Aug. 8, 2010
In this new generation of Internet-empowered, seller-agnostic customers, retail is the most vulnerable business sector because it has a multitude of critical customer touch points. Retailers of every size, type, and location must urgently confront the radically changed purchasing behavior of these aggressive, often-ruthless customers.
Today’s techno-savvy customers are armed with purchasing firepower unavailable to any previous generation — they use three lethal weapons to secure the benefits they seek and satisfy their intense need to win:
- Instant, comprehensive information from the Internet about all products and services sold at retail — online and offline
- Immense choice in every segment of retail — a wide variety of options and prices in every local community and from every corner of the world
- Real-time price comparison at the moment and location of purchase on smarter-and-smarter technology and newer-and-newer apps on their now-ubiquitous mobile devices
Moreover, social media constantly informs and influences these aggressive, self-centered customers. They communicate their in-store and online experiences immediately and vividly. Facebook and Twitter enable customers to share and compare their retail purchase experiences — favorable or unfavorable, real or perceived — with millions of people throughout the world. Retailers must understand the full extent of beneficial and destructive exposure they have in social media.
Make no mistake — there is no difference in the purchase behavior of "online customers" and "offline customers." Commitment to a single channel is rare and becoming more infrequent. Whether shopping online or in-store, customers are addicted to sites that compare availability, choice, quality, service after the sale and the most dangerous comparison of all: price.
This era of "new experts" is permanent. In fact, it will become an even more potent force because the generations of customers that follow will have more effective, more agile technology and they will be more adept at using it for their benefit — not yours.
These "new experts" are not just dorky teenagers — they are your spouse, your grandmother, your next-door neighbor, and they are you, when you are the potential buyer. Each of us buys products and services for ourselves or our company or someone we care for. When we do, we are as unfaithful and selfish as any buyer out there, looking for the best deal and walking away from our previous relationships with former sellers of choice.
Here’s the reality: Customer loyalty, long in decline, has virtually disappeared in every sector of commerce — in 2009, only 36 percent of business travelers were loyal and only 20 percent of car buyers were loyal (New York Times 12/1/09 and 10/20/09). To grow and prosper in this buyer-dominant world, you must stop thinking like yesterday’s seller and start thinking like today’s buyer.
Customer preference, from the customer’s perspective, is deliberately making a choice — deciding from whom or where to purchase in order to obtain a valued benefit. Here is how a customer might explain his or her way of selecting a vendor: "My preference is based on how good you are at meeting my wants, needs and aspirations and reducing my apprehensions, concerns and fears. I have a lot of choices, and I will decide where to buy after looking at all of my options. Given all of my options and all of the factors in my purchase decision, I prefer you."
Think of customer preference in terms of the specific advantages it offers you:
- The buyer will go a little out of his or her way to buy from you
- The buyer will pay just a bit more for your firm’s products or services
- The buyer will buy from you without always demanding a discount
- The buyer will buy from your firm more frequently
- The buyer will be slightly more tolerant when your staff fouls up
- The buyer will make you first choice over your competitors
Individually, these benefits may not make or break your same-store sales performance, margins, or bottom line, but collectively they will be the fundamental difference between growing and declining in today’s fiercely competitive retail word.
Embracing customer preference does not require a wholesale rethink of your business plan nor does it require investment in infrastructure or advertising. Retailers — any size or type — can create customer preference with big ideas and small ideas. Customer preference will make your company first choice. To achieve this ambitious but attainable goal, retailers must realign their entire organization to create customer preference at the four decisive moments in every purchasing progression:
- The Now-or-Never Moment — first brief contact
- The Make-or-Break Moment — lengthy transaction process
- The Keep-or Lose Moment — customer’s continued usage
- The Multiplier Moment — highly profitable repeat purchase, advocacy, referral
Retailers must forget about "building your brand" — it is costly and in today’s sea of brands, mind-numbing slogans and time-constrained customers, it seldom works. Alternatively, concentrate all your human and financial resources on delivering customer preference every time and all of the time.
Don’t confuse this transformative concept with a pep talk to your sales associates — organizational alignment behind customer preference requires that every staff member, from back office to shipping, be energetically committed to making your firm your customers’ preferred firm.
If you are looking for a model, read and re-read what Jeff Bezos has to say about this simple, but challenging undertaking: "We start with customers, figure out what they want, and figure out how to get it to them" (New York Times, 1/5/08).
Robert H. Bloom is the author of the forthcoming book "THE NEW EXPERTS: Win Today’s Newly Empowered Customers At Their 4 Decisive Moments" (Greenleaf). (Photo by TheeErin.)