Evolution of Digital Commerce Challenged by Technology Barriers

Businesses and customers are ready for a new generation of digital commerce technology, but implementing it is challenged by significant barriers in two basic categories: technology commoditization and the lack of an IT and business framework for delivering great customer experiences.  Regarding the first, for some companies making large IT purchases, the way an enterprise employs CAPEX and OPEX accounting practices to categorize spending on technology may be a deal-breaker when coupled with the time and resources needed to implement and maintain a product. But these subjects are increasingly relegated to the 55-minute mark of conference calls that weigh the pros and cons of available technology. Because while few organizations make a platform purchase based solely on the cheapest price, astute IT buyers now discuss and invest in analytical, data-driven tools for sales, marketing and service, deployed across Web and mobile environments, that help produce differentiated customer experiences and strengthen personalized, real-time digital commerce offerings. That leads to the second key consideration: Improving the customer experience is the top driver for almost three-quarters (74%) of organizations participating in our next-generation customer engagement benchmark research.

While differences exist in prices and delivery models among leading digital commerce providers, nearly all of them present themselves and their products in the same way. They claim that establishing a digital commerce presence is easy. Mix some customer data and match it with a little product information, some marketing and static digital assets, and online and mobile digital commerce storefronts begin to take shape. To a certain extent, that’s true. Possessing good customer data, some intelligence about buying patterns, knowledge of consumers’ preferred channels of interaction and the ability to analyze habitual behavior can facilitate quick creation and launch of a digital commerce environment. But it seems as if almost any digital commerce vendor can do what the next one can do. And it’s not just the content of their positioning statements that’s concerning but also the technology as well. Cookie-cutter tools are not likely to enable creation of a distinctive experience that lasts over time, and commoditized digital commerce products need a host of additional components to be able to deliver exceptional customer experiences.

We advise organizations to take stock of their Web-based and mobile sales, marketing and customer service technology infrastructure, map their digital commerce business practices and budget for additional components required to produce consistently superior customer experiences. Start by creating a plan to make it easy for your customers to do business with you, no matter how they interact over any digital channel. This applies to both B2C and B2B environments. The first step in that process is to understand the context of every digital customer interaction. But while that may sound simple enough for today’s enterprise, what follows in the digital commerce planning process has taken on a new sense of urgency and economic importance.

How an organization enables, supports and analyzes a customer’s economic activity, financial contributions and purchase patterns is critical. To compete effectively today you must monitor the economic health of every customer relationship and take corrective action when necessary. Further, examine whether your billing and payment systems are appropriately supporting your most loyal customers – those who engage in repetitive transactions, including subscriptions. They would be best served by billing and payment systems built on subscription-based and recurring revenue models that are designed to meet the ongoing commercial needs of consumers, regardless of their preferred channels of interaction. Look for dedicated technology suited to support in-depth billing and payment structures that thrive in digital commerce environments. They may not be easy to find; as my colleague Mark Smith has pointed out in discussing NetSuite  and Salesforce, the largest providers of subscription software as a service (SaaS) don’t effectively manage billing, payment or recurring revenue processes. Billing and payment for digital commerce is an aspect of the customer experience essential to managing and monetizing relationships over time. Our benchmark research on recurring revenue finds that flexible invoicing, efficiency and accuracy are the most commonly cited benefits of dedicated billing systems.

Keep in mind that the goal of digital commerce is for businesses and consumers to purchase products and services, not just click through a website. To succeed an organization must offer engaging presentations of products and services. This often is not the forte of digital commerce software providers, but addressing it is pivotal to supporting the effectiveness of digital commerce initiatives. In presenting multiple products to customers on the Web and on mobile devices it is necessary to give them access to consistent, accurate information about every product, regardless of the source or supplier. To strengthen their offerings in this area, some commerce vendors partner with product information management (PIM) providers. Our analysis of the role and effectiveness of PIM providers in supporting digital commerce in our 2015 Value Index on Product Information Management found many of them advancing to embed these capabilities; look for the latest evaluations of vendors in the upcoming 2016 Value Index.

An organization’s goal should be to go beyond ordinary commoditized digital commerce tools. Successful digital commerce requires presenting customers with multiple products and services, aligned with the context of every interaction, through every digital channel, in a way that will be seen as both unintrusive and valuable. This leads to strong engagement that can result in purchases of products and services.

In a digital commerce environment the customer experience, all the way through completing a transaction, must be seamless and designed to maintain and indeed strengthen relationships over time. This new generation of digital commerce technologies is radically different from earlier ones, and through well-architected infrastructures these tools can differentiate one’s brand and enable effective competition. This is what Mark Smith means by supercharging sales and commerce.

The internal back-and-forth between IT and business units in evaluating products based on price and platform and the allocation of future resources has become ancillary to what the real conversation should be: about the value created by providing a great customer experience. Managing digital customer experiences over time to maintain relationships and grow new ones is possible only by going beyond outdated technology systems. This focus is at the core of my analyst agenda and upcoming research. Please follow me as I offer guidance to organizations seeking to uncover the business benefits of evaluating and implementing the next generation of digital commerce.

Regards,

Tony Compton

Vice President and Research Director, Sales and Marketing

Follow me on Twitter and on LinkedIn

Rescuing Retail’s Mobile Customer Experience Requires New Technology

One aspect of living in downtown Chicago is that there’s always something going on. But as distasteful as the subject matter of certain local events can be, some proceedings can inspire perspectives on a number of topics. One that occurs to me is how the retail industry can apply the new generation of mobile and location-based technologies not only to shape the customer experience but even rescue it from challenging situations. On Nov. 30, 2015, the Chicago Tribune reported that the Black Friday protests on the city’s Magnificent Mile cost local businesses 25 to 50 percent of their expected sales. While protestors have a constitutional right to free speech, business operators also had an opportunity and a responsibility – to proactively engage customers before, during and after the tumultuous Thanksgiving holiday weekend.

As many of us will recall, the events that led up to the protests in Chicago on Friday, Nov. 27, 2015, were tragic. News was made when a dashboard camera video surfaced showing a Chicago police officer fatally shooting 17-year-old Laquan McDonald. As a result, the officer in question has been criminally charged and is awaiting trial. When the video was released, tensions permeated the city. Emotions ran high, and protests became a part of the city’s downtown landscape. But let’s be clear about that Black Friday on the Mag Mile in Chicago. Retailers and many other business owners in that high-end shopping district knew that protesters would take to the street that day in an attempt to halt commerce. Retail operators also knew that their customers would share that busy street. Nevertheless, I know of no business that chose to close in advance of the protests. Moreover, I’ve yet to learn of any business that made plans to protect their customers’ collective holiday shopping experience, let alone secure the revenue that might accompany it. In my opinion business operators on North Michigan Ave. failed their customers and stakeholders on that Black Friday.

Media reports claimed that the Black Friday protests in Chicago were peaceful, and a festive atmosphere even accompanied one local television reporter’s account, as she proclaimed that the stores were open and people are shopping! But in a few hours, the consumer shopping experience dramatically changed. As seasonal rains came that evening, protestors systematically cut off street-level access to retail locations, leaving bitter customers out in the cold. Stores began to lock their front doors. Many, including globetrotting tourists, stood confused and abandoned. If retail operators had anticipated this scenario, they could have thrown a lifeline to marooned shoppers by developing a technology-assisted customer experience plan that could have rescued the situation and even saved a substantial loss in holiday sales.

The retail industry’s keys to meeting the challenges presented by Chicago’s Black Friday protests should have consisted of five components: segmented and robust customer data; a strategy for mapping local consumer shopping territories via geo-fencing and real-time analytical insight into individual location information; two-way acceptance of mobile communications; a customer-centric technology infrastructure; and a consumer team that possessed the dedication and creativity to respond quickly to rapidly changing market conditions.

As Black Friday events began to unfold, affected retail operators should have executed a communication plan that immediately addressed known local customers. Advisory communications could have been sent via email or text message to local residents, holiday shoppers or not. Those personalized messages could have been reinforced by notices posted to all available social media channels. Moreover, retailer operators in tune with their mobile customers could have reaped the benefits of acting on customer proximity and location analytics. Retailers with robust mobile customer relationships could have utilized geo-fencing technology and intelligent consumer apps to immediately interact with those who were inside the protest zone and in close proximity to one of their stores. Any interactive mobile customer who became locked inside or outside a store, or who was connected to a retailer equipped with beacon technology and a customer experience platform augmented with real-time location analytics, could have been guided down alternate paths to open and accessible locations, optional online services or even a secure personal refuge.

For retail operators interested in the ability to quickly engage customers in the midst of any rapid change in local conditions or market dynamics, the overarching challenge has become threefold: securing a customer base that will opt in to mobile technology in advance of receiving real-time communications; employing talent that can creatively craft breakthrough notifications; and adopting a technology environment focused on making the most of opportunistic omnichannel customer experiences.

Indeed, retail operators who proficiently use next-generation location-based and mobile solutions can make the most out of every individual interaction and stand to benefit from measured increases in sales, service, customer satisfaction, organizational alignment and competitiveness. Vibes Media is one technology provider of products for GPS-enabled, location-aware mobile devices that can access latitude and longitude coordinates near stores in order to trigger important notifications. Contextual marketing tools from Pitney Bowes allow marketers to deliver messages to customers at any time and place, across preferred channels of communication. Moreover, one can imagine how geodemographic segmentation offerings from ESRI could have been used to proactively beat competing Chicago retailers to the punch in the hotly contested local shopping arena. Our benchmark research on location analytics finds a variety of ways in which such systems can benefit businesses; improving the customer experience is the one most often cited (by 20% of participants).

The pace at which retailers are using the new generation of interactive technologies to revolutionize the mobile customer experience must increase. The volatile situation in Chicago is far from over and may be replicated in other cities. It is only one example of what any retailer anywhere and its customers could face in the near future. Some mobile technology services have been designed to support customer loyalty initiatives, and they should be rolled out in the effort to generate sales and  revenue, as well as being implemented in the service and support of customer communities. For retail operators who possess the imagination and initiative to employ the mobile technology required to adapt to unforeseen business situations, there are no limits to what they’ll be able to do for their customers and accomplish for their business, even under seemingly insurmountable stress. The revenue they’ll be able to source and the customer loyalty they’ll be able to report as a result of these efforts will be proud measures of industry success.

Regards,

Tony Compton

Vice President and Research Director, Sales and Marketing

Follow me on Twitter and on LinkedIn