The shopkeeper at scale

Today marketers talk about personalization as some new Holy Grail. It’s hardly new.

Years ago, one-to-one marketing was a core practice of local shopkeepers everywhere. You know, the butcher, the baker, the candlestick maker. The shopkeepers of yore would uniquely identify their customers, interact with them to understand their wants and desires and then customize their offering to meet those needs. The best customers got the best treatment. The notion of treating different customers differently was common and these shopkeepers enjoyed huge market share.

Fast forward many decades and the shopkeeper model has largely been displaced by national chains that lean heavily on one-size-fits-all business models steeped in efficiency over effectiveness.

Yet as the present reality of slow growth markets becomes clear, as fewer and fewer store openings present themselves, as the easy growth from launching and optimizing e-commerce starts to subside, the tide is turning.

Slowly, we are starting to see brands that understand that the majority of future growth must come from stealing market share. Growing share of wallet in meaningful ways requires a more intensely relevant and remarkable customer experience rooted in a “know me, show me you know me, show me you value me” set of capabilities.

More and more, it’s about understanding how to replicate the old-timey shopkeeper feeling at scale. It’s about using deep customer insight and technology to transcend the self-imposed limitations of the mass industrial model that characterizes so many businesses today.

The good news is that the core technology and other supporting capabilities necessary to become a shopkeeper at scale now exists–and is improving all the time. The bad news is it doesn’t happen unless you make a choice and make a commitment.

The wrong side of scarcity

The formula for success in retail–in being intensely relevant and remarkable for customers and investors alike–is ultimately rooted in scarcity.

Scarcity for a highly desired good or service amplifies demand and enables a brand to command a premium price. Conversely, abundance undermines those abilities.

So, let’s be honest, in your market sector are any of these things truly scarce?

  • Frequent % off promotional events
  • TV ads that focus on the above
  • A cash back rewards programs
  • Free shipping offers
  • Ability for consumers to gather product and price information
  • A selection of major national brands
  • Sunday newspaper circulars
  • A professional looking website
  • Convenient locations
  • Friendly sales associates.

How about these?

In a slow growth, ever noisier, consumer-in-charge world, it’s hard to see how doubling down on the already abundant is likely to get any brand very far. Yet that is where most our focus, energy and resources seem to be pointed.

Unfortunately what passes for strategy at a lot of companies is the notion of being better at being common. Good luck with that.

Confusing the offering with the story

We’re typically pretty good at laying out the features and benefits; at explaining all the reasons why our product offering is superior to the competition’s and why it makes perfect sense that you should choose us.

Unfortunately when the consumer is overwhelmed by choice, when it’s hard to get them to even notice us–much less take the time to do the rationale calculation we are depending on–and when all too often price can be the default tie-breaker, all that focus on defining and hyping our offering may not benefit us very much at all.

If you think Apple wins because of its superiority in a head to head features comparison, think again.

If you believe folks pay a huge premium for a Louis Vuitton handbag because of the demonstrably superior raw materials, fabrication and stitching, I’d beg to differ.

The idea that the $250 cream or scent being hawked at the cosmetics counters at your favorite fancy department store “works” meaningfully better than what’s readily available at your local drug store is pure folly.

Unless it’s all about price, people buy the story before they buy the product. We get in trouble when we don’t understand the differences and the priority.

The road to your brand

When the customers you wish to acquire and grow think about your brand is there a closeness and connection that instantly arises, or do they see it as far off with the road to relevance marred by potholes and other sources of friction?

Are they moving closer or drifting farther away? Do you even know?

In an attempt to draw distant consumers closer we are often tempted to create an express lane paved with discounts and other give-aways. While this serves the purpose of shortening their journey (and goosing our top-line) this frequently proves to be uneconomic and unsustainable.

As we craft a more compelling customer growth strategy a few things are worth pondering, I think.

How far is the distance to our brand?

Are there customers that are simply too far away and should be ignored?

For each of the segments we desire to grow, what does the road to our brand look like?

What can we do to smooth the journey?

Once they arrive, what can we do to make them feel especially welcome?

And what can we do that is so remarkable that they will want to invite their friends?

Your mileage will vary

We’re told to pray to the god of omni-channel retail and all will be well. Yet after diving into a world of complexity and huge cash outlays, sales and profits remain lackluster.

We’re advised to study best practices and creatively “steal” the ones that resonate the most. Yet, despite reading all the books and hiring the leading consultants, our customer experience remains far from Apple’s and our culture feels like the anti-Zappos. And nobody’s working a 4 hour work week, I can tell you that!

We’ve built a sexy app. We’ve started an Innovation Lab. We go to all the best conferences. We even know to call it “South By” like the cool kids. We’re on every imaginable social media channel. We chant “seamless customer experience” at our staff meetings, for crying out loud! Why aren’t things going better?

Sadly, even if you do a great job importing what’s working for others, chances are you’re merely keeping pace. Necessary, not sufficient.

Assuming that what works for one brand and their unique customer set is readily transferable to your situation is not almost always wrong, it can be incredibly dangerous.

As the power shifts irretrievably to consumers, as their options for information, access and choice compound exponentially, as it gets harder and harder to command share of attention, your job is not to simply import what’s worked elsewhere and propagate “me-too” solutions.

No, your job is to deeply understand your unique situation, to embrace a treat different customers differently philosophy and to craft an intensely relevant and powerfully remarkable experience.

As tempting as it is to buy the sexiest car in the lot, equipped with the latest technology and anticipate the rush of exhilaration as you step on the gas, the fact is your mileage will vary–perhaps, a lot. The sooner we accept that the better.

And then it’s time to begin the hard, uncomfortable work.

A place to buy things

What do your customers really think of you?

Do they have a compelling story to tell about your brand? Have they had experiences that deeply resonate with them? Do they proactively advocate on your behalf? Can they easily justify the premium they choose to pay? Would they give you another chance if you screwed up?

Or, when it comes down to it, in their minds and hearts, you’re merely a place to buy things?

And when there’s a slightly better price–or a marginally more convenient option–they jump at the opportunity, without a trace of regret.

Optimizing to extinction

There’s a growing narrative that suggests that as e-commerce grows the obvious answer for most retailers is fewer and smaller stores.

It’s nearly taken for granted that if a brand struggles with sales then it’s time to take a whack to expenses.

And, most often, it seems as if investors value a story of efficiency rather than one of effectiveness.

It doesn’t take much creativity or inspired leadership to lay people off, close stores, prune inventory, defer capital expenditures and the like. Sadly, though not too surprisingly, it’s rare to find a company that actually becomes more customer relevant by following this path.

In fact you don’t have to look very long or hard to find scores that have tried cost-cutting their way to prosperity only to end up in the retail graveyard. You might even be able to come up with a few that are in the midst of this downward spiral.

It’s typically pretty easy to rally behind optimizing the cost side of the ledger. It’s far harder to get the revenue side right–to go from average to remarkable, me-too to intensely relevant.

All I know is if you set out to optimize something you might want to be sure you picked the right thing.