The Blended Customer Experience

The blended customer experience
The blended customer
experience
See how retailers are fusing trends and channels
to create customer-centric shopping
epsilon.com

Contents
The evolution of the blended channel 4
Enabling store associates to develop a genuine relationship 8
The showroom is no longer just for shopping—it’s a destination 12
The year of mobile payments 14
Bringing the digital brand experience to life in the showroom 16
Driving in-store conversions with location-based marketing 18
Creating connections: An Epsilon client story 20
About Epsilon 21

2014 was a transitional year for many retailers focused on
building the framework for connecting with customers in
the digital space. Mobile and web sales continued growing
exponentially—and this trajectory will continue in 2015. The
focus on the integration of online and offline is here to stay.
In the early stages of this year, we’re already seeing some
prominent trends, and retail brands certainly aren’t standing
still in the digital world. While it’s hard to go “all in” on all things
digital without overextending resources, it’s important to have
a strategy, identify your brand’s priorities and test out a new
idea to know the real potential. Do your research, create a plan,
implement it in a beta environment—and most importantly—
measure and analyze the results to learn what’s working and
to adjust for what’s not. It’s important to remember that the
way to evolve is one step at a time.

Fast forward to 20 years from now. Brick-and-mortar
retailers will likely be half the size they are today.
Consumers will be purchasing through new channels
that are just being born (think smart watches and
touch-screen kiosks) and channels that haven’t even
been created yet. But don’t plot the demise of the
physical store yet. According to Capgemini, “72% of
respondents, in all categories except for electronics,
see the store as important or very important,
compared to 67% for the Internet.”1
That said,
retailers will continue to strategize on the issue of
making the most out of their square footage.
Retailers are evolving their omnichannel experience,
but they usually keep to the distribution method
they have already established. For example, Amazon
doesn’t have the touch and feel where a shopper
can pick up the product and shop more. Brick-and-
mortar retailers have a tactile experience, but there is
opportunity to bring digital experiences to the tactile
environment. However, there are challenges that
stand in the way of this progress.
For one, many retail organizations are divided—digital
strategy in one silo and in-store marketing in another.
To continue to evolve, retailers must re-evaluate
strategic priorities. Yes, declining store sales are a
huge hurdle, but it’s likely that discounting isn’t the
answer. Retailers are discounting out of dysfunction,
and in doing so, margins are eroding. Instead, the
better model is to build out the strategy for evolving
the in-store shopping experience. While this will
require strategic alignment, breaking down the silos
and blending the channels is the only way to create
the in-store experience that shoppers are seeking
today.
The store of the future is no longer around the
corner—it’s here. Advances in technology, shrinking
brick-and-mortar footprints and an overabundance
of consumer options mean the retail experience is
growing and transforming right before our eyes.
2015 will most likely continue the balancing act
that we saw begin in 2014. Creating a personalized
experience for each and every customer while
growing your brand footprint can be quite a challenge.
Retailers need to be strategic in continually evolving
their digital strategies and using data-driven insights
with new innovations in technology to create the plan
that fits their growth goals.
If brands don’t evolve to bring a personalized
experience to their shoppers, they’ll fall behind. But
if they overstretch their capabilities, they’ll stunt
growth. It can be a fine line—one that requires careful
planning and investment to build for the future of the
retail landscape.
1
Capgemini, Digital Shopper Relevancy Research Report 2014.
The evolution of the blended channel

2
Steve Dennis’ Blog, Different, not dead: The future of brick & mortar retail.
“The blended channel is the only channel.
Stop thinking channels and start thinking about a
consistent, integrated customer experience for your
brand. Other than products and experiences that
can be delivered completely digitally, the majority
of retail purchases are influenced by both the
digital and physical realms. More and more data is
emerging to confirm this.Your mileage will vary, but
siloed thinking, organizations, incentives and metrics
confuse, rather than illuminate.”2
−Steve Dennis

Retailers in action
Neiman Marcus business operations went omnichannel a few months
ago—blending its online and offline shopping divisions to create a
seamless experience for its customers, along with new search
technology for its mobile app. With its new service called Snap Find
Shop, customers can now take photos of merchandise and find similar
items from Neiman Marcus in a single click.3
In this example, Neiman Marcus is successfully using technology to
create digital experience that is entirely centered around their
customer. “Today, most online shopping begins with search—either
through keywords or navigating filters—and as they say, a picture is
worth a thousand words. Visual search removes hurdles, taking you
directly from inspiration to gratification. In essence, Snap Find Shop is a
revolutionary way to service our customers at any time and any place,”
says Wanda Gierhart, Chief Marketing Officer of Neiman Marcus Group.4
Last year also saw In The Pink Stores (the largest chain of Lilly Pulitzer Signature Stores in the U.S.) launch
mobile point of sale (mPOS) in eight stores—removing the cash wrap entirely and replacing it with mPOS
terminals that are 100 percent mobile using Apple iPad®
and iPad Mini®
devices.
According to Retail Customer Experience, the results from the first 11 days of In the Pink’s rollout of mPOS
revealed a 24.5 percent increase in sales over the same period year over year. Transactions were up 6.5
percent, and transaction value increased 17 percent.5
Here, In the Pink incorporated mPOS to improve their customer experience by being able to ring their
purchase up wherever they may be in the store. This update also benefited In the Pink by putting real-time
data at the fingertips of its salespeople—allowing them to provide a more personal experience to their
shoppers. Not only that, but In the Pink was also able to gain back quite a bit of merchandise realty by
getting rid of space-consuming checkout counters.
3
Evigo, Neiman Marcus makes it much easier for mobile shoppers to buy items.
4
Ibid.
5
Retail Customer Experience, Major store transformation at In the Pink.
Photo source: www.retailcustomerexperience.com

6
Mozu, The future of retail is coming…are retailers ready?
Why it matters
Your customers are constantly connected—regardless of where they are. At any point in the day—in the office, in your store or on the road—they’re searching
and researching purchases online. Retailers must “blend” the channels to give the shopper the experience they are searching for, whether it’s online or in store.
Realigning organizations, breaking down barriers and integrating technology are all critical steps to creating a customer-centric experience. And it’s this experience
that will build brand loyalty in 2015.
30%of retailers consider
themselves to be
omnichannel integrated
49.2%of retailers are
investing in mobile
payments
Only15%
of shoppers say they
do not use their mobile
device while shopping6

Enabling store associates to develop a genuine
relationship
High-end department and local luxury stores have been doing clienteling since back in the old days with little black books, rotary-dialed phones and a whole lot of
people power. They are using technology to build and deliver powerful clienteling solutions to their store associates, personal shoppers and style advisors. Brands
such as Tory Burch, Burberry and Mitchells are leading the way with innovative clienteling solutions.
Retailers in action
Tory Burch’s Client Book, which acts like an associate version of Facebook, reminds
store associates to send personalized notes to customers on their birthdays, sizing
information, purchase history and notes about special events that customers have
mentioned.
In another example, Mitchells takes service to a whole new level with M World. This
platform allows customers to see their own virtual closets and communicate with
individual style advisors on new arrivals, wardrobe recommendations, appointments
for a consultation and last-minute “fashion emergencies.” M World simultaneously
gives style advisors access to everything they need to create deep personal
connections with their clients.
Photo source: https://twitter.com/kmtom/status/385046562415472640

Mobile clienteling
At NRF 2015, Ulta Beauty offered a behind-the-scenes
video with live makeovers to illustrate how their app
delights consumers and empowers associates.7
Steve
Orell notes, “Retailers, including Burberry and LL Bean,
are already delivering convenience, personalization and
efficiency through clienteling systems. This means sales
associates have customer profiles at their fingertips, in
real-time, on iPads and other smart devices.”8
Mobile
clienteling enables retailers to engage consumers in the
moment and make the shopping experience as easy as
a click. It’s all about improving the experience for the
customer and making it easier to browse and shop when
it is convenient for them.
7
SAP Business Trends, Burberry and Ulta Mobilize with Clienteling.
8
Orell, Steve, The Salesforce Blog, 5 In-Store Mobile Trends Retailers Should Implement Now.

Why it matters
You don’t have to be a small, service-focused high-end retailer like Mitchells to enable your store associates to create a bond with customers. Using customer
data, Wi-Fi-enabled store environments and smart devices, you can use cross-channel past purchase history in combination with information such as loyalty card
status, birthdays or browse history to surprise and delight your customers—building the beginning of a lasting relationship with them.
By adding in recommendation engines, real-time inventory look up and ordering, you can turn your sales associates into personal shoppers to deliver a blended
channel—a single-channel experience for your customers.
Clienteling has achieved buzzword status recently, but the term
has changed and evolved over time. Technology is now in place to
create in-the-moment personal experiences, and store associates
are empowered to create these moments for their shoppers. It’s also
easier for retailers to extend the in-store experience by following
up with personalized communications and social interactions. In a
modern clienteling strategy, you are arming your store associates
with data and information about your customers in a real-time
environment—enabling the associates to create a customer-
centric shopping experience. In turn, this opens the opportunity for
more intimate connections with your customer. This customized,
personalized shopping experience goes beyond the store—it happens
in the blended channel.
While this method has been pioneered by high-end retailers,
clienteling is now accessible for any brand. It’s simple for a store
associate to easily develop a connection with the shopper, building the
relationship and keeping the customer coming back to the store. Use the information you know about your customers (and fill in the gaps with third-party data for
what you don’t know) to create opportunities for connections. What you do with this will be unique to your space and customer, but it can all happen by enabling
your stores with technology and your associates with information on your shoppers.

9
Ben Pivar, How Clienteling Bridges the Gap between Bricks and Clicks.
”At the heart of clienteling is operating with a 360-degree view
of customers. In-store employees can view recent customer
interactions, past purchases, personal preferences, loyalty
indicators, as well as social media and website interactions. This
richer view significantly transforms the customer conversation
from anonymous to personal, and from supporting to enabling.
As store associates offer tailored suggestions and one-step-
ahead insights and promotions, while in the store or as a follow-
up in the hours or days after, sales are made and loyalty
is earned.”9
−Ben Pivar

The showroom is no longer just for shopping
—it’s a destination
10
The Wall Street Journal, Can shopping be fun again?
11
Ibid.
12
Ibid.
“The retail industry’s been flipped on its head,” says Robin Lewis, a freelance retail consultant
and the former executive editor of Women’s Wear Daily. “The store used to be at the center.
Now stores have to go to the consumers. For stores to get them, they must give them an
experience, a destination.”10
“It’s not enough just to get traffic to your stores. You need to make
shoppers excited, happy and leave feeling that they want to come back,” says menswear
designer John Varvatos.11
Many stores are creating special events and in-store parties to create exactly such an
experience. They’re providing drinks, food and entertainment to really make the shopping
experience something that is special and enjoyable—not a chore or something to be done
hurriedly.
Retailers in action
Fashion’s Night Out was intended to encourage consumers to shop freely once again, and fans of both fashion and pop culture soaked it all in. “… Fashion’s Night
Out was an attempt initiated by Vogue’s Anna Wintour to turn stores into nighttime destinations. For one night, retailers in cities like New York and London stayed
open late into the evening, hosting celebrity-filled soirees, all while selling inventory,” reports the Wall Street Journal.12
Pottery Barn Kids has created its own special in-store experience—focused on engaging the children for which the parents are shopping. In these events, kids
participate in hands-on workshops about color, pattern and textiles inspired by Pottery Barn Kids designs. If they complete all three workshops, they earn a junior
designer badge.
This Junior Designer Camp gets the kids and parents involved—incorporating creativity and fun with social—using the hashtag #jrdesignercamp. Parents who post
their children’s designs get the opportunity for their child’s design to be featured on Pottery Barn Kid’s social channels.
Photo source: The Wall Street Journal, Can shopping be fun again?

Why it matters
Retailers are becoming far too aware that it’s even easier for shoppers to make their purchases without ever stepping foot in their stores. The relationship with the
brands is becoming impersonal—affecting loyalty and lifetime value of a customer. It also reduces the likelihood of cross-selling and upselling that may be best
done with interaction of a sales associate. By creating a special in-store experience such as these, brands are able to build strong relationships with their shoppers.
And strong relationships result in increased brand loyalty and, ultimately, larger sales.
Photo source: Yoplait Greek Taste-Off Store Event Photo source: Disney store

The year of mobile payments
“The launch of Apple Pay in 2014 triggered renewed excitement in the mobile payments space. According to Deloitte, 2015 will be the year in which mobile
payments will explode into the mainstream, predicting that in-store mobile payments will increase by more than 1,000 percent worldwide this year. As retail
commerce becomes more smartphone and tablet centric, we’ll continue to see more mobile technology companies move into the retail space, enabling
retailers to enhance the customer experience and leverage loyalty strategies.
Apple Pay is one thing, but the departure from standard magnetic credit cards in the U.S. to more secure EMV cards (named for its original developers, Europay,
MasterCard®
and Visa®
) and the introduction of wearable mobile payment options (think the Apple Watch) are necessitating a huge overhaul of POS equipment
in stores. Reports suggest search giant Google will also enter the race by acquiring a payments provider for Google Wallet expansion.
Retailers in action
Apple indicates that it now has partnerships with 220,000 stores.
It lists Bloomingdales, Macy’s, Duane Reade, Sephora, Petco, Staples
and Nike as retailer participants for Apple Pay. This list continues to
grow exponentially as more retailers sign on.13
13
DigitalTrends.com, Apple Pay Partner News.
Photo source: 3DigitalTrends.com, Apple Pay Partner News.

Why it matters
A new survey from Boston Retail Partners indicates that nearly 40 percent of all large U.S. retailers plan to support Apple Pay by the end of 2016.14
However, only 8 percent of U.S. retailers are currently accepting Apple Pay. Currently, PayPal is dominating the alternative payment realm and it looks
to continue holding a large margin in coming years. But with nearly half of retailers planning to accept Apple Pay by the end of next year, those that
do not will fall behind in being able to provide this aspect of a digital payment experience for their customers.
14
Business Insider, Nearly half of all retailers plan to adopt Apple Pay by next year.
Source: Business Insider: Boston Retail Partners, 2015
13% 18% 31%
8% 30% 18%
3% 15% 28%
5% 13% 35%
3% 13% 13%
13%8%
5%8%
Already accept
Plan to accept within 12 months
Plan to accept within 1–3 years
PayPal
ApplePay
In-app mobile
payment
Google wallet
Softcard
CurrentC
Bitcoin
Payment types that US retailers
accept or plan to implement

Bringing the digital brand experience
to life in the showroom
Millennials shop and behave differently. They’re being turned on to brands and merchandise via social sourcing. They make buying decisions based on social
proof. By creating a showrooming strategy, you are serving the Millennial in the way they prefer to shop and engage with brands.
While shoppers are using mobile devices to research and make purchases more and more, retail brands are finding ways to give them an interactive experience
in their brick-and-mortar stores as well. These brands are helping shoppers research their purchases without even having to pull out their mobile device.
Retailers in action
Recently UGG Australia partnered with Decker Brands to open an omnichannel experience
store. This Innovation Lab “delivers compelling products to consumers through seamless
shopping experiences. The store’s aesthetic is complemented by interactive digital
enhancements that are intended to introduce elements of online shopping into the physical
brick-and-mortar store. The store gives shoppers access to the nearly 230 SKUs on display, as
well as infinite UGG products—an endless aisle of merchandise not found in store.”15
This new pilot store is also incorporating radio-frequency identification technology. Shoppers
can try on merchandise, triggering content on four large touch screens in the store. The
screens display product info, styling tips, video and complementary product suggestions—
delivering an engaging experience for the shopper while enabling the brand to upsell the
purchase.
Nordstrom is incorporating social into its in-store merchandising by displaying top-pinned
items for easy shopping. This concept of “social proof” helps to reinforce the purchasing
decision for shoppers—the idea that if so many social users like a handbag, it can’t be wrong
to want it too!
15
RetailCustomerExperience.com, UGG brings interactive signage to new concept store.
Photo source:
eConsultancy, 12 more examples of digital technology in retail stores.

Why it matters
By bringing the digital shopping experience into the brick-and-mortar stores, customers can have the best of both worlds. More and more, customers
are using their mobile devices to compare prices and find sizes, but brands like Nordstrom and UGG are making it even easier for them to browse
outside of what is already available. Incorporating social proof gives shoppers new ideas about what is trending and provides the affirmation that a
browsing shopper might need to make a purchase. It’s like shopping with your friends even when you’re alone.
Social proof
Social proof is the
phenomena where people
tend to believe that the
decision and actions of
others reflect the correct
behavior in a given
situation.16
16
eConsultancy,11 great ways to use social proof in ecommerce.

Driving in-store conversions with location-based
marketing
With smartphones in the hands of the majority of all consumers, location-based marketing (also called proximity or hyperlocal marketing) makes it easier for
retailers to customize the shopping experience, especially for loyalty program customers. Leading retailers and brands, including Apple, Macy’s, Coca-Cola and
Procter & Gamble, are using proximity marketing to close the gap between the customer and the register. Many retailers are still behind the curve in providing
immediacy and access to mobile consumers. Maturing location-based marketing technologies, such as beacons that use Wi-Fi triangulation and Bluetooth Low
Energy, are enabling retailers to satisfy mobile consumers who expect immediacy and access.
Coupons and push-notifications are the most widely used tactics for location-based marketing. Over half of surveyed customers indicated they would use coupons
if they were sent to them while they were in or near the store in question. Push notifications, authorized by the consumer, are also being used to alert shoppers
of relevant offers when within a few blocks of a store—or even department by department within the store. With the rise in wearable technology, retailers will
continue to realize the opportunity that location-based notifications will bring.
53%
of consumers are
willing to share their
current location to
receive more relevant
advertising.
57%
of consumers are
more likely to engage
with location-based
advertising.
63%
of consumers feel a
coupon is the most
valuable form of mobile
marketing.17
62%
of consumers share
local deals with friends.
17
JiWire, Location-based ads drive mobile shopping: survey.

Why it matters
While there are certainly some privacy concerns with using this technology
(Macy’s displays an opt-in notification on their entrance), this infusion of the
digital landscape in the showroom gives brands the ability to reach a shopper
with an offer while they’re in front of a product—right when they’re making a
decision to purchase. With data telling us that most shoppers are using their
mobile device while they’re shopping, it will be fascinating to see the value
these tests will prove in for retailers this year.
Retailers in action
Macy’s is also breaking into the in-store digital shopping experience
with its foray into iBeacon technology. Shoppers who are using the
Shopkick retail app will receive a notification when they walk into
select Macy’s locations. The notification sends them to the app
where they can receive deals, as well as notifications on specific
products they have showed past interest in.18
Following a pilot
test, Macy’s has rolled out iBeacon technology to all of their stores.
“Macy’s says the rollout marks the largest beacon deployment
in retail to date, with more than 4,000 devices planned to power
engagement and marketing efforts throughout the department
store change. The retailer plans to begin more tailored shopper
notifications in early spring 2015.”19
While Macy’s is using iBeacon technology for shoppers who are
already shopping, Alex and Ani is using it to drive new shoppers
into their stores. When a shopper passes within 300 feet of a store
location, the Swirl app sends information about the store’s product
with a discount offer to the smartphones of shoppers who have
opted into the Swirl app.20
18
The Verge, Macys begins iBeacon shopping test, will send alerts to your iPhone when you enter stores.
19
Gagliordi, Natalie, ZD Net, Macy’s rolls out retails largest beacon installation.
20
The Wall Street Journal, Fashion Retailer Tries on Apple’s iBeacon for Size.
Photo source: Theverge.com

Creating connections: An Epsilon client story
Sam just purchased an Ultralight Down Jacket from Patagonia.
But how did he get here?
Sam is always on the go with work, the kids and frequent weekends on the slopes. In the morning, Sam checks his email on his
smartphone during his commute on the train. Once he arrives at work, Sam switches to a desktop computer, which he uses
throughout the day until he leaves for home. After the kids are in bed at 9:00 p.m., he has more time to focus and starts using his
tablet.
Like Sam, consumers are using multiple devices to access content online, but also like Sam, their daily habits result in predictable
patterns. We know that emails opened on a smartphone result in 35% fewer clicks than those opened on a desktop, leaving today’s
marketers with the challenge of identifying consumers’ patterns so they can effectively time their marketing messages.
Retailers such as Patagonia have moved away from the one-size-fits-all approach to email marketing and are striving to personalize
email deployment so that emails are sent at the right time for each consumer on the email list. As a result, Patagonia turned to
Epsilon to help it address the “mobile dilemma” created by the mass proliferation of smartphones.
Patagonia asked Epsilon to identify predictable behavior patterns in their consumer population and sought to use the findings to fine
tune their marketing messages at a time that was right for each consumer. Epsilon analyzed six months of Patagonia’s customer
data to determine the optimal email deployment time to maximize the likelihood that Sam will receive his email at a time that is most
likely to result in a click, and ultimately, a conversion. Using Epsilon’s scheduling intelligence, Patagonia determined that Sam is most
likely to click on emails between 8:30 p.m. and 9:30 p.m. So at 8:00 p.m., they sent him an email featuring the latest men’s ski and
snowboard gear.
Sam received Patagonia’s message just before his peak click time. He saw the Patagonia email on the top of his inbox, immediately
opened the email, clicked on one of the links and purchased the perfect jacket for his upcoming ski weekend.
Patagonia understood that while opens are important, clicks are the precursor to conversion. By using Epsilon’s data and technology
to personalize email time deployment on an individual level, Patagonia increased click rates by 9.8 percent and opens by
3.7 percent. Email revenue also went up in line with the increase in clicks. Steve Wages, Email Marketing Manager at
Patagonia said “I want to use this tool whenever I can.”

Want to understand how to take the first next step in your digital
landscape? Let us help.
Epsilon is the global leader in creating connections between people and brands.
An all-encompassing global marketing company, we harness the power of rich
data, groundbreaking technologies, engaging creative and transformative ideas
to get the results our clients require. Recognized by Ad Age as the No. 1 World
CRM / Direct Marketing Network and No. 1 U.S. Agency from All Disciplines,
Epsilon employs over 7,000 associates in 70 offices worldwide. Epsilon is an
Alliance Data company. For more information, visit epsilon.com, follow us on
Twitter @EpsilonMktg or call 800 309 0505.
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