“Channel Agnostic”: The Pathway To Customer-Centricity

Having spent the past ten years or so driving customer-centric growth and marketing strategies at places like Neiman Marcus, Sears and Lands’ End, I used to say there were two types of retailers: those that embraced an integrated multi-channel model and those that operated in multiple channels, but treated the channels as largely independent entities.

Today, despite ample evidence of customers’ researching online before going to stores, or shopping physical locations to then go home and order in the comfort of their own homes, we still see many businesses with limited channel integration. In fact, a major player like Pier One actually shut down their e-commerce operation for several years because they somehow thought it wasn’t core to their strategy. They have since come to their senses.

But after many years of pontificating on the power of a seamless, integrated multi-channel experience, I think it may be time to move away from the term multi-channel integration–which by now should be table stakes for any half-way competent retailer–to something that aims for a higher plane and a chance to be truly remarkable in your customer growth strategy.

My new favorite term is: channel agnostic, which I first heard the leadership of JC Penney espouse.

What’s powerful to me about this term, is that it really puts the customer first.  It says as a brand we don’t care which channel you gather your research in, which channel you buy from and which channel you return in, we’re there to make it happen for you.  If we are out of stock in our store, we will jump on our point of sale system, find it at another store (or on the web) and ship it your home if you like.  “Integration” is nice–as if we just want to prove to the customer that we actually talk to each other, but ultimately it’s passive.

So how different would your company be if it really embraced the notion of being “channel agnostic?”  Would your marketing change?  Would your assortments?  Would your return policy?  How about the information that your sales associates have at the store?  In the customer service center?

And if you find that the changes would be significant, then the real question is: would making those changes make your strategy more remarkable, allowing you to better engage, grow and retain customers in the new battle for market share?

Why You Need a Customer Strategy. Stat!

My guess is that if I asked you to describe your organization’s business strategy you could readily tell me about your target customer, the products or services you offer, how you go to market and why what you do is just so darn compelling.

But what if I asked you about your customer strategy?  Could you clearly articulate which customer segments are most valuable to your company today and in the future?   Could you describe how your organization and processes are aligned to maximize the value of your most important customer relationships?  Could you show me specific initiatives and programs designed to acquire, engage, grow and retain customers in each segment?  And how about customer segment specific performance metrics like profitability,  share of wallet and net promoter score?

Having a compelling business strategy is necessary–but hardly sufficient–in today’s customer-centric world.  Face it, after the bounce off the bottom this year, most industries are faced with the prospect of slow growth–and unlike the past, it’s not going to be so easy to drive the top-line through price increases.  That means your revenue growth will have to come from market share gains.  And unless you are in the position to acquire lots of new customers, that means growing share of wallet with existing customers.

Chances are your competition has figured this out.  So now you are left to battle it out in the marketplace.  Are you going to resort to mass marketing and tired old price oriented tactics?  Or are you going to get serious abut customer-centricity and take your strategy–your customer strategy–to the next level?

I’d hurry if I were you.

Ruthless Experimentation: What Are You Afraid Of?

Part of any remarkable customer growth strategy is what I like to call “ruthless experimentation.”

Old timey, product centric growth strategy was all about the big reveal.  We spend months and months coming up with our bold new marketing plans and then–at this point, please pause dramatically–Ta-Da!–we see if (hope that?) the customer likes it.   If we are wrong, it’s back to the drawing board for Plan B.

Not only is this cycle unacceptably long, it does not reflect the dynamic realities of what it takes to build and sustain a relationship with your best and most promising customers.   Just about any business has the ability to test and learn on a number of fronts: permission-based email, direct mail, Facebook, Twitter, an in-store promotion and more.  So why do I have conversations virtually every day with executives who are still studying their social media strategy, struggling to develop an actionable customer segmentation or waiting to improve their CRM platform before they try more personalized marketing?

It’s simple: they are afraid.  Afraid to admit they don’t really “get” how something works.  Afraid that they may not hit their hoped for response rates.  Afraid a promotion might perform “too well.”  Afraid to pull the trigger on the “good enough” idea rather than the perfect one.

So what’s the riskier move?  Studying and planning until you have lowered your chance of “failure” to close to zero %?  Or sitting on the sidelines while your competition is out there trying stuff, learning, truly listening to customer feedback and evolving to make their value proposition more relevant and remarkable?

Being customer-centric is a dynamic, learning process.  Accept it, walk through your fear.  Experiment ruthlessly.  Be a linchpin.  And make something happen today.*

* see Seth’s Blog for more on this: http://bit.ly/cilzJL

Seducing the “Promiscuous Shopper”

From my experience, every industry has customers that are not loyal to ANY brand.  I call these folks “promiscuous shoppers.”  They have strange seductive powers.   They look so appealing–and what’s more, when you show them a lot of attention, they are attracted to you, showering your brand with their business.

In many cases, these customers haven’t found the right fit.  Occasionally, it’s an awareness issue.  That is, “Mr. Right Brand” is out there somewhere, but they just haven’t discovered him yet.  In other instances, the customer is well aware of her choices,  but no one brand has yet convinced her that they deliver a value proposition worthy of her loyalty.  But there is also the reality that some customers just don’t want to settle down.  They are incapable of being loyal and they go from brand to brand, chasing whoever gives them the best deal.  This latter situation is the most vexing for many brands and the place where a lot of time and money is wasted.

Think of your own behavior.  If you are anything like me, you have brands that get a significant share of your wallet because your needs and wants are met in a highly relevant, unique–and sometimes remarkable–way.  Then there are other brands that get your business because they meet your wants and needs in an acceptable manner AND because they buy your business (free shipping! double rewards miles!).

So given that every industry has some percentage of promiscuous shoppers what’s the marketer to do?

First and foremost you need to understand what percentage of your revenue and profits (don’t forget the profit part!) comes from these retail harlots.  Ideally you would have detailed consumer research to help you nail this, but you can get a good estimate by noticing what percentage of your revenue comes only when you run a really hot deal.   If you are finding that unless you run an aggressive promotion you have a hard time driving the top line, and that the same customers buy on deal over and over again (I’m looking at you Macy’s!), it’s time to get worried–and to get to work on your customer strategy.

Second, among the customers whose behavior is highly activated by these promotions, what percentage have the potential to be loyal, profitable customers?  Next, what levers (beyond price discounting) can be pulled to engage them further and grow them into loyal, profitable customers?  This level of customer insight likely requires some primary consumer research, but the ROI can be enormous.

We all recognize that aggressive promotions are often necessary to acquire new customers, drive deeper levels of customer engagement or simply to turn inventory into cash.  But if this is done without a clear, well thought out customer growth strategy, the potential to get stuck with a significant percentage of your customer base that is fundamentally profit proof is high.

The bottom line is this: not all “promiscuous shoppers” are worth seducing.   Your job is to stop spending time and money on those without the potential to be loyal, profitable customers and start spending the time on those that do.  Easier said than done, but well worth the effort.

Market Share Growth: Get in the Car and Drive

Most retail, consumer and luxury brands are starting to report positive sales and profit margin growth.  This is good news, but let’s face it,  the sales growth is against terrible numbers last year and the margin growth is through tight inventories and aggressive cost reductions.  And with easy comparisons until October, the news is likely to look pretty good for the next two quarters.

Unless the economic outlook improves dramatically, for most companies it will become clear that they are not getting back to pre-recession levels of business any time soon.  Going forward, growth is likely to remain muted and margin rate improvements are going to be tougher to come by.  So the real question is what are companies doing to drive market share growth?  For many companies that reduces down to this: what are they doing to drive share of customer growth?

When it comes to taking action on share of customer growth there are only two types of companies.  The first is the company that may have a corporate strategy (often exemplified by big binders of strategic and long-range financial plans sitting on shelves), but does not have a customer strategy. That is, they don’t have deep consumer insight, they haven’t developed actionable customer segmentation, they don’t have segment specific marketing plans, they don’t have truly useful customer value metrics and they aren’t part of the conversation age.  For these types of companies they need to commit to developing a customer strategy and they need to move with great focus and commitment.  Now.

The other type of company has a reasonably well articulated, pragmatic customer strategy (or they are close enough that they can realistically move into action).  With business improving and many competitors still trying to figure out what to do, these players have a once in a generation opportunity to press their advantage, whether that is through opening new stores, creating a compelling multichannel experience, developing a leadership position in location-based marketing or through many, many other possible leverage points.

The answer for both is the same: Get in the car and drive!