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Close Encounters of the Retail Kind: Why getting intimate with customers can deliver big bucks

July 5th, 2012

Category: Point Of Sale Systems

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“Merely satisfying customers will not be enough to earn their loyalty. Instead, they must experience exceptional service worthy of their repeat business and referral. Understand the factors that drive this customer revolution”. Rick Tate, Author: “Leadership and the Customer Revolution”.

Rick Tate, an expert on service quality, got it right. There is a ‘customer revolution’ going on for the first time in retail history and it has to do with the paradigm shift where the consumer, rather than the vendor, holds all the power. The pervasiveness of the Internet has seen to that. It has enabled consumers to instantly and speedily arm themselves with knowledge about competitor pricing and product information as well as product reviews and comparisons. Importantly, more of them are now discussing what they think about your brand, image and service levels via social media platforms.

Because consumers are so well informed, (and sometimes they have a much better understanding than you of how your brand is perceived and how good your service levels are) you really need to put a lot of energy into creating ‘exceptional service’ if you want to hold on to customers and be profitable.

Unfortunately, many retailers view the customer from a purely transactional basis while focussing on reducing the cost of a sale.

Some retailers (and this might be you) are feeling the pinch and have fallen into the trap of holding too many random ‘Sales Days’, slashing prices between 50% and 70%. While this is understandable, it could be de-valuing your brand and is only a short term solution.

The better solution is to work on delivering something of real value to the customer in the long term, so they want to buy from you even when there is no sale on! In the words of the late John llhan, founder of Crazy Johns mobile phone retail chain, “This may seem simple, but you need to give customers what they want, not what you think they want. And, if you do this, people will keep coming back.”

But how do you give customers what they want? And do you know what they really want? Talking to them on the shopfloor is a start but today you need to do much more to come to grips with their needs, wants and desires. The first step is to create a really good ‘profile’ of the customer, and then it’s important to do something with this information: that is, execute a strategic Customer Relationship Management (CRM) program incorporating highly personalised marketing campaigns, promotional activities and customer care tactics.

Gathering information about your customers delivers competitive edge
“The customer experience is the next competitive battleground” – Jerry Gregoire, Dell CIO

Make no mistake: if you don’t profile your customers, your competitors will, which means they’ll know how to woo customers away from you. Profiling customers is as easy as capturing basic demographic information at the point of sale such as age, gender and post code. Even basic demographic data lets you conduct specific promotions.

Conducting surveys is also another way to profile your customers. Surveys let you ask very specific questions so you can obtain deeper insights such as finding out how customers perceive the ‘value’ in what they pay for your products (denotes to the strength of your brand) or surveying the quality of your customer service (poor, average, superior, not enough staff, poorly trained staff, etc.)? You can then do something about the responses such as adjust your pricing or provide more training for staff.

Don’t discount Loyalty Programs – they really work if done right
“You don’t earn loyalty in a day. You earn loyalty day-by-day” – Jeffrey Gitomer, Author and business trainer on sales and customer loyalty.

Want to get to know your customers even better so you can give them what they want? Start a loyalty program. While they’re a long-term thing, “retailers that do rewards programs right can see “incredible loyalty”, notes a Harvard Business School article. The big advantage is they allow you to collect buying history on your customer. This is a good thing as you can create more targetted promotions which means your customers will appreciate you’re not wasting their time with irrelevant offers, and you’ll be happy as they’re more likely to buy.

However, loyalty cards and schemes have now hit saturation point. This means you need to demonstrate the superior value of your loyalty program. Whether you offer members a special discount or loyalty points’ accumulation, make your loyalty scheme sound very “exclusive”, where members feel special. For example, from time to time, offer a ‘secret sale’ or member only invite to a celebrity ‘meet and greet’ for a new product launch, etc. An article titled Successful Loyalty Programs by Marketstar Retail Insights provides a real world example that illustrates ‘value’ well.

Utilise a CRM system to enable powerful customer insights

Today, it’s virtually impossible for multi-store owners to obtain a ‘360 degree’ view of the customer without the help of a CRM system. A retail management system that comes with integrated CRM not only provides a cohesive and clearer view of your customer; it enables you to ‘mine’ their buying history and buying patterns. For example, you can view number of purchases overall, or purchases for certain time periods; types of products they buy, and so on; then structure promotions based on these insights.

CRM systems have the potential to increase average profit per customer because insights obtained therein arm you with better knowledge so you more ‘precisely’ upsell and cross-sell into your current customer base. Because everything is about fulfilling your customers’ highly personalised needs and wants, they’ll keep shopping and will refer you to their ‘friends’ providing you with a slew of new customers as well.

While CRM is a business concept first and foremost, supporting software systems are the enablers of customer engagement at an intimate level. Designing and delivering marketing programs and promotions that are based on indepth customer knowledge elicited from your CRM system have more chance of success than guesswork and intuition.

Be consistent. Be Frequent. Be Relevant

Good customer relationship management is about maintaining regular contact. Try to be consistent, e.g. every second Tuesday at 10am. Frequency of contact depends on the type of retail operation. As a guide, if you sell a high turnover product like health supplements then weekly or fortnightly contact is fine. However if you sell items like beds or lounges, monthly contact is more appropriate.

More importantly, be relevant: send promotions that relate to particular preferences and likes. For example, a men’s clothing retailer could promote a sale on ‘business’ shirts only to customers that have purchased business suits or shirts in the past. Remember the more relevant the promotion, the better it will be received. For example, offer an ongoing 10% discount on one item your customer buys frequently while maintaining full margins on all other products.

Mix it up and do things a little differently

“Be everywhere, do everything, and never fail to astonish the customer” – Macy’s motto

Yes competition is fierce and that’s why you need to provide exceptional service. Outstanding customer relationship management is also about surprising your customers. You may want to try some of the following examples (if you haven’t already).

  • Incorporate opt-in SMS marketing: upcoming sales, mobile only coupons, loyalty member discounts, ‘Saturday Super Sale, etc.
  • Create a referral program and offer your customers discounts on referrals.
  • Frequently send handwritten ‘thank you’ notes to important customers.
  • Have a regular e-newsletter that not only includes details of upcoming promotions but also includes information that is relevant to your business and of genuine interest to your customers.
  • Send a special message to your customers who are about to enjoy a birthday. This message can include an offer of a special promotion just for them.
  • Have your POS system prompt the sales assistant when a VIP customer has just had or is about to have a birthday. The operator can then offer best wishes to the customer. Of  course, if there is a birthday related promotion, then your POS system needs to be able to automatically apply the promotion based on the customer’s birthday.
  • Have a “start of season” or “new product” VIP customer preview evening. Make it special. If you are previewing your latest collection, then have a well-known model show off your range. If you are having a new product information session then have a product expert give a demonstration and answer queries about the product. Ensure you have food and beverage suitable to your VIP guests.
  • Have your POS system display to the sales assistant details of recent purchases as soon as a VIP customer is recognised. The sales assistants should be trained to enquire about how much the customer has enjoyed those recent purchases.
  • Have members’ only discounts on selected items clearly shown in store. This should be a strong incentive for non-members to join your loyalty program. And of course, customers that join the program can instantly take advantage of the advertised discounts.
  • Have “crazy sales” where in addition to VIP customers getting double loyalty points or a discount on the whole store (or a department), every Nth customer (or one lucky customer, or whatever), will receive a refund of the full value of their purchases during the sale. Ensure details of the lucky winner(s) are included in your e-newsletter. Even try to get your local paper to cover the event.
  • Encourage your staff to record details of any positive or negative feedback from customers. Not only will this lead to improvements in your systems, but it will give you the perfect “reason” to contact specific customers with a very tailored offer.

The above suggestions are all about giving the customers exactly what they want and making them feel special. I like the way Jeff Bezos, Chairman and CEO of Amazon thinks: “We see our customers as invited guests to a party, and we are the hosts. It’s our job every day to make every important aspect of the customer experience a little bit better.”

For more information on integrated CRM with CONTROL Retail Management System contact us today or call 1300 646 536. www.creativecomputing.com.au.