Applying customer-centric insights for sustainable competitive advantage
The retail industry is growing ever more intense and diverse. Traditional retailers must now compete with alternative formats, such as ultra-low-cost retailers like Aldi; and with specialists, like Whole Foods and Trader Joe’s. Amazon now ships groceries and is opening more distribution centers closer to main population centers. Add dollar stores and big-box players to the mix, and the marketplace of just a decade or two ago seems cast in the amber of mom-and-pop grocers with their wooden placard signs.
In this whitepaper, we reveal why early efforts to shift towards shopper-centricity have been unsuccessful, and present solutions for how these challenges can be overcome. The key questions explored answered include:
• How do you implement a systematic and comprehensive approach to understanding individual shopper needs at detailed levels in an always-on, dynamic manner? and
• How do you incorporate insights into daily decisions to build toward a shopper-centric approach that provides sustainable competitive advantage without risking shorter-term objectives?
To access our recommendations for implementing a shopper-centric approach, download the full whitepaper.
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Here’s an exercise for marketers trying to better know their customers: try doing it over a nice glass of Syrah.
Chances are the wine – like many customers – will give a different impression at different times. Even connoisseurs struggle with this phenomenon. Thanks to many variables, including the weather, food, and even the music playing, a wine judge’s preferences can oscillate fairly dramatically. According to a story in The Guardian, several research studies bear this out. One judge, Robert Hodgson, has found that only about 10 percent of tasters are consistent in their rankings of the same wine.
The story cites several other studies. One, from Heriot-Watt University in Edinburgh, found that different music could boost the judge’s wine score, sometimes by as much as 60 percent. “Researchers discovered that a blast of Jimi Hendrix enhanced cabernet sauvignon while Kylie Minogue went well with chardonnay,” the report states.
The story went on to identify several other contextual factors that affect a taster’s preference. The palate could be changed by what they’d tasted earlier, the time of day, the amount of sleep they had had, their health and the weather.
Same goes for the everyday shopper upon entering a grocery store, logging on to a website, or checking a promotional message on a smartphone. Each person has a basis of relevance, but it can shift slightly based on a bunch of contextual factors.
This is why I think about relevance in terms of content plus context. The marketing message clearly needs the proper offer to capture the customer’s attention, but it should be framed in an environment that gets customers to pay attention. Our work with high-frequency retailers, for instance, has shown that placing the same offer in a relevant contextual environment can more than double the profit margin per customer.
Such contextual relevance takes time; it is managed across a continuum of customer interactions, spanning months and even years in some cases.
How to begin? Like most customer management strategies, the process should start with segmentation, and sub-segmentation, to create a layering of insights. That said, it’s important to ensure that you don’t make the campaign so complex that it is too onerous to execute reasonably.
Once the marketer has identified its best-prospect customers, it is time to explore the “how” – by creating the proper contextual environment for the brand message. This is where the collected data proves its mettle, and flexibility, because the customer’s location, life stage, individual preference and even activities can alter what is important at that moment.
Purchasing behaviors, for example, may show a shopper buys staple groceries on Sundays, but one or two gourmet items on Thursdays. This may indicate a date night or regular special event that can be enhanced with an offer for flowers or dessert. Likewise, the data can be used to engage new mothers returning to work, specific ethnicities, or a combination of the above three.
Think of it next time you open a bottle of wine. Are you taking into consideration before selecting the wine that it may taste better with one type of food versus another? If not, then think about your planned meal, and how the taste of the food will affect the wine experience. That time given to consider the contextual environment – like pairing an Australian Riesling with a spicy Thai dish – can improve your enjoyment of that wine.
When it comes to reaching customers, the window of opportunity is often realized by traveling through several doors. When that customer is a B2B client, those doors can lead to the executive suite, the manufacturing floor or even the farm field.
Consider a day in the life of a business customer. Perhaps a purchase manager just found out she landed a promotion but at an office in another part of town. This event would likely change her needs and preferences. For example, due to her longer commute, the new executive may prefer to get her communications during her drive time via cell phone (hands free, of course).
The point is that the relationship between a loyalty initiative and its customers, regardless of who they are, is a collaborative one, reinforced through meaningful communications and recognition. So how does an organization get there? By being relevant, which comes from understanding four doors that outline the basic behavioral dimensions of the customer: the spatial, temporal, individual, and cohort doors.
I’ve written about the four doors of relevance before, but always applied them to a business-to-consumer relationship. When I began writing my book, “The Loyalty Leap for B2B,” I reconsidered them from the point of a B2B company. Let’s walk through each door together.
Spatial: In the B2B setting, the spatial door refers to physical, online and otherwise digital locations of the customer company. It requires mapping a company’s venues, knowing the whereabouts of its customers, and how the physical and digital locations affect how the organization brings its products to market. All of this means understanding how the company’s customers use its business.
Temporal: In its most basic sense, the word “temporal” means timing. Businesses, like people, have life cycles and life stages that introduce different needs at different points in time. What a business needs at one stage might not be relevant at the next, particularly if it acquires a new competitor or moves offices. Key markers such as size also will shift or introduce needs, in particular with financing, office equipment and government regulations.
Individual: The individual door reveals a company’s interests, mission, and preferences, as well as the unique proclivities of the buyer or business owner who is the contact. However, the B2B operator should recognize the characteristics of the business, not the needs of the individual with whom it is doing business. The needs of the individual in a B2B setting should be viewed as a collective.
Cohort: The last door opens to those characteristics – the moral compass, themes and purposes – that define an organization’s culture, under which its employees come together. These core purposes may include sustainability, which is a focus of Procter & Gamble and Walmart, or shared missions, such as feeding the hungry. The cohort door also discloses a company’s memberships to trade groups or organizations, as well as partnerships with buying groups.
With the use of the four doors, a B2B organization can ensure that everything it does throughout the company is formulated around its customers. Consider a family farm. While the spatial door reveals how different soils and climates affect growing conditions, the temporal door will provide insight into seasonal needs. More intimately, the individual door will open to specific values, such as a preference for recycling, while a membership to the National Family Farm Coalition, exposed through the cohort door, will indicate that the farmer is likely not an agribusiness.
By using the four doors in this way, a company can put the client at the heart of its objectives and develop the kinds of relevant products, promotions, messaging, and delivery that make its customers stop and say, “Hey, they get us.”
That is a sentiment that will open many windows, and doors, of opportunity.
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THE LOYALTY LEAP
In his bestselling book, LoyaltyOne President Bryan Pearson draws on more than 20 years of first-hand experience. His expertise in building emotional loyalty in the information age is demonstrated through insightful stories from the trenches of the data-gathering and marketing communications fields.