Most companies attempting to drive customer loyalty fail miserably—and few so-called customer-centric companies generate sustainable customer loyalty that drives measurable business results. Why? Because they get three key principles completely wrong, right from the start:
- Loyalty is about the company acting loyally to its customers, not vice versa.
- It is about a loyalty approach, not a loyalty program.
- Loyalty is about the store, not only about the CRM.
1. Loyal to Customers
We start to act loyally to customers when we understand them to a level of detail that ensures that we remain responsive to changes in their behavior, relevant to ever-changing customer needs and rewarding in the way we treat customers.
Acting loyally is about adopting a loyalty mind set of managing customer segments as strategic business units (aligning with how we think about a category management strategy as managing categories as strategic business units). This context demands change that is both incremental and transformational—evolution, but with a bit of manageable revolution.
What customer loyalty is, and is not:
- Acting loyally (responsive, relevant, rewarding) to our customers; not about customers being loyal to us
- An overall approach throughout our business; not a proposition or program
- Earning customer loyalty; not thinking that customers should become loyal
- Collaborative partnerships to win customers together; not tolerant of internal conflict between areas of the business or with suppliers
- Transparent; not opaque
- Driving sales and cash margin; not customers being responsible for percent margin
2. Loyalty Approach vs. Loyalty Program
We demonstrate loyalty to our customers by taking a loyalty approach wherein we commit to rewarding and delighting our customers with products and experiences that meet their wants and needs.
- We call this putting customers first—when we decide on priorities and actions based on insights from our customer data.
- By doing so, a retailer becomes an even more prominent choice in the customer's consideration set. This is not a tactic; it is a long-term strategy that makes the customer the focal point of our business decisions and objectives.
The loyalty program is an important element within a loyalty approach, as the key source of the data that enables customer intelligence, and as the channel that enables us to talk to our customers personally. I call the loyalty program the "little l" in loyalty, with the loyalty approach as the "big L."
But a loyalty program is not required to act in a loyal way to customers. Here's how to think of "big L" loyalty:
A loyalty approach, simply put, embeds customer insight throughout the retail organization to enable better, faster decisions and thereby increase sales and profit sustainably. Best-in-class practitioners have seen an incremental sales uplift in the early stages of a loyalty approach of between 1% and 2% and later stages between 3% and 4%, quarter over quarter and year over year.
3. Loyalty Is About the Store, Not Just the CRM
As I used to say to my retail colleagues, "If the store is lousy but we deliver brilliant targeted CRM, the store will still be lousy."
Even if the personalized CRM is perfect, customers need to perceive that tangible changes have been made in the store itself before they will respond by giving more of their custom. We must put customer insights into action within the "hardwiring" of retail practices—pricing, promotion, assortment, adjacencies, new products, the checkout experience and so on.
In a previous article, I shared several examples of being loyal to customers in store by simply making the shopping experience easier—setting the yogurt section by customer need rather than by brand blocks, for example, and by setting product adjacencies according to how customers shop, rather than by how items are sourced in the supply chain.
3 Ways to Activate a True Loyalty Approach
- Make better business decision by putting the customer first. Everything is better when you start with the customer. Start with the data you hold on customers—understanding how they shop and behave, what is important to them and how they engage with your business. This insight will identify a number of opportunities for better decisions using the data.
- Improve the customer experience by using data-driven insights to improve your retail offering, such as assortment, pricing and promotions. Use insights to connect you to your customer through the store. Think of the mantra "data to insights to actions"—this is how improved like-for-like sales growth and customer loyalty is delivered.
- Transform the organization using customer-driven insight to help you better understand, anticipate, measure and continually respond to your customers. This is realized through empowering, aligning and equipping your people with relevant insights, values, goals, strategies and actions.
[This is the fourth in a series of articles advocating the voice of the Customer in the highly competitive food-retail industry. David Ciancio is Global Customer Strategist for dunnhumby, a pioneer in Customer data science, serving the world's most Customer-centric brands in a number of industries, including retail. David has 48 years experience in retail, 25 of which were in Store Management. He can be reached at David.Ciancio@dunnhumby.com].
Treating Customers differently based on their 'profitability' is counter-productive to building loyalty and toward creating a healthy retail Customer Experience.
All Customers are not created equal…<p>Any typical Recency/Frequency/Spend analysis tells us that some Customers are more <em>valuable</em> than others in terms of the sales given to a retailer or brand. Further, loyalty industry methodologies like the EMO Index and the Net Promoter Score indicate that those Customers who are more emotionally engaged with, or who more strongly advocate for any retailer or brand tend to be more <em>loyal </em>to that entity.</p><p>Logically, it might follow that some Customers might be more <em>profitable</em> than others, and conversely, some could be downright unprofitable. Knowing which is which is the all-important question in a popular relationship management concept called 'Customer Profitability'.</p><p>A recent Google search returned more than 7 million references to Customer Profitability – how to segment, measure, and manage relationships with Customers based on how much an individual contributes to the firm's bottom line. An accountancy method even has developed around this concept: for example, understanding 'Customer Lifetime Value' and 'Customer Value Management Cycle' are seen as keys to business health by some firms.</p><p>But beware the siren song to consider individual Customer or household profitability.</p>
Customers’ gifts of choice – or not<p>Typically, Customers have choices around at which retailer they spend their money, what brands they select, and how much they engage with a brand's marketing. They decide to what degree they prefer one brand to another, and advocate at-will for their best (or worst) retail and brand experiences.</p>
Customers do not, however, have a choice on how much margin they give to a retailer or brand.<p>So, how is it that Customers can be responsible for their own profitability? Is the Customer accountable to margin by choosing to respond to a particular set of value propositions offered on the retailer's terms? Is the Customer culpable if a value proposition is not itself profitable, or if it allows for choices by Customers that vary in net profitability?</p><p>I don't think so.</p>
Doing what’s right for the business…and for Customers<p>Every business – <em>and most particularly a Customer First organization</em> – must focus its decision-making energy on doing what's right for its Customers and its shareholders at the same time. For Customers, it's about which value propositions increase participation (reach), sales (uplift), or frequency (visits) and thereby incrementally grow the basket 'one more item, one more time'. For shareholders, this means understanding which value propositions grow sales and margin and which don't.</p><p>Customers expect a fair exchange of value for their money. Shoppers cannot be expected to understand the cost to the business of the value offered. <em>It is not the Customers' fault if a loss leader is offered, or if a store coupon reduces the net margin, or if the mix of the products bought according to one level of affluence and lifestyle delivers a higher basket margin than that of another.</em></p>
Wrong for Customers, wrong for business<p>In my experience, (and please feel free to provide a different opinion in the comments) credit card and financial services providers are the strongest advocates of a 'Customer Profitability' approach to relationship management. It's little wonder in these quarters that annual industry churn of accounts is greater than 40%, or that the cost to acquire / switch each new Customer account is in the hundreds of dollars as industry standard, or that business costs have spiraled upward now for decades. Of course, these increased costs are transferred to the Customer via higher interest rates or hidden in higher exchange rates for the retailer (which in turn, drive up retail prices).</p><p>'Good' profitable Customers maximize their credit limits and retain high balances owed, whilst 'bad' Customers 'revolve' by regularly paying off their balances. Poaching to encourage switching is a hallmark industry tactic, using offers like 'freeing balance transfers', often punishing the Customer with hidden charges and costs to serve so that profitability by Customer might be optimized.</p><p>It's my observation that a 'Customer Profitability' mindset sits at the heart of these Customer-disrespectful and anti-loyalty practices. Simply, Customers do not have the gift of choice or the ease to understand which factors drive individual profitability, particularly given the customary qualification requirements and fine print common to this industry.</p>
A better language – Proposition Profitability v Customer Profitability<p>In a Customer First organization, measuring the profitability of its various <em>value</em> <em>propositions</em> should become a business imperative: without it there is no fact basis for managing the value exchange between the company and its Customers.</p><p>In a respectful, Customer First approach to business growth, each value proposition delivers recognizable value to Customers as well as recognizable margin to the retailer or brand. The better mindset and language is, therefore, around Program / Proposition / Offer profitability.</p><p>An emerging best practice in this area is an analysis of the relative cost of each <u>proposition</u> using a common cost metric vs. the Customer impact (uplift).</p><p>Analyzing the relative cost of each <u>Customer</u> or Customer type is a misguided exercise, and is counterproductive to growing true loyalty. If anything, the data reveals more about the retailer's bad habits than it does about 'bad' Customers.</p>
Implications for retail leaders<p>Think about the choices Customers are given in the value propositions you offer; is the profitability of these offers in any way within the Customers' gifts of choice? Who makes the profit margin decision – you or the Customer?</p><p>Mind your language, and coach your loyalty people away from segmentations based on 'Customer Profitability'. Yes, there is a value in understanding 'Customer Lifetime Value' and 'Customer Value Management Cycle' – but only by using spending and preference metrics; profitability considerations do not belong in the equation, however.</p><p>Guide toward the best practice of measuring the relative cost of each <em><u>proposition</u></em> to Customer impact, using a standard cost metric.</p><p>So, I repeat, Customers do not have a choice on how much margin they give to a retailer or brand. Treating Customers differently based on their 'profitability' is counter-productive to building loyalty and toward creating a healthy retail Customer Experience.</p>
Memories of panic buying may be fading here in the UK but have resurfaced elsewhere1. The near constant threat of another wave of Covid-19 may yet prompt another round of hyper demand. Whilst there is little hard evidence to determine the underlying drivers of panic buying2, there are numerous theories that the retail industry may benefit from exploring.
Feroud Seeparsand, dunnhumby's Senior Consumer Psychologist, outlines some likely theories to explain the 'why' behind the 'panic buy' and some implications for retailers to prevent it reoccurring in future.
1. Loss Aversion<p>Nobel Prize-winning economist Daniel Kahneman stated that 'loss aversion' was his and Amos Tversky's single greatest contribution to decision-making theory3.</p><p>We feel the pain of loss more than an equivalent gain. In other words, losing £100 hurts more than the joy of winning £100. When applied to panic buying, we fear for the loss of a product we could otherwise have had. Perhaps more to the point, we would normally have had access to a variety of products. Relative to this normal point of reference, the relative loss of not possessing a product helped lead to panic. As customers would normally possess a certain product, the relative loss of it created pain.</p><p>A curious detail is that small numbers can make big differences, a concept called 'diminishing sensitivity'; winning £200 does not double the joy relative to winning £100. In other words, even small numbers of a valued product can have a significant effect on one's decision making. It is because of this diminishing sensitivity customers may lean towards zero risk aversion, in other words not to risk missing out on a product; if you see it, buy it!</p><p><em>Implication for retailers: Use the new reference point that past panic buying did not stop most customers obtaining products.</em></p>
2. Social Norms<p>Another Nobel Prize-winning economist, Richard Thaler, and his colleague Cass Sunstein highlighted numerous heuristics to nudge behaviour4; one of these is social norms or copycat behaviour. We are perhaps all guilty of assuming restaurants with longer queues have superior dishes or assuming that the more popular films, plays or books are worth consuming. When applied to retail, if a customer sees another purchasing a particular item, the odds are that they will follow. This can easily be exaggerated through social media and news reports.</p><p>It does not matter if this perception is factually inaccurate; perception will still hold sway. If customers do cause products to sell out as a result, this is likely to lead to a scarcity effect, where those products are valued even more than before. This can be further exacerbated if such products are perceived to be potential life savers, like hand sanitisers or medicine.</p><p><em>Implication for retailers: Highlight how most people are not panic buying. Foodstuffs North Island and South Island, in New Zealand, got out ahead by introducing their 'Shop Normal' campaign, which encouraged customers to 'shop normally and be kind in supermarkets'. Tesco in the UK also ran a 'Together we can do this' campaign in national media to encourage people to 'shop normally together'.</em></p>
3. Uncertainty Breeds a Desire for Control<p>Sometimes the actions that can save lives, such as hand washing and social distancing, are simply not enough to regain a sense of control5, as they are too dependent upon the goodwill of others. Therefore, there remains a need to reduce anxiety. Stockpiling or buying more, as a form of retail therapy, is a manner for regaining control.</p><p>Scientists have found uncertainty leads to the consumption of utilitarian products (such as cleaning agents and cooking ingredients), i.e. products that give you something to do6. Shoppers are less likely to be interested in the latest fashion trends. When one adds to the mix a virus that demands hygiene, the hyper-demand for particular products can be better understood. The same scientists explore the concept of 'displaced coping', where shoppers purchased items that are of no direct relevance to their uncertainty. This may go one step to explain the recent insatiable worldwide desire for toilet paper.</p><p><em>Implication for retailers: Provide customers with products that may provide a sense of control, such as gardening, DIY, crafts, puzzles.</em></p>
4. Game Theory<p>Whilst behavioural economics and nudge theory assume irrationality, game theory (which also can claim a Nobel Prize by John Nash, as featured in the film A Beautiful Mind), assumes rationality.</p><p>In the same way panic buying exists, customers may panic and create a bank run, where customers take money out en masse which then collapses a bank. In one study, it was found that asking participants to recount a time when they felt fear was found to increase the likelihood of a bank run in the form of a game format7. There was some evidence that inducing sadness was less likely to create a bank run. Given the emotion of fear led to bank runs, it is of little wonder that the fear of a pandemic may have led to panic buying.</p><p><em>Implication for retailers: Influence emotion to avoid fear (e.g. through in-store media and music).</em></p>
5. Personality Theory<p>A recent global survey addressed toilet paper hoarding through personality traits8. It was found that customers who felt more threatened by the pandemic, possessed greater emotionality and greater conscientiousness (i.e. planned more) led to more toilet paper hoarding. This study may suggest that appealing to higher values2,9 (ie encouraging responsible behaviour) may not help to avoid panic buying.</p><p><em>Implication: Encourage long term planning and purchase of long shelf life products, to ease supplies if a second or third wave returns.</em></p>
6. Concluding remarks<p>This is not an exhaustive causal list, but instead focuses on theories that could have at least some practical application to limit panic buying. The theories covered include areas that assume irrationality, such as behavioural economics and nudge theory, or rationality such as game theory. Other theories may sit more on the fence.</p><p>Whatever the drivers for panic buying this is a topic that retailers need to address. Even if panic buying does not reoccur within the Covid-19 pandemic, it is likely to return in some future event whether it be a natural disaster, climate change, strikes or supply shortages.</p>
The dunnhumby Consumer Pulse Survey is a multi-phased, worldwide study of the impact of COVID-19 on customer attitudes and behavior. We surveyed more than 27,000 respondents online in 22 countries, with interviews conducted for Wave one from March 29 – April 1, for Wave two from April 11 – 14, and for Wave three from May 27 – 31. Due to the rapidly unfolding crisis in North America, dunnhumby conducted Wave four from July 9 – 12 in the U.S., Canada and Mexico only. Here are highlights from the study:
In a series of posts published earlier this year, we covered the results of the dunnhumby Customer Pulse – a global study designed to explore changing consumer mindsets during the COVID-19 pandemic. Over three waves, conducted between March and the end of May, we polled thousands of people from more than 20 countries on subjects including supermarkets' responses to the outbreak, the economic outlook, and how their shopping behaviour had changed due to COVID.
At the beginning of September – three months on from the previous wave and with supply chains stable and the changing nature of lockdowns – we wanted to revisit the Customer Pulse to see what, if anything, had changed. Below are some of the standout findings from this fourth tranche of research.
Are you looking to increase your contactable Customer base? How much money are you losing on incorrectly identified Customer communications? Throughout our 30 years of big data experience working with clients across industries around the globe, we have found that maintaining contact through relevant Customer engagement is a crucial component of putting the Customer First.
Essential to preserving contact data is ensuring that you have the most up-to-date information from your Customers; not an easy task. On average, people in the United States will move an average of 12 times in their lifetime. United States Postal Service data indicates 14% of the population change addresses annually. As email contact has grown, it's important to note that, on average, 30% of people change their email addresses each year. This is driven by ISP or job changes, or just to stop being spammed. As people move away from home phones to primarily mobile devices, phone numbers are stabilizing as consumers maintain the same numbers through physical moves.
1. Internal:<p>Maintaining Customer information manually through an internal data team can be time-consuming and costly. It may require Customers to update their information online or through a call center, with an internal data team to validate the changes, and your Customer engagement team to be made aware of the changes so they can update their downstream systems. If you are in contact with your Customers on a weekly basis, this process will need to be on-going and thorough to accurately capture the data changes.</p>
2. Third party:<p>Many third-party CRM systems and databases exist, often removing the manual steps from this process and may even automatically update Customer address information via online sources. In many cases this information is based on publicly available data or the USPS' address tools. However, these updates can verge on being "creepy" to many Customers. Automated systems do remove many of the manual touch points for your teams, but the information is then strictly provided by the third-party databases and processes. Additionally, downstream systems often still require updates from these tools to maintain the most correct Customer information across your data landscape.</p><p>While there are some hybrid models of options, here are the main pros and cons we have identified for the primary methods:</p>
It's a well-worn phrase by now, but it's true that the COVID-19 crisis has drastically altered the global retail landscape. Here in the Asia-Pacific region, a majority of markets are now looking past the panic of the first wave and towards the future. In this series of articles, we'll explore how grocery retailers must adapt to a more omnichannel reality to thrive in a post-pandemic world.
The new wave of online grocery customers
Throughout the COVID-19 crisis we've seen the sharp rise and fall of many trends. As countries veered from one phase of the pandemic to the next, we've seen everything from panic-buying and stockpiling, to a booming demand for hygiene products. While some of these trends have stuck, the resumption of a more 'normal' life in many parts of the Asia-Pacific have seen others tail off.
One trend which is set to stay is in eCommerce, particularly within grocery. Lockdown drove a surge to online grocers the likes of which we have never seen – and it seems customers have been convinced by the online experience. According to multiple recent studies China's grocery eCommerce market, already a booming sector with 29% growth last year, is now tipped to grow by 60% this year as the coronavirus has driven whole new segments of customers to the online grocery market. The trend is also sustaining; the main growth driver in JD.com's record-breaking '618' event this year was grocery, with sales almost doubling.
While general retail has been building momentum online for some years, grocery has been something of a laggard, rarely accounting for more than 15% of the overall grocery market. Historically the major barrier to entry to online grocery has been trust – over 50% of customers do not trust online grocery deliveries to pick the freshest and best items. For years this has been a catch-22 scenario for retailers: customers don't trust the quality of online grocery because they haven't tried it, but they won't try online grocery because they don't trust the quality.
COVID-19 has caused a new wave of customers to finally take a leap of faith into digital grocery. Retailers can be happy that they've won new customers online, but now comes the hard work of retaining them.
The need for Customer Infrastructure
Much has been made of retailers' attempts to keep up with surging online demand during the early phases of the pandemic. Even in globally advanced eCommerce markets like the UK, the lead retailer has had to significantly expand delivery capacity to keep up with demand. In order to meet the needs of new customers, retailers have rightly focused on having the right physical infrastructure in place.
However, if retailers want to keep meeting the needs of customers, they'll now need to focus on a different kind of infrastructure - the online customer experience.
The ease of shopping online is a double-edged sword for retailers. If customers can shop online with one retailer, they can shop online with any retailer. Your competitor store is no longer 1 kilometre away, it is one click away. Customers can literally browse competitor shop windows while they are in your store, and for countless retailers in the Asia-Pac region where online sales have historically been low, their digital stores may be looking rather outdated.
So while you may have won new customers, the fight to keep them is much more challenging.
Getting the digital experience right
The principles of great customer experience online are the same as instore. It's about helping customers easily find what they want. It's about helping customers feel they've got a good deal. It's about having a well-laid out store. Fundamentally, a great digital experience is about putting customers first and responding to their needs. Thankfully, the nature of eCommerce makes it possible to know these needs in detail through the wealth of data available to retailers. The data you're likely already collecting will tell you everything required to build a better overall and individual shopping experience for each customer who shops online.
Here are 3 ways retailers can act now to build a winning customer experience online:
- Bring the offline online
Your customers may be new online, but many of them will be existing offline shoppers. Their loyalty card history enables you to show them items they already buy. Better still, predictive data science can detect which of those items are staple and regular purchases that each customer might need right now – helping them quickly and efficiently build a basket based on their own personal behaviour. This knowledge can also help act as an online virtual assistant, helping customers find substitutes for out of stock products and prompting them with items they may have forgotten to add at the checkout.
- Make it easy to find value
In a world where customers can price compare at the flick of a tab, maintaining price perception is vital. This is easier said than done online, as customers won't spend time browsing the 500 products you have on special that week. Instead, use relevancy algorithms to curate your promotions list at the customer level using their previous behaviour, and show each customer the offers that actually matter to them.
- Optimise the navigation
Newer online customers tend to use online search and taxonomy functions much more than experienced online shoppers. If your online category flow is unclear, difficult to interpret or poorly arranged, shoppers will have a harder and more frustrating experience. Equally, if their searches lead to incorrect or blank results, customers will quickly lose patience. Site analytics data in the hands of an expert is a goldmine for optimising the online navigation – from naming and arranging categories in a strong taxonomy to eliminating poor-performing searches.
Retailers in Asia have a limited window of time to win the continued business of new online customers. As these customers become more familiar with the experience, the greater will be their demands and their likelihood to look elsewhere when their experience is sub-optimal.
At dunnhumby, we've been advising grocery retailers on digital best practise for over 10 years, led by 30+ years of leading experience in data science and we have developed a range of products for retailers to deliver exactly these kinds of industry-leading customer experience online, powered by retail data.
In the next part of our series on the post-COVID landscape in Asia-Pacific, we'll explore the diverging needs of customers in the wake of the pandemic, and how omnichannel personalisation can help retailers meet those needs efficiently and effectively.
Retail leaders must objectively understand how their business currently considers Customers before trying to set a more Customer-centric direction and focus. There are some formal assessment methodologies, like dunnhumby's Retail Preference Index (RPI) and Customer Centricity Assessment (CCA), which offer detailed evaluations of a business' capabilities, strengths and weaknesses based on Customer perceptions (RPI) or global best practices (CCA).
The approach outlined below is not intended to replace these formal tools; rather, these observations are intended as a kind of 'toe in the water' to help retail leaders form early hypotheses and points of views. These are rules of thumb, heuristics culled from global experience. Later, leaders might use these observations to informally check progress from time to time as a way of assessing whether the "program in the stores matches the program in our heads".
1. Who really runs the store?<p>Walking around a store (or better, walking around several), can give many clues toward understanding a retailer's attitude about its Customers, as well as revealing some of the challenges ahead for installing Customer First. As Customers ourselves, we are qualified to assess an organization's 'readiness' for Customer First, simply starting by walking around.</p><p>How a Customer experiences the store shapes their perception of the brand, and there are dozens (even hundreds) of 'moments of truth' for Customers in each shopping trip – opportunities for the retailer to win more loyalty, or indeed to lose it. And it only takes one 'bad' experience to erase all the good.</p><p>Leaders can form an opinion about the Customers' true shopping experience by observing 'Who really runs the store?' – a way to put on a Customer lens to assess if the Customer, the retailer, the supplier, or no one is driving shopping experience decisions, like range and presentation. For example:</p><ul><li>Choose three sections across the store (telling categories include yogurt, pasta sauces, milk, and packaged lunch meats). Look to see how the product is organized and presented (remember to try to see through the eyes of a Customer).</li><li>Is the section organized by brand (e.g. all Danone yogurt is merchandised together in a recognizable Danone brand block)?</li><li>By Customer benefit or usage (e.g. all brands of probiotic yogurt are merchandised together, as are all Greek style yogurts, all kid's yogurts, etc)?</li><li>Or, by some hybrid but logical planogram rather random plan, with little recognizable logic at all?</li><li>Would you conclude that the product display / layout logic is influenced more by supply chain, by brands, or by the Customer need states or trip missions?</li><li>How broad is the range (e.g., number of varieties or sizes)? How deep (e.g., number of brands of the same flavor or variety)? Does the breadth and depth feel Customer friendly, or confusing?</li></ul><p>Of course, analysing any available loyalty data will later tell us how Customers shop the category and that might well be by brand (or flavour or size, etc., and will certainly vary by section). But this first assessment helps us begin to form our perspective on how tuned-in the business is around its Customers, and about where within the business leaders might need to begin to install insights and the Customer language.</p>
2. What messages are Customers receiving?<img class="rm-lazyloadable-image rm-shortcode" lazy-loadable="true" data-runner-src="https://customerfirst.dunnhumby.com/media-library/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNTE0ODQ5OS9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTY0MjUyNDUxM30.7G_Sn_ukMUg7hOE2aq2SjlqJ89dTwJpSQHP3_K99dZg/image.jpg?width=980" id="3ca51" width="980" height="567" data-rm-shortcode-id="33a96859c92db55f20a35e5d8d3e65e8" data-rm-shortcode-name="rebelmouse-image" /><p>Store signage not only delivers a written message, but also a type of 'body language' that Customers tune in to, albeit not always consciously. Look around the store to see both the written and hidden messages, and hear the tone being communicated: ask, do messages speak respectfully to Customers? For example:</p><ul><li>Signage at the entrance rudely telling Customers what the rules are, even though 99.999% of Customers will never even think of shopping without shirts or shoes, or wearing roller blades</li><li>Narrow limits on the quantities of promoted products or services.</li><li>Rules and restrictions, terms and conditions.</li><li>Aggressive security barriers and gates at entrances – although sometimes operationally necessary, these also tell honest Customers that they, the shoppers, are not to be trusted.</li><li>Phony expiration dates for promoted prices – Customers learn that the deal will be repeated soon, if not immediately. Best example is the many carbonated soft drink promotions below shelf price that are repeated frequently, and the innumerable 'roller' prices practiced by many retailers.</li><li>Stupid pricing signs (any stupid sign, really).</li></ul>
3. What messages are Employees receiving?<img class="rm-lazyloadable-image rm-shortcode" lazy-loadable="true" data-runner-src="https://customerfirst.dunnhumby.com/media-library/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNTE0ODUwMS9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYyMDgxMTUyMX0.qIFlDdRtVT6COWsq65y1HkU9T_h2a-eAd1BYtGRRjLY/image.jpg?width=980" id="7531a" width="640" height="360" data-rm-shortcode-id="1de66f41a3b797324b2689f9e3e7109f" data-rm-shortcode-name="rebelmouse-image" /><p>While walking the store, traveling through stock rooms and the employee break room, note the signage and messaging aimed at staff. What seems to be valued more – numbers or people? </p><p>What policies and rules guide employee behaviour?</p><p> How are they expected to interact with Customers? </p><p>Are the messages respectful of staff? Of Customers?</p><p> What do signs say about the culture around Customers?</p>
4. Who has the power to satisfy Customers?<p>dunnhumby's Loyalty Drivers analysis suggests that Customers exhibit four 'mindsets' in their shopping journey – Discover, Shop, Buy, and Reflect. One element of the 'Reflect' mind-set includes the decision to return, exchange, or to request a refund when the product or service does not quite suit.</p><p>On your store walk, observe who has the power to satisfy Customers making a return or wanting a refund: is the front-line employee empowered to satisfy the Customer, or must the Manager be called? Is there one 'service' desk where Customers must queue to get their money back, or can the helpful cashier make it good on the spot?</p><p>Examine the return policy to assess its sensibility and ease from a Customer viewpoint. For example, must a Customer act within 7 or 30 days, and is a receipt required and signature under penalty of perjury? Is the taking of an oath necessary, or perhaps a drop of blood? The store's practice says volumes about who deserves trust in the eyes of the business. Requiring levels of approvals and higher management involvement (or some other form of hoop-jumping) is neither trusting of employees nor Customers.</p><p>The return / refund policies and practices are strong indicators of a company's readiness for, or progress along the Customer-centric journey. Customer First organizations give front-line employees broader authority to resolve Customer needs, and extend the power to satisfy Customers to most members of staff, in some form. For best practices in this area, please see the policies from Nordstrom in the U.S. and Ritz-Carlton globally.</p>
5. Do the words of your leaders matter?<p>Senior leaders set the tone for how Customers are regarded and treated in the business both by their words and their actions, of course. And the C.E.O.S – <u>C</u>ustomers, <u>E</u>mployees, <u>O</u>wners, and <u>S</u>uppliers – all take notice. It's widely documented that leaders who walk the walk are more effective than those who only talk the talk.</p><p>One simple yet powerful way to assess readiness and progress is seeing how leadership's walk and talk align. A word cloud, like the one illustrated below, makes the point very clear. In this example, recent shareholder statements (same quarter) were compared for two companies on a Customer-centric journey. We can see different progress in a form of 'walking the walk' at Retailer X and Retailer Y. The C.E.O.S are hearing what really matters to the leaders, and are forming the Customer culture accordingly, all the way down to store level.</p>
Implications for retail leaders<p>The store shapes Customers' perception of the brand; there are hundreds of opportunities for the retailer to win or lose loyalty in each shopping trip. Customers take clues, consciously and unconsciously, throughout their entire shopping experience, and draw conclusions about retailer warmth and attitude toward shoppers. And it only takes one disappointing experience to erase all the good.</p><p>Retail leaders must take an objective assessment of the shopping experience using a Customer lens to understand their current state and readiness for customer centricity. Pay close attention to the body language and tone of your policies. Store signage, employee empowerment and communications, and practices around assortment and presentation are clear indicators of the organization's attitude about the Customer.</p>
Who actually runs your store?<p><em>This is the first in a series of LinkedIn articles from David Ciancio, advocating the voice of the customer in the highly competitive food-retail industry.</em></p>
In the first episode of Customer First Radio, Dave Clements, Global Head of Retail for dunnhumby and David Ciancio, Global Head of Grocery for dunnhumby kick off the series by discussing what it means to be a truly Customer First business, share which retailers and brands today embody a Customer First mindset, and examine how Customer First materialized during the pandemic with retailers.