eBOOK
Creating a
Frictionless
Customer
Experience
WHY RETAILERS AND BRANDS MUST
GO BEYOND OMNICHANNEL
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eBOOK
Omnichannel isn’t Enough
86%
Somehow “omnichannel” has come to be the de-facto shorthand for the consumer’s
greatest good. Yet, in describing the internal transformation retailers and consumer goods
manufacturers must go through, it stops short of conveying a true consumer benefit or
value. Consumers don’t think in terms of channels. They simply shop.
of consumers will pay up
to 25% more for a better
customer experience
“Consumers value speed, simplicity, quick responses to
questions and reliable delivery, rather than worrying about
whether they shop online or in-store.”
The ability to shop anytime-anywhere, order online and pick-up in-store, receive orders
fulfilled from local stores, have a universal cart that travels with the consumer across channels
— and other capabilities that together represent “omnichannel”— will soon be table stakes.
Retailers and manufacturers must guard against a me-too approach to omnichannel. In
fact, blindly adopting omnichannel capabilities can lead to margin hemorrhage. They must
instead focus on defining the ideal shopping experience for their customer demographic,
brand value and business model, and then ensure that their business processes and
technology systems are optimized to deliver that experience consistently and seamlessly
wherever and however the consumer chooses to engage.
80%
of companies say they deliver
superior customer experience.
8% of their customers think
the same.
1
2
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The Annual Customer Experience Impact (CEI) Report
Lee Resources
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Digital
interactions
influence
Commerce and Engagement
are Converging
64%
The line between engagement and commerce is blurring. WeChat’s 550 million monthly active
users can find their favorite retailer, talk to a local store associate and buy merchandise — all
within the chat application. Pinterest, Instagram, Twitter and other social networking platforms
have either launched or announced “buy buttons” that allow customers to shop within the social
media experience.
of store sales3
With ubiquitous mobility, consumers are adept at navigating multiple “channels”,
devices and apps seamlessly. Today is focused on mobility, social media and the
web. Tomorrow may bring wearables and connected devices.
“The fact is, the consumer is the only channel.”
Retailers and manufacturers have spent decades
perfecting the art of building products that move
efficiently through the supply chain to be bought
at an end-point controlled by them (stores, catalog,
ecommerce, direct-to-consumer). As consumers
increasingly push them outside their four walls and
into unfamiliar territory – 3rd party apps, social networks, over-the-top messaging services, last-mile
delivery services, and subscription-based services
– this “organizational fabric” of culture, processes
and systems is put under severe duress.
Social media increased
its share of ecommerce
4
referrals
200%
3
4
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Deloitte, Navigating the Digital Divide
Internet Retailer, Q1 2015 Social Media 500
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Friction Equals Abandonment,
Loss of Loyalty and Diluted Brand Experience
The break points of this duress lead to “friction” in the customer experience. Friction refers to customer experience failures that cause
customer dissatisfaction and create incentive for consumers to abandon engagement.
“Customer experience is defined as the sum total of conscious events, as as a coordinated
series of interactions between a customer and a brand to accomplish anything. Above all words
— a customer experience is defined by the customer, for the customer, at each touch-point,
each time.” — E S T E B A N K O L S K Y
Retailers and manufacturers face a tough dichotomy: Conditioned by rich digital experiences, consumers have increasingly low tolerance
for customer experience failures. And, it is easier than ever for consumers to abandon engagement at the slightest friction. The impact is
far-reaching.
THE I M PA C T O F F R I C T I O N IN T HE C US T OM E R E X P E RIE NC E
Online Cart Abandonment:
The average online cart
abandonment rate is 68%5
5
Store Trip Abandonment:
78% of consumers have
bailed on a transaction
or not made an intended
purchase because of poor
customer experience6
Bad News Travels Quicker:
News of bad customer
service reaches twice as
many ears as praise of
good service7
Losing a Customer
is Expensive:
Customer acquisition costs
6-7 times more than customer retention8
Loss of Customer
Lifetime Value:
Companies can expect
to lose 65% of a customer’s
share of wallet the year
after a customer experience
failure9
Baynard Institute; 6 American Express; 7 White House Office of Consumer Affairs; 8 White House Office of Consumer Affairs; 9 SDL
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Causes of Friction
in the Customer Experience
DESCRIPTIONS
POINTS OF FRICTION
DEPARTURE
FROM THE
EXPECTED
Consumers have come to expect
some things to just be. Any
deviation is cause for a pause.
UI/UX issues, lack of free shipping,
not accepting a preferred payment
option, frustrating packaging
PROCESS
INEFFICIENCY
Inefficient processes break
down the promise of a seamless
experience and cause the exact
opposite effect.
Order inaccuracy, wait times
at store pick-up
UNRESPONSIVE
TECHNOLOGY
Consumers interface with
more enterprise technology
today than ever before. Slow
isn’t an option.
Slow POS terminals, unresponsive
digital displays, slow WiFi, high
application load times
LOW EQ
HUMAN TOUCH
Store and customer service
associates are brand ambassadors. When they fail, the
experience fails.
Procedural customer service, lack
of in-store customer profile, unidirectional social media strategy
IRRELEVANCE
Marketing, offers and promotions that are not personalized
transfer the burden of finding
relevance on to the consumer.
Lack of experience
personalization, security or
privacy breaches, lack of
product recommendations
UNFULFILLED
DEMAND
The inability to convert purchase
intent directly results in lost sales.
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Out of stocks, lack of total inventory visibility, limited fulfillment
options, long checkout lanes
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Removing Friction from the
Customer Experience
Retailers and brands must go beyond the traditional definition of omnichannel, and excel
at key aspects of their customer experience to ensure a frictionless experience.
EKN and IBM conducted a global survey of 300 retailers and brands to understand each
industry’s maturity across the key elements of a frictionless customer experience. The
findings from the research combined with insights from qualitative interviews with retail
and consumer goods executives are available as prescriptive “Industry Playbooks”. Each
Playbook delves into details of each of the 4 pillars of a frictionless experience, including
identifying key organizational and technology enablers.
RETAIL PLAYBOOK
Commerce & Payments
Personalization
Flexible Fulfillment
Customer Service
BRANDS PLAYBOOK
✘ ✘
✘ ✘ ✘
Product Innovation
Retail Execution
Supply Chain Flexibility
Marketing & Promotions
✘ ✘
To request a copy of the “Frictionless Customer Experience Playbook” for Retailers or Brands,
contact us or tweet us at @EKN Research or @IBMRetail
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About EKN
Our research is developed using inputs from the end user community and the end user
community extensively reviews the research before it is published. This ensures that we
inject a healthy dose of pragmatism into the research and recommendations. This includes
input of what research topics to pursue, incorporating heavy practitioner input — vis
interviews etc., and ensuring that the blend of research takeaways are oriented towards a
real-world, practical application of insights with community sign-off. For more information,
visit www.eknresearch.com. Email us at [email protected]
About RIS
RIS News is the essential source of information for retail executives, helping them connect
with relevant content, engage with their peers and find best-in-class business solutions and
strategies to make smarter IT and business decisions. We help executives adapt to change,
stay competitive and maximize profits and productivity. Visit: www.risnews.com
eBOOK
About IBM
IBM helps enterprises transform, innovate
and grow. We deliver high value for our clients by bringing deep industry expertise to
an industry-leading portfolio of consulting,
IT implementation services and ecosystem
of partners. Our unmatched analytics capabilities, cloud and cognitive offerings, enterprise systems and software are bolstered by
one of the world’s leading research organizations. We help retailers predict demand
to meet customers changing needs; create
a differentiated customer experience while
fulfilling on demand; and build a secure, agile enterprise that supports innovation and
drives profitable growth. With a significant
global presence, IBM operates in more than
175 countries. Visit: ibm.com/retail
About CGT
Consumer Goods Technology is the essential source of information for CG executives,
helping them connect with relevant content, their peers and best-in-class business solutions
and strategies to make the right IT decisions. We help executives adapt to change, stay
competitive and maximize profits and productivity. Visit: www.consumergoods.com
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