Robots and Rollbacks: Walmart, IoT and Linking Dissatisfaction to Lost Profit

Caroline Papadatos

August 10, 2017

Blog-RobotsandRollbacks
Last week, Walmart took another step forward on its innovation journey by announcing the company will be tracking customer facial expressions at the check-out to create an early alert system for staff to intercept unsatisfied customers. 

While their intentions are honorable, I have to admit I chuckled at the thought of store managers dashing through the store at every sign of shopper stress, irritation or general unhappiness. If my memories of after-school grocery runs are any indication, the system will be electric! There was also some irony to the pivot, since they originally tested facial recognition to combat customer fraud, but somehow turned it around as a customer service tool.

But on a more serious note, I love the IoT application to customer research, and applaud Walmart for bringing innovation to an area of customer management that has lagged behind in shopper performance. Most retailers have customer experience at the top of their priority list, but the biggest innovation to come in the past few years has been the shift from touchpoints to shopper journeys, which has done little to solve for the widening gap between customer expectations and operational delivery. 

Walmart’s advance is significant for 2 reasons.

First, it will push the envelope on linking observed customer experience to identifiable customers, so that Walmart can equate that customer’s experience with their shopping behavior and ultimately, their predicted spend. That’s a big step for a customer research industry that still uses representative samples and stated spend, and catches them up to their brethren in marketing and merchandising who already target customers on an individualized basis with personalized offers and communications. Walmart will link customer experience to customer profitability, and presumably, they will find means to personalize the delivery of experience on the basis of shopper behavior.

This arena of linking the operational cost of fixing problems to the lost revenue of dissatisfied customers is a territory that is largely unexplored, and most retailers still have customer experience buried in Operations. For all the talk of “unified customer experience”, few retailers are linking their customer experience investments directly to the revenue drivers of customer spend or merchandising profitability. And yet, the potential is huge.

In 2015, LoyaltyOne fielded a Customer Experience Risk Study with Verde Group that determined that 16% of a typical retailer’s revenue is at risk due to negative customer experiences. Now Walmart will have ways to link specific negative experiences to their best customers, and quantify the cost of the friction in the system on a 1-to-1 level.

Secondly, I applaud Walmart for taking a positive step in the fight to keep shoppers in-store vs. online. The online advantage is the ability to track every visit, every click, right down to thumbprints and eyeballs on screen, with relatively little fear of privacy recriminations. Physical stores don’t have it so good, and Walmart will have to manage itself carefully not to overstep the personal privacy lines that then skews into creepiness. It won’t be easy to get customers on board, but as Facebook did with facial recognition tagging, consumers will ultimately accept innovations that enhance experience and remove friction. Online players have the advantage of traceability. Offline retailers have the advantage of humanizing brand experiences by focusing their staff on identifiable issues in real-time to remove customer friction.

The question that remains is whether Walmart is the right first mover in this space. Walmart has never been a high-touch retailer, and given their low cost history it wouldn’t be surprising if this tool kicks off a staff cost-cutting exercise.

In its 2012 patent filing, Walmart said that it can “be very expensive to maintain sufficient staff to provide great customer service. It can also be difficult to establish an appropriate staffing level that will provide proper customer service without excess staffing.” Walmart may do what it does best, increase efficiency. But If Walmart is able to navigate a tricky implementation, using this tool to erase friction in the in-store experience, bring a human touch to solving customer problems and personalize their operational efforts for their best and high potential customers, this newest innovation could be the start of something big in shaping shopper behavior. As Walmart roles out this tool, retailers should take notice how the company benefits and leverages the learnings to make changes to its shopper experience; aligning the efforts of operations, marketing and merchandising to drive shopper performance, one smile at a time.

Global Solutions

Loyalty

Digital & Mobile

Retail

About the author

Caroline Papadatos

Caroline Papadatos

Senior Vice President, Global Solutions

As Senior Vice President of Global Solutions at LoyaltyOne, Caroline sits on the Executive Committee and leads global alliances and key loyalty partnerships in North America and abroad, including the loyalty consulting practice, new ventures in customer experience and LoyaltyOne’s partnership with Dotz, the largest loyalty program in South America. Caroline also leads LoyaltyOne Corporate Marketing, Thought Leadership and COLLOQUY, a loyalty industry publication. With her extensive practitioner experience in loyalty, customer centricity and brand management, Caroline is a successful B2C and B2B change agent and has a proven track record in designing and managing loyalty coalitions, delivering innovative customer loyalty and retention strategies to drive superior customer financial performance.

Caroline has worked across multiple industry sectors, including retail, financial services, telecom and publishing. Her past executive roles include Senior Vice President of Marketing for Rogers Communications Inc., Canada’s largest telecom services provider, CRM Manager at Sears Canada, Senior Vice President and Chief Knowledge Officer at LoyaltyOne and Senior Vice President of Marketing for the AIR MILES Reward Program.

Caroline has been an active Board member and strategic partner of the Canadian Marketing Association (CMA), and was bestowed an Honorary Life Member award by the CMA for her contributions to marketing in Canada. Caroline was formerly a Board member for The Verde Group, a customer experience company, and has participated on several Advisory Boards for technology startups in the areas of data, CRM, loyalty and customer experience. Caroline is the Executive Sponsor of the Women’s Leadership Initiative at LoyaltyOne, and was the previous Chair of the Roger’s Women’s Network. She has also held a Board position at Ronald McDonald House, and is an active fundraiser for Covenant House.

Robots and Rollbacks: Walmart, IoT and Linking Dissatisfaction to Lost Profit

Jul 4, 2018, 13:31 PM
Last week, Walmart took another step forward on its innovation journey by announcing...
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Last week, Walmart took another step forward on its innovation journey by announcing the company will be tracking customer facial expressions at the check-out to create an early alert system for staff to intercept unsatisfied customers. 

While their intentions are honorable, I have to admit I chuckled at the thought of store managers dashing through the store at every sign of shopper stress, irritation or general unhappiness. If my memories of after-school grocery runs are any indication, the system will be electric! There was also some irony to the pivot, since they originally tested facial recognition to combat customer fraud, but somehow turned it around as a customer service tool.

But on a more serious note, I love the IoT application to customer research, and applaud Walmart for bringing innovation to an area of customer management that has lagged behind in shopper performance. Most retailers have customer experience at the top of their priority list, but the biggest innovation to come in the past few years has been the shift from touchpoints to shopper journeys, which has done little to solve for the widening gap between customer expectations and operational delivery. 

Walmart’s advance is significant for 2 reasons.

First, it will push the envelope on linking observed customer experience to identifiable customers, so that Walmart can equate that customer’s experience with their shopping behavior and ultimately, their predicted spend. That’s a big step for a customer research industry that still uses representative samples and stated spend, and catches them up to their brethren in marketing and merchandising who already target customers on an individualized basis with personalized offers and communications. Walmart will link customer experience to customer profitability, and presumably, they will find means to personalize the delivery of experience on the basis of shopper behavior.

This arena of linking the operational cost of fixing problems to the lost revenue of dissatisfied customers is a territory that is largely unexplored, and most retailers still have customer experience buried in Operations. For all the talk of “unified customer experience”, few retailers are linking their customer experience investments directly to the revenue drivers of customer spend or merchandising profitability. And yet, the potential is huge.

In 2015, LoyaltyOne fielded a Customer Experience Risk Study with Verde Group that determined that 16% of a typical retailer’s revenue is at risk due to negative customer experiences. Now Walmart will have ways to link specific negative experiences to their best customers, and quantify the cost of the friction in the system on a 1-to-1 level.

Secondly, I applaud Walmart for taking a positive step in the fight to keep shoppers in-store vs. online. The online advantage is the ability to track every visit, every click, right down to thumbprints and eyeballs on screen, with relatively little fear of privacy recriminations. Physical stores don’t have it so good, and Walmart will have to manage itself carefully not to overstep the personal privacy lines that then skews into creepiness. It won’t be easy to get customers on board, but as Facebook did with facial recognition tagging, consumers will ultimately accept innovations that enhance experience and remove friction. Online players have the advantage of traceability. Offline retailers have the advantage of humanizing brand experiences by focusing their staff on identifiable issues in real-time to remove customer friction.

The question that remains is whether Walmart is the right first mover in this space. Walmart has never been a high-touch retailer, and given their low cost history it wouldn’t be surprising if this tool kicks off a staff cost-cutting exercise.

In its 2012 patent filing, Walmart said that it can “be very expensive to maintain sufficient staff to provide great customer service. It can also be difficult to establish an appropriate staffing level that will provide proper customer service without excess staffing.” Walmart may do what it does best, increase efficiency. But If Walmart is able to navigate a tricky implementation, using this tool to erase friction in the in-store experience, bring a human touch to solving customer problems and personalize their operational efforts for their best and high potential customers, this newest innovation could be the start of something big in shaping shopper behavior. As Walmart roles out this tool, retailers should take notice how the company benefits and leverages the learnings to make changes to its shopper experience; aligning the efforts of operations, marketing and merchandising to drive shopper performance, one smile at a time.

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Author : Caroline Papadatos
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