Every year, it seems the holiday shopper marketing engine starts to churn earlier and earlier. This year, I saw the first Christmas-related TV commercial the day after Halloween, and I knew the flood gates had officially opened! The busiest omni-channel retailing season of the year has arrived.
The Rise of Omni-Channel Retailing
Omni-channel retailing seeks to seamlessly integrate all available shopping channels, from catalogs, TV, radio, and brick and mortar stores to contact centers, the Internet, mobile, and social media. This integration supports customers as they move through the buying cycle, from discovery to trial, purchase, pick-up, and, in some cases, returns. The idea isn’t new of course. Omni-channel retailing got its start years ago, as consumers became comfortable with using smartphones and tablets to research and purchase products.
Since then, we haven’t heard as much about ecommerce spelling the death of the brick-and-mortar store. After all, in-store purchases continue to dwarf those made online. A year ago, MIT reported that online purchases made up about 5 percent of total U.S. retail purchases. And the 2013 holiday shopping period bears this out. In 2013, Cyber Monday purchases were $1.735 billion according to ComScore, just 14 percent of Black Friday purchases totaling $12.3 billion, according to a Bloomberg article citing data from ShopperTrak.
In the omni-channel retailing world, whether the customer makes the purchase online, over the phone, or in a store is irrelevant. As A.T. Kearney reports in its Omnichannel Shopping Preferences study, retailers recognize the difference between where value is captured (where the purchase is made) and where value is created (where brand building and awareness educate customers). Research and purchasing go together, and in the omni-channel retailing world, customers can use any channel for either. What counts is reaching customers to make the sale.
The Five Parallels
To deliver seamless integration of customer shopping channels requires major IT investments in a variety of areas – mobile, security, social media, analytics, etc. But it’s clear that the focus of omni-channel retailing on the customer experience goes hand-in-hand with an IT focus on end user experience. Thus, here are five parallels between omni-channel retaining and IT, illustrating how end user experience management delivers on the vision of omni-channel retailing.
1. Customers and End Users Are at the Center
Omni-channel retailing focuses on providing a seamless experience to the customer as they engage with various media channels throughout the buying cycle. Customers and their buying cycle are the focus, not the channels themselves. To illustrate, would you characterize the following scenario as an in-store or ecommerce purchase? A customer shops for apparel in a store, finds that the style they like isn’t in stock in their size. So the customer orders it via their smartphone, and has it shipped directly to their home. It’s a combination of multiple sales channels, not one or the other.
To facilitate this type of customer experience, IT must take a user-centric approach to end user experience management. Just as the customer is at the center of omni-channel retailing, the end user must be at the center of the performance monitoring strategy.
This requires the ability to ensure excellent end user experience for all of the applications and any of the devices on which a customer relies for their purchase decision. Web and mobile are just a start. End user experience monitoring must also extend to the POS applications at kiosks and at registers in the stores. For contact center staff to deliver excellent customer service, the apps and devices on which they rely must deliver excellent end user experience.
2. Evolution from Silos
Leading omni-channel retailers like Macy’s no longer break out revenue between in-store and ecommerce. Selling in silos doesn’t make sense when the lines are blurred across the customer buying cycle. In its 2013 annual report, Macy’s highlighted its store fulfillment progress among its major accomplishments. This initiative ships products from retail stores to consumers, whether consumers ordered online or from another store. And Macy’s Buy OnLine Pickup in Store works the opposite way. Macy’s goal is to drive up overall revenue, not manage revenue by individual selling silos.
Similarly, end user experience management enables IT to evolve from the siloed nature of domain-specific management tools. These tools are critical for deep-dive troubleshooting and resolution of the components supporting a customer’s shopping transaction. But relying solely on these tools won’t help IT quickly identify and resolve a slow application preventing a shopper from adding products to her cart, or a contact center agent processing a return. If the monitoring products for the network, the server, the database, or other data center components show “green,” but the end user experiences a slow app, it’s a problem. End user experience management goes beyond domain-specific management silos to enable IT to see what the end user sees.
3. Old Methods Remain Relevant
Netscape founder and venture capitalist Marc Andreessen was right about a lot of things, but shopping isn’t one of them. As Business Week reported in 2013, he prematurely signaled the death knell of traditional retail stores, saying “the retail guys are going to go out of business, and e-commerce will become the place everyone buys.”
Brick-and-mortar retail is very much alive and well. In fact, physical stores play a critical role throughout the buying cycle, as discussed in the A.T. Kearney Omnichannel Shopping Preferences study. And that role varies greatly depending on the product being purchased. For example, for health and beauty products and for furniture, 70 percent or more of respondents rely on physical stores for trial and purchase. Stores are where 75 percent of furniture is purchased and 70 percent is returned.
Similarly, although Web and mobile are increasingly relied on by shoppers as well as store employees, PCs aren’t going away anytime soon. The Apple store retail model may be emulated by companies ranging from AT&T to Tesla Motors, but contact center agents and customer service staff still rely on PCs and virtual desktops to support customers. And for IT to support them, they must rely on an end user experience management solution that addresses all device types – mobile, virtual, and good old physical laptops and PCs.
4. Transaction Management Across the Buying Cycle
As discussed above, omni-channel retailing is not just about the purchase, it’s about providing a seamless experience across all of the customer activities that span the buying cycle. Therefore, IT needs to extend end user experience management beyond basic transactions like adding products to the shopping cart and checking out. Applications must be instrumented to capture other activities that the business deems relevant. For example, gaps in the pricing system are indicated by “item not found” when a product is scanned. Problems in the inventory management system are shown by “product not in stock” after a query.
At leading omni-channel retailers, IT and their business colleagues collaborate to define the relevant user interactions with applications that support customers throughout the purchase cycle. Doing so empowers both IT and the business with end user experience monitoring analytics that indicate whether that seamless experience is truly being delivered.
5. Design for Peak Loading
Just as retailers add staff in contact centers and in physical stores to keep up with the expected holiday rush, so must IT be sure the infrastructure supports peak application loading. A barrage of customers armed with smartphones for price comparison can easily overcome a store’s IT infrastructure. The challenge is not only for mobile app developers to ensure their app scales to support vast numbers of simultaneous users, but the store’s Wi-Fi network must also be sized accordingly. End user experience management helps IT address this challenge by correlating user experience with app performance and the underlying network. So, if the mobile inventory app is slow, IT can trace the problem to the app, the network, the back-end infrastructure, or even the device itself.
Real World Case Studies
End user experience management has played a key role in the success of several omni-channel retailers. Here are a two examples:
A global operator of mid to upscale department stores identified their data mart as the source of slow response for the "Place Order" business activity in their POS app. The challenge for IT was that their POS app ran on a centralized virtual infrastructure, which made identifying and resolving the problem an extra challenge. Virtualization disrupts the traditional relationship between applications, physical hardware, operating systems, and presentation layers. With end user experience management, IT was able to gain visibility into all tiers of the virtual infrastructure and resolve the problem in time to support a 10x increase in orders during the holiday shopping season.
A multi-national consumer-to-consumer retail company experienced a significant variation in their CRM application response time across their three global contact centers. Like the scenario above, the CRM application ran on a virtualized infrastructure. Using end user experience management, IT traced the problem to the VDI servers serving one of their contact center locations. After reimaging the VDI server, they cut CRM response time by 50 percent. In a separate effort, they also used end user experience management to reduce boot log-in times by 34 percent by localizing the source of the slow boot to Windows XP and upgrading to Windows 7.
These examples underscore the many parallels one can draw between omni-channel retailing and the focus of IT on end user experience. In fact, it seems omni-channel retailing cannot be successful without having IT focused on the end user experience of the many customer-engaging factors that play into this integrated shopping methodology. One can only assume that as new technologies are introduced to market, these advances will continue to impact the way consumers interact with brands and make purchasing decisions. As this happens, gaining more insight about the end user experience will become critically important across multiple industries.
About the Author: As Chief Product Evangelist for Aternity, Mike Marks is responsible for planning and executing the go-to market product strategy. Before joining Aternity, Mike held senior roles in marketing, business development, and product marketing in the cloud, managed services, and service assurance teams of CA Technologies. A graduate of Brown University and Stanford Graduate School of Business, Mike also spent eight years as a submarine officer in the United States Navy. He lives outside of Boston, blogs at www.enduro-marketeer.com, and tweets as @MikeIMarks.
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