Being Remarkable · Customer Insight · Customer-centric · Innovation · Leadership

“In God We Trust. All Others Must Bring Data.”

The title of this post is a famous quotation from noted business consultant Dr. W. Edwards Deming.   And I agree with the sentiment.  Mostly.

Retailers in particular are notorious for having lots of data that they fail to turn into actionable insight.  The majority of leadership at major retailers have distinguished themselves more on intuition than their analytic abilities.   Apparently their organizations have come to trust their gut feel. I will leave it to others to decide whether these merchant princes and princesses are some sort of deity.

The title of my blog is “The Art & Science of Customer-Centricity” precisely because–in my experience–it is the marriage of rigorous analytics and a strong intuitive feel for what will work that yields remarkable results.

Left brain and right brain. Yin and Yang.  Starsky and Hutch (okay, maybe not the last thing).

We can all think of incredibly technically skilled folks whose work lacks true imagination and soul (I’m looking at you Kenny G!).   At the same time, we can  think of plenty of examples where we acted mostly on gut instinct only to realize that a bit more careful planning and analysis would have been a smart move.

Remarkable leaders understand how to leverage data and analysis.  They appreciate that a scientific approach to even the most artistic businesses can be powerful. They insist that their teams push rigorous thinking.  And they are careful to include the creative side as well, fully appreciating that it is rare that a statistical prediction or an Excel spreadsheet has the potential to create something truly innovative and remarkable.

Tap into the “genius of the AND.”  Resist the “tyranny of the OR.”  Trust what you can do.  Let go of the rest.

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Growth · Innovation · Luxury · Retail

False Positives

In case you don’t know, a “false positive” is a result that is erroneously classified as positive—typically because of a flaw in testing methods or analysis.

False positives can cause major issues.  One obvious example is the concern that can be caused by a faulty medical test result.

In business this usually plays out differently.

Retailers that open their initial new retail concepts in only the very best locations declare the pilot a success and begin an aggressive store roll-out program only to discover they can’t replicate their results on a broader scale.

Recent press declaring that “luxury retail is back” is another example of a false positive.  Industry observers simply have the wrong reference points; they  mistake better performance for good performance.  A deeper dive reveals that sales and profit margins are still well below pre-recession levels.  But the easy year over year sales comparisons—and gross margin improvements driven by unusually lean inventories—make the results look better than they objectively are.

Declaring victory when you are still very much in the battle is a dangerous thing indeed.

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Growth · Innovation · Leadership

Architects and Builders: Assembling a Growth Dream Team

Innovation does not happen without two fundamentally different types of people: Architects and Builders.

Architects are the designers, the ones that conceptualize the big idea, layout a plan to make their idea a reality and make sure the concept is engineered to work.

Builders, conversely, are the implementers, the ones that bring the idea to life, the folks that get the concept in the market.

The best architects know how to design something that can be successfully built.

The best builders understand how to translate something new to the world into a pragmatic reality.

The best leaders assemble teams with both types of people and assure that they can work together.

Leaders that are serious about driving remarkable growth don’t make the assumption that a great architect knows how to successfully put up drywall.  And they don’t expect a terrific contractor to come up with award-winning design ideas.

Is your growth team ready to take the field?

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Growth · Innovation · Leadership · Retail · Uncategorized

Taking Pitches

In baseball we often see a batter “take a pitch.”  In other words, before the ball is thrown the batter decides he’s not going to swing regardless of how good the pitch is.  Sometimes this is a tactic to tire his competition–the pitcher–out.  Sometimes it’s an attempt to draw a walk because that’s the best the batter can hope for under the circumstances.  Sometimes it’s a strategy to wait things out, figuring a better opportunity will present itself later.

Lots of businesses take pitches.

When Sears allows discounters and category killers to erode their core customer base and chip away at their dominant market share, they are taking pitches.

When Blockbuster fails to mount a compelling response to NetFlix and Redbox, they are taking pitches.

When Neiman Marcus, Saks and Nordstrom allow flash-sales sites like Gilt and RueLaLa to build brands with significant market value, they are taking pitches.

When dozens of companies deny the future of social networking and location-based marketing, they are taking pitches.

Of course there are times when it makes sense to wait things out–to study and analyze before placing a big bet.    Customer-centric companies know who their most important customers and prospects are, and when the metrics on those customers deteriorate, they dig in to understand the drivers and take action.

You don’t always need to swing for the fences, but it’s hard to win without a few hits.

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Being Remarkable · Growth · Leadership

Nice to do

What has your company decided is a must do, rather than a nice to do?

It’s interesting how focused and urgent companies get when they stand at the precipice of failure or external forces compel them to act.  Projects that have been lingering get axed.  Deadwood gets pruned.  Non-essential spending is cut.

If a company is in desperate need of growth, the heat is turned up on creating new sources of revenue and the normal pace of progress is often more than doubled.

But when companies become complacent, when they coast on past successes, when they are content with decent performance rather than remarkable performance, then lots of projects are only nice to do.  They languish.  They are the first to be cut when times get tough.

Great leaders at great companies rarely have resources against “nice to do” projects.  If they are passionate about growth, they put great people in charge, resource the ideas appropriately and hold the teams accountable to reasonable, but aggressive deadlines.

If you are working on a nice to do project right now, what needs to happen to get it on the “must do” track?    And if you don’t believe leadership has your back on the initiative, it’s probably time to get worried and do something about it.

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Customer-centric · Engagement · Loyalty Marketing · Retail · Uncategorized

“At Risk” Customers

Do you know who your “at risk’ customers are?

Unless you have a remarkable and highly relevant new business model—or have a retail concept that allows you to open multiple new units every year—the majority of your profits will come from existing customers.

Each year most businesses lose substantial revenue from customers that defect.   Of course any customer-centric company should track customer defection rates, understand their root causes and take action to improve customer retention rates.

This is helpful and essential analysis.   But it is also a look in the rear-view mirror.   What is especially powerful is identifying customers that are at risk of defecting and taking proactive action to retain the ones you wish to keep.

A basic step is to monitor decreases in spending activity among key customer segments—you do have an actionable customer segmentation right?—such as overall purchase frequency, change in duration between purchases, “trading down” to lower price points, shifts in promotional shopping rates.   Other useful metrics involve more subtle engagement indicators such as web browsing rates, email open rates and customer satisfaction/net promoter score changes.

With a “customer dashboard” that is relevant to your business, you can potentially identify at risk customers and take action to save them.  Most of the time it’s a lot easier to retain a customer than to find a profitable new one.

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Being Remarkable · Customer-centric · Leadership · Retail · Winning on Experience

Inertia

Is your brand’s current performance the result of consistently delivering a remarkable customer experience and evolving to meet new consumer needs and wants?  Or is it simply inertia?

Many companies deliver decent performance today primarily by reaping the benefits of prior success.  The song they should play at their shareholder’s meeting is “Living in the Past.”

Dissect YOUR sales and profits.  How much comes from products, services or customer relationships that you developed many years ago, rather than in the last few years?  If you are not a business focused on older customers, what would happen if tomorrow you got zero business from anyone over 5o?

Sears–one of my former employers–is not still around today because they meet consumer needs in a differentiated, relevant way.  They have not generated significant numbers of profitable new customer relationships in many years.  Their best customers are aging.  They exist because of inertia.

In reality, of course, plenty of forces are acting on companies like Sears that will lead to their eventual demise unless dramatic action is taken.

When your success is rooted in customer relationships that are broadening and deepening; when new customers come largely through word of mouth from your brand evangelists, that is momentum and that is a good thing indeed.  When your customer metrics are deteriorating and no forces are acting to change the trajectory of your business, it is just a matter of time before you crash to earth.

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