It’s possible to split retailers into groups based on how well they understand their customers, from customer-naïve to customer-aware and, finally, customer-obsessed, according to research by Forrester.
How they use or ignore technology plays a large part in how they are categorised, and there are lessons to be learned from their approaches, good and bad.
Typically, businesses that are largely motivated by shifting product with no insight into whether what they do is right for the customer have little idea of who their customers are, what they want or how they shop – and they generally make no effort to find out. They stand out because they tend to go out of business.
A great example of a customer-naïve business is Blockbuster – built on what seemed to be solid retail principles at a time when videos and DVDs were the main form of home entertainment, then failed to act when technology and customer behaviour changed:
- Revenue was based on renting outdated formats to customers, and fining them for late returns
- Blockbuster ignored customers’ preference for on-demand content delivered straight to their laptop or mobile device – Netflix asked the Blockbuster board for a deal when it was starting out, and was told its model would never work
- A short-lived attempt to offer on-demand content was too little, too late, and Blockbuster went bankrupt in 2010
- Netflix is now worth more than $8 billion in annual revenue
Lesson: when you have built a strategy around a specific customer behaviour, you must adjust your approach when they start behaving in a different way.
Hearing what your customers say and taking notice of what they do is the only way to stay relevant – and in business. If they want the convenience of picking up or returning goods in-store in their own time, invest in a good click and collect service with built-in returns facilities. If they want to use mobile to shop in-store, make it easy for them with a personalised experience and they’re more likely to be loyal. It’s a great way to keep your customers happy and your bottom line healthy.
These are retailers that have a superficial knowledge of their customers, but little understanding of what drives them to choose their store over a competitor. They aim to increase revenue with minimum outlay on keeping customers happy, and as a result they’re unlikely to deploy the latest technology because they don’t think their customers or sales colleagues will make the most of the investment. Customers only visit these stores when it’s a necessity and accept that it’s not always a pleasurable shopping experience.
Prime examples include some of the ever-increasing high-turnover, low cost retailers:
- The in-store experience is driven entirely by price
- Sales colleagues’ product knowledge is largely irrelevant because the price point is so low
- The retailer’s investment in customer experience is likely to reflect the customer’s low level of investment in products – they won’t be interested in even the most basic mobile technology
- As there’s no identifiable value attached to the customer, loyalty is likely to be non-existent. The same applies to sales colleagues – they’re really just there to replenish stock and process payments
Lesson: indifferent customer service leads to indifferent customers. They may not complain about your service because it isn’t terrible, but your competitive edge is limited to one factor only – price. You can lose this edge at any time, and an indifferent customer will simply shop somewhere else where they feel valued.
Retailers need to recognise that customers are more than their wallets, and sales colleagues are more than a salary bill. Treat them like VIPs – give sales colleagues access to everything they need to be the very best at their job, from online ordering in-store to in-depth product information. Give customers a connected, personalised experience across all channels and tailored to their needs.
A growing number of businesses have truly succeeded in making the customer the heart of every development, activity or initiative. Motivated by customer needs rather than business wants, they actively work to introduce new technologies to make customers’ lives easier. Their commitment to excellent service inspires total dedication.
These businesses build their tech strategy around customers, taking their wants and needs into account to provide the best service they can. They’re motivated by keeping customers happy so that they keep coming back, and keeping sales colleagues happy so that they do an excellent job.
John Lewis is a customer-obsessed retailer – its reputation is built on service:
- The business recognises the vital role technology plays in next-generation retail experiences. It set up a tech hub to incubate new ideas and encourage innovative thinking, runs JLab, an annual startup accelerator scheme, and has introduced a variety of initiatives, including a dedicated area in its Oxford Street flagship store demonstrating smart home connected devices
- Sales colleagues are partners in the business – they have a personal stake in tech developments which improve service
- Each initiative is run using agile processes – if a project doesn’t work for the customer, they retire it, learn any lessons and move on to the next innovation
Lesson: this is the position every smart retailer needs to be in today – ready to use the latest technology to give their customers the best possible experience. They have a specific attitude – a willingness to try out new ideas, see what works and either develop them or try something else.
Ever-increasing choice and more and more powerful personal technology have seen shopper demands expand across all channels, and businesses will have to become customer-obsessed to succeed. Now that technology plays a part in almost every shopping experience from mobile browsing to online ordering in-store, it has to be central to every customer-obsessed retailer’s strategy.