Verticalization in E-Commerce (Part 1)

Modeling Across the Customer Journey

Customer Centricity

Companies often act based on their own perspective and place themselves at the center of attention. This includes employees as well as products and services. Marketing channels are served from this center, often through different divisions of the company:

  • Sales (Point of Sale): Branches, web shops, direct sales and/or catalogs with mail ordering
  • Advertising: print, TV/radio, online advertising (banners, SEO, SEA)
  • Communication: mail, e-mail, chat, telephone, social networks

In some cases, this also causes there to no longer be a uniform perception of a company: there may be limited promotions to individual sales channels or qualitatively different advice in the branch and in the web store. Then we find the customer at the very end of the spectrum. For many reasons (see also "Changing e-commerce"), this way of thinking no longer works as well today as it did in the days before the Internet and mobilization.

Company Centricity vs. Customer Centricity

In contrast, customer centricity places the customer at the very center. Due to open competition and digitalization, customers have a wide range of options for their purchases and decide on the success of a retailer by making purchases.

A good approach to aligning the company's activities with its customers is to analyze the target groups and derive the necessary points of contact between the customers and the company. Only after this analysis does the company follow in the form of employees and services. There is always a complete, cross-channel view of the customers. This also forms the basis for implementing genuine OmniChannel strategies.

Customer Journey

If the points of contact of the (potential) customers identified in this way are combined, a customer journey can be derived. This is the name given to the customer travel route within the purchasing process. Of course, all customers have their own itineraries. It is therefore important to do justice to these as best as possible. If these points of contact and the associated processes and data are bundled according to their purpose (from the customer's perspective), domains ("problem areas") are formed. These now reflect the customer journey and form autonomous areas of responsibility as closed units. A good entry point, especially for Business to Consumer (B2C) trade, is offered by the following domain intersection

Domains Customer Journey

For Business to Business (B2B) trade this can be fundamentally different. Here, the customer is not the human being as a consumer, but a company - although this company is represented as a human being. Accordingly, the processes and behavior of these companies must also be taken into account.

The domains thus focus on customer-centric, technical obligations, whose implementation is carried out with channel-specific means.

Domain Search

At the beginning there is the domain "Search". It combines all aspects of a customer search, which starts with the attention (see AIDA model) for product, brand or company. It thus comprises more than the provision of a search field and a result list (so-called "Search Engine Result Page", SERP) of a typical webshop. Its technical tasks include

  • Perception of the company by interested parties
  • Supply / reception of interested parties at the point of sale
  • Finding adequate products at the point of sale

As the area with which most customers will therefore first come into contact, the list of activities includes internal implementations as well as the control of external parameters. These typically include online topics such as Search Engine Marketing (SEM). Similarly, the offline world is concerned with target group-oriented positioning and how it is addressed through advertising. With a positive attitude, a potential customer will visit the point of sale. It is important to give the customer a proper welcome at this point and to enable him to start a pleasant shopping experience. Customers who are specifically looking for a product should therefore be able to do this on their own without any major obstacles. In stationary retail, there are concepts on how a store should be structured. In the online sector, other concepts have become established, also due to the lack of spatial effect.

A challenge for people is the ever-increasing number of products in a sub-sector of the product range, i.e. navigating within categories of a catalog in online retail. One of the main tasks is therefore to support the customer in narrowing down suitable products. To this end, searches based on filters and facets have been established in web stores for some time now. A Guided Selling process can also be implemented using the same algorithms. This process takes place in the center of the point of sales and corresponds most closely to the advice given by a salesperson in a store: by answering a few questions about the product category, the selection of products is narrowed down considerably.

Discover Domain

Not all interested parties, i.e. visitors at the point of sale or recipients of a catalog, are looking to fulfill a specific need. This domain is therefore dedicated to inspiration, which in turn can result in a need. In traditional retailing, suggestions for how to use a products have been present for a very long time. Fashion department stores, for example, use mannequins, and the fashion mail order business is based almost entirely on photos of models wearing the products in different combinations. For some time now, there has also been more online available in this direction: some retailers create their own magazines with such inspirations.

But there are also a lot of other things in this area that should also make it easier for customers to build a relationship with the company. In addition to inspiration, creating an outstanding experience ("customer experience") for the customer also adds a great deal of value here.

This could include:

  • Editorial content from the company for the customer, for example as a magazine, blog or newsletter
  • Promotional campaigns, including landing pages (online), flyers (offline) or a combination of both
  • Creation of content by customers for customers or even for the company ("User Generated Content"), e.g. recipes, own usage content, exchanges, management of collections or the offer of an exchange platform
  • Extended services around products and companies
  • Loyalty programs with incentives

Evaluate Domain

The aim of the Evaluate domain is to provide customers with all the necessary information on products and/or services offered in order to make a product choice. At this point you evaluate whether it is the right product to satisfy their needs. Here is where a Product Information System (PIM), which is tailored to the products of the provider, can be invaluable. This means providing not only product structures but also relationships (catalogs, categories, variants) and means of comparing products.

Another important task is to ensure that this PIM operates with high-quality data. Poor data quality leads to negative effects on sales (see "EDQ Report on Data Quality"), while high data quality can lead to higher sales (see "EDQ Benchmark Report on Data Management").

The information from this domain (as well as that of the other domains) should be used across channels. So here the PIM should become the source of truth for product data.

Purchase domain

The focus of the purchase domain is clearly on its name and the associated components. From a professional point of view these are:

  • the management of a shopping cart
  • the use of templates, subscriptions and/or wish lists
  • the administration of customer data (e.g. for delivery)
  • the purchase (or order) with payment

This domain is a major lever for OmniChannel retailing: if all customer purchases (store, webshop) converge at this point, it is also possible to offer the same service to customers across channels, including services such as exchanges. For some time now, a shoe retailer with a very large branch network does not differentiate between where something is bought, exchanged or forwarded (see the report on Omnichannel sales at Deichmann).

Control domain

The last of the presented domain models is the domain check, which gives customers access to their account:

  • Management of personal data
  • Overview of purchases / orders
  • Tracking of deliveries
  • Access to loyalty programs

From the company's point of view, this domain also represents an important point for after-sales processes: Misuse checks, invoicing and customer support have begin here - close to the customer and the order.

Conclusion & Outlook

The model shown here provides a clean separation of domains along the customer journey and forms a very solid basis. Of course, this model can be adapted and expanded, for example by adding an additional domain Understanding. This is where the typical Business Intelligence processes could start.

The second part of this article will deal with the implementation of this model and also address the question of whether there are effects on the organizational structure and teams, and what effects those could be.