Retail Wars Part 1: From SoLoMo to Omnichannel
As with all disruptive technologies, the invasion of mobile into our daily lives brings its own changes to this fledgling industry. While we grapple with the potential of what this new technology can do for us, it has its own trajectory, evolving and dragging us along with it. SoLoMo was a label thought up in 2010 to embrace how mobile should integrate into the customer's experience. The concept was, and still is, valid, but has grown up into the omnichannel approach to delivering solutions to customers.
SoLoMo: Its Origin and Case Studies
You may have heard how this word originated, but for those who have not, here is the story.
In 2010, a bunch of venture capitalists were working on a presentation on three main trends that mobile platforms were creating . These were:
- Social - many consumers were mainly using their mobile devices (phones, tablets and laptops) to connect via social networks such as Facebook.
- Local - these same consumers were using apps (such as Foursquare) to find local businesses and venues close to where they were at the time.
- Mobile - the bulk of these activities were carried out via smartphones, although tablets and laptops formed part of this mobile revolution. In fact, smartphone users were generally using their phones more for connecting to the Internet than for their original purpose, that is voice calls.
The new buzzword, which is attributed to John Doerr, became a hot topic during the next few years, but is not used much today. This is not because the principles have changed, but because the approach to connecting with the consumer has become much more inclusive. Initially mobile apps were built as stand-alone products that did not integrate with the rest of the organisation's digital presence. As companies realised that they needed to present a more uniform and device-agnostic face to the world, SoLoMo matured into multichannel marketing.
There were some successful campaigns and apps that used (and still use) SoLoMo principles.
- Starbucks devised a loyalty app that rewarded Foursquare "mayors"(most frequent visitor to a venue) with a discount (the mayorship feature in Foursquare was discontinued in 2014).
- Nike created a free app called "Nike Plus" that combines the power of its wristbands, using the SoLoMo approach to connect users with the Nike community (social) and find routes nearby (local), all via the wristband (mobile).
- Adidas also has an app called "miCoach", which is more feature-rich than Nike's offering. While it might be a matter of taste as to which app to prefer, most reviews rate miCoach ahead of Nike Plus.
Initially, the cost of developing a mobile app was prohibitive, while nowadays even small and medium businesses can bring a product to market, usually outsourcing the work to a company who is experienced in mobile app development. Some of extreme disruptors in the current business are apps around which an entire business model has developed, such as Uber and AirBnB. These two companies exemplify SoLoMo:
- They are essentially social networks/marketplaces in their own right.
- They are location-based - the customer is looking for accommodation or transport in a specific location.
- They are easily accessed via mobile devices.
SoLoMo Threats and Opportunities
Retaining the Customer
While it is now relatively easy to develop an app and promote it to potential customers, the biggest challenge is retention. Some 23-25% of users only use an app once after downloading it. What is more, the churn rate within 90 days is 75%. While this can be partially attributed to the overwhelming choice in the app market, it also indicates that a retention strategy needs to be developed along with the app.
Most brick-and-mortar stores fear "showrooming," which is basically a practice where the customer visits the store to experience the physical article they wish to purchase and then buys it online. There are various strategies for combatting showrooming, which are discussed in a separate article.
Webrooming is the reverse of showrooming - the customer does all their research online and then purchases the goods at a convenient store. Alvin Toffler described such a customer as the "prosumer", someone who is very knowledgeable about the product and can even be involved in the product design. Some industries, such as the photographic and motor industries, are shaped by their prosumer customers.
Webrooming is clearly an opportunity for bricks-and-mortar stores, and they should capitalise on it.
SoLoMo from Its Teenage Years to Multi-Channel
While the terms "multi-channel" and even "omnichannel" co-existed with SoLoMo, actually putting them into practice is quite a different matter. Initially, organisations would engage the customer via several channels, each of which had disparate business rules and user interfaces. This was very evident in the retail banking industry, where the customer would encounter different processes and procedures for the same activity in the banking hall (over-the-counter), via the call centre, at an ATM, using the Internet or accessing mobile banking, which could have a different look-and-feel depending on whether you were using a phone or a tablet.
So while there were multiple options, they did not provide the same experience, and were product-focused rather than customer-focused. Many companies still support their multi-channel platform, because the move to omnichannel requires a fundamental change to a truly customer-centric view, where the design is based around customers’ experience and their expectations. This can mean a total revamp of all the affected business processes and is not purely a technological facelift. Furthermore, many large organisations, especially banks, have invested in a variety of legacy systems for their cheque accounts, credit cards, mortgages and asset finance, which each sit in their own silo, and cannot move to true omnichannel until they get over this problem. However, there are other major disruptors in the pipeline for banks, such as blockchain, which will force a rethink of their business models and core processes. Some companies, notably IBM, have invested heavily in the future of blockchain, in anticipation of the demand.
Today's SoLoMo has to be Omnichannel
A true omnichannel architecture is built around the customer. While it might seem complex to design a customer experience that is channel-agnostic, the opposite is true. Complexity is created by having disparate systems and processes that are maintained by several software teams using different architectures, languages and platforms. A small change to accommodate a new product or feature could require code changes in each environment, months of testing, and a high risk of defect as a result.
Any company that wants to invest in an omnichannel architecture should consider the possibility of outsourcing or co-sourcing the programme (this is far more than a project), especially if they are living with a set of unrelated legacy systems. A service provider that is experienced in ERP and/or mobile app development would be able to assist in building the new platform and transferring skills to the development teams maintaining the legacy systems. A company that can offer strategic advice and develop the requirements, as well as supply technological skills would be the wise choice.
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