Customer Experience trends are bigger and better for 2019. Artificial Intelligence (AI) tops the list, with a virtual army of app developers working around the clock to help us excite, entertain and educate our clients. With AI, shopping will be more highly personalized than ever, potentially quashing any lingering doubts that customer service and experience are very different animals. But in order to emphasize experience, we’ll need to better understand the customer and how s/he relates to the brand; knowing what s/he purchased on Monday won’t cut it.
Although the onrush of AI and related technology will make navigating Customer Experience more challenging in 2019, you’ll be glad you made the trip. Keep your hands on the wheel and your eyes on the following trends.
Customer Experience Will Be Delivered with A Brand Purpose
Providing a more pleasurable experience through signature scents, luxurious décor and beautiful music encourages consumers to remember us and return, but when the experience helps them make better buying decisions, it takes on purpose. One powerful way to accomplish this is to help customers physically grasp the usefulness of our merchandise for a given situation. Quality outerwear retailer Canada Goose figured this out and has been installing cold rooms in its flagship stores so customers can try on its coats in the conditions they were designed for. It’s like a walk-in freezer: cold inside, but warming the prospect up through a very cool experience. The store is no longer a place merely to display products, but to provide brand experiences that are simultaneously engaging and practical.
Larger Phone Screens = New Opportunities for Delivering Content
As our smartphone screens increase in size, fresh products, markets and opportunities are taking advantage of the new real estate. Apple recently acquired Next Issue Media and its “Texture” app, which some describe as a “Netflix for magazines.” For $10-$15 monthly, subscribers have access to a bonanza of popular magazine content. Tubi, meanwhile, is a video app with a significant focus on the Android phone market. The service delivers free, ad-supported film and TV content from major studios. For brand advertising, one of the most exciting opportunities is in mobile gaming. To date, brands account for only 15 percent of the lucrative ad spend in mobile gaming apps, but that’s set to change. Gamers are increasingly open to ad-driven content, and according to Adweek, today’s mobile apps “are integrated with customers’ devices, ensuring publishers and advertisers can leverage key data signals to seamlessly connect a relevant message to the right user.” It’s clear that as our smartphone screens grow, so do the options and benefits of mobile advertising.
Brands Develop Secret Apps for Superfans
While “superfans” may be a small subset of your customer base, they are disproportionately important to brand success. Target, Adidas and Ralph Lauren are among the brands that employ “secret” apps to cultivate relationships with their most devoted fans. Interaction with customers on these apps produces a wealth of insight into preferences, values and motivating factors while rewarding and inspiring their loyalty. Adidas’ Tango football (soccer) app delivers an array of video challenges that gamers and hardened street footballers alike find addictive. Nike meantime has released Nike Unlocks for NikePlus members, delivering such experiential content as fitness and meditation classes, mood music and augmented reality-driven encounters with new and in-concept products. If you’re a Ralph Lauren devotee, the fashion giant’s new Polo app has everything you’ll need to shop its worldwide collections plus unique, limited-edition merchandise not available in stores. For 2018 Lauren teamed up with another institution with roots in the Bronx—the New York Yankees—to create vivid experiences for fans of all (pin)stripes. Superfan apps will be a Customer Experience game-changer in 2019. Don’t take your eye off the ball.
Voice Chat Conveys Warmth and Personality
Text messaging is convenient: you send a text and the recipient reads and responds to the message in due course. It’s perfect in many situations, but voice chat makes any conversation come to life. It’s your voice, with your tone and inflection. It’s more personal and it helps avoid the misinterpretation that can occur with text communication. An app that’s hoping to conquer this space is Zello. Described as “the push-to-talk mobile app that redefines the walkie talkie,” Zello aims to let you talk to friends and colleagues “next door or around the world.” Zello offers free personal and paid professional versions and stresses its usefulness in teamworking. As you might expect, Apple is also in on the action. A walkie-talkie feature included with the watchOS 5 software update allows voice chats on your Apple Watch. It’s too early to predict the extent to which walkie talkie-style digital communication will impact the Customer Experience, but expect to hear a lot more about this development in the years ahead.
Podcasting is the New Future of Media
Podcasting is one of the fastest-growing forms of digital media in the world. According to Forbes, 13 years after Steve Jobs called podcasting “the next generation of radio” that vision has been fulfilled. More than 80 million Americans now listen to podcasts regularly per Edison Research’s Podcast Consumer 2018 report, which asserts that the medium’s “share of ear” has doubled in the last four years. It’s not just Apple’s commitment but Google’s that is propelling such widespread adoption. As reported in Pocket-Lint, a new Google app for Android—the company’s first dedicated podcast player—provides access to over two million podcasts. Google plans to apply AI in a number of ways: offering automatic subtitling, on-demand language translations, improved search functions and a smart suggestion engine. So what’s in it for brands? First, relative to other performance media the costs of producing a podcast are low, with few barriers to entry and an accessible audience for relevant, free programming. Check out branded podcasts from GE, eBay, ZipRecruiter, Basecamp and Sephora, and if you don’t want to produce your own podcast, advertise. SmartAsset explains the advantages podcast advertising has over other digital media: “When you listen to a podcast, the host or hosts generally read out the advertisements … there are no annoying pop-ups, auto-playing videos or intrusive ad breaks that are loud and out of sync with the tone of the program.” There’s no easy way to skip ads in a podcast and—for now—it’s a buyer’s market.
Projection Mapping Creates an Immersive Experience
Projection mapping lets firms engage customers in unique and often mind-blowing experiences. State-of-the-art projection mapping tech allows imaginative image and video content to be projected onto 3-dimensional surfaces—a big leap forward from flat, monotone walls and screens. As David Title, Chief Engagement Officer at Bravo Media, an experiential marketing studio, explains, “Projection mapping has a unique ability to transform an environment in ways that traditional screens and LED arrays simply can’t deliver. With an ever-increasing demand for immersive experiences we expect to see projection mapping used across industries, from retail and hospitality to real estate and public spaces, to engage, inform and delight. “Words we most often hear from spectators are “exciting,” “amazing” and “unforgettable,” and creative brand marketers are testing the possibilities across a range of industries; among the 60+ examples linked at GES are Southwest Airlines, VW, New Balance, Pepsi, LG, H&M, Mattel and Harrods. Although full-blown projection mapping “events” are out of reach for organizations with limited marketing budgets, there is enormous incentive for tech firms to produce applications that small to midsized companies and nonprofits can afford. Brainstorm your dream application, and if you find it too costly at today’s rates, treat it like the weather in New England and wait a minute.
Paid Loyalty Programs Gain Deeper Engagement
The traditional “free” customer loyalty program is here to stay but paid and VIP programs are trending at the top of the pack. Research shows that loyalty program members who pay or purchase to belong are incentivized to follow brand messaging, utilize member benefits and share personal information beyond the contact basics. Along with the more obvious perks and benefits, fee-based programs have been demonstrated to create a sense of exclusivity not found with the free variety. The result is something akin to true loyalty, and brands such as Amazon, GNC, Hilton, Bed Bath & Beyond, GameStop, Sephora and Renovation Hardware are making hay. Amazon has been remarkably effective in convincing affluent customers to pony up $99 annually for a Prime membership—an astounding 82 percent of U.S. households with annual incomes exceeding $110,000 are members—and these members are spending 250 percent more annually than non-members. (Amazon’s recently announced increase to $119 yearly should have relatively little impact on these numbers.) LoyaltyOne tells us that “sixty-two percent of consumer respondents said they would consider joining a fee-based rewards program if their favorite retailer offered one.” Among Millennials, the numbers are even more compelling, with “75 percent of 18-24 year-olds and 77 percent of 25-34 year-olds saying they’d pay to belong.” Enough said.
AI Moves from Personalized to Predictive
AI lets firms use the information they collect about the buying habits of a given client to create a more personalized experience and predict future actions. Predictive consumer analytics is not new, and neither is Amazon’s use of it. As early as 2010 Jeff Bezos described “business intelligence and data analytics, machine learning and pattern recognition, neural networks and probabilistic decision making” as among the techniques and technologies the firm was already exploring to build its customer base. A pioneering Amazon application allowed the etailer to predict when a caller was checking on an order, prompting the system to bypass superfluous auto-response options and get him directly to the information he was after. The company never ceases to build on such innovation. In February 2018, Wired spoke with Amazon VP of Devices and Services David Limp about a reported transformation in how Amazon predicts which and how many customers will buy a new product. “I’ve been in consumer electronics for 30 years now, and for 25 of those forecasting was done with [human] judgment, a spreadsheet, and some Velcro balls and darts,” Limp said. “Our error rates are significantly down since we’ve started using machine learning in our forecasts.” United Airlines, Netflix and Spotify are some other notable brands applying AI algorithms to their customer data and creating win-win outcomes.
Regardless of industry, businesses need to continually assess how customers view the experience they deliver. And while we know consumers prefer self-service and that firms can reduce overhead by using AI to address that preference, we need to be mindful that when a customer hits a wall she wants a human being to intercede. Therein lies the prize, because the human element will continue to be the key differentiator between your company and the competition. So stay human, and remember: the customer is still king, and in the tech-driven experiential age, Customer Experience—not service—is the king-maker.
If we don’t look ahead we risk being left in the dust, and perhaps nowhere is that risk greater than with the emergence of Artificial Intelligence (AI) as a practical retail technology. AI has left the lab, and although its long-range impacts and unexpected consequences remain the domain of science fiction writers, brands and retailers have seized upon it to predict individual consumer behavior and laser-target their messaging. Those who begin coupling AI with the human touch in the year to come will have a huge advantage long-term. As my 2019 trends that follow demonstrate, the technology gold rush will go unabated but savvy retailers will never lose focus on people.
Specialty Stores Thrive; Department Stores Surrender
Department stores have become damaged through perpetual deep discounting and their failures to motivate staff and excite consumers. All around us, once-dominant chains are shrinking and shuttering at a frightening pace, with venerable Sears and Toys R Us among the casualties. At the same time, specialty shops offering unique merchandise, highly trained (and well-compensated) sales associates, and irresistible services and spaces are booming. No retailer better exemplifies the trend—or its staying power—than Mitchells, a “luxury brands specialty store” that’s set the bar with its exceptional customer service; exquisite designer clothing, jewelry and accessories; and multi-generational relationships with designers and consumers. Jack Mitchell, CEO of the company his parents started in Westport, Connecticut, went on to write Hug Your Customers and, later, Hug Your People—titles that concisely sum up his retail recipe for success in a world of unlimited choice.
Consumers Spend As Channels Blend
Today’s customer is channel agnostic, switching effortlessly between online and bricks-and-mortar buying and employing a blend of shopping techniques: patronizing physical stores for tactile and social experiences, conducting product/pricing research via smartphone, and taking advantage of super-convenient online ordering and delivery options. “We don’t hear customers talk about channels very much,” James Nordstrom, president of Nordstrom Stores, told Diginomica. “Customers value experiences, and so the more successful we are in creating a great shopping experience, no matter how they’re choosing to shop, I think the better our business will be.” To exploit the trend, make your customer’s experience a good one no matter where he shops you.
The Circular Economy Expands, Retailers Go Sustainable, and Customers Approve
Serving the goal of sustainability, a circular economy is a regenerative human-managed system in which waste is minimized by slowing or closing energy and material loops. The economic model embraces durability, reuse, repurposing, refurbishing, recycling, and upcycling, and is being embraced by a growing cohort of environmentally-friendly merchants and manufacturers. Companies such as Unilever, Patagonia, IKEA, Lush Cosmetics, and New Belgium Brewing not only have the distinction of executives who can sleep at night, but legions of loyal, educated and affluent customers who reward environmental leadership at the cash register and like to tell their friends about it. Take Patagonia, the cultish outdoor clothing chain that has championed Earth-friendly practices and policies for over 30 years. The retailer’s Worn Wear program provides generous merchandise credits for returned Patagonia clothing in good condition. The returns are sorted into three categories: “Rewear” for clothes suitable for second-hand sale; “Reuse” for well-worn items to be turned into other products; and “Recycle,” which converts everything else to textile fibers and industrial products such as insulation. According to CEO Rose Marcario, Patagonia “wants everyone to become radical environmentalists by keeping our stuff in use longer.” Retailers with their eyes open won’t need a degree in climate science to know which way the wind blows.
Members-Only E-Commerce Becomes More Personalized
Amazon is far from the only retailer that’s innovating in e-commerce. Walmart describes Jetblack—a service launched from the retail giant’s tech incubator “Store No. 8” (not really a store) earlier this year—as “a new shopping service that combines the convenience of e-commerce with the customized attention of a personal assistant.” More pricey than Amazon Prime ($50 monthly for Jetblack vs. $12.99/mo. for Prime), the service is going after an upscale, busy clientele including “time-strapped urban parents.” A member simply texts her shopping request and Jetblack goes to work, delivering the appropriate merchandise within two business days—just 24 hours for popular items—at no additional charge. The launch publicity stresses an entrepreneurial, team-oriented approach to the question, “What if we doubled down on the customer experience and leveraged emerging technologies to build the most effortless, customized, and curated shopping experience possible?” The underlying system reportedly combines the skill and knowledge of expert human buyers with the speed and precision of AI and aims high to satisfy the unique needs of each member customer. If it flies, and it should, we’ll be hearing a lot more about this and other hyper-personalized services to follow.
Cashier-Less Checkout Expands Rapidly
As Amazon expands its Amazon Go chain of self-service convenience stores, dozens of startups are competing with established firms to master and lead this potentially game-changing retail model. An innovative Chinese entrant, BingoBox, has taken the cashier-less concept to another level, automating virtually every aspect of store operations in more than 300 unmanned outlets. BingoBox stocks snacks, beer, and just about any essential food or household item you might need in a pinch when other stores are closed. Shoppers scan a QR code to gain entry and pay for their purchases via mobile app. Other checkout-free startups include Zippin, with a recently opened concept store in San Francisco, Inokyo in Mountain View, and Santa Clara’s AiFi, which promises an affordable, flexible system for mom-and-pop stores and larger retail operations alike. This is an important trend that many of us will want to watch, but here’s the million-dollar question: Will automation that eliminates human staff find a home across the broad retail spectrum, or be consigned to the convenience store market where today’s innovation is occurring?
Retail Metrics Shift from Store Sales to Various Touch Points
While the same-store sales metric has long served as a baseline indicator of retail success, a number of industry analysts are questioning whether the metric is appropriate to measure modern retailing, according to recent reporting in RetailWire and Retail TouchPoints. Stores don’t always serve the same function that they did in the past, when they had one job—to complete the sale. Today’s stores have taken on a number of new roles, including marketing to boost brand awareness. That may mean the store no longer carries and sells products; that it has become an experiential destination center, showroom, and/or distribution center. Clearly, when sales are frequently completed in a channel other than the store, judging performance based on sales numbers alone is misguided. This is a reality that Wall Street investors and shareholders are learning to accept as retailers convert their stores into something new.
AI Becomes A Valuable Tool to Personalize Service
Retailers are using AI to personalize customer service, and the trend is picking up steam. Fifty-five percent of retailers plan to leverage the technology within three years, according to the 2018 Customer Experience/Unified Commerce Survey from Boston Retail Partners (BRP). Among the many applications: merchandise recommendations based on a customer’s response to a short survey, and the ability to contact a given client at the most favorable time of day. In April, Starbucks rolled out voice recognition ordering in South Korea, extending its mobile order-and-pay technology by integrating with Samsung’s AI chatbot, Bixby. Customers can use their phone in a conversational way—as if speaking with a real-life barista—to learn more about available beverages. Meantime, The North Face has adopted IBM Watson’s cognitive computing technology to help consumers find just the right jacket. But here’s the thing. While AI implementations will permit innovative businesses of all kinds to increase client satisfaction, Starbucks and The North Face know full well—as any customer-centric organization should—that connections made between two people will always trump “equipment” no matter how many bells and whistles are thrown in.
Mall Brands Enter the Subscription Service Rental Market
Ann Taylor and Express are notable among the fashion retailers that offer rental subscription services—an innovation that helps to offset reduced in-store traffic and create a new revenue stream. With Ann Taylor’s Infinite Style program, for $95/month subscribers receive up to nine garments every four weeks. “Wear it. Send it back. Get more. Exchange as many times as you like with free shipping, both ways.” Meantime, Express Style Trial works on a set-of-three basis and looks attractive at a flat monthly cost of $69.95. “This service allows our closet to become your closet. Start closeting items by browsing our site and viewing everything Express Style Trial has to offer. Check out New Arrivals for new styles each week.” In addition to helping clothing retailers maximize their inventories, affordable monthly rental programs such as these hold particular appeal for younger customers who may not have otherwise recognized the brand. Now it’s something they’ll want to talk about. According to Allied Market Research, the online clothing market rental market will exceed $1.8 billion by 2023.
In recent years, retailers have increasingly overlooked employees as their most important competitive differentiator, instead focusing on technology solutions that promise to reduce overhead and automate every conceivable aspect of the business. AI is a remarkable tool with capabilities we’ve only just begun to unleash, but as an executive obsession I fear it will further devalue our people. As enthusiasm for AI, unmanned stores, and ingenious self-service options swells in 2019, remember that when (not if) the machines drop the ball, customers will be most grateful for the human being in the room.
And consider the philosophy of MM.LaFleur as articulated by Rachel Mann, director of offline retail, when she said, “for us it’s all about the human experience—a refuge from Alexa and all of the choice and robots … it should be like you’re meeting your friend and she’s giving you good advice.” Now that’s a trend you can bank on.
Retailers can learn important lessons from studying kiranas, mom-and-pop stores in India. In our present day quest to design the most efficient and enticing shopping experience, complete with the latest technology, retailers miss what is really essential. Kiranas are small spaces, packed to the brim with merchandise. Catering to a neighborhood population, the kirana offers personalized service which the larger stores either can’t or don’t want to supply. Of course, as a thought leader in the customer service arena, that caught my attention. With a population of 1.3 Billion, 90% of India’s retail market is controlled by the mom and pop stores. 90%!
Amazon and Walmart are investing heavily in India according to a May 2018 article in The Wall Street Journal, Retail Goliaths Meet Their Match in India. While significant parts of the article were about cost structure, the authors stressed how personal relationships have proved to be a strong competitive advantage. Even though kiranas pay more in wholesale prices than the global behemoths like Walmart, the other costs for rent, labor and operational expenses are low. Quotes from customers peppered throughout the piece about the great customer service were compelling.
Every day I read magazines, periodicals and on the Internet that retailers feel the need to use experiences as a way to attract and keep customers. Miami just granted approval to build the biggest and most expensive mall in the world, according to a Canadian developer, Triple Five Worldwide Group of Companies. It will be called American Dream Miami. The complex will include 2000 hotel rooms, an indoor ski slope, ice-climbing wall and water park with a lake where guests enter a plexiglass submarine and dive underwater. What I don’t read about – everis how developing a personal relationship between an associate and a customer can add a competitive advantage. One of the owners of a kirana was asked why he is so successful. His response, “he keeps no inventory, he recognizes his customers by voice over the phone, and his deliveries arrive within 30 minutes because his delivery boys know where all his customers live.”
Can we compare a typical large retailer to a kirana? Is that fair? In my opinion, yes. Walmart and Amazon are giants in the industry and can’t compete with kiranas. It’s not about price or technology. One of the quotes from a kirana customer, “We have a personal relationship with our man at the kirana; the owner even knows my name. We can call and ask for one box of matches or four eggs and they come running.”
Of course, a retailer in the US or anywhere else in the world could not hope to match the cost structure of kiranas in India. However, the personalized service can be replicated. Perhaps a single item delivered in a moment’s notice might not be possible, but the spirit of overall service delivery can be duplicated. Retailers should think of their brick and mortar establishment as a coffee shop and associates can be trained to get to know their customers by name and know their preferences. People love to go to their favorite coffee shop where the associate behind the counter recognizes them immediately, says good morning, using their name, and asks about the family. And, if the customer is absent for a few days, that is noted too and the next time the customer stops in, the associate makes sure to ask how everything is.
Competition is the name of the game. You don’t know who or what the next competitor will be – just ask the limousine and music and photography industries. If one of the reasons that Walmart and Amazon can’t compete in India is because building personal relationships is not integral to their business model, it’s a strong argument for your business to rethink how personal relationships can become your mantra and clear competitive advantage.
There is no doubt that successful retailers in the future will heed the model; Think Personal! I would advise retailers to not only Think Personal but Act Fast before it’s too late. Don’t build fancy walls, build lasting personal relationships.
Every time I go to a trade show, I get a bad feeling. There are a thousand booths and each one is exhibiting “the most innovative technology” focusing on improving the customer experience. Early on, Jeff Bezos, Amazon’s CEO and founder, brought an empty chair into his meetings so leadership teams were forced to think about the crucial, missing element who wasn’t in the room – the all-important customer. Companies are setting themselves up for failure unless they leave space at the table for humans, both the customer and the associates, and acknowledge the emotional and connective component that is mandatory in order to create that unique and memorable customer experience.
Too many technology companies are looking at the customer experience as a mechanical solution. The buying experience is not in a vacuum – there is a human element. At some point, like in the Wizard of Oz, the curtain will be pulled, and companies will quickly realize that focusing solely on technological improvements is not the most effective path to reach their goals of generating increased sales and profitability.
Companies in various industries seem to be chasing the next shiny object. I’m a strong believer in technology – there have been major advancements – when the technology enhances the customer experience and it’s coupled with a human component. Look at the major issue with e-commerce. To the average consumer, one site looks another. Basically, the customer’s eyes are focused on the product and the price. When a customer is looking a one site, another screen pops up with the similar product at a lower cost. Retailers are spinning their wheels trying to retain their customers and are spending a fortune acquiring new accounts. Too many e-commerce transactions are one and done. Very few companies make money when a customer doesn’t buy again.
My mantra is the strongest bond is between two people,not between a brand and a customer. I personally have switched from one brand to another in a flash. There are some exceptions, like Amazon and Apple, technology driven companies, and long-established household brands; Coca-Cola, Budweiser and Tide. But the typical company must develop an underlying strategy incorporating the human component with an ultimate goal of creating a one-to-one relationship between the customer and either one person at the company or a small team.
Consumer driven companies can learn from B2B enterprises. It would be foolish for any company selling to another business not to have a dedicated person or team handle new accounts. It would also be heresy not to have an established on-boarding system to ensure a smooth start with new customers. Companies that sell directly to consumers need to think of ways of establishing a closer one-to-one relationship. It isn’t that complicated. It could be a cashier at a grocery store, the concierge at a hotel, the teller at the bank, etc. Recently I heard a presentation from a major wireless company that plans to set up small customer service teams to handle accounts in the same geographic area. What a great idea! If you have wireless service and live in New Jersey, the representative will know about the Jersey Shore. Simple and direct, an automatic connection.
Another company I heard speak was Sweetwater Sound, one of the largest dealers in musical equipment for musicians, recording studios, schools, churches, concert sound companies and broadcasters. Sweetwater assigns a company representative to every new account and that person becomes their engineering representative for life. It works and makes good dollars and sense. The other day I had lunch with one of my nephews who started working for a production events company. I asked him if he ever heard about Sweetwater. His response, I have my own personal representative, Sam. Who wouldn’t love this company and its personalized service.
When someone pushes back and says there is no way to scale personalized service, I say go buy your latest technological toy for your company and see how long your competitive advantage might last. It will probably keep your company in a competitive mode measured in months, not years.
You can easily fill your empty chair at the table with a piece of technology. But, inviting a human to sit with you at the table with make customers more loyal and loyal customers are the best antidote to the next technology gadget in the room.