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London Fashion Week took an even greater turn for the digital this week, when Burberry streamed their event live to their stores and people’s computers, laptops and phones. Everyone, everywhere could access next Spring/Summer’s fashions immediately. This is only the latest innovation for a digital Burberry, who have a new store on Regent Street in London. Here, as 22 foot high screen beams out images of this new collection.
The CRM gets more sophisticated, however. Clothes are tagged with interactive screens and radio frequency identification tags, which allow customers to flash the clothes in front of interactive screens to accessorise them with handbags, shoes etc. They can also do this on-line. The cross-selling opportunities are enormous.
Now Burberry intend to launch Customer 360, where stores will be able to keep a record of customers’ buying history and preferences using handheld tablets. So when customers enter the store, they are whisked off to the departments they are most likely to buy from.
Is this too much? Probably not? Customers are used to working digitally everyday across their phones, iPads and PCs. Retail needs to keep up with the trend and use it to their best advantage. Let’s see if it work for Burberry!
It’s easy to be sceptical about Britain’s ability to put on first class events, but this weekend showed that we can do it when we put our minds to it. The pageant, the concert, the service and parade were pure theatre and most people generally agreed it was well done and gave us all hope that the Olympics might be half-decent as well.
In-store theatre is something American retailers do really well, but here in the UK, we are less adept at. With the exception of a few stores, notably Selfridges, the British shopping experience remains relatively humdrum. Especially in the current trading environment, retailers are even less inclined to throw precious budget into costly in-store theatrics, which may, but equally may not, turn to profit.
Yet given the doom and gloom surrounding the market, perhaps a little bit of theatre is what the consumer needs to take themselves out of the day to day tedium of shopping and start to enjoy it again. Retailers who take the chance and get it right might just find themselves with a stronger brand affinity and stronger brand values than those who do not.
Getting the activity right for the consumer is key, however, otherwise the investment will reap returns. Understanding who the customer is and what they are looking for from their shopping experience is critical to determining what will work in store. Doing some research amongst customers, particularly if the retailers has a decent database base, will pay off as part of the planning.
Then, in the same way that the monarchy have strengthened their brand and its affinity with the British public, so can the retailer, albeit on a slightly smaller scale!
Retail has been having a tough time. Inflation is up, wages are down, credit is no longer easy to find and customers are spending less as a result. This much we all know. So how do retailers keep their customers happy in such a tough environment? Obviously, they have to have the right product at a price their particular audience will pay, whether high or low end. Yet to retain customers and keep them coming back, they need more.
So why do customers keep coming back? Sometimes, it is down to convenience and lack of alternatives. This is fine whilst it works, but is no measure of long-term loyalty. Sometimes, the decision to buy from a specific retailer is based purely on price. At other times, purchase decisions are based on a stronger, more emotional attachment to the brand, engendered through a combination of good product, good value, excellent customer service and importantly, feeling valued. This motivation to buy is the one retailers seek to engender in their customers, as it means that customers will return to buy more often and spend more money if they feel valued.
In most businesses, 80% of profit is generated by 20% of customers and these are the people who feel brand affinity. Getting this band of customers to buy just once more can significantly impact profit. Getting more than 20% of customers to feel this way will generate even more.
So how can retailers achieve this? Well, it is possibly less through discount and short term reward and more through added value and longer term benefits of being with the brand. Promotional tactics may bring money in short bursts to the bottom line, but will they engage the customer over time? Recognising customers with personal rewards can reap greater levels of loyalty. The real answer lies in a mix of the two approaches, where retailers incentivise customers to shop and reward them for repeat purchase in as personal way as possible, whilst still delivering on customer service at all levels.
CRM programmes are invaluable in achieving all of the above. If customer data is collected and analysed in line with business and marketing objectives and crucially, used all the time so that it is active and not dead data, it is possible to segment and reward customers according to their preferences and purchasing habits.
Customer choice is important too. Ask them how they want you to contact them, whether by email, mail, SMS or phone. Provide them with an app. Ask for feedback and act on it. It is important that brands are able to listen, as well as to transmit.
Apple has become one of the world leading brands and one of most profitable in the world. So profitable in fact, that people started to write about how its cash holdings of $76 billion made them richer than the United States government.
Apple’s passion for design and ergonomics is obvious for all to see. Using an iPad or an iPhone is a genuinely enjoyable experience, which in itself develops a strong brand identify and customer loyalty.
However, Apple has also build up its reputation as one of the best retailers in the business. An extensive report by The Wall Street Journal taps into confidential training manuals, a recording of an internal store meeting, and more than 12 interviews with current and former employees to reveal the nuts and bolts of Apple’s retail secrets.
What this treasure trove of information revealed, is a retail philosophy which goes to great lengths to ensure listening to customers comes first and sales are much more of an afterthought. This reflects the quality and faith Apple has in their products. Essentially the iPad and iPhone will sell themselves.
The training manuals and employee interviews conducted by the Wall Street Journal reveal a policy of problem solving, rather than simply selling. The confidential training manual reads: “Listen and limit your responses to simple reassurances that you are doing so. ’Uh-huh,’ ‘I understand,’ etc.” One employee recalls being told that he should never correct a customer’s mispronunciation of a product, for fear of patronising them. The Geniuses working the Genius Bar are taught to say “as it turns out”, instead of the more gloomy “unfortunately” when delivering bad news.
Apple has carefully developed its sales force and chain of iconic Apple Stores around the world as part of a strategy to attract huge volumes of foot traffic. To understand their success a little better the Wall Street Journal offered this stark comparison – More people now visit Apple’s 326 stores in a single quarter than the 60 million who visited Walt Disney Co.’s four biggest theme parks last year.
There is much which can be taken from the Apple model and used as a platform for UK and other international retailers. In a difficult retail market, where spending for pleasure has been to a large extent replaced by spending purely as necessity, the retailers who offer the best service will win out. John Lewis is a great example in the UK. Known for quality product and service, the customer will make them the first point of call. Deborah Stone of The Stone Consultancy, a leading retail consultancy, says: ‘Once you are top of mind, you are already half way to creating customer spend, but it is the quality of service which will clinch the sale.’
Google have recently published a new book by Lecinski, The Zero Moment of Truth, which attempts to redefine the way in which retailers are talking to consumers. The Zero Moment of Truth replaces the First Moment of Truth, a marketing concept originally coined by Proctor and Gamble, where customers would react to stimulus in store and then make their choice in store. Their experience of the product would then happen after purchase.
Times have changed and now the customer works in the zero moment. Purchases are often planned way ahead of time, reviews are searched and read and both the internet and smart phones play a highly significant part of the process. This does not just relate to large, expensive, important purchases, but it is also how many customers now shop for small, everyday products. They want to know what others think of them; they want make a far more considered, informed purchase.
Think about book purchases, for example. Hardly anyone buys a book on the strength of the back cover any longer. Reviews are read or listened to and the opinions of others weighed before purchase.
Hence, those retailers who show reviews on their websites do well. In fact, those who encourage customers to submit product reviews and are willing to get as much feedback as possible, do even better. People trust reviews when it comes to choosing a product and the more reviews there are, the better it is. The use of ‘how to’ videos is highly effective; how do they wear it or use it? Is it the right choice for me?
So how can retailers adopt the concept of the zero moment to their own advantage?
Firstly, make videos, which show the product and give consumers as much detail as possible. Lecinski found that between the point of the initial traditional advertising stimulus and the customer’s first interaction with the product, online activity often plays a vital role through search engines and social networking sites. Testimonials and product demonstrations really work.
Use keyword searches and other Google tools to help your customers find your products and the information you put around them. Make sure that your product description and the reviews answer the right questions your consumers are likely to ask.
Test what works for you and do not be afraid to try different concepts.
Make sure that someone in your marketing team is concentrating on this area. If it is incorporated into your marketing strategy effectively, it will give retailers more selling power and more influence over customer decisions.
Ultimately, this is about interacting with your customers on a more personal level and extending your CRM strategy into these interactive areas to show the customer that you are confident about your product, you are happy for others to review it, you will help them understand how to use it and that it is for them.
Retail figures out this week have served to highlight the winners and losers of the retail sector in the current depressed market. Those with the right product, marketing mix and customer service do better than those who do not get it right. It sounds like a glib remark, but when consumer money is tight and credit no longer easy to come by, customers will no longer support those stores who were on the edges of their repertoire.
So what seem to be the golden rules:
The right product goes without saying: know your market and make sure both the quality and price levels meet with the expectations and needs of your target audience.
The right sales channels are key. Retailers are learning, some the hard way, that they can no longer rely on customers coming into store. Some don’t have time, some don’t live in the right places and some don’t have the inclination to come to the high street, so an on-line shopping option and correct online strategy is a must. It allows customers to shop when it suits them and allows the retailer effectively to remain open 24/7.
The right marketing channels are crucial, but even before that, knowing your customer is critical. Who are they, what are they buying, when are they buying, where are they buying, are they multi-channel customers, how important are they as individuals to your business? Did they used to spend and have stopped? Can you bring them back? Market research and customer relationship management enable retailers to target their marketing activity as closely as they can to reap the returns on the bottom line.
Customer service is an area which can never be over-estimated. Whether it is the person on the sales floor, at the till or on the phone, they represent your brand to the customer. Good service will bring the customer back and encourage them recommend you to friends. Poor service will encourage them to do neither.
Finally, it’s important to remain positive. The media paint a picture of doom and gloom and this can be self-perpetuating to an extent. Retailers who really believe in their business and take the right steps to reach their target market will thrive and come out stronger on the other side.
It’s all change on the high street and not for the good. This is what we hear constantly in the media. The high street is dying, so much so that the government commissioned Mary Portas to come up with key recommendations for reviving it. The change has been driven almost exclusively by the internet.
Some shoppers adopted on-line shopping early, the majority took a little longer to trust it, but trust it they now do and it is a hassle-free, time-saving way to shop. We live in a world where time constraints are ever increasing and the internet provides the opportunity to help us in our daily lives by bringing the high street into our homes.
The high street itself will inevitably suffer, if we continue to take the view that the high street should remain as it has always been. Change, however, will come, whatever anyone does to try to stop it and however much everyone moans about it. We can see that these days, traffic is driven primarily by offers and sales. Customers wait for the sales, which happen at the same time at key points in the year. They know that if they wait, they can by it for less. Retailers are tied into these sales events, locked into them by the sales spikes they create and unwilling to take them out of their marketing calendar as they guarantee a certain level of sales. Yet the same pattern of marketing year in, year out will mean that customers grow accustomed to this and alter their behaviour accordingly. Retailers need to act smarter if they are to drive traffic throughout the year and to excite customers in other ways.
Similarly, the internet and its on-line opportunities should be seen as a key sales channel to enhance overall sales, rather than as a rival to the high street stores. The priority for brand marketeers should be selling the brand through all channels, so that the customer can choose the one which is right for them. This brings the customer choice and levels of service which will lock them into the brand intrinsically. If this is done well, the high street presence of such brands will benefit as well as their on-line arm, which should effectively to seen as another store, albeit virtual.
To save the high street, retailers need to focus on three things: the right product, genuinely high levels of customer service and specifically targeted marketing programmes, where they can address certain segments of their audience at key times to improve their return on investment for every marketing programme they undertake. The right product speaks for itself, whilst not always being the easiest thing to achieve. Outstanding customer service is vital for brands to survive in the future. Look at John Lewis, one of the few retailers turning a genuine profit in the midst of retail recession and a large part of it is down to their service provided by motivated and well-informed staff. Customers trust the brand and keep coming back for more. Finally, an effective customer relationship marketing programme enables retailers to talk to segments of their customers in ways which genuinely engage those customers and their specific interests, regardless of which channel they use to shop the brand.
Change is inevitable. Instead of bemoaning the change, we must embrace it and listen to what the customer wants. After all, the customer is always right….. we just don’t always remember that!
Many were hoping that 2011 would be the year of global economic recovery. Sadly as the year comes to an end, it is quite clear that in 2011 the international financial picture failed to improve and as we head into 2012, there is significant uncertainty in financial markets and economies.
Looking back on the year and specifically on how retail businesses have improved their customer relationship management, we can see how business as we know it is changing. With the cost of living going up all the time, consumers are changing their spending habits and are becoming very savvy shoppers.
As a result, those retail businesses that are able to differentiate themselves through their service, or quality of customer experience are the more likely to succeed. For some organisations, this has led to dramatic changes to the way it interacts with its customers.
Those retail businesses who have invested in an effective CRM programme will lead the way. They know their customers, can communicate with them in a targeted, segmented way, which improves return on investment and allows them to maximise the customer experience. Customer interaction, both in and out of the store, becomes far more effective and profitable. Look at John Lewis, who have just bucked the trend and turned in successful growth figures for 2012. How do they do it? By offering first class service through their staff training and their marketing campaigns at all levels.
In 2011, businesses have not only seen customer spend drop, but also seen customer expectations grow. Customers are aware that businesses are fighting tooth and nail for their time and custom, which puts the customer in quite a powerful position. For businesses, this means offering something more than just a good deal to the customer. It means offering a great customer experience.
One such way which businesses have been able to nurture a better customer experience is to embrace social media. What was once perhaps viewed with mixed feelings now has much more widespread support due to the success many businesses have had using social media.
It is important to note that social media is constantly evolving and in such a dynamic environment making predications is a challenge. Utilising Facebook, Twitter and the like is crucial. The market in social media is crowded and retail businesses need to stand out.
So, what does 2012 have in store? The Institute of Customer Service has talked about 2012 being a ‘war for customers’ due to the intense competition in a difficult trading environment. With this in mind, the businesses which really understand their customers, can innovate and offer the right service both on and offline will be best placed in 2012. If you do not have an effective CRM programme in place, now is the time to consider it. Over time, retailers will reap the rewards.
Deborah Stone at The Stone Consultancy, a leading retail consultancy agency in CRM, comments: ‘Retailers are often deterred by the initial investment a CRM campaign requires, but it is false economy. They are essential to customer retention and increased spend over time and this will only become more important as we head into 2012.’
Traditional customer loyalty programmes are based on rewarding customer behaviour in order to build up a relationship between the retailer and the customer. However, the established method of collecting points to earn prizes does have a shelf life. As a result, retailers and brands are looking to gamification and how it can be integrated into CRM systems and marketing programmes.
The conventional method of rewarding customers with points does work and has proved to be highly effective for some retailers. However this traditional method does have its limitations, in that it has become commonplace amongst big retailers and therefore, no longer offers a point of differentiation. The competitive advantage of having a standard points loyalty scheme has waned and such systems do not always provide the retailer the kind of in-depth understanding they require to maximise the effectiveness of segmentation and therefore, sales.
Gamification can be defined as the use of game design techniques and mechanics to help engage with audiences. One of the most popular forms of gamification currentlyis FourSquare, which has over ten million users. Users can claim ‘Mayorships’, unlock’ badges’, and on a more standard level, receive special offers and rewards such as discounts to specific retailers, while also tracking against friends via a leader board. All of this makes gamification as a mechanic for a CRM programme much more engaging and appealing to certain users.
It could be argued that not everyone has access to the internet or Smartphone’s and gamification will only appeal to particular age groups and therefore is possibly limited in its effectiveness. However, if you consider how rapidly Smartphone usage is growing and that access to the internet is more widespread than ever, it is impossible to ignore this as a new possible CRM platform.
The biggest challenge faced by retailer with established CRM programmes is how to integrate gamification into existing programmes and to decide whether or not they feel it is appropriate for their target audience and product mix. There is little doubt, however, that retailers who are able to embrace a more interactive CRM mechanic will engage their customers more readily than with the tired points schemes of old. Deborah Stone, Managing Director of The Stone Consultancy comments: ‘Smart technology is changing how people deal with the world across all elements, not just online. Gamification is an exciting development for retailers to consider when moving their strategy forward.’