Designing Winning Omni-Channel Experiences

Customer Expectations, Satisfaction and Growth

Customer expectations are the feelings, needs, and ideas that customers have towards certain products or service. Customers hold both explicit and implicit performance expectations for attributes, features, and benefits of products and services. Explicit expectations are mental targets for product performance, such as well-identified performance standards. Implicit expectations reflect established norms of performance. Implicit expectations are established by business in general, other companies, industries, and even cultures. An implicit reference might include wording such as “compared with other companies…” or “compared to the leading brand…” and is formed by experiences with competitors’ products and alertness of their services. Customer expectations are important for customer satisfaction and customer satisfaction is important for customer loyalty. Customer loyalty is important for business revenue and revenue growth as it is a necessary pre-condition for existence of repeat customers.

Customer satisfaction is a measure of how products and services supplied by a company meet or surpass customer expectations.

Satisfied customers become repeat customers and they promote the business to other potential customers. True customer satisfaction and stellar customer service can only happen through a complete and proper understanding of the customer expectations. Customer expectations sets and raises the bar for actual customer experience and the resultant satisfaction or dissatisfaction. It is a measure of how products and services supplied by a company meet or surpass customer expectations.

True customer satisfaction and stellar customer service can only happen through a complete and proper understanding of the customer expectations.

Repeat customers are an important revenue and profitable customer segment worth investing into. To name a few, repeat customers are easier to sell to, they spend more at key times (such as holidays), they are 9 times more likely to convert, and repeat customers spend more on average. Depending on which study you believe, and what industry you’re in, acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one. It makes sense: you don’t have to spend time and resources going out and finding a new client — you just have to keep the one you have happy. If you’re not convinced that retaining customers is so valuable, consider research done by Frederick Reichheld of Bain & Company (the inventor of the net promoter score) that shows increasing customer retention rates by 5% increases profits by 25% to 95%. However, only 16% of companies are focused on customer retention, even though it costs at least five times more to acquire a new customer than to keep an existing one. The relative size of repeat customer segment purchases to total revenue will depend on your customer retention strategies, but more on the post-purchase experience as most influential part of the customer journey.

Increasing customer retention rates by 5% increases profits by 25% to 95%

So the connection between customer expectations, necessity to meet & surpass customer expectations that results in customer satisfaction, which in turn results in increased profitability through the growth of repeat customer segment is quite straightforward. But, the road to very profitable revenue growth driven by repeat customer segment starts with knowing your customer expectations - explicit and more importantly implicit ones.

Road to very profitable revenue growth driven by repeat customer segment starts with knowing your customer's expectations - explicit and more importantly-implicit ones.

Historically, customers have expected basics like quality service and fair pricing — but modern customers have much higher expectations, such as proactive service, personalised interactions, and connected experiences across channels. To better understand how customer expectations are changing, Salesforce Research surveyed over 6,700 consumers and business buyers globally. The “State of the Connected Customer” report, found that 76% of consumers expect companies to understand their needs and expectations, while 70% said connected processes — such as seamless handoffs or contextualised engagement based on earlier interactions — are very important to winning their business. In today’s channel-rich environment, omni-channel capabilities drive the engagement of core shoppers with the retail brand and ultimately draw them to the physical store. Traditional retailers with physical stores will do better not only by leveraging the power of the online world, but by synchronising the physical and the digital worlds to provide shoppers with a seamless, multi-channel experience that online pure plays simply cannot match.

What Is Omni-Channel Retailing?

With many definitions and spellings, it’s easy to get confused.

• Retailers with a physical and digital presence
• “Seamless and effortless, high-quality customer experiences that occur within and between contact channels.”
• The ability to deliver a consistent experience across offline and online channels, while factoring in the different devices that consumers are using to interact with your business.

The most fleshed out definition of omni-channel I’ve seen involves allowing in-store visitors to see products and deals on their mobile devices, ship purchases to stores, have in-store purchases shipped to their home, have stores process returns, and allow for exchanges in a physical retail location.

The integration of these different channels raises the question how to redefine the strategic marketing elements and the operations, as these channels have different constraints and require different competences. This omni-channel retailing has major impacts on the operations and the supply-chain management. Order fulfilment for the customers using the different sales channels is a key challenge, as customers are directly impacted from the performance of this process. 

Order fulfilment for the customers using the different sales channels is a key challenge, as customers are directly impacted from the performance of this process.

Under hostile market conditions, traditional retailers have staked their futures on omni-channel retailing. Omni-channel strategy is a panacea for a difficult environment. In an article by Harvard Business Review, titled "A Study of 46,000 Shoppers Shows That Omnichannel Retailing Works" authors conducting the research study with a large US retailer, found that the more channels customers use, the more valuable they are and that they are are avid users of retailer's touchpoints. The retailer’s omnichannel customers are more valuable on multiple counts. After controlling for shopping experience, they spent an average of 4% more on every shopping occasion in the store and 10% more online than single-channel customers. Even more compelling, with every additional channel they used, the shoppers spent more money in the store. For example, customers who used 4+ channels spent 9% more in the store, on average, when compared to those who used just one channel.

After controlling for shopping experience, they spent an average of 4% more on every shopping occasion in the store and 10% more online than single-channel customers.

Designing Winning Omni-Channel Strategies and Experiences

While it is proven that omni-channel retailing will somewhat hedge your business from hostile pure-player competitors, as well as drive growth and revenue, there are obvious investments and organisational challenges that need to be overcome to create omni-channel functionalities and enticing omni-channel experiences.

With size and scope of organisational changes required to create omni-channel functionalities including but not limited to investments into technology, people and processes, you want to make sure that this strategic action - an action which pushes the organisation in direction that can't be reversed without significant consequences in terms of resources commitment, is a right one.

As with any strategic action, which moves the company in a new competitive position, it needs to ensure profitable and continuous growth. While everybody may design and architect an omni-channel experience - it can be good or bad or simply average for consumers and their market level defined expectations. Designing an omni-channel experience without taking into account how other players in the market perform - is a strategic shot in the dark. As other players - competitors & leading retailers shape market level consumer implicit expectations from an omni-channel experience, these external market, consumer expectations need to be taken into account alongside with internal operational ones.

Designing an omni-channel experience without taking into account how other players in the market perform is a strategic shot in the dark

A winning omni-channel experience can be only that one that continuously outperforms the market averages while ensuring the unique differentiators of the experience. With this in mind, to help guide omni-channel design efforts, we benchmark in each country the performance of key industry and market level e-commerce and e-retail players.

Can the customer pick up all online products instore? Can the shopper nominate a guest to perform the pickup? Possibility to try on product at delivery and return if you do not like it? Allow consumers to modify orders after the order was placed? Cross-channel functionality - is there a persistent basket allowing customers to start a purchase on one device/channel and finish it in another without losing their cart? Possibility to exchange an online purchases item for another item in the store?

These are just some of many questions and data points we look at within our benchmarking research.

SO DIGITAL GLOBAL BRAND E-COMMERCE EXCELLENCE PLATFORM guides formulation, optimisation and execution of omni-channel experiences by providing insight into competitive dynamics across and within individual markets. Our users can deduce which services and what performance levels are a must to have, what is not relevant, what is differentiating. Elements of omni-channel performance are just one of 200 + data points that we take a look at while benchmarking leading e-retailers and e-commerce players across dimensions of post-purchase such as : tracking, delivery, packaging (out-of-box experience) and returns & refunds.

Strategic benchmarking results will be your definitive guide to determine across which dimensions the target market competes and across which dimensions of post-purchase you can differentiate while taking into account the established market averages.

Market benchmarking results can be compiled into user made customisable reports - per dimension of shopping experience, data point, retailer, country etc. to enable market (average) performance comparison and learning insights. It is a management tool that helps companies formulate, evaluate, and improve their e-commerce strategies by providing a systematic assessment of competitive performance of post-purchase experience across markets.

Discover how you compare against best performing e-retailers across different markets and uncover their reasons of success by contacting us today and scheduling a free no-commitment 1-on-1 walk through of the client use case of Nike (EMEA).

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SO DIGITAL | GLOBAL BRAND EXCELLENCE SOLUTIONS is a technology company based in Amsterdam specialised in serving headquarters of global brands. We are proud partners of leading global digital growth brands like Nike (EMEA) and Uber (EMEA), but also other brands like TomTom (WHQ) and AS Monaco. With offices in Amsterdam, Berlin, Barcelona and Balkans we help global brands reduce complexity cost of global operations by delivering speed, scale and efficiency in execution across markets.

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References:

Gerald Lang. Multi-Channel Retail Supply Chain Management: Fulfilment systems in Multi-Channel Retailing - Customer Expectations and Economic Performance. 8th International Research Conference in Logistics and Supply Chain Management (RIRL), Sep 2010, Bordeaux, France. pp.1-25. ffhal00560956f

Tommy Walker : "Omni-Channel Retailing: What Is Omni-Channel Commerce, Really?"https://www.shopify.com/enterprise/omni-channel-retailing-commerce-what

Salesforce Research : "Customer Expectations Hit All-Time Highs"https://www.salesforce.com/research/customer-expectations/#