How do retailers become consumer centric?

Virtually every retailer is product-centric and ‘good customer service’ generally means treating all customers well. However, some customers are better than others and fall into a truly valuable category. So how does a retailer become consumer-centric and sort out and retain the better customers?

Being product centric no longer provides retailers a differentiator amongst its competitors and general good service is not on its own away to encourage your customers to stay with you. In today’s competitive landscape with social media emerging as a means to learn more about the products and services you offer, it is even more important to build strong relationships with your customers as they now have access to a very large megaphone to which they can announce both positive and negative messages about your brand.

Profitable relationships are hard to develop and keep, with retailers frequently seeing new customers leave before these relationships generate the value required to offset the cost of acquiring them, so how do retailers tackle this problem? I believe there are three key principles to driving a consumer centric approach to retail and ensuring that you know what you’re profitable and valuable customers look like, these being:

»        Recognising Loyalty

»        Tailored Customer Experience

»        Technology platform geared to managing customer value

Recognising Loyalty

The most important basis for consumer centric strategy development is a comprehensive understanding of what drives customer loyalty and how strong those drivers are. Understanding loyalty enables a retailer to define tailored customer experiences to match the different loyalty types driving customer acquisition and retention. So how do you define loyalty for your business? The following loyalty principles will help you as a retailer define loyalty for your individual business:

»       What drives a consumer at the acquisition stage?

The factors that create and influence consumers loyalty before they become a customer is key to understanding what influences brand recognition and influences customer value and retention.

»       Recognising all kinds of loyalty

Loyalty is not singular; there are many kinds of loyalty from evangelists, conditional, emotional and passive. So as a retailer you need to understand how these impact your different consumers and drives repeat business.

»       Know what to look for and how to measure it

Retailers do not often lack information on Customers and what they are transacting, but often do not know what influences acquisition and retention. Measuring loyalty goes beyond the normal boundaries of transactional behaviour to how they are engaging with the brand across the many channels available to them from shop front to social engagement. The difficulty is understanding what factors to measure and what factors makes for defining the loyalty segment a customer falls within that can be used to influence retention and more importantly what drives consumer profitability.

»        View the entire value chain

Third party channels to market affect consumer loyalty. Understanding the consumer experience across these channels and the impact on loyalty is crucial to understanding what drives loyalty and how to maintain that loyalty. A bad experience from a third party warranty standpoint may see you lose a profitable and valuable consumer.

»        Understand your business complexity and how it impacts your consumers

Products, services, bundles and channels make for a complex environment for your consumers. Understanding this complexity from a consumer standpoint helps to drive what is important from a loyalty perspective.

Tailored Customer Experience

Studies show that a defining factor in highly successful retailers is the ability to deliver differentiated customer experiences, tailored to specific consumer values, needs and intentions. Delivering a tailored customer experience relies on the retailer being able to understand and control the following three facets of customer experience. Being able to understand and manage these aspects will drive and enable the delivery of a focused loyalty based customer experience that will help develop and retain profitable customer relationships.

»       Know who your customers are

It is critical as a retailer to understand changing behaviours and to react appropriately. Being able to define segments of customers will help you as a retailer spot changing behaviours and react in an appropriate behaviour to meet the need of that segment and off the loyalty that the relationship expects. It is critical to understand the values that make up a valued customer and stay close to them so that you can react to their changing needs. Investment in business intelligence tools to assist with loyalty analytics will help you define the main drivers and recognise the different loyalty types. Knowing your customers helps drive targeted and actionable segmentation that can be incorporated into campaigns across the different channels.

»       Understand how to reach the customer

In today’s world of social media increasingly it is the consumer who drives what messages they are willing to receive and interact with. Understanding what channels drive different types of loyalty and what channels a particular segment utilises to interact with your brand will help you as a retailer target the right channel with the right message for the segment you are trying to influence. It is important to have a developed consumer dialogue strategy in place to enable the right level of interaction. Utilising tools built within Customer Relationship Management tools to monitor web traffic, referrer sources and what pages a particular consumer is viewing will help you build up a picture of the influences and dialogues that are taking place.

»       Delivering the expected experience

Once your understand what drives loyalty and how the different types of loyalty interact with your segment classification you can start to develop and deliver segment based differentiated experiences across the entire value chain. It is important to be consistent and maintain visibility of the experience and the impact the experience is having on consumer loyalty. In delivering an experience you need to consider the following factors, service, price, features, channels, relationships and dialogues.

Technology Platform

You understand what drives loyalty, you know the factors that drive segment alignment, and you have defined customer experience expectations, but how do you deliver on these factors and monitor performance and value? As a retailer the technology platform will assist with delivering consistent customer experience and assist in the driving of profitable and valuable consumer relationships helping you to identify the consumers that you want to retain and nurture, but is not the only factor as previously determined,  having a well-defined Customer centric strategy is crucial to maintaining a customer focussed approach. So what should be in your technology kitbag to support customer centric strategy, I would recommend the following should be considered but is not the definitive list:

»       Customer Relationship Management solution

The CRM system will need to be able to capture segmentation and loyalty indicators that help to define marketing strategies focused on the customer experience. The system ideally needs to cater for capturing complex connections between products, channels and people and collate information from the social and web media for which the consumers are interacting with. The solution should also be able to drive all forms of marketing via email tracking, web, social media and other forms of communications.

»       Loyalty enabled POS system

The point of sale system needs to be able to capture consumer information, whether that is through a loyalty scheme, survey or via the online / in-store shopping experience and transform this information into a database that can be analysed.

»       Business Intelligence

The business intelligence system needs to be role based driven enabling sophisticated models to be generated and ideally three dimensional looking at factors such as time, value and demographical information. The solution needs to be user driven and easy to drive by business people.

»       Enterprise Resource Planning System

The ERP needs to collate and pull together the transactional value of consumers while managing the logistics and financials of the business. Ideally the CRM and ERP solutions are integrated enabling indicators to be automated against consumers within the CRM tool.

In summary, in today’s tough economic times having a consumer centric strategy and approach to delivering customer value via understanding what drives loyalty and value will enable existing profitable customers to be retained while driving new opportunities with existing or new customers via tailored customer experiences.

 

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