IBM report: The smarter consumer has arrived
Tags: Consumer Behavior, Customer Experience, Digital Merchandising, Kiosks / Self-Service, Marketing, Merchandising, Multi-Channel Retailing, Social Media, Technology
3/7/11 - James Bickers
Last week, IBM released a new 20-page report,"Capitalizing on the Smarter Consumer," which contains the results of the company's recent survey of 30,000 consumers about how they shop and why. At the heart of the report is the idea that consumers today are smarter than ever before, and that calls for changes in the way retailers operate."Technology is completely entrenched in the life of smarter consumers," writes Melissa Schaefer, global retail research leader within the IBM Institute for Business Value, in the report's introduction. "They are comfortable using the Internet, mobile technologies, in-store kiosks and digital TV to browse for and buy goods."The report defines "instrumented customers" as shoppers who use two or more of those technologies to shop, and according to the survey, it's a group whose ranks are swelling: 49 percent of respondents are instrumented, a 36 percent increase over last year. The number of shoppers that don't use any of the technologies to shop has dropped to 14 percent, down from 20 percent last year.Some of the other key findings in the report:
- 75 percent of all consumers are willing to shop on a retail website
- 39 percent are willing to use in-store kiosks, a 10 percent increase over last year
- 25 percent are willing to shop via the mobile channel, up from 13 percent
- 24 percent are willing to shop via digital TV, up from 17 percent
- "Digital babies" have seized control: 52 percent of teenagers are instrumented, up from 38 percent last year
- 78 to 84 percent of consumers now rely on their social networks when researching new products
The shopping process itself is now fragmented, the report says. "What was once an uninterrupted flow is now a series of moments: the moment of first becoming aware of a product, the moment of researching it, the moment of purchasing it and the moment of taking possession."Retail consultant Doug Fleener notes that many retailers make the mistake of operating as if shopping were still a linear flow. "They engage, or don't engage, the customer as if the buying process is a single event with a finite start and finish," he said. "This frustrates the consumer and leads to a lost sale to the Internet."So, what should retailers do with this information? The report suggests a three-part strategy for changing retail operations to capture the new consumer:
- Listen and learn by monitoring consumer-controlled content and analytical tools. This includes everything from Twitter and Facebook to "haul" videos. (link to explanation)
- Enable and execute by having a single view of the consumer across channels, and changing "sales associates" to "service associates."
- Empower the consumer with better tools across all channels and better feedback mechanisms.
Expert reaction to the reportCustomer experience designer Mike Wittenstein says the report offers irrefutable evidence that customers now demand to be empowered and in control of the shopping process, and that retailers can no longer ignore this trend. "But smarter customers doesn't mean retailers will make less," he said. "They just have to shift the kinds of value they offer to be more in line with what customers want."He added that the report also underscores the importance of listening over telling. "It's by listening that retailers will learn what customers want most, and how they want it," he said. "The firms that listen better and serve first will be the new winners."Fleener said the shift to an empowered and educated shopper could pose an especially large challenge for specialty stores, since the product the consumer has researched and settled on might not be the best one for their needs. "If a specialty store staff doesn't add value to the shopping experience, I believe the store risks being commoditized," he said. "The challenge will be serving a customer in a way that meets their expectations while ensuring the customer is getting the best product."Jason Goldberg, vice president of customer experience for technology provider CrossView, disagrees with the report's foundational notion, however."They conclude that the consumer has fundamentally changed, and I don't agree," he said. "I think human nature has changed very little in the entire history of retail. The marketing tools most in vogue today rely upon the exact same marketing principals that have been successful for the past 200 years."While he suggests that consumer desires are unchanged, he does say that technology has raised consumer expectations when it comes to meeting those desires. For instance, a shopper in 1970 might never have imagined that it was possible to get specific answers from a brand, but a modern shopper knows it is possible and therefore expects it.(Photo by Steven Depolo.)
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