The ROI Revolution Blog
Channel, Competition & Customer: Takeaways from #IRCE2014
June 26, 2014
IRCE (Internet Retailer Conference & Exhibition), as you probably know, is the world's largest ecommerce event. It is one we've been attending for the past five years. This year, as I sorted through the deluge of information, thoughts, and notes post-IRCE, three common "themes" jumped out at me as important takeaways for any retailer, regardless of size.
The ecommerce landscape is changing faster every year. Staying on top of new trends and innovations in these core areas is vital. As Jeff Bezos, founder and CEO of Amazon, once said: "What we need to do is always lean into the future; when the world changes around you and when it changes against you - what used to be a tail wind is now a head wind - you have to lean into that and figure out what to do because complaining isn't a strategy."
So with that, let's lean into the head wind and delve into these three important themes from IRCE 2014.
"Seeing our customers as multichannel customers and taking a holistic approach to multichannel is driving the growth of our total business," said Mike Hogan, EVP of Gamestop, while discussing Gamestop's enormous success with a multichannel mindset. They recently integrated their online, mobile, and brick-and-mortar offerings into a rewards program that now accounts for 75% of sales at 5x the non-member profitability.
And Gamestop isn't the only one seeing this kind of success from the approach. Several other retailers also spoke on the importance of integrating online, mobile, and physical stores into one synergistic "omnichannel," and the successes they've seen from this way of operating.
For instance, luxury skin care retailer Dermologica discussed how they too used a rewards program to integrate across brick-and-mortar, social media, mobile, and online channels. Dermologica found that this creative, thorough incentive program encouraged omni-channel behavior that resulted in a 6% increase in the average number of purchases per member, not to mention an 18% increase in average engagement activities per member.
So my takeaway here is, even if your business doesn't have a physical store, it's valuable to take on the mindset that all channels and assets of your business are part of a greater strategic and synergistic whole. Brainstorm how an omni-channel approach could work for your business--it could be well worth your time. Many retailers are seeing huge success with this approach in terms of both sales and customer experience.
Time to speak the dreaded "A" word--yes, Amazon. Consumers love them, and for good reason. But for retailers who aren't Amazon, the high expectations Amazon cultivates in consumers across the board can present a pretty big problem. Everyone wants free, fast shipping now. Everyone wants a massive selection with excellent customer service. Even if you're not in the business of selling, well, "everything", you're not off the hook in the minds of most consumers.
If you haven't considered Amazon your #1 competitor up until this point, it's probably time to start. Because, as we heard many times at IRCE: Amazon is pulling in $60+ billion in revenue and growing TWICE the rate of e-commerce on the whole! That means if you want your slice of the pie, it's time to realize who and what your company is competing with. Fortunately, you're probably not in the business of trying to sell everything, so you can specialize and compete for your specialization.
In the words of Andrew Landau, co-founder of the explosively successful startup Chalkfly: "Take a market that you can serve really well, and focus everything you have on winning over the customer. Make sure your customers' experience with you is better than anyone else's in that market."
The takeaway here is that you, as company ABC Supplies, is not just competing against XYZ Supplies--you're competing with Jeff Bezos's distribution and customer service Goliath. You need to form a strategy to get consumers to put those dollars in your pocket, not Amazon's--and that strategy starts with winning over your customer with more than just the lowest market price.
Honestly, I think all of this boils down to giving your customer the best possible experience. In the words of Jeff Bezos: "Keep the competitors focused on us, while we stay focused on the customer." If you want to take back some ground from Amazon, you're going to have to start adopting the same mindset. Customer service-oriented retailers win, time and time again.
During one of IRCE's keynote addresses, Niraj Shah, CEO of Wayfair, shared many stories about Wayfair's own (very successful) tactics for improving the customer experience. But what stood out to me the most was one of Mr. Shah's very first slides. It was titled: "Following the Customer's Lead," detailing how Wayfair has listened to its customers in every stage of development to guide them to the next stage. The entire keynote focused on different ways Wayfair appealed to their customer, from an intimate understanding of who is shopping for what, when, and why, to varied content strategies to reach each consumer mindset in a way that is valuable to the customer, not just the company.
The way Wayfair really digs in and tries to know their customer is particularly excellent. Their goal is to produce individualized shopping experiences and quicker access to items their each customer likes. They use their social media presence not only to promote their brand, but also to facilitate the sharing of ideas and purchases among their customers. This in return gives them valuable insight that they not only gather but use to better the customer's experience.
It was truly amazing to see just how much effort Wayfair has put into their customer service--and the rewards they reap from that focus. Wayfair is now the largest online retailer of home products, netting $900+ million in sales in 2013! That's not an easy claim to make in a retail world dominated by Amazon, Walmart, and Target.
So I think I'll let Jeff Bezos sum up this last one: "In the old world, you devoted 30% of your time building a great service and 70% of your time shouting about it. In the new world, that inverts." The best investment you can make in your business is in happy, loyal customers.
And now I'd love to hear from you--what kind of customer service or channel strategies have worked for you? What other retailers have success stories that we could all learn from?
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