Change is inevitable. Nowhere is this more apparent than in the retail sector. The power wielded by consumers and the impact that they have on retailers' revenues and reputations requires e-tailers to ensure that they are responsive to the needs and expectations of online users.
A consequence of this shift in the balance of power is being felt in how retailers plan for the year ahead, in particular in relation to the performance of their online platforms. Peak planning has now become a moveable feast, as every day is now potentially a peak-trading day, not just Christmas or Black Friday. As retailers increasingly invest in digital transformation programmes, the scope of their preparation has to evolve. As the retail sector continues to change, how can digital performance management help to anchor retailers' digital flotilla in a sea of change?
An Evolving Retail Landscape
The 2016 Christmas trading figures reflect the continued importance of the online channel and tell their own story about the changing face of the retail sector. Marks & Spencer reported an increase in like-for-like sales of 1.3%, Debenhams 1% (with online sales up 17%); Mothercare sales were up 0.6% while like-for like sales at John Lewis rose by 4.9%. Figures from the BRC-KPMP Retail Sales Monitor showed like-for-like sales were also boosted by 1% in the five weeks to 31 December, increasing sharply from the 0.1% rise seen a year prior. With Christmas falling on a Sunday, there was a splurge of shopping activity in the week leading up to the big day with a 40% hike in sales compared to a quiet start to the month.
It all resulted in Christmas 2016 being a bigger trading season than the Black Friday period, a reverse on the trading story for 2015. The contrast in trading patterns in the space of 12 months captures the challenges that retailers face and why peak planning has to move beyond static periods to reflect a more fluid-trading environment.
Consumers attach a high value to attributes such as experience and service. Many may suggest the answer is to simply replicate these attributes online but this is to overlook the fact that in an online, digital environment, service and experience are defined in a very different way. This is not about replicating the in-shop experience per say but rather translating it so it centres on and around the base needs and key considerations of the consumer when they shop online – namely time, convenience, speed and availability. In short, customer service and experience in a digital environment centres on managing expectations and it is this that digital performance management delivers.
The Path to Digital Performance Management
It would be fair to say that the current view that prevails about website performance is somewhat clouded by the belief that testing is complex, time-intensive and a somewhat exclusive affair. Testing is generally regarded as the preserve of large companies with deep pockets and access to datacentres with row upon row of servers poised to perform load and stress tests on the IT infrastructure. This was certainly the case back in the 1990s when client server was all the rage and testing took weeks and months to set up, run and report. Companies had the luxury of having time on their side, as the web was still in its infancy, eCommerce was still a novelty and mobile phones were, well, just phones.
Fast forward 20 or so years and it is consumers calling the shots and setting the agenda as social media, smartphones and tablets dominate the way individuals engage and interact with retailers. Time is no longer a luxury and testing has to evolve to embrace an environment based around smartphones, tablets and apps.
For retailers that maintain legacy testing technology, the challenge is trying to figure out how to adapt an inflexible, expensive and linear testing tool designed in the 1990s to solve very different problems to the demands of a 21st century environment. Those demands dictate that testing can no longer be a static exercise conducted in the confines of a lab but an on-going, real-time event that is anchored within the consumer environment.
Fortunately, the advent of cloud computing has fundamentally changed the testing landscape. Retailers, irrespective of their size, can deploy scalable, cost-effective and dynamic testing platforms that deliver meaningful data and insights into not only the performance of their website or app but how that performance affects consumer behaviour and the way their customers interact with them online. In an age of the smartphone and tablet, continuous testing becomes the norm rather than the exception.
It is the conflux of changing consumer habits and expectations coupled with the availability of cloud-based technologies that has led to the emergence of DPM. Where once companies focused on testing in isolation, now the emphasis is on understanding the impact that a website's performance has on end user behaviour and managing those expectations. Testing has given way to a more detailed and analytical approach that seeks to better align the digital estate with the needs and expectations of its end users.
Understanding the subtle difference between the overall speed of your site and the time it takes for specific webpages to load is fundamental to understanding end user behaviour. If a retailer can establish which pages need to load faster and how their end users navigate through their site, they can better anticipate and plan for on-going as well as seasonal traffic. That is where digital performance management comes into its own – delivering detailed, actionable data and intelligence that allows retailers to develop and refine their digital estates to deliver the online equivalent of customer service and experience – performance. It's something that a number of retailers in the US have been quick to embrace as they transition their businesses to an increasingly digital estate. Nordstrom is one example of a retailer that has taken the notion of customer service and successfully translated it to their online operations.
The Nordstrom Experience
Customer service has always been a hallmark of the Nordstrom brand. When the retailer noticed a change in customer satisfaction survey scores for online performance, it immediately took action. Synthetic monitoring and internal testing wasn't giving Nordstrom the full picture – it needed to understand customer perceived performance and obtain actionable data to meet expectations. In order to extend the same level of top-quality service customers expected in-store to online shopping, Nordstrom started to look for a performance management solution that provided an end-to-end view of server- and client-side performance, rooted in real customer experiences. What they invested in was a real user monitoring (RUM) solution.
Nordstrom was moving heavily into cloud technologies and SOASTA provided the scale and support it needed. The engagement began with SOASTA CloudTest On-Demand services on Nordstrom's mobile PoS system. After the success of that project, Nordstrom implemented the CloudTest solution across its entire network.
Though the organisation was supportive of testing in production, it was truly convinced of the business value at the 2014 Anniversary Sale. The Anniversary Sale is Nordstrom's biggest event with traffic peaks four to six times higher than usual. Going into the 2014 Anniversary Sale, Nordstrom was able to find two critical defects in production that it was not able to see in our performance test lab. It demonstrated the reasons they needed to test in production and they began testing regularly in production with CloudTest, about ten times a year. They also started using the built-in RUM capabilities of the mPulse platform.
The mPulse platform summarised graphical information on performance and also gave key business metrics, especially conversions as a function of response time, so Nordstrom could see how the customer experience was affecting customer behaviour. Since the mPulse information was hosted by SOASTA, Nordstrom didn't have to build the infrastructure to store the data in-house, resulting in a significant cost saving.
Perhaps the most important application that Nordstrom used mPulse platform for was in addressing the customer satisfaction survey feedback. They investigated and found that it was the front-end performance that was degrading. Previously, the company had primarily focused its resources on back-end, server side performance. The findings prompted a shift in the culture and mind-set within the retailer.
Nordstrom's senior program manager of eCommerce operational intelligence was tasked with using RUM to marry client- and server-side data to make data-driven decisions about how online performance affects the business. To do this, Nordstrom customised its use of mPulse to meet its unique needs. Typically a lot of the customer experience is not translated when you are trying to measure performance using page load. Nordstrom did some work to shift the tagging and configure mPulse to start giving them ready information. The ability to derive deeper analytics with access to raw mPulse data and then combine that data with other sources proved invaluable.
Prior to deploying mPulse, there wasn't a good sense of customer perceived performance using metrics, as Nordstrom was relying on customer satisfaction surveys to measure online performance. With mPulse, Nordstrom set service-level objectives for mobile and web pages, identified pages not meeting those objectives, and plan to use this data to drive development to fix pages.
By embracing digital performance management, Nordstrom is able to proactively tune performance front to back, gain a deeper understanding of how real user experiences impacted business and utilise real-world data to detect and resolve problems well ahead of customer satisfaction survey results.
If there are any lessons to learn from Black Friday or the Christmas trading season, it is that managing expectations is central to a successful and profitable online operation. In the digital environment, customer experience and service are driven by a deep understanding of page load times, availability and how these impact on your end users. There's an adage – you can't manage what you can't measure. While this still holds true, the management and the measurement are now combined in what we call digital performance. As retailers adjust towards a growing digital environment, they would be equally prudent to adjust their testing regimes to one that is more holistic, insightful and able to manage the great expectations of the consumer.