No customer wants to be average

It’s only when our experience is terrible that we’d settle for average treatment. But what customer truly wants to be average?

average person

Most of the time, we hope brands know us, show us they know us and show us they value us.

And to do that, companies need to break out of a one-size-fits-all paradigm.

It’s not easy. Which is why so many stores are still filled with average products for average people and our mailboxes–virtual and otherwise–are chock-a-bloc with largely irrelevant pitches and promotions.

It also feels safe, even though it’s anything but. Relying on newspaper circulars and big TV ad campaigns and “Super Saturdays” and the same promotional calendar we ran last year, may bathe us in the warm water of familiarity, but more and more mass marketing strategies are delivering less and less.

Getting closer to the customer–making the choice to treat different customers differently–needs to be more than a slogan. It means busting the silos that get in the way of a unified and seamless experience. It means investing in deeper customer insight and the tools and techniques to deliver progressively more personalized interactions. It means embracing a test and learn mentality.

Mostly, it means radical acceptance of the reality that, for most brands, the only way to grow faster than average is to eschew the average.

 

Unified. Personalized. Amplified.

More and more, the customer is in charge. More and more, your best hope for superior growth–much less staying in business–requires stealing share from the other guys.

Unless you compete primarily on price–and your cost position allows you to win the inevitable race to the bottom–I suggest focusing on three guiding principles if you want to win in an ever noisier, omni-channel world.

Unified.

The lines between shopping (and media) channels grow more blurry by the day. The growth in mobile is making the demarcation between e-commerce and brick & mortar a distinction without a difference. Increasingly, the blended channel is the only channel.

For companies that hope to thrive, this means taking a sledgehammer to silos. Customer data silos. Inventory silos. Organizational silos. This requires eliminating the friction that exists throughout the consumer’s decision and purchasing journey. It necessitates an intense focus on integrating the way the customer interacts with your brand and connecting all the dots on the back-end.

Ultimately, you may tell yourself you have many channels, but from the customer’s perspective there needs to be one brand and a completely unified experience.

Personalized.

One-size-fits-all marketing strategies are becoming less and less effective. An explosion of choices means the battle for share of attention grows ever more intense. For many brands, it’s the end of mass and the beginning of us.

Understanding us–and consistently delivering remarkably relevant experiences and offers to us–puts a premium on deep customer insight. It requires developing ways to address us uniquely and in context. It requires a commitment to experimentation.

The notion of 1to1 marketing has been with us for some time now. At last, the tools to deliver on the promise are becoming readily available at scale. More importantly, the customer expects us to know them, show them we know them and show them we value them as individuals. Ultimately, he who gets closest to the customer wins.

Amplified.

In many industries there is a pervasive sea of sameness. Similar products and services. Nearly indistinguishable (and relentless) sales and promotions. Undifferentiated branding campaigns. Look-alike designs.

It’s always been a solid strategy to have a unique selling proposition. For a long time we’ve known that word-of-mouth is a brand’s most effective advertising. But in today’s world it’s harder and harder to separate the signal from the noise. Without the remarkable–without your purple cow–at best you’ll tread water. At worst, you are out of business.

Without something meaningful and relevant to amplify about your business it’s hard to imagine why anyone will pay attention for very long.  And without a remarkable story to share, it’s hard to imagine how your customers will help amplify your message.

 

Living in an A/B world

It’s a common practice for e-commerce sites to engage in so-called “A/B testing.” A typical A/B test randomly presents a brand’s current website design against an alternative which might improve results (most often conversion rates).

A variant of this approach has been employed by direct mail practitioners for years. To improve campaign response rates a “challenger” mailing is pitted against the current best performing offer (“the champion”). Database analysis is then used to help evolve the marketing strategy.

For years, structured test and control experiments have been narrowly employed and, for the most part, the province of relatively sophisticated marketing organizations.

Yet in a world where the battle for share of attention is fierce, where relevance is increasingly hard to come by and where whoever gets closest to the customer wins, every organization, big and small, needs to embrace a test and learn mentality.

Sure, it’s desirable to have beautifully designed experiments and statistically relevant sample sizes. But don’t estimate the power of continually presenting your customers with a stream of alternatives and seeing how they react.  “Here’s A, here’s B, what do you think?” is sometimes all the protocol you need.

You don’t need Ph.D statisticians. You don’t need complex campaign management software. You don’t need expensive consultants.

What you do need is a willingness to try. And to fail. And to try again.

Let’s get physical

Amidst all the breathless pronouncements about the inexorable decline of brick and mortar retail emerges an interesting phenomenon: some of the fastest growing and most exciting internet-only brands are opening stores.

Recently, Bonobos raised $55MM largely to accelerate its foray into “Guideshops.” Other e-commerce innovators such as Warby Parker, Trunk Club, Nasty Gal and Bauble Bar are all expanding into physical store fronts. Expect more announcements soon, not only from earlier stage companies, but from larger direct-to-consumer brands as well. This seemingly counter-intuitive trend reflects a few realities.

First, most of these venture capital funded darlings have thrived in their first few years by exploiting a highly specific customer niche and leveraging the heck out of the advantages of a direct-to-consumer model. Alas, the number of customers who are willing to buy product sight unseen, without working directly with a sales person and lacking the instant gratification that physical stores provide, is comparatively small when it comes to product categories where fit, material quality and fabrication are important. For these brands to continue to grow–and have a chance for material profitability–physical locations aren’t a nice-to-do, they are a necessity.

Second, brick and mortar retail is different, not dead. In most product categories, for many, many years to come, the overwhelming majority of sales and profits will continue to come from, or be influenced directly by, physical locations. Regardless of whether a brand started as an actual store or as a virtual entity, the ones that will ultimately win will offer a tightly integrated experience across their various channels and touch-points. They will eschew traditional mass, one-size fits all strategies and embrace more personalized missions. There remains plenty of business to be done in brick and mortar locations–if you have something remarkable and meaningfully customer relevant.

Finally, when we think about the market or the customer we inevitably get it wrong. Global pronouncements about industry dynamics or the “typical” consumer are rarely particularly illuminating and almost never sufficiently actionable. The brands that are winning–the ones that are stealing share from you–go beyond the averages and the mega-trends. They understand how to apply technology to create frictionless commerce. They delve into data and apply customer insights that inform stronger acquisition, growth and retention tactics. They are committed to experimentation. They treat different customers differently. And on and on. None of this is fundamentally rooted in how a brand started or whether trends tend to favor its success.

Of course it’s far from certain that these previously web-only brands will successfully transition to an omni-channel world. Some will stumble mightily. A few will fail completely. Others will see their growth stall at only a handful of profitable locations.

The one thing for certain is that for quite a lot of customers, the benefits of physical shopping are here to stay. For traditional players the rush to close and down-size their store base may have some merit. But it’s equally likely the problem isn’t just the real estate portfolio.

 

This is not for you

Maybe it’s somehow coded in our genes.

Or maybe society conditions us to mindlessly think that bigger is definitely better; that more is always more.

Perhaps our fear of failure drives us to cover every imaginable base?

Yet the brutal reality is that the list of organizations that require scale to succeed AND can actually pull it off is undeniably short. And friends, I’m here to tell you, chances are neither you nor your organization is on that list.

Alas the pull of mass is undeniable. Let’s reach more people. Let’s gain more subscribers. Let’s try to sell more stuff, regardless of customer relevance or potential for profit.

As media choices explode, and the world becomes ever noisier, our default tendencies seem rooted in casting a wider net and shouting louder. That’s just stupid. It’s also expensive.

The best marketing plans are crystal clear about who the product or service is for and what it takes to become highly relevant and remarkable for that precise audience. By extension, the other thing a great marketing plan does is to declare who the brand is NOT for. As most brands are at the end of the life cycle of mass-driven strategies–or never should have been there in the first place–this is a critical distinction.

Confident brands don’t chase their tail or get sucked into a race to the bottom by reflexively pursuing volume for volume’s sake. They spend their time in search of depth and meaningfulness with their core, not trying to rope some generic somebody into engagement with gimmicks or endless discounts.

More and more, there is great power in knowing who your brand is for and who it most clearly is not.

More and more, there is great freedom in declaring simply and confidently: this is not for you.

 

 

 

 

 

Different, not dead: The future of brick & mortar retail

“Reports of my death have been greatly exaggerated.” 

- Mark Twain*

Media reports highlight the dramatic shift of spending from traditional stores to e-commerce. Industry analysts and pundits predict the demise of brands with substantial investments in retail real estate. We live in an increasingly virtual world, they say, and those with deep roots in the physical realm are starting to look more and more like dinosaurs.

The transformation of shopping fueled by all things digital is profound with no signs of deceleration. The crazy little thing called the internet is changing virtually (pun intended) everything. But anyone who thinks that brick and mortar stores are going away has it wrong. Here’s why.

Brick and mortar retail can enhance the value proposition. Physical retail offers many important advantages–the ability to see and try on products, instant gratification, face-to-face customer service, social interaction and so on–that digital selling cannot readily replicate.

Purchase events matter. There is a reason that e-commerce penetration in many product categories remains low. Where the risk of buying online is perceived as high (apparel, many big ticket items), direct-to-consumer shares remain in the single digits. Brands like Zappo’s have innovated in customer service to overcome some of e-commerce’s limitations, but long-term growth potential is modest. In fact, e-commerce darlings like Bonobos, Nasty Gal and Warby Parker have begun to broaden their reach–and address flattening growth–by opening physical stores. Plenty of products–particularly perishables and low-priced items–also have underlying economic reasons why direct selling volume will remain constrained.

Consumer segments matter. Great customer intimate brands embrace the notion of treating different customers differently. When you do this, you understand the different needs, wants and behaviors of varied customer types. Depending on the product and the particular consumer, the purchase journey may begin and end at a physical store. For others, they will never set foot in a brick & mortar location. Others will research online and buy in store. You get the idea. Your mission is to understand the role your physical locations play in being intensely relevant and remarkable for the customers you need to attract, retain and grow. Then build out and customize the experience accordingly.

The blended channel is the only channel. Stop thinking channels and start thinking about a consistent, integrated customer experience for your brand. Other than products and experiences that can be delivered completely digitally, the majority of retail purchases are influenced by both the digital and physical realms. More and more data is emerging to confirm this. Your mileage will vary, but silo-ed thinking, organizations, incentives and metrics confuse, rather than illuminate.

Frictionless commerce is essential. Let’s be blunt: there’s more heat than light in the discussion of omni-channel capabilities. Strategically, the key is to hone in on how to be differentiated, relevant and remarkable for the customers you wish to serve. And then you must root out the sources of friction in your customer experience. With more consumers going back and forth between digital and physical channels in their decision journey, if you don’t make it easy to do business with you chances are there is a competitor who is ready to pounce.

Mobile adds value to physical retail. When e-commerce was either sitting at your home or office surfing the web, the distinction between digital and brick & mortar really meant something. Now with consumers untethered and having increasingly powerful devices with them 24/7, mobile becomes the great integrator–and makes the distinction between e-commerce and brick & mortar less relevant all the time.

Seismic changes ARE impacting retail. With the exception of companies in the early stages of maturity, most retailers need fewer stores and many of the stores they have will need to be smaller. But assuming that physical retail is going away any time soon is just plain wrong. The tendency to isolate e-commerce and brick & mortar performance is equally misguided.

Amazon and a handful of best-in-class e-commerce companies will continue to thrive. And new pure play digital models will undoubtedly emerge to captivate consumers and gobble up share.

But there is plenty of business to be done in physical stores. Less, but still plenty. And most of the growth in what is counted as e-commerce is not a shift to online-only brands, but rather to brands that have cohesive omni-channel strategies. Think Nordstrom and Macy’s so far. For them, stores are assets, not liabilities. But the way brick and mortar retail drives consumer engagement and loyalty is morphing quickly.

These emerging winners follow a simple but compelling formula:

More focused.

More differentiated.

More relevant.

More remarkable.

More personalized.

More integrated.

See you in the blur.

 

* This isn’t, apparently, the actual quotation, but one that has become part of his folklore.

Living la vida local

Until the end of the 19th century virtually all retail was local.

There was no such thing as a chain store or a catalog merchant. Most raw materials were locally or regionally sourced. The local shopkeeper predominated.

For centuries, the typical merchant specialized in a particular area of expertise–butcher, baker, cobbler and so on. He knew most customers by name and understood what they liked. With the ability to get instant feedback on his offering he could readily curate his offering to local tastes. He didn’t have to learn 1-to-1 marketing. It was his lifeblood.

In the 1880’s, Richard Sears and Aaron Montgomery Ward launched their catalog businesses, and in the decades that followed, consumers began to have greatly expanded choices. As the 20th century unfolded, the transportation infra-structure improved dramatically, creating greater opportunities for sourcing product from around the globe. Multi-unit retailers proliferated and eventually the bulk of retail shifted to regional malls, mass discount stores and dozens of national “big box” retailers and specialty chains.

In the last 15 years, the advent of e-commerce, along with incredibly efficient direct to consumer supply chains, have made it possible for the individual consumer to have virtually infinite choices available to them. The local shopkeeper model has become largely extinct.

Now it’s come full circle. Retail, like politics, has always been local. The winners have always been those that bring the most remarkable and relevant solutions to individual consumers. But over time what was possible shifted. Those that failed to keep pace lost out.

Today the retail world is becoming increasingly bifurcated. A few players are winning by riding the long tail and by offering low prices and efficient shopping. For everyone else, the world is a lot more complicated. Right now the challenge is to differentiate your brand in a sea of sameness. Right now the goal is to curate your offering–or make it incredibly easy for the customer to do it for herself–to a specific set of consumer needs and wants. Right now your mission is to know your customer better than the competition and to leverage that insight to craft more unique and personalized solutions.

Sounds familiar right?

Advances in technology make it possible for your brand to provide value in much the way the shopkeepers of yesterday did. To know me, to understand my individual preferences and to use that information to tailor your offering to my specific requirements is the formula for winning.

You can keep chasing price and remain wed to mass approaches to marketing, customer service and operations. And you can hope to beat Amazon and Walmart at their own game. Let me know how that works out. Or…

Or you can commit to treating different customers differently and invest in a strategy steeped in localization and personalization.

The choices are increasingly clear. The commitment to one path or the other is becoming more urgent. You need to choose.

Ultimately it’s death in the middle.