By Sabine Risse, ECC / IFH Köln
“The customer is king” – this is a saying that everyone has heard at some time or other.
However, what does that actually mean in practise?
Nowadays, the customer is more than ever the focal point of absolutely every company’s strategic orientation. Especially digitalisation of – both stationary and online – retail and the resulting opportunities that arise through its development lead to increasingly demanding customers. As the internet’s transparency reduces switching costs enormously, retailers face the growing risk of losing customers. Therefore, it is essential to understand the customer’s needs, motives and purchasing intentions in order to be able to satisfy them and to generate valuable conversions. Otherwise, consumers will be likely to buy somewhere else, as the next online store is only a click away.
First and foremost, retailers should ask themselves if they really know their customers and their individual requirements and whether they are putting these at the centre of their efforts. Next, they should seek to improve performance of their principal sales channel. Only those retailers who put customer centricity first and realize a design of their – online or stationary – shops that is optimal from the customer’s perspective will be able to evolve and build customer loyalty on a long-term basis.
Note: This article is part of our #DigitalRetail series – click here for an overview
Brick and mortar retailers lose their customers while in stores
As an IFH study reveals, Amazon is not always the “root of all evil” for stationary retail. In fact, often brick and mortar retailers lose their customers while they are in stores: Before eventually buying online, 28 % of consumers said purposefully went to the shop in order to obtain product information about a product, and at the time had not yet decided on whether to buy online or from a shop. However, 72 % of these customers decided to buy online while visiting the store.
How is that possible – what went wrong?
There are a number of reasons – e.g. the unavailability of products or an inadequate or even complete lack of employee initiative. This is why customers feel misunderstood, ignored – or in other words: dethroned. This shows how many brick and mortar retailers are struggling to convert browsers into buyers. The major advantage of a physical store over online trade is that there is an opportunity to make direct contact with consumers and bond with them – yet, often this strength is not sufficiently exploited.
The sales staff is the key to success
For brick and mortar retail, customer centricity above all means excellent service, and this includes offering individual advice. Contact with sales staff is extremely valuable for the customer relationship. After all, if customers are happy with their sales personnel, they will express above-average satisfaction with the overall purchase experience and are much more likely to return. Furthermore, customers greatly appreciate problem solving skills as well as competent advice in the decision-making process and also soft factors such as empathy.
However, the status quo shows that in practise, shop assistants play a subordinate role for consumers when they are looking for information. A consumer will often use a smartphone to check product ratings, instead of talking to a member of staff. Sales assistants should be giving customers a feeling that they are welcome. A friendly greeting, a kind smile and an open, positive aura can reduce inhibitions to address the sales staff. All too often, the customer relationship fails because of this very first hurdle.
E-commerce: Smartphones are putting pressure on online retailers as well
Likewise, the major upheavals of Digital Retail also effect online retailers. They should be aware of the need for a consistent customer focus and satisfactory peripheral conditions to generate a positive customer experience. These conditions include services such as despatch and delivery. Satisfying these criteria has the strongest impact on establishing lasting customer loyalty.
Furthermore, the variety of devices used by customers on the internet plays a fundamental role. “Mobile First” is nothing new – yet, from the customers’ point of view, retailers still have a lot to catch up on: Currently, customers are significantly less satisfied when buying with their smartphones than they are when making purchases with their PCs or laptops. When using smartphones for the purchasing process, especially the lengthy mobile loading times lead to decreasing customer satisfaction.
There is also a need to improve the transparency of shopping baskets, the descriptions of payment options and registration processes; here, a simplified, pared-down design with a clear navigation structure is the answer. On their mobiles, customers often cannot see the complete product range, which might lead them to switch to another supplier.
Back to basics: Retailers must provide channel excellence
Retailers also have to concentrate on an excellent design of the individual sales channels – “back to basics” is the motto here. Price, quality and convenience factors must be right, otherwise competitors will win. Customer-led services and the creation of a positive shopping experience are key factors. A further key to success is the initiative shown by sales assistants in shops and stores: anyone enjoying good service will be keen to come back. Consequently, employees must receive training on how to improve their social skills and to provide helpful advice.
If online retailers really want to keep pace, they have to act as rapidly as possible. Unimpressive online shops which fail to meet mobile customer requirements will lose customers to the competition – probably permanently. And this is just the beginning: New technologies are increasingly becoming an elementary component of consumer life – and this will impact purchasing behaviour, too. The smartphone is only the beginning of a long journey. Voice assistants like Alexa or Google are about to alter the world of shopping as we know it.
In times of Digital Retail, merchants must adapt to these changes in order to survive in the fiercely competitive marketplace. The basic factors must be right, but they alone will not generate long-term customer loyalty. Instead, positive customer experiences must be created: Retailers will remain memorable and distinguish themselves from the competition by emotional storytelling, great brand experiences and excellent customised services.
Because when customers feel treated like “kings” and “queens” again, they will gladly return.