Surviving the Latest Retail Apocalypse - with Kitewheel's Mark Smith

Welcome to the Retail Rundown, your go-to weekly podcast where RETHINK Retail teams up with industry experts to discuss the news and trends defining the world of retail.

Here’s a staggering statistic to kick off your Monday morning: 77% of consumers say they have tried new brands since the beginning of 2020

In this episode, we sat down with Mark Smith, President of Kitewheel, a leading solution provider for customer journey orchestration and analytics, to discuss what’s driving consumers’ willingness to try new brands.

Kitewheel recently released a report titled How to Survive The Latest Retail Apocalypse, which explores key industry trends and offers recommendations on how brands can make the most of an evolving retail landscape.

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Hosted by Julia Raymond Hare
Written and produced by Gabriella Bock
Edited by Trenton Waller

 

 

TRANSCRIPTION

Julia Raymond Hare:
Hello everyone. Today, we are joined by Mark Smith. Mark is a consumer experience expert and the president of Kitewheel. Kitewheel is a leading solution provider for customer journey orchestration analytics, and they recently released a report that caught our eye here at Rethink Retail. It was titled How to Survive the Latest Retail Apocalypse, and it explores key industry trends and offers recommendations on how brands can make the most of this evolving retail landscape. They pulled out four major trends and also included some new data that they generated from their customer base of retailers. Mark, thank you so much for joining us today.

Mark Smith:
Thank you very much, Julia. Pleased to be here.

Julia Raymond Hare:
It’s great to have you. And as I mentioned a few moments ago, you’ve just released this report, How to Survive the Latest Retail Apocalypse. Can you briefly run down what the key takeaways were that you guys uncovered?

Mark Smith:
Yeah, for sure. The report looks at a mix of some of our own data. We run customer journeys for a lot of large companies across the world, most of them in the US. And so, we get to see each year and we’ve been publishing our report for six or seven years now, and we get to see each year just what the trends are in terms of the way different businesses interact with their customers, which channels they use to do that interaction, what type of journeys they’re tracking their customers on. And of course, 2020 was an unusual year, and that’s why we put out this kind of special version this year, specifically of retail because retail got so impacted by the pandemic. And so, we were able to see some really significant shifts in the way the retail industry interacted with their customers.

Mark Smith:
And some of them are very easy to understand, Julia. All of a sudden the customer was in a very different situation for so many retailers. A customer stuck at home and not be able to go and have a physical shopping experience, so everything moving much more digital. And all of a sudden, retailers have to kind of understand that and have to grapple with the change in their customer base. And the ones who were most successful were the ones who were able to make that change quickly and actually be responsive to the different needs of their customers. So, they’re no longer visiting the store. They’re having to do it from home. And so, that opens up all sorts of competitive issues for retailers because the customers got a lot more choice and it’s a lot easier just to flick one brand to another.

Mark Smith:
So, we saw a big shift in obviously online shopping and a big shift in digital communications on the increase, but we also saw a big shift in the switching of brands going on from the consumer side because they are able to do that so much more easily and quickly. And so, that was certainly way ahead of previous years in terms of the amount of kind of brand switching that goes on. And of course, that brand switching takes down loyalty. And so, the level of loyalty that retailers can expect from their customer base definitely dropped in 2020.

Julia Raymond Hare:
Indeed. And so, that brings me to my question. You might’ve answered it a bit in your description of the report, but one of the stats that stood out to me the most, and the reason it stood out to me was about the brand loyalty because traditionally speaking, and I think the narrative in the last year from the retailers and retail influencers, at least in my circle, is the challenge of discoverability when it comes to e-commerce platforms. How do you get someone to not just have an intent? How do you lead them to their intent, right? And you said 77% of consumers tried new brands since the beginning of 2020. Is that more to do with them switching, or is that saying something about retailers spending more on advertising and being more discoverable? What would you attribute it to?

Mark Smith:
Well, I mean, switching brand is I think it’s down to the search that the consumer is on looking for the best experience. What is the easiest, quickest, simplest way that they can get the product they’re looking for or buy the service that they’re looking for? And so, I don’t think it’s just kind of advertising and browsing around lots of different websites. This is about people doing business with a new brand and that happens because you find a better way to do that business. You find a better experience. And the really successful organizations are the ones that are investing in delivering a great experience, making it really simple to become a customer, and making it really simple to find the product you’re looking for, and then making it really simple to transact. And the more that that’s automated and that the interests and desires of the customer are understood by the retailer, the more they can use the data that they’ve got to kind of be smart about interacting the right way with customers. The folks who do that best saw huge gains last year by delivering that kind of personalized experience for the customer.

Julia Raymond Hare:
Mm-hmm (affirmative). And Mark, this might be a question you can’t answer, but are there any retailers you could speak to that you feel are really doing the best in this area?

Mark Smith:
So, well, I think we’ve seen a lot of brands do a really great job of kind of simplifying that digital experience. There’s a lot of big name brands who set themselves off on a home delivery digital kind of experience, home-shopping based kind of experience that was hugely successful for them. And lots of those guys have been in news. I mean, you look at folks like Chili’s and their kind of order, deliver, pickup service that was huge success for them last year. One of our big customers is Kroger who were incredibly successful, switching rapidly to a kind of an understanding of the pandemic and an understanding of the impact that had on their customers and delivering a new, simpler, better experience for customers involving online ordering, store pickup. Those kinds of things had a huge impact on those businesses, and it essentially was the ones who moved quickest to understand the new environment and build processes to support their customers through this brand new world. And it was really about being agile and using new technology rapidly to fit the new world.

Julia Raymond Hare:
Mm-hmm (affirmative). And I like that you mentioned agile because I’ve been speaking a lot about what it means to be agile as a retailer, especially in the store environment. And what would you say is the biggest, I guess, prerequisite to being agile? Because if we look at someone like Target, they were able to respond quickly because they’d already been implementing digital capabilities years before other retailers, but would you say that’s agile? How would you define it?

Mark Smith:
Well, so, a number of ways. Certainly, having previously invested in infrastructure is a big help. And I think the biggest thing there is data, having put in place an infrastructure around data inside the organization to make it accessible and usable by all aspects of the business. The companies that had done that were able to get new things going very quickly. And all those brands that were kind of thinking about digital transformation and hadn’t got the core data platform in place, they got caught short. One great way of thinking about it is not being scared to try new things and essentially not being scared to fail. Agile as a process for businesses is instilling this rapid turnaround approach where, essentially, you try and test new approaches and you have a measurement discipline in place, which again comes back to data and having that data available, but you measure whether it’s successful and if it is, you keep going, and if it’s not, you change and try something else.

Mark Smith:
And being able to do that on a rapid cycle is really the key to an agile approach. And by doing that, you discover new and better ways to interact with the customer, and that gives them a better experience. And that’s the big thing that, really, I think, dominated what happened in 2020 was there was a coming together of a lot of businesses kind of moving down the digital route already, and a lot of businesses knowing that they needed to improve on the experience they deliver. For the last three, four years or so, there’s been a lot of talk in the industry that the experience delivered has become the new competitive differentiator. It’s no longer really the old traditional price and product, but experience has become the key thing that customers are looking for. And kind of what happened in 2020 was that just went from kind of a known trend in the market to suddenly be absolute paramount importance for in particular retailers because all of a sudden, the world changed, and the only thing that was being delivered to customers was their digital experience. And so, the ones were the good one were able to race away and dominate.

Julia Raymond Hare:
Mm-hmm (affirmative). And Mark, you said retailers need to not be scared of trying new things, not being scared to fail. And I think the last year or so has shown us sort of this openness, not only from retailers, but I’ve also heard a lot of people in the industry say from consumers, that consumers historically would be very critical when it came to new retail rollouts and services, but now, we’re more open because there’s an understanding that everyone’s trying their hardest. So, failing fast is actually okay. And it’s interesting, our team looked and found a piece of data from our friends at Nielsen, and they found that the intent of people saying they would likely try a new brand in the coming year was only at 46% in 2019. And it jumped to over three in four, so 77% last year. And do you think that there’s some consumer behaviors like this willingness to try new brands that we’ll see continue on in the next year or so? It’s here to stay?

Mark Smith:
Oh yeah, definitely, definitely. I just think that consumers are moving on. We’re all consumers as well, and we all know what it’s like. The modern world is a constantly changing world. How often do you pick up your smartphone and one of your favorite apps has changed, right? It’s changed. It’s got an update and there’s now a kind of a slightly different new way of doing something. And that’s just become the norm. We rarely sort of deliberately go download a new experience. We almost have got used to this world where it just sort of changes on us. The app’s been updated. It looks different. Oh, but look, I can do these new things. And that kind of mentality, I think, has become the norm for all of us as consumers.

Mark Smith:
And so, if we can get that from retailers, we’re very open to it, and we actually kind of like it. We don’t mind that it’s changed a bit because we believe it’s going to give us a better experience and a smoother process. The other big thing that’s going on, Julia, is we all expect these brands to use the data that they’ve got. We all know that this digital stuff allows them to collect lots of data. But there’s an amazing statistic from Forrester last year that 75% of consumers actually expect brands to be able to predict what they’re interested in. We all kind of know that this data’s there. And so, we actually have a high level of expectation that brands are going to use it in a smart way and know what I’m interested and then give me the right thing.

Mark Smith:
It gets very frustrating when you get those irrelevant ads, ads for things you’ve already bought, for example, which is one of my most painful things. It just drives me crazy. You guys know I’ve got this product already. Why you advertising the same thing? Can’t you advertise the next thing that I should be interested in?

Julia Raymond Hare:
Mm-hmm (affirmative).

Mark Smith:
And the good guys use data smartly and get to that point. And that’s what makes it all simple and easy and a great experience. It’s like, “Oh yeah.” You’ve probably had these experiences last year, Julia, where exactly the right product appears in one of your social feeds and you just have to click it, and it’s on its way and you’ve ordered it. And I think there’s been a huge improvement in the targeting of those kinds of things that the available data has given. Businesses who want to use it have got a lot more capability to really kind of microtarget the right thing for the right customer. And those things make us all super happy. It’s like, “Oh, just what I was looking for. I just have to press one button and it’s on its way.” I mean, that hopefully will be the future for more and more of us.

Julia Raymond Hare:
Mm-hmm (affirmative). That’s the ideal, frictionless experience. Right?

Mark Smith:
Exactly. And lots of examples of great success with that last year, often picking up on a key trend and then being able to target that new product, that new idea to the right people. But more and more retailers are trying to build that same kind of helpful experience into all of their interactions with the customers. And that’s the kind of stuff we call a customer journey. I mean, we as consumers are all on journeys. We’re living our life. We’re trying to live our life enjoyably and easily as best as we can, particularly at the moment.

Mark Smith:
But that is a journey where we touch brands in different ways through different channels. And the smart brands are bringing in journey technology on their side to ensure they can manage that, the journey of the customer so that every time that customer appears, whether I appear on a website or on a mobile app or on the phone, they know it’s me and they know what I’m interested in, and they can deliver that in a consistent way. And though that kind of intelligence is the more and more that comes into all aspects of our lives, the happier we’ll be because we’ll get a lot of help and support.

Julia Raymond Hare:
Totally. And that’s the competitive advantage of e-commerce right? That’s what all retailers, especially D-to-C, if they’re just focused on D-to-C right now, they should be trying to really leverage the fact that you can know who the person is [crosstalk 00:17:10] your site.

Mark Smith:
Yeah. But do it in this intelligent way that it isn’t just the old way. 20 years ago when database marketing came in for the first time, when retailers for the first time had a list of the millions of customers and the approach was very much, right, what can we send to them? Right? I’ve got the names and addresses and email addresses of 20 million people, and I’m going to send them everything I’ve got in waves of communication. That’s a terrible approach for the modern world where we’re already bombarded. The smart retailers and certainly the ones that we work with are all about making very careful selections of what’s exactly the right thing to send, the most relevant thing, and sure, every product owner wants their product advertised, but the organizations that switched their focus around to being about the customer and saying, “Hey, let’s do what’s best for the customer and choose the right thing for them,” those are the ones being successful.

Julia Raymond Hare:
Exactly. And Mark, let me ask you this because this statistic from the report, How to Survive the Latest Retail Apocalypse, this stood out. It was about one of your clients, not named, but you worked with them to implement a strategy where they actually reduced the amount of emails they were sending by 40%, and that was correlated with millions in net revenue, and the total engagement actually increased on those emails. What would you attribute that to?

Mark Smith:
Well, it’s funny, that’s kind of one of the examples that was in my mind. It’s down to getting the relevance of that email exactly right, but also realizing that you’ve only got so many opportunities with a customer that just filling their email box is actually a negative thing. You will lose out if you overcommunicate because the customer turns off. You just can’t possibly take on board all these emails and all these different messages. And so, customers zone out if you overcommunicate. And so, realizing that and realizing you have a limited number of opportunities to really engage the customer on each channel, but in this case, let’s say email, then you realize it’s about being really intelligent about making sure that the one or two chances you’ve got, you have to make the most of them and choose exactly the right thing.

Mark Smith:
So, yeah, I mean, amazing case study. I’ve been working in this industry for 20 years and in a way, this is kind of what we’d been waiting for the whole time was real evidence that actually lowering the volume of communication can increase sales. And it’s a key. There’s now real evidence out there that it can happen, that overcommunication actually detracts from your business performance, not just the cost of it, but in real returns in terms of the sales that you get. You actually lose sales by sending too many emails. The old world was always we don’t get good returns off email but if we just amp it up a little bit, we send them another million emails, we’re bound to get one or two extra sales out of it. Finally, we’ve got the real evidence that that’s not the case. Those extra millions of emails lose you business because you turn customers off.

Julia Raymond Hare:
I like that insight because it’s a great one, and like you said, it wasn’t necessarily supported a few years ago. Now we have the data showing that is where things are headed. And also in your report, you talk a lot about mobile and mobile is an interesting one simply because 10 years ago or so it was desktop that reigned supreme when it came to that purchasing part of the customer journey. But now, I was a little surprised at this stat actually, but it said 57% of consumers are willing to download and use a mobile app if it’s offered by a retailer. That’s pretty high. I think in the past it was lower. I mean, there’s so many apps. Right? But now people are somehow more willing to say, “Oh, let me check it out. Let me see what this is like.”

Mark Smith:
That’s right.

Julia Raymond Hare:
Why do you think it is?

Mark Smith:
Well, that’s again because of the changing experience. We’ve got the time because that’s going to be our main channel of doing business with this particular retailer is going to be through the app. And so, it’s worth putting in a bit of time to get it because our expectation now is the apps, maybe it’s going to be pretty cool and it’s going to make things easy and repeatable for me. And so, that I think is a big driver of why we’ve seen this increase in the downloads and the increase in that kind of acceptance because we’re all realizing that’s going to be the prime way I’m probably going to communicate with this retailer going forward. No longer am I going to be visiting the store all the time. So, let’s get the next best thing which is an app in many cases.

Julia Raymond Hare:
And some apps are great and they really do communicate the brand essence. Your profile’s saved. It knows what you’ve purchased in the past. You can check out easily. But then some apps suck if we’re being candid. Right? Some are just terrible. And you guys found that 90% of people said mobile shopping experiences could be better. I definitely would be in that category for a variety of reasons. But, Mark, what would you say, from your client base, what are some of the things that come up a lot that are things that need to be improved upon?

Mark Smith:
Yep. So, probably the number one thing is that the experience is kind of planned out as more than just a single interaction, so what we would call the journey. The reason you have an app is for a long-term relationship with that customer. And it’s not just about a one-and-done kind of single experience. And how do you tie together multiple experiences with a customer and guide that customer down a journey where you get them to use new features, you get them to buy more products because you’ve delivered an engaging experience in that app and it’s worthwhile them coming back? You encourage them back. You link the app to other communication. You link it to text. You link it to email so that you’re constantly trying to encourage the customer back to the app where you can give them a richer, more personalized experience which involves understanding the journey and that context of the customer being on a long-term cycle.

Mark Smith:
So, the retailer that we’ve worked with a lot in the last year, actually the last two years is the grocery chain, Kroger, and they’re our primary customers. They are the life-cycle marketing group. So, they have this long-term view of the overall life cycle that they’re building with their customers. It’s not just a single shopping visit anymore. It’s multiple trips and a long-term relationship that they’re looking to build with their customers. It’s the connection of that with the journey that the customer’s on that really brings great experiences to life for retailers.

Julia Raymond Hare:
And when it comes to grocery, what does that mean nowadays? Because it used to be personalized coupons, things like that, in terms of knowing who your customer is, where they’re at in their journey.

Mark Smith:
Yeah. The kind of new practices there are actually about this sort of experiential kind of helping and assistance for customers. I think there’s been a lot of great publicity around the work that Kroger did to help their customers, particularly in the early phase of the pandemic whereby they made the shopping experience safer, whereby they provided additional digital capabilities for ordering, where they provided new delivery and pickup facilities to, again, make it safe for the customer. And so, understanding all of those things and how to connect those things into the overall long-term experience is where the customer journey kind of comes to life.

Julia Raymond Hare:
And, Mark, just from your standpoint, do you think we’ll see more of the buzzword, experiential retail, come to the grocery space once the vaccines are rolled out and we get back to “normal”?

Mark Smith:
Yeah, I think a lot of those retailers have kind of learned that there is something bigger here and that the real value in your customer base is the lifetime value of keeping them loyal and keeping them engaged and extending how they shop with you, extending the range and the number of visits. And that grows the value. And so, I think there’s a lot of those kinds of themes running in that industry right now.

Julia Raymond Hare:
And while we’re on this topic of loyalty because it’s a theme throughout our conversation, is there a relationship between loyalty and the quality of the mobile experience? Because we are quite literally attached to our phones, our smartphones all day long. I mean, it’s kind of sad in a way, but we are. Right? So, is there a relationship there?

Mark Smith:
So, there certainly is, in terms of going back to your favorite apps. I mean, what makes it your favorite app? What makes it your favorite app is that the experience is good, but what does that really mean? It just means that you can get things done quickly and easily, that you’re not constantly retyping the same things into this device, that it’s a one-click activity purchase, that you’ve got a personalized experience.

Mark Smith:
The more that the retailer can deliver back to that individual consumer a set of things that they might be interested in and that they actually… The magic comes when they are things that that customer’s interested in, and then not just the top offer that the retailer has today. Sometimes there’s an alignment there if it’s a particularly good deal, maybe the customer’s going to be interested. But the businesses that turn around that whole dynamic to being personalized about the customer and giving them things they genuinely are going to be interested in rather than just what the business is interested in because we’ve got too many cans of beans on the shelves and we’re trying to sell them this week, and turning that around to what does Julia really need right now, that transition totally changes the game for the way the customer start to stick with you and remain loyal.

Julia Raymond Hare:
Great comment. I think that is a wonderful wrap-up to this episode. Mark Smith, he is the consumer experience expert and the president of Kitewheel. Mark, where can our listeners go if they want to download a copy of this report?

Mark Smith:
They should go to our website, kitewheel.com. Lots of great info there. All of our state of the customer journey reports are there with our data for the last six, seven years, plus this report and a whole set of other marketing fun.

Julia Raymond Hare:
Wonderful. It was great to have you on the show.

Mark Smith:
Thank you for having me. I’ve thoroughly enjoyed the conversation, Julia. Thanks a lot.

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