Consumer study reveals the seven pillars of customer-centricity

Businesses and retailers always talk about being more customer-centric and how they are focusing on delivering the best experience for their customers.

Most corporate mission statements, investor and shareholder briefings will make several references to this very point.

However, in reality, “putting the customer first” is easily said, but incredibly hard to do in practice. The only true measure of customer-centricity is the actions retailers take and their customers’ response to those actions. In spite of today’s hypercompetitive retail landscape, it’s still quite surprising just how few retailers are genuinely committed to customer-centric strategies.

dunnhumby’s recent global study into customer-centric retailers, based on 126,000 individual customer assessments of 399 retailers across different countries, uncovered some telling results on what matters most to customers, and ultimately, the financial benefit that awaits retailers who excel at putting their customers first.

Let’s begin by looking at the results. The financial impact of delivering customer-centric strategies could not be more clear. The top 25% of customer-centric retailers witnessed a sales increase on average of 3%, while their market share grew by 7% from 2015 to 2016.

Undoubtedly, customers respond positively to retailers who not only understand, but also continue to meet and exceed their needs. This makes customer-centricity an incredibly sound financial investment, whereby retailers that are delivering best-in-class customer experience reap not just the monetary rewards, but also build long-term loyalty with their consumers.

When analysing what matters most to customers, we found seven key pillars of customer-centricity: price, range & service, promotions, affinity, rewards, ease and communications.

We found seven key pillars of customer-centricity: price, range & service, promotions, affinity, rewards, ease and communications.

We found that brand affinity, defined as the personal connection that great retailers build with their customers, plays a very important role in customer-centricity. Brand affinity is based on having a deep understanding of your primary target group and providing differentiation on a core competency, while consistently delivering on these expectations.

In today’s competitive retail landscape this means that standing out for something matters even more than it did in the past. It’s always a good test for retailers to consider that if their brand/logo is not on a shop front or website, will customers be able to recognise them and their distinct offering?

When more isn't more

Price and promotions will always rank highly for customers, which highlights the importance of investing in and delivering on fairly priced products and value-for-money promotions that you know your customers want. Retailers like Aldi and Lidl have been very successful in making price their differentiator. These “value retailers” are connecting strongly with their core target audience and as a result, are experiencing strong financial performances.

At the same time, retailers such as Tesco have used their “brand guarantee” to provide instant money-back to demonstrate their commitment to their shoppers and remind them that Tesco won’t be so easily beaten on price.

Furthermore, with rising inflation and the growing likelihood of increased prices at the shelf edge in 2017, retailers need to ensure they are continuing to invest wisely on the most price-sensitive customer lines and cut back on the long tail of ineffective short-term promotions.

Standing out for having the best range and food quality is another key lever of customer-centricity. We’ve seen retailers like Trader Joe’s winning with their unique and diverse private label range, Waitrose differentiating with their meat and bakery quality, and unique Duchy Organic and Fairtrade ranges performing well for their target customer groups.

Standing out for having the best range and food quality is another key lever of customer-centricity. 

However, “more” is not always best when it comes to range choice. Many customer-centric retailers are simplifying their product ranges to make it easier for their customers to shop. By using better customer data, these retailers can eliminate duplicate lines and optimise their shelf ranges with the right breadth and depth of items that their customers desire. This makes simple economic and financial sense, driving higher volumes from fewer lines, enabling lower prices and better value for customers, and lowering cost to serve from the retailer.

Outstanding service is another feature a number of customer-centric retailers specialise in. This means choosing to invest in more staff and expertise to offer customers a more personalised shopping service.

In turn, advances in digital has led many retailers to rapidly expand their “click and collect” and “home delivery” services to bring their store to the customer and meet their expectations of retail on-demand. These retailers are now looking at ways to incorporate this “personal service” at every possible customer touchpoint through mobile devices and location services. The smart use of customer data enables these retailers to send personalised and relevant messages in the form of offers, recommendations, and helpful advice to improve the customer journey and increase the likelihood of a return journey.

In today’s competitive retail landscape, retailers hoping to not only hold onto, but grow their market share will need to prioritise their customer-centricity strategies. This requires bringing a single-mindedness to their business strategy, choosing where to differentiate from their competitors and delivering value to their target group of customers, whilst constantly ensuring that the fundamentals of a great in-store environment and shopper experience are in place.