Customer engagement has always been crucial to retail. But what defines customer engagement today versus even ten years ago has changed dramatically. When consumers could only really engage in a store or on the phone, retailers didn’t have to worry about having a customer engagement strategy, or ensuring that it was consistent across touchpoints. And when the only real ways to create awareness with consumers consisted of a television campaign, some print advertising, and a really strong location strategy, retailers only had to concern themselves with what they said, not what consumers might want to say in reply.
Today, all of that has changed.
The tools and the touchpoints available to influence customer engagement are still in flux, and retailers know it. And more touchpoints are being added every day with little to no drop-off in the overall number of touchpoints that need to be supported. In other words, retailers have to spread the same resources they’ve always had across far more touchpoints, just to maintain their relevancy with consumers. And they anticipate that the touchpoints they’re used to relying on – like stores – will lose influence over time.
As a result, retailers face a fundamental conflict around customer engagement. On the one hand, they talk a good game about valuing it.
Retailers indicate they believe their company values customer engagement, even if it doesn’t impact sales. They say their company is good at striking a balance between creating connections vs. being sales-y with consumers. And they really don’t believe consumer loyalty in retail is dead.
On the other hand, they see their influence in engaging with customers on the wane: 85% of retail respondents believe that stores are one of their top two influencers of customer engagement today, but only 62% believe that will be the case in the next three years.
Worse yet, if you add third party marketplaces and social sites together, the combination outscores retailers’ online channel in terms of influence, and comes within striking distance of stores (55% for the combination of social sites and third-party marketplaces in 3 years, vs. 50% for online site, and 62% of stores). Retailers are saying that, in three years, outside channels – channels they don’t control directly – will collectively have more influence over customer engagement than the retailer’s own online site.
To be fair, some of this perspective is a result of attitude, not reality. For example, in three years only 58% of FMCG retailers expect their stores to be one of their top two channels for influencing customer engagement. This is undoubtedly an over-reaction to Amazon’s acquisition of Whole Foods, which happened right as this survey was fielded. Will only 58% of grocers really find the store one of their top-two influencers of customer engagement in only three years’ time? When even today, extensive studies of millennials show that most of them don’t use a shopping list and don’t know what they’re going to buy until they walk into a grocery store? Sure, change is coming to the industry, but not that much change!
The problem is, retailers talk out of both sides of their mouths when it comes to customer engagement. As you’ll see in the Business Challenges section below, they are quick to embrace all of the promise of customer engagement, and just as quick to blame consumers for only valuing price when it comes to actually buying something – the ultimate measure of engagement.
Is this a retail catch-22? A self-fulfilling prophecy? And is there a way out of this contradiction? That’s what we set out to discover.
Want to read more? Download the full report, Beyond Promotions: Reinventing Retail Customer Engagement by RSR Research and Zmags, here.