Results Count ... everything else is conversation.: The Endangered Customer

Why people are the difference in the future of retail

By Chris H. Petersen

I was honored to be asked by Richard Shapiro to review his new book entitled: The Endangered Customer. Perhaps, the ultimate paradox is that I ended up reading it on my long flights to speak at the Omnichannel India Conclave. So much of omnichannel is focused on the technology and "mechanics" of multiple channels for today's empowered shoppers. Much of the retail pendulum has in fact swung to the "technology of sales transactions", which is why I found Shapiro's focus on customer relationships is so timely and relevant. Pareto's 80/20 rule is alive and well in retail … 20 percent of customer relationships drive 80 percent of the profit. What must today's multichannel retailers do to generate these kinds of relationships? Shapiro has outlined 8 steps designed to guarantee repeat business.

Why this is important: In the transformation to omnichannel much of the focus has shifted to technology for the sales transactions. Yet, the most important "sale" that a retailer makes are those touch points that create lasting loyalty and relationships.

The "endangered customer" = "endangered retailer"

Image Credit: Amazon

At first glance, I thought that the main title of Shapiro's book was odd: The Endangered Customer? In this omnichannel age, today's consumers are empowered to shop anytime and everywhere. They can literally find millions of items and compare best prices on their phones, and then chose where to purchase, how to purchase and where to take delivery. How can consumers possibly be endangered with all of these options?

The answer is … there is a fundamental difference between "consumers" as shoppers and "customers" who purchase and then repeatedly come back for more based upon their experiences with a retailer. As retailers increasingly turn to technology to automate and expedite sales transactions, there is an increasing danger that consumers become "traffic counts" to be converted into sales tickets. As a result, there is a real and present danger that retailers who focus on selling commodities at a price will not develop a deep engagement with those customers who value the relationship beyond a low price. It is these long term relationships which deliver repeat business, life time value and more profitability.

8 Steps to guarantee repeat business

Throughout his book, Shapiro makes the case that making the human connection with customers "will become increasingly rare – and therefore increasing more valuable". How can retailers do that in this age of fast paced technology? The subtitle of The Endangered Customer highlights the 8 steps that retailers can take to establish meaningful customer relationships, which in turn increase loyalty and retention.

Make me feel welcome (hope)
Give me your full attention (control)
Answer more than my question (connect)
Know your stuff (trust)
Don't tell me no (frustration)
Invite me to return (feel wanted)
Show me I matter (caring)
Surprise me in good ways (feel special)

Too simplistic? Sounds "old school"? Perhaps. But, these 8 steps are a time tested inventory of the critical people skills that are perceived positively by loyal customers. They are the "tough behaviors" that make a difference day in and day out on the retail floor, in restaurants, hotels and everywhere consumers engage. Store and service managers would do very well to employ Shapiro's 8 steps as a quality checklist of their customer experience.

There are no "silver bullets" for people … Hire for smiles still applies!

We have written previously about the power of the right people in retail. We have also commented and highlighted Apple's retail approach of "hiring for smiles". In recruiting for its stores, Apple has taken the approach that is far easier to train an associate about the technology, than it is to teach them how to smile and connect with customers. Apple's repeat business and revenue per square foot are testimony to the value of developing and sustaining loyal relationships with customers.

Shapiro draws the same conclusion in The Endangered Customer. Retailers need to recruit the right people oriented with talent … and then continue to invest in the best to retain them. The 8 steps really become both reminders and checklists for how managers can reinforce the kinds of engagement and experiences, which loyal consumers value.

The omnichannel paradox – Technology is necessary but not sufficient

As I speak around the world, one of the hottest topics in retail is development of "click and collect" strategies. Another acronym for it is perhaps more descriptive BOPIS – Buy Online Pickup In Store. As traditional bricks and mortar stores race to compete with online giants like Amazon, the theory is that they can offer consumers differentiated value by enabling online shopping convenience, with the ability for customers to see specific items when picked up in store. This certainly has some great appeal for personal items like apparel which involve subtle colors, style and fit.

The technology investment for "click and collect" execution in store is HUGE! Essentially, retailers have to now invest in capability to have real time inventory at the item level in every store. In a recent blog, I questioned just how many retailers can invest enough to pull that off reliably. But, assuming that the technology and mechanics are there, what could be wrong with such a compelling, seamless strategy that consumers say they want?

The holiday season was filled with horror stories of customers trying to collect in store. Often they couldn't locate the collect counter, there were long lines to collect, wrong items were there, or missing entirely. And, the big bottom line of the click and collect scenario … it's all about the PEOPLE in store who make or break the experience! And, with the wrong people engaging in the wrong ways, the customer will never return to the store or that retailer online.

Without the right people retailers lose their "soul" … and relationships

In the heydays of "mass marketing," bigger was better. Retailers like Walmart thrived because they could offer larger assortments at cheaper prices. Those cheaper prices at large hypermarket stores were a result of streamlining logistics, operations and people costs. In essence, in the process of scaling larger, large national chains lost their "soul", and the focus on people who build relationships with customers. In an effort to compete on "always" lower prices, staff became "labor costs" … not a strategic competitive, differentiator.

Today, almost every bricks and mortar store is competing with the large ecommerce players. And, in an effort to match lowest prices, retailers are too often treating people as a cost, not a strategic weapon that develops repeat business, especially with the most profitable customers. In an omnichannel world, Pareto's 80/20 rule is even more important for endangered retailers à 20% of customers generate 80% of the profitable business, especially through repeat business across today's multiple channels. Just look at John Lewis' status for what relationships mean in terms omnichannel business.

Image Credit: Photostock

Powerful lessons from The Endangered Customer for omnichannel

The endangered retailer today tends to treat the customer relationships as a non sequitur for omnichannel. The false assumption is that if consumers now shop anytime and everywhere, relationships are no longer that important … and by default, the power of people to develop those relationships is not important.

What I really appreciated about Shapiro's approach in The Endangered Customer is the countless examples of how people can make a difference in personalized engagement across any medium. Shapiro includes great examples of how websites can be personalized and made more consumer engaging. He includes countless examples of the power of CRM – Customer Relationship Management beyond the physical store. The key take away is that something as simple as email can make all the difference if you have the right people executing the 8 steps to make it personal.

Shapiro's bottom line message is one that I've often paraphrased many times:

Customers don't want to be sold … they are looking for HELP to make the right purchase, and a relationship that will support them before, during and after the sale.

I would highly recommend Richard Shapiro's latest book: The Endangered Customer. You will find it to be a useful guide for any aspect of omnichannel retailing. You can find the book on The Center for Client Retention (TCFCR), Amazon and other book sellers.

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