#shopperintelligence

[advancingretail]

The Need to Act on Customer Intelligence

Special Guest Blog by Jim Dippold and Jean-Marc Sallenave, Customer Management Partners

Back in the day, shopkeepers interacted with customers day in and day out, creating personal connections that allowed them to better meet their needs, and kept them coming back. They may not have used these words, but retailers were very good at “building loyalty” and “maximizing share of wallet”! As stores grew in size and corporate chains took over, the personal customer connection was lost. Big brand advertising took over. From that point on, retailers were essentially set up to drive brand sales, and more recently, category sales. In so doing, they stopped being very good at building loyalty and driving share of wallet from their customers. Today, this is a problem.

Since the turn of the century, new technology has been putting more and more decision-making power in the hands of customers. Weekly circulars used to be the only major source of competitive pricing information. This is changing quickly. We have seen an explosion of online and mobile tools to make shopping more convenient, unlock savings or simply to make more informed decisions before and during shopping trips. And digital-enabled shopping still has a lot of room left to grow.

At the same time, the role of brands is changing. Brand loyalty may not be dead, but the big brands certainly enjoy less of a “free ride” than they used to. Millenial and younger shoppers are just one discount, one review or one “Like” away from defecting to a competitor. They’re looking for different brands with different attributes than the older generations. They browse and shop all the time, on every possible device, but tend to buy only what is necessary, at a discount if possible.

In grocery, these trends are fundamentally changing how business needs to be run. There is an increasing need for retailers to gather and act on customer intelligence, just as customers themselves have increasing access to retailer intelligence, competitive offerings and prices. No longer can we make generalizations about the “average customer” because quite simply, the “average customer” doesn’t exist! Flooding the airwaves with mass marketing, or the marketplace with “something for everyone”, is no longer the key to success.

In short, the era of category management is ceding to the era of customer management.

What is Customer Management?

We define customer management as “the choice to organize, lead and manage the business from a foundation of customers”. Customer management doesn’t begin with technology. It begins, first, with the strategic choice to organize, lead and manage the business from a foundation of customers as business assets.

A key assumption of customer management is that the retailer’s long-term performance is ultimately driven by customer sales, not product sales. While category management primarily seeks to sell individual categories to as many customers as possible, customer management seeks instead to sell as many categories (and services) as possible to selected customers over time. The difference isn’t just academic, it impacts every facet of how the business makes decisions and organizes itself.

Customer management is a holistic business approach that seeks to create value for customers that translates into value for the retailer. A key feature of the process is that it is reciprocal. To quote Hallberg: “If there's no benefit to the customer, there can be no benefit to the company.” It is an approach that looks at customers as two sides of a coin: the customer’s value to the retailer, and the retailer’s ability to profitably deliver value to the customer.

All B2C businesses, including retailers, claim to be “customer-centric” and care about their customers. This is not the same as practicing customer management as an organizing principle for the business. Customer management is more than a belief about putting customers first, rather it is a tangible set of business practices aimed at identifying, attracting and keeping profitable customers. These practices operationalize the translation of customer insights into marketing, merchandising, supply and service actions that are tailored to different customers and customer groups.

Customer management challenges basic notions that retailers have lived by for decades. For instance, it requires the retailer to own and proactively manage the customer relationship. This is different from the traditional manufacturer-led model in which the manufacturer owned the customer funds and therefore determined their best use. Today, retailers can no longer afford to be a playground for manufacturers.

Retailers: Move Quickly or be Left Behind

There is plenty of evidence suggesting that traditional supermarkets are having trouble adapting. Only 47% of shoppers claimed a supermarket as their “primary store” in 2017, as compared to 67% in 2005. Over the same period, the average number of weekly shopping trips to the grocery store declined from 2.2 to 1.5 (source: FMI). In a world where customers have more choices, loyalty is never acquired; it has to be earned and reinforced continuously.

Today, retailers have the ability – with the right analytics, technology and business practices - to recreate something akin to the personalized experience of visiting the local market 100 years ago. And yet, they maintain the product and brand-focused management systems of old. To compete and grow over the long term, the customer, and not the product, should be at the core of everything the retailer does – including basic decisions like what items to carry, how to price them and how to promote them.

The 2018 Customer-Centric Retail Study

CART, Customer Management Partners and Winsight Grocery Business are conducting a study aimed at understanding what retailers are doing (and not doing) to become more customer centric, and assisting individuals and organizations improve their customer-centric retailing efforts. If you are part of a retail organization, you are eligible to take our survey. Upon completion, you’ll have the opportunity to request a personalized report benchmarking your organization’s customer-centric business practices to those of your industry peers. SURVEY

About the Company: The Customer Management Partners team is composed of highly seasoned professionals with 20+ years of experience in grocery retail, data, analytics, applications, business processes and strategy consulting. We are passionate about what we do and the senior partners are actively involved in working by your side.

Jim Dippold - dippold@cm-partners.org

Jean-Marc Sallenave - sallenave@cm-partners.org

[advancingretail]

The Value of Customers. The Power of Profits.

CUSTOMER INTELLIGENCE: The Value of Customers. The Power of Profits.

This 206-page eBook will teach you everything you need to know about customer information and the critical ways in which you can use it to go to market.

Get your free copy here