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How To Improve Retail Efficiency With Incentives

0aaAnnabel Thorburn ECommera

I was walking past a high-end British shoe shop when a pair of boots caught my eye. But disappointment struck when I got inside and found they didn’t have my size. The staff were quick to suggest ordering a pair in for me. Yet when I asked if any of their other branches had the shoes in stock, they were much less keen to leap to my rescue.

The reason? Incentivization. The staff wanted to make the sale in-store so it would be reflected in their targets. This logic is counter-productive and, as I didn’t want to wait, they lost out on the sale entirely.

When retailers create incentive systems that aren’t joined up in this way, it causes issues for the customer.

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This article talks through how to approach this challenge and implement a new strategy, in clear strategic steps.

  1. Examine every touch point;

  2. Record dominant customer behaviors;

  3. Create a sensible funnel — with more than just commercial moments;

  4. Redesign your incentive system to focus on integration; and

  5. Trial it, and improve it.

Step 0. Start With The Customer

You may have heard this a million times before, but I can’t in all honesty create this list without including it again. You know what it means, I know what it means: if you a plan to tweak the buying process but it makes life more difficult for the customer, think again.

An ounce of prevention is worth a pound of cure — if you have to make your customer happy again after giving them a frustrating experience, that will cost you more than anything.

Now, moving on.

Step 1: Look At Every Touch Point

You can’t optimize your teams’ incentives without accurately mapping the journey they affect. The first step is to do a comprehensive audit of every customer touch point throughout the life cycle.

Be careful to track every possible moment here. The only way you will achieve it properly is by speaking with a broad set of real customers. If you don’t find anything that surprises you, you probably haven’t gone deep enough.

Step 2: Work Out The Most Dominant Customer Behaviors

With this view of customer touch points in mind, you now need to look more closely at how your customers are behaving at each step. Are they showrooming, visiting your stores and then buying online? Are they doing the opposite and consulting the web, but then making a quick final purchase in person?

Are they just browsing? Or are they just visiting your blog again and again to learn how to barbecue, or to accessorize the latest fashion trends?

You need to think carefully about these behaviors, beyond the surface appearance.

If you’re a brand, it might be fine for them to just take a look at what you’ve got and finish their journey through any other channel. But if you are a retailer, the last thing you need is them disappearing out of your funnel because they chose to buy elsewhere instead.

Speaking of which…

Step 3: Make Sure You Have An Accurate Funnel

The previous steps should help you improve your understanding of the funnel to the point where you can bring in more than just the obvious conversion points. Think about every conversation and dialogue with your brand throughout the experience.

If you don’t have an idea of non-commercial moments in the lifecycle, you are either a pure commodity good, or you may not be tracking the journey closely enough.

Once you have refined this funnel, you can begin to optimize it. Think about how different customers arrive and leave at different touch points. You can’t optimize for everyone — sometimes the toughest decisions require focus, and that must be driven by your overall strategy.

Step 4: Only Now, Consider Incentivization, As Part Of The Journey Across Channels

Phew, we made it.

Yes, this whole article is about optimizing incentives. But if you haven’t followed the previous steps, your efforts would almost certainly have been wasted.

Most of what we have covered is designed to mitigate the problems of online and offline worlds having different incentives. In many ways, the solution to optimizing via incentives is to move beyond them and look at the bigger systems in play.

For example, once you include browsing in your funnel, and know how to track it at appropriate touch points, it can be used as part of rewarding teams appropriately.

A key part of achieving this is to make sure your customers have as many options as possible on all channels. If you’re an optician, a car dealer, a bespoke sofa maker or the like, then you may not be planning on customers placing too many orders on your site — but perhaps you could replace a “buy” button with a “make an appointment in store” and reward that accordingly.

One thing is for sure: if you measure by revenue alone, that’s the best way to guarantee that your online and offline teams will give no mercy to one another over that ‘last click’.

The final part of this puzzle is to not forget the things that must stay the same across and be rewarded in all these channels. Treating the customer amazingly well, capturing the data around their behavior and making sure you have a clear comprehensive view should be encouraged, no matter what.

Step 5: Trial And Improve

Finally, it’s crucial to understand that you won’t be able to achieve this task overnight. There will always be some inertia of company culture, so you have to take it one step at a time.

Get senior execs and the CEO bought in early, by highlighting the obvious benefits of the business.

Expect to trial the updated incentivization structure, especially if it heavily involves tweaks to your in-store activities.

Understand there will always be iteration, and make sure your timelines and your execs’ expectations reflect that.

And above all: measure all this properly.

In Conclusion

We all want to be at Step 4 right away. But the key to this process is making sure you have the foundations right. Furthermore, it’s really just the beginning, with the final step here — iteration — being effectively your plan for a good three to six months minimum.

If you can manage this, and not lose sight of the customer throughout, then you will have deserved every benefit you garner.

Now, what more incentive do you need?


 

Annabel Thorburn is Director of Consulting at eCommera. She previously spent more than 10 years working at Tesco rolling out its e-Commerce platform so she has experienced the birth and development of online shopping in the UK firsthand. She now leads the consulting team at eCommera, a commerce specialist that helps the biggest brands and retailers in the world (Clarins, Berghaus, Jimmy Choo, the list goes on) with their e-Commerce strategy and technology. Thorburn is an expert in digital commerce, the future for global retailers and optimizing the end-to-end customer experience.

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