“The customer is always right” is the old retail slogan but, for many decades, what the customer wanted or should want was determined by merchandise buyers at corporate headquarters?not the shoppers themselves. Today, consumers are much more informed and have higher expectations, which requires retailers to better understand their needs and then determine the plan of action that should be taken to satisfy those needs better than the competition?a customer-centric approach.
This customer approach puts customer experience and needs in the forefront, ahead of the business “bottom line.” Experienced retailers realize that to win in the market in a sustainable way, they need to satisfy the needs of shoppers first?and better than the competition. To accomplish this, retailers need to achieve and understand those needs in very detailed and timely way, and then take action.
Nordstrom is an example of a retailer doing a great job with its customer approach and how they treat all customers well in store, but differentiate and reward higher value customers with exclusive experiences, such as sneak previews and private shopping events. In addition, the launch of their multi-tender loyalty program proves they listen closely to customers across all their brands
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. The result was an opportunity for customers, specifically a youth market, to earn points, incentives, freebies, regardless of which store they shopped at or how they paid.
The objectives to creating a customer-centric approach present unique challenges. If all shopper needs were similar and static, grasping them would be easy, however, needs vary dramatically among shoppers and they shift over time. Due to this fast, ever-evolving pace of customer behaviors, there also needs to be a designated internal owner of customer service, such as a chief customer officer, who provides direction and guidelines for a customer-centric approach. Unfortunately, this role remains at large for many companies. Other internal business-related challenges include implementing adequate processes and training, shifting the organizational mindset from product centric to customer centric, and learning how to incorporate the customer into strategy and the tools that are required.
A common mistake retailers make is trying to please all customers instead of using data and analytics to help decipher the code of who their best customers are, who the high potential future customers may be, and those who have very limited interest. Knowing these key players will help identify the most valuable customers and also attract those on the sidelines.
There are ways that retailers can use loyalty programs to elevate their current customer approach or develop the starting platform. Loyalty can act as a gateway to customer centricity if done as a partnership with the customer, where data collected goes toward ensuring the customer has a better experience with the retailer in future visits. Loyalty through targeted communications, engagements and experiences shows customers that their challenges are being addressed and that the retailer is trying to win their business through special offers, personalized product offerings, services or events.
Through drawing inspiration from the needs and values of customers and the successful delivery of customized products and service offerings, retailers can see incremental sales increases of up to four per cent as compared with traditional customer marketing approaches. The customer may not always be right, but when it comes to building future success strategies, the customer is king.
Melissa Fruend is a partner at LoyaltyOne Consulting, responsible for the loyalty and CRM strategic consulting focus in our practice. Her team offers innovative loyalty strategies to improve customer engagement through increased customer identification that impacts revenues for brands. Recent client relationships include Abercrombie & Fitch, Giant Eagle, PetSmart, and Alaska Airlines among others.