Drive Your Incremental Profit With a Better Understanding of the Customer Journey
By: James Snyder
The customer journey was once a highly defined and frankly limited process, with just a few channels for sales and delivery. As shopping options continue to increase and change, your business must constantly adapt to stay relevant and increase profits.
Understanding the evolution of the customer journey, along with the unique challenges and opportunities related to it, is vital for making effective and informed decisions. After all, your business needs the appropriate context to expand and evolve.
The customer journey: Then and now
Customer shopping habits were relatively static for much of the 20th century. A shopper could do the following if they wanted to make a purchase, but not much else:
Visit a brick-and-mortar location
Send in a mail-order form
Make a phone call
Now, the sales channels for your brand and products may include:
A physical storefront
An ecommerce site
An ecommerce marketplace, distinct from or incorporated into your own online store
Search engine and other digital ads
Affiliate marketers
Similarly, customers have many more options for order fulfillment than in the past:
In-store purchase
In-store pickup of:
○ A digital order fulfilled by that same store
○ An order fulfilled by another store in your network
○ An order addressed by your fulfillment center
Direct shipment from:
○ Your fulfillment center
○ A store location
In the past, the barrier to entry was very high for companies looking to establish themselves in the retail market beyond their local area, due to the financial commitment needed for advertising and marketing in a mass-media environment.
Now, businesses enjoy more access to markets, thanks to advantages like websites and digital marketing that can offer exposure at a more manageable price. It’s easier to identify and target customers based on interests, location and other key demographics and tailor outreach to them.
Plus, connection points for customers are more numerous, and they continue to grow and change. New platforms regularly emerge (e.g.TikTok), but they’re only valuable if your business can act quickly and confidently to seize them.
Evaluating the combinations of sales and delivery channels used by your business is a valuable process. It will expose the paths that are more and less profitable for your company, supporting efforts to:
Steer customers toward the least costly, profit-driving combinations
Identify areas of focus for reducing operational costs
The current state of retailer operations
Modern retailers can largely be split into two large groups:
Purely online merchants, which tend to enjoy success in this more diverse market and focus on optimizing a single path to fulfill customer demand.
Established brick-and-mortar stores, which have largely adopted ecommerce systems but may be burdened with supporting multiple delivery paths to provide goods to customers.
Each type of retailer faces its own unique challenges. Whether it’s standing out amongst a crowded field for online merchants to balancing the physical and digital aspects of sales strategy for physical retailers, there’s almost always an issue to address. However, all retailers have to deal with the diversified market for sales and delivery.
With so many options for customers, effective management of all sales and delivery channels requires a diligence in understanding what demand is being driven and the impacts to profitability.
Challenges and opportunities impacting your business
The many potential combinations of sales and delivery channels all come with different profitability profiles.
Web sales, for example, reduce the costs related to operating, supplying and staffing brick-and-mortar locations. However, they may also have a high return rate. CNBC reported that return rates for in-store purchases are between 5-10%, while the same metric for online sales falls between 15-40%.
Brick-and-mortar retailers that allow in-store returns of online purchases, which are convenient for consumers, may see the financial advantages of digital sales negated due to increased costs for store operations tied to returns.
Your business can develop a specific profile of the products customers buy through each sales channel or entry point. Establishing baseline purchase metrics through each channel makes it that much easier to identify, and respond to, near-term changes in customer preference and the impact on purchasing and inventory liabilities.
Agility and responsiveness position your company for success
Businesses that can measure the effectiveness of their sales and delivery channels — and make adjustments based on accurate data and analysis — are in a much stronger position than competitors.
In this context, a connected planning platform that efficiently brings in data from throughout your organization is especially valuable. With complete insight into operations, it’s possible to consider cost, profitability, challenges and advantages from a holistic perspective. Informed, timely decisions can mean the difference between an effective adjustment and one that brings little value to the table.
Anaplan offers businesses a connected planning solution expressly designed to break down data silos and bring all relevant information to the table for consideration, analysis and action. This transformative approach to business planning is a perfect fit for addressing the constant change seen in the customer journey.
Allitix is an Anaplan Gold Partner, reflecting our deep knowledge of and high level of expertise with the software itself and the work necessary for successful implementation. When your business is ready to take the next step in customer journey planning and execution, reach out to our expert team to learn more.