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.
