The CX Imperative
Customer service is undergoing a profound transformation in today’s technology-driven and rapidly evolving retail landscape. Customer Experience (CX) is increasingly becoming the primary differentiator for many retail brands. Richer digital interactions with consumers are driving every aspect of the retail journey, resulting in powerful, effective and intelligent CX. In the interconnected retail market, CX is being elevated by next-generation practices.
However, the stakes are high – companies can lose billions from a single poor customer experience. A recent study projected a loss of USD 3.7 Trillion in annual sales due to poor customer experiences.[1] There is a dramatic shift in customer expectations regarding speed, convenience and knowledgeable, friendly service.
The pivotal question is: How prepared are retailers to adapt to this unprecedented change? A recent Everest Group survey in partnership with WNS on Generative AI (Gen AI) in Customer Experience Management (CXM) found that the retail sector is the least prepared across technology, people, process and change management readiness for Gen AI. The report emphasizes that less than 50 percent of retail companies are aware of Gen AI applications such as image creation, video and audio creation, code generation and synthetic data creation.
Retail enterprises must elevate their CX game – customer expectations are higher than ever, the margin for error is razor-thin and technology continually moves the goalposts.
The 5 Signs of Next-gen Retail CX
In this era of retail and tech upheaval, how can you tell if your operations are at the next level? While the old measures of success remain relevant – such as C-SAT, first contact resolution, agent utilization, cost per seat and revenue generated – world-class CX players are looking beyond these classic operational metrics to ensure they have key capabilities that signify next-level operations.
Based on two decades of market-leading delivery in customer services, here are WNS’ five tell-tale signs that your CX operations have reached the next level of maturity. For many retailers, these five signs are not on the radar; for others, they are known gaps and aspirations, and baby steps are being taken. For CX leaders, these are already proven ingredients of high performance:
Sign 1: Seamless Retail Omni-channel Integration
Customers engage with you seamlessly across physical, virtual and hybrid settings.
In the era of ‘phygital’ retail – with physical and digital channels interacting in new and complex ways – omni-channel integration ensures customers receive a consistent experience across all touchpoints, whether online, in-store or via mobile apps. Retailers must unify their data models and communication platforms to allow customers to start interacting in one channel and finish it in another without friction.
For example, Walmart[2] employs an integrated inventory management system that monitors inventory in real-time across all its stores, enabling strategies such as Buy Online, Pick Up In-Store (BOPIS) and providing customers with convenient and flexible shopping options. Similarly, Sephora[3] offers customers the option to try on makeup in-store or through the Sephora Virtual Artist app, blending online and offline experiences.
A leading UK retailer aiming to bridge in-store and e-commerce experiences collaborated with WNS to leverage a cloud-based Customer Data Platform (CDP). The CDP enabled a unified customer view by integrating online and offline interactions, significantly improving omni-channel experiences.
Augmented Reality (AR) represents a transformative form of hybrid customer interaction. It enriches the shopping experience by providing additional information and interactivity through devices or smart glasses. This bridges the gap between online and in-store experiences with product demonstrations, virtual try-ons and immersive brand storytelling.
For example, IKEA uses its IKEA Place app[4] to allow customers to visualize furniture and other items appearing in their homes before purchasing. The app leverages 3D and AR technologies, allowing customers to virtually position furniture in various areas of their homes, including living rooms and bedrooms. This creates a realistic and interactive shopping experience. Warby Parker offers a Virtual Try-on feature[5] that uses AR to show customers how different glass frames will look on their faces. This helps customers make better purchasing decisions without visiting a physical store.
Sign 2: Indispensable Virtual Assistants
Your chatbots and digital agents are achieving the impossible.
AI-led chatbots and virtual assistants can manage customer inquiries, from answering common questions to offering detailed product information. These systems utilize Natural Language Processing (NLP) to grasp and respond to customer queries conversationally, improving the overall customer experience. The latest deployments of digital agents, working alongside the human team, are performing at a level that was not achievable in the past – faster, cheaper and better.
For example, Walmart’s AI-enabled voice shopping feature[6] allows customers to link their mobile devices and home smart speakers to their Walmart account. Customers can then verbally state their desired items, and the system will recognize the request, identify the preferred brand based on previous purchases and add the item to the cart. Similarly, Sephora uses AI-powered chatbots[7] to assist customers with product recommendations and answers to common questions, enhancing the shopping experience both online and in-store.
Moreover, Gen AI-powered knowledge assistants are revolutionizing the customer care landscape, enabling agents to deliver exceptional experiences with remarkable speed and efficiency. These intelligent assistants rapidly retrieve information from trusted sources such as internal documents, knowledge bases and past transactions, synthesizing accurate and coherent responses tailored to customers' queries. This capability enhances the quality of customer interactions while significantly improving operational efficiency by reducing response times.
Sign 3: Pervasive Hyperpersonalization
You know where your customers value personalization – and you provide it in real-time.
Hyperpersonalization has become a cornerstone of modern retail as customers increasingly expect unique, relatable experiences that address their needs and preferences. Utilizing data analytics, automation and AI, retailers are offering personalized recommendations, targeted promotions and individualized customer service – on a scale and at a speed previously impossible.
Amazon, in many ways, defined this era of personalized shopping by leveraging advanced algorithms to recommend products based on customers' previous purchases and browsing behavior. However, Amazon goes beyond traditional personalization by utilizing its vast data resources to predict and pre-stock items in nearby warehouses even before customers place an order. This anticipatory shipping model enables faster delivery times and enhances customer satisfaction by reducing the wait time for popular items.
Similarly, a leading US retailer collaborated with WNS to harness a data science center of excellence to drive hyperpersonalization by predicting the next-best product a customer is most likely to engage with or purchase. By leveraging ML models and real-time customer behavior tracking, the retailer significantly enhanced customer engagement – improving marketing effectiveness and boosting profitability through personalized and timely offers.
Collaborating with a prominent grocery client, WNS utilized advanced analytics-driven customer segmentation, a customized hybrid recommender system and Gen AI-powered marketing to achieve hyperpersonalization. This strategic approach resulted in a remarkable fourfold increase in click-through rates and customer engagement.
Sign 4: Compelling Retail Loyalty Management
Loyalty management is at the core of your evolving customer proposition.
Loyalty management programs are far from new. However, the strongest performers in retail have turned them into the heart of the customer experience, providing insights, enabling personalization, and driving retention and customer advocacy.
Running a next-gen loyalty capability is at the leading edge of CX, data, AI and analytics – increasingly connected with and turbocharged by the developments in hyperpersonalization. The best programs are the result of finely tuned and evolved strategy and design. For example, they involve sophisticated content strategies, move beyond simpler points-based systems to cash / checkout redemption, use gamification and expand into business-to-business despite the data challenges. Loyalty management implementation and operations lean on diverse best practices such as master data management optimization, CDP and campaign operations.
For instance, when a duty-free retailer saw its discount-based loyalty program eroding margins, WNS designed a new, cashback-based loyalty program to unlock immense revenue potential. This analytics-driven solution provided the retailer with a comprehensive view of its members’ demographic and psychographic profiles, enabling them to utilize a customer behavior framework to better plan and design campaigns. This approach drove active engagement and effectively monetized the program.
Sign 5: Authentic Human Connection
Your brand projects genuine human warmth alongside digital innovation.
Digitization empowers but can also isolate. The human touch remains incredibly important for many memorable retail interactions, particularly for more complex and / or sensitive cases. As technology advances, balancing this becomes both easier and harder. It is easier because analytics and AI-powered functionality will become ever stronger – think Gen AI chatbots that will be nearly indistinguishable from human agents. It is more complex because customers may feel increasingly relegated to interacting with robots – particularly those who need empathy and authenticity. Every digital CX success story risks being derailed by a customer who feels cut off.
Retailers must balance ‘high tech’ with ‘high touch,’ incorporating new techniques and technologies without sacrificing personal interactions where they matter the most – in-store, over the phone or through other channels. Fortunately, leading retail CX providers are striking the right balance between change and innovation, aligning technology-driven change with their brand and values.
For example, WNS' EXPIRIUS CX model combines digital-first solutions with human-assisted services to improve customer experiences across direct-to-consumer channels like social media, apps, e-mail and web chat. This human-in-the-loop approach enhances customer satisfaction, loyalty and revenue.
Foundations for the Future
Looking ahead, it's evident that retail customer service will continue to evolve rapidly due to technological advancements and emerging best practices, supplementing or supplanting these five themes. Retailers must stay agile and forward-thinking to adapt to these changes and deliver exceptional customer service in a hypercompetitive marketplace.
However, the challenge for most retailers lies in making steady, step-by-step progress toward these next-gen aspirations while keeping operations on course. Turning vision into reality demands overcoming inexperience, inertia and the many barriers to change that accompany any complex transformation. Key ingredients include:
The journey to next-gen retail is long and complex. However, with the five signs above, the destination is clear. As Steve Jobs once said, “You've got to start with customer experience and work backward to the technology. You can't start with the technology.”
About the Author
Sumesh Chawla is a Senior Leader in the WNS Retail and Consumer Goods Practice. He has diverse experience across strategy, technology, transformation and operations – across America, EMEA and APAC.
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Disclaimer: WNS has sourced the data from various publicly available websites. WNS is not responsible for the content or accuracy of any linked sites.