Is there really such a thing as Loyalty? Podcast. No reading required!

http://loyalty360.org/resources/multimedia/is-there-really-such-a-thing-as-loyalty

Fishing for that elusive and fickle loyal customer

“I always say shopping is cheaper than a psychiatrist.” Tammy Faye Baker

First there is NO ONE thing you can do to grow your customer base. It is the many unique things you do as a business that put together, delivered well and consistently that makes that magic happen. It always starts with a unique product and or service. Even if it appears the same on the surface it is different and usually by only a small percentage. Five Guy’s is a quick service chain that if they asked me when they started up to invest in them, I would have turned them down. Why? Let’s see “you want to open a hamburger chain?” But you see it wasn’t just a hamburger chain it was an experience with not just great burgers, but ginormous sides of French fries. Five Guy’s appears to be exploding opening new restaurants everywhere I look!  Why is that? The answer is they created not just a unique product but a buzz from consumers about how great the experience is (Obama loves Five Guy’s!). The challenge of course will be sustaining that position for any length of time, but I wish I could have invested now. Do you remember Fudruckers?

It is always the challenge, “in” one day and “out” the next. The one constant is that who is “in” will always change. Now what does technology do to help a retailer be “in” or does it? I see technology being used to seduce retailers into believing some neat innovation will create the buzz to draw customers in like a magnet. While at Microsoft we were always showing examples of how technology would enhance the customer experience. A few years back we showed a solution that allowed you to stand in front of a huge translucent sheet of glass and to be able to try on different outfits virtually by waving your hands around. I have not seen this in any retailers yet, have you? We showed RFID tagging down to the package of gum inferring this will operationally make you more money and prevent shrinkage making this a great advantage over your competitors. We showed how you could use your phone to take a picture of a products QR code on the shelf and then to download all this great product information including competitive pricing. I have not seen much of that happening in retail stores either. Maybe it is because I live in South Carolina? These are what I call shiny objects which do not usually produce the buzz effect that it is was sold on. Interesting ideas of which some may pan out one day.

I keep harping on the basic fundamentals of old school retail.  What does that mean? You want to have a relationship with your customer and to be valuable and relevant. Think of the local general store or even Macy’s and Bloomingdales many years ago. Technology and the solutions you need to enhance your core business can only work if you have done the basics which included having that unique product and services.  Technology does help you scale and build in consistency of your business like these retailers of old. Remember that technology is a tool to help you do the basic and important things unique to your business but at a much larger scale. The technology in itself does not stand on its own.

Keep asking yourself how you can be fresh and exciting every day. Make sure your in-store experiences generate that buzz that will indeed grow your business while leveraging the really meaningful technology for scale. People want to come to your store to have that experience leaving with a true sense of fulfillment.  The retail store is and will be the center of the universe when it comes to the shopping experience. This is frankly why retailers spend all that money on brick and mortar.

It is All about Expectations!

Generally most of us do not have high expectations when going into a retail store. Most of my experiences have been either a sales associate is standing over my shoulder being an irritant or you cannot find anyone. I have actually seen in a number of big box retailers sales associates looking down at the floor as they walk past you so as to not make eye contact. This is why I keep writing about the magic point of engagement with your customers. Having all the technology in the world does you no good if your employees are not motivated and educated with the right tools to delight the customer. I do want to tell you a story that cites the example of great customer engagement with the use of technology. Yes this is about Apple but not their store layout or POS.

My wife owns a retail store selling art, furniture and jewelry. She had been using Square on her iPhone for her customer transactions and now wanted an iPad with a stand she had seen around town. She runs down to the Apple Store first thing that morning and is greeted by a young sales associate who stepped up with his iPad in hand asking how he can help. My wife wanted to buy an iPad but also get one of those neat stands you could flip over for the customer using Square. Obviously he could sell her an iPad, but finding one of these stands and to the specifications my wife wanted was not something she really expected to get on this trip. You see she wanted a stand that was made of wood not plastic that would fit her store esthetic. This is where expectations come in to play. Her expectations of a young twenty something person would be to say “we don’t sell that here, debit or credit for the iPad?” No this is where this young man got on the internet with his handy dandy iPad, pulled up www.tinkeringmonkey.com and showed my wife exactly what she was looking for. She was ecstatic. He also invited her to sit in on a new owner’s of iPad class which was just starting. My wife left the Apple store within a total of thirty minutes “floating on a cloud!”

Expectations were greatly exceeded with the young man knowing where to find this wooden stand, sharing with her and showing the information on his tablet, but more importantly the authenticity of caring about finding a solution to my wife’s problem. How do you bottle this? The sales associate was motivated, educated and had the tools to solve this woman’s problem. So it is the difference between what you expect and what you get that creates that “wow” factor everyone is saying retailers need. It goes back to an earlier blog I recently wrote, Nothing new under the sun which talks about how retail is really a service business not a product business. This is customer-centric retailing!

Are you missing the Art of Customer Engagement?

The sales associate platform is what I called it a number of years ago. When we talk about specialty and department store retail there is a somewhat different customer engagement model than in many other segments like grocery, convenience and quick service. These segments are focused and heavily reliant on the customer engagement occurring on the floor. Putting mobile devices in the hands of store employees and using these devices to perform their jobs is in its infancy. What you hear retailers asking for most are mobile POS solutions. Being able to check out a customer at the point of service is the hot need justified by more engaged sales associates with customers. This is true but I don’t believe this alone will differentiate your business and drive increased visitation and spend by your customers. There are many other mobile functions being explored like clienteling, digital catalogs, personal wardrobes, inventory look-up, customer information and unique offers to name a few.

Traditionally retailers have always balked at giving sales associates computers of any kind other than the cash register because they would become distracted and would waste their time not doing their jobs and not servicing their customers. Email for a store employee was and probably is still a big no-no for most retailers.  The biggest problem I have seen with these mobile devices has not been employees misusing the devices, but rather not using them at all. Why you ask? Because it is uncomfortable, clumsy, not well thought out and in many cases does not help! These sales people know what will make customers light up if they are so motivated, educated and have well thought out tools.  This is where business process or the art of customer engagement meets technology. When a customer enters the store what exactly happens next? Do you say hello can I have your name or swipe a loyalty card? Then what, you start showing them things they should buy based on some “big data” program crunching numbers all night? You get the point. Educating and training your employees on how you service and delight your customers is the first thing you should do building a culture of great customer experience. Contrary to what I hear, these young sales associates are not lazy and dumb, just unmotivated. You must focus on your employees and measure their level of enthusiasm about what and how they do their job. You cannot buy your way out by automating everything.

If you are vested in the store experience, the customer engagement model and the employee enthusiasm you are then ready to exploit the tools which can differentiate and magnify your brand. This is where I believe the store associate platform can now be used. The idea of a store associate platform comes from the same basic concept of an office worker except the person is moving (mobile) and they are engaging with people. These sales associates want the information they need to do a great job. Having a set of tools you can draw on for whatever comes up is a great way to make your employees feel valuable and motivated.

These platforms are available now and many applications are being built to assist retailers with the in-store experience. Consider a role based device where now with a well thought out engagement process and training your employees can do much more than just take a payment. They can actually in real-time provide the customer with virtually everything they need to close the sale. The sales associate can now not just have information about the customer and products, but also access to payroll, training, tasks, corporate communications, those things that make the employee feel like an active participant in making the company successful not just collecting a paycheck.

Think about it, get outside help, and really look hard at what is happening in your stores.

“Be careful what you ask for, because you just might get it!”

The store is where the action is. If not why would retailers have them?  It seems retailers are scrambling to put tablets in the hands of every employee in the store so they can be more customer focused; really? I will tell you about an experience at a high-end retailer that is doing extremely well in the apparel market, yet missing the boat with what they are doing with in-store technology. I walk into this retail store with my wife on Madison Ave in New York City while on our anniversary trip. I say this because my wife is the one shopping and I am really just snooping.  The experience was wonderful with bright and genuinely happy people greeting us as we entered and also offering us a Perrier or coffee. The sales associate is holding a tablet, so I had to ask! What is that for? Smiling he goes about showing me what it does. This is where I start to scratch my head.

First thing is it was awkward for him to share what was on the screen. Second there was no real value I perceived as a potential customer who might buy something. I saw pictures of items in a catalog but there was no point of reference to what he should show me. We finally came to the conclusion that I needed to be a customer in their data base before he could release all of the value the tablet had to offer. That is where it really got screwy! He was trying to type in my information on the touch screen which was cumbersome, but also had a serious delay time from when you entered something until the application was ready to accept more data. I was at this point embarrassed for the guy. He ended up connecting one of those snap-on keyboards because he had to go to yet another system and enter the same information all over again. I then inquired about how he would take my money if I had cash or a check since there seemed to be no cash drawer or printer around. He tells me the POS is in the back room where he would need to go disappear to make the transaction. Does this sound like customer focused added value to you?

I do believe these mobile tablet devices can be of great value, but you must clearly understand what it can do well and what it cannot. Any sort of keyboard intensive data entry is a non-starter. If you are going to share suggested purchases make sure you have a locked down and repeatable dialog of bringing that information up in the engagement process and that you also know what you want to do physically with the tablet while sharing things with the customer. Do not have an hour glass come up every time you hit enter! These are a few items, but essentially I see retailers implementing these in-store devices where in my humble opinion they actually detract from the sale.

Understand exactly what you will be doing with these mobile devices and ensure the experience creates a positive output. Work with people who know what works and does not work. Do not just go out there with a solution you purchased and hope it turns out good. It won’t! This again is where you must look hard at your business and truly understand what makes or better yet will make you more relevant and valuable to your customers.

“Loyalty? If you want loyalty buy a dog!” Part ll

“Loyalty is faithfulness or a devotion to a person, country, group, or cause. Philosophers disagree as to what things one can be loyal to. Some, argue that one can be loyal to a broad range of things, while others argue that it is only possible for loyalty to be to another person and that it is strictly interpersonal.” – Wikipedia. I recently wrote a blog where I stated I was loyal to Publix. I was incorrect! I am not loyal to Publix and here is why; I love Publix and drive out of my way to shop there, but if another grocery store came to town and offered all the same wonderful experiences plus more I would leave. If I was loyal I would stay shopping at Publix forever. I sometimes joke that the definition of loyalty is really the opposite of what we think. Maybe it means no matter how badly I treat you or disappoint you will never leave?

What loyalty really means to a retailer is frequency of visitation and spend measured against a period of time.  The word we are really after is that emotional connection that a customer has with a brand and that word is relationship. Relationship is about being connected with something or someone. That is what we are after, an agreement that if you do this I will do that! So as long as Publix keeps doing what they do and they stay with or ahead of their competitors I will continue to frequently shop and spend money at their store. This is the challenge all retailers face which is to be relevant and valuable to their customers maintaining that relationship for as long as possible. As human beings we are easily distracted to the next “pretty face” so keeping that relationship requires hard work. Here are some things to consider when trying to win and maintain a relationship with your customers.

First you must think like a customer. The Brand, are you in or out? The location, is it convenient and clustered with other stores/brands I go to? Are your products and services 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 ? Do you give me deals or services that let me know you are thinking about me? Ultimately how do I feel when I leave your store? The essence here is not hard to understand, just hard to do. Even if you get it right you must always be reinventing yourself or you will perish.

Generally what you see is a new retail concept from a start up or spin-off which captures the market and grows exponentially.  Build-A-Bear comes to my mind as a great example. Build-A-Bear reached $467M in 2008 based on their `public financials. Incredible considering they only opened their first store in St. Louis in 1997. In year 2012 Build-A-Bear reported annual revenues of $380M. There is always a cycle that occurs when a company is new and fresh versus later where doing the same things do not drive the same results. I know that Build-A-Bear is continuing to reinvent that wonderful and unique experience that took the market by storm but part two, or three or four are hard and requires constant vigilance, being critical to your relevancy and value to your customers.

The message here is that every retailer must keep their relationships fresh and exciting. Remember when it is all said and done people are your customers and like any personal relationship you must work at it!  Leadership is where all this starts and ends and it always has. This is customer-centric retailing.

“Loyalty? If you want loyalty, buy a dog!”

I remember speaking to a department store retailer many years ago about what exactly customer loyalty was, and he said to me, “Loyalty? If you want loyalty, buy a dog!” I have never forgotten that phrase, and it still makes me laugh. What does having a loyal customer mean? In sports, it means that even if your team is losing this year, you’re still buying season tickets. Unfortunately, customers do not feel the same way about retailers as they do about their sports teams. How many customers do you know that will continue to shop at a retailer that is neglecting them and not taking the time to discover and satisfy their needs? There may be some, but certainly not very many. The American Society for Quality states that “the number one reason for losing a customer is neglect.”  68% of the time, neglect is the reason given by customers for going elsewhere.  Only 14% of customers cited dissatisfaction of a product or service as their reason for abandoning a retailer. Those figures speak volumes about the importance of paying attention to your customers!

I, like most of you, have several email addresses. I have an email address that I use exclusively when signing up for loyalty and subscription-based services. You probably do that too and are well aware of why I do it. Besides all of the spam I receive, which I believe comes from retailers who sold my information, I also receive daily email offers from those retailers. I have never received an email offer that I actually thought was targeted uniquely for me and provided me with the feeling that the retailer knew me and what I might be interested in buying. Mass offers do nothing to drive loyalty from me, especially when I know everyone in the universe is receiving the same thing.  In fact, receiving this type of offer has an adverse effect on me, and I actually become irritated.  So my question is, with all of the recent talk about omni-channel and customer-centric retailing, what are retailers actually doing to achieve loyalty from their customers?

I remember another conversation I had several NRF’s back with Deborah Weinswig, Managing Director at Citi Group Research. I was talking about the work I was doing then at Microsoft to really change the game regarding retailers’ results around customer loyalty. Deborah’s comment was, “if only they would make the slightest attempt to know and cater to me!” Everyone wants to feel special and get a deal. The concept of selling products in a specialty retail store where you put those products on a shelf and hope someone will buy them because of a discount offer you placed in Sunday’s paper are over. I am not even sure many people receive the Sunday paper these days. The internet is disintermediating your retail store now! I do a lot of shopping on the internet, and if I have any loyalty these days it is with Amazon. I welcome the chance to get off my couch and go to a retail store where I feel special and get a good deal. Once I’m there, I will surely spend more money on other things to make up for any margins lost on “the deal.” This is not difficult to understand! It is about people and human behavior.

So in my opinion loyalty is truly measured by the actions taken by your customers. That means frequency of visitation and spend share are directly proportional to their degree of loyalty. You can argue that someone tweeting about your brand is loyalty. What if they tweet about you without ever buying anything? Are they still considered a loyal customer? Statistically, twenty percent of customers drive eighty percent of a retailer’s profit. It would be wise not to neglect or take for granted that twenty percent. First, identify who they are. If you cannot do that today, that’s where you need to start. Next, discover as much as you can about those people. Just ask them! If they are hesitant about providing you with information, they are not loyal, and worse, do not trust you! Fix that before going further. Lastly, treat all of your customers great, but treat that twenty percent greater! I heard that recently at an event where Theo Christ, Senior Director from Sak’s Fifth Avenue, talked about being customer-centric. She gets it, and it’s time others started getting it too.

Today, there are many solutions professing to have solved this “how to achieve customer loyalty” endeavor by installing their new widget. The real answer is that it takes hard work, introspective observation, help from those who know, technology, and most importantly, commitment and organization. You cannot reinvent yourself without doing the work and making the investments. If someone tells you differently, they are wrong!

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?

A Retailer's Reputation

"Repetition makes reputation and reputation makes customers.” - Elizabeth Arden.  All you hear about today is omni-channel and how with the advent of buying on the web and picking up at the store, brick and mortar retailers can win back market share from those ecommerce pirates! Ah yes and if you have a smartphone application you can bring even more people to your store in larger numbers. One can debate the value of these capabilities for revenue growth, but what about reputation?

 Technology is a great thing and has been very helpful making our lives better and our shopping experiences exciting and fulfilling. There is however a dark side that technology can also enable. One of the main drivers of consumer purchases is brand reputation or ranking (yes it is measured and monetized). What is "in" today is not tomorrow. Paula Deen is the latest empire we have seen crumble right in front of us on television and in a matter of days. How long did it take Paula to build her brand only to be decimated over some comment she made 30 years ago. How do you think this happened? Yes there was a lawsuit which started the ball rolling, but the media and social networking fed on this story like piranhas. Retailers know how easy a reputation can be severely damaged like Luluemon Athletica for example. “Investors have filed a class action lawsuit against Lululemon Athletica for allegedly making "false and misleading statements" to conceal the costs associated with its see-through yoga pants debacle. Lululemon's Biggest Fanatics Wanted CEO Christine Day Out For Months.” Carolyn Beauchesne, author of the blog Lululemon Addict, claimed in a post that Day "ruined" her favorite brand.” What does this mean?  Lost revenues and market share is what that means! Is it short term and recoverable? Absolutely if handled well, but expensive.

This brings me to the reason for this particular blog. I have been watching with interest this new concept of reputation management. There are companies that say they can manage your online reputation at an individual level or even at a brand level. This is curious to me given the examples above and how easy it is for bad news to go viral. Fortunately what I have found out is it is not these major issues that usually cause most of the revenue and brand rating erosion but the individual blogs posted here and there from the “disgruntled”. Does the saying “death by a thousand paper cuts” possibly apply here? Retailers are spending a lot of energy and resources to control or better yet manage their online reputation. This is real money in the millions of dollars that can quickly vaporize if not managed.

Customer-centric retailing is about making the customer the center of your business. If you are customer-centric and doing all of those great things to make that wonderful customer experience using your omni-channel technology, you better also be monitoring what is being said about your brand in cyberspace. There are a number of companies providing these services that make sure all the good stuff is at the top of Goggle searches and the less than positive stuff is on page 25!

Here is a list of the top 10 online reputation management companies:  http://reputation-management-services.topseosrankings.com/

Some further reading: http://www.forbes.com/sites/cherylsnappconner/2013/05/31/winners-and-losers-online-reputation-management-trends/

5 Customer Service Quotes I Hate to Hear.