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What is Customer Centric Retailing: All You Need to Know

Nikole Wintermeier | Sep 12, 2019
5 Is for customer-centric retailing

“I want a product. I want it fast. I want it personalized. I want recommendations and suggestions. I want an experience.” 

As retailers, I bet you’re hearing this more and more. Your customers demand individualized experiences. 

And, as if that’s not enough, they are hyperconnected, which means they want these personalized experiences across multiple channels. 

Yikes.

It's up to you to provide the best experiences for all your customers but also identify and nurture your most valuable segments to keep them coming back. To do this, the customer experience (CX) should be streamlined and customized with customer-centric retailing. 

Throughout this article, we’ll give you five “I’s” that will enable you to do this. 

Here’s what we’ll cover:

  • Interdepartmental Integration
  • Innovation
  • Insights
  • IT
  • Internal Infrastructures

Armed with this knowledge, you'll be able to make strides in your customer-centric strategy. 

 

What is Customer-Centric Retailing?

Customer-Centric Definition 

Firstly, customer-centricity means putting the customer first by understanding their needs and purchase behavior on a more intrinsic level. 

Customer data and insights will:

  • Drive the creation of new products 
  • Mature business strategies
  • Throttle the bottlenecks of the customer’s pain points
  • Place the customer’s shopping desires first  

As Peter Fader would put it:

“Customer-Centricity is a strategy to fundamentally align a company’s products and services with the wants and needs of its most valuable customers”. 

So it’s about understanding customer-centricity as a strategy, approach, and business model.

Secondly, many retailers today are still product-centric. What about you? Do you measure interactions as transactions instead of journeys

If so, it’s probably time to rethink your strategy.  

In the end, it’s not about putting all customers on the same pedestal of importance. It’s about having the right tools and analytics in place to understand who to target and how. 

Why is this important? I’m glad you asked.

 

Advantages of Customer Centricity 

Keeping your customers happy by understanding them better will:

  • Reduce churn rates
  • Increase customer satisfaction and thus retention
  • Foster brand equity
  • Maximize CLV
  • Increase the relevance and reliability of your retail store and products 
  • Allow you to optimize each touchpoint 
  • Anticipate your customer’s needs and expectations 

Additionally, Forrester research shows that better Customer Experience (CX) correlates to improved loyalty metrics (retention, enrichment, advocacy).

customer journey

But don’t just take my word for it…

 

Examples of Customer-Centric Retailers

The most popular and revenue-driving companies in the world are also considered the most customer-centric, according to Tompkins. 

Starbucks

Starbucks is maybe the best example of this, as they foster strong brand equity. Let’s be honest, nobody goes to Starbucks for the delicious taste of their coffee. 

We go there because they write our names on the cups, the baristas remember our preferences, we get free coffee for every ten, and we know that wherever we go in the world we can escape to the familiar sounds and tastes of the globalized brand.  

Starbucks is personal

stabucks customer centric

Amazon 

Amazon’s principle to start with the customer and work backwards means that customer data informs product innovation. 

amazon customer centric

They are “customer obsessed”, and this customer-centric retailing approach has made them the retail giants that they are today

Nordstorm

Nordstorm is another example of one of the most customer-centric companies worldwide. 

nordstorm customer centric

They go the extra mile by sending handwritten thank you cards to their customers, have friendly return policies, 3D foot scanning in-stores, and a mission statement that ensures all employees put the customer first. 

Curious what these companies have in common?

Let’s find out. 

 

How Do You Become More Customer-Centric? 

What Starbucks, Amazon, and Nordstorm have in common are the 5 “I” Principles below:

  • Integration 
  • Innovation
  • Insights
  • IT
  • Internal Infrastructures 

With these five tools you will be able to achieve a bird’s “I” view of all touchpoints and channels that your customers interact with. 

I’ll walk you through each of these steps, giving you actionable advice and tips and tricks along the way. And I’ll make sure not to drop anymore “I” puns. 

Ready? 

I-five! 

self high five

1. Interdepartmental Integration: Adopting a Customer-Centricity Model

A. Integrate a Customer-Centricity Model Across All Departments 

Data is the crux of customer journeys, since your customers don’t just engage with your products - they interact with your whole store omnichannel and across a myriad of touchpoints! 

So make sure customer data is centralized (more on how later) and easy to access for all departments: marketing will need this data to inform campaigns, and merchandising will need it for product planning. 

Moreover, be sure to prioritize customer experience (CX) across all operational silos... And, hey, break those silos down!

No walls and no boundaries characterizes the BEST business practices - think of it like a post-1960s Love Revolution, where everyone shares and gets involved.  

hippie commune

Yay!

Also, employ a CX team that has an outside-in perspective and can provide a holistic overview to optimize customer interactions across all segments. 

 

B. Make Big Data Digestible for Everyone 

Deconstruct complicated big data into digestible insights that marketers, customer service specialists, and merchandisers can leverage in their strategies.

digestible data

This might require you to hire a data analyst or customer analytics manager. However, this investment will have high returns as your brand becomes more data-driven.

 

2. Innovation: Driving Customer-Centric Innovations for Retail 

Because how else are you going to gain a competitive advantage? Innovation is key.

So what you need to do is harness the power of disruptive technologies. 

Think of Sephora: 

sephora VR

Sephora leverages AI and AR so customers can virtually try on makeup colors and styles pre-purchase. You can even sample fragrances via a touchscreen and scented air in-stores!  

So, so, cool. 

Sephora also has a self-proclaimed “Innovation Lab” where merchants, product developers, and technology experts brainstorm the best offerings in-store and online. L’Oreal has one too. 

But more than these technologies, what’s important in these labs is that departments Come Together - I repeat: integration - effectively enhancing performance metrics by innovating in cooperation. 

 

B. Have an Agile & Flexible Mindset

Holler if you recognize any of these:

  • Rigid, unlocalized strategies
  • Old-fashioned servers that are unable to adapt 
  • IT legacy issues
  • No inter-departmental cohesion when it comes to data and technology 

We get it. It sucks. Yet it’s important that you are flexible to change. Your structures and strategies should accommodate new ideas from your backend to your frontend. 

What you have to do is:

  • Upgrade your servers 
  • Quality check your data so that it's up to date
  • Load and run performance tests regularly (especially during high-traffic seasons)
  • Track trends to stay relevant

Amazon understands being agile in an age of disruption, and that’s why they are Number One. Think Alexa (voice recognition technology), Amazon Prime (innovating customer loyalty), Cloud Computing, and even delivery drones (you heard that last one right!).   

Disney too: they measure CX by “propensity to return” and “propensity to recommend” and say that the way to satisfy customers is through engaged employees. 

Thus,

innovation customer-centric retailing                                

Optimizing content for customer-centricity starts with a flexible business that is open to innovation.

And, in the end, Amazon creates trends, and Disney creates magic.  

Disney customer centric

Being unique will differentiate you from your competitors and  - I can confidently say - reduce churn rates because it will keep your customers constantly surprised and involved.  

 

3. Insights: Where do you Find Customer-Centric Insights?

You know what I’m tired of reading? 

“Get to know your customer”

All of you already know that you have to “get to know your customer”, using fundamental NPS and capturing feedback over time. But this KYC advice is repetitive and, unfortunately for you, doesn’t paint the whole picture.

What you need is to get to know your customers specific to their characteristics and traits. Therefore: 

  • Understand what drives your high-value customers
  • Find out what’s missing for them 
  • Check-in with your churned customers to understand where there can be room for improvement 
  • Map out high-value customer journeys from beginning to end and everything in between! 

These insights will bring you one step closer towards complete customer-centricity.  

Sounds simple enough. But how do you put the I in Insights?

 

A. Interviews and Focus Groups

These are great for one-to-one customer interaction and should act as information to supplement your webshop data.

For example, Slack creates mini-personas for their customers by encouraging customer support specialists to research their customers and storyboard each interaction.

slack customer centric

 

Furthermore, more and more tech-giants are employing ethnographers to understand local markets on a deeper level as well as creating new value propositions and personalized omnichannel campaigns.  

Not that you should run out now and find the next ethnographer you can. But this just shows that as we move more into digitally-driven retailing, human voices are becoming just as important.  

 

B. High-Impact Profiling Using Segmentation 

Next, you should delve into your granular data and create micro-segments by leveraging an enterprise-grade analytics solution.This will enable you to profile your customers appropriately using demographics or psychographics and personalize your interactions and communications.

Psychographic Marketing-2

Segmentation for customer-centric eCommerce includes an array of omnichannel use cases:

  • Personalized email campaigns
  • Customized copy in ads, social media, or online
  • Ad-retargeting
  • Dynamic product tags dependent on visiting segments
  • Tailored meta-descriptions and landing pages

And these are just the start. 

C. Psychology & Data 

We use psychology to gather customer insights - wait, what do you mean by “psychology”?  

Well, we place behavior-driving product tags on your webshop to better understand what motivates your shoppers. 

For example, if your customers are inclined to click on products with the tag “Bestseller” or “Limited Edition”, these clicks show something about who they are as people: 

You can read more about this here, oh and here if you want to find out more about the psychology of eCommerce

These kinds of nuanced insights are how we make eCommerce retailers more customer-centric. 

shopper DNA crobox

“Getting to know” your customers is therefore too small a framework of advice.  

Optimizing their psychological profiles by understanding their clicks and reactions as part of their subconscious shopping desires is a mature way to deliver customer intelligence. 

 

4. IT: How do you Leverage IT-Infrastructures for Customer-Centricity?

IT in this context means digitizing the entire CX and streamlining tools and systems for optimization. 

I know, I know, these are a hell-of-a-lot of buzz-words. But that’s what IT is about, right? Wrong. 

Sure, leveraging the “I” in IT is about having the right digital-first business strategy, but also having that “human touch” to organize your digital foundation.

The sparkle and shine of new technologies is great to automate customer engagement, but consumers still appreciate those personal one-to-one connections when they shop. You are catering to people, after all, not just User-Id’s. 

AI cartoon sales funnel

Moreover, whilst automation of customer engagement is necessary to deliver actionable insights, logistics and utility departments should be overseen by real-life humans. Yes, humans. How daunting.  

 

A. Centralize Customer Data Using CRMs, DMPs, or CDPs   

IT also means delivering real-time analytics to make customer-centric retailing dynamic and efficient. Customer data managers will help you centralize your data to build for scale. 

This “easy-access” will: 

  • Enable ad-hoc marketing 
  • Provide real-time insights for merchandising and manufacturing 
  • Facilitate inclusion from executive down to fulfilment and frontline workers 
  • Address CX holistically  

But with great power comes great responsibility. And I’m not just quoting Spider-Man because we are in nerds’ territory with IT (our favorite space to be in). 

I mean to say that when gathering customer data it’s important to stay transparent, especially given these post-apocalyptic-Cambridge-Analytica days. Respect customer data without compromising on privacy. 

 

B. Test and Experiment Using ML & AI 

ML and AI are the only ways you can process enough data to make accurate predictions about future behavior. It helps you efficiently track appropriate metrics and operational-performance indicators, all with respect to a 360-view of customer interactions. 

Einstein said, 

“No amount of experimentation can ever prove me right; a single experiment can prove me wrong.”

Leverage these technologies in order to optimize the CX based on real customer behavior and test, test, test to see what works and what doesn’t.    

Thank you Einstein, but that’s enough nerdiness for today. 

superhero nerd gif

5. Internal Infrastructure: How to Democratize your Customer-Centric Strategy

Once you have embraced new technologies and opened your retail ideation up for new and unique customer-centric approaches, it’s time to think logistically. That, or, reorganize your infrastructure first to then get started on the rest. 

The order doesn’t matter. What matters is that you have these 5 “I’s” under your belt and use them as tools to facilitate customer-centric retailing in a synchronized environment.  

So what’s the secret?

Democratizing your data and improving cross-functional collaboration means, in one way, telling everyone that you are now moving towards customer-centricity. “To all staff and employees: we are now customer-centric!.

great gatsby customer centric

Round of applause. It seems silly, but communication is a part of being transparent, and these are your best business practices.

Let’s put it like this: imagine for a moment that you’re in wartime and you have a strategy that will be crucial for your win. 

How will you get the message to your entire battalion?

You need people to echo your strategy across segments, all the way to your frontline so that there is a clear, cross-functional direction that will ensure your win. 

Maybe wartime analogies seem a little exaggerated, but with competitors like Amazon, retail is becoming a battlefield where customers are naming their champions.  

jeff bezos game of thrones

Your equivalent to the Chief Customer Officer (CCO) should oversee CX projects and - just like any army general - have a framework that is applied from the backend to the frontline. 

And don’t forget:

Your target metrics should be built to sustain a superior CX. Cross-silo activity and collaboration are necessary if you want to drive your troops towards that customer-centric WIN! 

 

Conclusion 

Customer-centricity will be a radical redesigning of your organization, especially if you suffer from old-age policies and inflexible legacy leftovers across silos and IT-infrastructures. 

But it will not only be worth it to shift to this strategy - it will be imperative. Maybe it is do or die for you retailers out there. 

These 5 I’s are indispensable for any retailer seeking to survive this war of superior customer experiences and the digital economy. 

Now it’s up to you. 

 

persuasion trend CTA

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