The retail customer experience

Organizations should provide opportunities for customer engagement on touchpoints throughout the entire customer journey wherever they prefer to receive information and make purchases. With mobile apps and experiential shopping, retailers must connect with consumers through omnichannel marketing and sales.

Online shopping shows all signs of maintaining its importance postpandemic. US e-commerce sales are expected to reach 22.7% of the retail market¹ share this year, an increase from 2023’s figure of 21.6%, according to FTI Consulting. Focusing on an experience strategy meets customer needs and helps retail businesses build a competitive advantage by increasing customer satisfaction and brand loyalty.

Established companies in the retail industry are increasingly under competition from startup e-commerce companies and direct-to-consumer brands, so they need to focus on delivering excellent customer experiences.

Every retail brand must focus plots a slightly different retail CX strategy, but there are some elements most approaches share. Ultimately, retailers should take a customer-centric approach by prioritizing the customer above all who are most likely to provide a positive experience.

1. Know the customer base
2. Start meaningful marketing initiatives
3. Invest in omnichannel retail approaches
4. Tie CX to strong customer service
5. Start loyalty programs

Retailers should focus on understanding what types of customers they have and attempt to segment them into various buckets for personalization. Leading retailers know that which customers prefer which experiences and can cater to many different groups.

Courting new customers and meeting the needs of existing ones often requires strong marketing campaigns that discuss the brand’s values and purpose and drives consideration.

For example, a retailer might entice an in-store customer to sign up for its newsletter by offering a 10% discount. Or another retailer might try to prompt a customer who has only purchased online to visit the store in person for an exclusive offer.

Influencing customer behaviors across multiple channels is a great way to build stronger relationships and have customer interactions wherever individuals receive their information.

A strong retail CX strategy should create positive experiences for most customers. However, issues might arise with a product or an experience at the store or online. Retailers should invest in customer service training and focus on empowering employees to resolve customer issues wherever they arise.

Retailers should make the creation of loyal customers a main priority. One way to accomplish this is through loyalty programs, where customers can earn free or exclusive items either through the frequency of purchases or how much the customer spends. Loyalty programs can also provide other perks like birthday discounts to encourage customer retention even if the customer has not purchased.

Customers can encounter several challenges in purchasing and receiving the right products for their needs. Here are some of the most prominent:

1. Inconsistent omnichannel experiences
2. Limited personalization and digital services
3. Fragile store technology
4. Unified commerce

While customers expect seamless digital and physical experiences, sometimes issues arise. Examples can include encountering different prices or offers on different channels and needing to supply information they already provided. Organizations should work hard to eliminate these issues wherever possible.

Deliver true one-to-one personalization requires investments in technology and processes. Some of these opportunities might be too expensive for some organizations or take a long time to implement.

Technology like those that power self-checkout kiosks can fail or quickly deteriorate. Retailers should only deploy technologies that they can quickly manage or fix or they risk annoying and potentially losing customers.

Retailers can use technology that unifies all sales channels, back-office processes and data into a single platform. Unified commerce spans inventory to advertising to sales.

Retailers should prioritize digital customer experience to reach the increasing number of people buying online.

1. Build a modern website
   
2. Dedicate resources to social media
   
3. Enhance personalization
   
4. Start virtual and augmented reality experiences
5. Offer multiple payment options
   
6. Pursue strong user experience design

As customers increasingly prefer shopping online, retailers should prioritize the functions of their online properties. They should pay close attention to their website, where many customers now want the opportunity to buy and get products delivered.

Customers use social media to spread both positive and negative messages via word-of-mouth. Retailers should formulate a strategy to monitor these channels to find advocates and critics in real-time. They can encourage happy customers to engage in positive word-of-mouth and solve unhappy customers issues so they don’t move to buy a competitor’s products.

Creating personalized experiences is a great way to drive deeper relationships with customers and demonstrate that a retailer is customer-centric. Retailers can use the customer data that they have previous purchases and self-supplied demographic and psychographic information to prepare special offers or create unique user experiences for customers.

Companies, such as clothing brands or home goods suppliers, have built out augmented reality (AR) capabilities so customers can try on clothing or see how furniture will look before buying them. This technology helps avoid unnecessary returns and can help customers who have difficulties visiting a physical showroom to see the products in a more realistic setting.

Customers want options for how they pay for goods. A Forbes study found 51% of respondentsno longer shop at retailers that didn’t accept digital wallets.² Retailers should upgrade their payment systems to offer options for consumers to pay with their phones through digital wallets.

Good user experience (UX) can mean the difference between a sale and an abandoned cart. Retailers should work with designers, developers, and other specialists to make it easy for users to find what they’re looking for, and easily add those products to a cart. Retailers should also make it as simple as possible to check out and pay without encountering unnecessary issues.

In-store retail CX varies slightly from digital CX in how retailers can interact with customers. However, there are many new and exciting ways retailers can improve their brick-and-mortar stores to become more valuable to customers in an era of online shopping. Many retailers are reimagining physical stores to meet customer expectations. Some examples of what stores can do to improve the in-store process:

• Offer BOPIS and curbside pickup: An increasing number of consumers prefer to buy online, pick up in store (BOPIS) as their way of ordering and receiving goods. They make a purchase online and specify when they want to pick up the products. BOPIS places the pick-up location within the store and curbside involves an employee bringing the product out to the customer in their car or outside. This provides retailers with a great opportunity to help consumers avoid lines and have a product ready for when the customer is available to pick it up. Forrester predicts these type of sales to exceed USD 200 billion by 2028.³
  
  
• Prioritize experiential retail: Retailers must provide some incentive to get consumers to visit their brick-and-mortar locations. They can host special events, such as bringing in a chef to demonstrate how to use a specialty shop’s produce to make special meals. They can host interactive sessions where customers can try out products, like a new bike at a sporting goods store.
  
  
• Offer self-checkout: Retailers should consider offering options to customers that allow them to scan and bag their products and make a payment without needing to interact with an employee. Retailers can set up self-service kiosks where customers can scan and bag items and pay without needing to interact with an employee.

There are several trends that have improved customer experience in recent years.

1. Artificial intelligence
2. Live commerce
3. Outsourced CX
4. Sustainability
5. Retail media

AI, especially generative AI, can supercharge so much of the customer experience. It can help drive personalization, help analyze customer feedback, power chatbots and virtual assistants, and ultimately streamline many processes. IBV reported that 78% of global executives plan to scale generative AI into their customer and employee experiences.

TikTok and other vendors have created opportunities for live commerce. Consumers can watch shows on TikTok that feature retailers’ products and buy directly on the app. They can partner with influencers, which creates a great opportunity for retailers to reach new audiences beyond their owned channels.

Some retailers outsource certain activities to keep overall costs low and to tap into more resources. Examples of outsourced activities might include sentiment analysis, customer service or marketing support.

Some customers prioritize buying from businesses that place sustainability at the top of their values. Retailers that are interested in reaching these customers should focus on minimizing their carbon footprint by embracing a sustainable supply chain, lower energy usage and eco-friendly materials.

Retailers have followed Amazon’s lead and now offer brands the opportunity to advertisers on their owned properties. This opportunity provides brands with the ability to reach customers and influence purchases.

Retailers need to measure several key customer experience metrics to understand the success of their approach and find ways to improve. Common metrics include:

1. Customer satisfaction (CSAT) score
2. Net Promoter Score (NPS)
3. Customer Effort Score (CES)
4. Cart abandonment rates

This score identifies which customers say they are either satisfied (4) or very satisfied (5) with their experiences in a survey that is sent by the retailer. Retailers anticipate that higher CSAT scores lead to stronger customer loyalty.

NPS involves asking customers whether they are likely to recommend the retailer to people in their network. Deriving the score involves subtracting low scores (6 or less) from the scores from “promoters” (9's and 10's), converting that net into a percentage.

This metric, closely associated with customer service, relates to how easy or difficult it is for a customer to resolve an issue or complete an action. Examples of this include the retailer fulfilling a request, completing a refund, or answering a question. Experts say⁴  this score helps retailers understand how customers feel about an organization.

A clear sign of a poor online customer experience is an increase in customers that put items into the cart and do not complete the purchase. Higher cart abandonment rates can demonstrate that there are issues with the overall customer experience.