Tag Archives: customer analytics

Customer Centricity – Now is the Opportunity to know your Customers Better

Customer centricity means that retailers should align products and services with the needs of their most valuable customers 1. Said Peter Drucker more than 50 years ago: “it is the customer who determines what a business is, what it produces, and whether it will prosper.”

Although Drucker’s rationale was spot-on, until recently, adopting customer centricity was a step too far for most companies.  Historically, firms have tended to be product-centric.  As a result, firms were more internally oriented, with their attention focused on selling superior products rather than on being oriented toward the purchasers and users of those products 3.

However, the advent of the internet and Web 2.0 all changed that.

The digital disruption provides an opportunity to focus on  customer centricity

The impact that digitization has on the retail industry is recognized by most commentators as “disrupting”. In fact, retailers have to reconsider the impact of technology on their usual business strategy and aim at implementing digital transformation; otherwise, chances to succeed are miserable, according to ELEKS writing in Medium.com.

The digital disruption is however not always bad news for the retail industry. Digital technology has made it easier to remove the friction points customers have with your business. As a result, the processes are more seamless, straight-through transaction path agnostic of the engagement medium, says Grant Pattison, Senior Manager, Marketing & Sales Technology, IAG.

Retail shoppers are treated with digital surprises when visiting their favorite stores. They ‘re overwhelmed by all the new gadgets and retail technologies such as touch screens, smart fitting rooms and augmented reality that make their shopping experience better. Indeed, data collected via IoT devices and sensors inside the store will help retailers track shopper movement, predict behavior and develop more interactive experiences that appeal to all the senses, concurs Alison Wiltshire, guest author in Internet Retailing.

However, the customers are paying for their experiences. Every time they enjoy the technology, they give something away about themselves to the retailer. The data that the retailer gathers is like gold dust. In fact, retailers are now using predictive analytics and other technologies, along with new organizational structures, to both anticipate and influence customer behavior 4.

So retailers that adopted digital technology have all the means to achieve customer centricity. Not really…

Moving from a culture of product centricity to one of customer centricity

It doesn’t make sense for retailers to use the latest technology to improve their customer’s shopping experiences when everything they are doing is centered round their products. It’s not the products that are important; it’s the customers that are most important!

The true essence of the customer centricity paradigm lies not in how to sell products but rather on creating value for the customer and, in the process, creating value for the firm 3. In other words, customer centricity is concerned with the process of dual value creation.

Your customers rather want to learn that your products add value for them instead of being suffocated about the benefits of the products. Therefore retailers need to communicate their value proposition in the omnichannel; through their websites and in social media networks and in store, suggests Douw G Steyn, Bricks2Clicks.co.za.

So how do you get your company to focus on customer centricity? Ehssan Abdallah article in Heidrick & Struggles’ blog mentioned five essentials of customer centric cultures:

  1. A customer-centric talent agenda. Executives need to determine how to build and sustain their company’s capacity to deliver customer service aligned with the company’s purpose.
  2. Meaningful customer service values. Retailers should ask the following questions to frame and define the organization’s customer service values but also better ensure that employees at all levels can understand and articulate how their actions contribute to success:
    1. What are our customers telling us they need?
    2. How can we harness analytics to drive day-to-day behaviors and processes?
    3. How can we connect customer service values to our organization’s purpose?
  3. Empowered employees. Employees should be encouraged to use their authority wisely, and thereby sending a strong signal to all the stakeholders of the company’s “whatever-it-takes” philosophy to delight its customers.
  4. A strong sense of accountability. In moving toward an empowered customer-centric culture that leverages talent effectively, leaders must select indicators to gauge performance and track progress for both behaviors and outcomes.
  5. Leaders who “walk the talk”. When executives promote customer service values, it sends a strong signal throughout the organization that management recognizes the customer as central to its existence.

Strong, customer-centric cultures offer organizations an organic, and sustainable, avenue to better results. Not according to some commentators.

Reasons why customer centricity may not be working (a different opinion…)

Jack Springman, a director at Digital Springboard didn’t make customer centricity part of his objectives this year. Here are his reasons:

  1. Customer-centricity is too vague a term to be useful. What does customer-centricity mean, specifically? How do you define it? How do you know when an organization is genuinely customer-centric?
  2. Customer-centricity is not measurable. If you can’t measure it, you can’t deliver it. So how do you measure centricity? You can’t.
  3. It’s a means, not an end (and one that could be counterproductive). Improving the customer experience is an end; customer-centricity is a means. So even if you could measure centricity, which should be subsidiary to what you are trying to achieve.
  4. Staff-centricity versus customer-centricity. There is a relationship between staff satisfaction and customer satisfaction. Unhappy employees may battle to be customer centric.
  5. Customer value requires all stakeholders to be looked after. Of course, no business can exist without customers, but nor can any but the very smallest survive without staff or suppliers or perhaps partners.
  6. Reduced prioritization in the strategic agenda. Think about the impact in other parts of the organization, especially as customer centricity is supposed to be an organization-wide commitment.

Jack suggests that in place of customer centricity, firms should create value for customers in a way that also creates value for the business.

Concluding

After all of this, it’s not about the company. It’s about the customer. Jack Springman rightfully said that no company can exist without customers. So, if you want to keep your customers and get some more, you must know what their needs, wants and demands are. Of course, if you add value for your customers, then they will return the complement.

And yes, with aid of digital technology unsurmountable bits of data are collected from our customers for us to utilize.  After all, customer’s first point of interaction is mostly nowadays a machine or robot…

Shouldn’t we rather have a customer/ robot focus from now on?

Read also: The Value Proposition for Bricks and Clicks Retailers

Image: Flickr.com

 

Notes:

1 Lemon, K.N. and Verhoef, P.C., 2016, Understanding customer experience throughout the customer journey, Journal of Marketing: AMA/MSI Special Issue, 80:69–96.

2 Drucker, P.F, 1954. The practice of management: A study of the most important function in America society, Harper & Brothers.

3 Shah, D., Rust, R.T., Parasuraman, A., Staelin, R. and Day, G.S. 2006. The path to customer centricity. Journal of service research, 9(2):113-124.

4 Van den Driest, F., Sthanunathan, S. and Weed, K. 2016. Building an insights engine, Harvard Business Review, 94(9):64-74.

Implementing Social Customer Relationship Management in Retail

One of the most important goals for retailers is to maintain long-term and profitable relationships with their customers. The construct Customer Relationship Management (CRM) started when retailers moved the orientation of their business from their companies to their customers. However, the advent of the internet, Web 2.0, and online social networks have disrupted the traditional way that retailers communicated with their customers.  Hence, Social Customer Relationship Management (SCRM) came to the fore because of the emergence of a “social customer”.

Social customers comprise the 2.8 billion* active social media users (Dr Dave Chaffey *, Smart Insights, 27 Apr, 2017). With these billions of social media users, retailers are no longer in control of customer relationships. Instead, customers and their highly influential virtual networks are now driving the conversation, which can trump a retailer’s marketing, sales and service efforts with their unprecedented immediacy and reach 1. However, social media needn’t to be a threat for retailers. Indeed, retailers that learn how to use social media technology to their advantage can gain valuable insights about the demographics and buying behaviour of their customers.

The use of technology for successful Social Customer Relationship Management

Social networks offer retailers practicing Social Customer Relationship Management masses of customers who group themselves around a brand 2. It is here, in these networks, that retailers can study the community’s behavior toward a brand or firm beyond purchase. The data originate from motivational drivers such as word-of-mouth activity, recommendations, customer-to-customer interactions, blogging, and the writing of reviews 3.

But retailers haven’t yet realized the opportunities of using their own data resources for Social Customer Relationship Management. Sandra Gittlen, mentioned  the following recently in CIO: “In an age where most companies have a social media presence on platforms such as Facebook, Twitter, LinkedIn, Snapchat and Instagram, it’s somewhat surprising that many still haven’t figured out how to turn the data gathered from company-owned properties and broader social media listening tools into automated and actionable intelligence”.

Trainor, Andzulis, Rapp and Agnihotri, (2014) 4 identified four functional blocks enabled by social media technology that are particularly relevant in a CRM context:

  1. Sharing – refers to technologies that support how users exchange, distribute, and receive digital content (e.g., coupons, texts, videos, images, “pins” on Pinterest, etc.). This is similar to the concept of information reciprocity – the activities and processes that encourage customers to interact and share information – which has been shown to positively influence a firm’s ability to manage relationships.
  2. Conversations – represents technologies that facilitate a firm’s interactive dialog with and between customers (e.g., blogs, status updates on Facebook and Twitter, discussion forums, etc.) and capture the information from these dialog.
  3. Relationships – represents the set of technologies that enables customers (and businesses) to build networks of associations with other users (e.g. Facebook, LinkedIn, Ning, Yammer, etc.) and allows organizations to utilize this network information.
  4. Groups – represents the set of technologies that support the development of online user communities centered on specific topics, brands, or products. Examples include SalesForce.com’s Ideaforce and Igloo’s Customer Community application software.

Integrating your Social Customer Relationship Management program with your marketing automation

SCRM deals with the strategies, processes and technologies that retailers can use to link the social web with their CRM strategy. According to Reinhold and Alt, (2012) 5, SCRM poses a challenge for large firms with numerous employees, market offerings and offices. Consequently, they need to discover the relevant conversation threads, synchronize information flows, initiate the appropriate actions and communicate at an individual level within millions of social web conversations.

However integrating SCRM with marketing automation is not impossible – you only need to start right. Malinda Wilkinson (DestinationCRM.com) advises that it’s important that your technology should always follow your process, not precede it. “Without this integration, it is difficult to create a consistent experience for your prospects and customers. And on top of that, too much time and too many resources will be drained trying to coordinate activities to ensure leads don’t fall through the cracks”, concludes Malinda.

Fitting your Social Customer Relationship Management program with your business philosophy

The success of an effective CRM system depends on the background marketing methods and business philosophy 2 of retailers. Therefore customer centricity should become the new strategic goal, where retailers build their brand and image together with their customers.

Linda Shea in AdAge.com proposes the following to become and remain a customer centric company:

  • Executives need direct interaction with customers. The key to executive buy-in, commitment and active support is first-hand knowledge and understanding of what is delivered to the customer, relative to their needs and desires.
  • All employees need to embody the intended customer experience. A narrative must be cascaded down to every single individual in the organization. Your employees must clearly understand their role in delivering the promise the narrative makes to the end customer.
  • Just say “no” to off-strategy ideas. Excitement abounds in most organizations with ideas and fresh thinking that may lead to new revenue streams. However, it is imperative to recognize that customer-centricity is not a destination but rather a multi-faceted, multi-year journey that will require laser-sharp focus, commitment and investment.

Concluding

Retailers that are not with their customers on the social networks will soon run out of customers. The Social Customer Relationship Management construct is customer centric by definition, giving retailers the opportunity, with the aid of marketing automation, to be part of the social media cloud.

Further reading:

  1. Finding Customers in the Vastness of the Internet
  2. Predictive Analytics helps Retailers to make sense of Big Data
  3. Demise of Loyal Retail Customers in the Digital Age

Notes:

1 Heller Baird, C. and Parasnis, G. 2011. From social media to social customer relationship management, Strategy & Leadership, 39(5):30-37.

2 Bagó, P. and Voros, P. 2011. Social customer relationship management, Global Journal of Enterprise Information System, 3(3):35-46.

3 Yoon, K. and Sims, J.D. 2014. Integrating Social Media and Traditional CRM: Toward a Conceptual Framework for Social CRM Practices, Harnessing the Power of Social Media and Web Analytics, IGI Global, Chapter 5:103-131.

4 Trainor, K.J., Andzulis, J.M., Rapp, A. and Agnihotri, R. 2014. Social media technology usage and customer relationship performance: A capabilities-based examination of social CRM, Journal of Business Research, 67(6):1201-1208.

5 Reinhold, O. and Alt, R. 2012. Social Customer Relationship Management: State of the Art and Learnings from Current Projects. In Bled eConference, 155-169.

Image:

Flickr.com

 

Big Data for Small Retailers – Is it Doable?

Do Big Data (BD) for small retailers offer an opportunity to compete with the big retailers or is it too much trouble? One of the fall outs of the digitization of business is the massive amount of data that are everywhere. Every time a customer makes a purchase online or registers online, data is generated. The data can potentially tell you almost everything about consumers. Retailers that sort, analyse and interpret BD can add value for customers and so increase their shopping experience.

Surely retailers should take advantage of BD since it contains captured detailed information that probably was overlooked in the past. However, to get the most out of BD, retailers need to be innovative. The promise of new revenues, customers, and new businesses with BD will require development and investment in teams and technology 1. But first let’s have a look at what BD is all about…

What is big data?

Big data is a term that primarily describes data sets that are so large, unstructured, and complex that it requires advanced and unique technologies to store, manage, analyse, and visualize 2. Therefore, big data represents the data sets that cannot be perceived, acquired, managed, and processed by traditional IT and software/hardware tools within a tolerable time 3. Compared with traditional data sets (small data), big data typically includes masses of unstructured data that need more real-time analysis, according to Chen, Mao, and Liu, (2014).

Where can retailers find Big Data? Rajdeep Nair responds as follows on Quora: “Data is everywhere… it can be purchase data or images uploaded by you on the social media site or data sent by mission sent to Mars by NASA. Everything that is there on the internet and company or an organisation’s confidential data stored on the server. Mostly  data is stored on the server, the technology of which is improving and evolving rapidly.”

However, a good place for small retailers to find “Big Data” is on their own systems. Have you ever analysed your own data sets before?

What retailers can do with Big Data

According to Russell Walker 1, firms that are first movers in leveraging BD have great advantages because they develop innovative insights about customers and markets. These insights can transform services, and even business models. Bernard Marr, contributing to Forbes declared Big Data as “A game changer in the retail sector”.

Bernard notes that Big Data analytics is now being applied at every stage of the retail process. Says Bernard: “BD is used to understand what the popular products will be by predicting trends, forecasting where the demand will be for those products, and optimizing pricing for a competitive edge.”  Moreover helps BD retailers to identify the customers that are likely to be interested in their products and works out the best way to approach them. It also to help them making the sale and working out what next to sell them.

Alex Woodie writing a piece in Datanami.com suggests there are 9 ways retailers are using big data technology to create an advantage in the retail sector.

The advantages of Big Data to retailers

  1. Recommendation Engines – by training machine learning models on historical data, the savvy retailer can generate accurate recommendations before the customer leaves the Web page.
  2. Customer 360 – customers expect companies to anticipate their needs, to have the products they want on-hand. Also to communicate with them in real time (via social media), and to adapt to their needs as they change. In the cutthroat world of retail, developing a customer 360 system using Big Data may be a matter of survival.
  3. Market Basket Analysis – is a standard technique used by merchandisers to figure out which groups, or baskets, or products customers are more likely to purchase together. It’s a well-understood business processes, but now it’s being automated with the help of BD.
  4. Path to Purchase – analyzing how a customer came to make a purchase, or the path to purchase, is another way big data technology is making a mark in retail.
  5. Social Listening for Trend Forecasting – platforms like Hadoop were designed to facilitate the handling and analysis of large amounts of unstructured data, such as Facebook posts.
  6. Price Optimization – setting the right price requires knowing what your competitors are charging. Data can be collected electronically using daemons that crawl competitors’ website to get detailed info about product pricing.
  7. Workforce and Energy Optimization – big data technology can deliver benefits on the marketing and merchandising side. As a result it can help big retailers optimize their spending on human capital.
  8. Inventory Optimization – by analysing BD, retailers can plan their seasonality in the shipping algorithms better.
  9. Fraud Detection – retail fraud is a huge problem, accounting for hundreds of billions of lost dollars every year. Retailers have tried every trick in the book to stop fraud, and now they’re turning to big data technology to give them an edge.

Concluding

The narrative about Big Data is more with ‘Big Retailers’ at this moment. However, with smaller retailers adding the online channel to their business, there are ample opportunities for them to use their own data to great effect. Everything else will cost retailers a lot of money. Maybe to start with small data is better for smaller retailers.

Have a look at this video by Tera data corporation more more on Big Data for retailers:

Notes

1 Walker, R., 2015. From big data to big profits: Success with data and analytics, Oxford University Press.

2 Xu, Z., Frankwick, G.L. and Ramirez, E. 2016. Effects of big data analytics and traditional marketing analytics on new product success: A knowledge fusion perspective. Journal of Business Research69(5):1562-1566.

3 Chen, M., Mao, S. and Liu, Y. 2014. Big data: A survey, Mobile Networks and Applications, 19(2):171-209.

Image and video

Pixabay

Tera Data Corporation