The current economic difficulties have triggered a huge movement towards cost cutting and efficiency. Companies are cutting costs all across the entire value chain from installing motion sensing lights to code sharing to shutting down stores. This is all nice, necessary and obvious. I hope these guys are also following the conventional strategic wisdom of protecting or even enhancing efficiency, productivity and quality while cutting costs. The notion demands an independent blog inquiry but more of that later.
Today I would like to kick start a blog series to understand, on a very practical ground, as to how a business can emerge stronger than its competitors when the sun starts shining again. I start by taking a close look at the RETAIL industry.
Retail in all its forms, apparel, food or anything else has always seemed to operate under a basic set of rules. Very simply put, a brand was CREATED by marketing and advertising, USED by selling products through outlets and PROTECTED using customer loyalty programs (I am talking about sale strategies and I haven’t forgotten supply chain issues!!) The strategy was simple, the game was levelled but there were masters of the game who played it better and emerged as leaders. However, as the world tries to change the rules of business as we speak, I will try and do my bit for retail.
The original model relied upon making the customers reach out to the brand. There is a focus on grabbing every opportunity by mass marketing. Loyalty was created by arousing greed (which is bad only if banks have it of course!) and giving away free stuff as a fraction of a percentage of the profit and brand recall is achieved by advertising. The only thing missing was that the whole game relied on the fact that when a consumer needed something, he would remind himself to buy a particular brand.
Given the current circumstances, I think there ought to be shift in the paradigm in the way businesses reach out to the point of sale...not just in 'space' but in 'time' too! Sale strategies should now focus on grabbing opportunities when they appear in the form of consumer needs and when they will be wanted and accepted. A retail brand is these turbulent times have to operate their business like a car alternating between brakes and the accelerator. While costs are cut, investment should be made in practical CRM solutions. Customer information needs to be captured, interpreted, extrapolated in time and used when appropriate to drive sales. The eventual strategy of an unsolicited email or a SMS is to, by chance or luck, just happen to arrive when the consumer has a need. We all know by now that it doesn’t generate demand the way it is projected to. The same principle has to be used intelligently though.
Consider some examples. In apparel, customer information like age and current educational status should be used to predict occasions or a specific need to increase probability of sale. Colleges usually have graduation ceremonies during the same period. Send offers on suits and blazers when they do. Advertise wedding dresses if the customer is engaged. Discount kids wear for customers who purchased baby clothing for a new born. Babies outgrow faster than a bamboo tree!! Baby presents are usually clothes. Exploit these trends in other sectors as well. It’s neither evil nor breach of privacy...its business! For department stores, capture customer information about household needs, infer usage patterns and promote offers on cereals, food grains, soups and sauces when you think they might have run out. The idea can be imagined in any retail concept.
Basically REACH OUT by estimating when the consumers need you most.
The thought is, that a single one time investment in an intelligent information system which uses an almost free mode of communication like email will definitely increase the probability bringing back those consumers to you which business fight so hard to retain. The emotional angle of a business that CARES will generate free loyalty that others will struggle to maintain. Finally, considering competitor reactions, it is a fact that 82% of businesses react in the next natural line of action as a reaction to an external situation so getting ahead using this practical and new approach would be a much needed and less anticipated differentiator in the competitive retail industry. Using compassion and extending help when it’s needed to be profitable is a win-win and its high time retail businesses understand this and transform the way they invite their customers.
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