The new table stakes of customer-centricity

When the cost of information was high, it used to be that you could get away with uncompetitive pricing.

Before virtually everyone had access to high-speed internet anytime, anywhere, you could get away with silo-ed sales channels and disconnected customer experiences.

Before your customers had frequent exposure to best-in-class customer service, or easy to use on-line checkout or relevant personalization–or whatever counts for meaningfully useful these days–you could get away with parts of your value proposition being less than ideal.

But in a world where the power continues to shift from brands to consumers, where your customer doesn’t care how you happen to be organized, where she increasingly expects you to know her, remember her and tailor experiences to her precise wants and needs, the table stakes continue to rise.

Sure, you can probably get away with some of your short-comings for a bit longer.

But getting away with something hardly demonstrates leadership.

And failing to understand, and to act upon, the differences between “nice to have” and table stakes is a sure path to failure.

 

Built for me (Part 3): The promiscuous shopper

You may know the old joke that ends: ”We have established what you are, madam. We are now merely haggling over the price.” Now apply that in the retail context.

I introduced the notion of the promiscuous shopper nearly 3 years ago. This special, but hardly rare, breed of consumer is always on the hunt for the best deal and completely devoid of any potential to be loyal.

When you choose to anchor your marketing strategy on relentless un-targeted promotions, and then layer on extra coupons and rewards points, it’s the promiscuous shopper who is the first to bite, and who then spikes as a percentage of your business.

To be fair, most businesses need some of these consumers from time to time. There is clearance product to be sold and any sensible marketing and merchandising strategy will reflect a natural demand curve.

An unusually high level of discounting may also be necessary to drive initial trial, so long as you are confident that repeat business has the potential to be loyal and profitable.

And certainly promiscuous shoppers are not always immediately apparent. Time and solid analysis are needed to separate them out and start to chase them away.

But always bear this in mind: when the promiscuous shopper feels that your business is built for them, it’s the first sign of trouble. Big trouble.

Built for me (Part 2): Treat different customers differently

In my last post, I suggested that the most powerful brands elicit the feeling from their core customers that the business was designed around their unique needs and wants. That is was built for them.

This idea is a core tenet of strategic business model design. But it extends to tactical execution as well.

I’m hardly the first person to espouse the “treat different customers differently” mantra, but embracing it is essential to putting “built for me” into practice day in and day out.

Built for me can extend to how you deliver your customer experience. One size fits all approaches rarely yield superior customer service marks. When you don’t pay attention to–and act upon–my unique preferences, I’m less and less likely to return.

Know me, show me you know me and show me you value me.

Built for me should be a driving force behind just about any brands marketing strategy. More and more, mass promotion fails to move the dial or gives the illusion of prosperity when all you are doing is chasing sales with no potential to be profitable–or chasing customers with no potential for loyalty.

Leverage analytics and insight to deliver a progressively more personalized set of messages, offers and experiences.

There is no question that pursuing a built for me strategy introduces cost and complexity. But more and often than not, failure to embrace this path eventually leads to middling performance and consumers who are more than happy to take their business elsewhere.

 

This might take a while

Certainly the world is moving at an increasingly faster pace.

Clearly we have seen transformative new business models seemingly come out of nowhere to supplant industry incumbents.

Without a doubt, traditional sources of customer loyalty are being challenged in a rapid onslaught of ever-expanding options and innovative marketing techniques.

Yet, for many brands, it is still very much the case that relationships and trust matter.  And those precious assets are rarely earned quickly.

Despite the publication of Permission Marketing well over a decade ago, too many brands fail to follow the basics of Seth’s admonitions.

Too many brands want to get married on the first date.  Too many brands fail to take the time to treat different customers differently.

Too many brands think quantity trumps relevance (I’m looking at you Groupon).  Too many brands think they can shift their customer base quickly (I’m looking at you JC Penney).

As the pace of change accelerates, you may be tempted to do everything faster. But if you have a business model that is anchored in trust, rooted in deep relationships and in building a growing permission-based asset, the right answer may well be to go more slowly and deliberately.

Yes, it might take a while. But it’s likely to be worth it.

 

 

My Top Ten Blog Posts of 2012

Happy New Year.

And now, as has become my custom, here are my top ten posts of the past year. Enjoy. Comment. Debate. Share.

1.   The world’s best loyalty program.

2.  The end of e-commerce.

3.  JCPenney’s Road to Recovery (Part 2): The intervention.

4.  JCPenney swings for the fences (Part 1).

5.  JCPenney’s Road to Recovery (Part 1): The reality distortion field.

6.  JCPenney’s Road to Recovery (Part 3): The 10 point action plan.

7.  In gut we trust.

8.  Now you’re just somebody that I used to know.

9.  Honey, I shrunk the store.

10. 8 things that are wrong with your omni-channel strategy.

And one of my personal favorites that, in my humble opinion, was mostly overlooked: Knowing what ‘yes’ looks like.

But it did get excerpted in Seth Godin’s new book The Icarus Deception.  So I got that going for me. Which is nice.

Massively easy. Precisely wrong.

Most of the year turn on the TV, open your Inbox, wade through the Sunday paper and just about all you see are advertisements filled with store-wide sales and category-wide coupons and double points this and double points that.

During this Holiday season it’s even worse. More advertising. Promotions layered on top of promotions. Door busters. Early opening specials. And on and on.

It’s the retail industry’s equivalent of carpet bombing.

Why focus on best fit consumer segments? Why worry about reinforcing–or at least not denigrating–your brand positioning? Why fret about profitability? Let God–or the Finance department–sort it out after the fact.

The typical defense of this approach is that it works.

Really? Show me the data.

If your definition of “works” is market share, rather than building progressively deeper relationships with valuable customers, I will grant you that. If it’s about revenue, instead of profitability, okay you win.

But the real reason is that it is easy.

Developing actionable customer segmentation methods, building a permission asset, testing your way into progressively deeper personalization and increasingly differentiated and relevant value propositions takes time, involves risk and requires a financial investment.

Relying on mass, undifferentiated marketing is taking the easy way out. And for many, it will be the shortest way out of relevance and, ultimately, out of business.

The shopper genome project

No doubt you’ve heard of The Human Genome Project–the effort to decode our species by identifying and mapping all of our genes. Ultimately it’s an effort to better understand what makes us tick, from both a functional and physical standpoint.

As a business or brand leader you have a similar challenge when it comes to decoding your current and potential consumers’ attitudes, needs and behaviors.

In a world of vast and growing choices, the pressure is only increasing to develop deep, actionable insight into your customer base.

In a world where most segments are growing slowly, your only chance for out-sized growth is to gain market share. And that requires understanding which levers to pull that are compelling enough to win new clients or grow share of wallet with existing ones.

In a world where most competitors are either engaged in a race to the bottom or stuck in tired old mass marketing techniques, you have the chance to win big by embracing a “treat different customers differently” strategy. But you need to understand how to meaningfully segment your customer base and exactly which value propositions to deliver to which segments. And you need to get into action.

In a world where smart devices are growing like crazy and (finally!) offer the promise of the right offer to the right customer at the right time, you had better be able to follow consumers as they channel hop and to deliver permission-based, highly relevant and personalized communications.

More than a decade ago Don Peppers and Martha Rodgers opined that the only true lasting competitive advantage is to know more about your customers than the competition–and to be willing to act on that insight.

That’s never been more true than right now.

 

Pick a lane

Funny how often it seems like keeping your options open seems like the least risky strategy.

The job seeker crafts an “I can do anything” resume designed to make her appealing to the widest range of potential employers.

A brand launches a low price guarantee, while still claiming to embrace a strategy focused on service and differentiation.

A retail CEO attempting a bold turn-around talks about making his brand more distinctive and relevant while also striving to become “everybody’s favorite store.”

Sometime you can have your cake and eat it too. Spiritually, the middle way can be the path to enlightenment. Black and white thinking can often get you into trouble.

But in a world of overwhelming data, endless choices and a sea of sameness, you had better choose. And choose wisely.

It’s far more risky to engage in the race to the bottom if you aren’t committed to being THE low-cost provider.

It’s far more risky to try to be a little of everything to everybody than something powerfully compelling and remarkably relevant to a tightly defined set of consumers.

We are all familiar with the driver who straddles the line, failing to commit to a lane.

But that’s just annoying.

For businesses, it’s death in the middle.

Pick a lane.

And then step on the gas.

 

 

 

Big data, little action

You’re probably hearing a lot about so-called “Big Data” and “Big Data Analytics.”

Here’s one definition I like: “Big data analytics is the process of examining large amounts of data of a variety of types to uncover hidden patterns, unknown correlations and other useful information.”

More and more, companies will start to discover that–unless they can win on price–their only hope for carving out a sustainable advantage is to become more intensely customer relevant than the competition. Making sense of the ever-growing pile of consumer data–transactional, web browsing, social media activity and the like–can be incredibly powerful. There is no question that innovative technology and new techniques are emerging that will transform brands’ abilities to glean powerful insight.

But…

But the reality is that for many companies the problem is not a paucity of data or an inability to extract nuggets of potentially interesting findings. Data is not insight. Insight is not action.

Many of the companies I have worked for have a ton of data, but not an ounce of capability nor willingness to act upon it.

If you don’t have a well articulated customer growth strategy, if you don’t have people who know how to turn data into actionable tactics, if you don’t have leadership committed to customer-centricity and being channel agnostic, more data is not going to help.

First things first.

 

 

Retail’s fifth “P”

For years, marketers have been told that their marketing plans must address the “4 P’s”: product, price, promotion and place.

Over time, various gurus have come along suggesting that other P’s are essential components of any marketing strategy. So now we have people, physical evidence and process thrown into the mix. Others have moved away from the letter P entirely, giving us a couple of variations of the “4 C’s” as well as the “7 S’s.” Fair enough.

But in a world where options are exploding, channels are blurring and consumers are easily overwhelmed, the new “P” that really matters is “Personalization.”

Sure, there are segments that are all about price, where the customer is willing to do the heavy lifting to get the best deal. But if aren’t Costco, Amazon or a handful of other retailers, you can’t win just on price and dominant assortment. You HAVE to treat different customers differently. You have to embrace personalization.

It is said that “retail is detail.”

Now retail must become “me-tail.”