Posts tagged: tree stump theory

“If it ain’t broke, you ain’t looking hard enough”

The poor economy has done nothing to lower customer expectations of online retailers, and recent mixed results data from ComScore and ForeSee Results indicate that retailers who continue to improve their customer experiences are pulling away from their competitors in both sales and customer satisfaction.

ComScore reports online retail up 4% for the holiday season. While an increase is always nice, this is a much lower growth rate than online retail has seen in the past. And last year’s comparison base was far from stellar. ForeSee Results shows a significant drop in customer satisfaction year over year. Since satisfaction is predictive of future financial results, a drop is concerning.

But still, I wondered how sales could be up at all if satisfaction was so far down.

A deeper look at the ComScore data shows the Top 25 retailers growing 13% while “Small and Mid Tail” retailers are declining 10%. Satisfaction scores are also split, but the differences we’re seeing seem to be more based on those retailers who are continually improving their sites versus those whose cost containment measures have slowed or stopped improvements. It appears that the retailers who closely measure the effectiveness of their sites from their customers’ perspectives and continuously improve their customers’ experiences are the retailers with increasing customer satisfaction scores. Those retailers who didn’t improve customer experience this year are suffering declining satisfaction scores. Many of those in the Top 25 are the retailers who have continued to enhance their customer experiences. Those enhancements are not only helping them to increase their sales, but because of the high visibility and usage of those tops sites, they’re also raising consumer expectations of all sites.

Customer satisfaction can be best defined as the degree to which a customer’s actual experience meets his or her expectations. Therefore, rising expectations can depress satisfaction scores if customer experience improvements don’t keep pace.

In the rapidly changing world of online retail, stopping or delaying improvements is like treading water in a swimming race. While you may temporarily save some energy, you will fall hopelessly behind and your only hope of catching up is spending a lot more energy than you likely saved treading water

Growing online retail businesses realize and fully embrace the need for continuous improvements, and they also realize that online retail in general is far from producing the level of customer experience truly necessary to provide excellent self-service shopping experiences. I recently heard Robin Terrell, Managing Director of John Lewis Direct in the UK (and Amazon alum), say “If it ain’t broke, you ain’t looking hard enough” in a talk about the need to improve customer experience. It’s a brilliant statement, and I totally agree with what he was saying.

So, “improving customer experience” is a huge and vague statement. Where do we start?

  1. Recognize that it’s broke and you ain’t looking hard enough
    We’re still in our infancy in online retail, and we’ve got a long way to go. We too often try to increase our sales by generating more traffic and don’t spend enough time converting the traffic we’re already got. Often, the obstacles to conversion are not the big, shiny, whiz bang functionality; they’re lots of little things that add up to big problems. Those problems are hard to see without a concerted effort, as I discussed in more detail in my Tree Stump Theory post and other posts on conversion.
  2. Truly learn how effective your site is from your customers’ perspective
    We can all identify lots of improvements we’d like to see on our sites, but it’s the improvements our customers most need that will drive our best growth. So understanding where we are and aren’t effective from our customers’ perspectives is critically important, but difficult.Focus groups and usability labs can be very helpful, but they can’t be our first or only methodology because it’s not possible to project learnings from a small group of people onto our entire population of customers.

    First, we need to quantitatively understand our effectiveness in the eyes of our total population, and that requires a statistically solid customer polling and analysis capability. Blatant and shameless plug alert: I’ve had great success using ForeSee Results in the past for exactly this purpose. Once we understand problem areas at a macro level, we can add a lot of color by interacting directly with customers in focus groups and usability labs. More details on this process can be found in my post entitled “Is elitism the source of poor usability?”

  3. Consider getting some help from usability professionals
    Usability audits are different from usability labs. Usability auditors are professionally trained to understand how people interact with websites. Many of them have degrees in Human-Computer Interaction, a field that truly seeks to understand how people interact with software. These types of people can really help to identify problems with our user interfaces that untrained eyes have trouble seeing but which regularly obstruct customers from accomplishing their tasks.
  4. Put in place a process to continuously improve
    This is really about budgetary and project management mindset. We must just accept the fact that we can’t tread water in a never-ending swimming race, and our only chance of competing is to keep swimming. We have to build our staffs, our budgets and our processes with the recognition that competing in the marketplace means continuously improving our customer experiences. Which leads to …
  5. Wash, rinse, repeat
    Since the leaders in the marketplace are running this same cycle, we cannot rest. We must continue to recognize our sites are broken, continue to measure our effectiveness from our customers’ perspectives, find problems, fix them and begin again.

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We’ve got a lot of data that shows that retailers who best satisfy their customers generate the best financial results. I suppose that statement doesn’t sound like rocket science. But understanding that satisfaction has a direct relation to expectations and that our customers’ expectations can change independent of what we do on our own site is important. The leaders are continuously improving their sites, and they’re improvements are raising our customers’ expectations. We’ve all got to swim harder to keep pace.

What do you think? What’s your view on the marketplace? How have you see customer satisfaction affect your business?


The Case to Cross It Up

For any retailer with more than one channel, becoming cross-channel is a critically important way to fully leverage its assets to provide a greater experience to its customers, which ultimately leads to more customer retention, brand loyalty and, of course, sales and profits.

In an effort to highlight and tackle the issues associated with implementing cross channel strategies, Kasey Lobaugh of Deloitte Consulting and Jim Bengier of Sterling Commerce pulled together a Cross Channel Retail Consortium of retail thought leaders that included executives from a cross section of retailers as well as some industry analysts, vendors and yours truly for a day of discussion this past Sunday on the strategy, tactics and challenges of implementing effective retail cross channel experiences for our customers.

Before I delve deeper into my thoughts on the day, it’s probably worth defining “cross channel.” Many times, “multi-channel” and “cross-channel” are used interchangeably, but I don’t think they’re the same thing at all. “Multi-channel” is simply operating in more than one channel while “cross-channel” is leveraging the strengths of each channel to create an overall customer experience that is greater than the sum of its parts. It’s 1+1=3.

Sounds great, right? So, why aren’t more retailers doing it?

Three basic themes emerged from the group:

  1. Lack of executive and board level understanding of the value of customers transacting in multiple channels (and, conversely, the negative affects that occur when customers are prevented from interacting with a brand across channels)
  2. Lack of incentives for various employees, from executive to front line staff, to encourage shopping across channels
  3. IT systems limitations

So, let’s tackle these issues one-by-one.

1. Lack of executive and board level understanding of the value of creating cross channel experiences

The group agreed that getting the buy-in of the CEO is critical. No one believed, and I certainly agree, that a strategy as all-encompassing as creating a cross channel experience has any chance at success without the CEO actively driving it. So, just get the CEO to support it. Easy, right? Not so much.

In my experience, the best way to convince a CEO of the value of any strategy is to show him or her how it will maximize profits. One retailer in the room was able to show the value of customers shopping in multiple channels pretty easily by tracking customer transactions in all channels through a loyalty program. Others were able to do the same in various degrees, but the general concern was the potentially high cost of discounts provided in exchange for such information. (I have lots to say about loyalty programs, but I’ll save that for another post). Janet Sherlock of AMR Research extolled the virtues of emailed receipts as an environmentally attractive and altogether less costly alternative option to harness ID’d transactions. I find that proposal extremely intriguing.

While transactions tell us about customers who completed transactions in each channel, they don’t tell us about customers who researched online to buy in store or customers who took a look at products in store before buying online, and the group longed for an industry standard metric that could be used to assess the amount of sales influenced by the another channel.

Another driver of CEO support is attention to the issue from the Board. One retailer said all it took was a bad experience by one 17-year-old granddaughter of a Board member to get the issue front and center. Funny how life is, isn’t it? Who could imagine that one young girl’s frustration can drive a strategic shift in a major national retailer? But maybe the lesson here is about the importance of getting decision makers’ heads out of the financial spreadsheets and into real-life experiences to help them understand how their companies are (or are not) serving their customers.

2. Lack of incentives for various employees to encourage shopping across channels

One retailer described the challenges of focusing on customer experience at a retailer that is driven by “an imperialist merchant organization.” (There was no way I could write this piece without including that quote.) Merchants, by their nature, tend to care a lot more about product than customers. But in the end, they’re generally heavily driven by sales, margin and turn metrics. There are many cross channel strategies can be implemented to help merchants drive these key metrics.

For example, the web has many selling capabilities that are nearly impossible to achieve in store because of physical constraints. Customer reviews are extremely popular online and customers regularly report using them to make purchase decisions (both online and in store); however, they are very difficult to make available in a physical environment. Some retailers are making them available via in-store kiosks, but the kiosks are a large capital investment to make if they’re not already available. But just about everyone’s got a computer in his or her pocket or purse these days. Let’s make more use of mobile phone technology to give people access to customer reviews, recommendations, wish lists, gift registries, etc. in store while they’re standing in front of the products.

There are also advantages in stores than can be leveraged online. Many retailers have incredible experts in their stores. How can those experts build content that can be used by customers and other employees alike to improve the shopping experience? How about security? Should retailers start to look for ways to accept payment in their stores for web orders when customers aren’t comfortable paying online? Believe it or not, there are still a lot of customers out there who aren’t comfortable using a credit card online, and in this economy there are more and more customers who aren’t comfortable or aren’t able to use credit cards period. But they’re still interested in buying from us, and we should find every way we can to help them do so.

3. IT systems limitations

There’s no question that IT legacy systems cause us a lot of trouble when we try to integrate our customer experiences. But I also wonder how many times we fall back too easily on such an excuse. I’ve written about my Tree Stump Theory previously, and it’s certainly prevalent in this case. We have a lot of compelling reasons why systems prevent us from implementing such key capabilities as the ability to accept returns of online purchases in store. But guess what? Our customers don’t know those reasons, and even if they did, they don’t care. While many retailers have found ways around the returns issues, just as many still have not. Either way, the case to prioritize such efforts should rely on some of the same techniques described above to make compelling cases to the CEO and the incent imperialist merchants.

Pure play retailers, and especially Amazon, continue to grow at rapid rates by pulling more and more market share. Multi-channel retailers have assets in their stores that pure plays don’t, but it’s going to take implementing true cross channel strategies to leverage those assets in a competitively advantageous way. Let’s cross it up!

What cross-channel strategies have you implemented or are considering implementing? What are the barriers to cross-channel in your organization?

Photo credit: Wikimedia Commons



The Tree Stump Theory

Since I mentioned it in my eTail presentation last week, I’ve received a number of requests to expound on my Tree Stump Theory in this space. So, here goes:

As truly amazing as the human brain is, it’s not able to re-process everything we see anew every time we see it. So, our brains take some shortcuts by basically ignoring things we are very familiar with, and that can cause us trouble any time we have interactions with people who don’t have the same level of familiarity with something as we do. I usually talk about this in reference to website usability, but it actually applies to many areas of our lives. To illustrate the concept, I have my Tree Stump Theory…

Imagine if someone brought a big tree stump into one of your conference rooms. The first time you saw it, you would say something like “Hey, what’s with the tree stump?” Someone would give you a compelling reason why it was there, and you would go on with the meeting. The next time you entered the conference room, you would notice the tree stump but not ask about it. After while, someone might throw a tablecloth on it or dress it up in some manner, but it would still be there. You would no longer ask about it or think about it. Frankly, you wouldn’t even really see it. You’d just arrange yourselves at the table in a way that worked around the tree stump and go on with your meeting. Meanwhile, anyone new coming into the room can’t help but see the tree stump and find it to be an obstacle.

We all have these types of “tree stumps” on our sites and in our lives. I bet you could think of something like this in your house right now. They manifest themselves as obstacles to good web usability, but they’re also our biases, our stereotypes and any other set of assumptions we rely on, usually unconsciously, to drive our daily actions and decisions. Sometimes they’re relatively harmless, but more often than not tree stumps prevent people from buying on our sites, or they are the unspoken roots of disagreements and miscommunications in our daily interactions both at work and at home.

So how do we get rid of our tree stumps?

1. The first step is to recognize the fact that tree stumps are everywhere, even when we can’t see them.

If you’ve read this far, you’ve probably made it to step one.

2. Next, get some help finding them

The very nature of tree stumps makes them difficult to self-identify. If you’re dealing with web usability, try the steps prescribed in this post. If you’re concerned about tree stumps in strategies, policies or general decisions, seek some input from someone who is outside the general team and who has a different background from you and your key decision makers. Ask them to openly question everything.

3. Specifically call out assumptions, preferably in writing

Assumptions are the roots of tree stumps. We make assumptions so often that we don’t always realize we’re making them. Listen for statements or reasons that hint of tree stumps. The most obvious is “That’s the way we’ve always done it.” If you hear that one, sound the sirens. But there are other, less obvious comments like “People want…” or “Based on my experience…” or “In a previous life we…” Don’t get me wrong, some of these statements could be perfectly accurate and valid. But whenever someone is applying past experience to a currently situation, he or she is assuming the two situations are similar enough to warrant the comparison. That’s potentially an assumption fraught with problems because the number of potentially important variables in any situation is massive. Writing down those assumptions and then testing them on the current situation often brings bad assumptions to light.

Also, on the web usability side, remember that while your internal reason for a tree stump may seem extremely valid to everyone in the company, your customers don’t know those reasons and even if they did, they probably don’t care. Common explanations that won’t hold water with customers include:”I’m not in charge of that area;” “It doesn’t matter because people don’t use that anyway;” or the time-honored classic, “That’s due to the limitations of our platform.”

4. Schedule regular reviews of your own assumptions

This one in some ways is a repeat of #3, but the point here is to specifically and methodically question yourself. This is really hard to do, of course, but it has a tremendous amount of value. One technique I’ve used in various situations is to write down my first impressions of important situations so that I can regularly review them in the future after I’ve learned more. I recently talked with Shop.org about this technique in reference to starting a new job. Beyond that technique, it just takes practice and discipline to think about your own biases and assumptions to see if they still apply.

I also find it helpful to constantly look for new ideas. I read lots of business and science books. I don’t always agree with everything I read, but new ideas cause me to question my own ideas. I also enjoying reading thought-provoking blogs, some of which are listed to the right, and I follow interesting people on Twitter. More than anything, though, I love to spend time talking to people who think differently than I do and are willing to share their perspectives. (And I hope you’ll share your comments on this post and others.)

Tree stumps are everywhere. We’ve all got them. And as soon as we remove some, more will crop up. It takes a concerted effort and a solid process to regularly look for and remove the tree stumps in our lives and our businesses. But I’ll argue that those of us who are aware of our tree stumps are on a much faster path to improvement than those who go on ignoring them.

What do you think? What types of tree stumps have you run into? How do you go about removing them?


Retail: Shaken Not Stirred by Kevin Ertell


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