From Transactions to Engagement
Retailers are embracing the shift from transaction-focused interactions to a sustained customer engagement, recognizing that consumers’ buying journey neither begins when they set foot in a physical store or visit a digital storefront via browser or mobile device, nor ends when the sale is completed.
In today’s connected world, with Alexa, Google, and Siri in our homes, cars, and with us wherever we go, the journey starts earlier – when the consumer has an unfulfilled need (recognized or not). Be it a new batch of K-cups for their Keurig machine, a portable battery pack to boost the charge for their smart-phone that runs low by 4:00 pm, or a new outfit for a planned vacation to Hawaii in the cold of February, there are tens or hundreds of customer journeys starting for each consumer, every day.
The end of the journey has changed too. It’s no longer the point of purchase: it’s the conclusion of the vacation, being able to keep using the phone through the end of the day, or enjoying the hot cup of coffee from the Keurig machine. It’s often accompanied by a Facebook or Instagram post or a product review. That journey’s “end” can (and should) actually be the beginning of a new cycle, a new journey of needs, ripe for retailers or consumer products companies to take advantage of it, but how?
Creating a Digital Twin of your Customer
Industrial Products companies have been creating “digital twins” of their key assets – production machinery, mining equipment, delivery vehicles, large-scale refrigerators and industrial ovens that monitor and measure operating performance, temperatures, heat generation, and wear and tear. By mining the real-time data from their assets and applying machine-learning techniques to effectively predict (and proactively address) required maintenance and avoid unplanned downtimes, they have successfully improved productivity and profitability, in addition to creating entirely new business models.
Retailers and CPG companies now have a similar opportunity. By combining detailed transactional data with insights from social media and consumption / usage data from IoT enabled devices (smart phones, connected home lighting, appliances, home entertainment systems, heating & cooling, and cars, for example) it is now becoming possible to create “digital twins” of consumers.
Combining transactional data – such as the quantity and frequency of K-cup purchases – with insights to consumption, as well as non-transactional knowledge such as family size and makeup, time spent away from home on a vacation, local travel to work, etc., allows companies to establish a reliable model of individual consumers, to predict timing and frequency of purchases of products – but also to understand the point at which that unique customer is likely approaching their own personal “reorder point” – the ideal time to present them with an offer (but not necessarily a discount.)
Applying these insights with machine learning to understand customers’ behavior outside of a store’s four walls, retailers can communicate in an effective, relevant and timely manner to let them know, for example, that their favorite coffee K-Cup is available at two or three local stores (which we happen to know are conveniently located on their route home from work), and if they want to double their order, we will include a complementary 4-pack of breakfast Danishes (which we also know would have been overstock in 36 hours) and have it all waiting for them.
Leveraging insights gained from both product consumption and how connected devices are being used (e.g. – a sudden increase in the number of low-calorie meals being prepared / cooked) present entirely new opportunities for retailers to cross-sell and up-sell. When internal battery monitors indicate low levels in devices, you tailor offers to include extended battery-life models. If a customer typically adds an additional 30 seconds after microwaving their dinner, flag them as a target for a higher-wattage model, or offer them a service call to check the output of the appliance.
The consumer of today demands relevancy, and applying “Digital Twin” concepts to predictively offer relevant solutions to them, not as they enter a store with their minds (and shopping lists) already made up, but rather at point in time (and location) they will be most receptive will drive additional profitable revenue and, just as important, increased loyalty.
The Future of Retail is Insight-Driven Relevancy – and that future is here today.
Come Experience the Future of Retail, Now. See SAP at the National Retail Federation’s Big Show
If you are going to be at NRF’s Big Show in New York on January 14-16, stop by our booth (2523), and see how SAP solutions work in a connected goods world, how they support creating a better customer experience in store and online, and how emerging technologies are creating amazing opportunities for retailers to transform with innovation and new business models.