The value of customer experience in retail
- Posted on September 19, 2016
No one invests more in customer experience than retailers. They are at the front of the experience economy improving store layouts, creating unified commerce experiences, and investing in employee training to provide the emotionally satisfying experiences that create loyal, engaged customers. Investing in experience is a tricky thing though – individual retailers often spend money without a clear sense of return. However, recently we’ve gained new insight into the value of those investments.
Earlier this year Avanade and Sitecore worked with Vanson Bourne to interview 880 influential business decision makers across six countries and 14 industries, a significant number came from large organizations in the retail sector. Our survey results showed that retailers who were prioritizing customer experience investments were experiencing a dramatic improvement in customer loyalty, along with improvements in net revenue that loyalty brings.
Retailers investing in customer experience saw 18% - 23% improvement across a range of performance indicators including lifetime customer value (an average 23% improvement) and average revenue increases of 19%. The report offers plenty of good news for customer-focused organizations; retail leaders looking to justify customer experience investments in the coming year would be advised to take a deeper look at the data to see how they are measuring their own successes.
The focus of this report was primarily on investment returns but we wanted to get a top line sense for how organizations were achieving results as well. Almost three fourths (73%) of successful organizations surveyed indicated that they’d made investments in improved marketing technologies - not just improved e-mail marketing and more optimized ad buys – but technologies enabling them to engage with their consumers and create more personalized experiences. The work for retailers is far from over though, only 13% of retailers felt that they were ahead of customer expectations in their customer experience efforts.
The pace of change in retail hasn’t let up in 2016. We continue to see mergers, store consolidations, new entrants to the market, and new technologies that challenge even forward thinking retailers. Digital technologies continue to be enablers of great experiences when thoughtfully applied. In research available later this year, we’ll provide more insights into how retailers are developing experiences to improve customer loyalty and profitability. Until then, take a look at our research on Customer Experience and Your Bottom Line: either the retail executive summary or the full report. The results are likely to help as you begin business planning for 2017.