Jeff Herrera, CMO of Annex Cloud chats with Bridget Fahrland, Head of Digital Strategy at Astound Commerce about optimizing your consumer touchpoints from online to brick-n-mortar retailers. Also, strategic tips for non-essential and essential businesses as they begin to plan their gradual re-opening.
Bridget, Hi Good morning, and thanks for joining us. This is our Annex Cloud Market Movers video chat series, actually kicked us off about a week ago. And what we've tried to do is bring together some really good strategists, some thought leaders, some key influencers to help in this really challenging market environment. Right? We want to be proactive. We want to make sure people are thinking about all the right things and we're providing value across as many different levers as we can from both a solution partner SI perspective, as well as somebody like us at Annex Cloud with the product and help bring together retailers, manufacturers, and distributors with some really good thinking about how do we manage this difficult economy? So with that said, thanks again for joining us.
Thank you very much for having me. And I think you're right. That's what great partners do right now is to think of proactive things brands can do.
Exactly. So listen, let's kick this off and just get a kind of state of the state. Here we are, gosh, mid-May 2020, and we've had a, what I call the initial shock, right? The shock of the impact of COVID-19 and of course the economic situation as a result. I think the latest numbers today are one in five, so 20% is going to be unemployed. 33 million have filed unemployment claims. A lot of things are challenging right now. And there are some bright spots, right? There are some bright spots that are happening. We're all going to get through this and get through it together. And I think it would help to bring together some thoughts and perspective around, here we are May, what are some of the things that brands, manufacturers, retailers, what should they be thinking about now to be successful in 2020?
Got a big move to digital. We've got stay at home orders, but all that is starting to slowly come out of its shell a little bit and we're actually starting to see some movement there. But now that that's happening, can you help provide some guidance on what are some of the things that those key prospects and clients should be thinking about in 2020, to make the most of it, get through this difficult time period, and most importantly set themselves up for success in 2021?
Sure. So I think in terms of near term summer and fall, even if retail stores open up a little bit, there's a lot that they could be doing with digital to enable that because it still won't be exactly the same. Right? So I think retailers, as restaurants have done, looking at curbside pick up from stores, for sure, looking at mobile payments to decrease touch, and then I think the thing people are missing most now as retail reopens a little bit, what's really going to be missing from that is time and physical presence. Because even if you go into the store to pick up something, it's going to be a very surgical visit. You're not going to want to spend a lot of time in the store. So online, that discovery element and that selection element becomes even more important. And I think providing content and guidance and bringing in sales associates digitally for high consideration items.
So I'm not talking about low consider, you know, you don't need to bring in a digital associate for a box of Clorox Wipes, right? But for things that people might start considering again, like apparel, like sporting equipment, like electronics, have that conversation digitally with sales associates so that when they come, they can just pick up curbside or go in and make a very quick one, two decision. So think of digital as more than ever, it's always been kind of that first step to in-store, but now it's going to be more of that first step. More of the in-store is going to bleed into that first step with sales associates' presence, guidance, and content around products.
So you're really talking about, and this is critical, so you're spot on is, those touch points, those critical touch points in the customer journey, right? What was once, two months ago is now. And to your point, you have to be able to maximize or optimize those consumer touch points in that journey. And now, because everybody's migrated to online, because they don't have that traditional store experience, we'll see how that evolves over the next 30, 60, 90 days, but it'll never be quite what it once was. So what is sort of the way that brands, manufacturers, and retailers can really optimize that digital experience across every touch point? You mentioned customer service, exactly. But as they come in and they're shopping or they're browsing, and they're trying to understand, what is it that is going to make them work with the net buying environment and knowing that they don't have that physical connectedness right now, what is the way that brands and manufacturers should really consider optimizing that experience online?
So for online, I think first of all, very clear messaging right up front about what is available and not have people waste time looking at out of stock items, which we've all felt the pain of over the past few weeks with Amazon and Instacart and all of that. So let's start with, here's what's available, here are the available windows for pickup or delivery, right? Or coming in-store, that's number one.
Messaging around what safety procedures you have, letting people know, when you come in, this is how it's going to work. There might be only so many people in a store. We're going to ask you to distance. We're going to ask you to wear masks, whatever that may be, making those expectations upfront.
Next, helping people find the right product online versus doing that in-store, whether it's through guided selling, product finders, product comparison, letting prepay happen so that they can just do the curbside or in-store pickup, and then enabling video chat for customer service.
I do think what we're looking at right now is dividing this into essential versus non-essential, right? Essential retailers are open. Grocery stores are open, pharmacies are open, even garden and home goods store like Home Depot is open, right? So what we're talking about now is the gradual reopen of apparel, of bookstores, of toy stores, of electronic stores. So when you think about the non-essential, that needs more guidance for the customer and bringing that video presence in as a sales associate and bringing that guiding content in.
For sure. Yeah. That's a really important point on the content piece. Also, we were thinking of it in terms of, you worked so hard and you invested so much to acquire those customers. And now you need them more than ever, because the timing of where we're at, you don't have a lot of resources to go out there and fill a pipeline of new customers. That's just going to be a challenge and in the best use of those resources right now. So I think what does make sense is, you have a customer that you worked so hard to acquire, and how are you engaging that current customer? What are you doing to work the value equation, so they constantly see that you're supporting them, they're supporting you, and they of course echo that across many different channels? How are you guys thinking about that whole retention, loyalty piece tied to that experience online?
Excellent point. So first of all, you're absolutely right. This is a time as retailers are looking to, like everybody, working with smaller budgets, probably marketing to unknown or new customers is going to take a cut. And this is a time to really dig into your loyalty base. So you may already have a loyalty program, in which case great, there are things you can do to expand and focus on that loyalty program. If you don't, maybe now's the time to start thinking about getting one and using your email and order list to build that.
I think the good news here, for retailers is, when we look at who this is impacting, yes, and the unemployment's going to be at 20%, consumer confidence is at an all-time low right now, I think, well, actually I shouldn't say all the time, since 2014. So the biggest low since 2014. So really when you're realistic about that, there's the top 5% and the top 25% of household income, their behavior is not really going to change that much. I mean, before we came into this crisis, there was already a large segment of America that was living paycheck to paycheck, boosting their income with side gigs. Right? Then there's the top five to 10% who even if impacted short term with employment, probably is optimistic they're going to pick up employment again in the fall and frankly has some savings. So you'll see still some discretionary spending among that top percent.
Most likely that the top 10% of household incomes align with folks who are in your loyalty program for non-essential goods. So that's really good news for non-essential retailers. So now it's time to double down on those customers. How do you do that? I would say one is access. As your stores reopen, why not reach out to your loyal customers and give them access early? Give them reservations. Say, "We are only allowing five people in, every 30 minutes and you are in the front of the line," right? So think about loyalty beyond points in this world.
Think about loyalty as you get access. Maybe your most loyal customers, if you have a large retail footprint, you should be prioritizing your loyal customers for delivery from store using your sales associates to deliver goods to homes from stores, your loyal customer should get that kind of treatment. Your loyal customers should get one-on-one chats with sales associates if they need help. And then lastly, look at how to build your loyal customers and the advocates, right? You're taking a cut on marketing, so now let's look at loyal customers and say, we've given you this exclusive access. We've given you all these great things. You're feeling good about our brand, maybe now is the time to share like, "Hey, I went to this store and it was a great experience. I felt safe. I felt taken care of and it was efficient."
Yeah. That's so good. As you were talking, I was thinking through a little bit of... You're talking about the appreciation for their loyalty and demonstrating ways to show value to their most valuable customers, as well as creating opportunities for those that may not shop as frequently as their most valuable, but they still shop a bit, it's an aspirational component that says, look, what you can get if you're able to do one, two and three things. That's exciting.
And then you also mentioned kind of the experiential element. So when you create these levels of appreciation with customers, I remember, you actually mentioned this on a webinar that you recently had is, give them something to talk about in social, content, right? And this is what you're doing, right? You're showing that level of appreciation. You bring them where they can go to their social channels. I.e Instagram, I.e Facebook, and talk about these great experiences that they've had with your brand. And most importantly, in the loyalty program you get rewarded for doing so.
So whether you're showing pictures, or writing reviews, or referring anybody, or showing a great video, a fun video, because you're at home and you're just enjoying some great product, those are the things that really matter. And those are the things that create those loyal customers that keep coming back for more and more, and they tell all their fans and friends about it. So the one thing that stood out to me was the social element, right? We're in this, all of us, you and I are proactively talking about ways in which brands and retailers can perform in this very challenging economy. There's an opportunity for brands to really connect with a social platform around what they stand for, kind of their shared purpose with their customers.
I.e, they could be frontline workers or supporting tremendous amount of frontline workers, or they're doing something tied to the environment, or they're doing something for hunger, whatever it may be, whatever their brand stands for, that's an important point because you can leverage your customer retention program and loyalty to emphasize the importance of that social community effort. Are you guys seeing some of that too? Because that's an opportunity for loyal customers to come in and say, "Yes, I'm committed to this brand. We share the same values. And not only am I getting the best products or services in the market, but are also committed to doing these social things that are very important to my community, especially in this time."
Absolutely. We're seeing brands do that. And we're seeing brands... So we're seeing brands really, I think, especially brands that again, are more non-essential vertical, right? So we see brands pivot, like Burberry is retooling their trench coat factory to make protective gear. We see Brooks Brothers making masks, that pivot really tells you a lot about a brand, right?
And I think those are classic, established brands, and they're going to be here for the long haul, and they have the ability to do that pivot. That messaging is so on brand, and so it means a lot to their customers. So absolutely we see that. We also see brands having customers donate points to certain things. So Radisson, you can donate your points, the airlines, you can donate your points. Like, donate points to help doctors fly to where they're needed, donate points for doctors to stay when they're serving elsewhere. So then you feel like you're part of something.
And you know, for the brands they're doing something good, but they're also making sure that they don't have the huge liability of millions of points out there when people can finally spend them again. So it's not 1000% altruistic, but it's still a good thing. I think something you said earlier, I want to say is like, before, so many things about this time are accelerating things in digital that the brands and businesses should have been doing earlier. And I think loyalty is a great example because loyalty for so many brands just meant points, it was quid pro quo. Buy this, get that. And that's not loyalty, that's just delayed promotion, right?
So the brands that had real loyalty didn't even have loyalty programs, the Patagonias, the Apples, they don't even, right? But then there's the REIs. They have a real soulful loyalty and they have points, and things they should be doing and some are, is all along, they should have been setting up their loyalty program to be about more than points. To be about advocacy, to be about exclusive access to content, to feel that special connection. So I think brands should do this now because this is who they should double down on. And then that's going to take them into 2021, where hopefully life will be a little bit more back to normal. And then they're set for that piece.
I think, people say things are never going to be the same. I don't know if they're going to be, honestly, I feel like they're going to change a little bit. You might see the more curbside pickup moving forward. You might see more unique loyalty programs moving forward. Someday, people are still going to go back into stores, and they're still going to go back into movie theaters, and they're still going to go back and sporting events. So now is the time to do the block and tackling, to be ready for how you can be during those times.
Yeah, no question about it. In fact, just to illustrate your point, J. Crew, unfortunately just filed for bankruptcy. And I just read in the Wall Street Journal, that one of the reasons that they found themselves in this difficult position was because they just didn't have a loyal customer base. And that's a sad reality of what can happen if you're not doing the blocking and tackling tight at keeping. And it's logical, right? I just spent a fortune trying to acquire customers, I want to make sure I've got to keep them, keep them transacting because it has such an impact on average order value, frequency of purchase, gross margin increase in like retaining your most valuable customers.
And the other part that I thought you made quite a bit of sense on was the element of kind of quid pro quo with a loyalty program. I think there's a lot of transactional opportunities out there, but it's the emotional part that you want to connect with and win with. And that's what a lot of these successful brands are doing. Target's doing a good job of that. Macy's doing an excellent job. REI is one of the leaders in that space. Those are the really good examples of companies that take customer retention very seriously and make sure they're doing all that right blocking and tackling.
The one thing I did want your perspective on before we sign off is, when you have a prospect looking for some digital assistance and strategically looking at how they make this work, and they say, "Guess what, Bridget? Now this Amazon thing's becoming a real challenge for me. I just don't know how I'm supposed to live in a world with Amazon when they're just so big. And they've got so much scale." But again, to your point, it's great on the transaction side, but if you could talk a little bit about, for those clients and prospects that need some assistance on navigating, how do I coexist in a world with Amazon? I'm sure people would appreciate that from you.
Absolutely. So I don't think our point of view on Amazon has changed much since the COVID crisis. We've always viewed Amazon as make them your frenemy. Certainly, for most of our clients, they sell their products on Amazon, but naturally they don't have as much of a margin. So our Amazon advice has always been, what you'll never get, you're competing on Amazon, and Amazon's more and more making you pay for placement, right? And I think for larger retailers and manufacturers, this is a bit of a turnoff because now you're competing with like these mom and pop shops, right? And the marketplace.
So long term, really looking at exclusivity, what can you offer on your own site that you can't offer on Amazon? And we do a lot of product configuration and customization that you just can't do on Amazon. So if you want a special jersey off puma.com, and you want to customize it with your name, you can't do that on Amazon. So look at products that you can have exclusive, look at subscription programs, and again, loyalty. You cannot do loyalty on Amazon. So exclusivity, content, loyalty, keep that all off of Amazon, and then still use Amazon, of course, as a sales channel.
But remember, you're not competing with Amazon as a whole, you're competing with yourself within Amazon. This is a very different thing. I did want to go back to the J. Crew thing because I want to say that we've actually done some of our best work with clients who are in bankruptcy, right? So bankruptcy is a little bit like a divorce or losing your job. And it's like, you're at an all-time low. And then from that comes positive things. You can focus on, okay, what should J. Crew be doing right now? Focus on what is their soul? Who are they? They got into a quick turn transaction just trying to get the next sale, now's a great time for them to think, who are we? How do we want to differentiate in the marketplace? What can we offer that isn't me too, that is like something distinct and new? And again, going, they do... I mean, it's funny because nobody ever really was talking about J. Crew. Now it's like Brittany Spears, everybody's worried about J. Crew, right?
So this could actually be a good thing for them. Now people are like, "Oh, J. Crew, I'll miss them."
Yeah. Yeah, no, for sure. Yeah. Especially for somebody like myself who grew up with that brand. And it's just hard to see, but we're going through it and it's great that people will have really good resources like yourself, at Astound Commerce, who's got a tremendous focus and a track record of success, across many different platforms. So again, anything that we can do jointly to support clients and prospects, that's the whole point of this. Let's be proactive. Let's talk about these sayings. The worst thing that I think some of our prospects and clients can do is, is just be frozen, right? Just take the appropriate action, focus on the certainty of the business, as opposed to the uncertain elements of the business and get through this difficult time, because we will get through it. I think we're starting to see a lot of good movement there.
So again, Bridget, thank you so much. This is very, very good. I hope we can do it again.
Oh, I'd love to.
And I think if anybody wants to see any of your great insights, they can go to your homepage on astoundcommerce.com, right?
Yes, astoundcommerce.com. You can go to our homepage. You can go to our insights section and there there's a lot of free thought leadership that you can download. We are also if brands are interested, doing 30-minute, one-hour, pro bono workshops to sort of see some fast concept and ideating right now with our clients and other brands.
Bridget, thank you so much. Great to see you as always.
And we'll do this again.
Always good to see you. Thank you.
Take care. Bye-bye.
CMO, Annex Cloud
Head of Digital Strategy, Astound Commerce
Since 2010, Annex Cloud has provided industry leading loyalty solutions to more than 250 leading brands and retailers, including Jenni Kayne, Hewlett-Packard, Bed Bath & Beyond, e.l.f. Cosmetics, Olympus, Sugarfina, Mizuno, MacKenzie-Childs, VF Corp., with the ability to engage tens of millions of their customers one-to-one at scale.
The Annex Cloud platform provides fully integrated Customer Loyalty, Referral Marketing, and User Generated Content (UGC) solutions that seamlessly work together to optimize the customer journey and deliver a unified customer experience that is designed to accelerate revenue growth, retain valuable customers, increase average order values (AOV) and drive repeat order frequency.
As the world’s most trusted independent digital commerce specialist, we empower success through expertly created experience-driven ecosystems that fuse ever-evolving technology, data, design, and storytelling to build meaningful and lasting relationships.
With more than 20 years of expertise and thousands of experience-driven ecosystems woven into our DNA, we create unique and compelling experiences for customers across all channels and drive sustained business growth for our clients.
To learn more about Astound Commerce, visit astoundcommerce.com