Creating a Frictionless Customer Experience

Transcription

1 Creating a Frictionless Customer Experience BRAND S PLAYBOOK SPONSORED BY

2 Why Frictionless Matters. In a preceding point of view Frictionless Customer Experience: Why Retailers & Brands Must Go Beyond Omnichannel, we illustrate why existing Omnichannel strategies aren t enough to provide superior customer experiences, for consumers and retail partners. Instead, brand owners must focus their energies on aggressively removing friction from the customer experience or risk becoming irrelevant in the face of competitive products who will deliver consistency across platforms and channels. In this point of view we share key findings from a global survey of 150 brand owners, illustrating the value of being frictionless. Insights from the survey as well qualitative interviews with leaders have helped identify 4 key processes for suppliers to focus on. SURVEY DEMOGRAPHICS Global coverage: United States, United Kingdom, Germany, China and Australia Top line-of-business departments represented are Marketing Category Management Brand Management Supply Chain 13% 12% 24% 31% Senior decision makers were surveyed: C-level Executives 32% VP-level 28% 27% Food & Beverage Companies of various sizes were included Range of product categories were represented: 24% Electronics 38% $1B - $9.9B 18% Household Products 16% Apparel & Footwear 13% Personal Care Products 15% Over $10B 47% Under $1B 1% Tobacco

3 New Product Development: Speed Matters Some brand owners believe commerce to be purely the realm of the retailer, but those that don t take steps to enable frictionless experiences will be left behind. Brands have more influence on the end consumer experience than ever, by leveraging sophisticated technologies and unfettered access to shoppers. Consumer connections must be leveraged to extract insights and identify new products early in the demand cycle that can be differentiated in a crowded marketplace. Delivering new products that meet those needs before the competition is key to success. Brand owners must collaborate both internally and externally to bring new products to market faster and manage existing product portfolios. Product launches that are coordinated internally with promotions and supply chain execution and externally with retail customers will result in improved sales and more loyal consumers. Average new product Development time from concept to shelf = 7 Months Average time to re-launch/ re-invent an existing product from concept to shelf = 5.1 Months Sales could be improved 10.3% if new product launch times were reduced by 1 Month. POINTS OF FRICTION Unmet consumer demand Missed opportunities due to changing consumer trends Competitive products Inconsistent product data Not enough differentiation in product portfolio KEY ENABLERS Consumer insights capabilities Accurate, comprehensive product data Efficient supply chain execution Integrated product development Promotions and launch synched with supply chain Product development was ranked as one of the three least agile business functions.

4 Retail Execution: Creating a Superior Experience at the Store Shelf Creating a frictionless shopping experience involves enabling the consumer to acquire products where and when they desire. To do so, manufacturers must reduce out of stock situations and collaboratively work with retail customers to ensure efficient and timely replenishment. Out of stocks continue to be an issue for both trading partners, and suppliers can leverage technology and data to track and eliminate barriers to success. Replenishment programs combined with employee training can make an impact on the store shelf. Sales organizations armed with tools and data can help provide retailers with the insights necessary to predict and eliminate stock outs. Manufacturers must further push the envelope by partnering with progressive retailers on initiatives such as in-store endless aisle kiosks and alternative fulfillment strategies such as drop-ship and direct-to-store. To deliver on the promise of creating frictionless shopping experiences manufacturers need to look beyond in-store execution to include demand from digital channels. Last mile execution will not be limited to getting a product on the shelf but to ensuring it s available to ship across the distribution ecosystem. 7.7% of revenue is lost due to stock-outs at the brick-andmortar store; of this, 6.6% is attributed to inventory being a available at store but not at shelf TOP 3 REASONS FOR STOCK-OUTS: Inaccurate demand data Lack of labor training or availability Shelf level stock-outs POINTS OF FRICTION Product out of stock on shelf Product not on shelf but in back room Consumer buys competitive product or goes to competitive retailer KEY ENABLERS Replenishment programs Inventory visibility throughout supply chain Collaborative data sharing between retailers and suppliers Access to real-time POS sales and on-hand inventory data from the retailer can improve on-shelf availability 13.8%

5 Supply Chain: Integration and Visibility Rewarded Efficient and effective supply chain processes have been the focus of the consumer products industry for decades, resulting in sophisticated supply chain organizations with advanced planning and operational capabilities. However, further improvements to support frictionless commerce can be made by incorporating new technology and data that has only been available recently. Specifically, data shared by retailers including POS and inventory can be leveraged using advanced analytics to improve overall supply chain performance, reduce out of stocks, and increase sales. While many brand manufacturers currently integrate this data into planning processes, the retail community has still not embraced the benefits of sharing data, making it difficult to build a complete customer view. For those trading partners that do share transactional data, some even incorporating loyalty data, the benefits have been substantial. Nevertheless, manufacturers must be wary that supply chain capabilities match the speed of the insights derived from the data; having hourly POS data won t help if the supply chain isn t agile enough to react to changing demand signals. Implementing a strong Sales and Operations Planning (S&OP) process can address many related challenges, enabling supply chains to deliver higher returns and maintain satisfied customers. POINTS OF FRICTION Out of stocks at retail Inefficient supply chain Increased expediting costs for both customer shipments and inbound materials Penalties and fees assessed by customers for logistics violations KEY ENABLERS Collaborative data sharing initiative with retail customers Retail sales and inventory data integrated into Supply Chain Planning processes Efficient and data-driven S&OP process Access to real-time POS sales and on-hand inventory date from the retailer can help improve Sales 10.6% 01 Better communication between departments DATA TYPES SHARED BY RETAILERS 1-2X/DAY TOP 3 BENEFITS OF S&OP Improved forecast accuracy 1-2X/WEEK POS DATA 37% 30% RETAIL INVENTORY 21% 48% PROMOTION PERFORMANCE 24% 39% Improved planner productivity SOURCE: OCTOBER 2015 CGT CUSTOM RESEARCH: THE VALUE OF S&OP

6 Marketing and Promotions: Opportunity to Connect Marketing processes have been the most impacted by the changes in consumer connectivity, and the resulting promotional activity must change as well to keep up with consumer demand for personalized and relevant offers. The upside of the connected consumer and the adoption of social media is the wealth of data that can be analyzed to provide brand owners with insights to drive successful marketing campaigns with increased ROI of promotion spend. Data can also drive promotional efficiencies, particularly by shorting the time needed to execute a plan. CG manufacturers have an opportunity to drive brand affinity with marketing, especially through the effective use and monitoring of social media. Management of promotional funds, while always a top priority for industry leaders, has taken on a new urgency in recent years. Trade Promotion Management (TPM) and Optimization (TPO) initiatives that can incorporate consumer insights and deliver a more streamlined promotional calendar are the drivers, and these projects are delivering substantial value, especially when coordinated through the supply chain. Trade technology now goes beyond basic deduction management, and when combined with predictive analytics, can go a long way to delivering on a frictionless experience. POINTS OF FRICTION Out of stock during promotion Invalid deductions Unknown ROI of trade spend dollars Marketing disconnected from operations KEY ENABLERS TPM (and where appropriate, TPO) Social media monitoring Consumer engagement Consumer insights leveraged to drive demand signal 2.1 MONTHS = time it takes to execute in-store promotions, from setup to shelf execution Lead time to setup and execute promotions could be reduced 10.3% with real-time collaboration capabilities Promotion ROI could be improved 11.5% by using predictive analytics 37% monitor their brand on social media more than once a day

7 Frictionless Customer Experience Action Roadmap Brand owners need a holistic gameplan to aggressively identify and eliminate points of friction across the 4 key areas of the customer experience. The framework below is intended to provide a strawman of such a plan. Build Analytics as an Enterprise- Wide Capability Build or augment a single view of customer data and activity Improve analytics maturity with a specific focus on predictive and investigative customer analytics Create Bi-Directional Consumer Engagementy Build or strengthen a social media engagement strategy Be more transparent with shoppers about how their data is used to personalize the customer experience. Allow them to view and edit their personal data and activity history Strengthen Inter-Disciplinary Approaches Eliminate barriers between disciplines, particularly between sales/ marketing and operations Leverage IT as a partner Collaborate with Retail Customers Create an environment where both partners are focused on the consumer experience Share data and insights to facilitate consumer engagement While the core tenets of a frictionless experience are the same globally, regional variance in relative maturity of business process and technology adoption and cultural and consumer preference differences should be accounted for when developing a plan of action. The research underpinning this report is based on participation from consumer goods executives across the United States, United Kingdom, Germany, China and Australia. To request detailed, country-specific data contact us or tweet us

8 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 us at EKNinfo@edgellmail.com 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: 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: SPONSORED BY