Retailers may believe they’re already well on the path to customer-centricity, and that only a few tweaks — such as making shoppers’ online activity visible to in-store associates — are needed to seal the deal. Unfortunately, customer-centricity is a much more complicated proposition than it first appears, so much so that a respected retail industry expert goes so far as to say that no retailers are currently customer-centric.
Customer-centricity doesn’t happen overnight, so retailers need to go all the way back to the basics and:
- Maintain a clean and current customer database, built by collecting any and all information about the customer from across all touch points;
- Engage with customers before, during and after transactions through all channels, and make every interaction with the customer as relevant as possible; and
- Have a clear value proposition that revolves around the customer and starts with the C-suite.
Retailers Are Still Uncertain Of What Customers Want
The disconnect between retailers and shoppers reveals that it’s not easy to have a customer-centric retail strategy, and retailers shouldn’t assume they know what their customers actually want.
“For all of the talk about getting close to the customer, I will say that no retailer is customer-centric,” said Vicki Cantrell, former SVP of Communities at the NRF and Executive Director of Shop.Org, during a session at the 2017 Retail Innovation Conference. “There are some that are leaders, that are doing amazing things with some innovative thought processes and great customer initiatives. But I’m telling you, you are not customer-centric. You can say it all day, but you are not.”
There’s a lot of evidence supporting Cantrell’s assertion. In fact, according to a 2016 study from RetailNext and Forrester, a significant percentage of retailers don’t realize what matters most to their customers:
- Only 49% of consumer respondents stated that they receive a consistent experience across all channels;
- 79% of respondents reported pricing consistency as a critical or important requirement, while only 52% of retailers agreed; and
- Retailers put emphasis on unified wish lists and shopping carts, but consumers ranked these capabilities as unnecessary.
Retailers suffer from a number of deeply embedded structural issues that, despite their good intentions, keep them from achieving higher levels of customer-centricity. For retailers that do believe they are in fact customer-centric, Cantrell poses three basic questions that, when answered honestly, give retailers a truer picture of their actual customer-centricity:
- “Is the financial structure in your company in any way, shape or form related to a channel? If ‘yes,’ you are not customer-centric,” said Cantrell.
- “Are your store, bonus, commission strategies, or the way you reward employees and do yearly bonus plans related to a channel? If so, you are not customer-centric.”
- “If your customer data is in more than one place or if you don’t have all the pieces you need, you are not customer-centric.”
Customer-Centricity Differs Among Retail Categories
Customer-centricity starts with attaining the “Holy Grail” of engagement: a unified view of the customer. The idea of understanding what consumers want and how the retailer should move forward to meet those desires is another challenge.
“The best way to describe the retail environment when talking about customer-centricity today is retailers are trying to figure out what they can do on a tactical level — given the fact that there is so much change — in terms of being able to step back, look at their business and say, ‘This is who we’re going to be and we’re going to re-engineer around it,’” said Bryan Amaral, Founder, President and CEO of Clientricity, a retail industry consultancy. “They’re scattered without a clear strategy of what this customer-centricity might look like. I’m seeing a lot of this.”
But what a customer-centricity strategy means for one retailer could be completely different for another. “Retailers are not stepping back and asking, ‘For this particular category, what does good [customer-centricity] look like?’” said Amaral. “For example, a lot of high-touch customer interaction is typically not required for replenishment products.” In fact, by 2020, 50% of everyday essentials will be auto-replenished via the Internet of Things (IoT), according to Gartner.
“When you think about where we need to be truly customer-centric, it needs to be in areas where consumers aren’t self-directing,” said Amaral.
For example, customer-centricity at a high-end apparel store could mean letting individual shoppers know when a new shipment from their favorite designer has arrived. At a fast-moving consumer goods retailer such as a supermarket, it could mean ensuring stores are always in-stock with specialty or gourmet items that are prized by the brand’s most high-value customers.
Online Customer Data Plays Vital Role For Retailers’ Brick-And-Mortar Stores
Data is the core element of a successful customer-centric approach, yet many retailers have yet to bring all customer data into one place. This results in silos and gaps within their databases, which doesn’t help retailers gain that single view of the customer.
“Retailers have access to valuable information about customers from various touch points through their journey — [but] most of this is unleveraged,” said Charisse Jacques, Principal at A.T. Kearney. “Retailers should enable the organization to use customer data for decision-making and make it an integral part of business processes. Retailers also need to have a consistent understanding of their targeted customer personas — based on psychographic profiles — and understand their wants and needs.”
ThredUP, for example, recently opened its first brick-and-mortar store in Texas to engage with customers face to face. But what takes this strategy to a customer-centric level is the fact that ThredUP leverages its data from online sales to determine trending brands in order to better stock the store.
In a blog post announcement, the company stated that “store inventories are informed by our most active customers, so the more you shop, the more just-your-style pieces you’ll find.”
ThredUP’s strategy is a great example of how to leverage customer data from an online channel to create a better experience in-store — bridging the gap between the two channels.
“Customer data has to be [retailers’] number one priority,” said Cantrell. “Either get more of it, get it more complete, manage with outside services to clean it and get it good, and have it managed by a person, not by three different departments. Really hone in on getting that customer data to be able to say that you’re, in fact, customer-centric.”
Fabletics is another retailer leveraging its online customer data to create an even better in-store shopping experience for customers. The retailer expanded its online business to physical stores in 2015 and has opened more locations this year. It’s utilizing data from 1.2 million subscription members to improve forecasting and inventory, and also takes data from stores to improve online merchandising.
Arm Store Associates With The Right Tools To Better Engage Customers
Store associates have the potential to gather even more customer data in stores, and also to develop personal relationships with customers. Equipping employees with the proper tools — whether it’s in-store technology or even mobile devices for each employee — that can gather information about the customer’s engagement can provide retailers with a new level of data that they may not get through online interactions.
“Within the customer information, companies should know which associates interacted with which customers — whether call center or in-store,” said Amaral. “We want to know where those relationships exist, what products they’ve been interested in and what they purchased. And it all has to live in one place.”
Having the C-suite on board is also an important factor for companies to consider, according to Cantrell.
“It starts with the CEO,” she said. “Can the CEO really report and tell everyone, ‘Here’s our structure and why we’re making this decision, here’s what this means to us, here’s how we think about the customer. This is how the whole company has to operate. It has to start from the top and any change that has to happen has to be communicated all day, every day with everyone — all the way down to the store level. It’s hard work. It’s the change.”