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Think Tank: Five Challenges in a Digital World

Today's column is by Bob Lord, global ceo of Razorfish and coauthor of "Converge: Transforming Business at the Intersection of Marketing and Technology."

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Bob Lord Razorfish 2013 Think Tank WWD

Bob Lord

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Editor’s Note: Think Tank is a periodic column written by industry leaders and other critical thinkers. Today’s column is written by Bob Lord, global ceo of Razorfish and coauthor of the book “Converge: Transforming Business at the Intersection of Marketing and Technology.”

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Not long ago, elements of successful marketing programs were firmly within the grasp of the retailer. But the dramatic convergence of three powerful forces — media, technology and creativity — has signaled a transfer of power away from the storekeeper and on to the shopper.

Take pricing, for instance. Once easily manipulated, pricing now has to be transparent, and retailers have to be ready and willing to price-match. Product information was once controlled by the brand; now there are countless review sites. Place now is often a question of technological choice, with e-commerce, mobile commerce and social commerce growing even as the store remains central. And promotions need to incorporate social proof; they can’t just regurgitate the corporate line.

The rules of retailing have changed, and a new set of challenges has emerged. Here are the top five you need to have on your radar.

1. SHOWROOMING: Digitally savvy consumers are turning brick-and-mortar retail establishments into places where they can eyeball and lay hands on a product before buying it online, probably for a discount. In a survey last year, comScore found that 35 percent of shoppers had showroomed, with almost three-quarters of those identifying price as the reason for doing so. It’s a vexing enough problem that more than a few retailers have simply thrown their hands in the air. A recent report from Retail Systems Research (RSR) found that 14 percent of retailers chose simply to ignore the trend — double the number from the last year’s survey.

2. THE PHYSICAL-DIGITAL DIVIDE: All too often, we see that a company’s organizational chart puts e-commerce at odds with the store operation. Not only is there no incentive for the two to cooperate, they’re actually disincentivized to work together. They’re essentially locked in competition for the same consumer dollar. This impacts the consumer experience. Products bought online can’t be returned to the store — and vice versa. And it’s the reason that in-store pickup of products ordered online often yields a terrible experience. Although retailers generally agree that the shopping experience should be consistent across channels, only about one-third have achieved that consistency, according to an RSR survey.

3. THE WRONG VIEW OF THE CONSUMER: Having a single view of the consumer means that your sales associate knows if the shopper in front of her has bought from the store but also whether this person has shopped online. This is a surprisingly elusive state of affairs, due to back-end integration problems that have plagued large enterprises since the rise of e-commerce. When integration is lacking, it leads to inconsistency. If a store wants to make a holiday promotion, it has to make a new business rule 10 times for the POS system, e-commerce engine and mobile site. The likelihood of delivering the same experience across channels is low. There’s lots of friction based on dissatisfaction on the part of the consumer, who expects the store to be acting out of a single repository of knowledge and insight.

4. THE DEMAND FOR SOCIAL PROOF: The consumer in buying mode expects more information from third-party sources — that’s a new challenge for any retailer trying to drive unplanned purchases. Consumers want social proof — that is, what friends and family or category experts think about the product. And that’s not something most retailers are set to deliver on a storewide scale. Some, however, have tried. One retailer we’ve worked with overhauled its in-store product fact tags, added reviews, made the product description easier to read with bullet-pointed key product features and included the average store rating. Putting raw consumers’ reviews that aren’t wildly positive testimonials on the store shelf is a major step for any retailer. Surely a few sales will be lost because of a low average rating, but the payoff is a deepened relationship with the consumer in-store.

5. SALES ATTRIBUTION: Attribution is a major issue for retailers. There are models that give the sales channel all the credit. Then there are retailers that use point of delivery as attribution — whoever delivers the product gets the credit. In this case, if the store doesn’t have the product but the Web site does, the associate won’t make the online order for the customer because then e-commerce will get credit. Instead, the associate might push a less profitable product. When it comes down to it, first-touch attribution makes no sense, and neither does last-touch attribution. Clever retailers have blended attribution models so that all the touch points that influence the sale get some credit.

Each of these challenges requires a different set of solutions, but there is one thing you can do to impact all of them. Break down silos and get your e-commerce and stores operating on the same page. Incentivize them to cooperate and collaborate, not compete. Then you’ll be ready to serve today’s empowered shopper.

Lord is also ceo of Publicis Groupe’s Digital Technology Division, which includes Razorfish, the Digitas LBi network and Denuo — leading over 7,500 employees worldwide. He also drives the agencies’ digital product offerings, which include Fluent and CRM365. And he represents the Groupe’s technology assets on Publicis Groupe’s P12, its Strategic Leadership Team and is on the board of directors for its VivaKi unit. He serves on the board of the Ad Council, the IAB, is an active member of the TED community and a founding member of The Nantucket Project. Lord holds an M.B.A. from Harvard Business School and a B.S. in Engineering from Syracuse University.

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