Retail in Real Time APIs: A Key to Customer Loyalty
The term API might sound like a technology issue, but it’s not, really—it’s a business issue, and a critical part of a strategy to ensure that retailers remain competitive in the digital world. Understanding how to benefit from APIs is the difference between being a digital competitor or getting left behind; between surprising and delighting customers with timely, relevant offers—however they might be interacting with your brand—or annoying them with misplaced, irrelevant ones.
In retail, APIs enable the creation of personalized, seamless, app-powered experiences for customers. They let you to adjust on the fly to the incessant changes in customer preferences and market conditions. And, when coupled with new predictive technologies, they enable the incorporation of a particular customers’ recent history of interactions with your brand to extend offers that actually anticipate their wants and needs.
In this new world of speed and agility, the importance of stability and security of inventory databases, transaction systems, and CRM isn’t diminished. It’s imperative to keep back-end operational systems secure and steady while enabling a nimble and agile approach to deploying new projects that engage customers, across all channels. Gartner calls it “bimodal IT;” at Apigee we refer to this as “two-speed IT.”
Whatever it’s called, there’s a particular technology stack that powers this kind of dual system in the retail market: a digital business platform enabled by apps, APIs, and data. Apps are the core constructs, data is the currency, and APIs bring apps and data together.
For retailers, APIs enable the maintenance and stability of data in retail systems of record while also opening the door to omnichannel experiences, new methods of customer engagement, and, when coupled with new predictive analytics technology, apps that are adaptable, and can help predict which offers will most please customers.
Customers, how nice to meet you
More and more, customers have grown to expect a modern experience from retailers, regardless of how they’re interacting with your brand. Recent data, gathered by The Apigee Institute in a survey of 1,000 U.S. smartphone users, found that 74% of respondents would be more likely to shop at a store offering key functions and services via an app.
APIs enable you to meet your customers wherever they are, by facilitating the creation of compelling apps and new ways of communicating (push notifications and real-time social messaging are overtaking emails as key ways to be in touch with customers).
This has to be seamless—”omnichannel,” as it’s often called—so customers have a smooth, uninterrupted, harmonious experience, regardless of whether they’re shopping or researching at home, in-store, on their mobile device, or on their laptop.
As one retail developer program leader said recently, “it’s really important to link the in-store experience to customers’ digital lives, and APIs are the key to that.”
There’s strong proof that doing this contributes to the bottom line. National drug store chain Walgreens’ omnichannel strategy, for example, led to this: customers who interact in-person, online, and on a mobile app spend 6x more than those who only visit stores.
Target is another example. In the past year alone, the retail giant has grown its online traffic by 22% (or 8 million people) by focusing on a mobile-first strategy that resulted in 57% of all of its web traffic originating from mobile devices. This bested companies that were founded to do business in the internet age, like Amazon (34% of web traffic via mobile devices) and eBay (43% of web traffic via mobile devices).
Retailers know that customer loyalty is critical to increasing revenue, and that personalized, customized experiences are key to attracting and keeping customers.
APIs enable this because they’re a two-way communications mechanism. Back-end systems feed data to an app via an API, but every time a customer interacts with your brand, especially in the digital realm, he or she also generates data that can help hone individual and personalized experiences for them, in near real time.
Imagine the ability to easily test a new app or feature with customers, and respond to their reaction very quickly—by removing the feature if it doesn’t resonate, or forging ahead if it does. When we asked why APIs are so useful for retailers, an API program leader at a major U.S. retailer said the technology enables the business to learn about, test, and build different guest-facing digital interactions.
“APIs allow our developers and business teams to very quickly and easily create new guest experiences … and truly delight our guests,” the executive said.
It’s time to get personal
Things get more challenging when retailers attempt to personalize offers. Customers are smart, and increasingly well-informed. They’ll see through feeble attempts at personalization, which often come from campaigns based on profile attributes or bucketing customers into broad segments. These gestures of manufactured warmth can repel customers, who ultimately may start to doubt the accuracy and sincerity of your brand.
Imagine you’ve emailed a valued customer a 20% discount offer on a new jacket. Unfortunately, she bought the very same jacket at full price two days earlier via your mobile app. If your email campaign system had recognized her activity on your mobile app, you wouldn’t have sent her the discount. Now you have an annoyed customer on your hands.
Advanced predictive analytics helps avoid this kind of off-putting customer experience. Say a retailer knows a customer is just a few blocks from one of their brick-and-mortar locations. The retailer also is aware of the customer’s touchpoints with the company so far: recent tablet transactions, web interactions, prior purchases, and current interests (in this case, a pair of shoes).
By taking into account these and many other data points, the retailer can predict the best offer for this customer—not a group of customers, not a large segment, but this one, unique customer. In this case, it might be a push notification with a 15% discount on this customer’s coveted shoes, redeemable in-store, that day only.
With predictive analytics, understanding the customer journey—the temporal order of interactions—becomes possible. After all, it’s very valuable to know what customers did after receiving a direct mail offer, or what items they had in their cart before abandoning a transaction.
Two speeds, one goal
Data on customer journeys isn’t something stored in retailers’ back-end systems. In fact, service-oriented architecture strips away information to minimize business function noise. It’s not built to take into account critical contextual information like a user’s device type or location.
APIs, on the other hand, maintain contextual data, enabling the creation of apps that can be quickly tailored to adapt to changes in market conditions and customer preferences.
Both are necessary, of course. Existing back-end systems of record—transactional, customer data, or inventory—must be maintained to run reliably and securely. But a new API-centric layer in the IT infrastructure stack is key to enabling agile innovation to meet the new digital business requirements and customer expectations.
Consumers want rich experiences across every touchpoint and companies are challenged to profitably meet evolving expectations on a global scale. Businesses have a massive opportunity to derive unprecedented value from big data, providing breakthrough customer experiences that meet customer expectations in real time across multiple platforms.
That’s where apps and APIs come in. With the right solution in place, you can deliver a superior omnichannel experience for every customer, accurately predicting the best possible offer, all in context, all in real time. In the end, though, it’s not about technology; it’s about serving your customers the way they expect to be served, and it’s about the future of your business.
Contributed by Ed Anuff, Senior Vice President of Product Strategy, Apigee. Learn more here.