Customer-centric retailing gone bad!

It is interesting how we use words like customer and consumer to refer to people who purchase goods and services from our companies. I recently heard the term “B to P” vs “B to C” which really caught my attention. The quest to have a closer more relevant relationship with people who purchase goods and services from us is about understanding human behavior. I can see how retailers are chasing the hype of social networking, mobility and such things as clienteling to get ahead of competition not really understanding the core drivers. At the core people generally behave on fairly predictable terms so it is important to understand what levers you have as a retailer to drive these behaviors and to whom you choose to do it with.

I use this example often when I talk about observing new initiatives driven by technology. I have a grocery store close by which a number of years back spent a lot of money re-inventing themselves as a high end food competitor. One big problem was they thought they could automate service and bypass employee costs via automation. As I walk into this store I am immediately presented with the option of joining their “loyalty card” program via a nice looking kiosk. I walk by as I am not interested in spending my time typing on a computer. As I enter the start of my shopping experience with my shopping cart I am immediately presented with a wall of “personal shopper” devices that I can use if I had a “loyalty card” and the desire to figure out what they were for? Entering the fresh produce area there is a large flat screen with someone talking which I can’t quite understand and frankly not interested in hearing. As I choose some fresh produce I see that I have the opportunity to weigh and print out a label which can be scanned at the checkout. Interesting, why would I want to do that I ask myself? As I go through the store I see additional attempts to add value such as touch screen devices on certain isles to locate a product I could not find. Usually it was out of order or when usable difficult and frustrating to navigate. To cut to the chase of this experience, when I went to finally checkout I was forced to go through a self-checkout because there was only one lane open for full service and it was full? I am not sure whether the thought was how to improve service or just cut costs for employee’s, but in either case I dreaded going to this store even though they did a reasonably good job merchandising their products and providing the products I wanted. I actually would drive a few miles out of my way not to go there. Consequently I never really saw any traffic at this store and they are no longer a brand in business. Morale of this story is to understand what real value means to the people you want to serve! Read this blog I recently posted about another grocer http://rocheonretail.blogspot.com/2013/06/i-have-to-write-about-this.html

Technology is a wonderful thing and provides many improvements to our lives and even how we purchase things. Understand though that technology is a tool and as retailers you need to first understand and know who your customers are and what makes them tick as it pertains to your offerings. So before running off and buying some expensive new gadget for your stores, think hard about how it will help drive your core mission and value proposition. You should never waiver from this; it is easy to get caught up in the latest “shiny thing”. However as a person that has spent over thirty years in technology for retailers I do have some insight that I would like to share.

The first is data. You cannot know your customers without data. Not being a local corner store and with constant turnover of employees you cannot depend on (for the most part) long established personal relationships to drive value if you are a typical chain retailer. Data about your customers and more importantly what you do with this data is critical to the development of relevant relationships with the people you serve. Most everything in this world fits into Pareto's Principle - The 80-20 Rule. Twenty percent of your customers will or should statistically provide 80% of your profit. So your first mission is to understand who these people are and manically treat them special. How do I know how to treat them special? Part of that is what makes you unique and is required for you to be in business, the other is to have predictive analytic tools that can help you sort and model out signal indicators helping to pinpoint those human behaviors you wish to influence with that twenty percent. This is the real “secret sauce” and you need to really look hard at the many options you have as a retailer in this area. Many companies want to sell you large complex storage eating monsters, you don’t need that! What you need is a comprehensive solution that acts as an engine using this data in many ways and channels to better serve the people you have chosen to have a relevant relationship with. This engine is typically called CRM. CRM is the repository and delivery mechanism of customer information which allows you to operate real time with your customers providing consistent and relevant experiences.

I have to write about this!

 It just happened! I was in Publix doing the grocery shopping as usual (I think men like to grocery shop more than women). I noticed Diet Coke on sale, buy 2 get 1 free. I was going to buy Diet Coke any way so I bought three twelve packs so I could get 1 free. At the checkout I only put 1 twelve pack on the check-out counter with the intent of telling the clerk to ring up 3 getting that great deal. As I closed out the transaction and began to leave I noticed I had not told the clerk about the other 2 twelve packs in my cart. I turned to the clerk and told him he needed to ring these two up that I had forgotten. I pulled out a 20 dollar bill to pay for the 2 twelve packs and speed up the transaction. Do I have you completely confused yet? This is when something amazing happened!

The clerk turned to me and said “sir; I rang these two twelve packs up on a separate transaction so you did not get your discount.” He told me I could get a refund for 1 of the 2 twelve pack Diet Cokes at the customer counter. He called the store manager over who said “oh my, let us give you a refund sir and we are sorry this happened. Also sir, the deal was buy 2 get to 2 free so let me get you another twelve pack of Diet Coke plus your refund!” The manager then says “can I take your cart to your car?” I said no thanks, but great service. The reply was “that’s why we are here!”

I do not remember a retailer going out of their way to help me and to make me feel special like Publix did today. They don’t even know me other than I go there 3 or 4 times a week. I am a loyal Publix customer. They just do everything right. Most importantly I feel like they care about me and really strive to make my experience great. No technology involved like a tablet or smartphones. How can this be? Publix does not even have self-checkout? Do you wonder why they do not use self-checkout or personal shopper devices? The reason I assume is they truly put customers first and want that human interaction! The Publix technologies which I know they have plenty of are behind the scenes and are transparent to the experience. Interesting? They don’t even know my name and measure my spend but they have my loyalty? It is called culture. Publix must spend an amazing amount of time training their employees and encouraging a customer-centric experience.

Could Publix do even more with technology and personal promotions for me? I think the answer is yes, but they had to get the basics right first!

Liars figure and figures don't lie

On June 25th of 1889 the statistician Carroll D. Wright gave the opening remarks at a Convention of Commissioners of Bureaus of Statistics of Labor.” The old saying is that “figures will not lie,” but a new saying is “liars will figure.” It is our duty, as practical statisticians, to prevent the liar from figuring; in other words, to prevent him from perverting the truth, in the interest of some theory he wishes to establish. We can only do this by being absolutely fair ourselves.

I see so many numbers being presented these days about what is happening in the retail market and what will be happening in the coming years. I am not saying anyone is wrong or lying, but I am saying people use data to support conclusions. Ten years ago RFID was projected to have taken over the world and most recently QR codes. Has it? I tend to operate by looking at the data, but to also look around at what you see. For example I have seen some big percentages published saying people will go to a store and price check with their smartphone. I have never done this, never seen this or even known anyone who has. I have no doubt it happens but I am suspect to how big of a deal it really is.  It could be me, but I think somebody has a solution trying to find a problem. I do my show rooming on the internet using ratings from hundreds if not thousands of people not getting in my car and driving to Best Buy to gaze at TV screens.  

I do believe there are huge changes happening, but also I believe the market will sort out what works and what does not. It has always been that way and I am not certain numerical predictions in the past made much difference. No one could have imagined the struggling Amazon Company selling books online and losing money for ten years would now dominate retail. Ask yourself why? Jeff Bezos had a vision but also a foundational philosophy he has never wandered from, customer-centricity. Amazon was not about books or even being a Wal-Mart killer. "If there’s one reason we have done better than of our peers in the Internet space over the last six years, it is because we have focused like a laser on customer experience, and that really does matter, I think, in any business. It certainly matters online, where word of mouth is so very, very powerful." Amazon was named recently one of the most admired retail companies in the world in by Forbes. Amazon uses “figures” as good as or better than anyone, but the maniacal desire to create a lasting customer experience and to own the lifetime value of their customers is their underpinning. Without that data is just data!

So my point is as a retailer you must inspect your business and clearly understand what you do with and for your customers so that you generate the desired output. All of these numbers being thrown around are great points of information, maybe, but you must carve out you own space and experience. Buying technology for you to match prices to your online competitors in the store for example is a going out of business strategy.

These publications work hard to provide information to help, but they cannot tell you what to do about it. Untold millions of dollars are blown every year by retailers chasing the latest shiny object of the day.  The word of caution is to spend your time and money on the “why” before running off implementing something that may not work for you. Why are you doing something different if you have not completely thought through what that is? The most important changes come from the companies leadership commitments required to change how they are organized and their business value proposition. Technology as is statistics is a tool to help you do the things that make a difference. Let’s make sure we don’t have the “cart before the horse!”

Act now! No time has ever been better!

Over the past 30 years I have watched with interest as massive technology advancements have changed the face of retail. I've seen first-hand from one of my first IT roles with IBM just how the PC revolutionized retail practices and forced a tectonic change in the way that consumers purchased products.

Technology has brought many rewards, but with systems often implemented over a long period of time and added to with bespoke solutions; many retailers do not now have consistent end-to-end visibility, usability, manageability and most importantly, integrated business processes. By adding more applications and capabilities over time, the initial simple but powerful solutions like the AS/400 and 4680 POS from IBM no longer provided the required enterprise framework. Add to this the complexity of the internet commerce channel and you have a mess.  So today, retailers have trouble enabling true omni-channel capabilities and cannot yet make best use of the information they have to optimize their operations.

This has now reached a critical point. The speed of innovation means that where once we could take several years to deploy new applications, retailers now need to be constantly on top of, or even ahead of, the technology game. Retailers need to look hard at where they see themselves five or even ten years from now, which is difficult considering the constant pressure to keep afloat and respond to the current needs of the business. What is required is a new view of the retail infrastructure and application framework with the clear objective of developing a single version of data across the entire enterprise. Winging it with loosely integrated legacy operating systems and ERP solutions will not get you to the finish line!

There are several ways to strategically build or acquire the required infrastructure and application framework, although today I believe Microsoft offers a great solution to the core questions we all ask ourselves: 'what does having this infrastructure really mean?'; 'how do I know what is required and how will I build a roadmap to get where I want to go?'; 'what will this undertaking cost and am I guaranteed the outcome will be as predicted?'; and 'how do I get my business to operate as a dynamic business with integrated and interoperable business processes?'

In retail, having the ability to leverage a foundation which provides the agility to connect all business processes and entities is critical to being able to compete going forward. More importantly, the use of this persistent information for all employees and customers is the real key. Even having information locked up in a huge data warehouse typically only reserves the right of information access to a few, much less to all, which is what is required. It is the merging of real-time information with business process that provides retailers with the structure to create a differentiating business model not using someone else's 'best practices', which could also be used by any competitor.

In addition to the inter-operable operating system and platform products, being able to operationally use in real-time all of this data is a must. Web services, specifically a retail web service gateway designed for omni-directional movement of data is a required function. Data will always be disparate, structured and unstructured and will only get more this way. Having this next generation data conduit allows software developers, system integrators and customers to take control and to focus on the innovation required in today’s high competitive and quickly changing retail landscape The technology is here today! You just need to know where and what to look for.

The good news is you do not have to do all of this in one big gulp! Most importantly mid-market retailers are now more in a position not seen for many years to take advantage of today’s new technologies. Why? Because mid-market retailers still sitting on these old AS/400’s and Unix based systems who have not been able to afford the massive investments required from legacy ERP vendors can now have it all for a fraction of the price and time. With the right vision, strategy and plan you can achieve this admirable position in a controlled and cadenced environment while actually saving expenditures and improving bottom line. 

One final note, there are a number of great consulting resources out there that have been in the thick of this transformation and can offer valuable help from lessons learned. Get good advice and council to avoid the trap of buying shiny objects that do not produce results!