Retail Convergence

Retail Convergence - A Changing Landscape

There is a large movement in retail toward what is now being called Convergence. Convergence is the blending of channels into a single concept that leverages components from all consumer touch-points into a single set of processes and procedures that act the same, regardless of the consumer touch-point. 

While one could argue that this is simply Omni-channel, this would not extend the vision far enough. Convergence is not just about the unification of channels, it is about the unification of activities and interactions across all touch-points, including what have been perceived as channels in the past, but are becoming increasingly difficult to link to a specific system or business unit. An example of this convergence is the use of mobile devices while in a retail store, either through third-party solutions such as a Google search, or through mobile applications residing on the consumer phone itself.

Convergence comes in the form of data, commerce, and interaction. Data being a natural progression of the movement toward a single version of the truth for unified data, with commerce coming in the form of the endless aisle and DOM capabilities, while interaction imbues the benefits of engagement and messaging across all touch-points in a centralized process and vision.

As a recent Forrester article pointed out, a majority of sales today happen in the world of a blended on-line and in-store interactions. Sales begin on-line through eCommerce or social engagement, move to the store, and sometimes back to eCommerce again before a purchase is made. While Omni-Commerce is a portion of this customer lifecycle, not all interactions with a brand come in the form of purchases, or even as a lead-up to a purchase. Interactions may be related to brand awareness, service or follow-up, ratings or comments on-line, recommendations to friends, and a host of other aspects of a customer journey that are largely out of the control of the retailer or brand. 

Convergence is an attempt to unify processes and procedures, as well as technologies to combine all channels into a single concept rather than a recognition that channels even exist. It is to Omni-Channel what Omni-Channel was to Cross-Channel.  The movement form Cross-Channel to Omni-Channel was to break down the walls barriers of the channels, so they could function in tandem, whereas Convergence is the breaking down of the silos of channels themselves.

How will this impact retail and retail technology?  It will impact overall retail in a very dramatic fashion, in that the lines between channels will no longer exist. Commerce online and in the store will be seamless, with orders being placed on mobile devices while in a store, and baskets being shared between customers and associates to build the perfect outfit. Marketing will provide a queue of consumer messaging which can be delivered by any touch-point, and when performed can trigger the next communication, which is also oblivious and uncaring as to the next customer touch-point.

Influencing the customer journey will become the primary goal of a retailer, and providing tools to assist retailers in influencing the journey will become the principal purpose of retail technology companies. 

The next few years will fundamentally change how system and process are managed in retail, and for those not progressive in their thinking, there is a serious risk to success on the horizon. 

The Male Apparel Shopper

What Motivates Men to Buy

Men traditionally shop less often than women, and when they do shop it is often to replace existing items, or to address a new need. In the case of menswear it is most often to replace existing items in order to refresh their closet.

 While this varies per customer, in the menswear industry there are five primary motivations for a man to buy, they are fit, style, selection, quality, and service. There is of course one other factor, namely price, but this is typically taken into consideration as it relates to the other items. Price is more a function of determining value, and not in and of itself a motivator to buy. Men will buy if they believe something is of good value, and value is derived from the benefits they receive from a product less the price. If in their mind an item provides value of $1000 and the price is $900, then the price is justified and the product is a good value. On the other hand, if the same item is viewed as providing only $800 of value, then the price is too high, and the product is viewed as not being of good value.

So, if we were to put this concept into a simple formula, we arrive at the following:

Value = Benefits - Price

If this is the case, there are then two ways to increase the value of a product. The first is to lower the price and the second is to increase the benefits – or at least the perceived benefits.
So if a customer’s primary focus is on Style, it is imperative that style becomes a main talking point, but then also including discussions that highlight other areas of interest can also help to increase perceived benefits. For example, speaking of the style in addition to the fit and quality will increase the perceived benefits.

As a final note, it is important to understand that customers do not buy features.  In my many years selling custom clothing I often had sales people who focused on horn buttons, silk threads, Bemberg linings, and the like.  While it is good to discuss these items in describing quality, it is critical that you don’t stop with the feature.  You must then describe the advantage and ultimate benefit to the customer, it is this benefit that is ultimately what the customer buys. Benefits like looking good, feeling more comfortable, attracting others, etc., is what product presentation is all about. Benefit selling can in fact build a price objection, as expensive sounding features with no defined benefit simply sound like unneeded extras.

Clienteling and the Male Shopper

Clienteling in Menswear

While clienteling is an applicable skill in most service-focused retail, with my 15 years in retail management in the men’s apparel industry I thought I would write a little bit about how to apply capabilities of clienteling to the menswear business in particular.

As I have discussed in previous articles, clienteling is a colloquial term that came about to describe the activities a sales staff might take with their clientele.  As such, it is a verb which describes the actions an associate takes to better service their customers, and to establish long lasting relationships. In practice these activities can be grouped into two buckets: collection of information that establishes a learning relationship, and the personalized actions one takes based on this information.

While the menswear business is not unique, the shopping habits of men and women are often different. In fact, according to an article by Jay H. Baker Retail Initiative and the Verde Group titled “Men Buy, Women Shop”  the differences are significant. Women enjoy the shopping experience, and more often look at shopping as an experience, while men look at is as a necessity, something to accomplish quickly and with little interaction. For men shopping is a means to an end, while for women it is in fact often the primary goal.

This can be a critical distinction in how to service male shoppers in nearly any retail environment. The quicker you can assist the customer in locating a product, the more likely you are to make a sale. So how is this relevant to clienteling? Isn’t Clienteling about regular interaction with the hopes of bringing the customer into the store more regularly, providing them recommendations of add-on items, and providing targeted personalized communications?  Yes, that is precisely what clienteling is designed to do, and in fact what it is highly effective at doing entirely because of the male shopping habits. If a retailer embraces these tendencies, they can in fact become even more effective in clienteling.

Here are a few simple rules:

1.  Help men to shop.  While this sounds common sense, it is not the act of helping the male shopper when he is in the store that is particularly effective, it is helping him before he arrives in the store. Schedule appointments if possible, but even if not possible, at least plan in advance. Put outfits together that are specifically aimed at what you know about the customer, and do your cross-selling in the form of coordinating items prior to the visit. Check for wish list items, notes and preferences to be sure you have all information that is relevant.
2. Understand what motivates the customer by asking questions and making note of their propensities. This is covered more as a sidebar to this article called “What Motivates Men to Buy”. Use these primary motivators when selecting products, and don’t be afraid to remind the customer of the added benefits they may not have considered. With each interaction, engage customers so you are equipped with more knowledge the next time. Note sizes, preferences, lifestyle, and add items to wish lists.  
3.  Facilitate the customer’s ability to get in and out as quickly as possible. Have a fitting room ready, get a fitter queued up in advance. Use look book tools to find where a product might be in the enterprise if not in stock, and work with the customer so items can be shipped directly to the customer.
4. Schedule the next follow-up. As men like to visit stores less often than women, they typically are less likely to come back if they have an issue. Set a follow-up a week out to be sure the customer is satisfied. Also schedule an outreach 3 or six months out to remind you to reach out to the customer and get into a scheduled routine. For products with limited lifespans such as dress shirts, set a replenishment – even if its two years out. Knowing when a customer needs to replace their wardrobe enables you to get ahead of the customer, so that they don’t shop the competition to replace these items
5. Contact the spouse. Women do a disproportionate amount of apparel shopping, so working with the wife or significant other can pay dividends in the form of more frequent visits, both from the customer and the spouse. While there is still often a need for the customer to enter the store (clothing that needs alterations for example), having the spouse as an ally can pay dividends in bringing the customer into the store, and women are far more loyal to their sales associates, so this also helps to solidify relationships.

By understanding the shopping habits of the male menswear shopper can help to increase sales through effective clienteling. Leveraging your knowledge of these habits can help to increase frequency, increase units per transaction, and most importantly, increase customer loyalty and satisfaction.

Effective Principles of Clienteling

Clienteling

The word clienteling came about as a rhetorical use of the noun clientele. It was used to describe activities one might take when working with their clientele, and is used now primarily as a verb to describe those activities. The word Clienteling now also describes initiatives or programs (manual or software-based) which revolve around these activities, much like CRM describes solutions for managing customer relationships.

Looking at the broader definition of Clienteling, I often define it as a philosophical approach to better serving ones customers (clientele). An approach focused on highly personalized service that is established over time through a learning relationship.

While the verb clienteling might describe most activities associated with the sales process, the more common activities can be summed into three key elements:

1. Access to information to assist the customer while in the store 
2. Customer profile enhancement (likes, preferences, wish lists, etc.)
3. Personalized customer communication (outreach)

While personalized communications finds itself last on the list, it is in actuality the primary goal of a long-term Clienteling program. It is through the successful completion of the other two items, however, that this communication becomes meaningful and effective.

The Customer Life-cycle

As described above, relationships are established over time. Selling is like any other relationship in that the more you know someone, the more you understand their needs and wishes. You don’t learn everything about a person in a single encounter. But over time, as the relationship matures, your understanding of them improves, and your ability to relate to them and to guide them improves as well. It is through the enhancement of the profile over time, that the communications can be more targeted and meaningful for each and every customer.

The following graphic highlights how a customer/associate life-cycle can change over time. From the first time encounter, whereby the associate needs to identify the immediate need, to a long-term relationship, where they are able to anticipate needs, make personalized suggestions, and follow-up regularly.

The Pareto Principle

Any Clienteling initiative should be designed in such a way as to get the most benefit for the least cost. The Pareto Principle states that roughly 80 percent of the effects of an activity are derived by 20 percent of your efforts. This principle holds true for retail as well, where for most retailers roughly 80 percent of all sales come from 20 percent of the customers. This 20 percent are the most loyal customers, and most often shop the most categories of merchandise. 

With this general understanding in mind, many clienteling activities focus almost exclusively on the Top 20% of customers. The logic being that an increase in sales of 10% with this segment represents an increase of 8% for the enterprise as a whole. It would take an increase of 40% in sales for the remaining customers to equal this same 8%. Obviously the cost to reach 80% of your customers is also significantly higher than for the 20%, so this approach makes sense on a number of levels.

There are three items to consider, however, with using this approach exclusively:

1. Over time customers attrite, albeit at a much slower rate with the 20 percent, so a focus solely on this group of customers at the exclusion of other will see your pool of customers diminish
2. First-time customers may take some time to qualify as a top customer, and without appropriate guidance from the store associate the relationship may never mature to this point
3. These customers are most often already your loyal customers, and may already be benefiting from some form of Clienteling, so the gains might not be as immediate as with customers previously ignored in these efforts  

So, while there is tremendous benefit to focusing on these top customers, you can see that this effort alone will have diminishing returns over time. For this reason, it is important to also nurture elements of the 80 percent, but to do so in a highly targeted and strategic manner. The most effective approach is to focus most energies on the top tier of customers, but to design targeted in-store “campaigns” around segments of the remaining customers. These in-store campaigns for non-clients might include one year follow-ups, replenishment items, birthday/anniversary wishes, in-store events tied to past purchases or noted wish lists and preferences, etc.

The below graphic demonstrates these principles. In this diagram the word Customer defines a consumer that may not be in an associates “book”, while the word Client defines consumer that belongs to an associate’s book (or multiple associates’ books).      

     

Note:To a large degree the success of clienteling activities, and most specifically outreach, is tied to basic math. The more of your clientele you work with, the more successful you will be. While the old manual process only supported a limited book, and therefore the same customers were contacted over and over; this has changed dramatically with clienteling applications.  If we assume the average associate has 125 customers in their client book, and reached out to each customer every 2 months, that will consist of 750 interactions. While that number sounds good at first, if you break this down to the workday it is far less impressive. This 750 communications averages only three a day. By augmenting this list of clients with targeted customers, an associate can double their outreach without losing focus on their best customers.   

Putting It All Together

The typical customer life-cycle goes from a first-time buyer, to a repeat customer, ultimately to a long-term client. It is the goal of every retailer to move customers from point A to Point B, and eventually to Point C.  Working exclusively with customers who have reached Point C in the life-cycle has immediate value, but diminishing returns if new customers are not brought through their own journeys.  So the question becomes, how do you focus most efforts where they have immediate benefits, but not at the expense of those efforts that will pay off in the future?

This is accomplished by designing a program that enables the associate to keep their primary focus on their top customers (their Client Book), but to augment this activity with pre-defined scheduled and automate campaign types that support the nurturing of a larger segment of customers based on customer needs, life events, interests, and other relevant and personalized outreach.