By Greg Cohen, CRSO, Merchant Warehouse
Big-box retailers have long relied on sophisticated, data-driven analysis to deliver a better customer experience. From targeted marketing to omnichannel consumer experiences, their deep pockets have allowed them to invest in technology that can quickly process huge amounts of data and turn complex information into actionable insights. Plus, using mobile and location data, they can now personalize and streamline shopping experiences like never before.
On the surface, this doesn’t bode well for small- and mid-sized retailers, who have historically lacked the budget and human resources to invest in this scale of marketing and technology.
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However, a revolution has begun: Affordable, new technologies and solutions are being developed every day that offer SMBs comparable systems and software to help them compete with the big-box retailers, all at a fraction of the cost. With many of the newer tablet based POS systems, upgraded applications to existing systems and mobile commerce-derived consumer engagement solutions, SMBs now have accessible options when it comes to technology-driven business management, marketing and customer engagement.
If small retailers want to compete in the era of Big Data and omnichannel commerce, they must explore these new technologies, understand the opportunities that exist today and those that are coming soon. Here are a few specific examples of ways that small businesses can leverage big-box technology to remain competitive:
1. Connect Online To Offline
Every time a consumer purchases something, their data should be captured and analyzed. This is true whether they buy online via an e-Commerce site or in your store. It’s vital that you are able to connect the dots between offline and online to draw a complete picture of your customers. Doing so will allow you to deliver a more seamless customer experience. For example, if a customer purchases a certain type of shirt online and then buys matching pants in-store, both shopping experiences should be tied to a universal customer record. Tools from POS providers like Lightspeed and GoPago make it possible for SMBs to sync their offline inventory to online e-commerce sites, giving consumers the flexibility and convenience they prefer.
2. Reward Your Loyal Customers
Merchants should also employ loyalty programs to give customers a more personalized and positive experience. Using new loyalty technology, merchants can gather valuable information about their customers such as age, gender, home address and how far they travel to visit a store. However, traditional loyalty programs tied to plastic cards, key fobs or even paper punch cards, are not convenient for consumers or particularly valuable for merchants. Instead, explore the many digital alternatives on the market today. Examples include Belly, which offers consumers points and rewards in exchange for their loyalty and LevelUp, which drives repeat business by providing increasingly valuable offers to loyal customers. Alternatively, merchants can employ new technologies such as Apple Passbook or Google Wallet to provide the benefits of a loyalty program to their customers within the context of a streamlined digital wallet. It’s also important to be proactive with loyalty programs, sending out offers and discounts that encourage consumers to come back, try new items and purchase higher-margin products.
3. Identify Product Purchase Patterns
Small merchants can also leverage big-box technology to identify product purchase patterns and build systems that capitalize on consumers’ habits and behaviors. To do this, SKU data can be used to track product attachments. For example, many people who buy smartphones also purchase chargers shortly thereafter. With this knowledge, a store could pair these items, offering a specific deal or suggesting the second product to customers at checkout. This is a simple action that can go a long way towards driving incremental purchases and increasing loyalty by demonstrating attentive, personalized service. Amazon’s “Frequently Bought Together” feature is an example of how e-Commerce stores have begun to employ these tactics. Smaller merchants can execute this type of “SKU rationalization” using some of the techniques described here or by using technology such as EmcienPatterns.
4. Analyze And Optimize Your Pricing
Merchants should also regularly analyze their pricing and identify opportunities to raise prices without upsetting consumers. Conversely, businesses will be able to quickly recognize items that may be priced too high and can adjust to satisfy their customers’ needs. This is a vital step that will have an obvious and direct effect on the bottom line. For example, merchants can observe attachment rates of products such as in the smartphone example above. While increasing prices on the core item a customer came in for may not be a good idea, merchants can often pick up margin on the up-sell items. For example, a consumer who’s just purchased a new smartphone may be willing to pay $20 instead of $15 for an extra phone charger. Using some of the guidelines outlined here, merchants can identify pricing software that will give them the right combination of intelligence and analysis to achieve their goals.
5. Leverage Local Search
Local search is another powerful tool that can help merchants learn more about what people nearby are looking for and deliver it to them in a relevant and timely format. The future of commerce is in search, and small business owners can leverage technology to capitalize on and respond to the searches that potential customers are already doing nearby. One good place to start is to search Google maps and ensure that your business has optimized its rankings for important keywords so that when customers search for them, they will be directed to your store. You can also check your rankings for location-based product or service searches within review sites like Yelp and check-in apps like Foursquare to ensure that you leave no stone unturned. Further, technologies are being developed today that rely on location features within smartphones to connect on-the-go customers with the things they want by leveraging their searches to offer relevant results.
Small merchants who take advantage of the trickle-down effect of big-box POS technology stand to win big today and set themselves up for success tomorrow. The playing field has been evened, and it’s up to smaller retailers to find and utilize technology that will give them a competitive edge. Using the techniques outlined above, SMBs can rev up their marketing programs reach consumers more efficiently and effectively than ever before.
What about you? What kind of “big-box” technology are you applying to your business?
Greg Cohen is the Chief Revenue and Strategy Officer at Merchant Warehouse, a leading provider of payment technologies and merchant services. The company’s solutions enable merchants to more effectively connect and engage with their customers regardless of how, where or when they choose to shop.
