Most Interactive Retail Kiosks Fail
Why Integrating Technology Naturally in the Shopper Journey is the Key to ROI
Many retailers are struggling with how to integrate consumer-facing technology in-store. Many back-office technologies that are not consumer-facing are much easier because you have the opportunity to train your employees to adopt new behaviors. From AI analysis of the supply chain to trim down inventories and predict trends, to camera-based tracking of in-store customer flow, background technology is in many ways easier to implement that in-store technology that directly touches the consumer – and interactive digital experiences are no different.
Digital signage is certainly nothing new. Digital delivery is much more cost-effective than static signage in embedded displays, with all the maintenance required for update. And of course, digital signage is much more dynamic. You can display videos or static imagery, rotate and even increasingly deliver dynamic content based on audience or based on product interaction (pickup and touch).
So why aren’t we seeing more digital signage in stores? Part of the reason is that a lot of digital display networks are founded on the wrong consumer advertising principles of interruptive marketing. Retailers are careful not to overwhelm their brand with flashy displays en masse. Traditional advertising campaigns are designed to be interruptive, not naturally incorporated into the shopper journey with interactivity.
Enter the interactive retail kiosk. Typically using smaller displays like iPads, kiosks have been much more effective in streamlining ordering in quick service restaurants (QSRs) than in retail. Automating the order process is a known process that’s well understood. In retail, successful kiosk implementations are fewer and farther between. Usage is often disappointing. Results are lagging with studies generally showing 1-3% lift in the normal range, and outliers up to 10%. For comparison, at PERCH we are seeing 30-80% product conversion lift on our interactive retail displays.
The need for the kiosk is unclear to the consumer and most importantly the experience is completely outside of the shopper journey. If a consumer is in the middle of shopping, why should they veer off to the kiosk? What value does it add? Where does it start? Often these are just versions of an eCommerce store. Why should I go online when I specifically came in-store to shop? And how do I find the items I’ve already selected and liked?
Sales lift and ROI is directly related to reducing the friction of consumer usage. We have worked with RFID based solutions that require customers to tap products against a reader. The usage is low. Adding a new step in the shopper journey is that disruptive and so our clients who have used RFID are now moving to fully camera-based solutions.
Consumer friction is why mobile apps are also problematic. Only a small percentage of customers who walk in the door have your mobile app, even if you spend a great deal of money on marketing it. There’s a great deal of friction to get someone to download the app and you have to present a great deal of incentives to get your customers to do it.
There’s a lot of buzz about Augmented Reality right now. We think it’s tremendously interesting as well. Looking at projections, you are not going to see the types of consumer adoption and behavior that will have meaningful business impact for about 5 years. Most of the excitement and industry growth in AR is coming for enterprise applications with more clearly defined ROI. Augmented reality will get there, but it's unlikely to be a significant business driver in the near-term.
So when you think of ROI, the deeper the integration into the natural shopping journey the higher the ROI generally. We’ve plotted technologies along this path based on ROI data we could find and from customer conversations we have had. It’s a little early for augmented reality and there are few data points, but we think it’s an interesting technology if you get mass market acceptance, which Apple is now pushing with ARKit. The big question is whether retailers benefit from consumers constantly on their phones in-store and whether the content will come from brands or retailers and who will control the experience.
As you can see, kiosks are not seamless in the journey and understandably get low usage and low effect on ROI. Ultimately, tablets are much better as a tool for sales associates to look up inventories, answer questions on colors and sizing and potentially more advanced functionality such as loyalty program lookup. Investing in service as a differentiator makes sense in a lot of segments. Providing more information to consumers in theory makes sense, especially as consumers expectations in the digital age have increased. The key is to provide the right message at the right time, naturally in the shopper journey, which is why we at PERCH initiate those experiences when customers touch or pick up products. With that context and indication of interest, we can draw consumers in naturally, and the results are much more impressive.
So whatever marketing technology you look at from beacon-based messages, kiosks, digital signage, loyalty programs and more, always look at reducing the consumer friction in adoption and usage and figure out how to amplify the natural joys in the shopping experience. You’ll find greater success.