1:1 Customer-Centric Retailing

1:1 Customer-Centric Retailing

Customer Centricity has become a prevalent buzzword in the retail industry over the last several years. There is hardly a retail executive today that is not touting the virtues of a customer-centric corporate strategy. Is Customer Centricity simply a platitude or retail jargon expressing business as usual, or is this truly a fundamental change in the way retail is being performed today?

The unfortunate answer is both. In many instances this Customer-Centric rhetoric serves little purpose other than to allow retail executives to paint the picture of a new and improved corporate direction; while little has changed in the actual operation or strategic direction in the enterprise.  In other organizations, however, executives are looking for ways to truly reshape their business through targeted customer centric strategies designed to foster and maintain long-term loyal relationships with their customers.  These executives recognize the true value of approaching their business from an alternate perspective, and are investing heavily in efforts to restructure their organizations around a new paradigm known as Customer Centricity.

Business jargon serves a useful purpose in condensing what is often a large idea or concept into an easily expressed and easily digested word or phrase. The jargon aids in the coalescence of ideas into a singular form that serves as a common language to a given target audience as a branding mechanism. This branding helps to differentiate an idea or concept from others, thus allowing it to gain greater recognition and critical mass.

Unfortunately, this branding of an idea can often have negative implications as well. The most common shortcoming is the lack of a thorough understanding of the entire scope of the topic. This can occurs for two reasons. First, the use is quite often very industry specific, and does not always translate to other industries easily or consistently.  Second, the extraction of this “condensed” expression of an idea is subject to personal interpretation. Without prior understanding of the scope of the initial idea or concept, the individual is left to infer as to the larger meaning – leading to varying definitions.

A perfect case in point is the use of the acronym CRM (Customer Relationship Management). While those in Sales or Marketing are quick to derive Customer Relationship Management for the acronym CRM, the larger meaning is still subject to varying interpretations. In one industry CRM may be thought of as the activities around managing prospects, accounts, and sales pipeline; while in another it may be about segmentation, campaign management, and call center activities. In fact, to many people, CRM is interpreted to mean the computer software solution used to support any or all of the activities described above.  Overall, the meaning is quite broad, while the individual definitions are often quite narrow.   

One reason for this confusion is that CRM is actually not intended to define activities or software solutions, but is in fact intended to convey a strategy. CRM is a strategy designed to foster, maintain and enhance relationships through a set of repeatable processes. It is accomplished through the development of operational practices which manage activities related to the customer interactions.  While the typical implementation of a CRM strategy involves using technology to organize, automate and synchronize the desired business processes and activities; these same activities could be performed manually (albeit far less effectively). 

Customer Centricity

The term Customer Centricity shares a similar fate as CRM. It would be hard to find a CEO today who would tell you that his or her company is not already customer-centric. But ask what makes them so and you would likely get very different answers. The reason for this is once again the individual interpretation of the meaning of Customer Centricity. At a very high level, the meaning is easy to define (putting the customer at the center of the business), but detailing exactly what this means is another thing entirely.  

Ultimately, the reason for this is that Customer Centricity is at its heart not a strategy. It is first and foremost a philosophy. Customer Centricity is a belief system whereby a business shifts their business model away from a focus where products and services are perceived as the core asset, to a focus where the customers are the core asset of the business.  It is no longer about finding customers for an organization’s products, but about finding products for an organization’s customers. This is a fundamental paradigm shift for most retail organizations.

A customer-centric strategy is borne out this customer- centric philosophy. It is defined by the goal of building long-term loyal relationships through providing solutions to customer problems – owning those problems, and the resolution to those problems. By taking on the responsibility of solving customer problems, the retail organization builds a lasting relationship with their customers; one where the customer wouldn't think of shopping anywhere else.  

While the application of a customer centric strategy may be different depending on the retail vertical (for example, a designer driven apparel retailer’s brand is driven primarily by the vision of the designer, while an electronics retailer may have more flexibility related to the products and services they offer), The primary tenet is the same --- the customer is at the center.

An effective Customer-centric strategy is accomplished through a better understanding of the customer’s needs.  Not just as they pertain to the retailer’s current products and/or services, but as they pertain to the customers overall lifestyle, and day-to-day activities. There is a requirement to understand the customer at a new level – a much broader level. It is not sufficient to focus only on a customer’s past purchases or basic demographic information. There is a need to expand the knowledge and insight related to of each individual customer in such a way as to tailor each interaction in order to solve problems that are unique to that individual. Understanding a customer’s shopping habits, on-line habits (both related and unrelated to your brand), social habits, lifestyle, sports and recreational activities, travel, aspirational goals, preferences, etc. can all come into play while executing a customer-centric strategy.

There are a number of articles and a few books on the topic of Customer Centricity; each with accounts of retail organizations use of a customer-centric strategy. While many of these examples of customer-centric retailing point to transformative changes created through the implementation of such a strategy, these examples most often focus on the customer as a group or segment. The analysis is most often done at the aggregate, not an individual. It is achieved through the combination of viewing their business through the eyes of the customer, combined with new input parameters that shed a new light on their business model.

One such example is highlighted in the book by Ranjay Gulati, called “Reorganize for Resilience: Putting Customers at the Center of Your Business”. He details a situation where grocery stores began offering pre-bagged salads through the realization that many consumers were trying to eat healthy, however grocery stores were not selling a proportionate amount of salad ingredients. By viewing the shopping experience from the “outside in” and by identifying the issues consumers were having related to the inconvenience of washing and chopping ingredients, they made a logical leap and solved the problem for the customer by pre-mixing and bagging salads.

This type of innovative thinking can help organizations to transform their business over time, and can be a key ingredient in a customer-centric strategy. It is important to note, however, that this “macro” view of Customer Centricity tends to be less operational in nature, and more tied to strategic initiatives such as new product lines, innovative service offerings, etc. On the other hand, a “micro” view of Customer Centricity can see gains in very short order, with the existing business framework – but a new perspective.

The “micro” view of Customer Centricity is even more about the individual, not about the group of similar individuals. In marketing terms, it is the segment of one. This is referred to as 1:1 Customer Centricity.  Ultimately, the benefits at the 1:1 level can be seen much more rapidly, and can impact every single interaction.     

1:1 Customer Centricity

Perhaps surprising to some (although it really shouldn't be), the in-store sales associate is most often the individual in a retail environment that is the most customer-centric in their day to day dealings with a customer. This is particularly true in a high service business, but is also true to varying degrees in virtually all retail. While more and more customers are shopping on-line, bricks and mortar retail still represents the vast majority of sales today. Online shopping provides a convenient medium, and an easy shopping experience. It also provides very simple price comparison across retail brands, so price becomes a more important factor in the buying decision.

What e-commerce still fails to provide, however, is the personal interaction; someone to provide counsel, answer questions, look for and recommend alternatives, investigate issues. It is this one-to-one relationship that strengthens loyalty and fosters long-term relationships. The interaction is most often enhanced through the gathering of information by the sales associate.

o   What is the item’s intended use?

o   When will it be used? 

o   Is there a particular look or brand you were interested in?

o   Is this for use while traveling? 

o   How often do you travel?

o   Where?

o   Oh, and based on what I now know, may I suggest the following three coordinated items that will enhance this purchase?

o   I’m also expecting a new shipment of product in a week that I think would address this other need you mentioned, do you mind if I contact you when they arrive? 

o   By what method?

It is through this 1:1 relationship that the associate is able to interpret the problems, and to take responsibility for fulfilling the customer’s needs.  It is also an opportunity to identify other needs that the customer may not have been thinking about at the time they came into the store. If done well, the customer is delighted and a relationship is born.      

The best sales associates are masters at capturing the appropriate level of customer information in order to identify needs, and then using this information to personalize their recommendations. Unfortunately, there are a finite number of “best” associates. More often than not, the average associate in an organization falls short in some critical areas, which negatively impact the relationship with the individual and with the brand.

Imagine, however, if a retailer had the capacity to learn more about their customers. To record all of the information gathered during the in-store exchange, as well as on-line interactions with their own e-commerce site and that of their competitors, know of comments being made about them on social media sites, or blogs? Imagine if they could replicate the “best practices” of their top associates, and provide personalized service to each customer across all channels, and through the contact medium preferred by the customer.      

This is what 1:1 Customer Centricity is all about.