Industry
Retail
Omnichannel CX and Intelligent Innovation – The Future of Retail
Highlights
- Tracking and measuring digital influence on store sales is one of the major focus areas for global retailers looking to enhance customer experience across channels and provide hyper-personalized offerings.
- In doing that, the primary challenge that retailers face is to integrate individual online and offline customer interactions across channels for a unified, consolidated view of customer journeys.
- An integrated framework built on a data analytics application will help retailers analyze digital influence on store sales.
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Digital influence on in-store sales
Understanding the influence of digital channels on in-store sales is critical for omnichannel retailers to sync business processes with buying patterns.
Research online, purchase offline (ROPO) is fairly common today, especially for the high-value electronics, fashion and beauty, sports, and home improvement categories. Retailers must channel future digital investments to tap the huge potential of such retail sales at stores that are influenced by customers’ online behavior. This will underscore the need for cross-channel retail and provide a seamless omnichannel experience throughout the customer lifecycle.
Today’s consumers want to get the best of both the online and offline retail setups and are changing their buying behavior accordingly. The influence of digital channels on store sales is relatively higher in case of electronic items because these products are increasingly sold online with attractive offers or as online-only products. Categories with high physical product immediacy, such as groceries, footwear, makeup, and fragrance, are less influenced by online behavior.
Consumers, influenced by social media and digital advertising, research online and compare product prices and features before making a purchase decision. However, they refrain from using e-commerce websites for purchases due to numerous factors, including the fear of transactions failing, lack of trust in sharing personal information, and concerns about product quality. Additionally, consumers may lack confidence in the services provided by online stores and have insufficient product information. The familiarity and convenience offered by traditional shopping may also discourage them from making online purchases.
Track connected shoppers
Online and offline retail worlds meet to provide true omnichannel customer experience.
Omnichannel retailers are trying to provide the best of their services, more personalized offerings, and seamless customer experience between online platforms and physical stores. The final buying decision depends on product categories, price, quality, availability, feedback, and other factors. However, irrespective of where the purchase happens, the digital world has a key role in influencing that decision.
Retailers must have end-to-end visibility of the customer journey to drive overall sales and get all online and offline teams together to grow holistically. They must recognize the influence that digital channels have on purchasing decisions across the customer lifecycle and keep consumers within their own ecosystem. The brand’s objective is to understand consumer behavior completely in terms of interactions between online and offline stores. Online marketing efforts should not be limited only to generating revenue from online orders; they should also impact offline sales. Hence, it is particularly important to identify online visitors and track them in stores or vice versa, as illustrated in Figure 1.
Figure 1: Categorization of online and store customers
For a seamless omnichannel service experience, retailers must establish a well-designed tracking system to identify digitally influenced shoppers. Measure the influence in both online and store channels and report insights to the CXOs as well as marketing, digital, and product heads. The success of the omnichannel business model depends on the implementation of an effective integrated customer data ecosystem to accurately predict purchase behavior.
This will also enable retailers to lift conversion rates, create upselling and cross-selling opportunities, improve loyalty programs, and offer personalized promotions and attention along all digital touchpoints to customers who have made in-store purchases.
Gaining a complete view isn’t as easy
Most retailers lack an enterprise-wide customer data platform or an enhanced customer 360-degree view.
This makes it hard for them to synchronize online visitor traffic data with that from physical channels to obtain a consolidated view.
In case of anonymous customers, typical enterprise resource planning (ERP) platforms or order management systems (OMS) have limited scope of integrating orders from multiple channels with the customer relationship management (CRM) system or golden customer data through a customer data platform (CDP).
Although the priority for large omnichannel retailers is to build an effective marketing analytics system across all sales channels, they are struggling to interconnect data stored in various sources and formats. Integration of fragmented data is the real challenge, and there is a need for a single repository that can source all necessary data for analysis, measuring, and reporting. It is a challenge to identify anonymous web visitors and link them with a known customer base.
Another key technical hurdle for retailers is data storage, both in terms of granularity and traffic history. Third-party data providers and web analytics tools collect data from websites or digital advertising services and provide analytical insights. That means, retailers are always in a dilemma over determining the appropriate amount of data to use for tracking. Additionally, they evaluate the digital impact either using software as a service (SaaS) cloud storage or by storing data in their own data centers.
A conceptual view of a measuring framework
An integrated analysis framework can provide a single-pane view of digital influence across sales channels and product categories.
We propose a framework (as shown in Figure 2) that not only considers web or mobile browsing-based user behavior data from web analytics tools, but also the influence through a digital advertising service clickstream captured by third-party tools. This involves the creation of a single repository for point of sale (PoS) data and core customer attributes such as name, login, contact, occupation, and so on, along with details of their digital interactions. Such a system will help retailers in matching, tracking, and reporting data to enhance customer omnipresence.
Retailers can make use of public cloud infrastructure with modern digital technologies, including microservices and application programming interfaces (APIs), low latency in-memory or graph database, batch-based customer matching algorithm, and a reporting or dashboarding tool to support flexibility.
Figure 2: A framework for measuring digital influence across sales channels and product categories
The system should comprise a data integration hub that uses third-party API integration to ingest data from web analytics tools and other internal source systems and convert it into a canonical data structure. A canonical data structure is characterized by a set of attributes such as device ID, source or medium, site taxonomy, geography, user ID, campaign hierarchy, shopping funnel, purchase funnel, page views, and session duration. These attributes are used to measure the online behavior of anonymous customers.
The customer-matching layer can track details such as user ID, IP address, contact number for membership or loyalty ID, and email for physical transactions and identify the customer journey across digital and store interactions. To identify a customer, the customer login device ID and IP address can be tracked in a database and frequently checked for login and browsing activity. For unidentified visitors, a separate many-to-many reference data with device ID or IP address can be maintained. This can be used to match regularly with identified visitors when a customer logs in through the same device. The customer matching output could be retrofitted to the customer data platform or CRM systems and enriched for future reference.
Predetermined business rules for customer tracking such as matching frequency and attributes can be used to store historical data for further reporting and advance analytics. To measure digitally influenced sales and reporting, enterprises should implement a front-end portal with data visualization tools accessible through smartphones and tablets. This well-designed architecture will also enable retailers to effectively manage granular-level data in mini batches for faster, efficient, and cost-effective processing.
The digital influence factor is calculated using statistical methodology as a percentage of digitally influenced conversions. The amount of traffic to a product on a website is statistically correlated with in-store sales of that product. The correlation depends on the store type and sales for each stock keeping unit (SKU). The digital influence factor is aggregated as a weighted average by percentage of total sales per SKU and store type.
There are a few other techniques retailers have adopted to measure the ROPO metrics on a product at each store. These include customer surveys, GPS tracking, and soft conversion through product page link to store availability. However, the application linking online and offline data through customer information such as email, login, or contact number is extremely valuable and effective in measuring digital influence. It is also useful in connecting website sales and advertising clicks with Google Ads and Facebook or Google profiles to generate insights into each step of the customer journey.
Connected customer tracking will be a game-changer
Measuring the impact of digital influence on online and store sales offers a new approach to knowing your customer.
The shift in the buying behavior of consumers is not only challenging retailers to innovate and be competitive, but also strive for new growth opportunities. Retailers are trying to integrate individual online and offline customer interactions and are not just relying on statistical analysis to measure digital influence on store sales. While there are many challenges in tracking customer data and measuring the impact on sales, the right architecture and well-thought-out applications can help retailers stay ahead.
A connected customer tracking system across channels with complete visibility of the customer journey can be a game changer for retailers. Leveraging modern architecture with digital technologies in a public cloud environment will be key for tracking, measuring, and reporting digital influence in phygital sales at high speed with scale.
