In a digital world, customers’ expectations are becoming increasingly demanding. This has led to those retailers still reliant on monolithic, traditional approaches to fall behind the curve. Retailers need to embrace digital transformation in order to keep up with the bar that pure plays like ASOS have set for customer experience.
Insight: Customers Demanding Improved Experience
It isn’t just other retailers that should be the concern, however. With customer experience set to overtake price and product as the key brand differentiators by 2020, it is being embraced by sectors well beyond its retail roots: in utilities and logistics, financial services and automotive. This means that customers are comparing their online experience not only from a retail competitor, but from their insurance company, their bank etcetera. People look at organisations and ask: ‘Is that a good experience?” based on what they have experienced elsewhere on the web.
Alan Walsh, CEO, Amido
For retailers the real challenge comes from consumer’s previous experiences and their raised expectations. Retailers are no longer the only ones leading the online pack - 89% of Millennials trade with a competitor following a poor customer experience, if a retailer can’t provide as good an experience as a user has become accustomed to then they are in danger of losing that business.
Unrivalled customer experience is simply the ‘why’; the endgame. The ‘how’ is the truly important, but most challenging, part of digital transformation. “At Amido, we specialise in designing and deploying cloud services. This approach is as relevant to high street retailers with an online presence as they are to pureplay retailers; individual micro-services can range in size and scope from a small, closely defined and discrete business task, to a whole area of operation or market that sits across online and in-store; identity management, loyalty, delivery or discounts for example,” says Walsh.
Many retailers, both on the high street and online, are now adopting this approach, isolating individual areas of functionality from a heavy weight commerce platform one at a time and creating new service boundaries, allowing them to innovate without affecting the day to day running of the business.
Amido’s work with ASOS first started around Identity. As ASOS’ cloud partner Amido were tasked with improving customer experience for 20 million customers, working with them to design and deliver a global identity solution, using Microsoft Azure that allowed Asos to better understand its customers. By embracing a cloud-first, agile architecture, ASOS can now compete on a global level, while still providing a personalised customer experience. This is something that monolithic applications are unable to provide.
Identity is an example of a stand-alone business function that sits within the cloud services remit. It is something that retailers could get running and integrated relatively quickly. Identity is the gateway to true personalisation – an increasingly important pillar of effective e-commerce. Through identity, a retailer can process customer data more effectively, collecting user information across several different platforms; from online and mobile, as well as social media. Identity, when linked to other services deployed on the cloud such as CRM or analytics, creates a more personalised experience, something that users have come to expect as part of a good user experience.
With reports suggesting that personalisation can deliver five to eight times the ROI on marketing spend, and can lift sales by 10% or more, cloud services could be the solution for those retailers suffering under the pressure that digital disruptors have created.
Walsh says this is an approach that moves away from the traditional thinking of taking a one-size-fits-all solution: “This is very much a mind-set change for retailers. As digital progresses, people need to move forward and innovate. It’s very much a different approach from that of the traditional one-size-fits-all.”
Although in an ideal world he would see a business taking a cloud-first route, he can understand that it might be more suitable for enterprise retailers to take a more hybrid approach to transforming their businesses.
“The solution is rarely a single product answer to a complex enterprise, meaning that integration is inevitable. In most cases the answer is a hybrid approach of multiple products and some custom build,” says Walsh.
Although he says the big software vendors do still have a place, they are no longer the only answer to retailers’ technology needs. Monolithic applications have a place, but they don’t have the agility, or ability, to react rapidly to customer expectations. When competing at scale, monolithic applications can’t hold up against agile, cloud, rapid software development.
A cloud services approach can also help retailers handle peak trading periods. The increasingly ‘spiky’ nature of online retail, means that most organisations will generate the lion’s share of their profits over a few peak trading days, with some generating as much as 10% of their revenue during the Black Friday peak.
Leading retailers such as Asos now boast 99.99% availability, and with their adoption of micro-services this means the site will never be down all at once, various parts may be down, but the rest of the system is up and running as normal, meaning customers remain satisfied with the level of speed and efficiency of service during these periods. Something retailers like Game, Dell or Quidco would have appreciated when they crashed during Black Friday last year.
Customers’ expectations for their online experiences are more demanding than ever before, from the level of personalisation to the availability and speed of the site. It is for retailers to keep up with such demand if they are to continue to be able to compete. With pressure coming from all angles, it is time for retailers to embrace digital transformation, one step at a time.