Marginal Gains #4: Recovering payments
Editor’s note: Special contributor Jordan McKee leads 451 Research coverage of retail payments, which explores the role of payments in commerce and customer experience transformation strategies.
Today’s shopping journey involves plenty of friction, which not only disappoints shoppers and has a negative impact on loyalty, but also leaves significant revenue on the table. This is often a result of discontinuity between sales channels, resulting in information and process silos that prohibit customers from receiving the personalized, fluid experience they desire.
To remain competitive, forward-thinking retailers must focus on streamlining the path to purchase by building retail experiences that put the customer at the center of each interaction. This is at the heart of unified commerce – a strategy for creating a cohesive shopping journey across sales channels by maintaining a single view of the customer and delivering a consistent brand experience across all shopper touchpoints.
Building a unified commerce strategy begins with understanding the needs of the connected customer. These needs are at the root of all change in retail and should dictate the terms of engagement. Connected customers should be rewarded for their loyalty with experiences that transcend the shopping journey. These demands aren't going unnoticed, with 84% of North American retailers seeing a marked rise in consumer expectations.
Our research continues to show that the demands of the connected customer orient around the following three pillars:
1. Convenience. Consumers want fast and easy experiences. They want to shop when, where, and how they want in a manner that allows them to reach their desired good or service in the most efficient way possible.
2. Context. Consumers expect to be treated as individuals and are seeking out experiences tailored to them.
3. Control. Consumers want to engage with retailers on their own terms, including through more natural mediums like messaging apps and social networks. Further, they expect to be able to pay using their preferred method while being assured that their data is secure.
While delivering on each pillar across a single channel, such as online, can be effective, true success comes from addressing these three expectations holistically across all customer touchpoints. This is especially important given the differing channel preferences of North American consumers, who still slightly favor in-store as their preferred shopping channel. This continued desire to interact with physical products creates an impetus for retailers to connect their physical locations into their digital strategy in order to further enhance the value of their brick-and-mortar footprint.
A unified commerce strategy can translate into real results that bolster a retailer's bottom line. Our analysis shows that by addressing negative shopping experiences, which amount to $887 billion in abandoned sales annually, and creating positive shopping experiences, which amount to $296 billion in potential additional sales annually, retailers have a $1.2 trillion revenue opportunity in front of them.
Retailers must begin by mapping out their current customer journey and identifying all existing friction points. Ultimately, any area where the shopper's momentum is obstructed creates an opportunity for abandonment and behavior change. While there are many possible starting points, three areas in particular stand out as near-term priorities:
With $1.2 trillion in potential sales at stake, the business case for implementing a unified commerce strategy is blatant, but executing it is easier said than done. Retailers must align with partners that can enable them to bridge internal information silos and change processes to adapt more fluidly to market demands. Ultimately, partners that can help increase customer visibility across touchpoints and implement approaches to better convert impulse and desire into sales will be fundamental to any successful unified commerce strategy.
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