RSR Research: Introducing ‘The Engaged, Customer-centric Retailer’
By Paula Rosenblum, Managing Partner
Through
a special arrangement, presented here for discussion is a summary of a current
article from Retail
Paradox, Retail
Systems Research’s weekly analysis on emerging issues facing retailers.
We’d like to present a new model for successful retailing
– one that RSR calls The Engaged, Customer-centric Retailer. This model is
the logical follow-on to what we called TECC, or Technology-enabled Customer
Centricity.
We coined the term TECC in early 2007. While the words don’t flow easily off
the tongue, the concept helped us explain how retail winners were starting
to solve the paradox of improving customer service while holding the line on
payroll costs. They were adding technology to support customer-centric initiatives
and improve store execution in general. We called that TECC in the store.
On the merchandising front, adding the customer dimension of data to merchandising
applications covering planning, allocation, replenishment, pricing and promotions
is the key that unlocks the door to localization of those functions. Behind
the scenes, we called that TECC Merchandising.
And of course, adding the customer dimension to data warehouses can help measure
and quantify organizational success. Yes, we can call that TECC Business Intelligence.
The only fly in the ointment of TECC is it doesn’t provide a feedback loop
between retailers and their customers. We might know what customers buy, but
we don’t necessarily know how they “feel.” And how they feel is directly
correlated to their loyalty.
Over the past three years we have witnessed the explosive growth of social
networks like Facebook, Twitter and MySpace, along with other Web 2.0 interactive
sites. We’ve struggled to understand the value for retailers. Even now, as
retailers continue their land grab of Facebook pages and Twitter IDs, the
value often remains unclear. Dell has created exclusive promotions for their
Twitter “fans,” but no one can really quantify whether these were incremental
sales or just margin giveaways.
As part of a client project, the light finally went on in our heads: the aggregation
of the data obtained from social networks, customer service emails and other
unstructured consumer remarks give retailers an almost instantaneous vision
into their customers’ sentiment, and allows them to engage with those people.
We can find out how they feel. For better or worse (because they really might
NOT like what we’re doing), we can move beyond the noise associated with the
squeaky wheels of individual customer dissatisfaction to an overarching sense
of what customers like about our products, our service, and our employees.
In other words, retailers can use technology to engage with their customers.
We present, for your review, our model of The Engaged Customer-centric Retailer
(TECCR):
Once the model is rock solid and thoroughly understood, we’ll create some tools
to help retailers see where they fall in the continuum. Some retailers may
be heavy to the left, others may find their strong suits on the bottom, but
the best will find themselves squarely in the center.
Discussion Questions:
In which quadrants in the TECCR model do you think most retailers are
most engaged? Where do they need the most work in order to reach the middle
for optimal customer engagement?
Most retailers seem to be in the financial plans and competitive and sales info quadrant. Sure they talk about engaging the customer, but in too many instances, that’s just lip service. They need to really understand what consumers want and how to meet those needs, while exceed customer service expectations.
The “only” fly in the ointment is that we don’t know how the customer feels??? In a customer-centric model? Stealing a line from a Wendy’s’ commercial of yesteryear–“Where’s the beef?”
Most of the retailers I’ve known lean heavily one way or the other. It’s like a right brain–left brain thing.
I’ve worked with retailers who can accurately quote margin figures, inventory levels, current ratios, etc, from memory, while disenchanted customers storm out of their stores.
On the other hand I’ve known retailers who provide the most engaging customer experience imaginable while their operations spin out of control.
The trick is being able to achieve both simultaneously. That’s the magic of great retailing.
I can’t help but go back to an old refrain: We’re looking for love in all the wrong places. Seems we’re clinging to the idea that technology and mechanical analysis is what will weave us together into an enduring fabric of loyalty and understanding. This is like a blood lab offering a dating service based on hemoglobin count. Brilliant stuff but….
My view is the future of research like this will be in the area of energetics. Understanding how energy (which everything is) impacts connections of all sorts. All our experiences are the results of energies converging in certain ways. This is why certain people “light up a room” when they come in while others make you want to have a shower after you meet them. Indeed it’s how energies mingle that keep the entire universe intact. We’re into the Quantum Age and the ultimate advantage goes to those who get there first.
I think most retailers are left sided on this one. They like living there because controlling cost and cutting inventories make the street happy and help the bottom line in times like these. But, the right side is where they can improve top line performance. They talk about engaging the customer and employees, but they try and do get away with a lot more talk than action. This will continue until they start believing that paying attention to the customers that are coming into their stores will improve their market share and top line sales. The lean payroll environment begs for customer-facing technology that allows the sales associates that are left to leverage their time more effectively.
I guess what needs to happen is that the customers must decide they have had it, and really cause the retailer pain. I don’t see this happening anytime soon, as the customer expects lousy service and demands nothing.
As retailers, we typically evaluate how the customer feels based on what she spends and how often she spends it. That’s too late. That’s reactive, not proactive, and it’s problematic.
As an aside, one sentence that got left out of the revised article is that retailers also have to initiate the conversation with the consumer. That’s very important.
Retailers have been translating customer-centricity into their processes…add self-service options, localize assortments, shift in-store personnel around, provide online customer service, create zoomed images of products, provide a space for customer reviews…BUT, I stand by the statement–none of that really tells you what the customer feels. It tells you a result.
There’s the beef, and that’s the issue. Hope that makes sense.
Isolating financial orientation is folly.
“Once the model is rock solid and thoroughly understood.” Another counter-intuitive model; who has time for that?
Customer-centrism only works if the retailer knows that the primary target is the associates of the company.
While we say, “retail ain’t for sissies” we also sometimes say “the juice ain’t worth the squeeze.”
“[Get] over the noise of what the customer doesn’t like?”
I think that might be an issue right there.
While the model looks quite promising, I’m not understanding or seeing enough that links the staff and the customers. I see employee “info” and “process & performance info,” but is this measuring the level of engagement between staff and customer?
I also wonder if the model is measuring employee engagement, which we know has a direct link to customer engagement.
I teach business at the graduate level. All the textbooks are filled with models such as these. While on the page of the book they look very sophisticated, most have no touch with reality. And neither does TECC.
The model for a retailer is simple. In the first box is the customer. In the last box is the customer. And if there is anything following the first box that doesn’t get you to the last box, the model is irrelevant.
Good to see that there is progress to include the really useful feedback from shoppers; an important step. But why is it that when we talk about the really successful retailers, there is a driving force from the top that translates all the way down to frontline staff who engage all day, every day?
Thinking about Stew Leonard, who is an integral part of the community served. Or Best Buy President, going out on the floor across the country to keep in touch with what the real issues are, and how to use the information from front-line staff to transform the experience, not just fix it.
Collecting and mining shopper feedback will provide clues about shopper thinking, but not everyone feels the need to write or contact the retailers about their feelings–good or bad. Shopper information must be considered in context, at the store level–as part of the way a retailer runs their business.
As a third generation retailer, I think Anne Bieler’s comment was on the money–that the most successful retailers have a “driving force from the top.” Technology solutions may be helpful but the active ingredient is leadership. When the organization is committed, its people find many ways to connect with customers. Sam Walton walked that talk and his people followed.