How Offline Retailers Can Fight Amazon

Brick and Mortar stores

As our world continues to shift towards online commerce, offline retailers are watching their market share slip into the hands of sophisticated, data-driven digital retailers. Consequently, retailers have asked themselves how brick-and-mortar stores can win in the age of Amazon, instant gratification, and the proliferation of data.

As it stands today, more than $300B in revenue is generated through online retail, while nearly 11x that still flows through traditional offline channels. By 2025, McKinsey forecasts that online commerce will represent less than 15% of total retail sales. Don’t worry — good ol’ fashioned shopping isn’t going anywhere.

However, it’s for this reason that Amazon is coming for you — opening brick-and-mortar stores across the country, using sophisticated data to enhance the traditional shopping experience and taking an even larger bite out of offline commerce. So, while in-store shopping lives on, technology will dramatically change what it looks like.

As Amazon ventures into the offline retail space, competing stores must play to their strengths — customer relationships, experience, and geography — while embracing new technology and getting smart with data in order to stay competitive. Following are five best practices for offline retailers that want to compete, and succeed, in Amazon’s world:

Unlock insights from your customer data.

Unearth intelligence about your customers by capturing and using transaction data.

The success of online shopping isn’t just due to “convenience” — it’s due to the deep insights into customer habits and preferences that digital merchants collect and use as a foundational part of how they do business.

Until recently, offline retailers haven’t had the tools to compete in this area. However, with the availability of new technology, brick-and-mortar stores have access to transaction data and real-time business intelligence. The ability to segment customers by habit and history, track store performance data, and deploy high-ROI campaigns are just a few of the ways in which offline retailers are using these insights to drive more business.

Ditch impersonal email campaigns.

How can you put customer data in practice? Do away with the one-size-fits-all email campaign as a marketing strategy. One thing that Amazon does exceptionally well is using behavioral data and past purchase information to craft highly personalized email messages. Meanwhile, offline retailers are sending “batch and blast” discount campaigns that don’t take the recipients’ past shopping experience into account. The result? People stop engaging because the messages aren’t tailored to their interests.

Instead, segment customers in a way that allows you to craft personal, timely messages. Better yet, implement a solution that does this for you, and reaches out to customers at a time that’s delightful and useful for them (right after a purchase, for example), not just convenient for your marketing team. The result will be less discount-driven email campaigns and more customer engagement.

Focus mercilessly on delighting and retaining your VIP customers.

For retailers, the top 25% of your customers make up about 75% of your revenue. This means that those individuals must be identified and very deliberately retained to protect this revenue stream. How do you keep these customers out of the clutches of a Neo-Amazonian, high tech competitor? Fight back with technology of your own.

First, you must know exactly who these VIP customers are. If nothing else, this is one of the most valuable ways in which your data can start working for you immediately. By identifying these high-value customers, you’re now able to reach out to them and provide perks that other businesses cannot – special events just for VIPs (a la Nordstrom), accelerated rewards when they come purchase with you (shout out to Southwest A-List) and other perks.

Invest spectacularly in catalyzing repeat visits from existing customers

Your VIP customers aren’t your only valuable patrons; Any customers that you already have are your best source of future revenue. It’s 7 times more expensive to acquire a new customer than to drive an incremental visit from an existing customer. This is another shining moment for customer data to make a case for itself. Reach out to customers immediately after they transact to incentivize the next visit.  A customer loyalty program works brilliantly in this situation, but only if it’s effortless for customers and provides clear value to them,) When a customer is enrolled, each transaction brings them closer to a high-value incentive. Where traditional loyalty programs like punch cards represent the pre-Amazon offline world, app-based loyalty programs can collect actionable customer data and serve as the central nervous system of your business.

Operationalize customer feedback

Customer feedback comprises a valuable piece of the data puzzle for offline brands. Guest experience isn’t just about giving patrons a warm and fuzzy feeling — it’s a litmus for the health of your brand and the performance of your stores. Soliciting customer satisfaction feedback, especially when you can tie that feedback to transactional data, becomes an incredibly powerful way to collect actionable intelligence on your businesses’ performance. A great way to collect data consistently is by surveying customers via mobile phone after every transaction. Make it easy for customers to speak their minds – paper surveys and long questionnaires rarely result in the volume of feedback needed to answer questions like: How satisfied are your customers? Where is your operation thriving — or suffering? When combined with loyalty and customer data, you can pinpoint feedback to individual customers and even respond to that feedback in order to keep your customers happy — maybe even offer a reward that they can redeem in store to thank them for the feedback. Take that, Amazon.