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The digital disruptor dilemma and how to smash it

Retailers that can balance performance with innovation will become industry leaders, writes Jim Cavanaugh. 

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Australians are becoming so reliant on online shopping that our e-commerce market value is expected to reach $35.2 billion by 2021. With the majority of the population now shopping across a multitude of online channels, including websites, mobile applications, connected devices including Alexa and social media platforms such as Instagram, balancing peak performance of these digital services has become a major challenge for retailers.

Today’s users expect a flawless digital customer experience no matter the channel, and consumers will not hesitate to delete an app or abandon a website because of technical problems. Therefore, investing in the necessary tools to provide a frictionless customer experience is critical to ensure survival in increasingly competitive markets.

The emotional impact of an inferior online experience

Major global retail players such as Amazon are transforming the way we shop through innovations such as subscription services, click and collect options, and same-day delivery. However, regardless of how innovative a service is, if it is not performing properly, loyalty can be shattered in an instant. Imagine the irritation of users dedicating time to filling their virtual shopping carts, only to come back later to find their carts empty, online stock hasn’t been updated, or live chat options have failed to load.

Rising customer expectations for immediacy and convenience means that any kind of technological failure, whether big or small, can result in significant emotional reactions amongst consumers. When apps don’t work, customers experience frustration, impatience and even stress in particular situations. But a poor customer experience in retail does not stop with the failure to convert a single transaction. Customers may never return after one bad experience which can severely impact brand loyalty. Eighty per cent of users will delete an app due to poor performance, and alarmingly, 30 per cent of customers have moved onto an alternative app in the past because of a sub-par experience.

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End-to-end visibility of the entire customer journey will help retailers avoid the emotional backlash from a poor customer experience and will foster brand loyalty in the process. This is critical to the future of retail, because as customers grow ever-more accustomed to flawless technological experiences with online shopping, the less forgiving they will be when the technology of their favoured brands fails.

With visibility, come insights and innovation

In the next age of retail, we’ll bear witness to increasing levels of personalisation and buyer sentiment analysis. Yet, it’s clear that if basic performance issues persist, such as promotional codes not working, a website failing to load, or customers not receiving assistance in real-time, the quality of products or services won’t matter to on-demand, emotionally-driven customers already on the lookout for newer, faster and more efficient ways of online shopping.

Customers are increasingly less tolerant of digital experiences that fail to meet their immediate needs or expectations, meaning it is no longer enough for retailers to reactively monitor online performance. By leveraging customer and application performance data in real-time, retailers can transform trends and patterns into valuable insights and then take action on the fly to enhance the customer experience and ensure consistent performance. This is where the concept of marginal gains provides relevancy. Retailers have the ability to assess and improve even the smallest aspects of digital performance in the name of continuous improvement. With competitors just a click away, marginal gains could be the difference between success and extinction.

Meanwhile, as the number of online touchpoints increases, the amount of data retailers can analyse and learn from in real-time also expands. With every service underpinned by software and applications, multi-channel retailers can better understand their customers’ behaviours, such as their likes and dislikes, as well as their purchasing triggers. Further, if retailers can effectively analyse multi-channel data and turn this into insights, they can continue to innovate and refine their services based on customer buying habits and personalities.

Ultimately, survival won’t be determined by innovation alone. Unless retailers are able to leverage their data to profit from the insights at their fingertips, they will run the risk of being left behind and overtaken by more digitally-savvy competitors. However, those retailers that can continuously adapt, improve and balance performance with pioneering innovation will find themselves convincingly competing with the industry’s online giants. This is no doubt one of the industry’s greatest challenges, and time will tell which retailers will successfully embrace a data-driven business model, and which retailers stand to lose out when it comes to keeping up with the rapid pace of digital change.

By Jim Cavanaugh, Vice-President, Asia Pacific and Japan, AppDynamics