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In business, the customer may always be right – but just who is the customer?
It’s a question that goes to the heart of things – even if plenty of businesses down the years have been guilty of thinking too much about themselves and too little about customer need or the customer experience.
Just ask Kodak or Blockbuster (which had plenty of chances to buy Netflix and catch that changing customer tide – but spurned them all).
Of all the ways for a business to achieve lasting competitive advantage, developing a granular understanding of customers in order to deliver against their needs is among the most valuable. Who are they? What do they buy? Which channels do they prefer? How do they respond to changes in price or promotions? It’s a list of essential questions that most will add to effortlessly, even if the answers are harder won.
Next to this, in many spaces today, understanding how to deliver for customers is more important than ever.
In part, that is because customer loyalty is harder to secure in a hyper-connected world where price comparison, verified reviews and more are just a screen-tap away.
So we can say this much. Buying into the theory around being a customer-centric business is the easy bit. Delivering on being customer-centric mostly isn’t.
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Ioannis Melas is a partner and customer insight and segmentation specialist at the global advisory firm EY. He says what is striking right now is how moves that some businesses have made in recent years to own the customer conversation are being overtaken by fuller engagement models as companies begin to embrace the potential that flows from true digital transformation.
“It can sound like hyperbole, since for many years some of the CRM [customer relationship management] and ERP [enterprise resource planning] companies have been overselling digital transformation and its potential to companies that, realistically, were a way off making the leap,” says Melas. “But that is no longer the case.”
Today, says Melas, the strongest companies work out how they are interacting with decision-makers – whether an individual consumer, a household or in an enterprise business – and are poised to engage and to monetise.
“In other words, we are moving away from the idea of self-service as the be-all and end-all,” he says. “Companies are considering the customer experience, customer resolution and are making customer efforts right across the lifecycle.
“Whereas digital was seen as a channel-shift play not so long ago – moving the touchpoint from a contact centre to an online portal, say – it’s now better understood that the right customer engagement in the discovery phase, during the purchase and in a variety of ongoing ways once the custom is secured, is the best way ahead.”
One sector where customer-centric thinking has developed more quickly than elsewhere is, arguably, in retail, so it’s useful to turn the spotlight on activity there for learnings.
JML is a retailer that specialises in selling consumer products using innovative film marketing, both in-store and online. It currently boasts an annual turnover of £100m and sells products in more than 70 countries, all via a business model that sees it source new-concept products to promote through a combination of TV advertising and in-store screen-led promotions.
Jai Whiting, head of digital and e-commerce at JML, says: “Our operations are quite complex, but a customer doesn’t care whether, as a business, we have different units or services delivering our offer.
“But there is still an expectation from customers. If someone has bought from us on the high street, in one of our concessions, if they then go online to buy, they probably expect us to join up the dots and hold information on them.”
Yet if that is the expectation, it is still hard to achieve in practice. Merchandising systems may now be built to support that kind of multichannel approach, but the reality for a business like JML – and many others – is messier.
It sells through concession stands in stores such as Asda and many other high street giants, which makes data collection harder than it might be. It has also recently been forced to shut many of its unprofitable international operations and to focus far more on exporting from the UK rather than running overseas subsidiaries. “These are big changes and challenges, but they aren’t uncommon in retail,” says Whiting. “Pivoting and adapting is what retailers do.”
To this end, JML last year embarked on an ambitious customer relationship management project using Microsoft Dynamics 365 that is designed to unlock new insights and a better customer view. “It’s a powerful tool for developing leads, nurturing contacts, tracking sales and delivering actionable data, but the ongoing challenge is to get it tuned just right for our needs,” says Whiting. “We are nearly there now.”
The company’s headline ambition, which Whiting is explicit about his work needing to deliver, is to double sales by the end of 2019 despite last year’s international rethink. “The focus of the operation is now shifting to an international distribution model while we develop retail, online and digital operations – and the CRM project sits at the heart of that project,” he says.
“Yes, it’s ambitious, but there is so much we can learn and act on if we get things right. For us, it is often about tracking the impact on sales of our different activities, and learning what works. For example, our TV activity will routinely drive our online traffic, and particularly mobile.
“We see that spike in traffic, but then it’s a question of understanding how to improve conversion once we have a would-be customer’s interest.”
JML’s situation is a particular challenge, says Whiting, because its customers have an older profile and are less inclined than many other demographics to buy via a mobile phone.
“It’s all part of the buying cycle, however,” he says. “Just because our conversion is lower on a phone compared with a desktop or a tablet doesn’t mean we aren’t getting closer to a sale – and a relationship. Yes, we want to close the loop and see a completed purchase, but anything we can do to improve pick-up and interest is a step forward. That’s the focus of some of our work.”
Part of the challenge for any retailer operating online is that every customer has choices and can compare options before making a purchase. “That’s an opportunity, too, of course, but we always understand that we aren’t the only game in town,” says Whiting. “A customer may look at a product in store and then go away and look around online. They may look to buy on Amazon, for example, particularly if they have an Amazon Prime account in place guaranteeing next-day delivery. There are lots of actions they might take.”
The focus for JML in its CRM work is to give itself a wide view of the customer through every point where there is an interaction, says Whiting. “It’s a simple concept, but it is hard for many retailers to deliver. Many businesses have siloed profit and loss operations internally and just can’t easily break that mould. While we have lots of distinct operations, we are working to understand how they interact and deliver for us.
“You could say it is about being grown-up. Rather than insisting that we know our routes to market, we know we have to be customer-centric in our thinking and acknowledge that traditional models for making a sale are changing. Those that don’t change course – like BHS didn’t – risk irrelevance and failure, and we understand that.”
So what can the data tell a business like JML? What is it looking to learn and act on? “Some of it is the classic stuff you might understand by big data,” says Whiting.
“Once you interrogate the data, you can see buying patterns. Maybe some parts of the country buy particular product types more than others. Maybe we can respond to weather data to have the right offers playing on our TV shopping channel, and the right stuff in-store too. It’s that kind of opportunity. If you put out an email marketing campaign trying to sell garden products when it’s raining, you are doomed to fail.”
There is an element of trial and error in some actions the business will take, says Whiting, but the point is to benchmark against your own performance and drive improvement. “We aren’t trying to be perfect – we are just working hard to improve and to keep improving. And there are always opportunities to grow because we have a global customer base and a global audience now.”