What is customer centricity?
"We define customer centricity as knowing your customers' expectations and meeting them. This means knowing customers and treating them the way they want to be treated across all touch points that influence the customer experience," Emilie Kroner, head of consumer markets organization engagement for dunnhumbyUSA, told RetailWire. "The most customer-centric retailers put the customer first in every decision that they make or strategy that they create."
Ms. Kroner said dunnhumby has identified seven pillars of customer centricity:
1. Product assortment
2. Price
3. Experience
4. Feedback
5. Promotions
6. Loyalty
7. Communications
In its second Customer Centricity Index (CCI) report, dunnhumby measured home improvement (DIY) retailers and chains selling housewares.
Using its seven pillars assessment, dunnhumby reported that Menards graded higher than larger rivals Home Depot and Lowe's as well as True Value and Ace Hardware among DIY chains for customer centricity.
"Menards' success with customers lies with its strong pricing strategy, as well as promotions that customers saw as meeting their needs," Ms. Kroner told RetailWire.
"Menards' rebate program has really resonated with their current customer base, which helped drive their strong CCI scores. With the rebate program, customers who shop are able to get deeply discounted, or even free, products," Ms. Kroner added. "With customers feeling that the pricing strategy, including rebates, is 'great on everyday items' and offers 'strong prices that cover many of the products that I buy,' the price-to-quality perception is higher than what the competition is offering."
The current housing market not withstanding, Ms. Kroner said price sensitivity is a major issue in the home improvement market. Menards has effectively capitalized on the pricing issue, but will need to focus on "which products are most important to their most loyal customers — and use customer behavioral data to focus their pricing strategy, including rebates and promotions, on those items" going ahead to maintain its customer centric edge.
According to dunnhumby's findings, retailers with higher CCI scores led competitors in comparable sales growth over a three-year period. Retailer scores were determined by a weighted average of results across dunnhumby's seven pillars and consumers' likelihood to recommend a chain.