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Retailers have long attracted and retained customers by competing on price. But today, consumers are always one click of the mouse or one tap of the smartphone away from a lower-priced competitor: Walmart, Amazon, eBay.

Competing on price is no longer viable. Where retailers need to focus is on customer experience. If you can engage with customers however they choose to shop with you, if you can deliver excellent customer service the first time and every time, consistently across all your channels, then you can differentiate yourself in the marketplace.

Achieving that goal requires investment in a few key areas. Chief among them is the right technology to capture both consumer and product information, deliver it to front-line employees, and enable you to treat customers as a market of one.

From Data to Devotion

The goal of delivering an excellent customer experience is to drive loyal, profitable customers. Customer loyalty isn’t a new concept. But retailers are beginning to rethink how to achieve it.

In the past retailers tried to win loyalty by offering discounts. But when customers come to expect a special deal as a matter of course, and when every competitor offers similar savings, discounts do little to make customers loyal to your brand.

Customer experience, in contrast, can still be a differentiator. By capturing and leveraging relevant information, retailers can tailor the experience to individual customer needs and tastes. And customers really do respond: research suggests that the upper half of your customer base will spend up to 50 percent more with you if they receive a personalized offer.

Of course, making individualized offers requires some investment in systems and processes. In particular, you need to be able to do real-time retailing. That means the ability to capture up-to-the-minute customer information and leverage it instantly.

Customers leave a trail of breadcrumbs behind them as they shop online, on their mobile devices, and in the store. You need to be able to follow those breadcrumbs. As customers interact with you, you should be able to see their activities across channels. For example, if they’ve researched a product online, you should know that when they come into your store.

Next, you need to be able to deliver that information to store managers and associates, again in real time.  Otherwise, your salespeople won’t be able to sell effectively. But we’ve found that retailers who have empowered their people with real-time access to relevant data can increase sales by up to 25 percent.

Last, make sure you’re using customer data wisely. Just because I bought a package of diapers doesn’t mean I have a kid. But if I’m buying dog food every week, then chances are I have a pet. Recognizing the difference means you can deliver the offers that make the most sense—and that have the best chance of increasing sales.

What It’s All About

What are the technology solutions you need to understand customers, deliver timely, personalized offers, and optimize the customer experience? First is a common IT foundation for all your customer, product, and touch-point data. That will enable you to bring together information and processes across all channels and deliver that “endless aisle” experience.

You also need to be able to combine a broad range of other relevant data points. That includes, for example, call center data and customer complaints. And it increasingly involves social-media activity. Such a repository of customer activity gives you the basis for making personalized offers.

Next, you need to be able to make those offers in real time. That requires in-memory computing that can deal with large quantities of data very rapidly. That’s what lets you really target a segment of one, with real-time offers that are based on immediate activity and therefore highly relevant.

In your stores, you need to invest in mobile technology to empower salespeople. Your entire business system should be available in their pocket or on their belt, wherever they happen to be. That requires mobile devices, wireless infrastructure and, most important, mobile enabling of enterprise systems. Yes, there’s a capital cost for all that. But if you see a 20 percent, 15 percent, or even 10 percent sales increase, the return on investment could come in mere months.

Finally, think about simplicity in your IT solutions. Customer data and sales tools need to be easy for your salespeople to leverage. That could even involve mobile or Web-enabled apps for things like improving workflow, submitting an expense report, or requesting time off. If the tools are easy to use, your people will be far more likely to use them. They’ll also spend less effort on mundane tasks and more time on selling. After all, that’s what retail’s all about.

While the right technology is crucial to customer experience, it’s really only half the battle. Retailers still rely heavily on front-line workers to differentiate themselves in the marketplace. In Part 2, we’ll look at the steps retailers should take to align employees with a superlative customer experience.

SAP will showcase these solutions at the National Retail Federation’s 2014 Convention and Expo, January 12 – 15 in New York. Don't miss it - Register now!