Opinion: Customer-centricity is only way for retail to thrive

While there are notable exceptions, online pureplays are winning in most sectors, continuing to gain share from more established retail brands. Most omnichannel retailers are not transforming their business models fast enough to compete.

While it’s undeniably true that legacy store estates are a big problem for many, the more fundamental issue is a failure to learn from pureplays by becoming truly customer-centric and data driven.

Many omnichannel companies talk about these things but few have really embraced them as a new way of doing business.

Customer-centric retailing

What does it really mean to be a customer-centric retailer? Crucially it’s based on viewing the business through the customer lens so trading meetings start with ‘how have our customers been behaving?’ rather than ‘what’s selling and what isn’t?’.

Understanding trading from a product perspective will always be important but customer-focused businesses give primacy to the customer lens; understanding customer segments and paying close attention to measures such as new customer acquisition, purchase frequency and customer churn; making them central to the way they plan and trade the business.

“Making effective use of the single view of the customer is the key to success in omnichannel retailing”

Pureplays do this and it was always a feature of old-fashioned catalogue retailers too. But it’s not something that has typically been in the DNA of store-based businesses – it needs to be, and fast.

In today’s omnichannel world, there is an abundance of customer data to enable better decision making, but often the data is not used effectively because it sits in silos, from both an organisational and a systems perspective.

Customer data can be gathered at each customer touchpoint – including social media, websites, mobile apps, in-store, call centres and email. There is rich data available at each of these points that can be used to deepen customer understanding and act on it.

Web analytics can tell you who visited your website, using what device, at what time of day and how they got there. You can also see which pages they visited, how long they spent on them and where they went when they left.

Retailers who’ve invested in the right technology can also now collect a range of data on how customers behave in-store, which, while not as comprehensive as what is available in digital channels, is moving quickly in that direction.

A single view of the customer

Bringing together all the data about a customer, gathered across all channels and touch points, to create a single view of the customer is an incredibly powerful tool that can be used to drive competitive advantage and tangible benefits.

This single view is so important and powerful because it allows for personalisation and targeting at either the individual or segment level. It means you can make the landing page a customer sees when visiting your website personalised based on the knowledge you have about their previous behaviour across every touchpoint.

Store assortments can be tailored, based on the aggregate information of all customers in the local catchment area. Promotional offers can be targeted at individual or micro-segment level to maximise effectiveness.

This is what the best pureplays are so good at. Only if omnichannel players catch up can they then leverage the incremental advantage that insight into behaviour in-store can provide.

Getting and making effective use of the single view of the customer is the key to success in omnichannel retailing.

The transformation challenge

For most, the starting point is that they have some, not all, of the data necessary to create the single customer view, but it is not as joined up as it needs to be.

A business may be sitting on a wealth of web analytics, but only a few people in the online part of the business have access to it, and it’s only used to optimise website performance rather than being applied across all channels and elements of the customer journey.

Many omnichannel businesses will also have email lists, loyalty card data, home delivery information, call centre data and other customer data sources besides.

The journey to a single view of the customer therefore involves cleansing and bringing together the customer data already available, and starting to fill in the gaps (for example, by deploying technology to track customer behaviour in-store).

The good news is modern, flexible, cloud-based technology solutions make bringing together disparate data sources to create a single customer view much quicker, easier and less expensive than in the past.

“Some of retail’s traditional ‘dark arts’ need to become science”

It is not a trivial exercise, but it is much more achievable than it would have been even a few years ago when a massive multi-year project would be needed to get all customer data on a single platform.

Today, a single customer view can be achieved by wrapping a visualisation, analytics, automation and personalisation layer around existing legacy systems, rather than having to replace everything and start from scratch.

The transformation required to become a successful omnichannel retailer in a digital world is fundamentally about becoming customer-led and data-driven.

In my experience, the biggest challenge lies in changing legacy cultures and ways of working. It should no longer be acceptable to regard digital as ‘someone else’s job’. Core retail processes need to have the customer at their heart and the entire business needs to be viewed through the customer lens.

Ultimately, some of retail’s traditional ‘dark arts’ need to become science. Key decisions should be driven by data and a comprehensive understanding of customer behaviour at an individual level. Many of those decisions should be automated on a day to day basis.

It’s a big challenge but it cannot be ducked any longer.