The problem with exponential growth, Recurly CEO Dan Burkhart told Karen Webster in a recent conversation, is that it is hard to actually understand, even when it is going on all around you.
Burkhart will be one of many innovator CEOs on Innovation Project’s The Future Meets The Present Right Now: Can Retail Keep Pace? panel next week in Cambridge when the greatest payments show on Earth kicks off. Burkhart will be joined by Loop Commerce CEO Roy Erez, Harland CDO Joe Bilman, One Match Ventures founder and investor J. Skyler Fernandes and current Proudwork CEO — former Rakuten.com CEO — Fumio Kobayashi to discuss the rapidly resetting world of retail — and what merchants can do other than just “going digital.”
Because, Burkhart point told Webster, going digital is table stakes. Consumers don’t feel you’ve given them much of a benefit by a digital or multichannel option existing — the option itself actually has to be a good one.
“If you as a consumer have alternatives for where you buy whatever the good or service is, you will vote with your feet and go elsewhere. The world right now is that the convenience of the internet will be so competitive and be so immediate an option for any consumer that it will often to win out. For brick-and-mortar retailers right now, you have to have a universal experience that spans the gamut so the consumer can have a choice.”
The online experience, Burkhart told Webster, has to hold up and has to be consistent — but that consistency is a hard channel to deliver on. It’s hard for online-only merchants — which deal with any number of complex variables around customer acquisition, activation and activity — and it’s exponentially more difficult for brick-and-mortar players that are managing a user experience across channels.
But difficulty, he noted, is somewhat irrelevant at this point, because adapting at this point is not an option — it will be a necessity for any retailer that wants to stay in business. The digital era is here — and deepening. Even in the most rural pockets of the U.S., Burkhart noted, consumers have internet access and the ability to see pricing almost totally transparently and plug into Amazon and get all sorts of goods delivered to their doorstep within two days.
“If you take price out of the equation, the internet has become the petri dish for competition and acceleration and innovation. So you have this grand equilibrium happening on the internet, which basically makes it impossible to compete on price, which means ultimately you get buyer experience as the grounds to compete on. And that is hard. If it were easy, it would be commoditized.”
So how to navigate what’s next in retail when what’s next seems to actually be happening right now — and at a faster pace by the day?
Before founding and leading Recurly, Burkhart worked at eBay driving customer activity, the third leg in what he described to Webster as the three A’s in eCommerce — the first one being acquisition (bringing consumers in) and the second being activation (getting them started).
Activity, he noted, is the hardest because it is the area concerned most with loyalty — and keeping the customer engaged past whatever the initial draw to the site or shop was.
“To give a common example, we’ve all been to openings of successful restaurants that were well reviewed and the food was good — but it just wasn’t memorable enough. It wasn’t a place we decided to eat out at every month or two — and those restaurants end up having a tough time if they can’t get those patrons to come back repeatedly.”
Now Recurly as a business works to help with that activity goal by helping retailers set up and run subscription services. That obviously keeps customers coming back in the sense they are always buying — but he noted that a subscription is a start for a retailer, not an ending. The goal is to use that starting point and the loyalty engendered in the brand because the consumer has a subscription and then use it to boost further activity. That might mean an upsell, or it might mean using the data about what they are buying regularly to time the right promotions.
“That has to be a very polished frictionless experience to move someone from a purchase trial to a paid subscription, and that just begins the experience. From there, it is then it is about migrating those customers into offers and promotions that feel natural and are natural extensions of that entry point.”
That is easy to say and hard to do, and merchants across channels, in subscription services and not, get it wrong. Too many promotions, not the right type of promotions — it all ends the same way, according to Burkhart. The consumer tunes it out, doesn’t return and doesn’t become the kind of repeat buyer the merchant wants.
Which, he noted, why the devil, going forward, will be in the details.
Sweating The Small Stuff
When one looks at the firms that are succeeding in the new retail environment — Amazon being the biggest bright-line example — you see a unity of corporate focus. Amazon CEO Jeff Bezos said the firm is obsessed with getting the consumer experience right — and that idea is carried down, in lockstep, in every interview and public representation the company makes. That kind of focus is just what is necessary.
“It comes down to the culture and values placing a high degree of importance of every last detail in order to get it right,” Burkhart said. “A firm can invest all the capital in the world into getting a perfect UX built for them on the outside — but if everyone in the firm from the CEO to the clerk hired yesterday aren’t on board and in lockstep on every last detail of that user experience, the effort is going to fail. If it falls down at any point along the continuum, you’re done.”
Some brands — particularly the big-box stores that populate the increasingly less popular strip malls of America — probably will fail in the next five to 10 years. The ones that succeed, Burkhart said, will have to think a lot differently from how they ever have.
But some will — some are. And for those who are at Innovation Project 2017 next week — you’ll get a good idea of how the ones that are making it work are making it work and how the rest of retail can keep pace in an environment where exponential growth is becoming something of a norm.
We look forward to see you at the conversation.