Do's and don'ts of building an omnichannel retail strategy
By Mandy Pattenden, Marketing Communications Director
The COVID-19 pandemic transformed the retail industry, causing a tremendous shift to digital channels and hastening the rise of omnichannel retail. According to eMarketer, the pandemic caused e-commerce to grow more than 30% in the U.S. in 2020. As physical stores closed down or operated at reduced capacity, retailers acted quickly to digitally transform themselves. But omnichannel retail means more than simply making one's products available online. It is about integrating all online and offline channels and processes, to provide a seamless and consistent customer experience across all touchpoints. Whether in the physical store, on the website, a mobile app, social media channels or other touchpoints, an omnichannel retail strategy enables merchants to meet customers in the channel of their choice - whenever, wherever - and provide a frictionless process throughout every step of the buyer journey.
Because an omnichannel retail strategy entails more than simply building a website or mobile app to complement the physical store, retailers must carefully consider not only the preferences of their target markets, but also how they will handle behind-the-scenes processes such as ensuring data security in digital channels. Here are five important “Do’s” and “Don’ts” for building a successful omnichannel retail strategy.
Do: Consider your customer demographics and their preferences
The first step in building an omnichannel retail strategy is to consider your target customer base, break it down into subsegments and understand the unique preferences of each demographic group or subsegment within your target market. When deciding which channels to operate in, take into consideration who your target customers are and prioritize the channels that they are already using. For example, a recent survey of 1,000 U.S. consumers conducted by Semafone revealed significant differences in the channel preferences of various age groups when it comes to making retail purchases.
Overall, familiarity continues to be a key element when it comes to the shopping channels that consumers trust. Respondents indicated that their preferred channel for purchasing goods and services is in-person, at a traditional store (27%); followed by well-known online marketplaces such as Amazon (21%) and retailers' individual websites (11%). Consumers' specific channel preferences come into greater focus, however, when we take into account their age. For example, while our survey showed that, overall, social media was the least preferred channel for purchasing goods (just 5%), we gain much greater detail when we examine age groups. Among 18 - 24 year olds, 17% of respondents identified social media as their preferred channel - making it more popular among this demographic than in-store purchases (14%). Yet, among those 45 and older, just 1% said social media was a preferred channel, falling far below the preference for in-store purchases, which checked in at 32%.
Omnichannel retailers must have options available to meet customers in any channel. However, to determine where they should prioritize their efforts, retailers should take into account age and other demographics, and focus on optimizing the purchase process in the channels that their target demographic uses most.
Don't: Force your customers into new channels
Similarly, retailers should never try to force customers into new channels that they do not prefer. With stores shut down during the pandemic, more consumers have had to interact with brands over the phone. However, our survey showed that consumers are hesitant to make purchases and verbally speak their payment card information over the phone, with just 10% of respondents saying they do so regularly. Additionally, only 18% of respondents said they have completed a purchase over the phone in the last 12 months.
Consumers are also generally distrustful of providing payment card data over social media platforms, with more than half (56%) saying they would not do so. Though the future of shopping may be through social platforms like Instagram and Pinterest, retailers will need to overcome consumers' security concerns before investing too heavily in these channels, and they should never try to force their customers to purchase through these channels before they are ready.
Do: Demonstrate strong security and privacy practices
When asked which is more important during the purchasing process, consumers in our survey overwhelming chose data security and privacy (47%) over ease-of-use of the payment interface/experience (14%). For years now, consumers have seen almost daily headlines about data breaches exposing their sensitive payment card details and other personally identifiable information (PII) to hackers and fraudsters. 2020 was a record year for data breaches, with a whopping 37 billion records being exposed (an increase of 141% over the previous year.) As a result, consumers are rightfully concerned about sharing their payment details through digital channels.To ensure that their omnichannel retail strategy is a success and that consumers are willing to use their digital sales channels, retailers must demonstrate that they have the technologies and processes in place to protect their customers' sensitive data. The use of secure payment platforms and the ability to prove compliance with the Payment Card Industry's Data Security Standard (PCI DSS) will go a long way in providing peace of mind to consumers, especially when it comes to making purchases in nontraditional channels.
Don't: Introduce friction
Though consumers in our survey understandably valued security over ease-of-use, that doesn't mean retailers can afford to introduce friction into the purchase process. Research shows that the average online shopping cart abandonment rate is just under 70% -- meaning that seven out of ten potential customers will abandon their cart before completing the purchase process. This costs retailers billions in lost sales annually.
An omnichannel retail strategy must aim to create a frictionless customer experience across all channels and touchpoints. Too much friction - such as the need to download alternative payment apps or log-into third-party payment sites to complete the purchase process - will inevitably increase abandonment rates. Cardprotect Relay+ provides a frictionless and familiar purchasing process for consumers, enabling them to securely enter their payment card details without diverting them to third-party apps or other channels.
Do: Implement the right technologies
Investing in the right tools, whether it's an e-commerce platform, a customer relationship management (CRM) system, a secure payment solution, or other technologies, is crucial to the success of an omnichannel retail strategy. Retailers selling across multiple physical and digital channels will need technology platforms that are flexible, scalable and easy to integrate with other technologies in order to create a consistent customer experience across channels. They will need solutions that provide real-time data analytics in order to gain visibility into every purchase in process, every piece of inventory available, and knowledge of where customers are in their buying journey.
With the right technologies and processes in place, retailers can successfully build an omnichannel retail strategy that meets consumers in the channel of their choice, provides a superior customer experience and delivers the type of frictionless yet secure purchase process that today's consumers expect.