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Posted on October 13, 2010 by West Corporation 


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Maximizing Retail Profits Through Customer Engagement

by Scott Zimmerman

The changes in the economy due to the recession have directly affected the retailer/consumer relationship, specifically consumer loyalty. Consumers are more concerned about their own finances than they are about sticking with a retailer. The impact of this trend is that retailers have to be more in tune to what customers want, how they want to be treated and what they will respond to — essentially valuing customers’ business more.

As surely as the days grow shorter and the air gets colder, retailers know that their hottest time of year is fast approaching — the proverbial Christmas rush. But with more consumers making purchases over the phone and via the Internet, the process of engaging customers has expanded beyond just the point of sale to include the pre- and post-shopping experience too.

That’s when engagement communications technology can make the difference. Engagement communications comprises the blending of advances in communications such as voice messaging, SMS, email and web portals with a human touch. Together they create points of engagement with a customer rather than a simple connection. Making a connection might inform, but it doesn’t necessarily activate. Create engagement points and the path is opened up for activation.

Engagement communications involves tailored and personalized campaign-based outreach that encourages two-way dialogue. While outgoing messages can be scaled to the hundreds and even thousands, each is delivered and experienced in a personalized manner.

For example, according to the survey by the National Retail Federation, 40% of shoppers say that sales or promotions is the largest factor when determining where to shop, while another 12.6% state that everyday low prices are most important. Other consumers rated selection (21.5%) and merchandise quality (13.4%) as the primary factor. Only a handful of consumers said they are making buying decisions based on a convenient location (5.6%) or helpful customer service (5.2%).

In response to this information, a retailer could utilize engagement communications technology to send a text message offering early bird discounts and free stocking stuffers to the first 100 customers in his store on a specified date. The same retailer could deliver an e-mail to customers offering free shipping and gift wrap to entice them to make a purchase.

Retailers also should consider engaging customers through well-planned inventories and more strategic promotions. Best-sellers in October and November are most likely to be the key items that will drive business in December. These are items that customers have demonstrated they want to buy and that you simply can’t afford to run out of before the season ends. Knowing what customers want give retailers the opportunity to send relevant and timely communications of store specials on key items, which will engage customers in a meaningful way.

Imagine how appreciative a shopper would be to receive a text message indicating the arrival of a new shipment of a “must have” item or a friendly message to notify a shopper that an advertised special was no longer available in order to save him a trip into the store.

As customers shop throughout December, their objective evolves from seeking a full range of potential gift items to seeking that item they know is a “can’t miss.” When they are shopping those last few days they are looking for those one or two items that they just know will be right! Merchandise assortments that meet those customers’ expectations will assure that sales are maximized and markdowns are minimized.

Last year, the Associated Press reported that tight inventories presented some issues for retailers in the important weeks after Christmas when consumers were redeeming gift cards. Others looking for great deals on marked down items like wrapping paper and decorations found the shelves bare.

But creating a positive customer experience doesn’t just stop when the customer leaves the store or logs off of your web site. The engagement continues until the package arrives at the recipien’s door, which is not easy, but a vital task. Shipping giant UPS delivered about 400 million packages worldwide during the 2009 holiday season (now you can see why Santa needed help from his elves!)

And in today’s world of Yelp, Twitter and YouTube, a single act of poor delivery can have a far-reaching impact in terms of customer loyalty. Increasingly, the quality and timeliness of door-to-door delivery makes or breaks the customer experience.

Customers expect product delivery to accommodate their schedules. They are highly resistant to delivery windows of four to seven hours. In response to that demand, a retailer could send a text message or voicemail when the delivery representative is 30 minutes away. The message is quick, informative and avoids the potential of unproductive waiting time for the customer.

Although product delivery has not typically been geared around this thinking, the payback is persuasive: improved delivery cycles, lower overall cost of delivery and increased customer engagement and satisfaction. Companies where service and product delivery are a critical part of the brand promise and bottom line performance should be actively investigating how to integrate these communications into their delivery logistics.

With these communications advances, engaging customers through automated messaging and communications can be highly personalized, massively scalable, and surprisingly interactive. Hundreds and thousands of delivery schedule and reminder calls can be made in a matter of minutes, and they can be scheduled at times when people are most likely around to receive them.

By proactively reminding customers of delivery times, and then being able to update them ‘on day of’ delivery through automated voicemail, email or SMS advising on driver locations and actual delivery windows within 30-45 minute schedules, the perceived level of personalized customer service increases dramatically. This approach to engagement communications means that delivery trucks can cover more visits in a single day and delivery times can be pinpointed and communicated within smaller windows — something customers have been clamoring for across product delivery markets.

Today’s consumers expect, and in many cases demand, that information be tailored to their ever-changing needs and interests. Retailers that pay attention to what customers do, and listen to what they say, can deliver precise and intuitive recommendations that result in more sales.

Many small and mid-sized retailers will do as much as 20-40% of their annual sales in the final two months of the calendar year, according to the National Retail Federation. Other service businesses, such as restaurateurs, caterers, travel agents, etc., are also dependent on doing brisk business each holiday season. It’s fair to say that the holiday season is a crucial make-or-break period during which retailers earn the profits that they must live off of for the slow first months of the next year.

By knowing what customers want and keeping them engaged in the purchasing process, retailers can make this Christmas the most wonderful time of the year.

Originally published in Retail TouchPoints, October, 2010


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