The Need to Transform Customer Experience in Retail


It’s no secret that the events of 2020 significantly impacted consumer preferences, behaviors and routines. Digital adoption leaped ahead 10 years in just 90 days as a result. The challenge for retailers is understanding, at speed, how customer behavior is changing and how behaviors will continue to evolve.

It’s requiring a bold reset in how customer experiences can be revolutionized. The emphasis is on better understanding customer events right through to notifying frontline teams of actions needed to pre-empt a problem in a customer’s journey.

Many retailers, however, lack the tools needed to recognize and deliver on consumers’ shifting needs. They are still reliant on surveys and other sampling techniques to gather customer feedback. Survey-based approaches serve only as temperature checks to see how the retailer is doing. These tools are unable to translate the massive volume of customer data and signals into immediate actions that drive customer acquisition, wallet share and retention. 

Retailers need to move beyond traditional approaches to effectively deliver experiences in ways that are targeted, prognostic and responsive, transforming CX to what’s truly needed today — and tomorrow. 

How can they do this?

Predictive Customer Insight

A few leading retailers are pioneering new approaches that take full advantage of the explosion of data over the past two decades. Retailers can regularly, lawfully, and seamlessly collect smartphone and interaction data from across customer, financial, and operations systems, yielding deep insights about their customers. Those with an eye toward the future are boosting their data and analytics capabilities and harnessing predictive insights to connect more closely with their customers, anticipate behaviors, predict interactions, and identify CX issues and opportunities.

The data offered holds valuable insights that can prompt alerts and guide swift action to improve CX.

Turn Insight Into Action

The transition to predictive insight will not take place overnight. Retailers now have the opportunity to take their CX programs to the next level — starting from where their organizations are now.  There are four key steps to jump-start your CX transformation.

  • Work on changing mindsets (including your own): The transition will inevitably involve challenges, not least of which is a shift in mindset. CX leaders may feel that predictive systems are outside of their purview. But times are changing, and today’s leaders need to focus on data as they once zeroed in on a single CX score. Some may point to the fact that their organization has already done regression analysis on a few key performance indicators. It’s time to think bigger and bolder, and to build a system – not dabble in data.
  • Break down the silos and build cross-functional teams: CX functions often fall into the trap of creating their own silos within a company. Creating predictive systems takes real collaboration across functions. Data owners will inevitably span operations, marketing, finance, and technology functions, so convening across senior leadership will be vital to ensure efficient data access and management.
  • Start with a core journey data set and build to improve accuracy: Most organizations face challenges with data quality and availability – and without data, this transition is a non-starter. The good news is that retailers can get started even with basic customer-level data, even if the data sets are not perfect. The first step is to collect individual customer-level operational and financial data. A combination of customer profiles and digital and analogue interactions is usually a solid jumping-off point.
  • Focus first on the use cases that can drive quick value: In the early days, it’s important to have a clear view for how the insights will be applied and focus on a few specific use cases that will create immediate return.

Embrace the New CX

The CX programs of the future will be holistic, predictive, precise, and clearly tied to business outcomes. It’s time for a bold reset on CX – retailers that start building the capabilities, talent, and organizational structure needed for this transition stand to reap substantial benefits. The pace of change in CX technology has accelerated; those that do not embrace it will be left behind while competitors gain ground and steal a charge with the competitive advantage it creates for them.

Kevin Neher is senior partner at McKinsey & Company.

More on Customer Experience