Today’s consumers live in an increasingly omnichannel world. In fact, a recent survey by the NRF and Forrester found that “traditional and online retailing are increasingly intertwined” as customers shop across channels.
And yet, brands still operate in the same silos they did 20 years ago. While the retail industry has been screaming “omnichannel” from the top of every bygone mall for years, brands’ in-store and online teams remain functioning as two different entities, with different metrics, goals and strategies, yet serving the same brand.
It’s the perfect example of the left hand not knowing what the right hand is doing, and in this case, this siloed approach is leading to duplicated efforts, ineffectiveness, and most importantly, losses in sales and customer loyalty. Just the other day, I purchased an item on Target’s website to pick up in-store, and they ended up cancelling the order because they didn’t have it in-stock at that location (although the website said they did). Had their inventory count been correct originally, I would have just selected a different item rather than cancelling the purchase completely.
As in-store and digital increasingly play an equally important role in brands’ customer strategy, an integrated approach is required for any brand that wants to survive in the next decade or even the next five years. And while the industry is quick to blame the chasm between online and in-store on legacy technology and siloed data systems, retailers should consider looking at their own internal barriers between teams as a first step.
The Challenges of Change
If the root cause of in-store and online silos point to internal team structure, why has it taken so long for brands to simply integrate the teams? As with so many organizational challenges, a lot of it ties back to budget and attribution.
Currently, both digital and in-store teams have to fight internally to secure budget to run their programs. And while true unselfish optimization is ideal, a lot of the time there’s a strange dynamic where 80-90 percent of sales happen in physical stores but 70-80 percent of those in-store sales were supported by online marketing activity and budget, creating a bit of a power struggle where both budget and egos are at stake.
To further complicate things, more times than not, brands’ technology hasn’t been optimized for omnichannel either, so most companies don’t have one dataset to analyze online and in-store sales together. This means teams are operating off of completely separate sets of data—one data set for in-store and another for online.
Without a way to clearly show how online impacts in-store sales or vice-versa, these two entities remain siloed. A lack of clear attribution leads to no clear path forward.
Mobile as a point of attribution
Today’s marketers have become so accustomed to defending budget, they rarely take the time to rethink investment. However, the few that do might realize the valuable opportunity to invest in the one clear device that takes consumers both online and follows them in-store: their smartphones.
This year, mobile will influence 32.2 percent of U.S. offline retail sales, and it can be the ultimate bridge to connect how a customer’s online experience impacted what they purchased in-store. If executed correctly, it’s an attribution goldmine.
Take Sephora for example, which made headlines last year for merging its in-store and digital teams. It made mobile the center of its integration strategy, rebuilding customer profiles to include 360-degree data that tracks in-store purchases, interactions with sales people, online browsing, and, most importantly, the behavior that led to a sale. If a Sephora customer looks at a lipstick online and then buys it in-store, the Sephora team can see that, and counts it as a win for both channels.
Named by Forrester as a top retail mobile app, Sephora depends on its mobile app to provide the data that holds digital and in-store together. Downloaded by its most loyal shoppers, the app features the Sephora Virtual Artist, which allows customers to try different cosmetics in a virtual reality setting before buying online or in-store, giving consumers additional incentive to engage the app.
Home Depot is another example of a company that successfully merged its online and in-store programs through the help of mobile. Its app was (not coincidentally) named the No. 1 mobile retail app by Forrester.
As a store already known for its exemplary in-store customer support, the mobile app acts as an extension of this philosophy by offering a “virtual customer service agent” that helps customers navigate through the store. Similar to Sephora’s Virtual Artist feature in its app, these types of helpful features give customers real incentive to use and engage the app. And, with strong mobile app engagement, these brands are able to tap into valuable insight into the customer’s online profile as well as their behavior and purchases in-store.
It’s more than a mobile app
While brands like Sephora and Home Depot may make this integration of in-store and digital teams look simple, any enterprise marketer knows the decades of repeated organizational structure, tools, and KPIs makes this transition anything but easy, and it often comes with a high price tag.
In my experience, the best first step in integrating these two teams isn’t the mobile app itself, but starting with shared KPIs between the two teams. For example, teams should be working toward the overarching goal of growing sales across online and in-store, versus working toward one or the other.
Measuring success through the same lens is one of the best ways to change behavior. And of course, this integration needs to start at the top level: the CMO and director level must lead the charge with the right training and education. Otherwise, these shared KPIs and other joint projects will not be taken seriously.
From there, it’s time to look at the mobile strategy—how savvy is the mobile app? Will it be able to support these shared KPIs? Does the app understand the customer’s lifestyle? Is the app built to reward loyalty?
As Sephora and Home Depot both showed, mobile is what drives this connected experience, so brands not only need a way to activate mobile attribution data, but they need an app that provides enough value for customers to want to download and engage with it. Without customer engagement on the mobile app, marketers won’t have the data and level of insight needed to connect in-store and online experiences.
While the transition to becoming a truly omnichannel company requires investment of both time and resources, retailers that make the commitment to restructure their internal teams and think of mobile as a serious bridge between online and in-store will see a significant difference in customer engagement and their overall bottom line over the next few years.
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