24th May 2024

7 customer experience challenges in the retail industry

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In the fast-paced world of retail, success hinges on more than just stocking shelves and processing transactions. Today’s key challenges revolve around creating memorable experiences that keep customers coming back time and time again. In an era where online shopping options abound and consumer expectations are at an all-time high, delivering exceptional customer experience (CX) has become the cornerstone of retail success.

Beyond merely satisfying shoppers, investing in customer experience can drive substantial revenue growth, foster unwavering loyalty, and set a brand apart in a crowded marketplace. Conversely, failure to do so can spell disaster. In this blog post, we delve into seven of the main customer experience challenges retail industry faces and how they can be resolved.

What is customer experience?

Customer experience differs from customer support in that it encompasses the broader journey and interactions a customer has with a brand, including all touchpoints and the overall impression formed throughout the entire relationship. Whereas customer support typically involves addressing specific customer inquiries or problems, with a focus on prompt and effective resolution.

Customer experience challenges in the retail industry

1. Data and organizational silos

Data and organizational silos often stem from historical practices and disparate technologies across departments. These silos cause problems such as fragmented customer data, inefficient operations, poor communication, inconsistent customer experiences, limited insights for decision-making, data inaccuracies, and difficulties in scaling and innovating. Breaking down these silos is essential for retailers to streamline operations, deliver seamless customer experiences, and stay competitive.

Data silos

Solution: Integrate systems

We’ve worked with many businesses operating with disparate systems to bring them together within a single pane of glass. For example, we worked with a big retailer to bring disparate customer service and sales systems together via the Twilio Flex platform. By integrating in-house point of sale systems, along with delivery and returns, we were able to give customer service agents - and in-store staff - access to the same information with which to better assist customers. Shoppers can now even text store clerks to enquire about item availability and pricing and request items be put aside for their next store visit, making the whole experience much more personable.

2. Agent churn

Agent retention is a significant challenge for contact center teams. The industry often faces high turnover rates, with average agent churn hovering around 30-45% annually. This high turnover not only disrupts operations but also incurs substantial costs. Replacing a single contact center agent can cost between $10,000 and $20,000, considering recruitment, training, and the loss of productivity during the transition period. These factors make retaining skilled agents crucial for maintaining efficiency and providing consistent, high-quality customer service.

Solutions to reduce agent churn

Supportive technology

To combat contact center agent turnover, it's vital to leverage technology effectively. By integrating user-friendly platforms and automation tools, contact centers can streamline tasks and provide better support to their agents. These systems should offer seamless access to customer data and knowledge bases, empowering agents to resolve issues efficiently.

We helped CarFinance 247 (CF 247) do just this, which has made for a much better agent experience.

“You open the system, and all the information is in front of you. The experience is entirely different in terms of the flow of the conversations we're having, and how we’re able to help the customer. The system follows the flow of the telephone call rather than the other way around."

Mark Richards
CarFinance 247 contact center agent

Use AI-powered tools

Implementing AI-powered tools for handling routine inquiries can alleviate the workload on agents, allowing them to focus on more complex tasks that require human intervention. Moreover, leveraging predictive analytics can optimize staffing levels, ensuring agents are adequately supported during peak periods, thus reducing stress, and improving overall job satisfaction.


Continuous training programs are also essential to equip agents with the skills and confidence to utilize technology effectively.

Encourage feedback

Finally, establishing a robust feedback loop enables contact centers to address agent concerns promptly, fostering a supportive work culture that encourages retention.

3. Delivering a seamless phygital experience

"Phygital" refers to the integration of online and offline elements to create a seamless and immersive customer experience. In retail, phygital experiences blur the lines between digital and physical channels, aiming to provide customers with a cohesive journey regardless of how they choose to interact with the brand.

An ineffective phygital strategy can result in disjointed customer experiences, erode trust in the brand, waste investments in technology, damage brand reputation, and hinder long-term growth and profitability.

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Solution: Seamless experiences

Retailers can ensure a seamless phygital experience by integrating technology solutions that synchronize data across online and offline channels. Embracing an omnichannel approach is crucial, providing customers with a unified experience regardless of the touchpoint.

One prominent example of phygital integration is omnichannel retailing, where customers can seamlessly transition between online and offline channels while enjoying consistent service and access to products.

Another form of phygital experience is virtual queuing with QR codes, which allows customers to hold their place in line digitally while they browse or engage with other activities, reducing wait times and enhancing convenience.

4. Dealing with peaks in customer demand effectively

Effectively managing peaks in customer demand is a significant challenge in digital retail customer experience. During peak periods such as holiday sales or promotional events, digital retailers often experience a surge in customer interactions, overwhelming agents and frustrating customers. Therefore, digital retailers must implement robust strategies and scalable solutions to handle peak demand efficiently.

Solution: Leverage AI

In collaboration with AI specialists Sprint Reply, we developed AI functionality to manage initial interactions with sellers, gathering and categorizing information via SMS. This automation allowed contact center agents to focus their attention on assisting customers who required further support, optimizing their time and enhancing overall efficiency.

5. Tracking data and performance metrics

Without accurate and comprehensive data analysis, businesses cannot assess the impact of their initiatives, identify areas for improvement, or make informed decisions. By monitoring key metrics such as online and offline sales, customer engagement across channels, conversion rates, and customer satisfaction scores, businesses can gain insights into the success of their phygital efforts.

This data-driven approach enables companies to optimize their strategies, allocate resources effectively, and drive better business outcomes in the ever-evolving landscape of digital and physical retail.

Solution: Be data driven

Twilio Flex Insights offers retailers valuable tools for tracking data and performance metrics in their contact center operations. With customizable dashboards, retailers can monitor key performance indicators like call volume, wait times, and customer satisfaction scores in real-time, facilitating quick identification of trends and areas for improvement.

Historical reporting features allow for deeper analysis of customer behaviour and agent performance over time. Retailers can also track agent performance metrics and campaign effectiveness, enabling targeted coaching, resource allocation, and optimization of marketing efforts.

With seamless integration with third-party systems, Flex Insights provides a comprehensive view of contact center operations, empowering retailers to make informed decisions and deliver exceptional customer experiences.

Twilio Flex Insights 2

6. Customer retention

Customer retention rates are declining in the retail industry, posing a significant challenge for businesses. According to recent studies, the average retail customer retention rate has dropped to 63%. This decline is alarming for retailers, considering that acquiring new customers can be up to five times more expensive than retaining existing ones.

The cost of acquiring new customers has risen steadily, with businesses spending significant resources on marketing and acquisition efforts.

As customer retention rates continue to fall, retailers face increased pressure to develop strategies that prioritize customer loyalty and satisfaction.

Fostering long-term relationships with existing customers through personalized experiences, exceptional service, and targeted retention initiatives is essential for retailers to mitigate the impact of declining retention rates and sustain growth in today's competitive market.

Solution: Omnichannel

Twilio Flex can contribute significantly to increasing customer retention rates by providing a flexible and scalable contact center solution that enhances the customer experience. With its customizable workflows and integration capabilities, Flex enables retailers to tailor their customer interactions to meet individual preferences and needs.

By offering seamless omnichannel support across voice, SMS, chat, and social media channels, Flex ensures that customers can reach out using their preferred communication method, leading to greater convenience and satisfaction.

By delivering personalized and efficient service, resolving inquiries promptly, and fostering positive interactions, retailers can cultivate stronger relationships with their customers, ultimately driving higher retention rates and long-term loyalty.

7. Data privacy

The convergence of regulatory frameworks such as General Data Protection Regulation (GDPR), the California Consumer Privacy Act (CCPA), and the demise of third-party cookies presents a multifaceted challenge for retail businesses regarding data privacy. Stricter regulations and heightened consumer awareness have shifted the landscape, necessitating more stringent data protection measures.

Compliance entails significant operational adjustments, including data governance, consent management, and transparency in data processing practices.

Moreover, the impending demise of third-party cookies, long relied upon for targeted advertising and analytics, compounds the challenge by disrupting traditional data collection methods.

This upheaval raises concerns for retailers regarding the effectiveness of their marketing strategies, customer segmentation, and personalized experiences.

In navigating these challenges, retail businesses must prioritize ethical data practices, transparency, and consumer trust to maintain compliance, foster customer confidence, and mitigate the risks associated with data privacy breaches.

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Solution: Built-in compliance

Twilio Flex offers a comprehensive solution to address the challenges posed by evolving data privacy regulations and concerns.

With built-in compliance features, such as data encryption, access controls, and audit trails, Flex ensures that retail businesses can adhere to stringent data protection standards mandated by GDPR, CCPA, and other regulations.

Flex's customizable workflows enable retailers to implement consent management processes, allowing customers to control their data preferences and opt-in or opt-out of data collection activities.

Additionally, Flex's real-time analytics and reporting capabilities provide retailers with valuable insights into customer interactions while respecting privacy regulations.

By leveraging Flex's secure and compliant platform, retailers can navigate the complexities of data privacy regulations with confidence, safeguard customer data, and maintain trust while delivering exceptional customer experiences.

Improving retail customer experience with Twilio Flex

In today's retail landscape, delivering exceptional customer experiences is vital, but achieving this goal is not without its challenges. From addressing data and organizational silos to reducing agent churn, delivering seamless phygital experiences, tracking data and performance metrics, retaining customers, and navigating data privacy concerns, retailers face a myriad of obstacles in their quest to meet and exceed customer expectations.

Fortunately, Twilio Flex offers a comprehensive solution to address these challenges head-on. By providing customizable workflows, integrated communication channels, real-time analytics, and built-in compliance features, Flex empowers retailers to streamline operations, enhance customer interactions, and foster long-term loyalty.

With Flex, retailers can navigate the complexities of the modern retail landscape with confidence, delivering personalized, efficient, and secure experiences that drive business growth and customer satisfaction.

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