According to leading research experts Forrester, businesses that sell either products or services can be divided into several categories based on their customer understanding, from customer-naïve to customer-aware and finally, customer-obsessed
How each company is categorised is often driven by their attitude to technology and how they use or ignore it. There are lessons to be learned from their approaches, good and bad.
These businesses have little idea of who their customers are, what they want or how they shop – and they generally make no effort to find out. Largely motivated by shifting product with no insight into whether what they do is right for the customer, they are easy to spot because they tend to go out of business.
Blockbuster is a classic example – a business built on what seemed to be solid retail principles at a time when videos and DVDs were the main form of home entertainment, but which failed to act on a shift in technology and take notice of what its customers wanted:
- Its strategy was based on continuing to rent outdated formats to customers, and to penalise them for late returns
- It ignored the move towards on-demand content delivered straight to the user’s laptop or mobile device – Netflix approached 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 revenue
Lesson learned: when your business depends on a specific customer behaviour, it is essential to pay attention when they start behaving in a different way.
That way, you can build it into your strategy, keep your bottom line healthy and your customers happy. If they start using mobile to shop in-store, embrace it and make it easy for them – personalise their experience and they’re more likely to be loyal. If they want to be able to pick up or return goods at their convenience, invest in a good click and collect service with built-in returns facilities. Listening to what they say and acting on what they do is the only way to stay relevant – and in business.
These businesses know their customers on a superficial level, but have little understanding on what drives them to choose their store over a competitor. They’re motivated by increasing revenue with minimum outlay on keeping customers satisfied – they’re unlikely to make use of the latest technology because they don’t think their customers or sales colleagues will make the most of the investment. This kind of retailer can be identified by the fact that customers only visit when they have to – it’s a necessity and not always a pleasurable shopping experience.
Some of the ever-increasing high-turnover, low cost retailers are prime examples:
- Every initiative is driven by price, and the in-store experience is geared to the ‘stack ‘em high, sell ‘em cheap’ retail philosophy
- As the price point is so low, sales colleague knowledge about products, their quality, availability, alternatives etc is largely irrelevant
- If the customer’s investment is low, the retailer’s investment in their experience is likely to reflect this – even the most basic mobile technology won’t be of interest
- There’s unlikely to be any kind of customer loyalty because there’s no identifiable value attached to the customer. The same applies to sales colleagues – in effect, they’re just replenishing stock and processing payments
Lesson learned: 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. This edge can be lost quickly, and an indifferent customer will simply vote with their feet and shop somewhere else where they feel valued.
Retailers who value their goods and their customers 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. And give customers a connected, personalised experience, seamless across all channels and tailored to their needs.
A small but 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. Excellent service is a way of life, and it inspires total dedication.
These businesses have woken up to the all-round benefits of delivering a good customer experience. They 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.
Department store John Lewis is a great example of a customer-obsessed retailer – its reputation is built on service:
- Sales colleagues are partners in the business – they have a personal stake in tech developments which improve service
- The business fully 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 from a dedicated area in its Oxford Street flagship store demonstrating smart home connected devices to virtual mirrors in-store
- 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 learned: this is the position every smart retailer needs to be in today – ready to work with the latest technology to give their customers the best possible experience. It involves a change in attitude – a willingness to try out new ideas, see what works and either develop them or try something else. Those that have taken the plunge have reaped the rewards – customers who see their stores as a destination rather than just somewhere to pick up shopping, and worth the effort of paying a visit rather than staying home and ordering online.
As shopper demands expand across all channels, fuelled by ever-increasing choice and more and more powerful personal technology, businesses will have to become customer-obsessed to succeed. And, as 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.
About Dan Hartveld
Dan Hartveld has a global reputation for excellence in the field of mobile retail. He has developed award-winning, first-in-class commercial solutions for leading retailers including Topshop, Burberry and MasterCard. Known for his expertise in the practical application of innovative technology to achieve measurable results for retail, Dan is a trusted expert and advisor with a proven track record in real-world business.
He was instrumental in developing Red Ant’s Connected Retail Platform and rolling it out across retailers, and he was a key member of the team which won the prestigious IBM Watson Mobile Developer Challenge for its cognitive sales associate app.