Digital first or customer first? The future of brick-and-mortar is both

Published November 10, 2020

 

In 2020, there are two types of businesses. Those that do the bare minimum in order to stay relevant—of which are barely afloat, if not sunk. And those that look toward the digital-first future—and which are successful because they use today’s tech to put their customers first.

The most successful brick-and-mortar businesses today had to pivot—and fast. According to Twilio, “97 percent of enterprise decision makers believe the pandemic sped up their company’s digital transformation.” Any crisis has a way of driving innovation, but when that crisis called for contactless banking, dining and shopping—digital solutions took the lead. Now that consumers have settled into their digital-physical lives, businesses are starting to realize that digital is at the heart of how commerce works in the 21st century.

A digital-first—and, therefore, customer-first—transformation is critical if you’re going to succeed in today’s commercial climate. In this post, we’ll lay out what it means to be “digital-first,” walk through the tech that powers digital-first experiences, uncover the core traits a digital-first business should have and share our tips on how to get started with your digital transformation.

 

What it means to be a digital- and customer-first business


Despite what the term alludes to, a digital-first business puts customers first.

The digital-first age offers continuous evolution, all in the spirit of brands getting closer to the people they want to serve. It’s an age “where we want to have frequent, low-friction, immersive digital interactions with customers,” said Asad Khosa, EMEA digital lead at NCR. It’s an age where businesses are finally realizing that “it’s not about transactions. It’s about connection.”

“It’s not about transactions. It’s about connection.”

Digital-first businesses use today’s advancing technology to better connect with current customers—and gain new ones. And although "digital-first" may be a newer concept, every business era has a digital transformation story. The 1990s gave birth to the term “brick-and-mortar,” as the arrival of ecommerce created the need to differentiate between physical stores and virtual ones. In the 2010s, everyone was talking about “SoLoMo” (Social, Local, Mobile) as the rise of the smartphone led businesses to envision new opportunities to connect with consumers.

In 2020, success for brick-and-mortar businesses means making the shift to a “digital-first” mindset, largely in the form of digital advances that personalize consumer experiences.

 

Personalized customer-first experiences are the future, and digital first is the driver


Digital-first doesn’t mean digital only.

Edward Parker, VP of digital services at NCR, believes a brick-and-mortar business’ priority “needs to be on the digital experience, in whatever way that is.” To focus on the customer experience also means looking at the technologies that drive it, making sure they’re easy to manage, effective, data-driven, simplified and cohesive. To that degree, Parker added, “Stores are thinking more about their customers than they are about the technology.”

“Stores are thinking more about their customers than they are about the technology.”

The most effective digital-first solutions put customers first and technology last. Tech-driven personalization is at the core of consumers’ interactions with the services they use every day, like Netflix and Spotify, and all of those interactions are personalized in a way that feels natural. (Today’s tech is stealth like that.) Because of this constant personalization, consumers now expect brick-and-mortar businesses to offer up the same user experience in real life.

Quoted in a recent Twilio report, Adam Lashinsky, a writer and editor for Fortune, said, “Every business in the world is learning right now the importance of digital operations, from communicating to selling to business processes.” He also added a warning for those businesses whose operations aren’t shifting to digital, noting “many will be left behind.”

 

To compete with ecommerce, recommend more options and expand checkout choices

Armed with more digital knowledge than ever, today’s consumers expect their wants and needs to be anticipated and provided in real time. And they know it’s possible. Recent Salesforce data supports this expectation, since “62 percent of customers expect companies to adapt based on their actions and behavior,” and “75 percent of customers expect companies to use new technologies to create better experiences.”

According to Accenture, when a retailer recommends more options based on historical data—like past purchases—they are more likely to make a purchase, both online and in-store. It’s also common practice that consumers will conduct research online before moving forward with an in-store visit, and they want the same level of information during their in-person visit as they had online.

Needless to say: If businesses don’t adopt technologies that connect the dots between a customer’s online and in-store preferences, they’ll start to lose those sales to their eCommerce counterparts.

Offering self-service options is one way brick-and-mortar is winning digital audiences over. According to Oracle’s “Retail in 4D” study, of the consumers surveyed, 55 percent want to reserve something online for an in-store, same-day pickup, 56 percent want self-checkout options, and 60 percent want to check out on their mobile device.

 


Personalized digital- and customer-first experiences build credibility and foster loyalty


It costs more money for a business to gain a new customer than it does to retain an existing one. So the more loyal your customer base, the more successful you’ll be. Using digital personalization to nurture those relationships is key, but digital personalization doesn’t just mean "move your business online." Khosa thinks, “Being digital-first really means you actually have a focus on customers—where your brand is the experience and the experience is the brand.”

"Being digital-first really means you actually have a focus on customers—where your brand is the experience and the experience is the brand."

Despite today’s COVID-induced digital wave, brick-and-mortar is still king among the next wave of consumers. (And remember, digital and physical are no longer mutually exclusive.) According to Accenture, “77 percent of Gen Z respondents in the U.S. said that shopping at brick-and-mortar stores is their preferred channel.” In another Accenture survey, 75 percent of respondents said they are more likely to buy from a business that does at least one of three things: “recognizes them by name, recommends options based on past purchases, knows their purchase history.”

One digital-first way to implement personalization is through a loyalty program.

 

Personalization pays off in loyalty

One way to better connect with your customers while bridging the gap between physical and digital is by starting a loyalty program. To start, ask yourself how a loyalty program will benefit both you and your customer, and what digital tools will you use to nurture that relationship at scale?

Customers expect companies to understand their expectations—in real time. When they do, it pays off, especially among the next wave of consumers—Generation Z. The value add of loyalty goes something like: Personalized experiences = loyal customers. Loyal customers = more referrals. More referrals = better customer lifetime value (CLTV). Better CLTV = more sales.

Using digital-first technology to create a customer loyalty program is even more useful when it turns into referrals. According to research by Extole, referred customers have a 25 percent higher lifetime value (LTV), and they’re four to five times more likely to refer more customers to you. When it comes to designing a loyalty program, start by identifying your value proposition, deciding who your target audience is and outlining your specific objectives.

 

Use digital-first technology to connect with customers and increase engagement

Brick-and-mortar businesses have increasing success with pairing customer loyalty with engagement-increasing tactics. For example, you can use predictive analytics to drive behavior-backed purchases and upsells. Customer engagement can also be measured by communication patterns and online interactions.

Fifty-five percent of customers (or a whopping 68 percent when just considering millennials/Gen Z) would rather communicate with a business digitally—through multichannel tactics like email, social media and live chat—instead of traditional methods. Monitoring customer engagement helps uncover ways for businesses to better connect with customers. It will also give you unique-to-you insight into which digital tools are working for your business—like decreasing support needs or increasing sales—and which aren’t.

 

Behind the tech that makes digital- and customer-first experiences possible


Pandemic-specific digital solutions are at the forefront of the digital-first transformation. A digital-first mindset is one that puts customers first, and during a time when care and connection should be top priority, technical solutions that will keep both consumers and staff safe are necessary. This is clearly demonstrated with the comeback of the QR code.

There are two main technologies behind the creation of digital-first experiences: Customer data and artificial intelligence (AI). Although they’re technically separate things, they often work together, especially now that COVID-19 has accelerated digital initiatives.

 

AI powers improved customer experiences

AI works alongside data to enable digital-first experiences, like personalized greetings and recommended actions based on historical data. What was once a longer-term tactic will now become an “immediate digital transformation initiative,” Forbes claims. And now that COVID-19 has accelerated many businesses’ walk into the digital era, the word “immediate” rings truer than ever. For example, Twilio found that one in three companies launched AI-powered live chat and chatbots for the first time during the pandemic, like the one referral marketing company Extole launched, below.

 

 

In Salesforce’s State of the Connected Consumer Report, the tech powerhouse claimed, “Wittingly or not, data proliferation — paired with increasingly refined modeling capabilities — is making AI a mainstay of everyday life and fundamentally altering expectations.” Those expectations are data-driven and are tied to personalized experiences.

 

Data powers personalization

Behind every digital personalization is the customer data that informs it. According to IDC, it’s estimated that “by 2025, every connected person in the world on average will have a digital data engagement over 4,900 times per day – that's about 1 digital interaction every 18 seconds.” The high amount of digital interaction consumers display every day, paired with data that comes from those interactions, allows businesses to better understand consumer behavior. This understanding enables businesses to create digital-first experiences that cater to their specific customers' wants and needs.

For example, NCR partner Sensibill offers a digital receipt management technology that translates purchase data into actionable information for financial institutions to turn into personalized experiences.

 

 

Consumer sentiment around data has always been a hot topic. Although consumers are being more careful about the data they share with companies, they also know that without it, their world won’t be nearly as personalized. In fact, Gen Zers accept data collection as “a necessary evil.”

 

How to start your digital-first, customer-first transformation


Great businesses always find ways to connect with their customers. And today, that connection leads with digital. Like it or not, consumer expectations around personalization are heightened in a post-COVID world. This reality places a purposeful and deliberate focus on the digital-first and, therefore, customer-first transformation.

Parker suggests starting with digital technologies and working backward from there. To do that, you’ll have to take it a step further than just having an online presence. "Digital transformation is more than selling things online," Parker said. Instead, start by asking, “What is the experience you want to achieve?” From there, enable the experience with the technology and data to create the optimal customer experience.

To create an experience, you need to pair online consumer behavior with seamless, personalized in-store experiences.  Digital transformation includes a whole host of things, so if you feel stuck, prepare a digital transformation roadmap by asking honest questions upfront. Which services, verticals, company culture, communication models and product offerings do brick-and-mortar businesses need to operate as a digital (and customer) first business? Do you have a website, social media channels and a loyalty program? If not, what do you need to do in order to get those up and running (and fast)?

For your business to succeed, a digital-first approach needs to be part of your DNA—it needs to be your first instinct. To get there, you have to make a digital-first transformation. NCR’s digital-first solutions at the forefront by providing technologies and insights that support and nurture customer connections—never by taking away. We take care of the creation, the technology and the operation of your digital-first solutions, so you can focus on your customers instead. Reach out to learn more.

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