The Major Blind Spot Facing Retailers Today
Imagine this scenario: a person walks into a retail store on a given Saturday afternoon. This person walks around and fills her basket with a handful of items. She proceeds to the checkout, pays for the items, has her loyalty card scanned, has an interaction with the cashier, receives a receipt, and then goes home.Think about how much data is generated during the course of this twenty minute shopping excursion. That person’s ingress into the store is captured by the infrared beams of a wireless traffic counting system. Her transaction is processed using a state-of-art point-of-sale ystem. Because of her membership in the retailer’s loyalty rewards program, her purchase is logged and added to a detailed account history. Finally, her overall store experience and any specific incident that might have arisen as a result of her interaction with the cashier are measured using customer experience measurement software, which triggers an invitation to participate in a purchase experience survey on each and every receipt printed by the retailer’s point-of-sale system.
The non-buyer experience is the major blind spot facing retailers today.
In short, virtually every possible angle of that shopping trip has been quantified in some way, either through raw behavioral measurement (traffic counter, order tracking) or through attitudinal measurement (post-visit customer experience survey). Today’s retailer can be forgiven if he thinks that he has all his bases covered. Unfortunately, not every person who walks through his store is a buyer. Certainly, if he operates a small food service lot in a mall food court, it’s likely that most people who approach his counter will buy from him. But if he operates a clothing boutique, a big box store, or a home furnishings clearance center, he will find that a significant number of people who stroll through his aisles, peruse his merchandise, and examine his displays never actually end up buying anything. How can this retailer know if these people are happy with their experiences? And, more importantly, what can he do to convert these non-buyers into buyers, thereby tapping into a prodigious stream of new revenue?
Why the Non-Buyer Experience Counts
These are turbulent times for retailers. Today’s customers have access to a rapidly increasing amount of information on both the products they plan to purchase and the kind of service they can expect from retailers. There is a huge informational asymmetry in play right now: hyper-connected shoppers know all about the retailers whose stores they visit, while the stores have zero visibility into the hearts and minds of these shoppers, unless the shoppers happen to be in the minority who follow through with a transaction. The challenge for today’s retailers is to be vigilant in getting to know the people who walk their floors, including those people who do not actually follow through with a purchase. Retailers must learn what shoppers expect to see in store, what they find disappointing or dissatisfactory, and what measures can be taken to convert them into buyers.
Existing methods for collecting retail customer experience data rely heavily on receipt-based invitations served to buyers, but this method leaves a crucial shopper segment untapped: customers who have entered the store but do not make a purchase. Retailers have visibility into the raw number of shoppers who pass in and out of their doors, but they have no way of tapping into the hearts and minds of their non-transactional shopping segments.
Included in this group of non-buyers are new customers who are simply browsing, consulting prices, inspecting products up close, or gathering information that will help them to formulate a future purchasing decision. But many non-buyers begin their shopping experience with a clear intent to purchase, before ultimately walking away unconverted and unconvinced. Non-buyers may even include formerly loyal customers, who were so put o by a past experience that they choose to engage in nothing more than cursorily walking the aisles and browsing the products, gathering information for a purchase that will ultimately be made at a competitor’s store.
Converting non-buyers into buyers can be an extremely lucrative proposition for a retailer. Indeed, it is the single biggest potential revenue generator that a retailer has access to. As any retailer knows, even incremental improvements to the in-store conversion rate can yield huge revenue lifts across the board. But retailers who focus only on buyer experience data can only guess at what is causing non-buyers to walk away from their stores empty-handed.
The missing data on non-buying customers is essential to a thorough understanding and monitoring of customer expectations, especially at a time when profound technological changes are reshaping the very mindset of the shopper.
How Intent Shapes the Shopping Experience
Consumer spending may be recovering from the recession, but this modest recovery has been matched by a wave of recent technological products and services that tend to advantage the consumer over the retailer. The emergence of price-comparison web sites and mobile applications has accelerated transfer of market share from brick-and-mortar to online retailers. And since customers are doing their part to keep themselves well informed, they have extra high expectations that the retailers they shop at stay relevant. Given these scenarios, crucial feedback that could help retailers stay in the game lies with non-purchasing customers.
Identifying shopper intent is the first step towards delivering truly remarkable shopping experiences. The simple truth is that not all people who pass through a retailer’s doors have an intention to purchase during that shopping excursion. Parsing out the various shopper intent segments allows the retailer to drill down into two critical groups:
- shoppers who intended to buy but were deterred by an easily identifiable and correctable buying barrier (see below); and
- shoppers who had no intention to buy, but instead were gathering information for a future purchase.
In the case of the latter cohort, it is critical that the browsing session sculpts and influences the shopper’s next steps, such that the shopper returns to the store to buy at a later date. The last thing a retailer wants is for his store to be used as a showcase or demo hall, where shoppers get a tactile sense for products in anticipation of conversion events that might happen at a competitor’s store or online presence. This is particularly the case when it comes to the sale of high-end electronics, as most shoppers will indeed pay a visit to a big box store to see, experience, and manipulate an iPad or an LED television, but their actual transactions will frequently take place at whichever website happens to post the lowest price for the item in question.
To ensure a store experience that stands above the rest, it is invaluable to have feedback from a complete set of customers. The key to retaining customers and winning over new ones is relevancy — the ability to tailor the customer experience in anticipation of customers’ needs. Customers will stay loyal to stores that have made the effort to understand them and to demonstrate this understanding through a relevant customer experience. Fearing the “decline of retailers who do not have … a standout store experience¹” progressive retail decision makers will look to infuse their in-store experiences with the very novelty and interactivity that shoppers have come to expect from e-commerce websites.
The basis for this transformation must lie in holistic and representative customer feedback collection. While it will always remain important to collect experiential data from actual purchasers, converting browsers and researchers into buyers will require engaging with an entirely different set of shopper perspectives and pain points, which can only be done if retailers have methods in place to collect data from the myriad of non-buyers that move in and out of their stores.
How Leger Metrics Identifies the True Buying Barriers
Retailers obsess about the purchasing experience and rightfully so. Keeping buyers happy enough that they return and make subsequent purchases is the only way to succeed in the retail environment, and any retailer that does not devote a substantial amount of resources to measuring, monitoring, and improving the purchasing experience risks putting its entire operation in jeopardy. But for every moment that retailers spend obsessing about the thoughts, perceptions, and future proclivities of actual purchasers, they should be spending another moment also obsessing about how to convert shoppers, browsers, or bargain hunters into buyers.
Buyers and non-buyers have vastly different cognitive orientations and pain points. While many retailers have embraced the notion of customer centricity inasmuch as the buyer is concerned and, quite correctly, have implemented in-store customer feedback programs, relying on customer experience data from purchasers alone can paint a highly inaccurate picture of the overall shopper base. The fact that the buyer purchases an item means that whatever barriers to purchasing might have crept into his mind during the course of a store visit, these were somehow overcome over the duration of the shopping trip. But in the case of non-buyers, purchasing barriers are real, insurmountable, and varied. They include:
- Product out of stock
- Trouble finding product
- Prices too high
- Trouble locating a sales rep
- Poor service from sales rep
- Long lines at checkout
Breaking down these barriers to purchasing — which is the first step towards boosting in-store revenue — means engaging with non-buyers, making sense of their feedback, and taking direct action to remedy whatever issues are causing them to walk out of the store empty-handed.
Ultimately, that means utilizing innovative techniques to gather feedback from shoppers who do not follow through with a purchase during their visits. To do so, feedback invitation paradigms seed to be shifted and new, more innovative invitation methods need to be deployed. Ubiquitous feedback invitation methodologies — kiosks, digital signage, smartphone-readable quick response codes, or other advanced methods — must come to complement the existing, invitation-on-receipt methodology. Intelligent retailers, mindful of the dierences between buyers and non-buyers, will want to gather data at as many persuasion points as possible, and not just at cash registers.
Leger Metrics’ Retail Customer Experience Measurement solutions facilitate the gathering of non-buyer experience data and the blending of this data together with purchaser experience metrics — such that retailers are presented with a unified, holistic, and instantly actionable picture of shopper feedback and sentiment.
When broken down using Leger Metrics’ advanced analytics engine, retailers can gain crucial insight into the buying barriers that are deterring shoppers from purchasing. From there, retailers can learn what levers to manipulate in order to boost conversion and transform non-buyers into buyers.
Retailers who take effective action to reduce the number of empty-handed shoppers who walk out their doors are putting themselves in a position to tap into the single biggest pool of potential revenue that exists today.
¹ “ Phone-Wielding Shoppers Strike Fear Into Retailers.” Wall Street Journal Online. Retrieved on January 6, 2011.