Nothing New Under The Sun!

Ecclesiastes 1:9 (NIV) What has been will be again, what has been done will be done again; there is nothing new under the sun. This has always been for me a very interesting quote from the Bible. What does this have to do with retail you ask? Retail was forever a service business not a product business. A change occurred somewhere shortly after WWII with the huge economic boom that followed and the commoditization of retail in the form of lower product prices over service. Everyone can now be “rich”! At least that was the dream.

The switch from service to product was subtle and took a number of years to fully catch on. It was a race for who could get big enough to control product price. In retail the focus until late has always been about operational optimization in the form of product costs vs price sold. Nothing about customers or service was focused on because the value proposition was the lowest price. Hence retailers like Wal-Mart grew to be gigantic and the good old great service companies I remember like Sears became a shadow of what they once were or gone. The problem is most companies followed this model which they were in many ways forced to and found themselves in a death spiral. We know who they are, JC Penney, Sears, Kmart, Montgomery Wards, Circuit City, Borders and soon to be Barnes and Noble for example.

Barnes and Noble is a very interesting study. They did it all you might say, online, in store experience (remember Starbucks), customer service/brand loyalty and even gadgets like Nook! One word, gives us that answer, Amazon. It took 10 years or so but with the advent of electronic books easily downloaded at a great price along with Amazon’s personalized and convenient way to purchase, market share then moved away from Barnes and Noble like a vacuum. But what about omni-channel, mobile, customer experience theory that many retailers are being told to go run off and do? Would mobile phone applications or tablets for the store employee have stopped the flow of red ink? What was it Barnes and Noble should or could have done differently? Were they just collateral damage from a market change unable to re-invent themselves?

There is no simple answer to this question and no silver bullet to the problem. The answer does lie in understanding your customers and doing something that makes them feel good about spending money with you on a regular basis. How do you do it? First you are not going to out “Amazon” Amazon and the fight for lower product prices is a non-starter. What does Amazon have? I can tell you from my point of view. It is selection (you name it they have it), reviews and trusted advice, convenience (one button shopping a great 2 day free delivery on most items) and many other things such as movies, tablet devices, etc. Amazon’s Prime is very sticky!  

You must think like a customer. Why buy from you? Why would I go to a store to purchase anything? The biggest reason is I want it now. That means you better have inventory that I can see and acquire on-line and quickly get into my hands without a hassle. The shopping experience is a very social thing and still very sticky as well. I am motivated by many things when it comes to shopping. The Brand, are you in or out? The location, is it convenient and clustered with other stores/brands I go to? Are your products unique and satisfying to me and my social network? Do you know me and treat me special when in your stores? Do you give me preferential treatment (This is a big one)? Do you give me deals or services that let me know you are thinking about me? If you do these well, then you can give me all of these neat things for my phone and on the web but not before.

Technology is critical to execute in such a fashion. You must have real-time operational access to all this customer information for delivering that great service at that glorious point of impact. Remember you are selling a service the generation of revenue from the sales of an item is just a by-product.  Focus on how you can provide a unique and differentiated experience and then look how technology can serve you.

The Yin and Yang of 21st Century Retail

“In Chinese philosophy, the concept of yin-yang which is often called "yin and yang” is used to describe how seemingly opposite or contrary forces are interconnected and interdependent in the natural world; and, how they give rise to each other as they interrelate to one another.” Wikipedia. The “yin and yang” in retail today are the forces of technology driven to automate everything pitted against the need for the human touch and relationship. Both are much interconnected and absolutely required in this staggering logistical and operational quagmire of ecommerce married with hundreds maybe even thousands of brick and mortar stores flying the same flag.  In fact you cannot expect to succeed and grow as a retailer if you don't completely understand both of these forces and learn how to make them “give rise” by their interconnectedness.

This is where many retailers are challenged because of their conventional organizational structure trying to accomplish something unconventional. Most retail companies are siloed by how they operate organizationally. Traditionally, you have The CEO, CIO, CMO, VP of this and that all looking at their world with a lens focused on their point of view and goals. There is a lot of talk these days about the CMO becoming more of a quarterback than the traditional “advertising” role paid to promote the brand. I have even recently been seeing this new title, Chief Customer Officer.  “A chief customer officer (CCO) is the executive responsible in customer-centric companies for the total relationship with an organization’s customers. This position is relatively new addition in the CxO hallway, and was developed to provide a single vision across all methods of customer contact. The CCO is often responsible for influencing corporate activities of customer relations in the call center, sales, marketing, user interface, finance (billing), fulfillment and post-sale support. The CCO typically reports to the chief executive officer, and is potentially a member of the board of directors.”  Wikipedia. So things are in motion to evolve the traditional hierarchical organization creating a new “thread” that runs through the entire company focused on the customer experience. This is a very important step forward if you desire to be a leading brand.

This new role can provide the leadership, vision and change in culture required to bring together these potentially opposing forces of technology and humanness. Technology is so much more than it was just a few years ago where your primary goal was to reduce cost in the supply chain so you could maximize profit. That was the world of product retailing. The customer in many ways was an inanimate object that you marketed to and competed on price for growth of your business. Today in this new era of the customer, traditional organizations and business strategies built on domination through getting the lowest price does not hold much favor for long term success. You must as in Chinese philosophy learn to use the “yin and yang” of technology and humanness to work in an interconnected and complimentary fashion. This is customer-centric retailing! What are you doing?

Is it the Carrot or the Stick for Customer Retention?

I love to hate airlines. I feel like an indentured servant always working off my rewards and benefits. Airlines are all the same to me and I have clawed my way to gold or platinum on every one of the major airlines over the last twenty five years. I know people that rather than taking a direct flight with a non-affiliated airline for one hour, will take four hours with a connection just to get the points from “their” airline. I believe airlines tend to stay away from the word loyalty and use ambiguous names like Medallion or Advantage. I don’t feel like I am being rewarded because I flew with their airline. I feel like I had to pay penance to get the service everyone should get, or should they? I guess everyone cannot get on the plane at the same time?

Retailers generally do not have the luxury of treating their customers badly and then making them earn the right for good service by the spending of more money. Do you think they would if they could? Fortunately retailers must earn your retention by doing the many things that make you feel special and have you believe you got a deal. Retailers pretty much have to use the carrot and not the stick as in the case of the airlines to grow their business. Even though Amazon or Wal-Mart are huge,they know they can be displaced tomorrow by some new comer or competitor. This is healthy and important. No matter how much we believe a retailer has a hold on us, there are always multiple choices. In the case of airlines you do not have that many choices and those choices are getting less. Think about the upcoming American and US Airways merger?
Will that make services better and prices go down?  Because of this carrot or stick approach which is created by the economic theory of scarcity, we can look forward to a future of ever increasing better experiences in our daily shopping.

There is a clear financial motivation for a retailer to provide you with great service! The great services come in many flavors and are the primary differentiators of their business. This is why the omni-channel, mobile, customer-centric initiatives are so critical to a retailers future. Besides having highly trained and passionate employees (all employees not just sales associates) technology can also be used to remove much of the friction in the sales process. Why is it important that I can find a product on your website and find out if my local store has it in stock? Because if you don’t your competitor will! There are numerous examples like this that a few years ago were rare, but now are expected. These new expectations will continue to grow and it will be great for the consumer.

Now comes the hard part. As a retailer how do you do all of this exciting stuff and still make a profit? No simple answer here and the answer is some retailers will fail. This is the cycle! As a retailer you must go back to your core and first make sure you have a solid foundation with your leadership, vision and culture along with your products and services. This is a continual re-examination which requires commitment. The foundational part of your retail business which is dependent on the carrot and not the stick is what you build all of this technological innovation on not the technology itself.

Lastly seek outside help with technology. You are not in the business of creating technology solutions and if you are you should look hard as to why.   Amazon and Wal-Mart might be able to pull it off, but certainly not a mid-market retailer. Your leadership team must have an objective perspective and proven advice when considering the purchase of technology to advance your retail business. You cannot do it alone!

Who are you?

Every day there seems to be hundreds of articles about how to improve a retailer’s customer loyalty and lifetime value. I know I am one of these people writing this stuff! What I see is a lot of mechanical advice like, send personally targeted emails, offer a rewards program based on loyalty (frequency and spend), deploy tablets in the store to maintain constant connection with the customer, have WiFi so customers can use your companies smartphone application in the store for the endless isle experience.   All of these things may have value, but not just by the fact that you do them. Here is the trap! These are things you do, but not who you are! Your company grew out of nothing to become what it is today because you had something customers wanted to be a part of. What was that? Is it still core to what and who you are as a brand or have you drifted off into the weeds. Do you need to reinvent yourself or better yet reassess your core value proposition?  Best Buy and Barnes and Noble are two companies I regularly talk about in my blogs that needed reassessing. Why? Maybe their value proposition window has come and gone? Did Amazon do what needed to be done leaving those companies scrambling to pick up the pieces?

 You can never "rest on one's laurels", but neither can you discard who you are as a company. Barnes and Noble have an incredible brand that I personally watched being re-built over the last 25 years. Barnes and Noble was founded in 1873 in Wheaton, Illinois as a printing company. They opened their first bookstore in New York City in 1917.  Barnes and Noble has re-invented itself many times over. In the 1980’s with the book industry not doing well Barnes and Noble did a bold thing and went out and acquired their competitor a much bigger 700+ book store chain called B. Dalton Books. Barnes and Noble did not just buy this chain and milk it, they took their combined companies and created a new and different bookstore experience where people came and hung out. What a concept, have customers hang out and they will surely buy something. Barnes and Noble was now providing a service! Barnes and Noble kept with what they knew books, but turned the concept of buying books on its head. So now Barnes and Noble need’s to make another bold move or not. This is the cycle of retailing

The message here is that Barnes and Noble figured out a way to be “in” and created a place to be seen and have a great experience. The position for "king of the hill" is always changing. This is where the pivotal point comes in a company’s life that they must look hard at who they are and who they want to be and get to making it so! No one from the outside can tell a company that answer.  What will you do?

5 Customer Service Quotes I Hate to Hear.