Published: 22 August 2024
Contributors: Keith O'Brien, Amanda Downie
Retail customer experience (retail CX) is the act of providing customers with excellent service during shopping and buying opportunities through in-store or digital e-commerce channels.
Organizations should provide opportunities for customer engagement on touchpoints throughout the entire customer journey wherever they prefer to receive information and make purchases. With mobile apps and experiential shopping, retailers must connect with consumers through omnichannel marketing and sales.
Online shopping shows all signs of maintaining its importance postpandemic. US e-commerce sales are expected to reach 22.7% of the retail market1 (link resides outside ibm.com) share this year, an increase from 2023’s figure of 21.6%, according to FTI Consulting. Focusing on an experience strategy meets customer needs and helps retail businesses build a competitive advantage by increasing customer satisfaction and brand loyalty.
Established companies in the retail industry are increasingly under competition from startup e-commerce companies and direct-to-consumer brands, so they need to focus on delivering excellent customer experiences.
Establish a 360° view of customers such as data matching, entity resolution and data cataloging.
2024 IBV Consumer Study
Every retail brand must focus plots a slightly different retail CX strategy, but there are some elements most approaches share. Ultimately, retailers should take a customer-centric approach by prioritizing the customer above all who are most likely to provide a positive experience.
- Know the customer base
- Start meaningful marketing initiatives
- Invest in omnichannel retail approaches
- Tie CX to strong customer service
- Start loyalty programs
Invest in omnichannel retail approaches
For example, a retailer might entice an in-store customer to sign up for its newsletter by offering a 10% discount. Or another retailer might try to prompt a customer who has only purchased online to visit the store in person for an exclusive offer.
Influencing customer behaviors across multiple channels is a great way to build stronger relationships and have customer interactions wherever individuals receive their information.
Tie CX to strong customer service
A strong retail CX strategy should create positive experiences for most customers. However, issues might arise with a product or an experience at the store or online. Retailers should invest in customer service training and focus on empowering employees to resolve customer issues wherever they arise.
Start loyalty programs
Retailers should make the creation of loyal customers a main priority. One way to accomplish this is through loyalty programs, where customers can earn free or exclusive items either through the frequency of purchases or how much the customer spends. Loyalty programs can also provide other perks like birthday discounts to encourage customer retention even if the customer has not purchased.
Inconsistent omnichannel experiences
While customers expect seamless digital and physical experiences, sometimes issues arise. Examples can include encountering different prices or offers on different channels and needing to supply information they already provided. Organizations should work hard to eliminate these issues wherever possible.
Unified commerce
Retailers can use technology that unifies all sales channels, back-office processes and data into a single platform. Unified commerce spans inventory to advertising to sales.
Retailers should prioritize digital customer experience to reach the increasing number of people buying online.
Dedicate resources to social media
Customers use social media to spread both positive and negative messages via word-of-mouth. Retailers should formulate a strategy to monitor these channels to find advocates and critics in real-time. They can encourage happy customers to engage in positive word-of-mouth and solve unhappy customers issues so they don’t move to buy a competitor’s products.
Enhance personalization
Creating personalized experiences is a great way to drive deeper relationships with customers and demonstrate that a retailer is customer-centric. Retailers can use the customer data that they have previous purchases and self-supplied demographic and psychographic information to prepare special offers or create unique user experiences for customers.
Start virtual and augmented reality experiences
Companies, such as clothing brands or home goods suppliers, have built out augmented reality (AR) capabilities so customers can try on clothing or see how furniture will look before buying them. This technology helps avoid unnecessary returns and can help customers who have difficulties visiting a physical showroom to see the products in a more realistic setting.
Offer multiple payment options
Customers want options for how they pay for goods. A Forbes study found 51% of respondents (link resides outside ibm.com) no longer shop at retailers that didn’t accept digital wallets.2 Retailers should upgrade their payment systems to offer options for consumers to pay with their phones through digital wallets.
Pursue strong user experience design
Good user experience (UX) can mean the difference between a sale and an abandoned cart. Retailers should work with designers, developers, and other specialists to make it easy for users to find what they’re looking for, and easily add those products to a cart. Retailers should also make it as simple as possible to check out and pay without encountering unnecessary issues.
In-store retail CX varies slightly from digital CX in how retailers can interact with customers. However, there are many new and exciting ways retailers can improve their brick-and-mortar stores to become more valuable to customers in an era of online shopping. Many retailers are reimagining physical stores to meet customer expectations. Some examples of what stores can do to improve the in-store process:
- Offer BOPIS and curbside pickup: An increasing number of consumers prefer to buy online, pick up in store (BOPIS) as their way of ordering and receiving goods. They make a purchase online and specify when they want to pick up the products. BOPIS places the pick-up location within the store and curbside involves an employee bringing the product out to the customer in their car or outside. This provides retailers with a great opportunity to help consumers avoid lines and have a product ready for when the customer is available to pick it up. Forrester predicts (link resides outside ibm.com) these type of sales to exceed USD 200 billion by 2028.3
- Prioritize experiential retail: Retailers must provide some incentive to get consumers to visit their brick-and-mortar locations. They can host special events, such as bringing in a chef to demonstrate how to use a specialty shop’s produce to make special meals. They can host interactive sessions where customers can try out products, like a new bike at a sporting goods store.
- Offer self-checkout: Retailers should consider offering options to customers that allow them to scan and bag their products and make a payment without needing to interact with an employee. Retailers can set up self-service kiosks where customers can scan and bag items and pay without needing to interact with an employee.
There are several trends that have improved customer experience in recent years.
Artificial intelligence
AI, especially generative AI, can supercharge so much of the customer experience. It can help drive personalization, help analyze customer feedback, power chatbots and virtual assistants, and ultimately streamline many processes. IBV reported that 78% of global executives plan to scale generative AI into their customer and employee experiences.
Live commerce
TikTok and other vendors have created opportunities for live commerce. Consumers can watch shows on TikTok that feature retailers’ products and buy directly on the app. They can partner with influencers, which creates a great opportunity for retailers to reach new audiences beyond their owned channels.
Sustainability
Some customers prioritize buying from businesses that place sustainability at the top of their values. Retailers that are interested in reaching these customers should focus on minimizing their carbon footprint by embracing a sustainable supply chain, lower energy usage and eco-friendly materials.
Retailers need to measure several key customer experience metrics to understand the success of their approach and find ways to improve. Common metrics include:
Customer Effort Score (CES)
This metric, closely associated with customer service, relates to how easy or difficult it is for a customer to resolve an issue or complete an action. Examples of this include the retailer fulfilling a request, completing a refund, or answering a question. Experts say4 (link resides outside ibm.com) this score helps retailers understand how customers feel about an organization.
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Footnotes
1 US online retail sales to reach USD 1.2 trillion this year: report (link resides outside ibm.com), Retail Dive, 17 July 2024.
2 53% Of Americans Use Digital Wallets More Than Traditional Payment Methods (link resides outside ibm.com), Forbes, 25 August 2023.
3 Forrester predicts offline retail sales will surpass USD 4 trillion by 2028 (link resides outside ibm.com), retail dive, 3 August 2023.
4 10 Customer Service And CX Metrics You must Consider (link resides outside ibm.com), Forbes, 12 February 2024.