Omnichannel Retailers Stand to Win or Lose at Every Touch Point

Jan 01, 2014 8:41 PM  By

The cardinal rule of retailing never changes: Customers punish poor performance. This has been true for as long as we’ve been buying and selling things – maybe 12,000 years or more. In one sense, nothing’s changed since that Sardinian farmer vowed to never again trade copper nuggets for goats with that guy in the next village who not only acted impatient during the sale but also neglected to disclose the goat’s hoof condition.

Compuware-Graph-Bharath-Gowda-300But in another sense, everything’s changed. Today we wouldn’t dream of buying that goat until we polled our Facebook friends about where they got their goats and how much they paid, scoured the web for goat merchant reviews, did some in-store showrooming and bar code scanning to see if we could get a better price at a goat place down the street, and maybe used an augmented reality app to see how different goats would look grazing in our back yard.

Google famously called this the Zero Moment of Truth (ZMOT), and it represents a change in the shopping and purchasing process that puts more power into the hands of consumers by giving them access to information and opinions about products well before they spend any money. In this environment, all faults are laid bare, and it’s almost impossible to hide poor products and bad service. Of course, the force that’s driving this change is technology.

Study Reiterates Old Rules, Highlights New Ones

All retailers – brick-and-mortar businesses, catalog companies, web-only merchants – depend more and more on a growing network of IT systems to enable a positive selling experience. The big question is, are those retailers paying attention to what poor performance is costing them? Two things tell me the answer is no. One thing is my own insights gleaned from discussions with clients who come to my company seeking solutions to their performance problems. The other is a recent study conducted by Intellitrends, and commissioned by Compuware, which reveals that a lack of awareness about performance is a growing and often ignored business issue – and one that hits all businesses, but impacts retailers in particularly costly ways.

The vulnerability for retailers is in the omnichannel experience – the need for retailers to provide a fast, consistent, and seamless shopping experience no matter how the buyer interacts with the seller – in person, on their PC or tablet, or via a smartphone. Lots of touch points, lots of complexity, and lots of opportunity for sketchy performance or outright tech failure. It’s easy to understand the study’s finding that the short-term cost of a single major technology issue was $10.8 million.

Finally: Some Hard Truths About Technology Failures

The study, which gathered input from more than 300 executives and Line of Business (LoB) managers, sheds light on just how common performance failures have become:

  • Forty-eight percent said they experience tech-performance issues daily.
  • Three of four reported that the frequency of failures is increasing or staying the same.
  • Fifty-one percent have recorded a major tech failure within the past 4-12 months.
  • Four of five (81%) indicated the same major tech failure has occurred multiple times.

They were also asked about which areas of their businesses were most dependent on technology performance: customer service, finance, sales and marketing, distribution and supply chain were the top answers. And when asked which areas are impacted most by poor performance over the long-term, market share and brand equity losses were two of the top three responses. Those answers should give any retailer the chills.

If I had to pick one stat that bothered me the most, it would probably be this one:

  • Only one-third regularly collects data and quantifies the impact of failures.

That means businesses aren’t taking seriously a problem that is costing them money and customers and hurting their reputations. That Sardinian farmer may not have had the option to take his business elsewhere (though I’m sure he told all his friends about his bad experience), but today, the barriers to switching from one seller to another are basically nonexistent. Customers will think nothing of paying a little more to the company that gives them reliable, fast experiences. Glitches, slow load times, or even just a few minutes of a site being “down,” will quickly send buyers elsewhere.

And losing contact with customers is the ultimate failure for retailers.

Bharath Gowda is Strategic Solutions Director at Compuware Technology Performance Services.