How Retail Must Evolve as an Industry to be Relevant to Customers

Retail Store of Tomorrow . . . Today! | Networlding.

I reviewed a blog post today from Melissa Giovagnoli, the Founder & President of Networlding.  I think she has really hit on something with her concept of a Networlding Genius Bar.  With social media becoming much more pervasive and widely used around the globe, it is certainly a concept that is coming of age.

We have seen an explosion of User Generated Content, on-site product reviews and online survey tools over the past few years.  The world is evolving to a new level of two way communication.  It is no longer just about push and/or pull marketing, but a real and deeper relationship with your customers.  In order to have that relationship, you must invite them to the conversation and allow them to say what they want, when they want, where they want.  You cannot filter out the good from the bad, nor can you simply ignore the bad.  Many consumers look for reviews on products, services and companies today before making their purchasing decision.  Their decisions are rarely based on price alone anymore. It is more about the customer experience as they are seeking the whole package, including companies that understand them, treat them well, and obviously have what they are looking for. Please take note of the fact that I said customers above. There are many buyers who still purchase on price along, but they are mostly bottom feeders who you will not have a long term and profitable relationship with. The key is to get it right with the 20 percent of the customers who make up 80 percent of your revenue. If you get it right with them, through the use of word of mouth, they will invite others to the dance.

Now that you have read my pre-able, and hopefully read Melissa’s post from the attached link above, I am going to take a slightly different spin and focus on what senior retail executives should be locking themselves up in a conference room to begin white boarding to develop strategies for including social commerce and a 360 connected engagement with their customers into their marketing and brand strategies beginning immediately.  It time more retailers of all sizes, shapes and types begin to not only embrace it, but use social media and commerce as a competitive advantage. We have never had access to so many robust tools that enable us to have a two way dialogue with our customers that can foster truly deep and meaningful relationships.

Apple has done a brilliant job engaging with their customers in a friendly and informative way through their overall retail experience and in particular the Genius Bar.  They have created a cult following.  The Apple store experience is superb and something others should take notice off.  They continue to innovate from a product, store experience and distribution perspective.  They have really mastered the art of bringing the brand alive in everything they do, through a consistent and high touch customer experience.  Whether you are a buyer of an iPod, a MacBook Pro or an iPhone, you get a high touch experience within the Apple store and if you need help, the Genius Bar is on site to address most of your issues.

I submit to you, the new retail imperative is the need to introduce social networking and commerce into the shopping experience across all channels. You need to bring some of the new online social networking and engagement models into the store experience.  This can pay dividends in that it deepens the relationship and engagement with customers, while also creating a community which enables the community members to connect with one another and generate their own content.  This would be analogous to the developer communities that are so busy building app’s for the iPhone and other companies/devices. Connecting with your customers 24/7 in a 360 degree fashion will make you more relevant with your customers, by being there when they want you in a seamless and channel agnostic manner. This will lead to and re-enforce the deeply connected relationship you want with your customers.

Additionally, stores should leverage the data they have on their customers to help aid in the browsing and shopping experience even more.  They can use predictive modeling to assist in suggestive selling based on profile data, purchase history and store visits.  Shoppers should be able to use a devise, such as an iPhone, to log into their profile while in a store to “like’ items, as well as tracking items for future sale events, etc.  This would give the retailer a better glimpse of the customers intent to buy.  This data can then be used by the retailer to generate one-to-one communications and promotions for customers.

With GPS tracking being so pervasive today, why not use it to your advantage, as a retailer, to monitor shoppers and their browsing habits.  Here is a wild idea, that I think could be a real differentiator:

As part of a loyalty program, create a community that allows customers to connect to one another, as well as to the retailer.  Let them all have a conversation where they can ask each other for input on questions they have pertaining to a future purchase decision.  They can get some of this today through online product reviews.  Take it a step further and let them access this from within the store.  Take that a step further and allow customers to be tracked when in your retail store with a home grown or licensed app like Loopt or Brightkite.  You can have someone in command central within your store that is monitoring customers who are in the store and also tracking associates to see if they are helping the customers, because they will be tracked also.  Each co-worker can have a handheld devise that enables them to see when customers from their loyalty program are in the store, click on their profile and review product recommendations within the section of the store they are shopping, based on category modeling that has already been done in the background and just waiting to be used when the customer enters the store.  Just think how much brighter your sales associates would seem.  You can also improve your modeling down the line by comparing the recommendations made to what the customer actually purchased.

Additionally, you can allow the customers to create something similar to a wedding register in which they can click on an item bar code to put it in their wish list for future purchases or to share with others as potential gift items.  Associates would be able to see this the next time the customer comes to the store and do suggestive selling against it. You could ping customers with special one-to-one offers when they are near your store, or in your store, based on what they have “liked” or purchases in the past. Make it real, make it relevant and make it right now, with a strong call to action and limited time offer just for you! Use your customer data and your technology to create a one-to-one conversation that is highly relevant, rather than just being a recipient of a one-to-many saturation mailing to drive store traffic. The more you can make it about me, the more likely I am to feel connected.

GPS tracking within the store would also allow the store to see how much time customers spend in the store, where they go in the store, if and what they buy.  This is essentially a brick and mortar retail version of Tea Leaf.

Lastly, with Facebook now having in excess of 200 million users, why not have your own Facebook page to create the community experience. Have a similar section on your website. Have store associates ask customers if they would like to friend your brand. Additionally, get them engaged with Twitter and have a team within your organization manage an effective and meaningful communications strategy across these and other social platforms. It is not just about being there, it is about being relevant, always on and engaging in the right way, based on the spirit and meaning of your brand.

Give this some thought and have some fun with it. I guarantee you that you will have to be here eventually. The social conversation is not a passing fad, it is a new way of being. Therefore, be bold, be early and be relevant.

My Strategy for the Sony/Google Challenge to Amazon’s Kindle

Sony, Google Challenge Amazon – WSJ.com.

This is a recent story about Sony and Google partnering up to challenge Amazon.  What Sony needs to do is follow the successful strategy of Lexus when they came into the U.S. market to challenge the luxury car incumbents.  Lexus focused on the customer experience, providing elegance at an affordable price.  They were not trying to step down and give middle and lower class americans a luxury car they could afford, but rather provide a luxury vehicle that could rival Lincoln, Cadillac, Jaguar, Mercedes and BMW at a much lower price.  These cars were elegantly appointed with comfort, style and standard features far beyond what you would get in the above mentioned brands.  Additionally, the purchasing and services process were very simple and hassle free.  They did their research and attacked all the pain points of the owners of other luxury brands.  Many people decided to give Lexus a try, not me though as I have always been a BMW loyalist, as either their second or sometimes primary luxury vehicle.  Where Lexus excelled is in substantially raising the bar on repeat purchase rates.  Customers were blown away with the ride, the quality of the vehicle, the fact that they had far fewer repair issues than their competitors.  As Lexus increased their share in the market, they were able to raise their prices and not lose customers, while also continuing to steal share away from their competitors.

Sony is in a fairly similar position in that Amazon is the category leader with a first movers advantage.  What Sony has going for it, however, is the fact that they are not entering into a mature market, but rather an emerging category where there is plenty of opportunity.  Amazon has snagged the early adopters already, who will help propel the Kindle forward through word of mouth and repeat purchases, just as has been the case with the iPod.  Sony certainly wants to avoid letting Kindle gain the significant competitive advantage that the iPod has.  iPod has watched many wanna be competitors come and go.  iPod is a great product and has its direct linkage to iTunes, where songs cannot be exported across other devices, thus making switching costs very high.

Sony’s partnership with Google is brilliant in that it can help to minimize the current advantage the Kindle has of being owned by Amazon which provides a simple and seemless ordering experience, as well as being the current leader in convincing publishers to make their books available for electronic distribution through the Kindle.

It is my believe that eventually, the Kindle, and whoever else emerge in this space, will replace many printed books.  We will begin to see students use them in school, as well as other new business models popping up where travelers will be able to rent a kindle for a flight or cruise or other travel event and download content on their rented device.

Early on, Sony needs to prove it is a viable contender to the Kindle.  They need to made their product available at a below market cost to convince consumers to give it a try.  I am sure there is some fear that Sony may not stay in the space, thus they would rather go with the Kindle because they know Amazon is in this for the long haul.  We need to see the Sony product in the hands of people.  If I were Sony, I would send it to leading bloggers, executives and other influencers who could help Sony to gain share.

Just like with Gillette, they switched from being in the razor business to being in the razor blade business.  Sony should not focus so much on making money initially on its device, but rather the revenues from the downloads.  You never get a shot at the download revenues if you do not have devices in distribution.

My challenge to you Sony is to break from the traditional product entry strategy.  Use your creativity, ingenuity, and the combined brand cache of Sony and Google to give the Kindle a run for their money.  I would be happy to set my Kindle aside and try your product if you want to use me as a test.  You need to find your core and then run with it.  Make some noise, let people know you are in the game.  Turn up the volume Sony and get this one right like Lexus did and not wrong like Microsoft and Dell did against the iPod.

MAKE US AN OFFER WE CAN’T REFUSE

Sony Reader product page: http://tinyurl.com/2za2ru

Winning or Losing the Minds, Hearts and Wallets of Our Customers

Over the weekend, I made a trip to the mall with my wife to the Cole Haan store. Last year I bought my wife a purse from Cole Haan for over $500. and after only having used the purse about 10 times in a year, the strap is beginning to fall apart. I figured since I spent over $500 on this purse, which has not been abused, I should see if Cole Haan will do something about it. The sales associate was extremely curtious and understanding. Without hesitation, she said it is obvious there is a flaw in the strap, thus we will gladly repair it for you and apologized for the inconvenience. I was quite impressed with the associates handling of this situation. She did not even look up my previous purchase history, which is several thousand dollars, nor did I have to tell her that I was a frequent shopper having spent several dollars over the years.

This is an excellent example of good customer service and a company that empowers its associates to make the right decision for the company and the customer alike. This is an act that will not go on unnoticed by me. In the future, I will certainly not hesitate to continue to shop at Cole Haan.

In these difficult economic times, it is vitally important that other companies take note of this type of behavior. It is very expensive to acquire customers and it take a lot of work to move customers from being uncommitted to being loyal. Customer loyalty is not about having the best price, in most instances. Those customers who shop just on price are typically not your most loyal customers. These customers, are merely transactors who will not hesitate to defect for a competitor who offers a better price.

There are a number of examples of companies who do a good job of differentiating themsevles against their competition. Their differentiation in on service, those little extras, or better trained associates, coupled with a strong in stock position if it is retail. or personal recognition of customer behavior orchestrated through an effective one to one marketing campaign based upon your purchase behavior and preferences.

Many companies are focused today on cutting costs to make it through the other side of these tough economic times. I submit to you, it is the companies who keep their customers first that will service and continue to win the minds, hearts and wallets of their cherished best customers, as well as dong the best job at converting uncommitted customers to best customers.

I have had the good fortune of working with, and being a customer of many companies who do an outstanding job of putting the customer first. It is a part of their corporate culture, from the CEO down to the sales associates, or waiters, or flight attendants. Those companies who do a good job know who they are, but they can all do better. I am not going to make this post about who else is doing a good job. If anyone is interested in my list of who is doing it right, feel free to email me and I will respond to you directly. Additonally, I am not going to out the companies who are not doing a good job, or those who have gone from good to great to gone or soon to be gone, I think they know who they are as well.

If you find a company who does a good job like Cole Haan has, return the favor and tell your friends and continue to open your wallet in their stores rather than going to a competitor. If you show loyalty to a company and they do not show it back, you are certainly free to flee. If you are trapped because there is not another company that provides the goods or services you need, let them know. Most companies, the good ones anyway, want to here from their customers; the good, the bad and the ugly.

You do not have to spend a lot of money on a product or service to expect good service in return. It can be as simple and inexpensive as a newspaper on a street corner or a coffee at your favorite coffee shop. The point is, these are competitive times and companies need to work hard to provide customers with service that wins the minds and hearts of their customers, which will translate into maximizing the customers share of wallet. When companies we engage with make an effort to win our minds and hearts, we should return the favor in kind by being loyal to them. There is a great old Midas commercial that says “pay me now or pay me later”. This is a two way street. If companies treat us poorly it will cost them lost customers and revenue; conversely if they treat us well and provide the products and services we seek, we will reward them with our business. If we leave a company that has treated us well to save a few dollars, what happens when that company goes out of business or if you have to return a product and they are not accommodating. The few dollars you saved are lost in spades. Companies and customers alike, think about the end to end life cycle of the value of committing to each other.

Thanks Cole Haan for going that extra mile for me, I will be back soon and hopefully so will my friends.