Why strategic customer experience initiatives win out over price reduction every time

By Ron Lutz, CCO at Miller Zell

Forrester predicts that this year alone, 20% of brands will give up on customer experience strategies and resort to price reduction to drive sales. An even more alarming amount of those surveyed, 89%, reported return on investment for customer experience isn't well established in their companies.

As retailers, you know customer experience is the name of the game. So where does CX need to go from here to be successful enough to avoid a price drop? Glad you asked.

Keep it simple, CX

Defining customer experience is hard. Implementation within a brick-and-mortar location is even harder. Yet driving CX initiatives home will always trump price reduction strategies in terms of driving consumer engagement and loyalty.

The first reason being that customers might not even notice that you cut your prices. A study recently published by Bain & Co. revealed consumers' perceptions of a retailer's costs were misguided as they assumed retailers were cheaper or more expensive than what actual prices reflected. This shows that cost is not always the most influential indicator of loyalty.

Instead, it's crucial to drive understanding of your brand. Value is relative and means something different to every consumer. Often even the same consumer, at the different times they shop. Assessing value needs to go beyond price and convenience in order to deliver an experience that will consistently resonate with the consumer. Two driving components of this are discovery and simplicity.

Let's start with discovery. According to Kantar ShopperScape Research, over two-thirds of shoppers report they do more shopping at retailers that provide a gratifying experience.

In the case of Mizuno, the sporting goods giant wanted to deliver an experience center that would distinguish the shopper's journey at its U.S. flagship location in The Battery Atlanta from other avenues to buy their product, like sporting goods stores or mall outlets. To go beyond the average retail location, the brand installed golf and baseball swing stations, including custom analysis and tablet stations, where consumers can access product details. This experience not only allows customers to discover equipment in a new way but gives them easy access to learn more about products they're interested in.

Harvard Business Review found that, when evaluating more than 40 shopping variables — including price, perception and frequency of brand interaction — "decision simplicity" won out. Consumers value receiving trustworthy information and the opportunity to confidently weigh purchase options. Make that process easier for them and it will elevate your CX — take a page from Ikea's book.

The Swedish-born furniture retailer is beloved world-wide for its reasonably priced and minimalist-focused home goods — but its stores aren't exactly renowned for an expedient shopping experience. To cater to busy Manhattanites, who need to decorate small spaces without a furniture shopping ferry ride, the brand developed the Ikea's Planning Studio located on the Upper East Side. The experience is curated to accommodates to an audience. Not only do customers receive one-on-one help to design their smaller spaces, but all products purchased on-site will be delivered directly to the customer. There you go — again simplicity meets discovery for a well-rounded CX.

Do it right, don't back down

You might be saying "sure, a defined CX with a defined ROI is the goal. But getting to that point is a real challenge." And you're right, the roadmap to a strategy that works for your company isn't always obvious. But when looking to 2020, brands can (and should) create a unique customer experience strategy that won't require a mid-year pivot to short-term gains.

Here's a great place to start from:

Start with a detailed look at your customer base. Get an understanding for how consumers actually view your brand versus how your company thinks they view it, including pricing. Make sure prices are competitive across the board, then focus on CX. Forget using pricing as a crutch to get potential customers in the door.

From there you can determine what really matters to your customer base. For example, would it make sense to rotate your store design regularly/seasonally to keep the experience fresh or would that be frustrating to consumers in your industry? Is your target market looking for an involved in-store experience or are they trying to quickly grab-and-go? Drilling down on what potential customers want will make all the difference when laying out a successful strategy.

Your next step will be to ensure your strategy is scalable and sustainable for year-long execution. Decide what in-store components (store layout, signage, digital installations) will best serve your audience. Consider how the experience will affect the individual shopper — does this make their decisioning easier or more exciting?

And finally, consistently evaluate the success of your strategy. The in-store experience for today's retailer isn't a one-and-done situation. Smart companies will routinely evaluate the success of their current customer experience, seek out critical feedback and refresh their strategy to serve the ever-evolving consumer.

By tackling your CX initiative in a way that is feasible to maintain and grow, I can say with much confidence that your company won't be the 20 % that abandons its strategy this year.