustainable retail business you need to have at least two of the these three elements in place: customer segment, product or service and operational capability. John Lewis are a good example, with their focus on both product and operational capability (see Fig. 3 below).
Main learning point: Irrespective of the different channels that are relevant to a retailer and its customers; there are a number of key elements that need to be in place regardless. I believe that there are three key lenses which are applicable: customer segmentation, product or service and operational capability. It was important for me to learn how these lenses impact the retail proposition and how retailers position themselves. The next thing for me to learn about are the key metrics that play a role in retailers’ omni-channel approach to selling.
Fig. 1 – A graphic outline of “The consumer decision journey” by McKinsey & Company – Taken from: http://www.mckinsey.com/insights/marketing_sales/the_consumer_decision_journey
Fig. 2 – Example of Pret A Manger’s freshness proposition – Taken from: http://blog.kj.com/slow-fast-food/
Fig. 3 – Examples of Waitrose’s values with respect to product and operational capability
- Product safety
- Product provenance and integrity
- Sustainable products
- Local, regional and british sourcing
Related links for further learning: