FORESEE EXPERIENCE INDEX: RETAIL CX INSIGHTS

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1 FORESEE EXPERIENCE INDEX: RETAIL CX INSIGHTS How brands compete and win on customer experience COMMENTARY Eric Feinberg Vice President RESEARCH José R. Benkí, PhD Senior Research Scientist Rebecca Berry & Jeff Sylvester Senior Analysts 2018 ForeSee

2 F O R E S E E E X P E R I E N C E I N D E X : R E TA I L C X I N S I G H T S Customer Experience is at the Heart of the Brand Promise When you deliver great customer experience, you deliver on your brand promise. It s been two decades since the internet altered the dynamic, but the change was locked in from the start: Customers call the shots and it s truer now than ever before. But this also gives retailers an opportunity: Meet a need by delivering a unique product, meeting a price point, or creating an experience and shoppers will reward you. This last point is especially important this year, as Customers are looking for retailers to make good you ll see in our report. Online stores used to be seen on a promise a promise to relinquish selling to as the endless aisle, an extension of the physical them in favor of understanding their needs. Meeting store and the subservient channel. That s now been those needs gets easier and faster when you employ inverted. Thanks in large part to Amazon, the store is both digital and physical outlets. In the end, brands now the fulfillment vessel for digital. Customers search that are customer-focused do well; brands that are and explore on web and mobile devices. Maybe they customer obsessed do even better. purchase there as well (and they re increasingly doing so see page 3), but they re also likely to flip channels The only way to win is to see who s winning. and visit the store to complete the transaction. Tractor Supply s big success in desktop web (see page 6) proves the point: They gave users a site This ability to calibrate with customers is driving every that encourages browsing and research, but also treats retail trend we see. It s what makes BOPIS buy the store as an extension of that site. And they get online, pick up in store so popular, it s the reasoning bonus points for aligning the site experience to their behind Amazon s purchase of Whole Foods, and it s customers lifestyle. S E E T H E RA NK INGS» why brands are merging digital and online experiences. 2

3 Deconstructing the Customer Journey ACROSS ALL CHANNELS: STORE, WEB, AND MOBILE Shoppers take a flexible, personalized path to purchase Customers are channel hoppers driven by convenience. Omnichannel harmony, flexibility, and personalization are rewarded; roadblocks send buyers to competitors. The more touches you can perfect, and the easier it is to move between those channels, the more likely customers are to return. 41% use two or more channels during the purchase process 26% start in one but purchase in another STARTS IN ENDS IN OF THOSE WHO STARTED IN STORE STORE 89% 3% 2% STORE 23% visited digital at some point before purchase 28% WEB 60% 5% WEB OF THOSE WHO STARTED IN DIGITAL MOBILE 27% 12% 49% MOBILE 35% visited a store at some point before purchase 3

4 Brands That Get It Right Winners in store, web, and mobile experiences Customers expect retailers to excel in multiple channels. Some brands are already proving they have what it takes to compete and win on customer experience. Costco ranks well in two channels, but mobile is its albatross. Some retailers, like Tractor Supply, peak in one channel. What s clear is that membership has its privileges. In fact, the success of Amazon Prime makes the online giant more like Costco than Walmart. TOP STORES TOP WEB TOP MOBILE 4

5 Store CX Winner Apple makes being there an important part of the journey ENVIRONMENT MAKES AN IMPACT FXI Score % say a memorable store experience is important APPLE STORES DRIVE ONLINE SALES STORE 1 st NEARLY 20% EMPLOYEE ENGAGEMENT MATTERS OVER 80% of purchasers who start in store buy through a digital channel compared to only 5% at the aggregate level of Apple store visitors want assistance from store associates compared to 66% at the aggregate level the shops are so elegant and aesthetically pleasing. It makes me want to stay in there forever. WEB 12 th MOBILE 14 th 5

6 Web CX Winner Tractor Supply knows its audience, creates a personal connection FXI Score +6 Customers rank Tractor Supply s web experience more than 6 points above the top-50 retailer average % of their customers have been to the website at least once in the past 30 days STORE 11 th 20% While most purchases are made in store of all Tractor Supply shoppers use the website during their journey The site tills new navigational soil with its use of a mobile inspired "double hamburger" menu one each for products and lifestyle. I like the menus and the overall look of the site. It's a very country and down-home feel that matches the store and its clientele. WEB 1 st MOBILE 44 th 6

7 Mobile CX Winner Williams Sonoma cooks up a big experience on the small screen FXI Score % of shoppers who start in mobile end in mobile OVER 20% of Williams Sonoma purchasers use the mobile site during the purchase process Lovely pictures using merchandise in a home setting. colorful, filled with recipes. STORE 20 th 88.3 FXI SCORE Baby Boomers score 14 points higher in mobile than Millennials (74.3) WEB 13 th MOBILE 1 st 7

8 Mapping Retail CX Priorities Sellers race to the bottom, but shoppers don t follow Conventional retail wisdom says price is paramount, that discounts and sales bring in buyers. But the data reveals a different, more nuanced story: DIGITAL PURCHASERS STORE PURCHASERS STICKER SHOCK Only 6% of shoppers selected an item primarily because of price. EXPERIENCE WINS Environment and findability Product Descriptions Merchandise Merchandise rank as the top priorities for both in-store and digital purchasers. BRAND LOYALTY About 45% of buyers across channels say their most recent purchase was Price Product Finding Service Price Environment driven mostly by retailer preference, and more than 75% say they shop at a preferred set of retailers regardless of prices. SCORE Top Priority SCORE Top Priority IMPACT IMPACT Priority Maps use CX data to show retailers which customer experience improvements will yield the biggest business benefits. In the graphs above, elements in the bottom right quadrant are the most impactful to the business when a change is made. In other words, a low-scoring, high-impact element is ripe for prioritization. 8

9 Why Customer Experience Matters The data behind the ROI of CX The better the customer experience, the more likely shoppers are to recommend and buy. When shoppers engage with and trust retailers, it benefits the bottom line. STORE WEB MOBILE 85% 81% 67% more likely to recommend the store more likely to make an in-channel purchase more likely to make a purchase in any channel For one national retailer, a one-point increase in CX led to a $149M increase in revenue 9

10 Shoppers Flexible Fulfillment BOPIS, BORIS, and BORO interest grows Customers want convenient and versatile pick-up and return options. Retailers are responding, but not fast enough for shoppers. BOPIS BUY ONLINE PICKUP IN STORE 61% of customers place a high importance on BOPIS availability 87% 90% 69% 58% relied on it this holiday season, up 25% over last year look for flexibility in returns when selecting a retailer say free shipping is very important when selecting a retailer place high importance on shipping options when considering where to shop 61% use BOPIS, and 23% plan to increase their use BORIS BUY ONLINE RETURN IN STORE said the ability to make convenient returns 69% influences whether they purchase online or in store of online shoppers won t purchase 40% online if they can t return in store BORO BUY ONLINE RETURN ONLINE won t buy from an online retailer 54% that charges for return shipping But retailers are not delivering: Only 25% say online returns are easy 10

11 Category CX Rankings and NPS How industry subsets are meeting customer needs PET SUPPLIES PETSMART, PETCO % of shoppers have a separate holiday gift budget for pets FXI NPS Pet and auto shoppers come to those categories with a built-in emotional connection, giving retailers an opportunity to provide memorable experiences. Conversely, fast fashion and tech are more volatile markets, and sell to customers more interested in great deals on new models, and less loyal to brands. AUTO PARTS & ACCESSORIES ADVANCE AUTO PARTS, AUTOZONE, O REILLY AUTO PARTS Purchasers who start in desktop are just as likely to stay in desktop as they are to go to a store APPAREL TRADITIONAL NORDSTROM, MACY S, NEIMAN MARCUS, ETC % said brand familiarity draws them to these retailers HOUSEWARES WILLIAMS SONOMA, BED BATH & BEYOND % said a loyalty program is very important in their purchase decision COMPUTERS & ELECTRONICS APPLE, GAMESTOP, BEST BUY, CARPHONE WAREHOUSE More than 25% use ratings and reviews websites to help with purchase decisions HOME IMPROVEMENT LOWE S, MENARDS, HOME DEPOT, B&Q Nearly 80% of all purchases are made in store APPAREL FAST FASHION H&M, ZARA, FOREVER 21, ETC % visit fast fashion stores based on word-of-mouth recommendations Net Promoter Score (NPS) is another key retail metric, giving brands important promoter/detractor measurements. It s vital to also know the specific actions you can take to improve customer experience. 11

12 Retail CX Rankings FXI Scores: 40,000 shoppers rate 50 leading retailers The FXI Score is a composite customer experience metric based on shopper interactions with each brand s store, web, and mobile channel on a scale. When two or more scores are identical at one decimal place, the next decimal place is used to break ties and determine rankings. 12

13 About the ForeSee Experience Index About the Author and Research Team The ForeSee Experience Index (FXI) is the definitive customer experience report based on survey data from over 40,000 shoppers across their store, web, and mobile experiences. The study was completed using a consumer panel representative of the general population fielded in the fourth quarter of The retailers in this year s reports were chosen using the 2017 Deloitte Global Powers of Retailing study, which ranks global omnichannel retailers by revenue. ForeSee selected the top 50 non-grocery brands with operations in the U.S., U.K., or Canada for the FXI. ForeSee has produced the FXI every year since This year s findings were published in two parts, Retail CX Rankings and Retail CX Insights. The reports introduced a new overall FXI Score, which is an omnichannel metric comprised of a retailer s CX scores for store, web, and mobile. Each channel s influence on the overall score was determined by the number of respondent interactions with that channel. This year the reports include both the new omnichannel FXI Score for each retailer and rankings by individual channel. Since the study uses a different approach than in previous years, comparisons to historical data are not available. Eric Feinberg, Vice President, authors many of ForeSee s thought leadership and research studies. He is a frequent guest speaker on customer experience analytics, Voice of the Customer, and marketing strategy, and has contributed to Forbes, CMO.com, CustomerThink, Retail TouchPoints, and other publications. Eric is also a board member emeritus of the Digital Analytics Association, and a graduate of the University of Michigan. José Benkí is a Senior Research Scientist at ForeSee and an Adjunct Assistant Research Scientist in the Survey Research Center at the University of Michigan. He has expertise in survey participation, interviewing, speech science, and cross cultural and cross-language survey research. He is a member of the American Association for Public Opinion Research and the Acoustical Society of America. Senior Analyst Jeff Sylvester uses his data science and market research expertise to help ForeSee s retail clients advance their CX programs. Jeff also leads survey design and internal analyst training initiatives for ForeSee. He holds a B.A. from DePaul University. Senior Analyst Rebecca Berry specializes in improving retailer KPIs across all channels through meaningful CX analysis and data insight. She graduated from Eastern Michigan University with a B.A in English, Language, Literature, and Writing. 13

14 About ForeSee ForeSee helps companies achieve measurable business outcomes with customer experience solutions that listen to, capture, measure, and benchmark customer feedback across web, mobile, store, branches or field offices, and contact centers. Organizations use ForeSee CX Suite and its proven methodology to guide critical decisions and predict business impact with certainty. ForeSee is the customer experience choice for 70% of the Internet Retailer (IR) 100, 90% of U.S. government executive branch departments, 8 of the top 10 retail banks worldwide (and half of the top 50), and thousands of other companies and organizations. For more information, visit Go deeper into the FXI data. Schedule a customized briefing: foresee.com/fxibriefing