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Retail and the Consumer
By Steve Rempel, CIO, Rite Aid
Many will tell you that today’s consumer is more powerful than ever, thanks to the personal mobile computers we have in our pockets, our homes and even our cars. There are some who think this trend will continue over the next 10 years, but that may be a fool’s path. The amount of compute power is more than ever, but what most retailers are lacking is the relevant information that consumers want from them on each and every interaction. And to make that more complex, “what consumers want” often changes by shopping trip, by the day of the week and even the time of day in some cases.
Think about it—does a retailer want to communicate about loading up on a grocery basket to a consumer that is commuting early and late via train to New York on a Tuesday? On the other hand, do they want to communicate to that same consumer on a Saturday morning about a Mocha Latte when that is the day the consumer normally buys groceries for the week?
This is a mistake that companies make over and over and over again, as they don’t always understand and follow three basic, yet critical principles:
1. Understand the individual’s behavior patterns and interests based upon data that is already available to the retailer through past interactions.
2. Understand what each individual wants and when they want it, but don’t always aggregate.
3. Then using the above information, make every single interaction relevant and valuable for the consumer.
It’s very important that retailers follow the above three principles, in this order; doing so will help ensure retailers get an ROI and increase the chances for a continued relationship with the consumer.
Once you have these tenets in place, measure every interaction in detail, noting what worked and when it worked; capitalize on that information to build and adjust future interactions from that point on.
Case in point, from 2003 to 2013, I lived in the Bay Area and shopped almost exclusively in a single grocery chain, a single men’s clothing chain and one or two wine shops. All three of these retail outlets had frequent shopper programs where they reached out to me with ideas of products I would like to buy based on what I have bought in the past. Those suggestions came with deeper discounts or special offers included.
In one of these outlets, the store continued to market me some things that were of interest but I also got specials for two items I had zero interest in baby products and dog food.
Every retailer should strive to maximize the power of the data the company already has through careful analysis and thoughtful application when it comes to communicating with consumers
The other two companies sent me offers that were relevant, so I stayed with both, allowing each to go to the second principle. One then failed trying to go to the third principle; making each interaction relevant and of value to me because I already owned six suits from them and really did not need a new suit every two weeks. I needed shoes; they have shoes, and I have never bought shoes from them. Their data should have showed them I bought suits, and that most people with suits may buy shoes. I never received a single shoe offer.
The wine store was the only retailer to achieve the third principle. They are a case study I bring up and use often. You might say you can only drink so much wine—how can they achieve the third principle and maintain their relevancy? Well, wine is often given as gifts, so I started getting interactions that talked about “wines as gifts”—different wine at different price points. If I had purchased a lot of wine one week, I got a thank you note recognizing the purchase and that next interaction was more about wine accessories, bottle openers, decanters, etc. etc. They also have homemade pasta and bread for sale as well as wine-based dinners. You get the point: all of these offers were communicated at the right time to a very engaged consumer.
Like many of you, I have a favorite airline that I love to fly. I fly them almost every week and they know almost everything about me as it related to air travel. I buy a monthly pass from GOGO inflight Wi-Fi; the airline must know this, yet every time I book a flight they serve up an ad to have me buy Wi-Fi for this flight at a reduced price. What a waste of valuable screen space when they must know I have never bought this product from them at time of booking. Their assumption must be that everyone wants to buy Wi-Fi at this time.
My point is that most retailers have more data then they understand and most don’t seem to have the expertise to leverage it in the form of customized interactions for their most valuable consumers. People continue to say that this is very hard and I actually take the opposite view. I feel this is actually easy if you take the time, truly respect your customers and abide by these three very important principles. Retailers should remember that one to one, long lasting, relevant and mutually beneficial engagement is a marathon and not a sprint.
I recently stayed at a luxury hotel in Punta Meta and I don’t think you can find a customer of that hotel that has anything bad to say about the interactions before, during or after his or her stay, and this particular high-end luxury hotel chain has over 44,000 employees across the globe. I say this to show that extremely high quality retailer-to-consumer interactions can happen and are happening if you look for them. Retailers need to find them and learn from them for their own business.
My premise is not that consumers won’t continue to have more information that is available to them as we continue down the path of more and more mobile computing; I believe the winners in this game will be the companies that understand and create the most relevant interactions for each consumer when they want that interaction.
Every retailer should strive to maximize the power of the data the company already has through careful analysis and thoughtful application when it comes to communicating with consumers. Truly understanding your customers before and during your interactions will pay off in dividends down the road, and, in more than one way.
And to all the CMOs reading this article, remember: “Don’t try to sell them dog food if they don’t have a dog.”