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CxM and PoS - A tale of two Cities

CxM and PoS, these are two protagonists of an ever continuing story. It comes in many different flavours but it essentially is about change vs. stability.

On one hand we have the PoS, the contender, a long time best hated friend of the retailer, an infrastructure that they cannot do without. They can’t! Simple as. The PoS is the infrastructure that all in-store sales are executed on, the infrastructure that is crucial to gain and keep an overview about in-store (and overall) inventory, an infrastructure that also tries hard to gain additional knowledge about the customer. But then the core entities that the PoS works with is not the customer, but are the product and the sales, the transaction.
Without the transaction the retailer is dead.

On the other hand we have the new kids on the block: CxM, Customer Experience Management, CXM, and Customer Engagement Management, CEM. New, although they, too, are around for quite some while already. Going on I will mainly stick to CxM, lacking something better. Mind the lower case ‘x’!

A retailer cannot do without CxM either. As evidenced by the capital C, CxM disciplines are all about the customer, engaging with the customer on every possible meaningful channel, providing her with a positive and lasting experience, pre- and post sale. Consistently.
This experience is what makes the customer transact with a retailer in a competitive world.
Without a customer there is no transaction.

Still, our protagonists are like cat and dog, like fire and water, like two cities at war. This doesn’t sound right, doesn’t it? So why is it like this? And can this duplicity be resolved?
The problem is that a PoS infrastructure is a huge and strategic investment for a retail chain. Even for a chain of one. A PoS infrastructure is a technology choice that comes with its own databases and, more importantly, proprietary database structures. These are built around (in store) inventory and the transaction. A PoS essentially is geared around what gets sold in every individual store. It does not cover web sales, which are regularly use a different payment technology and inventory management system.

Yes, there are tiered PoS infrastructures, and yes, many PoS systems cover customer maintenance and loyalty modules – but no, most PoS systems do not extend beyond the stores (an increasing number could, though). Additionally, changing this infrastructure is a major exercise. Think of a (not too big) retailer I work with, that has around 1,400 PoS lines across 400 stores in multiple countries, and rising. Every update to the PoS system needs to be rolled out to this number of stores and lines; an exercise that takes considerable time. And in the scheme of things this is not even a big retailer. A PoS infrastructure is all but nimble.

Enter web site, e-commerce, Facebook, Pinterest et al., smart phones, in store wifi systems, beacons, even security camera footage, customer reactions on various campaigns on different channels that a CRM system gathers, reward- and loyalty programs, ... along with ever increasing computing power and analytic abilities, many of them unlocked by the increased computing power.

All these “systems”, if implemented, collect and offer the retailer a great deal of information about the customer, her behaviour, even preferences and increasingly needs and intents.
Customer preferences matter a lot. Online customer behaviour, on the retailer’s web site, on Facebook, Pinterest, Twitter, branded and other communities matter a lot. The customer’s ability to not only expect but to also get relevant (sic!) information in real time becomes crucial for the retailer’s success.

What a retailer gets out of these systems is location-, behavioural- and preference data. This is data that enables retailers to identify trends, to react on events in real time, to personalize offerings, even to predict needs and events or derive intentions.

If this data can be put to good use it, together with the transactional PoS data, is an invaluable source of insight that enables ongoing customer engagement and good customer experience. Improving these starts with the ability manage inventory across stores, to do focused marketing and does not even end with improving product development to provide services that are better meeting customer expectations.

All of the sudden the store’s current inventory and past transactions are no more THAT important. The overall inventory, and where it is located, matters at least as much.
Unluckily the systems that deliver all this data are silo’ed, too. Each system has its own database which regularly is not connected to any other system. Many of them are SaaS systems.

If existing, the in-house analytics and CRM systems are potentially the best connected ones.
All of these systems have something in common, though: They all enable the retailer to be nimble.

And here it is where fire and water clash.
The highly distributed PoS system is not nimble. Not at all! It is also not feasible to ‘just’ replace it. With this it is very hard for retailers to include the store into a strategy that strives for providing a consistent customer experience through all possible touch points.

Can this clash be overcome? It is not a trivial venture but it is certainly possible.

It requires acting small while thinking big. This sounds like a phrase but is important. The big goal is to have a strategy and infrastructure that
  • bases on optimally delivering to customer needs
  • covers every touch point with the customer while remembering that not every customer journey is created equal
  • is flexible enough to quickly adjust to changing customer demands
  • embraces the strengths and weaknesses of the existing systems. Not every touch point needs all available information
Getting there is a journey of small steps with every step providing an incremental return. This return may be operational, like process efficiency; financial, e.g. more revenue, less cost; or intangible, e.g. reputation.

It is not a linear journey. It needs frequent reassessment and readjustment. And it needs executive support.

So after all not two cities at war?

More later. Stay tuned.

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