Macys Wants To Blow Up The Silos and Bring Ecommerce In-store

I was surprised to come across a quote from Terry Lundgren, CEO at Macy’s (source: pymnts.com) -

“It’s clear to me that the consumer likes shopping online,” Lundgren said to Reuters. “I am focused on how do we make them feel as comfortable and ready to buy in our stores as they do online?”

He goes on to describe the need for a broad array of other tools that essentially merge traditional notions of in-store with ecommerce:

1. In-store, web-connected kiosks that pull up customer reviews and accept payment
2. an electronic, automatic sales system that offers recommendations; 
3. and an “Endless Aisle” that uses tablet technology to bring the diversity of products available online to the physical storefront

In other words, what Macy’s is doing is rethinking how its customers buy (and how its sales teams sell) and applying new technology to reinvent the entire experience.  

Sounds like a Customer Engagement Strategy at work … and should help them participate in the continued growth in ecommerce sales across the hundreds of categories they carry.

Just in case you were wondering, Macy’s saw its e-commerce business grow 40 percent in 2011 and it expects to reach $2 billion (seven percent of its total) this year.

Every CMO and CIO Should Worry About Content Abstraction

We’re all familiar with the fact that we’re in a period of proliferation of devices and methods for accessing content. If you thought of things from a market share perspective, there are two really important things going on. 

First, the total consumption of web-based content and functionality in total has increased dramatically.  You can’t go about your daily affairs and not see someone with their nose stuck into an app or perusing a mobile version of a site. 

Second, the desktop PC’s share of total web-based content and functionality has declined precipitously as mobile, tablet, and other form factor content and functionality have proliferated. 

So, what does this mean for CMO’s and CIO’s?

It means that it’s more important than ever to think about brand content in a different way. You can’t be certain that one system is going to be able to manage or deliver content to many devices. 

If you’ve made a bet on a particular platform for your content - and you don’t have absolute control and a great deal of flexibility when it comes to re-purposing or driving the content - then you’ve made a bad bet. 

Keep in mind that the iPad was launched in April of 2010. 

Have you wondered why so many of the top ecommerce retailers still to this day DO NOT have a tablet-friendly site?  Their site links are too small, too close together, you can’t swipe images, can’t pinch to zoom, and really just can’t do anything that you want to do on a tablet?

It’s because their content is locked up - and NOT abstracted in a form where it’s easy to change / adjust based on the targeted device or user.  In most cases, ecommerce retailers have adopted the content management tools that are tied into their ecommerce system.

Along comes a new device or new need and those systems are now obsolete. CMO’s and CIO’s are now stuck waiting for the development cycle of their third party ecommerce provider - Oracle, IBM, Demandware and on and on.  

Put simply, these big ecommerce platforms won’t ever be able to evolve fast enough. Were they ready for the millions of Kindle Fires that fired up on Christmas Day last year? Nope.

If you want to win in the marketplace and serve your customers and consumers, you can’t afford to wait around for your platform partner to update their content management system - certainly not the 2+ years that so many have waited to catch up with the iPad. 

It’s for this reason that CMO’s and CIO’s need to take control of their brand content - wherever it might be - if they want to be able to adjust to marketplace changes and adapt to new devices and new technological capabilities. 

How long will it be until there is a life-sized tablet at retail that can be used to shop a collection of items that go far beyond what’s normally in the store? Chief Marketers and Chief Information Officers need to be thinking about how to take greater control over the content that they’ll need to continue to populate tablet devices as they show up absolutely everywhere.

Step Out From Behind the Dummy - Brands Should Go Direct to Consumer

Today, when I walk into my grocery store, I already know what I’m going to buy. Funny how no one - least of all the grocery store itself - has ever figured out how to put that information to use while I’m shopping. Today, however, the power is there for CPG (consumer packaged goods) companies to engage me directly - at the very moment I’m in the store.

These consumer brands have to wake up and realize that they have the tools to finally step out from behind what can be brain dead retailing intermediators. If a company like Coke or Kraft or P&G had its act together, it would leverage the levers of the marketing mix to get me to enable an auto-loading app (triggered by a geo-fence) on my phone when I walk into the same store I’ve been visiting for over 10 years.

Yes, you read that correctly. I have been shopping for the same things for 10 years at the same grocery store. I’m still an absolute stranger every time I walk in the door. It’s really remarkable.

Once this hypothetical app is enabled, it could deliver any kind of messaging to me - from highly targeted recipes to individualized offers to introducing new products or even delivering advertising. Have you been to a grocery store lately? Next time you’re there, look up from your phone and you’ll see that everyone else is … also on the phone!

Brands need to rethink their marketing strategies around customer engagement - how people actually buy stuff in stores where they really do their shopping - instead of swinging for the creative fences or trying to buy social media friends.

I do wonder how long they will continue their same old investments, instead of taking the time to map the way things are - and then creating a roadmap of all search, social, ecommerce, location, and analytics driven investments - in a way that sets them apart, delivers on brand benefits, and most important of all, drives sales. Until then, it’s all just throwing stuff at the wall.

Customer Engagement Lab - Ready To Get Started?

Given the dramatic changes in technology, every retailer needs to know the answer to one simple question.

Now that it’s possible to reach consumers while they’re in the store, how do I figure out what I should communicate or deliver? 

Of course, the knee-jerk reaction will be the terrible idea of serving up the same old spam in this new channel, essentially delivering the electronic equivalent of your weekly circular. Oh, please resist the tempation, because it will no doubt result in the same reaction you’re getting now. Yawns. 

Now that every consumer who walks into your store is armed with a smartphone that has more computing power than the systems that put a man on the moon, it might be time to rethink how stuff works.  

It’s time to experiment. There’s really no other way to address your knowledge gap around what you should say or deliver in store to improve your conversion numbers. Quick, someone’s walked into your store. What’s the one thing you should say or deliver that will have the highest likelihood of improving conversion and of generating a higher customer lifetime value.

I’m confident that not one retailer on the face of the earth can answer this question with any degree of certainty. You’re not behind but you should realize that the game’s afoot and you have an opportunity to gain the upper hand on both Amazon and your other competitors. 

If you want to get smarter, and figure out what you should be communicating to in-store visitors to drive sales, press pause on the next “do nothing” campaign.  Say no to more churn and burn. Stop thinking …  and start knowing. 

Invest in getting smarter about what works.  If you really want to make your numbers this year - plunk down some funds to learn how to drive your business.  

It’s called the scientific method (from EMM-TNSOM):

1. Observe some aspect of the universe—that is, your market. For example: The average age of the population is increasing.
2. Invent a theory that is consistent with what you have observed. The average age of my buyer is increasing.
3. Use the theory to make predictions. Older buyers are more health oriented and would respond to marketing programs and products that address health concerns.
4. Test those predictions by experiments—in this case, marketing programs—or further observations. Launch health-oriented products and marketing programs.
5. Modify the theory in the light of your results. Get results and learn!
6. Go to step 3, and repeat until you’ve mastered this ability to repeat successful experiments to achieve your desired results.

We’re kicking off a customer engagement research effort to generate just this kind of feedback. If you’re interested to learn more and potentially participate, don’t be shy. Give me a call. 

Time To Reengineer The Retail Experience

I was lucky enough to work in the early nineties for the strategy consulting firm that was run by Jim Champy and Mike Hammer, the co-authors of Reengineering the Corporation. As you might imagine, I had the chance to work on several reengineering projects.

The premise of reengineering?

Reengineering essentially means to disregard all the assumptions and traditions of the way business has always been done, and instead develop a new, process-centered business organization that achieves a dramatic leap forward in performance.

It means start over.

What’s important for making reengineering possible is an improvement in technology. At that time, the early 90’s, most of what was getting reengineered were back of the house functions.

The consumer facing retail experience didn’t really change at all, despite this huge wave of adoption of new technologies, namely the emergence of ERP systems. 

The reengineering revolution never came to retail, as evidenced by the fact that retailers don’t really have any idea what happens between the front door and the checkout. 

That’s all about to change, thanks to the arrival of social, mobile, and local technologies.

Retailers should avoid just grafting mobile technologies onto their existing processes or onto the existing shopping experience (we would call this the equivalent of paving the cowpaths) and invest the time in transforming retail with these new tools and capabilities.  

It will be these companies and brands that take the time to reengineer that will wring the real benefits out of the technologies and create the, pardon me, change that we’ve all been waiting for. 

Why A Customer Engagement System? To Manage The Brand Experience

The modern chief marketer, whether for a retailer or a consumer product, has a big job. Namely, to be both responsible and accountable for the entirety of the brand experience.

While nearly everyone in the company may interact with customers in some way, and in so doing shares some degree of responsibility, it’s really only the chief marketer (and, when not there, the CEO), who can be accountable for the entirety of the brand experience. 

So, what’s a brand experience?

Let me back up and give you a particularly salient overview from my book (Enterprise Marketing Management - Wiley:2003):

The brand experience is simply a way to describe the sum of a customer’s interactions with a brand.

If a brand is the bundle of functional and emotional benefits, attributes, icons, and symbols that, in total, constitutes the meaning of a product or service, then the brand experience is the name for a customer’s complete experience with the brand. The term brand implies a perspective from the company outward (inside out). The term brand experience implies a perspective from the customer to every interaction with the company (outside in).

I want to draw your attention to that last line because it’s really what’s important.

A brand experience implies a perspective from the customer to the company - an out-side in perspective.

Ten years ago, when I wrote this, social media didn’t really exist - though its promise was clear. Today, with social media replacing both traditional and earned media, it’s within the grasp of marketers and brand owners to actually manage the brand experience. 

It’s the management, support, and embellishment of this outside-in customer perspective, leaning heavily on social media and social networks, that falls within the purview of a customer engagement system. 

How To Recognize Customer Engagement When You See It

Retailers and retail technology providers have been focused on solving the same problems for so many years. Now that we’re in an age of transition to systems of engagement, it’s important to recognize what customer engagement really is when you see it. 

In other words, most retail supply chain, ecommerce, and merchandising systems tend to focus on things like:

1. What’s for sale or on promotion?  - where is it, what sizes, what colors
2. When will it be here? - when will product X get to location Y (the store, my house) and thru what channel?
3. How much is it? -execution of price changes, managing promotions, negotiating

As I mentioned earlier, these are great questions to answer and retailers are required (or at the very least motivated) to be able to answer them. So, don’t get me wrong. I do think it’s great to make it easier for sales people to actually know what inventory is available at other stores or to be able to purchase in-store and from the online store at the same time and ship things all over creation.

It’s just that these efforts and investments are modern retail blocking and tackling -not customer engagement.

Customer Engagement Systems, whether for in-store / mobile customers or for an ecommerce site, answer very different questions.  And, you’ll note, that these questions are really centered on … the customer, not the retailer’s assortment per se. 

1. What is the customer shopping for?
2. What’s the best brand, product or solution for the customer (including preferences and supporting communication to determine what a customer’s friends, an expert, or another customer might suggest)?
3. What incentives or notifications are most likely to generate the optimal customer behavior?

Ultimately, Customer Engagement will lead retailers away from the one size fits all experience - to one based on Customer Lifetime Value. If you’re an ecommerce retailer and still sending everyone on your email list the same creative and offer, these same concepts are quite relevant for your ecommerce shoppers as well. 

True engagement occurs regardless of channel, however, when the retailer has an option, it should be able to leverage its customer knowledge and preferences to weigh tradeoffs and promote the most profitable behavior. 

If your customer would like to purchase a product and have it shipped to her brother, then it’s up to you, the retailer, to be able to meet customer expectations in the most profitable way possible.  You may want to make it easy for sales people to place the order from your ecommerce operation for direct shipment from the ecommerce DC. 

While the ability to execute and weigh profit tradeoffs is critical, once you’re processing an order, you’re no longer engaging the customer. You’re getting the job done. 

All Things Customer Engagement at NRF’s 2012 Big Show

I’ve just returned from the National Retail Federation’s annual convention and expo in New York. Although the notions of customer engagement have only begun to peek through for consumers, it’s very much a topic of conversation for retailers and the major technology providers. 

A big takeaway:

A Customer Engagement System isn’t the same as your ecommerce, supply chain or point of sale system.  These are systems of record (transactional systems) that are focused on ensuring the reliability of highly structured data.

It should come as no surprise that technology companies want to “embrace, extend, and extinguish” any new technology (or a new term) to their advantage. Not that there’s anything wrong with that …  

In other words, if you’re a supply chain technology provider, it’s natural to want to co-opt a term like customer engagement and define it in such as way so it’s all about looking up what’s in the supply chain. Because that’s what you’re good at - and where you have a natural advantage.

Alternatively, if your expertise is really acting as a point of sale system, you want to define customer engagement as being all about letting customers or salespeople complete a purchase anywhere in the store. 

Referring back to my previous note about Geoffrey Moore’s notions of systems of record and systems of engagement, there’s a big difference between an enterprise system that’s responsible for recording transactions and one that’s focused on engaging with customers (consumers).  Here’s a nifty Harvard Business Review blog post that discusses the differences between a system focus on engagement and the retailer’s traditional set of systems (of record). 

My favorite quotes from this article:

• Engagement systems “listen” to assess status, sentiment, and context. For example, detection of negative sentiment could lead to a discount on your next purchase or a proactive phone call to address an issue.

• Engagement systems support two-way conversations. Chat, video, and sharing features enable conversations among individuals, teams, and even machines.
  
  
• Engagement systems are powered by business rules and complex event processing engines.  

While there was a lot of discussion of customer engagement, they were primarily traditional systems being gussied up in a new term, showing primarily ecommerce, supply chain visibility and point of sales features on an iPad or an iPhone. 

While these are perfectly valid and wonderful advancements, they’re not the same thing as a customer engagement system that really engages the customer, has a social focus, leverages unstructured data, hooks into the social graph in a meaningful way, and transforms the retail experience to … sell more in-store.