Last updated on November 27th, 2024 at 04:17 am

The retail industry is evolving faster than ever, transitioning from traditional brick-and-mortar stores to a dynamic omnichannel environment. Today’s consumers demand seamless shopping experiences across both physical and digital channels, and staying competitive means investing in modern commerce solutions that can keep up.

While legacy systems may feel like a comfortable old pair of shoes, they often struggle to grow with your business, making it difficult to scale, integrate, and stay compliant. On the flip side, modern solutions, though requiring a higher upfront investment, are tailor-made for the demands of today’s retail landscape.

To navigate this critical decision, understanding the total cost of ownership (TCO) and return on investment (ROI) is key. By evaluating omnichannel TCO and ROI, you can make informed choices that align your technology investments with your long-term business goals, positioning your brand for success.

Legacy Systems vs. Modern Commerce Solutions

Legacy systems might seem economical at first glance, but they can end up costing you more in the long run due to higher maintenance, operational, and integration expenses. These systems often struggle to scale, meet compliance standards, or provide robust security—resulting in hidden costs that can spiral out of control.

In contrast, modern commerce solutions may require a higher initial investment, but they’re designed for scalability, security, and seamless integration. Over time, these systems deliver greater value, reducing your long-term costs and freeing up resources for growth.

It’s crucial to also consider the impact of technical debt—those quick fixes and shortcuts that accumulate over time. Legacy systems often accrue significant technical debt, driving up the total cost of ownership (TCO). Modern solutions, with their up-to-date technologies, help you minimize technical debt, reduce maintenance costs, and boost ROI through more efficient, cost-effective operations.

How TCO and ROI Guide Your Commerce System Choices

Deciding whether to stick with legacy systems or upgrade to modern commerce solutions is no small task. That’s where TCO and ROI come into play, providing a clear framework for evaluating the long-term value and financial impact of your investment.

Using TCO and ROI calculators, you can cut through the complexity and get a comprehensive view of your options. These calculators help you account for hidden costs, business-specific inputs, and key performance indicators (KPIs), giving you the insights needed to make decisions that drive your digital transformation forward.

What is TCO?

Total cost of ownership (TCO) represents the sum of all direct and indirect costs involved in acquiring, operating, maintaining, and upgrading a commerce system throughout its lifecycle.

But TCO isn’t just about the numbers. It’s about understanding the full financial impact across every facet of your business. By weighing these factors, you can see the big picture, balancing costs against the potential savings and revenue a modern commerce system can generate.

How to calculate TCO

To accurately calculate omnichannel TCO, consider all the indirect and direct cost components over the system’s entire lifespan:

• Initial Investment: Calculate the costs for purchasing and implementing new systems, including hardware, software, and installation fees.
• Maintenance and Operational Costs: Factor in the costs of keeping the system functional, from support and updates to repairs.
• Integration, Scalability, Compliance, and Security: Don’t forget the expenses related to ensuring the system integrates seamlessly with your existing infrastructure, scales as your business grows, and meets regulatory and security requirements.
• Hidden Costs: These often-overlooked expenses, like technical debt, can significantly impact TCO if not accounted for.

And remember, TCO isn’t just about costs. You’ll also want to consider potential revenue growth, savings, productivity gains, and customer experience enhancements. A TCO calculator can give you a comprehensive view, helping you compare different commerce systems and make more informed decisions.

What is ROI?

Return on investment (ROI) measures the profitability of an investment relative to its cost. It’s a vital KPI that helps you assess the financial returns from your technology investments, comparing the gains or losses against what you’ve put in.

ROI is your go-to metric for evaluating whether a particular investment is truly worth it.

How to calculate ROI

To calculate omnichannel ROI, start by determining the total investment cost, which includes all expenses associated with purchasing, installing, and maintaining a modern commerce solution. Next, calculate the total revenue generated by the new technology, factoring in benefits like increased sales, improved operational efficiency, and cost savings.
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Then, subtract the total costs from the total revenue to calculate the net profit. Finally, apply the ROI formula: divide the net profit by the total investment cost and multiply the result by 100 to get the ROI percentage.

TCO vs. ROI: What’s the Difference?

TCO and ROI are two sides of the same coin, each offering valuable insights into your business decisions.

While TCO focuses on the total cost of owning and operating a system over its entire lifecycle, including direct and indirect expenses, it provides a clear view of the long-term financial commitment. ROI, on the other hand, measures the profitability of an investment by showing the financial return relative to costs incurred.

By considering both omnichannel TCO and ROI, you ensure that your business decisions balance long-term costs with potential returns, setting the stage for sustainable growth.

Unlock Revenue Growth With Modern Commerce Solutions

Modern commerce solutions do more than just streamline operations—they open up new revenue growth opportunities. By leveraging cutting-edge technology, you can reduce costs, improve efficiency, and elevate both employee and customer satisfaction.

Cost savings and operational efficiency

Modern commerce solutions empower you to streamline processes, automate routine tasks, and seamlessly integrate systems—leading to significant cost reductions across various areas. From cutting in-store labor costs and enhancing customer service team productivity to optimizing IT operations and order management, these solutions drive efficiency at every level. Additional savings come from decreased shipping costs, reduced inventory overstocking, and improved energy efficiency.

In fact, a survey by McKinsey & Company highlights that the top benefit of modern commerce is the optimization of technology costs, underscoring the long-term value of investing in these systems.

Risk mitigation and compliance

In today’s retail landscape, protecting your revenue and mitigating risks is non-negotiable. Modern commerce solutions play a pivotal role in safeguarding your business. By leveraging robust encryption, conducting regular audits, and maintaining dedicated security teams, these solutions ensure your data is protected and your operations remain compliant with industry regulations. Staying current with technology is also crucial in preventing cyberattacks and keeping sensitive information secure.

Moreover, composable commerce offers the flexibility to integrate best-in-breed technologies tailored specifically to your needs. This approach not only reduces technical issues but also enhances the overall shopping experience, bolstering your brand’s reputation and revenue.

Better employee and customer brand experience

Modern commerce solutions are designed to elevate the experiences of both your employees and customers. With intuitive interfaces and streamlined workflows, these systems boost employee productivity and satisfaction by making tasks simpler and improving operational visibility. On the customer side, advanced analytics and tailored recommendations create personalized shopping experiences that increase satisfaction and foster loyalty. Additionally, integrated systems ensure that operations across various business functions run smoothly, leading to faster response times and a cohesive brand experience.

Assessing TCO and ROI: Your Path to Digital Transformation

In today’s fast-paced retail environment, understanding TCO and ROI is essential for making informed decisions about replacing legacy systems with modern commerce solutions. By carefully evaluating both, you can uncover cost savings, efficiency gains, and revenue growth opportunities that come with digital transformation.

Don’t wait—now is the time to evaluate your current systems and explore the transformative benefits of modern commerce solutions.

If you’re ready to assess your omnichannel potential, reach out for a personalized consultation!

Last updated on December 16th, 2024 at 09:04 pm

As retailers prime their omnichannel strategies for 2024 and beyond, three takeaways from NewStore’s annual Omnichannel Leadership Report should remain top of mind: brands must offer more omnichannel capabilities, invest in native mobile commerce apps, and embed more digital features into their stores.

While an increasing number of retailers have embraced omnichannel strategies over the last few years, they still face opportunities for improvement – especially when it comes to bridging the gap between their physical and digital shopping experiences. NewStore’s 2024 Omnichannel Leadership Report surveyed nearly 700 retail brands’ omnichannel capabilities across three unified shopping channels: mobile apps, online, and stores. The research found that brands must work on enhancing their in-store, online, and mobile offerings by connecting all three of these channels to create a cohesive, customer-centric shopping experience.

Read more about the top takeaways from the report below, and find out how your business can take actionable steps to develop a unified commerce strategy spanning all retail channels.

Takeaway #1: Brands Aren’t Maximizing Omnichannel Capabilities

While some retailers have fully leaned into omnichannel transformations, many are still not leveraging omnichannel strategies to their fullest potential. The report found that brands scored an average of 43 out of 100 when it came to taking advantage of available omnichannel solutions. This indicates that brands are missing opportunities in effectively linking their mobile, online, and physical shopping journeys.

If retailers want to undergo a true omnichannel transformation that results in customer-centric experiences – and builds long-term brand loyalty – they must start by considering several key strategic elements:

• Impact to the customer: The goal of undergoing a transformation is to improve the experience for the end user – in this case, the customer. Therefore, retailers should put themselves in their shoppers’ shoes and think, “What’s in it for me?” and “Which omnichannel features would I benefit from?”
• Changing teams’ mindsets: For a transformation to succeed, all parts of the organization must row in the same direction. Each department will play a critical role in rolling out new omnichannel features, which makes it imperative that everyone aligns on the vision and owns their part of it. 
• Focusing on in-store experiences: If a retailer has a brick-and-mortar footprint, the in-store experience may serve as the customer’s first touchpoint with the brand and set a lasting impression. For instance, if the retailer sells consumable goods, it can offer tastings in stores to entice customers and then later follow up with tailored product recommendations over email.
• Making technology invisible: Omnichannel technology should seem invisible to customers when they’re shopping in stores. Whether a sales associate with a mobile device is reviewing available inventory or a shopper is checking out via a self-service kiosk, the experience must appear seamless. And to build a deeply connected commerce ecosystem and develop better customer relationship management, it’s crucial to partner with the right technology vendors.

Creating a robust omnichannel strategy relies on many elements of organizational change. Read about how top retailers have mastered the art of omnichannel transformation and the lessons they’ve learned along their journeys.

Takeaway #2: Retailers Should Invest More in Mobile Commerce 

Although today’s consumers are more reliant on their phones than ever, many retailers’ mobile commerce capabilities haven’t evolved as much as shoppers would like. Brands with dedicated mobile shopping apps remain in the minority, and even those mobile-first shopping experiences often don’t boast the latest features to facilitate a smooth customer journey. 

The Omnichannel Leadership Report discovered that only one third of brands have a native mobile shopping app, with very few of them having invested in promoting the app. Additionally, most of these mobile apps don’t include interactive features, exclusive content, or built-in rewards programs. Even fewer apps contain capabilities like wishlists, inventory checkers, and live chat – all of which can help drive usage.

According to Statista, mobile commerce sales are expected to account for 62% of all ecommerce transactions by 2027. This makes it essential for brands to up their mobile commerce game – and their starting point should be a native shopping app.

Several outcomes of having a native mobile app include:

• Reaching customers where they are: Data.ai’s State of Mobile 2022 report found that many people spend one third of their time awake looking at their mobile device. Consumers also spent 100 billion hours in shopping apps, which underscores the unparalleled convenience of browsing and buying on mobile devices.
• Direct-to-consumer sales become easier: If a retailer wants to sell directly to consumers and bypass brick-and-mortar stores and wholesalers, a native app is the easiest option. Brands can leverage push notifications and personalized content to connect with their target customer – with minimal advertising needed.
• Increased conversions: Since mobile apps typically deliver less clunky experiences than a mobile site, consumers may spend longer amounts of time browsing, without encountering unnecessary pop-ups and ads. If they make an account for the app, it will also remember all of their information and provide a faster checkout experience. As a result, users may be less likely to abandon their carts.
• Customizable features: Retailers that build their apps from the ground up can choose from a slew of customizable features that will foster better connections with customers. These can include creating lookbooks for apparel and accessories, built-in loyalty programs with redeemable points for special perks, and free shipping just for app users.

To discover more ways your brand can boost mobile commerce sales, read all 7 Reasons Why You Need A Shopping App.

Takeaway #3: Stores Need Additional Digital Features

To stay competitive, retailers must embed more digital features into their brick-and-mortar stores. According to the report, buy now, pay later checkout options are only offered in a third of stores. The same statistic applies to stores that equip their sales associates with mobile devices to assist shoppers as they browse. If retailers want to increase foot traffic in their stores and appeal to time-strapped customers, they must find strategies to bridge the gap between their digital and physical experiences. 

If done right, the potential rewards – like increased sales, competitive differentiation, smoother customer experiences, and adaptability for shoppers to engage with brands on their preferred channels – are massive.

Several of NewStore’s top ways to create an omnichannel strategy include:

• Auditing current channels: Map out all your existing channels (including website, store, mobile app, email, and social media) and try to identify any gaps in communicating with customers, especially with those who prefer to toggle between online and physical shopping platforms. 

Afterward, brainstorm the ideal customer journey and consider adding new omnichannel features to connect online and brick-and-mortar shopping experiences, whether that’s offering ship-to-store pickup options or adding mobile checkout capabilities in stores.

• Combining digital and physical experiences: A strong omnichannel strategy ensures that shoppers can start their journey on one channel and end it on another. To better bridge the gap between physical and digital shopping experiences, retailers should offer features like BOPIS (buy online pick-up in store) and universal shopping carts that let consumers add to their carts from any channel. 

Other valuable omnichannel features include inventory visibility, which allows sales associates and customers to view real-time product availability across all retail locations, and clienteling, which gives staff access to valuable customer data that can help increase shoppers’ average basket size.

• Examining your retail ecosystem: To ensure brands are equipping sales associates with the best technology to drive sales and personalize customers’ experiences, they should consider investing in an order management system, mobile point-of-sale (POS) solutions, and customer relationship management platforms.

The best part about creating an omnichannel strategy? It’s completely customizable, which forms the basis for composable commerce: giving companies the opportunity to select from a variety of vendor and commerce options that work best for them.

More Takeaways: BOPIS, BORIS, and BNPL Gain Traction

The modern omnichannel experience now counts BOPIS and BORIS (buy online return in store) as key components. While many shoppers prefer the ease of making purchases online, the convenience of retrieving their items or returning them in a brick-and-mortar store is still important. According to the Omnichannel Leadership Report, 60% of retailers’ websites offer BOPIS options, while 68% offer BORIS capabilities. 

Buy now, pay later (BNPL) also experienced adoption growth – 69% of websites now offer this short-term financing option to customers. 

Other parts of the commerce ecosystem that continue gaining popularity include loyalty rewards and free shipping. Not only do loyalty programs foster longer-lasting relationships with consumers, but they also provide retailers with more personal data to improve shopping experiences – and drive higher sales. In fact, over 80% of consumers claim they would provide more personal data in exchange for a better customer experience.

One increasingly important factor of the customer experience is free shipping. With Amazon – and its one- and two-day shipping options – capturing a large portion of the ecommerce marketplace, retailers must stay competitive by also offering free shipping. However, even free orders should arrive within three business days to meet consumers’ expectations.

Research in the Omnichannel Leadership Report found that 87% of websites offer free shipping in North America and internationally, with two-thirds of brands requiring a minimum purchase threshold to receive the free shipping perk. 

For retailers breaking into new markets and working to retain existing customers, offering loyalty programs in addition to free and fast shipping options will become must-have omnichannel strategies. 

The Case for Unified Commerce

Ultimately, omnichannel shopping will continue its rapid growth trajectory, especially as brands attempt to reach untapped markets and compete with today’s ecommerce behemoths. The biggest indicator for omnichannel success is implementing a unified commerce system that reaches shoppers on all platforms and offers a seamless customer journey, regardless of the starting point.

Brick-and-mortar experiences are still a pillar of the retail ecosystem, and brands must work to bridge the  gap between their physical and digital channels. The good news? The options are vast – and retailers can cherry-pick the vendors and solutions that best fit their needs to create a robust omnichannel strategy that will cement their stake in the marketplace.

Download NewStore’s 2024 Omnichannel Leadership Report for a deeper dive into these takeaways, and speak with one of our experts about choosing the right omnichannel solutions for your business.

Last updated on March 23rd, 2026 at 10:52 am

Establishing long-term customer loyalty is at the top of every retailer’s wish list. To achieve this, retailers should segment their customer relationship management frameworks by regional audience and pinpoint what their loyalty objectives are trying to solve for. Not only will this help them stand out in the competitive marketplace, but it will also drive greater customer retention.

Gianfranco Cuzziol, International CRM and Personalization Lead for Natura & Co’s Avon brand until February 2024 (and current Business Lead at Dr. Martens), recently discussed the thought process behind developing a global customer relationship management (CRM) framework during an Endless Aisle podcast episode with Marcus LaRobardiere, NewStore’s Vice President of Marketing. Gianfranco and Marcus also defined various types of customer loyalty – including advocacy and retention loyalty – and addressed how those impact consumers’ long-term relationships with brands.

Read below for several key takeaways from Marcus and Gianfranco’s conversation, and click here to listen to the full podcast episode.

Creating a Global CRM Framework 

As the global marketplace grows more crowded, retailers must evolve their CRM frameworks to better reach audiences around the world. According to Gianfranco, retailers should begin this process by developing a common framework and then allowing teams in regional markets to adapt the framework according to their specific needs.

“There is often a need to say, ‘Look, let’s draw a line under this,’” Gianfranco said. “Let’s create this common framework across the globe so we’re protecting the brand. Then, we’ll bring you all up to a certain degree of maturity [to] understand the way we do CRM, automation, personalization…

“That allows you to have some flexibility within the framework to deliver to your requirements, because you have your own objectives, depending on the business unit or the market you’re sitting in.”

This results in retailers needing to create segmentation models based on how customers in various parts of the world prefer to shop.

“We created this segmentation model and a customer lifetime value model for the globe,” Gianfranco said. “But it became apparent that having a global customer lifetime value model didn’t really work. 

“The way that customers transacted and shopped in the far east was completely different to how they transacted in Australia. We then had to drill down and provide a segmentation model that was fit for purpose for each of the four regions.”

CRM Implementation with Cultural Differences

A key piece of developing a strong CRM framework stems from incorporating cultural nuances and ensuring that regional teams understand the rationale behind all decisions.

“Part of the new tech vision data implementation also involved a certain amount of cultural work,” Gianfranco said. “We needed to make sure that we took the regional retail and marketing teams – and digital teams – along the journey, and make sure they were fully bought into that vision. 

“We had consultants in store who were slightly reticent about collecting customer information,” he continued. “So we needed to go through a training exercise to prove to them that there was value in collecting a customer email address and name.”

If sales associates understand the objective behind each step of the framework – and how it impacts them personally – they will be much more likely to develop better customer relationships, which in turn will drive stronger customer loyalty to the brand.

“The welcome journey we implemented was from the store you made your first purchase in,” Gianfranco said. “We want you to have that relationship with the store, if not the consultant as well.

“You spent that time converting that prospect into a customer, and we want to reward you by making sure the customer comes back to you. We did the very simple thing of saying, ‘We can prove to you that for a customer for whom we have an email address, here’s the incremental value it brings back to the business, and hence to your store, by you collecting that.’ And so there was part of that cultural education piece we needed to deliver.”

Defining Customer Loyalty

In addition to developing adaptable CRM frameworks, retailers seeking to prioritize retention should focus on fostering long-term customer loyalty. Part of this strategy includes defining the end goal of driving customer loyalty – whether it’s trying to increase customers’ average basket size, creating brand advocates that will spread the word among friends and family, or retaining existing customers with retail promotion strategies.

“[There are] many definitions of what loyalty is,” Gianfranco said. “It doesn’t matter which organization you work in – try and work out what you mean by loyalty and identify what loyalty means to your customer. [As an example], there’s behavioral loyalty. I shop every day at my local mini-mart. I’m not necessarily loyal to them; it’s just that they happen to be about 50 yards from my house.

“And then you’ve got advocacy loyalty,” he continued. “If you come up to me and say, ‘Would you recommend a BMW as a car,’ I would say yes. I don’t own a BMW, but I have owned [a] BMW, and it’s an amazing driving experience. 

“And then there’s retention loyalty [where] lots of freebies come my way. You need to make sure you think about loyalty, what it means, and whether you’re trying to drive loyalty, [or] whether in reality what you’re trying to drive is more frequent purchase.”

Developing Customer Personas

Gianfranco also noted that developing customer personas yields better personalization opportunities. A customer persona refers to an archetypal profile of a target customer, complete with behaviors, needs, and motivations.

“I think personas have their place and often [are] the starting point to more refined personalization,” Gianfranco said. “For example, when a customer first comes to your website, you know nothing about that customer. You might know where they’ve come from because you’ve tracked where they’ve clicked in from. You start to understand the product they’re looking at. 

“But as you start to acquire data points about that customer, as they spend time on that website, as they perhaps register [for] a newsletter or talk to your agent online – that’s when you can start moving into more sophisticated, relevant conversations with that customer,” he continued.

“[For example], in the beauty space, you’ve bought a cleanser and a toner. Here’s the hydrator that goes along with that. You need to make sure the information you’re giving a customer is relevant to that particular product – how to use it; when you should be replenishing that product; what’s an alternative if it’s not right for you.”

Balancing Customer Personalization with Privacy

While customer personalization is key to attaining and retaining shoppers, it’s also imperative to keep in mind that privacy is a top concern for many individuals, especially as AI in retail continues gaining momentum. Therefore, retailers must be forthcoming about their privacy policies and remain compliant with them in order to maintain customers’ trust.

“There’s this privacy personalization paradox – customers want a personalized, relevant, connected experience, but they also want you to be mindful of their privacy,” Gianfranco said. 

“What I found is that upfront, if you can be as transparent and honest as possible with customers, they’re more likely to trust you with their data. Be consistent with the way you apply that – don’t all of a sudden change the way you use the data without having talked to the customer.”

Connected, Adaptive, and Relevant Shopping Experiences

Gianfranco also discussed the components of an ideal shopping experience, which hinge on retailers’ understanding that all customers begin their journeys with a specific mission in mind.

“With all this data and technology around at the moment, we have to remember that customers are on a mission,” Gianfranco said. “It could be, ‘I want to buy something really quickly. I’m going to do some research. I want to provide some feedback.’ So that’s the core piece we need to think about. What is the customer trying to do, and then how do we spin out the technology data and experience to deliver on that in the way the customer wants?

“I often talk about the ideal shopping experience…I call it CAR,” he continued. “It needs to be Connected, Adaptive, and Relevant. Because the customer’s trying to get from A to B, and that’s what CAR is there for us to do. You have to adapt that experience to meet [their] need.”

Prioritizing Customer Retention

Once retailers determine the type of customer loyalty they’re aiming for, they should then brainstorm strategies to prioritize customer retention. While reaching new audiences should always be a priority, the benefits of fostering long-term relationships with consumers can’t be overstated.

“We should be thinking about retaining customers more – treating our customers better,” Gianfranco said. “There are lots of numbers around how much more expensive it is to acquire new customers than retain an existing one. The one thing to bear in mind is that good acquisition makes good retention. 

“If you nail [retention loyalty], [it] then reduces your advertising costs, acquisition costs,” he continued. “And by nailing that and understanding what makes a good customer, it allows you to be smart in the acquisition space. You spend all that time and effort getting a new customer on board…don’t lose them.”

Interested in learning how your business can foster stronger customer loyalty and drive retention? Speak to one of our experts today.