Last Updated: Thu May 1, 2013 09:00 am (EST)

Developing Good Relationships Is Coming Back In Style

retail chain, customer centric, customer experience, customer relationship, loyalty, shoppers, mobile
Retail chains are modernizing and reinventing how last generation's regional and family operators used relationship marketing to garner customer loyalty. Overtly focussing on moments for transitioning each customers' relationship makes the strategy actionable and much more affordable.

More than 20 years ago, Ed Dunn from Allen Collins sold me my cavalry twill top coat. Beyond conveying the importance of being well-dressed to a corporate work life just getting underway, he and Collins associates made the sale happen while making it look simple and obvious. When Ed wasn't available, colleagues stepped in. In the background, they had debriefed one another to consistently advance the relationship, no matter who had the up. They carefully developed what we today call a 'total lifetime value' relationship. Ultimately, the product assortment and economics of stores at nearby Westfarms Mall were the undoing of great relationship retailers, like Allen Collins, and the not-so-good. Now, years later, a growing number of retailers hope that what was good in relationship marketing, can help defer or completely avoid a lowest-price-wins spiral. Think that is a fine idea that will not fit your labor model and stores' margins? You may be surprised that, in a modernized form, relationship marketing is becoming more cost efficient than the alternatives. Cost-effectiveness is the result of acheivements in customer analytics and salesperson automation.

retail chain, customer centric, customer experience, customer relationship, loyalty, shoppers, mobile  Deepening customer relationships is again becoming more important to retail margins 
Stephen Grody
Director, Known Presence

Store managers and Associates know well that exceeding a shopper's expectations ensures a return shopping trip. But, stores with tight labor models generally stop there. There is little time for discovering a shopper's needs or steering them because Associate time is mostly spent transacting, restocking and neatening presentations, and occassionally fielding product questions. Customer behaviors also seem to confound. Having to re-disclose basic information about wants, needs and preferences to each associate seemingly drives shopper impatience. No wonder that many shoppers use a clipped conversational cadence and hurried pace. They are making the most of Associates' limited time and abilities to conduct a relationship.

Take any retailer's Associates, group them by sales performance, then compare what the top-quartile does to achieve their results with what lower-quartile Associates do to get theirs. The contrast could not be more stark. Best-Performing Associates attentively listen to and sell into each shopper's wants, no matter how little time is available. They look for opportunities to entice returning shoppers into trialing products in different categories. Instead of delivering just another well-executed transactional experience, Best Performers are relentless in trying to progress the customer one step towards a better relationship. In short, the Best Performers are more like Ed Dunn than most people imagine.

Best Performers are made, not born. Bea Auerbach taught G. Fox's Associates to remember each customer and what they experienced and to plan for what should happen on their next visit. Today, Best-Performing Associates recognize and remember important customers on-sight, just like Bea taught. Some professional Associates have had formal training in the stages of a shopper's relationship with the store. Others proceed informally but just as effectively. That takes a little bit of time, some effort, and a lot of memory, especially when shoppers visit multiple departments, store locations, or both online and bricks and mortar stores.

While retailers are tuned-in to shoppers' requirements for transactional quality and efficiency, consistency of relationship gets short shrift. The challenge has been the operational limits -- memory, in this case -- of any single Associate and whether building a capability to rise above those limits can work. Professional retailers can name their Top-10 customers while marking the count on the fingers of both hands. Recognizing the Top-10 percent is harder. Thankfully, technology is bringing progress to the relationship.

Responsive To Exceptional Customers

Years before mobile computers and YADA ("Your Assistance Delivered Anywhere") and its equivalents brought transactional services out from behind the counter, American Airlines had Red Jackets. American moved to less glaring garb in part because these representatives were not supposed to be easily recognized. They are there for customers for whom "millions of miles travelled" isn't impressive. If you are one of those, these American representatives will greet you in the flow of a busy concourse and, walking apace so to not slow you down, ask if there is anything American might do to help make the trip better. The whole idea was that they recognize you and take the initiative to serve you well. That strategy took the onus of asking for help off of the traveler as part of a hassle reducing experience, which positioned all other carriers as being net contributors to the hassle these best customers had to endure. Would you guess that American earned an increased or decreased share of spend from such "millions of miles" customers?

For many shoppers, getting good customer service requires the behaviors of a squeaky wheel. Getting jostled in Cosmetics as if at a Zabar's deli counter Sunday morning? Shift to an aggressive posture and interrupt someone. Been waiting too long for someone to take your money? Swipe the theft protection tag at a doorway receiver, then turn back into the store. Better yet, go online and send a flaming tweet about your experience problem du jour. One of the bevy of expediters will likely swoop in to manage the situation away from becoming a public relations nightmare, and over-deliver to get you calmed back down. Current "best practices" seem to be asking "what level of customers complaining strikes the right balance of cost containment and brand loyalty?". Oy vey, was that the sound of Bea turning over?

Retailers are certainly due praise for making progress. The most substantive progress has been online which has been a crucible for quality of service improvement for over a decade. So what of the core business? There, the majority of shoppers are in physical stores and are not online and are neither downloading nor running your App during their visit. Making comparable progress in the physical world seems increasingly important not only on its merits, but also to keep the proper balance in relative strengths of brick-and-mortar and online stores. Scaling-up to provide service "in channel", i.e., in the world of physical stores, will require cost-efficiencies on-par with those of online channels. Retail cannot wait for its omni-channel future to leap forth fully grown, at some indefinite future date, to address these opportunities.

99+% of shoppers are unrecognizable by 99+% of store personnel. Online, the exact opposite is true. Correcting the imbalance is an essential part of an omni-channel strategy. No less, it is central to how physical stores will earn a continuing role beyond as mere showrooms for online retailers. Mobile technologies -- not mobile apps, but mobile infrastructures -- will be key to correcting that imbalance. Teaching an entire store to recognize customers is a state-of-the-art mobile infrastructure application. So is protecting customers' ability to selectively opt-in and opt-out.

The 99+% have differing preferences for what shopping experiences should result from their being recognized by their retailers. Being addressed by name by someone unfamiliar is still garish in many cultures. And some of the 99+% want neither recognition nor special treatment. As with online, automation gives stores the ability to handle both recognition and knowingly allowing some shopper to pass with anonymity. Technology makes recognizing affordable, but that is only half the story. Retailers have to adapt store-delivered experiences to what is known about each customer. And technology is the way to personalize what the store does as that customer explores the flor plan and the shopping visit progresses. Training store personnel to the meaning of such insights and how to use them in a timely fashion is this generation's challenge for retail leadership and management.

Summary

Personalizing customer interactions in online commerce and in cable advertising has improved financial results in those businesses. Recognizing as few as the Top-15% of retail's physical store customers and personalizing how Associates respond to them makes the revenue lift opportunity in same-store results. Customer analytics and mobile Associate applications convert opportunity to results. No smartphones or tablets required. Just action from Retailers.

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