Mike Hughes, Co-CEO
In the small window of time between filling a shopping cart and checkout on an ecommerce site, a lot can happen and not all of it good for the retailer. The customer has several choices: abandon their cart loaded with the latest winter collection apparel, make the purchase on the spot or have an impulse to add a pair of trendy gloves. It is at this moment, when a customer is deciding what to do, that relevant, personalized offers presented in real time can make the difference between a successful sale or not.
For Exchange Solutions, an expert in real-time analytics and customer engagement, typical online shopping scenarios like these and many others present significant opportunities to influence retail customer’s behavior and change the game for many retailers today. Simply put, “Exchange Solutions helps retailers understand a customer’s propensity to make a purchase, identify behavior gaps and individualize compelling incentives. Further, our incentives are margin aware meaning that low margin baskets won’t qualify. We are the only analytics solution provider integrating margin and revenue into a customer engagement product. It boils down to this: dynamic and interactive customer engagement based on what we know about a customer enables retailers to grow the lifetime value and improve the shopping experience of its customers while lowering the cost of doing business,” states the company’s Co-CEO, Mike Hughes.
According to National Retail Federation, last year’s Thanksgiving season witnessed a never-before hike in online sales, 108.5 million shoppers whereas, their brick-and-mortar counter parts closed sales far below at 99.1 million. The numbers stand as a testament to the booming culture of online shopping and as more brands look to ecommerce to grow sales, Hughes says that the biggest competitive differentiator for these retailers will be the ability to provide relevant, personalized offers and incentives in real time to its customers. “It’s all about identifying a personalized and economically rational offer for the consumer,” explains Hughes, “and then making the offer compelling enough for the consumer to act in real time as they are making the purchase.” Further, every one of Exchange Solutions’ personalized offers is margin-aware and profitable for the retailer. All the data collection, analysis, offer generation and omni-channel engagement happens on the ES Engage platform, which Exchange Solutions runs for the largest retailers in the world.
Translating Data into Value
For Exchange Solutions, it all starts with the data. Hughes says that most retailers find themselves deluged by disparate data streams, some of which are obsolete. “Most retailers have data that they can’t access, let alone analyze, such as information generated by legacy CRM systems, ecommerce customer databases, store-level data, and customer transaction records. And it’s not easy to link all these sources of structured and unstructured data,” he adds. “In order to close high-value buyer behavior gaps, retailers need to know what the customer is thinking or wanting to do at the moment and more importantly, what they would like to do but need some incentive.” To delve into such depths, the data needs to be parsed, classified, compared and analyzed, which is extremely difficult for retail IT organizations. Exchange Solutions not only collects that information, they also manage the key dimensions of data—volume, velocity and variety—and turn it into actionable information.
“We collect and analyze structured and unstructured data, attach attributes to the information and then using our proprietary real time technology, engage the customer in the moment,” says Hughes. In addition to collecting click stream data, dwell times, rich media clicks and user generated content views from a website, Exchange Solutions also has ‘listening posts’ that can collect meaningful data from other systems used by the retailer, including point-of-sale systems, geo-fencing, social media posts, and mobile engagement. Further, Exchange Solutions can augment customer propensity conclusions with purchase history, third party insights and cognitive inputs. By collecting all this information, analysing it through advanced algorithms and machine learning, Exchange Solutions builds a more comprehensive profile about the buyer.
To get started with Exchange Solutions, there is a straightforward three step engagement model. “First we prepare a benefit assessment which takes into account each retailer’s unique business challenges and quickly delivers a business case that shows a compelling ROI. It is essentially a record of what incremental lift in revenue and margin we will deliver in the Pilot and Scale phases,” said Hughes. “Next we run a live pilot on a subset of the retailer’s customers, collecting and analyzing data and presenting personalized incentives in real time. The pilot typically runs for 30 days and proves the results of the business assessment.” Once the pilot is complete, Exchange Solutions moves to the full scale rollout, which is typically 8 weeks from the start of the benefit assessment. “From a technical perspective, we have a very light integration where we put a pixel on the retailer’s webpage and use banner space to present offers. There is little to no work for the IT department to do,” added Hughes.
The key premise is to stop
thinking about customer
engagement as a program,
and start looking at it
as a series of one-toone
Data collection is done using the pixel placed directly on the retailer’s ecommerce website or through Exchange Solutions’ partners such as the Salesforce Commerce Cloud, Oracle and IBM ecommerce platforms. The Exchange Solutions ES Engage platform addresses all the key challenges ecommerce retailers face, including cart conversion/ abandonment, increasing average order value, repeat purchase frequency, up sell, cross sell and category penetration. Retail customers can choose, customize, and fine-tune the business rules on the standardized ES Engage platform to achieve desired results. Once the program is launched, the vast amount of data is analyzed and run through intelligent machine learning algorithms to present targeted offers. “For instance, based on the person’s click stream data and purchase history, if the consumer is determined not to be a serious buyer and likely to abandon their cart, an offer is presented in real time stating ‘complete your purchase right now and receive X percent discount.’ Conversely, if we determine the consumer is a serious buyer and is likely to convert their cart, the focus shifts to increasing their average order value with an offer, for example stating ‘increase your cart size by $100 more and receive a Y percent discount,’” illustrates Hughes. Finally, if a consumer is likely to convert their cart and has a high cart value, that consumer will not get an offer since there are no behavior gaps.
According to Hughes, when it comes to customer engagement, the approach is very transactional in nature and the main focus is on acquiring customers, not on maintaining and growing long-term customer relationships.
Retailers often invest significant amounts of money on customer acquisition and other marketing programs that don’t develop true long-term value and retention of customers. “Our focus is real time continuous engagement with retail customers to develop long term and loyal relationships,” said Hughes. “Retailers need to stop thinking about customer engagement as a program, but as a series of one-to-one personalized micro-engagements.” This naturally paves a way for deeper and longer-lasting relationships with customers.
"Exchange Solutions manages the entire data collection and analysis process to identify and deliver personalized offers that are economically rational in real-time"
Recently, one of their long-term clients, a well-established international retailer wanted to upgrade the traditional loyalty program, to an omni-channel program with advanced analytics and personalized offers. Exchange Solutions’ role as an integral and strategic marketing partner, an almost natural extension to the client’s internal teams, enabled the client to implement the enhancements, effectively “supercharging” their existing customer retention program with a lightning fast 6 week turn-around in time for the holiday season start! With more than three million active members in the program, and an additional 30 percent participation rate, the project was a huge success.
Under the Hood
Behind the scenes, Hughes says that it is the world class expertise of Exchange Solutions’ entire team, and especially the software developers and data analysts, that make its customer engagement programs a success. “We have been in the business for 20 years now and we know what works and what doesn’t,” he states. The seasoned teams often meet with retailers and discuss their specific challenges and goals to align our product to help them achieve their goals. “We ensure that for every dollar retailers spend with us, they get a return that’s better than their business as usual marketing programs,” Hughes adds.
A large international home improvement retail customer approached Exchange Solutions to reduce cart abandonment. The opportunity was to implement ES Engage providing one-to-one personalized offers that significantly increased cart conversion. The Exchange Solutions team, during their business assessment also determined that the retailer had an average order value challenge. Exchange Solutions explained the opportunities they saw in preventing cart abandonment and increasing average order value. The retailer was on-board and using the ES Engage platform, the retailer drove over 20 percent incremental sales for customers who received personalized offers compared to those who didn’t. That was during the pilot and since the results were so compelling and the desired ROI was achieved, the retailer widened the scope of the ES Engage program to include their entire customer base where they experienced the same incremental sales performance.
The company also makes significant investments in partnerships—such as the one with IBM Watson—to ensure they are ahead of the curve in terms of cutting-edge technology trends. Others include incorporating machine learning and cognitive capabilities into the ES Engage platform. “You can say the trend is our friend here,” Hughes adds. And there’s more to come. A serial entrepreneur, who believes that the year 2017 will be a breakout year for retailers, Hughes is confident about Exchange Solutions’ performance in the new age of big data analytics.
Having already served major home goods retailers, department stores, and grocers, Exchange Solutions plans to aggressively expand the ES Engage platform into all categories of retail. This is an exponential advancement over business as usual marketing optimizing customer lifetime value while reducing promotional expense. We see personalized one to one offers as the future of retail customer engagement and Exchange Solutions is clearly the leader in this area.