Can store experiences save retail?

070717_instoreexperienceAt the Rebecca Minkoff store in New York’s Soho, “smart” digital walls and mirrors let you tap for a different clothing size or color — as well as a free glass of champagne. At the Warby Parker store near Hollywood, you and your friends can create your own 15-second shareable video in a “green room” furnished with props and backdrops. At Jungle Jim’s International Market near Cincinnati, bizarre animatronic figures entertain you while you browse unusual gourmet foods. And at Pirch’s luxury home appliance stores, you can try out the appliances before buying them, including shower heads (just bring your own swimsuit.)

Other brick-and-mortar retailers offer cooking classes, celebrity appearances, personalized makeup advice, wine tastings: the list goes on and on. Much of this activity, of course, is intended to combat the juggernaut of online ordering via Amazon and other sites.

“The customer can get all of their clothing without ever leaving their bed,” says Stacey Bendet, CEO and creative director of designer clothing company Alice + Olivia. “So the experience in-store has to become more VIP, more exciting.”

 But are these in-store “experiences” worth the effort and money that retailers are pouring into them?

“You can’t just [look at] … what’s the ROI on a certain thing in the store, like short-term, immediate impact,” says Denise Dahlhoff, research director at Wharton’s Jay H. Baker Retailing Center. While various measurements are possible — comparing test stores to control stores, measuring differences in amount of revenue or number of new customers — she recommends thinking bigger-picture. Store experiences should be considered holistically, “part of your branding and marketing in general.”

Barbara Kahn, a Wharton marketing professor and director of the Baker Retailing Center, cautions that not all in-store experiences are created equal. For example, simply installing a photo booth in your store probably isn’t enough to get people to come in and shop. Rather, retailers should “create something that’s of value … an experience that people would go out of their way to take part in. Not just incidental experiential trappings.”

She talks about “drop culture” as a successful example. Urban clothing brands such as Supreme create specially-timed launches — “drops” — of unique new apparel that actually draw crowds. The scenario is similar to people camping out outside an Apple store to get the newest iPhone. With Supreme’s drops, she says, you can only get that cool thing if you’re in the right place at the right time. The customer is essentially purchasing excitement, a crowd experience, a social experience in addition to the clothing itself.

Another experiential success, in Kahn’s view, is Eataly, a chain of Italian marketplaces that combines restaurants, grocery stores and cooking schools. It capitalizes on the appeal of Italian culture and sophistication. “It all works together like a little universe,” she says. “There’s a nice synergy there; you can taste the foods in the restaurant … you might then go to the grocery store to buy it so you can make it at home.”

Beauty products, too, lend themselves well to in-person experiences, says Kahn. She says makeup is about “trying on, learning, a little bit of instruction about … what will look good on me particularly; talking to other people.” Physical stores such as Sephora and Ulta are doing well as a result. While cosmetics are of course sold online, too, says Kahn, those transactions are missing that experiential, social piece.

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Four Steps to Maximizing Customer Lifetime Value

Customer lifetime value (CLV or CLTV) is the most underappreciated B2C metric.

“Underappreciated, you say? We measure customer lifetime value, and it’s really important to us!”

Sure it’s a common metric, but why is it important to your business?

Most B2C marketers use customer lifetime value as an input to determine how much is reasonable to spend to acquire a new customer—customer acquisition cost (CAC). But for top-performing B2C companies in the world, CLV is the metric on which business decisions are made.

Here’s why:

  • It’s a faster path to revenue.
  • It’s an easier path to revenue.
  • For both reasons above, it’s a more profitable path to revenue.
  • And, of course, it justifies increased spend on customer acquisition.

Unfortunately, even in a world where it costs five times more to acquire a new customer than it does to keep current customers, online retailers and other e-commerce businesses are continuing to invest nearly 80% of their digital marketing budgets on customer acquisition, and just 42% of businesses are currently even able to measure customer lifetime value, let alone accurately. Those two stats are more closely related than they seem at first glance.

By simply using some rough approximation of customer lifetime value to justify acquisition spend, companies are focusing on the wrong side of the equation. What they don’t realize is that investing in maximizing CLV is indeed the most profitable—and, increasingly, the fastest—path to revenue growth.

Consider, for example, that for each 1% of shoppers who return for a subsequent visit, overall revenue increases approximately 10%. That means if online retailers retained 10% more of their existing customers, they would double their revenue. Here’s another way of looking at it: Reducing your customer defection rate 5% can increase your profitability 25% to 125%.

Growing revenue by driving up customer lifetime value can also be viewed as the easiest way to do it. Though customer marketing is complex, technology is making it incredibly more manageable and effective. For example, the probability of selling to a current customer is 60-70%, on average, whereas the probability of selling to a new shopper is 5-20%… not to mention returning customers spend on average 67% more than first-time customers!

So if growing customer lifetime value is so fast and easy, why isn’t every B2C marketer talking about it?

The reality is that although increasing CLV is, for most businesses, generally a faster, easier, and more profitable path to revenue, it takes a significant shift away from the traditional marketing focus on volume and a re-focus on the quality of every customer interaction.

Read more at Here’s the good news

My point of view:  Customer Lifetime Value was introduced to me early 2000 by Rust and Zeithaml. Considering the fall of long term relations and the rise of encounters lifetime value got another relevance: what’s the customer encounter (or series of encounters) worth. And even important do you measure it at an individual level or at the level of a target group.

No longer brick-and-mortar vs. online retail: Customers view a ‘single lens’

Sebastian Vedsted Jespersen: The Future of Retail: Entangling Brand and the Customer

The evolution of the retail business model

It is universally known that Amazon is obsessed with making shopping a seamless experience. For this reason, the company that started off pioneering eBooks, continues to contribute to the evolution of the traditional retail industry as a whole. Over the years, retail segments have followed Amazon’s lead and transformed their various e-commerce business models in order to influence consumer behavior and reshape expectations. Notable examples include shoe seller Zappos, who rewrote their premium e-commerce offering with a more generous and customer friendly shipping and return policy to aggressively compete against the growing demand and expectations of online shoppers and win back share of market from their competitors. The first e-commerce eye wear brand, Warby Parker, proved that even the most deeply entrenched brick and mortar businesses can be open to digital disruption.  And digital-only brands like Harry’s and Dollar Shave Club turned high-margin CPG shaving products into beloved digital subscription based services.

Amazon and brick-and-mortar

Amazon’s decision to establish its first brick-and-mortar book store in 2015 is a testament that the former rhetoric of offline versus online channels is outdated and that brands need to focus on a holistic customer journey versus separating them by channel. The common denominator between these examples is clear: brand and customer entanglement. Both retailers and brands are working to further entangle with their customers by meeting individual needs regardless of the time, place or touchpoint.

Entangled Marketing is a new business model for building a supportive, enduring and mutually-rewarding relationship between brand and customer. The key to successful entanglement lies in having access to a deep understanding of customers and leveraging data-driven insights across touchpoints. Retailers should focus their digital marketing strategy on ensuring shoppers convert across the continuum of touch points as a holistic journey rather than only by channel. An IDC study indicates that these customers are the most valuable, with a 30% higher lifetime value in comparison to shoppers using channels in silo.Brands have missed the point when dividing their focus according to channel, rather than providing a fundamental need to their customers and prospects: creating a seamless cross-channel shopping experience.

This strategy, coined as ‘omni-channel retailing’ is the reason why there has been a continuous surge in traditional retailers seeking to establish an online presence and likewise, why e-tailers are looking to create a physical presence to complement their online channels.

The challenge for both groups of retailers is that they are used to operating in silos and instead, should be creating a seamless customer experience.

Creating seamless shopping experiences

Several retailers have created successful multi-channel experiences with built in social community, highly engaging mobile marketing campaigns, and intentionally well-designed, intuitive, easily navigable websites. However, having a truly entangling infrastructure entails these experiences synchronizing and complimenting  each other. Some example capabilities that are increasingly ubiquitous include, retailers such as Best Buy providing customers with the ability to purchase products online and pick-up in store. Customers are now given a multitude of options as brands create more convenient ways to enhance their customers’ shopping preferences and in doing so, creating relevance and value that their customers share.

sebastian jespersen
CEO & President of @WeAreVertic. An Innovator, Business Strategist, Online Lead and Breakthrough Digital Thinker. Co-Author of #EntangledMarketing, @EntangledM

Similar to Warby Parker, men’s fashion retailer ‘Bonobos’ have hybridized the online and offline shopping experience for customers. The brand is focused on the customer first rather than product or distribution. Like Zappos and several other e-tailers, Bonobos offer free shipping and returns, however what really makes them stand out is their Guideshop.

Customers are provided ‘one with one’ attention, as the store provides them with a personal shopper that helps them find the perfect fit, and these guides also place the order on a laptop or mobile device to be delivered to the customer. Another example would be, eBay and Rebbecca Minkoff  who opened a digitally connected store that innovatively merged online and physical shopping with its instore digital changing rooms and interactive mirrors. Across the U.S., Sephora is providing their shoppers with more personalized offerings with the use of iBeacon technology. These are just a few examples of ongoing retail transformation and disruption within the industry.

Entangling and retail

The modern-day shopper seeks information throughout their shopping experience and they are more informed than ever before. A 2015 InReality report indicates that 75% of in-store customers turn to their mobile devices to help fill in information gaps. This may be for information such as if a product is out of stock, or if a competing retai

Read all at : The Future of Retail: Entangling Brand and the Customer | Sebastian Vedsted Jespersen | LinkedIn

Author: sebastian jespersen