As retailers attempt to weather the transformations occurring in the retail marketplace and sustain performance, they are realizing that they must migrate away from the traditional product-centric archetype toward one that is customer-centric.
However, what does the concept of customer centricity really mean?
I came across a definition of this concept by Professor Peter Fader of the Wharton School – and I couldn’t have said it better myself.
He defines the concept of customer centricity in retail strategy as: “a strategy to fundamentally align a company’s products and services with the wants and needs of its most valuable customers. This strategy has a specific aim: more profits for the long term.”
When you break this definition down, a critical point is revealed.
Retailers must know who their most valuable customers are; identifying the core customers is the key to unlocking the true potential of any business.
So rather than being product-centric – focusing on the products you bring into the market – it’s important to know what products and services your core customers actually want.
In order to do this, retailers must learn about and listen to their customers, cultivating meaningful relationships that allow you to meet their increasingly high expectations.
Getting to Know Your Customers with Customer Analytics
It’s incredibly easy to say that your business is customer-centric, but it’s actually quite complex to execute.
However, the benefits can be tremendous – companies that are highly customer-centric have stronger long-term sales grown and lead in two-year comp sales growth over those companies that are product-centric.
The best way for retailers to discover who their customers are is through analytic solutions that use enriched customer data, which goes beyond loyalty program data, email lists, and transaction records.
Customer analytic solutions allow retailers to:
- Understand who their best customers are and what they want
- Develop marketing campaigns that target the right customers with tailored messages that make stronger appeals to their audience, in terms of dayparts, price points and regional preferences
- Identify and target untapped customers in both existing markets and new markets
This sharper perspective of your core customers that’s revealed through customer analytics can be used not only for targeted marketing, but also to guide everything from site selection to relevant product offerings, promotions, store designs and other elements of the overall brand concept.
The Bottom Line
If retailers use the customer data they’ve collected in the right way, they can shape retail strategies, set business goals, optimize marketing activity and implement solutions that are aligned not only with company objectives, but also customer behavior and customer expectations.
If you want to learn more about the steps you need to take to put your customer at the center of your growth strategy, download Buxton’s latest report: The Four Data-Driven Steps to Customer Loyalty.