For most of the 20th century, American consumer companies flourished by focusing on product, price, and brand. Today that’s no longer enough. Companies must now employ the customer relationship skills of the 19th-century neighborhood tailor combined with the merchandising superiority of today’s large retailers.
Most companies do a reasonably good job of the latter. I cannot name many companies that do the former well. When I walk in to a store that I have frequented in the past, the people who work there do not know my name, what I bought last time (with cash), when and what I am likely to buy, that I wear only shirts with French cuffs, or that I have lost 60 pounds on the Weight Watchers diet and need a fresh wardrobe in this new size. Rather than ask me about the progress of my diet or suggest a newly arrived Thomas Pink French cuff shirt, the salesclerk tries to push expensive suits on me. Instead of wasting my time with him, I walk away and use him only when I need something fetched in my size.
That’s why the CEO or CMO needs to be in charge of the customer experience–not the chief information officer or the chief operations officer or the head of any one marketing or sales channel.
That’s also why marketers need to add new metrics to the ones they’ve traditionally used to measure success. In addition to EBITDA per square foot, measure EBITDA per customer. In addition to profitability per SKU, measure profitability per customer. In addition to customer churn, measure shopping cart abandonment rates. In addition to cross-sell/upsell rates, measure customer channel shift rate to lower-cost channels (for instance, from call center to the Web). In addition to lifetime value, measure lifetime channel share per customer.
We are at the cusp of a millennial shift in the way things are bought and sold – from a product focus to one based on deep customer relationships, from transactional to emotional. Since time immemorial, from the earliest bazaar to the traveling spice merchant, from the street-side vendor to the neighborhood grocer, from the leading retailer to the dot com start-up, sellers have made money from buyers by exploiting their superior information and knowledge about products (availability, price and demand). With Internet proliferation, that information gap has disappeared; one could argue that most buyers tend to be far more sophisticated at using the Internet to discover product information and prices than most large companies.
But while that opportunity has disappeared, sellers now have access to two things they did not before. For one thing, when buying online, customers reveal exponentially more information about themselves. For another, new media (Internet, kiosks, cell phones) allow sellers to personalize each interaction with each buyer.
The key to a seller’s success in the next millennium, one may surmise, will be his ability to capture as much customer information as he can and then use it for the benefit of the customer. Sellers who build deep, powerful, and trusted relationships with buyers will be the winners and may end up selling the same buyers a diverse set of products and services. Sellers will be classified not by the category of products and services they sell but rather by whom they sell it to. The question companies need to answer is: How well do I know my customer?
Love Goel is chairman/CEO of Growth Ventures Group (www.growthventuresgroup.com), an investment and advisory firm focused on multichannel retailing.
