By Nikki Baird, Managing Partner
1/13/2009
We all like our categories and our lists, and there have been lists aplenty so far – both categorizing the ups and down of 2008, and lists of predictions for 2009. One of the things we often get asked at RSR is to categorize each year – for example, is it the year of the store? The year of the customer? The year of supply chain?
So far, I have resisted making big predictions as to things like the “hot” technologies, whether this year will be a total wash or have some redeeming value, etc., etc. But I will make one prediction now: 2009 will be the year of the existing customer.
With uncertainty still reigning supreme and words like “frugality” and “austerity” coming into vogue, this year will be more about keeping customers you already have – certainly making sure that you don’t lose those customers – than about gaining new ones. New customers seem to be a rare species these days. And now that the holidays are over, retailers have no excuse. The shoppers that are left are the ones you might usually get during this time of year, rather than holiday shoppers with money burning holes in their pockets (even if it was a smaller amount than usual). There really isn’t any more holiday traffic to try to capture with deep discounts.
So how does a focus on existing customers change retailers’ priorities? I have a few thoughts:
· Know your (existing) customers well. If customer intimacy was important before October 2008, then it’s screamingly critical now. With loyalty programs galore and other ways of gaining identifiable information about customers (like email addresses) out there, retailers have no excuse not to get to know their customers better. And more importantly, retailers must use that information to demonstrate that they take customer insights to heart. Just as few things are more frustrating than entering all of your information into an automated phone tree only to have to repeat it when you talk to a customer service rep, consumers do and will take note when they loyally provide a retailer with their shopping behavior, only to have that retailer make offers that are completely irrelevant. You don’t need to provide customers with an excuse to defect.
· Online is no longer a salve for sales. Early results seem to indicate that online retail sales fell for the first time ever this holiday season. For a lot of retailers, that means that online no longer bolsters poor store sales. It also exposes a lot of rocks under the water within online operations. When online sales were growing hand-over-fist, it was easy to justify scrambling to meet the demand, regardless of the cost. But retailers who slash and burn eCommerce operations in order to preserve precious profitability risk alienating existing cross-channel customers – the most profitable out there, according to our research. While eCommerce operations are long overdue for some streamlining, if you pursue cost savings there without an eye for creating cross-channel processes, you’re setting yourself up to fail the minute customers re-open their wallets.
· Pay attention to customers wherever they are. Almost a corollary to online issues, it is no longer enough to listen to internal voice of the customer surveys and mystery shoppers. Customers have more channels available to them to provide feedback about shopping experiences than ever before, and if you’re not listening, you’ll only give them an excuse never to come back. I had a close brush with missing out on a hot gift item for my son, thanks to a snafu with Target’s eCommerce operation. As a consumer, I love Target. I don’t want to be mad at them. For heaven’s sake, I certainly don’t want to have to start shopping at one of their competitors. As an experiment, I joined an “I hate Target” fan group on Facebook and told my story. I wanted to see if someone from Target was paying attention. But I forgot that my every action is broadcasted to all of my Facebook friends – which span everyone from high school friends to business friends. I got a ton of feedback from people who had no idea what I was up to – offering sympathy and their own sordid tales of bad customer service. The lesson? Just because a tree falls in the woods and nobody you know is there to hear does not mean that it doesn’t make a sound. It may echo much farther than you think, in venues that you won’t have access to. Did I ever hear from Target? Nope.
It’s easy to forget about sins of customer service to your existing customer base when hordes of new (or unknown) customers are walking through your door every day. I think it will be awhile before a time like that comes around again. If you have a way to know your customers – individually, separately, especially the best customers – then you have both a huge competitive weapon for keeping their business and a huge risk of alienating them if you don’t start working to keep them. The year of the existing customer, indeed.
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