2014 crm-unified-commerce-survey

CRM/Unified Commerce Benchmark Survey

2014

ContentsIntroduction 2

Unified Strategic Customer Initiatives 4

Unified Technology 8

Unified Processes 10

Unified Execution 13

Conclusion 14

Future Possibilities 15

Survey Methodology 16

About Boston Retail Partners 17

Appendix - Graphs 18

2CRM/Unified Commerce Survey

IntroductionCustomers have forced a fundamental reshaping of retail, demanding a seamless convergence of the in-store and digital experiences. Retailers can no longer divide that experience among separate channels; they must make it a holistic experience, transcending channels to effectively relate to their customers. From the customer’s point of view, she doesn’t care what channel she is shopping from – she simply wants to shop the retail brand. In summary, this is Unified Commerce!

While delivering a seamless customer experience is the driver, technology allows the customer to tailor her own experience. Unified Commerce leverages technology to provide the platform, and real-time retail is the key to delivering the experience. As retailers change the focus within their organizations, the elimination of silos and need for unification to support this initiative becomes apparent.

• Where is your retail organization on its journey to deliver a Unified Commerce experience? • Are you farther along the path than your competitors? • Has your organization “unified” enough to offer your customers a seamless shopping experience?

Read on to see how your organization stacks up to other retailers …


2014 CRM/Unified Commerce Benchmark SurveyTo deliver a seamless experience, retailers need to gather, analyze and disseminate customer, product, pricing and inventory data in real-time. In the 2014 CRM/Unified Commerce Benchmark Survey of top North American retailers, most of the respondents said they already have implemented customer databases to gather this data, and nearly two-thirds of the retailers have plans to implement real-time analytics within the next two years. Retailers certainly seem to be moving in the right direction.

However, achieving Unified Commerce can be a monumental project requiring seamless execution of the right strategy, technology and business processes. Retailers that successfully

deliver Unified Commerce will understand and adopt a “unified” approach for all these components:

• Unified Strategic Customer Initiatives• Unified Technology• Unified Business Processes• Unified Execution of Initiatives, Technology and Processes

The objective of BRP’s 1st Annual CRM/Unified Commerce Benchmark Survey was to identify retailers’ current and planned customer relationship management (CRM) and marketing initiatives as the shift to Unified Commerce occurs across the retail industry.


Unified Strategic Customer InitiativesOverall, both the market and retailers are shifting toward this new paradigm, offering customers a seamless experience and the ability to easily shift from one touchpoint to another. This trend is clearly indicated by the top initiatives identified in the CRM/Unified Commerce Survey (Exhibit 1):

• 3 percent have the ability to identify the customer when she walks in the store, and another 72 percent plan to implement this within five years.

• 16 percent currently have real-time retail from POS (which offers the “Amazon” experience in the store), and another 63 percent plan to implement this within five years. • 28 percent currently use mobile marketing, and another 62 percent plan to implement it within five years (56 percent plan to implement mobile marketing within two years).

Today

Plan in 5 Yrs

Exhibit 1 — Overall Customer Experience Initiatives

Identify Customers Walking in Store

Have Real-time Retail from POS

Use Mobile Marketing

0% 20% 40% 60% 80% 100%

62%

63%

72%

28%

16%

3%


The customer is the center of the universe. Retailers need to ensure their customers are able to get the shopping experience they want and expect – wherever and whenever they want. Offering that necessitates a Unified Commerce approach, delivering a convergence of digital and in-store shopping experiences in a holistic manner.

Unified Commerce requires a common commerce platform for customer engagement, whether in the store, on a mobile device or online. Combining traditional point of sale, mobile, Web, clienteling, order management and fulfillment into a consolidated, real-time platform is the objective. Many retailers realize the implications that come out of this convergence of platforms when they add mobile to their e-commerce experience, surfacing a number of questions around pricing, promotions, delivery, payment and a host of related issues.

In Boston Retail Partners’ 15th Annual POS/Customer Engagement Benchmarking Survey, published earlier this year, we identified that customer experience is the driver. Customer-facing technology allows the customer to tailor her own experience, Unified Commerce offers the means to meet customers’ needs, and real-time retail is the key to making it all happen.

In this survey, we find the same driver, with 95 percent of the respondents indicating customer experience/customer engagement is one of their top three current initiatives (Exhibit 2 – see Figure 1 in Appendix for full list of initiatives).

Some of the other top initiatives that indicate a focus on customer experience and involve the ability to personalize that experience include guided selling/clienteling, social selling and location-based mobile marketing.

Personalization is critical to the shopping experience. With real-time retail, the possibilities for personalization are nearly endless. At a recent workshop moderated by Boston Retail Partners, a group of more than 40 retail executives discussed some of the potential ways to understand who the customer is and how she shops. Some of the possibilities identified by this group included:

• Creating persona-based user interfaces to provide associates and customers with the right tools for their personal needs. • Using a mobile phone’s MAC (media access control) address to identify the customer as she enters the store and track her browsing patterns. • Employing energy-efficient smart LED lights that track customer traffic patterns in the store via their smartphones and offer timely, relevant promotions based on the planogram. • Offering digital interactive customer receipts that provide links to how-to videos for self-installed products, or affirm a fashion purchase by associating the item with a favorite celebrity.

Exhibit 2 — Top 3 Current Initiatives

100%

80%

60%

40%

20%

0%Customer Experience / Customer Engagement

Customer Analytics Customer Segmentation

95%

69%63%


• Offering guided selling enabled by real- time retail to allow associates to tailor each customer’s experience based on her preferences, previous purchases and online shopping habits.

• Employing social selling to understand the customer’s preferences and desired level of engagement.

From this discussion, we see that location-based mobile marketing is gaining importance as retailers look at ways to offer promotions inside and outside the store. Offering a timely promotion within the store when your customer is nearby customizes her visit and offers a one-on-one opportunity to influence a purchasing decision before she reaches the checkout line.

As we look at the initiatives retailers plan to focus on within the next two years, real-time analytics bubbles to the top: 23 percent have implemented it, and 61 percent plan to do so within two years. This capability allows the retailer to perform analysis on the customer, transaction and inventory data as it streams in. (Exhibit 3 – see Figure 2 in Appendix for full list of initiatives)

Analytics is a key enabler for retailers to affect the customer experience in real-time. Real-time analytics allows a retailer to

immediately update and analyze data held in a customer database, offering the ability to support guided selling, clienteling and the “Amazon-like” ability to remember previous purchases and support suggestive selling in the store.

Another interesting initiative is the ability to identify customers when they walk in the store via their smartphones. Only 3 percent of respondents have this ability today, but 72 percent plan to implement it within five years. This capability is a fundamental requirement for location-based marketing and personalizing the customer experience. This is an area that has seen controversy as retailers move to adopt technology that allows for tracking customer in-store shopping behavior, just like online shopping behavior is tracked. The technology is evolving from Wi-Fi to Bluetooth-based solutions, and even to some nontraditional solutions. In a similar vein, state transportation authorities are using related technologies to measure and report traffic delays on public roadways. Automated signs anonymously track Bluetooth-enabled devices carried by motorists and their vehicles in real-time to estimate how long it takes to travel between two locations. This system complies with new federal legislation that requires real-time traffic information be provided to the public.

Exhibit 3 — Initiatives Planned for Next 2 Years

70%

60%

50%

40%

30%

20%

10%

0%

61%

41%

31%

Real-time Analytics Real-time Retail from POS (Amazon Experience at

the Store)

Ability to Identify Customers when they walk in the store via

their smartphones


Apple’s Bluetooth-based iBeacon technology is also being tested in different ways to personalize the customer experience through upcoming trials at companies like American Eagle, Alex and Ani, and Virgin Atlantic. Regardless of the technology, the goal is to engage the customer in a more meaningful way. Once a customer opts in or engages, real-time analytics can access the knowledge of purchase history, online and in-store browsing behavior and preferences to potentially influence what ends up in her shopping basket during this visit.

Retailers are developing budgets with increased marketing dollars allocated to mobile marketing, CRM analytics and customer experience/customer engagement, all of which support the initiatives indicated above (Exhibit 4 – See Figure 3 in Appendix for full list of budget items). This data validates that retailers realize the importance of Unified Commerce and the technology to support it.

Exhibit 4 — Budget Increase 2013 to 2014

63% 59%56%

53%

100%

80%

60%

40%

20%

0%Mobile Marketing CRM Analytics Customer Experience /

Customer EngagementLoyalty Program and

Supporting Technology


Unified TechnologyEnabling the customer to have the shopping experience she demands requires a strong technology foundation. In order to connect the various components and deliver a Unified Commerce experience, a robust messaging layer – or service-oriented architecture (SOA) layer – is usually required. This middleware layer is what allows retailers to enable real-time capabilities and deliver personalized user interfaces for both the associate and customer. These interfaces blend traditional POS, Web and mobile capabilities, ensuring customers have exceptional service while retailers simplify support structures and lower selling costs.

Most retailers surveyed – 81 percent – have implemented some type of customer database, typically as part of a CRM or loyalty platform. As indicated by our 15th Annual POS/Customer Engagement Benchmarking Survey, we’ve seen a steady increase in customer identification and capture at POS. Traditionally, this data has been leveraged for back office direct marketing efforts (mail or email). This data is how retailers know what’s in the customer’s closet, where and how she shops across the brand, and what defines a meaningful recommendation or offer. With a Unified Commerce approach, this knowledge can be used to engage the customer in real-time

while she is shopping, or enable an associate with guided selling or clienteling tools (Exhibit 5 – see Figure 4 in Appendix for full list of CRM technologies).

As real-time engagement becomes more important, it’s essential that retailers capture customer data and preferences at every touchpoint. Real-time analytics are a priority for retailers, but they’re only as good as the data available.

More than half of the retailers surveyed also have plans to implement clienteling within the next five years. Having customer data and being able to offer it to the associate to build a relationship with the customer allows the retailer to increase sales and loyalty, as well as deliver a more personalized buying experience. Most of the clienteling implementations in use today leverage technology that is not integrated to the POS. By separating this data from POS and from the selling process, associates are not able to leverage it at the time buying decisions are being made. As Unified Commerce solutions evolve, we expect to see opportunities to deploy clienteling or guided selling as part of the overall commerce solution.

Exhibit 5 — CRM Technology Planned for Next 2 Years

50%45%

41%

56%60%

50%

40%

30%

20%

10%

0%Mobile Marketing Customer-Facing

TechnologyAnalytics/Dashboards/ Business Intelligence

Campaign Management


Mobile technology has completely transformed retail. Customers now have information available 24/7. They have become accustomed to shopping online and they want to have that same personalized digital experience in the store and they often want to control that experience! Savvy retailers realize that putting tools into customers’ hands is critical. Offering customer-facing technology and even allowing customers to use their own tools to create shopping/wish lists, look up inventory and shop from a digital catalog all are important pieces of the customer experience. One-quarter of the retailers surveyed offer customer-facing technology, with another 50 percent planning to offer it within two years.Of the retailers surveyed, 28 percent have

implemented mobile marketing, and another 56 percent plan to implement it within two years. With mobile marketing and the ubiquitous mobile phone, retailers can reach their customers nearly anywhere. This creates opportunities to fundamentally shift how retailers market to their customers and allows for a more personalized offering.

The overall focus in the next two years is about taking the data that already is being gathered and applying math and science to the data to improve the customer relationship.


As mentioned above, offering a Unified Commerce experience requires a unified approach within the organization. Unified Commerce is one platform to eliminate the different silos originally set up to address the different channels that are available to customers. This platform gathers point of sale, mobile, Web, clienteling, order management and fulfillment into one area to address the customer across the entire transaction. Selecting and implementing the right technology for Unified Commerce requires a consistent and holistic approach to ensure the components work well together to deliver a seamless customer experience. Too often, we see different areas of the organization with different objectives and different ways of choosing and implementing technology.

Because marketing and CRM technologies play a critical role in Unified Commerce, we asked retailers about their current processes for developing a marketing technology strategy, evaluating and selecting solutions, and implementing that technology. We wanted to understand the current cohesiveness between marketing and IT because these are such critical areas within the development of Unified Commerce: IT owns the Unified Commerce

platform, while marketing generally “owns” the data that is gathered and analyzed, which are key to the customer experience.

Slightly more than half the retailers surveyed currently utilize a combined in-house process between IT and marketing to develop a marketing technology strategy (Exhibit 6 – see Figure 5 in Appendix for full list of processes). Unfortunately, this indicates 44 percent of the retailers surveyed currently are not involving IT in strategy development, which offers opportunities for some organizations to bridge this current gap between marketing and IT.

Unified Processes

Exhibit 6 — Current Unified Process Status

Technology evaluation and selection

Marketing technology strategy development

In-House - Marketing & IT

56%

56%

20% 40% 60% 80% 100%0%


The selection of new technology also sees 56 percent of the retailers surveyed using a combined approach, and 75 percent of them are satisfied or extremely satisfied with their current process. Of course, this also means 25 percent of these retailers are dissatisfied with their current process (Exhibit 7).

The current marketing software landscape is quite crowded and confusing. There is a wealth of marketing technology vendors in the marketplace – the image in Exhibit 8 represents nearly 1,000 companies that provide software for marketers, organized into 43 categories and six major classes. And this image is not comprehensive! It represents only a sample of the types of software available, and there are many companies and additional categories that are not shown. Although there are a tremendous number of software options and technical choices facing the marketing department, 44 percent of the retailers surveyed

are not including IT in their software planning and selection. For various reasons, marketing often conducts its own projects to evaluate, select and implement technology without the guidance of the overall corporate IT strategy.

Further, marketing technology strategies are also often separate – 44 percent have a separate marketing technology strategy from the corporate-level IT strategy. Again, this shows separation between these departments when a unified vision is critical.

Exhibit 7 — Satisfaction with Current Selection Process

Extremely Satisfied

Satisfied

Dissatisfied

Extremely Dissatisfied

72%

3%3%

22%


Exhibit 8 — Marketing Technology Landscape


Effectively delivering a seamless customer experience requires collaboration and unified execution among key stakeholders, departments and systems. With any CRM initiative, marketing and IT are the two key departments involved. As we look at the challenges within marketing and IT, we asked retailers about the organization in place to support the processes needed. One of the ways some larger retailers are improving the unification of marketing and IT is by creating a new role within the organization, sometimes called a chief marketing technologist.

The chief marketing technologist is a senior-level employee responsible for developing a marketing technology strategy and evaluating and implementing appropriate technology solutions. This role often is filled with a dedicated IT person residing within the marketing department. When we asked respondents whether they currently had this type of role within their organizations, 37 percent said they have created a similar role.

The top responsibility of this role is to align marketing technology and business goals, with 70 percent of respondents indicating this is the most important responsibility within the role. Having this role develops better collaboration between marketing and IT and aligns the organization to deliver a seamless customer experience.

A majority of retailers (63 percent) either do not have someone in this type of role, or they manage the marketing technology landscape in another, perhaps less-formal manner. Of this group, 74 percent reported they do not plan to implement such a position (Exhibit 9). With the emphasis on technology within marketing and the focus on delivering a seamless customer experience, there needs to be a closer connection between marketing and IT, and the marketing department needs someone skilled at evaluating and implementing the technology solutions needed to offer customers their personalized shopping experience.

Unified Execution

Exhibit 9 — Plans for Marketing Technologist Role

Yes - within 12 months

Yes - within 1-3 years

Yes - timeframe unclear

No plans at this time

11%

74%

5%

10%


ConclusionUnified Commerce is becoming the mantra of the retail industry. While it is not yet pervasive, the key initiatives required to achieve Unified Commerce consistently are the top priorities for retailers, and the industry is slowly and consistently working toward this goal, as evidenced by the results from the CRM/Unified Commerce Survey.

The top initiatives identified by the retailers surveyed revolve around customer engagement and the customer experience. The results also show most retailers are collecting quality customer data and plan to implement real-time analytics in the next two years. The looming challenge is that while marketing has become the center of the Unified Commerce organization, it is often still on its own in regard to developing marketing technology strategies and evaluating and selecting technology. With the importance of multiple key marketing initiatives to achieve a seamless shopping experience, retailers need

to examine ways to improve the unification of marketing and IT to successfully implement these projects. And in many larger retailers, that improvement comes through the development of a role in the organization that helps bridge that gap. This senior-level role is responsible for working with IT to develop a marketing technology strategy and evaluate and implement the technology.

It is impressive how many retailers are focused on implementing CRM and marketing technologies and capabilities to enable Unified Commerce, but there is a lot of work to be done to deliver on this promise. Achieving Unified Commerce is a monumental project that requires the seamless execution of the right strategy, technology and processes. Retailers that successfully deliver Unified Commerce will have done so by adopting a unified approach: unified initiatives, processes, technology and execution.


Future PossibilitiesAs retailers work toward unifying the organization to fulfill the Unified Commerce promise, the next phase of enhancing and personalizing the customer experience already is approaching. This next phase will shift the focus from customer identification to retailers having new insights into not only the customer’s shopping behavior, but also her behavior at home or work.

The “Internet of Things” (IoT) describes an environment where the Internet is connected to physical objects embedded with sensors that can then communicate data. The IoT is not just about gathering data, but also about the analysis and usage of that data. It has the potential to change the way the customer shops and will, in turn, change the way retailers market.

IoT will further enhance the personalized customer experience, as marketers have further opportunities to interact with the customer after the purchase. Instead of an item being purchased and taken home, never to be seen again, there can be ongoing communication with the item to understand and even enhance its usage for the customer. This helps extend the customer experience beyond the purchase.

The IoT also will change the checkout experience and transform the point of sale. With sensors embedded in merchandise and mounted within the store, customers have further control over their shopping experience. They can choose the items they want to purchase and the purchase will automatically be charged to their credit card on file as they leave the store.

The challenge for retailers will be continuing to understand how to encourage and entice customers to opt-in and provide personal information. Retailers that focus on utilizing customer data to enhance the customer experience will be more successful than those retailers who demand customer data without positively enhancing customers’ shopping experience.

The opportunities are endless, and retailers who continue to look for additional opportunities to enhance the customer experience will be most successful.


Boston Retail Partners conducted the 2014 CRM/Unified Commerce Benchmark Survey in March and April of 2014 by contacting more than 500 top North American retailers. Through an online survey system, we gained insight into retailers’ planned initiatives, priorities and future trends.

This paper summarizes the survey’s results and key findings, offers insight based on BRP’s client engagement and retail experience, and identifies current and future trends in the industry to offer retailers opportunities to continue to evolve and prosper.

Specialty retail represented the largest segment of survey responses with 31 percent falling into the specialty soft goods category and 31 percent in the specialty hard goods category (Exhibit 10). The remainder fell into various other categories, such as grocery, food and beverage, and general merchandise.

Of the retailers surveyed, the breakdown in size based on gross annual revenue included a broad selection of Tier 1, 2 and 3 retailers. Three-quarters of the retailers surveyed had gross annual revenue of $100 million to $5 billion (Exhibit 11).

The respondents were primarily vice presidents and directors of CRM or C-level executives.

Survey Methodology

Exhibit 10 — Company Category

Exhibit 11 — Gross Annual Revenue

31%

31%19%

7%6%

3%

3%

Specialty - Soft Goods (Accessories, Apparel, etc.) — 31%

Specialty - Hard Goods — 31% (Books, Electronics, Furniture, Home & Garden, Sporting Goods, etc.)

Convenience & Fuel — 3%

Grocery, Food & Beverage — 19%

General Merchandise — 7%

Other — 6%

QSR/Restaurant — 3%

(Mass Merchant/Department)$10B or more — 9%

$5B to $10B — 6%

Less than $100M — 10%

$500M to $1B — 34%

$100M to $500M — 25%

$1B to $5B — 16%

34%

16% 25%

10%9%6%


About Boston Retail PartnersFor more information or assistance on any of the topics covered in this survey, please contact:

Brian Brunk, Principal

Boston Retail Partners(405) [email protected]

Walter Deacon, Principal


Ken Morris, Principal


David Naumann, Director of Marketing

Boston Retail Partners (916) 597-1007 [email protected]

Boston Retail Partners (BRP) is an innovative and independent retail management consulting firm dedicated to providing superior service and enduring value to our clients. BRP combines its consultants’ deep retail business knowledge and cross-functional capabilities to deliver superior design and implementation of strategy, technology, and process solutions. The firm’s unique combination of industry focus, knowledge-based approach, and rapid, end-to-end solution deployment helps clients to achieve their business potential. BRP’s consulting services include:

Strategy Business Intelligence Business Process Optimization Point of Sale (POS) Mobile POS Store Systems and OperationsCRM Unified Commerce Customer Experience & Engagement Order Management eCommerce Merchandise ManagementSupply Chain Information Technology Private Equity

Boston Retail PartnersIndependence Wharf, 470 Atlantic Ave., 4th Floor Boston, MA 02210

©2014 Boston Retail Partners. All rights reserved. No part of this publication may be reproduced or transmitted in any form or for any purpose without the expressed permission of Boston Retail Partners.


Appendix - GraphsFigure 1: Rank the following current initiatives in order of importance to your organization. Exhibit 2 within the main document is an excerpt from this graph.

Figure 2: Indicate your organization’s plans for these potential initiatives. Exhibit 3 within the main document is an excerpt from this graph.

Importance of Current Initiatives

Plans for Potential Initiatives

Customer Experience / Customer Engagement

Customer Analytics (Lifetime Value, RFM, etc.)

Customer Segmentation

Guided Selling / Clienteling

Social Selling

Social Log-in or Sign-in (Facebook Connect)

Mobile Apps

Location-based Mobile Marketing

Digital Signage

Ad retargeting - tracking cookies on site visit for retargeting

Real-time analytics

Paid organic social amplification - paying for ads on Twitter, Facebook and LinkedIn

Niche marketing or narrowcasting

Real-time retail from POS (Amazon experience at the store)

Embedded digital marketing in print media

Virtual Closet across all channels

Gamification

Ability to identify customers when they walk in the store via their smartphones

1

Implemented

2

Implement in <2 years

3

Implement in >2 years

6

4

No plans to implement

7

5

8

9

0%

0%

20%

20%

40%

40%

60%

60%

80%

80%

100%

100%

66%

16%

16%

13%

6%

22%

28%

28%

25% 13%

13% 3% 3%13%

13% 6%

6%

16% 13%

13% 13% 13%

3%

3%

3% 3%

3%

3%

6%

6% 9%

22% 31%

25%

28% 9%

6%

6%

6%

6% 6%9%

9%

9%

9% 9%

9% 9%34%

19%

19%

22% 16%

16% 16%

13% 13% 44%

13%

16%16%

9% 9% 19%

3%

31%

23%

22%

19%

16% 41% 22% 22%

16%

9%

6%

3%

19%

31%

23%

41%

52%

25%

19% 31% 41%

31% 6% 47%

28% 13% 41%

34% 16% 28%

61% 10% 6%

44% 13% 13%


Figure 3: Indicate how your organization’s budget has changed from 2013 to 2014. Exhibit 4 within the main document is an excerpt from this graph.

Figure 4: Indicate the status of the following CRM technology implementations. Exhibit 5 within the main document is an excerpt from this graph.

Budget Change from 2013 to 2014

CRM Technology Implementations

Increased Decreased No change

Mobile marketing

CRM analytics

Customer experience / Customer engagement

Loyalty program & supporting technology

Customer-facing technology

Social selling

CRM outsourcing

Customer Database

Digital Marketing

E-commerce

Loyalty

Anyalytics / Dashboards / Business Intelligence

Campaign Management

Mobile Marketing

Customer-Facing Technology

Clienteling

22% 6%

3% 55%

55%

42%

45%

53%

56%

59%

63%

47%

44%

38%

38%

3%

72%

Implemented

Implement in <2 years

Implement in >2 years

No plans to implement

0% 20% 40% 60% 80% 100%

0% 20% 40% 60% 80% 100%

81%

78%

69%

56%

42%

41%

28%

25%

17%

13%

9%

25%

34%

45%

41%

56%

50%

27%

6%

6%6%

6%

6%

6%

16%

9%

9%

27%

3%

6%

3%

6%

16%

30%


Figure 5: Indicate your organization’s current process for the strategy, selection and implementation of new technology within the marketing department. Exhibit 6 within the main document is an excerpt from this graph.

Marketing Department’s Current Processes

Marketing technology strategy development

Technology evaluation and selection

Technology implementation

60%

50%

40%

30%

20%

10%

0%In-house -

marketing deptIn-house -

IT deptIn-house -

marketing & ITVendor partnership Utilize ad agency Unsure

13%

3% 0% 0% 0%0%

16%

31%

56% 56%

38%

13%

19%

28%

6% 6%3%

13%

2014 crm-unified-commerce-survey

Retail

unified commerce experience

unified processes

unified approach

seamless customer experience

seamless experience

seamless shopping experience

retailers current

customer databases