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Omnichannel Benchmarking for Your Retail Business

Omnichannel Benchmarking for Your Retail Business
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Benchmarking is an essential tool for successful retailers. Benchmarks help retailers understand how well they are performing in key competitive vectors such as Finance, Operations, Technology, and Customer Experience.

Retail consultancies, Wall Street analysts, industry associations, and investor communities each approach benchmarking from their unique perspective and play a role in gathering and disseminating information. Retail leaders and their Boards of Directors compare and contrast their performance with industry peers.

Many retail benchmarks are already well established. For financial types, Gross Margin Return on Investment (GMROI), Inventory Turnover, and Free Cash Flow are commonly reviewed retail benchmarks. Marketing and brand professionals are focused on Net Promoter Score (NPS) or Customer Satisfaction scores via ACSI. eCommerce retail leaders look at Site Conversion rates or Average Order Values and strive to exceed industry averages.

In response to the rising importance of omnichannel retail, a new set of omnichannel benchmarking tools have recently appeared.

Kibo recently announced its Convenient Commerce Index (CCI). NRF and FitforCommerce just produced an Omnichannel Retail Index. And Forrester Research will soon release a report measuring metrics for omnichannel success.

At first glance, it’s not clear which of these benchmarking tools will be most useful for retailers; they seem fairly similar. A deeper dive reveals differences that are worth understanding.

Kibo’s CCI is focused on retail operational capabilities and process enablement, looking at omnichannel from the inside of your company out. NRF and Forrester’s indices are consumer centric, measuring the customer experience in terms of fulfillment options, seamlessness, and expedience.

 

Kibo’s Convenient Commerce Index

Kibo’s CCI, like other indices, measures what you do in omnichannel to serve customers, and yet it also analyzes how your omnichannel processes are enabled.

Each category score looks specifically at a competitive wedge or pressure point and analyzes it based on your ability to win in the market. The total cost of providing a capability or the speed of enabling a process are where the rubber meets the road.

In the context of the CCI, it’s not enough to enable a process like ship-from-store. You have to be able to rapidly evolve the capability (e.g. speeding delivery times or lowering costs) to earn a top score. Does it take two minutes of a business user’s time or two weeks from a consultant or IT associate to tweak an order routing rule? Over time, faster process enablement wins.

The CCI is the practical manager’s omnichannel benchmarking tool. It graphs the enterprise’s entire inventory picture and scores each touchpoint of inventory as enabled or not for omnichannel retail. Fulfillment processes, applications, and devices across the enterprise are similarly mapped for omnichannel enablement.

Here is a preview into key metrics of the CCI:

Customer Experience: Process Enablement

Compares your business against industry standards in areas such as inventory lookup, ship-to-consumer from distribution center, ship-to-consumer from store, same day in-store pickup, returns, and customer service.

In-store Fulfillment Process Enablement and Automation

Benchmarks your in-store fulfillment and how efficiently you utilize your store inventory, physical locations, and staff resources.

Order Routing Rules Management

Measures your order routing rules management to see if it properly optimizes fulfillment based on advanced logic. Focuses on split shipping, sales velocity, store throttling, cost, and operational speed.

Global Available-to-Promise Inventory

The ability to access and validate inventory is paramount to ensuring your customers are able to see, purchase, and receive the products they desire. The CCI measures how accessible inventory is across enterprise touch points such as the call center, in store (save the sale), and web.

 

 

Other Omnichannel Indices

NRF FitforCommerce Omnichannel Retail Index

NRF’s new Omnichannel Retail Index reviews a range of retailers from the shopper’s perspective. Retailers can use the Omnichannel Retail Index to understand how they compare to other retailers in providing omnichannel services to customers.

Forrester Research Metrics for Omnichannel Success

From what we’ve been able to discern so far, Forrester’s metrics will be similar to the NRF approach, using a secret shopper to evaluate omnichannel performance. Forrester will likely focus on larger retailers in their initial report, although findings will be applicable to retailers of all sizes.

 

Choosing the Right Omnichannel Index for You

Considering the tremendous importance of omnichannel excellence in a retailer’s or brand’s future success, we think it’s worth benchmarking from multiple perspectives. Just as a financial view of a business requires multiple metrics, omnichannel performance should be measured from the insider (using a methodology like Kibo’s CCI) and also from the outside (using either the NRF-FFC or Forrester tool).

We know customers are looking for every convenience possible when it comes to shopping. And we know retailers and brands need to provide convenience while at the same time driving profitability. Benchmarking is critically important to providing what customers what in a way that is profitable for you.

 

Benefits of Benchmarking for Omnichannel Retail

Shows areas of improvement

A great omnichannel benchmarking tool will show you where you can improve. Based on industry benchmarks, you will be able to clearly create quantitative baselines. Improvement identification will help you determine which aspect of your omnichannel program to focus on, giving you a competitive edge for a successful omnichannel program. The accuracy of the areas identified for improvement is important, as you don’t want to waste time, money, and energy based on false information.

Plan and track progress

Once you have identified areas of improvement, benchmarking for omnichannel allows your company to make smart decisions in your planning, and allows your company to begin to track progress. This is the time to decide what adjustments your company will make, and to set goals surrounding those adjustments.

Quantify Value and Total Cost of Ownership

By benchmarking you will be able to identify and quantify the business value of recommended improvement, to make the business case for investment and gain cross-organization alignment. Investing in the right place at the right time is essential to business growth and a positive ROI.

Benchmarking for omnichannel will allow you to better deliver on shopper expectations in a timely, efficient, and cost effective manner. You will identify significant opportunities for growth, allowing you to take data and insights and act on them to become an omnichannel powerhouse.

 

 

Next Steps:

To look at the NRF FFC Omnichannel Retail Index (for NRF members only), go to:

https://nrf.com/resources/retail-library/omnichannel-retail-index-2015

To learn more about the Forrester report, go to www.forrester.com.

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