Retaining Relevance in the Omnichannel Journey Report. Report

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1 Retaining Relevance in the Omnichannel Journey Report» Report

2 Report» Retaining Relevance in the Omnichannel Journey» How indoor positioning technologies give retailers the ability to offer a richer, more relevant experience for mobile shoppers bridging realworld and digital commerce.» December 2015 Derek Top, Research Director, Opus Research Opus Research, Inc. 350 Brannan St., Suite 340 San Francisco, CA Published December 2015 Opus Research, Inc. All rights reserved. 2

3 Retaining Relevance in the Omnichannel Journey» When the word omnichannel comes up, it is often accompanied by adjectives such as seamless, effortless or even predictive. These superlatives underscore the value that brands and retailers must bring by supporting a continuous customer experience. Customers have more ways than ever to take control of their shopping activities. Retailers, in order to keep their stores in the critical path, have unprecedented opportunities to help customers hone in on the goods they want to buy and where they want to buy them. But retailers are struggling to break down the barriers between e-commerce, mobile and in-store, and deliver an omnichannel customer experience. Beyond Multichannel: Where Omnichannel Begins The word multichannel merely captures the idea that individuals use a lot of devices and information sources while searching for products and services. By contrast omnichannel brings the promise of a consistent and controlled experience whether that person is shopping online from a desktop or mobile device, by telephone, or in a brick-and-mortar store. Each interaction informs the next and spans smartphones, in-store operations and person-toperson communications. Research conducted by Opus Research in June 2015 showed that shoppers routinely use 4-5 different channels or sources on their way to making a purchase. They most often start with a web-based search where Google rules, then move to the web for advice from chat agents or friends on a social network. The next stop for many shoppers is either an e-commerce website or to a local brick-and-mortar store. In this context, omnichannel means rapid recognition, upon entry to the website or the physical store, of that individual and his or her activities and intent. This is core to the friction-free approach to putting customers in charge of their digital transactions. Consumers don t think in terms of Channels. they do what they want, when they want, WITH the device of their own Choosing. increasingly, that device is a smartphone. Smartphones play an increasingly central role in the shopping process, from research to purchase, making them the logical link between connected shoppers and connected stores. Indoor positioning and proximity technologies 3

4 such as WiFi, beacons, LED lighting, magnetic positioning, video cameras and more enable a level of mobile consumer engagement never before possible. These technologies provide key indicators that enable marketers and retailers to anticipate a mobile shopper s needs and then meet or exceed their expectations. In-Store Digital Showrooming A recent study by xad found in-store smartphone usage has increased four times since In a retail context, many customers are showrooming or visiting to review and research product only to leave and purchase online. But when price and availability are comparable in-store, shoppers have shown a desire to purchase onsite, and a growing percentage of shoppers are looking to make a purchase decision immediately. Retailers shouldn t fear showrooming. Mobile devices provide shoppers access to an endless stream of information that can be used to enhance the store experience and influence immediate conversions and onsite purchases. As much as 60 percent of shoppers convert in-store, versus 21 percent on their smartphones and 14 percent later on the desktop, according to the same xad study. Location technologies can help identify this behavior and inform retailers where and when to apply resources to convert these shoppers to buyers. Loyal Customers Use Mobile Loyalty Apps When a consumer downloads a mobile loyalty app and gives permission to share his or her location, retailers have the opportunity to directly engage with customers, taking into account their specific location and gauging intent based on their past behavior, interests and loyalty status. That engagement becomes relevant, and informed, and thus more valuable to the consumer and to the retailer. But retailers have struggled in getting to customers to consistently use mobile loyalty apps. Providing consumers a compelling reason to open and engage with a mobile loyalty app could start with a timely, relevant push notification. A 2014 study by Localytics showed in-store notifications leads to a two-fold increase in app open rates and a three-fold increase in the all-important conversion rates for mobile shoppers. Proximity technologies can automatically prompt a mobile loyalty app to open, offer a welcome to the store message and provide enticing offers. loyalty mobile app usage increases the opportunity for brands and retailers to engage with mobile shoppers, offer promotions or discounts. Plus, there is hope for retailers. Data has shown close to 75 percent of mobile shoppers have their favorite retailer's mobile app on their smartphone, with two-thirds of those shoppers using the app in the past six months (2015 GPShopper/comScore survey). As reported by Chain Store Age, data released by Kohl s in the 2015 holiday shopping period indicated 5 million Kohl s app visits, and 70% of mobile purchases arose from their "Yes2You" loyalty app users. 4

5 In-Store Navigation: Finding the Right Path to Purchase Beyond coupons and promotions, retailer mobile apps also have the opportunity to enable in-store navigation and blue-dot wayfinding. Consumer comfort and familiarity with outdoor maps, especially on smartphones, makes it natural for them to use digital maps (and navigation) in large or complex indoor spaces such as specialty retail or grocery stores, big box, home improvement stores, and others. The benefits for in-store navigation are clear for customers, retailers and brands. Customers are offered step-by-step guidance through the store, direct to an aisle. Accurate in-store navigation can even pinpoint the exact location of product on a shelf if that data is made available from the retailer. Customers who can t find products can t buy them. technology provider aisle411 has found people using indoor location apps and product maps have on average a 35% higher ticket value than those who do not. Best Practices for Consumer Engagement A highly personalized, omnichannel customer experience, enabled by indoor positioning technologies does, of course, enter into the thorny areas of privacy and compliance. Retailers need to be aware of best practices to engage consumers through an opt-in, permission-based omnichannel strategy. While many consumers are ambivalent about online privacy people share personal information with the likes of Google and Facebook daily some surveys suggest consumers are largely skeptical of mobile-location tracking. At the same time, other data suggest users are happy to share personal information for when there is clear value for doing so. The privacy landscape is evolving rapidly and has become a central discussion for marketers and brands when deploying indoor location technologies. Jules Polenetsky, executive director and co-chair of the Future of Privacy Forum, has laid out three key considerations for marketers in deploying indoor positioning technologies and locationbased strategies: Opt-in: Need to disclose privacy policy for location sharing in mobile apps Take steps to determine if location information is personal or anonymous Third parties: Be clear with vendors about the right to use data elsewhere If adopted, these best practices on indoor location and privacy can help retailers reconcile the challenges of developing in-store, omnichannel strategies. How Indoor Location Analytics Benefit Retailers It is important to note that the benefits discussed above for delivering an improved mobile shopping experience are enabled through a transparent, opt-in strategy by retailers. Indoor location technologies also enable merchants and retailers the ability to monitor consumer movements for analytics purposes. This in-store data informs the retailer about how well to serve the consumer and effective ways to sell merchandise. 5

6 The business benefits for retailers to glean from indoor location analytics directly impact store operations, merchandising and marketing. Among the data gathered through in-store analytics include time spent in store departments, effectiveness of merchandise displays and foot traffic. Metrics such as shopper conversion, optimal staffing ratios and the specific traffic effect of merchandising and marketing programs can be powerful tools to increase revenue, basket size and net profit. Currently, the single, major driver of indoor location adoption is analytics. yet that same infrastructure will very quickly enable new Consumer experiences in the store and other CommerCial environments. Granular data that tracks the distribution and movement of individuals helps retailers fine-tune positioning, stocking and leasing tactics for end-caps and create a more engaging experience for loyal shoppers. This data can provide cues for sales associates to provide direct customer support. Such proximity solutions optimize profitability, efficacy and brand-support strategies for end-cap merchandising. Enabling Technologies: Positioning Vs. Proximity There are a surprisingly large number of technologies that can deliver or determine indoor location. Multiple technologies are currently being implemented by retailers, and depending on the use case, can work independently or in hybrid environments. Venue owners without the need for high precision may be satisfied with a more basic set-up that relies primarily on beacons or an existing Wi-Fi infrastructure. However, those that want to provide aisle or shelf-level accuracy and targeted, mobile consumer engagement, it is important to identify key differentiators between proximity and positioning solutions. Stand-alone beacons, LED lighting systems and other technologies can deliver proximity solutions. When a shopper with a location-aware mobile app passes through a zone, the phone s application is made aware of the person s entry into that specific zone or micro-fence. At that stage, a mobile app can be automatically opened with an opportunity to directly engage the customer with an alert, an advertisement or a message designed to create value for the consumer and the venue. Proximity engagement is considered to be a significant means of increasing revenue, customer conversion and customer satisfaction. The phone becomes a targeted communication medium in a highly relevant context. Beacons and proximity solutions are increasingly being used by retailers who are eager to engage shoppers. Beyond proximity solutions, indoor positioning solutions are more sophisticated, deliver greater accuracy, enable reliable, real-time attributes and create high-value location marketing opportunities. Positioning can display the user s location on a floorplan, just like a moving blue dot on a map. This level of detail can enable you are here applications, wayfinding, turn-by-turn solutions and more. 6

7 VLC: An Ideal In-Store Positioning Technology One emerging technology that is capturing the attention of retailers is VLC (visible light communication), which uses pulses emitted from LED lights to communicate with image sensors on smartphones. Since LED lighting systems are rapidly being adopted for their energy savings, there is a funding model in place for retailers to bundle indoorpositioning with the installation of energy efficient lighting. This mitigates the need for a retailer to maintain separate infrastructure for indoor positioning within their stores, making an LED integrated approach scalable across a wide footprint of stores. By interacting with the image sensors on a smartphone, VLC can display both horizontal location and orientation with impressive accuracy, allowing retailers to determine exactly at what display or product a shopper is standing near. With inclusion of fixed location transmitters, a smartphone, in-store maps and a loyalty app, VLC can provide location and navigation within a store. This, in turn, offers the opportunity to deliver targeted, highly personalized content for an exceptional, omnichannel experience. Delivering on the Promise of In-Store Omnichannel Experience As noted above, the empowered customer is already using multiple channels to begin their search for products and services. Brick-and-mortar stores may ultimately be the final destination on this path. With the help of indoor positioning technologies, retailers are poised to deliver on the promise of a superior customer experience. It begins with a customer downloading an opt-in, permission-based mobile app. With the smartphone in or out of pocket, the customer could be welcomed into the store with an automatic launch of a retailer s mobile app. Proximity technologies, such as beacons, are able to send communications directly to a mobile shopper s smartphone. Data can be gathered to learn where and when they entered store, how long they were in that department and the other departments they visited. Promotional messages can be delivered to their smartphone to offer discounts and other resources that are most likely to interest that individual customer. Product data and comparisons, discounts and other information can move the customer into a buying decision. When correlated with that shopper s previous purchasing behaviors, a further-tailored, higher-value engagement message can be delivered. A map of the in-store navigation system, enabled by indoor positioning technologies, can guide the customer through the store and sent the fastest route to a specific product of choice. This digitally enhanced customer journey boosts loyalty (as well as basket size) and offers each customer the opportunity to request help and get someone to directly interact with in the aisle. A customer could start a product search online and then set up a time to meet with an in-store expert to pick up where they left off. If retailers and brands can get the user experience right, be respectful of consumers and deliver relevant information and promotions to in-store shoppers, they have the potential to engage and influence them at point of sale. Digital technologies and indoor positioning systems have the opportunity to transform a store from a place of distribution to one of discovery, serendipity and a superior customer experience. 7

8 About Opus Research Opus Research is a research-based advisory firm providing critical insight and analysis of enterprise implementations of software and services that support multimodal customer care and mobility strategies. Opus Research calls this market Conversational Commerce with tailored coverage and sector analysis that includes: Self-Service & Assisted Self-Service, Voice & Call Processing, Intelligent Assistance, Mobile Search and Commerce, and Intelligent Authentication. For sales inquires please info@opusresearch.net or call +1 (415) This report shall be used solely for internal information purposes. Reproduction of this report without prior written permission is forbidden. Access to this report is limited to the license terms agreed to originally and any changes must be agreed upon in writing. The information contained herein has been obtained from sources believe to be reliable. However, Opus Research, Inc. accepts no responsibility whatsoever for the content or legality of the report. Opus Research, Inc. disclaims all warranties as to the accuracy, completeness or adequacy of such information. Further, Opus Research, Inc. shall have no liability for errors, omissions or inadequacies in the information contained herein or interpretations thereof. The opinions expressed herein may not necessarily coincide with the opinions and viewpoints of Opus Research, Inc. and are subject to change without notice. Published December 2015 Opus Research, Inc. All rights reserved. 8