In this episode of the Futurum Tech Webcast, I’m joined by Brian McGlynn, General Manager of Commerce Solutions at Coveo to talk about one of my favorite topics: customer experience. And in this instance, we’re discussing customer experience in the ecommerce ecosystem.
Before we get started, some background. We’ve witnessed some major shifts in the last few years as it relates to customer experience. Customers are more savvy than ever before, they’re more demanding than ever before, they are more impatient than ever before, and they have more options than ever before. The onus on brands is to understand and embrace this shift, and to position themselves to deliver top-notch, personalized, customer experiences at all times — and across all channels.
Of course, this is often easier said than done, and that’s especially true when it comes to search functionality in ecommerce situations. So, what can brands do to ensure they are serving up the optimum digital experience, especially when it comes to search functions? That’s exactly what Brian and I talked about.
Here are just a few of the things we covered:
- The current state of the customer experience when it comes to ecommerce
- The challenges organizations are facing when it comes to digital experiences
- How important search and product discovery for ecommerce are
- The different ways AI can improve the ecommerce ops and have a dramatic impact on customer satisfaction
- How Coveo is helping customers capitalize on technology in order to improve their search functionality
You can watch the video here:
Or stream the audio here:
And if you’d like more information on Coveo, visit their SAP store page here. You can also find Brian on LinkedIn here, and he’s more than happy to connect and answer any questions you might have on how improving search functionality for your ecommerce operations can be a game-changer.
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Transcript:
Shelly Kramer: Hello and welcome to the Futurum Tech Webcast. I’m your host, Shelly Kramer, principal analyst and founding partner here at Futurum Research. And on today’s episode, I’m joined by Brian McGlynn, the General Manager of Commerce Solutions at Coveo. And we are going to talk about one of my favorite topics, the eCommerce customer experience. Before we get to that, just some little stage setting, so I don’t have to tell you, we’ve witnessed some major shifts over the course of the last couple of years when it comes to customer experience.
Customers of course have more options than ever before, and they’re always at risk of commoditization by gigantic eCommerce engines that will remain nameless. But the reality of it is today the onus is on brands to deliver really, really topnotch experiences at all times, not just from eight to five. And so of course this is easier said than done, especially when it comes to eCommerce. And so what we’re going to talk about today is how brands can think about this and what they can do to ensure that they are offering up the very best in customer experience. So Brian, welcome to this show. It’s great to have you.
Brian McGlynn: Thanks. Yeah, glad to be here. Glad to be part of it as well.
Shelly Kramer: Absolutely. Well, I’m sure it’s going to be a great discussion. Before we get started, before we dive into all things eCommerce and customer experience, I’d love to hear a little bit more about you and your career journey.
Brian McGlynn: Yeah, so thanks for, once again, having me. It’s been interesting how I ended up at Coveo after number of years, been here about three years and known Coveo for 15 or 17 years over time watching this company grow and build out. I’ve always been in this data space. I’ve always been fascinated with customer technologies, customer serving technologies, data, and really how those items go and interplay together. And actually how I ended up coming aboard here was at a hotel meeting in New York City with actually our head of partners at the time. I had represented a German eCommerce software platform and I had reached out to Coveo potentially becoming a partner. I saw the need from what we had in our solution, not just to get people the right products, but certainly in business to business commerce and others where people are looking to really on their own, as you started to talk about earlier, really 24/7, always on economy.
One of the biggest things for getting people what they need is finding information. And that’s where I’ve reached out to Coveo and understanding that part of the customer journey was looking at, “Okay, what does it take to maybe use buying a particular industrial item and a medical device and all?” All the supporting documentation, other parts around that to support the professional buyer were things that technology for discovery of information would go into. So I reached out to Coveo about becoming a partner and next thing you know turned into a bigger conversation about coming in here and taking over and leading and growing our business around search and recommendations.
So been added for that part, spent time at Deloitte as well, doing the same thing. So in some ways, I can’t say I’ve had too much of a pivot over the years, but certainly over 20 years really focusing around customer technology, around information and getting information to the right people at the right time.
Shelly Kramer: Well, awesome. For I am most grateful for people like you. I am no stranger as I’m sure as our audience, our listening and viewing audience too. Customer experience has gone bad and trying to navigate through whether it’s discovery of something that I have money in my hand and I want to buy, whether it’s discovery or whether it’s ease of purchase and all of those things. I think all of us have been in situations where you’ve gone, “There’s got to be a better way.”
Brian McGlynn: Yeah, exactly.
Shelly Kramer: Who’s thinking these processes through? And I want to strangle them because they are not thinking about me as the customer. So from a completely geeky standpoint, I mean, I love being able to be in the business of really understanding what amazing customer experiences look like and that many technology solutions that are out there to help brands facilitate that. Right? So let’s talk a little bit, if we can, about some of the many challenges that are facing customers today in the eCommerce space as it specifically relates to digital experiences. I’m assuming we’re going to talk about B2B customers. Are we going to talk about B2C customers too?
Brian McGlynn: All the above.
Shelly Kramer: All the above? And the reality of it is, are they even all that different?
Brian McGlynn: It’s interesting. It’s really influenced. I mean, actually to address that, an interesting topic. So B2B customers, we look at it, there’s professionals buying from certain items, B2C and consumers, we go back 20 years night and day difference. You think about it, the likes of the Amazons and the others in the world really set the bar really with the pioneers about getting people to purchase and try online. So we look at consumers more, us as consumers, our private lives, go in and really went into it, leaned in a bit, started working a bit with some of the eCommerce components and got familiar with it.
The interesting part is in the B2B side where people were starting to look at digital fulfillment, digital order taking, they were able to do so, was less about consumer optimization, more about just being there. So we’ve seen a big divergence in dichotomy recently. Certainly in the B2B side, a lot more focus on organizations to say, “Hey, I want an experience that’s just like Amazon. I want an experience that’s like all the leading other B2C ways of doing it.” So people forget about it, businesses forget about it many times. We’re all consumers. I mean, even the buyers are consumers-
Shelly Kramer: Absolutely.
Brian McGlynn: We want that easy experience. We want that technology to be that easy to work with. So there’s been a big push and a demand certainly we’ve seen lately where organizations are saying, “Okay, I want it to be easy. I want to be able the technology to predict what I need, to help me find information what I need in that part.” There’s been a whole raft of movement of organizations to adopt newer B2B technologies that emulate and really simplify that and a whole other set of challenges around that. But it’s certainly from that part, there is a difference from the complexity, a difference of complexity of the business, but the similarity from a people’s expectations we’re finding along those lines.
Shelly Kramer: And our expectation, as you said, is incredibly simple. We want it to be easy. And I think that whether a B2B customer or a B2C customer, they are showing up with their money in hand ready to spend it, ready to give it to you. And so let’s do everything we can to make that a wonderful experience. Right? Because, I mean, there’s just absolutely no reason not to do that. So what are the challenges that you’re seeing customers face as it relates to being able to provide those kind of seamless, quick, easy, efficient customer experiences?
Brian McGlynn: Well, certainly we look at it the leading ways that are out there for organizations, the leading technologies that are in the market today are really, you look at big, the AFNG index. Well, Amazon and Google really define the way people go in and search and they look for information. So our view certainly as a company is that technology search is the leading, if not one of the most important items that are out there from an expectation. We can all train to where we go in, type in what we want, and then it gets out and put together. Okay, here’s whether it’s toaster at this point or whether it’s still [inaudible 00:07:43] mixes that may be for different components that will be out there. It’s all around going through, people have that expectation of going in and finding and candidly, these organizations have done good, they’ve done good things and organizing information that’s out there.
The challenge a lot of organizations have is we had a customer that came in, became a Coveo customer because their owner. This is a multi-billion dollar company. Their owner and founder and CEO was on his private jet and couldn’t find a red hat. He’s like, “I can’t find a red hat.” In there, typing in a search. It’s not an easy thing to solve because red, maybe rouge, maybe rush, all different other areas around that. And being able to surface and understand that and really understand what somebody’s trying to look for and match that across over 500,000 different products that someone might be looking at, it’s not an easy problem to solve.
And especially when you go in trying to normalize all the data that comes in new products that are out there and coming into it, and it’s just that simplification we have. And 10 years ago, 15 years ago, we’d tolerate it, we’d spend more time [inaudible 00:08:44] search, we’d spend more time looking at it. As Google and Amazon and others have invested immense amount of resource into artificial intelligence, machine learning and technologies like that but done a good job. So now we expect it when we go anywhere and if we’re not seeing the same thing as consumers, it’s really basically a tab click away to where we’re now back on Google doing search, looking for it and boom, get picked off to a competitor or somebody else that making it right.
Shelly Kramer: It’s kind of like back in the day, I remember doing a lot of speaking and one of the things that I would try to tell organizations that I was working with is that nobody cares if you show up on page three of Google. Nobody’s going there. But I think that another important thing is that I think consumers make decisions all the time on whether this company is the right company for me based on these search and discovery experiences. Because if it’s too complicated to find what I’m looking for, one, I feel like you’re not focused on me as a customer and you’re not focused on, you don’t really understand the customer experience that I’m looking for.
But also I think, does this company, they’re very unsophisticated in the way that their website looks or this discovery, this search and discovery process looks, if they’re so unsophisticated there, do they really have the ability to serve my organization’s needs? I mean, we’re talking beyond just the purchasing of a widget or something. I mean, if we’re talking about big needs, big purchases, that sort of thing, I think the experience that you serve up even especially in those early stages as it relates to search and discoverability says a lot about who you are as a company and how you’re going to be able to serve me in that customer relationship.
Brian McGlynn: Yeah, I think you absolutely hit that. And that’s been a part of it is especially when you look at B2B commerce where people are going in, and it may be the average order value of a typical B2C shopper, might be $85 or so on. B2B, we have clients where the average order value is $500,000. 70 items in a basket where a professional buyer is looking through as part of a buy-in group. So definitely as they go in, we see it in our own signals and what we see with our clients is there may be five, six, 10 different touch points.
Someone is going in engaging with content, engaging with various different items, researching and reviewing before they make a large investment to go in and bring together. And those are the sorts of things that we see on a regular basis. So organizations that are either light on content, they aren’t serving it to the right people are getting it there. You think about it from that part, someone is buying professionally and that part gets difficult. So there is that level of being there and finding it. And the other was just from the overall friction. So much of it goes in from first of all having it. The other part is just getting it right. So one of the things we look at is going in and finding something’s on page three or page two, it’s irrelevant. That’s either going to end up a phone call [inaudible 00:11:55] cost, and have a hit on the customer service because most people don’t want to call a sales rep. They want to serve themselves. They’ll call say-
Shelly Kramer: Say it isn’t so.
Brian McGlynn: Exactly. As much as a sales team doesn’t want to hear that. No, realistically, we’re there, people have done the research and they’ve done work before there. So that’s the part we want to do is just to see and really help guide the user around that part. That’s for technology that can anticipate the user and find that is really important. The interesting part for 10 years ago, a little more tolerance for it. Now there isn’t. Part of it is there is the digitals caught up to a lot of where the analog was. So you take, for example, an experience where somebody would walk into a sporting boot store and if you’re in the boating section at this point and you say, “Okay, well I’m looking for cushions.” Well, they might be looking for boat cushions at this point versus knee pad cushions or other parts around that. So there’s a context that’s out there and that’s something that often misses in many cases as well a lot of the more earlier technology and earlier evolutions.
It’s the same where today if you go on a website or you go on a digital experience and you’re looking at, for example, maybe in boating and then you go in and you search on a particular item or maybe it’s a retailer or a sporting store that sells boots. Well, as you type in B-O at this point, having it to where it’s sensitive to say, well, it’s boots you might be looking at, whether it’s sporting or hunting versus what somebody might have for boating at this point for needs. These are the sorts of things and signals that people have and getting those things right. It really comes down to is that technology paying attention is just like walking into a store and what would’ve been a tone deaf employee that didn’t pick up on the cues. It’s the same thing. And I find that technology is now just getting so much more at the expectation. Good part is people get it right. It certainly does pay for itself, but those are the sorts of things that we see along those lines.
Shelly Kramer: And I think that it’s kind of like if you walked into that same sporting good store and you had this little text bubble that walked next to you and it showed that I purchased life jackets and rafts and all kinds of things relating to boating. And so it would lead me exactly to the spot in the store where there’s going to guess that I want other boat equipment. The thing about it is that all of the data on my past behavior exists. And so being able to leverage technology to pull that in, it’s kind of like going back to, you mentioned Amazon and I’ll mention Netflix and there’s so much content out there. For instance, if you’re interested in watching something, right? There’s so much content in there, I don’t remember, I do remember what I watched, but sometimes I’m just like, “What am I going to watch next?”
And the fact that Amazon Prime video knows that I’m a fan of British drama series and so they do the heavy lifting for me and they can serve up and say, “Here’s what we think you’ll be interested in next.” Or the same is true with purchases. And when somebody shows up with their wallet in their hand, B2B or B2C, what you want to be able to do is you want to be able to anticipate. Sometimes I might come to a site without maybe a full shopping list or a full understanding of what I’m going to buy. And if I’m procuring something from your organization and it serves up for me, “Well, Shelly, you may also think about this or this or this since you’re already looking at this piece of equipment.”
That just makes my life easier. Makes it easier for me to give you money. It makes easier to for revenue growth and profitability. So all of this stuff is really taking data that we really should already have and should be able to much more effectively utilize. So that’s why solutions, technology solutions are so exciting because not only do they make it easier for the customer, any kind of customer, they make it much more easy for an organization to really grow and have deeper relationships with customers, but also have that play out on the bottom line. I mean, those are all wins.
Brian McGlynn: I mean, you look at it from there and it’s an interesting challenge and that’s one that you do bring up a good point of is we see with personalization, so personalization strategies are important for exactly [inaudible 00:16:27]. We look at some clients want to increase the wallet, share revenue for visitor. We’re seeing a lot as well where we see as a discovery aid where someone may go in, there’s clues to whether they’ve purchased in the past, what they’ve looked at and what they’ve navigated towards. And then the ability to go in and use that to show and really even fine tune those particular items. So maybe landing someone on something that’s better or fit at this point or others along those lines. We’ve seen that for many different cases where technology’s able to do that and grind through the information. One of the biggest challenges we deal with is really that balance between what we know about somebody from what they’ve purchased in the past and then experimentation.
So whether it’s seasonality or bringing in that new technology or other parts around that are key. We look at it where some of our business partners, we work with a footwear store where they’ve gone through and they’ve found that if they show, for example, if it’s women’s shoes, they found, if they show men or kids along with it, the order value goes up substantially. And the whole idea is that understanding and previewing, “Okay, well this is potentially someone shopping for their household,” and guys hate shopping. So a lot of times maybe like my wife or others says, “Yeah, this would be good. Let’s add this to the cart, let’s add it to the cart.” So we see that in this part of the B2C side. B2B side, we see the same thing with recommendation technologies on replacement parts. Now customer of ours have been out there and they service large fleets of trucks.
And the whole idea is that when people pull into a garage, truck is off the road and they need to get it back on the road very quickly. So the whole idea is going in maybe with the supply chain issue that’s out there, they can go in and find a part that would help fulfill the need very quickly and they can do that, “Did you want this? Did you want this?” The whole thing is it all goes in and really giving that ability to really engage with the user, give them options and really keep them bought in at this point.
That’s really that direct fish or push for someone who has explicit intents, they’ve searched, they’ve put in information right with implicit based on their behavior where machine learning can look through that and bring in various different tools as to how it lines up products that someone’s looked at, how it shows in particular what you might like or suggestions that would be in there all the way to the list of results, someone making a search at this point. These are all little items that seem innocuous in many cases, but massive amounts of machine computing power can go through and in many cases can be a doubling of revenue in some parts where organizations can absolutely improve their performance, but it comes down to just getting people the right thing at the right time as they go through.
Shelly Kramer: Right, absolutely. I think that I read something in some research that your team had put out, I think earlier in 2022, and I can’t remember the name of the report, but I’ll link it in the show notes here. But I think something that’s really important to keep in mind is how distracted your customers are. And I’ll give myself as an example. I’m doing things all day. I have 18,000 different things open on my desktop. I’m partway registered for a client event that I have to attend, but I’m not finished yet and I’m halfway through this purchase of something else that I got pulled away from because I had … So lest you think that you are the only one operating in a totally distracted world. I can promise you, you are not and your customers are not. And what jumped out at me from the research that you did is that today, customers have about 1400-ish interactions a day doing various things with interacting with various parts of technology people, all different kinds of interactions.
Those interactions are expected to number in the 5,000. So going from 1400 a day to 5,000 a day by 2025. That’s a really short period of time. And as distracted as I am today, I can only guess, I can only anticipate with dread how distracted I’ll be by 2025, which is just a couple of handful of years away. But the point is that there, all of this is meant to emphasize how important it is to serve up the easy button for your customers and to let technology play a role there because the technology does exist to play a significant role there. And that’s exciting.
Brian McGlynn: Yeah, I think so. I mean, you nailed it. I mean, altogether, it’s amazing. I go back and many times to think about, “Okay, what was life like in the ’90s?” And all that, the analog world and things were out there in little bit digital intrusions and push technology and notifications. Well, I think to your point, we continue with the amount of data that gets expanded upon the overall part how many petabytes, exabytes.. I’ve heard all these different terminologies just for the amount of data available out there. So it really comes in as someone expresses interest or has some interest, how do you quickly pierce through the noise and make it so there’s no friction to where there was? And that’s why I go back some of the older technologies of B2B commerce where there might have been 1970s mainframes where people would go in, order and go through all kinds of workflow screens and different things to get to the end result. Well, now we don’t have the patience for it, we don’t have time for it.
Shelly Kramer: We don’t.
Brian McGlynn: And no one knows how to use it to spend a year figuring out how to order through that. I remember working many, many years ago at IBM when I first got out of college and some of the old systems, we had to log in on and punch in information. You type a slash to go to the screen and whatever. And people just don’t have the patience for that. And what we’re dealing with, 1400, if you think about 5,000 interruptions or digital interactions, you’ve got to make them meaningful. You got to make them very precise and really understand the, that’s where we look at it for us, all the research around intent, understanding the user’s intent. In some ways being less wrong is one way to look at it as well because it’s all case. The AI technology’s doing is guessing. It’s guessing what people are doing, it’s guessing based on items and it gets it right very, very often.
And if it doesn’t, it learns from it and then it tries to figure out those pieces as it goes back in. So the more we can do that, the better off it is. And of course doing it across multiple channels, whether it be head commerce, whether it be multichannel, omnichannel or people touching to get different points as well. Being able to get people that information to help make purchasing decisions and facilitate that, ultimately is really where I think anyone’s going to win as they go in certainly the hearts and minds of the customers, which ultimately will turn into the wallets of customers as well as they go in as well.
Shelly Kramer: Well, and you’ve actually already answered in advance kind of the next thing I wanted to talk about was really how AI impacts customer satisfaction in eCommerce. And I know we’ve talked about it a little bit before too, but it’s so many of those things. It’s being responsive, being nimble, serving up options, personalization capabilities. There’s nothing more to me as a consumer. My husband would probably tell me I’m a professional consumer, but as you mentioned about women’s shoes and children’s shoes and everything, I’m the buyer for our family. I’m also the buyer for our organization and I’m making decisions all day long that affect a large number of people. So when I can go into an experience and wherever it is I’m shopping and that platform can recognize me, can know my history, or can serve up options that I may be interested in, all of that just shortens my engagement time and it also shortens my time dissatisfaction and it lengthens deeply or deepens my loyalty and my affinity to the brand.
And I think that what you want to always be aware of in the eCommerce space is that you’re always a heartbeat away from commoditization. And when your customers don’t have such a great experience with you that after the purchase, when they can’t walk away and go, “I remember where I bought that because it was a great experience.” You know what I’m saying? Those things are so important because I can’t remember where I bought something because either I had an unmemorable experience, I had an ordinary average experience, you’re at danger of being commoditized because the thing of it is when I go to Amazon, Amazon remembers me. Amazon remembers me and that’s who we’re all competing against in many instances. So I think that there are a lot of benefits of AI as it relates to customer satisfaction. Did I miss anything that jumps out at you, this particularly, that you see from your customers?
Brian McGlynn: I think when you look at it and with where we see with our customers and what they see at this part, it really goes in and absolutely about time with really valuable time and differentiating. And that’s a big part. And by going in, if they’re already starting, many in other cases, you first of all have to have the same kind of caliber of tech. You have to, as the barrier to entry. If a retailer really wants to go and they need to figure out, as we see in many cases many want to build, they want to build all their own tech and others, which in my opinion is not the right idea. There’s a lot of technology like us where we go in, we provide world class technology around search recommendation and modern merchandising. Organizations need to think about partnering and really think about what they’re good at.
They should be knowing their customer, really think about what their mission is around the brand. And that’s really the part to win the hearts and minds to get people to come back. People will come back for what they like, what they find differentiated either in experience or where they can’t get anywhere else. They’ll leave for friction, they’ll leave for disjointed experiences in others. And that’s really what it comes down to. We’d say in the radio business many years ago, people will not, they’ll tune out for what you play. They won’t tune out for what you don’t play. And it’s a thing where you look at it and if it’s a bad experience where someone goes in and they’ve got to log in too many times or they have to thumb through a lot of different pages and other parts, they’re not going to come back.
And that’s generally what the reality is, where it goes in. So all that cost of digital acquisition, of advertising spend and all the others that are there for not where going through and really being able to capture users’ intention in that part. One of the issues we got into, once again where our technology goes in, a lot of retailers have gotten so focused, and this goes for B2B as well, on where they, they’ll certainly take mundane tasks, not allowing to do the strategic sort of work. And we see that with merchandising. There’s been stuff 10 years ago, a lot of really wave one and wave two technologies allowed merchandisers the abilities to boost products, provide incentives, build some layouts, that’s absolutely important. What comes down to it is a lot of, there is tech limitations where people have to go in and constantly monitor what terms did people not find, what’s the layout and the analytics, it’s great to have the insights, but it’s just like saying, “Okay, it rained yesterday, I should have brought umbrellas.”
It’s really saying that when you’re sitting there soaking wet, “All right, maybe now we can look at the predictive signals and have the machine figure that part out and make the right recommendations and allow me my strategic mind to think about what’s a good layout, who are the suppliers I should go into? What sort of a persona to want to project? Are we going to look at ethical items? Are we going to look at saving money? Are we going to look at a premium layout and assortment and building that?” And that’s really, we see retailers and others that have been liberated being able to get their time back, being able to let technology do what it’s good at, predicting and showing, then using their minds to be strategic and move forward.
That’s really what we’re seeing as those who are pulling ahead of the pack and that’s a soul searching moment a lot of retailers have to go to is figure out, as I remember going with an executive at a major gifting company, he looked at me and he said, “Okay,” he says,” We have to figure out. Are we in the data center business? Are we in the business of selling gifts?” And it’s a case where he says, “It’s just the reality. We’ve over years built up all this technical infrastructure and we spend so much of our P&L managing it and running it versus letting our mind share go back into saying how can we differentiate how we can really go out there and connect with our consumers at this point? And that’s where that balance, bringing in good tech partners, looking at modern tech, what it can do around understanding a user and the consumer experience and then allowing them to be true to their brand and fulfilled brand promise to the users as well.
Shelly Kramer: We talk about that a lot here at Futurum about the importance of and the value of smart strategic partnerships. And in today’s, you mentioned, I find myself nodding along about people used to build their own stuff and have all their own proprietary things and all that, but there’s some real challenges with that today. One is there is certainly a dearth of skilled technical talent. So you’re competing, your organization is competing against the biggest companies in the world in terms of tech talent. And when instead when you can have the mindset of what is it we are good at, how about if we focus on that and bring in and rely on vendor partners who bring to their engagement with us, all of the track record and all of the experience and the learnings that they have of doing this for other clients, other customers and they put that to use for us.
So I think that there’s just every reason not to think that you need to be what it is you’re not and build everything yourself. And it’s really, really smart. And when you see some of the biggest companies in the world, including some of the biggest tech players forming strategic alliance after strategic alliance after partnership after … I mean there’s a reason. It’s the right strategy. It makes perfect sense. So what I’d like to talk about now is what are the metrics that are important to be tracking as you’re thinking about this and as you’re thinking about how technology solutions can play a role here, what kind of metrics do we need to be looking at and tracking and how, for instance, Coveo help with that tracking.
Brian McGlynn: You look at metrics as a real key part and metrics are we’ve looked at, especially now with the light of the economy where things are heading, and I say it’s an area of economies have cycles of forests, of cycles, there’s all kinds of cycles and we’re seeing over consumption, a lot of debt, we’re looking at some potentially unchartered times with that. And the metric that we’re seeing more and more just from the dialogue of retailers and certainly anybody in B2B selling online is really starting to look at not the growth at all costs we’ve looked at from all parts, but profitability and other parts like that.
So metrics are absolutely a key part. We talked about earlier trying to look at forecasting rain and in all parts. There’s that where you want it in the moment. There’s ultimately a driving item. When you employ AI, when you bring in ML, there’s an objective you need to bring into what signals do you listen to and what are the business objectives that you’re going into. Throwing in AI for the sake of AI, we’ve seen many times. “Hey, we’ve got some AI.” Well, doesn’t really do anything. Why is it there?
Shelly Kramer: It blew up.
Brian McGlynn: Exactly. It’s like, “Hey, this is great. I’ve got AI.” Because I’ve heard many investor presentations where people just had to put something in there. But it’s the thing where realistically with AI, a big, big part we’re looking into at profitability. So it’s actually a big secret, so to speak. We say the elephant in a room where you look at eCommerce growth, it’s been 10% year over year for many years. COVID came at a nice 20% bump in maybe 30 to 40 for some customers and then back down. Well, it’s great when you have a constant profit margin in many cases. But supply chain, cost, energy, all that’s eating up at the cost of good sold. There’s spending powers gone down. And you look at the average profit margin today for retailers somewhere around 6%. But we look in 2024, 2025, it’s going to start trending down to 2%.
And that’s just overall. Online is less. And that actually starts getting negative. Some retailers today actually lose money, some lose over a billion a year, they don’t want to lose market share. But there’s a whole part by not seeding market share. There’s still a big part where people are focusing in around on driving for that. So what we look at is profitability is a big north star to look at per transaction. So a new term, we have revenue per visitor. We’d almost look at organizations starting to need to think of margin per visitor. What’s the MPV at this point? The net margin, the overall margin. And it’s great to go in and bring in customers. We all want to do that. We need to look at the margin of what it comes in at this part and the good part that comes out, I mean altogether it’s a simple case from business. It’s cost.
It’s revenue minus cost equals the margin. With that, there’s the ability to go in, bid on more for attracting traffic and continue to do that. And other parts where ultimately drop into the bottom line to provide benefits for that. And this is where AI, once again, can play that where AI strategies in the past, many of them for recommendations and search have been popularity. People going in, “Well, this is more popular, this is more popular.” That’s bad for two reasons. One, my size and most popular for me is not necessarily what I want. The other part is doesn’t necessarily talk to the goals of the business. And maybe it is a store brand, maybe it’s a private brand or one that has a large amount of promotion behind from the manufacturer that should get a little bit more of a spotlight on a result page or on a listing page that’s out there.
All those things can go in and drive to a more profitable experience that’s also more relevant for the user. We’ve got a customer boost their margins by 72% online by Employable Technologies. And what’s amazing, that’s pure 100% bottom filtering profit. And it’s also happier customers because they got what they wanted along those lines. So it is a good balancing act that’s there. But I would look at it, I mean, the metrics that we really look at is looking at customers, and I certainly implore retailers to go back and start looking at the trajectory of the margins, looking at the trajectory of the profitability, looking at customer lifetime value and customer long term margin value. Somebody that goes in and buys $5,000 laptops at very low margin on a regular basis, beats up on the customer, beats up on the customer support center and causes a lot of cost, maybe a negative customer.
Whereas somebody who goes in and buys $200 staplers that have an 80% margin may actually be a better customer. And it’s a balance between these parts to look at. But these are the kinds of signals that people need to start thinking about with technology and really how they go in. The olden days of analog merchandising, sure, shelf placement and a lot of that would talk to it. We get digital at the digital shelf, a whole new game. And to do that at scale, really our view is an AI, a way to do it, but intelligent AI that takes those signals into play.
Shelly Kramer: So to wrap up, it’s really pretty simple. Profit margins are already fairly low. They’re going to get lower over time in the next near term for a variety of reasons. And we are living in a data driven world. And when you can use the power of intelligent automation and machine learning and these things, when you can use that to really get insights into your profit margins on such a granular level of per customer, that can go a long way toward helping you develop your strategies moving forward.
And I think that the tremendous upside, I mean, the profitability, of course, upside is a no brainer. And that gets the attention, of course, of leaders at many levels, but not to be forgotten and what goes 100% hand in hand with the opportunity for increased profitability is increase with your customer experiences, being able to serve up better and better and more informed and more personalized customer experiences to result in return customers and increased brand loyalty and all of those things. So it’s really pretty much a no-brainer.
Brian McGlynn: Yeah, that’s what we’re telling everybody. We’re hoping. The way you phrase it, it is, the way you phrase it.
Shelly Kramer: It is. It is a no-brainer. Well, Brian, thank you so much for spending time with me today. And so if you were listening to this conversation or watching this conversation, you’re in the eCommerce space, B2B, B2C, it doesn’t matter and you want to explore how Coveo Solutions might be able to help you. I’m going to include a link in our show notes to Brian’s LinkedIn profile and to the SAP store where you’ll find Coveo. And I’ll include a link to the research that Coveo did that I mentioned earlier in our conversation. So you’ll have all kinds of information that can help you, but I know that Brian would be happy to talk with you. Brian, right?
Brian McGlynn: Absolutely. Love to, love to.
Shelly Kramer: Absolutely.
Brian McGlynn: That’s part of our job.
Shelly Kramer: Absolutely. Well, mine too. So with that, again, Brian, thanks so much for hanging out with me today and to our viewing audience and our listening audience, it’s been great to have you as well. And I strongly encourage you to double down on the customer experience and what it is you are serving up as it relates to what you are doing in the eCommerce space because you will not be sorry to level up.
Author Information
Shelly Kramer is a Principal Analyst and Founding Partner at Futurum Research. A serial entrepreneur with a technology centric focus, she has worked alongside some of the world’s largest brands to embrace disruption and spur innovation, understand and address the realities of the connected customer, and help navigate the process of digital transformation. She brings 20 years' experience as a brand strategist to her work at Futurum, and has deep experience helping global companies with marketing challenges, GTM strategies, messaging development, and driving strategy and digital transformation for B2B brands across multiple verticals. Shelly's coverage areas include Collaboration/CX/SaaS, platforms, ESG, and Cybersecurity, as well as topics and trends related to the Future of Work, the transformation of the workplace and how people and technology are driving that transformation. A transplanted New Yorker, she has learned to love life in the Midwest, and has firsthand experience that some of the most innovative minds and most successful companies in the world also happen to live in “flyover country.”
