In today’s retail climate, knowing your customer inside out is vital to your business’s success. Gathering customer information is key to delivering efficient and targeted marketing campaigns. But one of the biggest – and often overlooked – benefits of good customer insight is its value in tailoring and improving your business; developing unique relationships and experiences with customers will keep them coming back.
Richard Clark, managing director of retail market research agency BCMR, says that understanding your customer in terms of their attitude and demographic and how they view your business is essential. “It gives you the information on which to base your decision-making – whether that’s about store environment, price architecture or product,” he says.
However, John Lewis head of marketing strategy and planning Rob Weston says it is even more fundamental to your business than that. “If you don’t know how to serve customers and get them through you door, you won’t survive,” he says. A Marks & Spencer spokeswoman agrees: “We have always said that customers are at the heart of everything we do. That’s why we speak to thousands of customers every year.”
There are many ways of collating customer insight, but sometimes the simplest is the best. Weston says: “We are at an advantage, because the tenure of our partners is such that we can build up a huge databank of customer experience and product experience just through feeding back from staff.”
He explains that thinking along the same lines as the customer is also important. “It’s common sense: if you have particular groups of shoppers, such as the time-pressed shopper, then think through what that shopper needs and run through the customer journey on a needs-based model,” he says.
Of course, these methods are accompanied by a raft of other ways of collecting customer information at John Lewis – from pre- and post-shopping surveys to mystery shopping and accompanied shopping visits.
Retailers can also gain customer insight by observing how customers shop rather than merely speaking to them. Ian Addie, retail consultant and research and development director at insight consultancy Nunwood, says: “That’s about understanding the experiences and mental processes that people have when they are in the mindset of a shopper and in-store. As shoppers, a lot of what you do in-store is based on instinct. It is sometimes hard to say why you have gone up one aisle rather than another.”
Although the usual method of collating information in this instance is by using static cameras or in-store observation by individuals, Addie says biometrics are increasingly coming into play. His agency has a biometric monitoring device, which is attached to the shopper’s body to record physical responses – such as changes in skin temperature – which vary according to the emotions they are feeling. “That allows you to understand which parts of the store are evoking positive emotions and which are evoking negative emotions,” he explains.
Similarly, glasses that record exactly where and to what a shopper’s eye is drawn in-store can also be used. “We have been using that since the beginning of this year and it is incredibly insightful,” says Addie.
Insight can be used to not only improve a store’s service and environment, but also in the development of new products and to determine – for instance, in the fashion industry – the likely popularity of next-season products. Philip Michell, consulting director of customer management outsourcing company Vertex, says: “The catalogue retailers have long done it with preview catalogues, but it’s also done online now. The more sophisticated sites can give access to a group of preview products. You can also have a shadow web site with a slightly different address that is operating in parallel. That allows the buyers to spot the winners,” he says.
External communication from customers – be it complaints or queries – is an invaluable tool in improving a business, given that it will enable retailers to identify exactly where it is letting its customers down. “You need to analyse your customer service line and complaints resolution and learn from that,” says Weston.
Michell, whose company runs contact centres for a number of retailers, agrees. He says that there are various measures that can be put in place to learn more about the customer before their call has even been answered, which means that the member of staff who takes the call already has some idea of who the customer is. “The key is obtaining a number of hooks,” he explains. “That can be a telephone number with which our systems can associate a number of things, such as socio-demographic status from publicly available information,” he says. Having better knowledge of the customer before the phone is answered is more likely to lead to a better experience. “Our advisers in the call centres have the information at their fingertips to talk to the customers. Based on that information, they can have empathy with the customer.”
Such contact centres are also invaluable for collating customer feedback, whether it is through online or e-mail surveys, or telephone surveys at the end of the call. “Customers can go through a structured survey that allows their customer experience to be scored and also allows us to score independent of the channel and down to adviser level,” says Michell. This means the retailer gains an insight into how its advisers are performing.
Although its main importance may lie in improving product and the customer experience, such insight can also be used to help lessen risk for retailers, for instance, when it comes to returns. “For some retailers, there are customers from whom you wouldn’t want to accept an order because you know that customer is ordering in large volumes and returning more than 90 per cent of the items. For those customers, you can hide such products from them, so it would just seem as though they were out of stock,” says Michell.
Although most retailers realise the importance of gathering and collating customer information many baulk at the cost of it, with research budgets often the first to be slashed in tough times. But, now more than ever, it is important to understand how customers think and what they want. New Look head of brand planning and customer insight Oliver Lucas says: “If ever there was an argument to cut a research budget, it would be in better times. In tougher times, when you are competing that much harder, your competitive advantage should be that what you are offering is more in tune with what your customers want than any of your competitors.”
However, costs of such research are falling and efficiencies are rising, in line with the move to online customer research. “The cost of research and getting good customer feedback is going down, because of the growth of broadband use across all ages,” says Clark. The trend is making collecting and collating customer insight an easier task, because research can not only be less intrusive but also more targeted.
However, Addie argues that there can be nuances. “The issue with online panels is: How representative are they? Internet penetration is growing all the time, so agencies are increasingly able to provide a representative group, but there are still some skews because online access is still favoured to the younger and those with more money, so you can end up under-indexing the old and the lower socioeconomic groups,” he says. For some retailers, such as fashion player New Look, whose target market is one that is online and has money to spend, this isn’t a problem.
New Look has gone a step further and in June created an online social networking site that aims to establish long-term relationships with its customers around the UK. “Geographical disparities make it hard to constantly get customers’ opinions, but having a central hub is a great way of getting their opinions in an inexpensive way,” says Lucas. “Traditional research tends to dip in and dip out. This will allow us to talk to people over a longer period of time and will let us use customer opinion to guide us.”
Using such an initiative to get customers more involved with the brand also helps to build customer loyalty. They feel they are true ambassadors for the brand, because actions taken as a result of their feedback are communicated to them clearly. “They feel like they are genuinely having an influence over the business,” says Lucas. As New Look customer insight executive Davie Taylor puts it: “These people aren’t just participants – they are ongoing friends of New Look.”
However, customers have to be able to trust that the retailer will take action as a result of their opinions. “It’s great to listen to customers, but it’s about what you do with that knowledge. Customer insight costs thousands of pounds and it means nothing unless you do something with it,” says Lucas.
Weston agrees. “It’s really important to get the customer at the table of any key business decision,” he says. And not listening to them could lead to the most expensive business mistakes you make.