‘Data- and tech-driven customer engagement at scale’
Retail and commerce have changed dramatically in recent years. Like many other sectors, retail companies are discovering the enormous power of their data treasures. At a recent Masterclass for Digital Leaders in IJsselstein, the real experts of experience spoke. In addition to Rituals CDO Martijn van der Zee’s practice, Anderson MacGyver consultant Cliff de Laat put the topic in a broader perspective.
Chairwoman of the day Crystal Reijnen kicked off the meeting with the famous example of the American supermarket chain Target. This company has been applying data mining to analyze customer behavior and do predictive analytics for more than a decade. “When someone buys balloons and toys, a child’s birthday is probably coming up. Target then responds with a discount coupon, for example, to strengthen the connection with the customer,” said Anderson MacGyver’s Product Lead and Management Consultant specializing in digital strategies.
That in-depth understanding of individual customers did not lead to the desired effect with a customer in Texas. The purchase of a specific brand of soap combined with certain vitamins taught the system that pregnancy was in play. The forwarded congratulations did not go down well with the 16-year-old recipient’s father. Several weeks after his angry phone call, the man called again. This time to apologize, because he became a grandfather. Reijnen: “Target apparently had a keener insight into the life of his little princess than he did.”
“As consumers, we experience the power of data every day,” she continues. “We continuously receive personalized offers, participate in loyalty programs and have to deal with dynamic pricing. The question facing traditional stores is; how to transform to a contemporary digital experience. What barriers must they break down to do so, and what decisions must their digital leaders make?”
This is what the Masterclass in the cozy hearing room of the IJsselstein home base, is about. Before Martijn van der Zee, Chief Digital Officer of Rituals, talks about his experiences in the digital domain, the floor is given to Cliff de Laat. Before joining Anderson MacGyver as a consultant three years ago, he was involved in digital projects within supermarket chains Jumbo and Plus, among others. For more than a year he has been active as product owner at Scania Group.
An excellent customer experience is crucial to attracting and retaining customers, according to De Laat. However, the commercial domain is characterized by a high degree of change, disruption and technological innovation. “All this requires a different involvement from the technology department. More focused on agility than traditional business process support.”
The emphasis is on time-to-market, on responding to changing conditions, creating the right products. “Business outcomes such as revenue growth and retention are more important than output in terms of the amount of code written. It’s about enabling change and creating satisfied teams as drivers of innovation.”
The innovation cycle by which business desires become reality, has four elements: ideation, problem, solution & market, and finally delivery. “Together they form a kind of stopwatch,” De Laat explains. “Time starts running as soon as you become aware of something. Time stops when a product or solution is put into use. This automatically gives you a measuring tool for your own agility.”
The consultant cites as an example the development within food retail from fixed prices on physical labels to automated adjustment on electronic labels and discounts, such as two for the price of one. Digitalization now allows prices to vary based on time of day, specific customers and product condition. “Several iterations, all of which have contributed to what is now possible.”
De Laat briefly touches on some retail trends. Examples include data-driven customer engagement, AI-based or non-AI-based personalization of customer interactions, sustainability-focused strategy and operations, unambiguous onmichannel experiences – while increasingly blending online and physical.
To make progress, the aforementioned innovation cycle plays a role in each of these areas. But then companies face a different kind of challenge: scaling up the preferred solution. Cliff de Laat speaks of a “scaling lag,” a brake on scalability most of the time caused by an outdated technology landscape. This usually prevents initiatives from becoming profitable.
“The ‘scaling lag’ is mostly caused by an outdated technology landscape.“Cliff de Laat – Management consultant at Anderson MacGyver
To break through this, a number of principles are important. On the technology front, these include API-first, a containerized and microservices-based IT infrastructure, CI/CD pipelines with automated deployment and quality assurance, a standardized integration architecture and an engineering mindset. In addition, solid and scalable data management, a high-performance and industrialized data architecture and ditto analytics platforms are crucial.
According to the Anderson MacGyver consultant, it starts with an idea and ends with the delivery of value at scale. “Pressing the stopwatch gives a good indication of how the self-repeating innovation cycle is functioning and the state of scalability within an organization. This also provides handles for improvement,” De Laat said.
Martijn van der Zee has been working as CDO of Rituals for five years now. Before that, he was responsible for marketing at KLM and Suitsupply. He has a personal and professional passion for the human side of technology in particular. “What is interesting is that the same available digital technology is used in different ways everywhere,” he says.
Lifestyle cosmetics brand Rituals creates an almost unparalleled and unique experience, both in terms of products and customer journey. The company nevertheless faces several challenges, related to five shifts of focus: from European to global, from natural to sustainable, from store to omnichannel, from brand to community, and from beauty to wellness.
According to the CDO, the company is building a global brand through a variety of touch-points: over a thousand of its own stores and more than three thousand shops-in-shop, e-commerce, wholesale through third parties and travel: sales at airports by airlines and in hotels. “From digital and technology, we try to support all these activities in the best possible way,” he said.
Despite their own profit and loss account and autonomy, these business activities must be able to scale up within the bigger picture. To this end, the digital competence within Rituals is part of the foundation just like IT, marketing and fulfillment.
Van der Zee: “I say with pride that we are a retail-first company. Although I am part of the group working on digitalization.” Indeed, in his view, online is easier than traditional retail. “How many physical stores really capture the imagination? Now compare this to the virtually limitless possibilities of websites.”
Rituals’ relatively modern and open central IT architecture is a big advantage for strengthening its connection with customers worldwide. “When everything in the back-end is cloud- and SaaS-based and you’ve chosen an integrated set of best-of-breed applications, it’s relatively easy to add a nice front-end. That’s exactly what we’ve done in as many as 30 countries.”
Customer data and transactional information are crucial components in the data architecture, which is similar across all countries. “When people feel connected to your brand and products, they more easily provide the opt-in that we use to grow the number of data points.” The Rituals customer database is growing rapidly. Half of the new arrivals come in through the physical store, the rest through web, app and campaigns focused on it.
According to CDO Martijn van der Zee, ‘conquering’ new countries is a snowball effect in which the user experience is central, for example in the wonderfully designed shops. Circling around this are three elements that keep the ball rolling: digital touchpoints, data-driven digital marketing and prompting action. “Once the process is up and running in a country, brand awareness naturally increases and connection to the brand increases,” he says.
“It sounds paradoxical, but a scalable central setup is necessary to make things happen locally: sales and customer service in the right language and currency, optimal fulfillment and so on. Because we can apply all the experience we have gained to new markets each time, the roll-out in new countries is happening faster and faster.”
In the question-answer round of the meeting, Van der Zee would later add that the local voice is always represented centrally to be able to respond proactively to specific front-office-related needs. Without compromising speed.
He shares responsibility for this with Rituals’ CTO and CMO. “Only then can you get things rolling in a decentralized yet scalable way.” For this, not the organizational chart but collaboration is crucial. “A digital leader is by definition a nice person because he or she can’t do anything without the support of people within other domains such as marketing, IT and supply chain. Our data teaches us every day whether we are doing the right things right.”
“Only in broad collaboration can you keep things rolling decentralized yet scalable“Martijn van der Zee – CDO of Rituals
Day chairwoman Crystal Reijnen starts the closing Q&A session with a question for both speakers: what drives the shift from agility to scalability? According to Cliff de Laat, this plays out especially when a newly developed MVP or other innovation is very successful and applied on a larger scale. Martijn van der Zee agrees, although there is no standard approach or roadmap. It depends a lot on the organization, industry and product.
A question from the audience: what are actually the KPIs for scalability? De Laat: “It’s important to know how competitors within the industry are doing. So every organization has a different need in this area. You also need to know how much time and other resources you want to spend on the intended innovation.” Van der Zee adds: “It’s not easy to benchmark yourself. Having an open eye to the competition already helps tremendously in determining where you are approximately.”
According to the Rituals CDO, what are the key architectural principles for multichannel globalization? “A truly open, API-based, headless architecture” he answers. In addition, you preferably embrace globally standardized and available solutions, which must be able to interoperate with the back-end in terms of architecture. “All this in combination determines speed and agility on the front-end.”
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