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".
Hence, the context and laboratory for these suggestions is the retail store, where the rubber meets the road, so to speak.
1. Who really runs the store?
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.
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.
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:
- 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).
- Is the section organized by brand (e.g. all Danone yogurt is merchandised together in a recognizable Danone brand block)?
- 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)?
- Or, by some hybrid but logical planogram rather random plan, with little recognizable logic at all?
- 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?
- 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?
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.
2. What messages are Customers receiving?
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:
- 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
- Narrow limits on the quantities of promoted products or services.
- Rules and restrictions, terms and conditions.
- 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.
- 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.
- Stupid pricing signs (any stupid sign, really).
3. What messages are Employees receiving?
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?
What policies and rules guide employee behaviour?
How are they expected to interact with Customers?
Are the messages respectful of staff? Of Customers?
What do signs say about the culture around Customers?
4. Who has the power to satisfy Customers?
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.
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?
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.
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.
5. Do the words of your leaders matter?
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 – Customers, Employees, Owners, and Suppliers – all take notice. It's widely documented that leaders who walk the walk are more effective than those who only talk the talk.
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.
Implications for retail leaders
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.
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.
Who actually runs your store?
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.
Using shopper data to develop insights that drive better decisions is an approach many modern retailers follow, but how many manufacturers are really reaping the rewards that granular shopper data can provide…
With many sources of market data available and product sales data, manufacturers may feel that they have sufficient insight to understand which of their brands are performing well and which may need intervention. But to get a true understanding of who is buying your products - why, how and when - a far more granular level of data is required.
Here are some examples of how shopper insight can give brands deeper knowledge of consumer habits in relation to their products:
Your promotions – are they really working?
If you're running a promotion for one of your products, you'll hopefully have sales figures which show whether there has been an uplift in LFL sales during the period of the promotion. An increase probably can be attributed to the promotional campaign. So far so good. But what else do you know about that promotion campaign which could help your future marketing activities and investments? Who is buying your product on promotion? Are you cannibalising sales from existing shoppers who would have bought it anyway at full price? Are they 'pantry loaders' who are buying in bulk, bringing their spend forward? Is it one shopper buying 3 products, or 3 shoppers buying 1 product each? Are you keeping and converting new customers who buy your brand on promotion? By knowing more about who your shoppers are and what motivates them to buy your product, you'll be able to steer your marketing spend more effectively and avoid wastage.
Brand loyalty – does it really exist?
It's one of the biggest challenges for brands in the face of changing consumer habits and proliferation of channels to purchase: generating and maintaining brand loyalty amongst shoppers. Common beliefs that brand loyalty no longer exists and mass marketing is required to keep continually topping up the funnel with new shoppers in order to keep brand sales buoyant are hard to dispute, unless you have data to prove otherwise. Yet if brand owners don't understand who is buying their product and where there might be headroom for growth, they will struggle to create the right environment for this to happen. Industry sales data might tell you what your market share is, but do you know what your shopper's repertoire is? Are they only buying your brand or buying competitor brands within the category as well? How frequently are your shoppers making purchases? What events or factors are prompting their purchase decisions: pack size first, then brand? Or the other way around? Understanding switching, cross-shopping and retention behaviours are key KPIs you can measure from granular shopper insights.
Giving your new products the best chance of success
New product development is viewed as a great way to encourage existing shoppers to buy more of your products, and attract new shoppers to your brand, yet the failure rate for NPD is remarkably high. Convincing retailers to give up shelf space for your new product can be difficult, and if it doesn't bring in the expected return on investment for both parties, retailers will be quick to de-list it. Understanding category dynamics and the likely universe of shoppers who have the highest propensity to purchase will create a solid foundation for your NPD. Using shopper insight can help you determine what proportion of the retailer's customers you should target with your new product – based on previous purchase behaviour and basket mix. Who has a history of trying new products and sticking with them? Getting an early read of 'trial and repeat' behaviour can help with targeting.
Category growth and shopper Needs
Brands and retailers can both be winners if they work together to grow categories. But understanding shopper needs is vital in making this happen. Key questions you'll want to answer are: What are the gaps in the range? Are there any un-met customer needs which could point to opportunities for growth? What is driving loyalty amongst shoppers within particular categories? Did your promotion or new product launch drive overall category growth? What's the relationship between certain products in the category, and which matter most to shoppers?
A great example of collaboration between manufacturer and retailer to co-create a promotional plan to drive sales and category growth can be viewed here.
There are many issues that will undoubtedly be keeping manufacturers up at night – generating and keeping brand loyalty, creating excitement for shoppers in a sustainable way that doesn't damage your brand (overpromotion), driving growth through innovation (NPD) and increasing brand penetration through retail outlets. The great news is that shopper insight can play a key role in solving these issues and giving your business competitive edge. Getting access to more granular data is the starting point…