ASSESSING IT
It’s important to look beyond the traditional hard metrics of ROI to determine the bottom line value of an IT solution. Here are five key areas CFOs need to consider when evaluating technology:
1. Sales growth: There are many types of applications that can drive increased sales, but some of the most common are solutions that optimize pricing, including markdowns. Determining the ideal price for maximizing sales without cutting profits at a store level is too complex for merchants to do on their own. Two other examples of technologies that can aid sales growth are efficient POS systems that minimize customer wait times, and analytical solutions that determine the ideal assortment mix for local populations.
2. Cost control: Technology also can aid financial performance by minimizing the cost of doing business. CFOs should consider whether a solution streamlines processes. For example, a tablet may reduce the need for store associates to check stock in the back room or ask the manager questions, improving staff efficiency. A supply chain automation system can greatly reduce the cost of distributing products and fulfilling orders. Any application that reduces manual effort most likely reduces overall costs. CFOs should include this factor in their analysis.
3. Improved customer experience: Customer experience typically is thought of as a “soft” benefit, since it’s hard to assign a precise monetary value to happier customers. But in an era where Walmart and Amazon most likely beat you on price and carry your assortment, a top-notch customer experience is one of the few competitive differentiators left.
A solution that helps retailers seamlessly identify customers and deliver time-sensitive, personalized recommendations improves customer experience. This includes beacons, as well as “personal shopper” apps, online expert chat solutions and anything else that makes the customer feel like he or she is individually recognized and served.
4. Increased traffic: Generating more visitors to your store or e-commerce site will not automatically result in more sales, but will increase the odds of sales growth and also will aid branding efforts. There are a wide variety of store analytics solutions that can deliver data, such as dwell times, traffic patterns and product conversion rates. Armed with this information, retailers can optimize store layout and design to bring customers through the doors.
Solutions that tie a retailer’s e-commerce site to social networks play an important role in attracting visitors. In addition, gamification solutions that make online shopping more like playing a video game, with challenges and rewards, have been shown to drive site traffic.
5. Blended channels: Given the consumer’s demand for cross-channel shopping, CFOs should consider the value of solutions that enable the blending of different channels for seamless shopping. On the front end, this includes technology that provides customers with a view of store inventory online, or allows them to reserve items or make purchases online for in-store pickup. On the back end, solutions that offer a real-time look at a retailer’s full inventory, or enable order processing across channels, support the seamless operations that have become standard for modern retailers.
Some technologies offer benefits in more than one of these five key areas. Take workforce management as an example. According to Brett Friedman, SVP global sales and marketing for Reflexis, workforce management often is viewed as a way to reduce labor costs and comply with government regulations. However, it also can assist other areas of the enterprise.
“While automated labor scheduling and time and attendance solutions do reduce costs and ensure compliance, workforce management also can help increase sales and profitability in some key areas,” Friedman said. “It typically reduces 5 to 15 hours per week of store manager time spent writing schedules, aligns employee shifts with customer demand and leads to operational improvements through advanced labor analytics and real-time alerting to correct course within the financial cycle.”
— Dan Berthiaume