By Paula Rosenblum, Managing Partner
8/11/2009
This week, we’d like to present a new model for successful retailing – one that RSR calls The Engaged, Customer-centric Retailer. This model is the logical follow-on to what we called TECC, or Technology-enabled Customer Centricity.
We coined the term TECC in early 2007. While the words don’t flow easily off the tongue, the concept helped us explain how retail winners were starting to solve the paradox of improving customer service while holding the line on payroll costs. They were adding technology to support customer-centric initiatives and improve store execution in general. We called that TECC in the store.
On the merchandising front, adding the customer dimension of data to merchandising applications covering planning, allocation, replenishment, pricing and promotions is the key that unlocks the door to localization of those functions. Behind the scenes, we called that TECC Merchandising.
And of course, adding the customer dimension to data warehouses can help measure and quantify organizational success. Yes, we can call that TECC Business Intelligence.
The only fly in the ointment of TECC is it doesn’t provide a feedback loop between retailers and their customers. We might know what customers buy, but we don’t necessarily know how they feel. And how they “feel” is directly correlated to their loyalty. IBM talks often about turning customers into ‘advocates,’ but it’s hard to know, until long after the fact, if efforts to do so have been successful or not. And as we know, the rate and sophistication of technology adoption in the consumers’ hands both increase exponentially.
Over the past three years we have witnessed the explosive growth of social networks like Facebook, Twitter and MySpace, along with other Web 2.0 interactive sites. We’ve struggled to understand the value for retailers. Even now, as retailers continue their land grab of Facebook pages and Twitter ID’s the value often remains unclear. Dell has created exclusive promotions for their Twitter “fans,” but no one can really quantify whether these were incremental sales or just margin giveaways. Internet pioneer 1-800-Flowers recently opened a storefront on its Facebook page and while we’re always bullish on the emergence of new selling channels, in our point of view it’s hard to see a lot of incremental activity there when an ad with a click-through to flowers’ actual site would suffice.
As part of a client project, the light finally went on in our heads: the aggregation of the data obtained from social networks, customer service emails and other unstructured consumer remarks give retailers an almost instantaneous vision into their customers’ sentiment, and allows them to engage with those people. We can find out how they feel. For better or worse (because they really might NOT like what we’re doing), we can move beyond the noise associated with the squeaky wheels of individual customer dissatisfaction to an overarching sense of what customers like about our products, our service, and our employees. In other words, retailers can use technology to engage with their customers.
It seems de rigueur for an analyst to take these realizations and turn them into a model, and so we have. We present, for your review, our model of The Engaged Customer-centric Retailer (TECCR: clearly we’re not good at creating acronyms that roll off the tongue easily).
Once the model is rock solid and thoroughly understood, we’ll create some tools to help retailers see where they fall in the continuum. Some retailers may be heavy to the left, others may find their strong suits on the bottom, but the best will find themselves squarely in the center. In the meanwhile, we’d like some feedback. Feel free to drop us a line at research@rsrresearch.com. We really do want to know what you think.
We believe engaged customer centricity is the right model for retail in the second decade of the 21st century. Responsive and reactive. Engaged.
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