5 Tips for a Successful Digital Transformation
Two of the hottest buzzwords du jour are “digital transformation.” A search on RIS News’ website yields a superabundance of articles pointing to big-name retailers such as Walgreens, 7-Eleven, Best Buy and Lunds & Byerlys, detailing their digital transformations.
However, looking at the entire retail landscape paints a different picture. The 2018 RIS/Gartner Retail Technology Study, for instance, found that only 38% of retailers are either delivering, scaling or harvesting benefits from their digital transformation plan. The majority (61%) either have no strategy in place (13%), only have a desire to transform their business (12%), or they’re just in the early stages of designing a strategy (36%).
If you’re a retail IT leader or business executive who’s among the 61% of retailers that have yet to implement a digital transformation strategy, you’ve come to the right place. Here are five tips that will help you hone in on the essential prerequisites and technologies that are part of every retailer's digital transformation.
1. Enable Two-Way Online Customer Communication
For retailers that sell primarily through the brick-and-mortar channel, it may be tempting to treat your corporate website and social media sites as afterthoughts. You also may not pay much attention to third-party review sites like Yelp. This is a big mistake because often prospects’ first impression of your business begins with an online search. An outdated website suggests your products and services are outdated, too. Equally important is the opportunity to engage customers online. Savvy companies use reviews—even negative feedback—to their advantage.
For example, while researching a Bose Bluetooth speaker online recently, I came across a two-star review (out of five) submitted by “MrSteve,” which illustrates my point. The nearly 400-word write-up spends about 40 words noting a few positive points about the speakers, followed by a lengthy and detailed criticism of the shortcomings of Bose's app. So, what's so good about this two-star review (which Bose also lists as the "Most Helpful Critical Review")? It's the way the company responds, thanking the customer for taking the time to write the review, empathizing with the customer’s concerns and offering a solution. It shows they’re listening, they care, and they want to make things right. I was only half-interested in the product before I read the review, now I'm very interested. And, I'll bet that when I'm ready to buy the product down the road, they will have made significant improvements to their app.
2. Use AI to Take the Guesswork Out of Customer Preferences
Most retailers have loyalty programs that reward customers based on the number of visits to the store or their purchase volumes, but these programs typically provide the retailer with little information about the customer, and they rarely reveal what’s driving the customer’s decisions.
Artificial intelligence (AI) and deep learning are needed to provide retailers a means of individualizing each customer interaction at a scale unattainable by traditional loyalty programs and rules-based solutions. Without these technologies, the dream of one-to-one marketing isn’t feasible. By leveraging an AI and deep learning-driven platform and technology architecture, merchants can process a vast amount of customer, behavioral and product data, respond in real time with the most relevant content or products, and understand the business impact of each new experience created.
The Amazon shopping experience offers several examples of AI in action. Recalling the Bose Bluetooth speaker mentioned earlier, after viewing the product on Amazon’s website, the page also presents a “frequently bought together” option. The AI-generated display includes a revolving charging cradle and carrying case with a yellow button labeled, “Add all three to Cart,” making the $45 upsell even easier.
3. Adopt a Mobile-First Strategy
If there's one thing the majority of your customers have in common, it’s a smartphone addiction. Consider this: There are more than 224 million smartphone users in the U.S., and the average user touches their phone 2,600 times a day, according to research from Dscout. These devices offer a wide range of opportunities to engage with (and capture information from) customers, yet only 20% of retailers report having up-to-date mobile POS technology in place, according to RIS’ 2017 Customer Engagement Tech Trends Study.
Not only do mobile solutions come into play with customer-facing engagements such as mobile payment, self-checkout, and personalized messaging, they also play a critical role in employee-empowering services, such as meeting with customers in the merchandise area and looking up inventory and other valuable information as well as completing sales transactions. Mobile devices also play a vital role in the IoT trend, enabling users to monitor and control internet-connected devices such as locks, lights, thermostats, and other “things” from the convenience of their phones.
If there’s one thing that puts a damper on a mobile initiative, it’s when you inadvertently alienate part of your customer base. If you're going to launch a mobile payment app, for instance, don't make it for iPhone users only or just for Android users. Make sure all your customers are invited to the party. Even with your customer-facing mobile apps, try to avoid platforms that restrict your choice of devices whenever possible.
4. Make Sure You Have Adequate Bandwidth
Offering your customers free Wi-Fi while they're in your store is a great way to create a positive experience and capture invaluable data. However, if several customers are simultaneously using your Wi-Fi network to stream videos or download large files, it can quickly create a performance bottleneck that brings the network to a crawl. Avoid this problem by ensuring you’re using an enterprise-grade wireless router (e.g., Meraki, Ruckus, Ubiquity) that’s designed to accommodate dozens of simultaneous users and securely separate the guest and production environments. Additionally, check with your ISP or IT solution provider to ensure you have adequate bandwidth to allocate for your guest network.
5. Don’t Gamble with Business Continuity
Despite the fact that it's possible to segment your network virtually as described earlier, there are good reasons to consider having two separate networks. Security is one reason merchants choose this option and business continuity is another. This is especially important if you're store is an area that’s far away from the service provider station (e.g., a rural area), or you’re more prone to internet outages due to inclement weather. Having a backup network, such as a cellular 4G router, that automatically kicks in if your primary connection fails, will keep credit and debit transactions running smoothly and will help keep your customers happy.
Retail is a highly competitive space, and we’ve seen our share of casualties in recent years, even during periods where the economy as a whole is trending upwards. Last year, for example, nearly 3 out of 10 retailers (28%) either lost revenue or experienced no growth despite the overall retail market experiencing 4.2% growth, according to the RIS/Gartner study mentioned earlier. What these studies also show is that the retailers that are seeing the most significant gains are the ones that are making the customer experience a top priority and have accepted that making a digital transformation isn't just a fuzzy idea to get to "someday," it's a reality that must happen right now.
-Luis Artiz, group product manager at Epson America