Customer behaviour has transformed in the wake of the COVID-19 pandemic, resulting in commerce deflation that has been worsened by widespread cost-of-living increases. In November 2022 and during the entire year, eCommerce growth and online consumer spending was seen to slow, an observation reported in the latest Adobe Digital Price Index.
Especially in the Electronics and Computers categories (the top categories in the eCommerce) the prices were significantly down (respectively 13,4% YoY and 18% YoY) due to a decrease in the requested volume, while for Groceries and Pet Products categories (the emerging categories in the eCommerce) the prices rose (respectively 13,7% YoY and 11% YoY). This shift has forced business decision-makers to take urgent actions to ensure that they can continue to compete and succeed under such challenging conditions.
It is critical that organizations focus on customer engagement with retention in mind, ensuring that they are increasing their digital maturity. This must involve moving from a pure online selling presence, toward a more comprehensive end-to-end proposal that encapsulates both online and physical touchpoints. In plain terms, having an omnichannel perspective has become more crucial than ever before. Our BCG experts have mapped out the primary success factors and how organizations will need to leverage them to come out on top, and in this article, we will explore them in depth.
Personalized, hybrid omnichannel experience to enforce customer engagement and increase conversions
Increasing digital maturity will be vital for Companies that should evolve from having an exclusive online selling presence, to creating an end-to-end, omnichannel proposal.
As well described in “The next frontier of Customer Experience”, the on-going digital transformation amplifies customer journey coverage, that is no more limited to the purchase decision, but starts with the first perception of the brand via online (i.e., social media, community forums, etc.) or physical touchpoints, including all interactions before, during and after the purchase.
This new perspective must span both online and physical touchpoints in an integrated, comprehensive manner. But crucially, this omnichannel evolution will fall short if companies fail to first ensure that their customer and prospect engagement efforts are enabled by a seamless and intuitive experience. Achieving this is fundamental to retention considering that happy customers are 80% more likely to spend more. In addition to that, engaged customers often act as brand ambassadors, spreading out their positive experience across social media channels or through word of mouth, increasing prospects.
Maintaining engagement and conversion rates is the primary success factor for companies today, which in their commercial strategies should take into account KPIs like average order value (AOV), Customer acquisition cost (CAC), churn and Customer lifetime value (CLTV). Accomplishing this goal requires fully personalized, hybrid omnichannel experiences to be implemented. Key examples include click-and-collect shopping options and the ability to pick up online purchases in person. Due to the way in which personalization allows for improved product offerings and touchpoint positioning, customer needs can be easily identified and addressed more seamlessly.
Salesforce highlighted in its ‘State of the Connected Customer’ report that 60% of customers now expect companies to understand their needs when it comes to experience. This key statistic emphasises the increasingly critical nature of personalized, omnichannel approaches. The report also notes that 74% of respondents said that they have already used multiple channels when starting and completing a transaction, indicating a high degree of readiness among customers for innovative, integrated experiences. Delivering this successfully will be critical in achieving high-quality flow, conversion and retention of customers.
From a revenue perspective, market results show that companies that master personalization can increase their overall growth rates by as much as 10%.
These results from a structured approach can ensure the delivery of the right kind of experience, via the right channel, at the right time, boosting marketing efficiency and digital sales, and strengthen customer relationships.
One more data point from BCG analysis about Personalized Offers, shows that the redirection of 25% of spending used on mass promotions into personalization efforts has the power to boost ROI by a game-changing 200%.
This amounts to an annual growth opportunity of more than $70 billion. Companies can begin the groundwork to achieve this by entering the right supplier negotiations now.
Taking transformational action and reaping the rewards
The personalization topic evolved under the pressures of the COVID-19 pandemic, and companies must enforce their just-in-time approach to personalization if they are to evolve their methodology to the next level. For companies, deploying a just-in-time approach means building at scale data analytics to understand shifts in macro purchase patterns at a persona-level.
This strategic approach needs to be fuelled by high frequency leading indicators, optimizing individual customer engagement and the integration of real-time market data. By analysing and acting on things like footfall data, online search trends, and consumer spending forecasts, companies can effectively increase their customer base and gain market share.
With these steps in place, organizations can transition from leveraging occasional customer touchpoints to creating an ecosystem that is part of the customer’s life. Once this has been achieved, an advanced omnichannel customer experience (OCX) can be fostered by ensuring end-to-end cross-channel coherence.
As we explained in, “Stand out from the crowd,” organizations must focus on the definition of their own CX leading elements, starting from a proposed framework of core differentiators. In line with our perspective, we would like to emphasise two of them:
Focusing on data, their collection must be leveraged to achieve strategy generation, resulting in a holistic, connected view of the overall customer experience. Other important benefits associated with this approach include the ability to easily address friction points and a deeper understanding of actionable data. This process amounts to a dynamic, holistic customer experience, that will win vital engagement and retention at this crucial and challenging business moment.
The top performing companies will be collecting data from a wide range of origins, including online, offline, and third-party sources. Once widespread data collection is achieved, success will depend on the effectiveness of how it is analysed, and the execution of the strategy it informs.
Navigating the journey with us: from strategy design to implementation
When it comes to enabling the design of change, including the development, design, sustaining and monetization of the Customer Experience program, BCG proposes a proprietary framework called “the MIDAS touch.”
The framework sequences activities and orchestrates access to the firm’s tools and resources, such as technology implementation, AI, data analytics, and creative support.
This paradigm supports the company going through the steps of measuring, innovating, delivering, activating, and synchronizing the journey, as well as adopting a well-structured and recognized mindset approach.
In early January 2023, BCG’s experience in Customer Experience strategy and transformation was confirmed by The Forrester Wave publication, which recognizes BCG as the market leader among Customer Experience Strategy Consulting Practices. The report also noted that BCG “has a robust approach to marketplace analysis that features a wide variety of data sources and methods, and a proprietary ROI model that estimates the value of investing in Customer Experience improvement”
The type of Customer Experience revolution that companies need must feature a holistic business approach and a technological review, ensuring that the right end-to-end experience can generate strategic results.
At BCG Platinion, we support clients to implement the Customer Experience revolution by addressing four key areas.
This consists of a strong focus on business impact, experience design, target architecture, as well as the end-to-end process and technology involved. In this way, we generate a powerful understanding of how technology impacts the E2E value chain, and ultimately how to create a truly excellent customer experience.
Such approach has been widely and successfully proven over our extensive experience of helping clients to enhance the customer journeys they provide. We believe that personalized offers have now become imperative. As trends and market conditions shift, we believe that transitioning from mass promotional schemes to more personalized offers will massively increase return on investment (ROI).
With this in mind, BCG Platinion supports omnichannel customer journey excellence from the ideation process through to scaling. This process features customer journey design, roadmap, and use cases prioritization, and creates full and consolidated view of the customer. Our experts also enable clients to conduct target architecture design, select the right solutions, and prove their value through pilots and MVPs. Once this method has been completed, further progress can be achieved at scale.
As part of the process, our teams also help to pinpoint existing constraints associated with legacy systems, such as siloed data and redundant systems. Taking this tailored approach equips us to establish the most high-value strategies on a case-by-case basis. Above all, we have found that there are five key priorities involved in delivering personalized customer journeys:
Planning and realizing an effective Omnichannel Customer Journey requires the ability to deeply analyse the customer base to design a tailored path and define the technical framework to concretize it.