What does omni-channel and customer-centric have to do with the price of tomatoes? A few weeks ago, as I walked through the local shopping centre, I was so amazed at what was happening in the stores, that I took these photos. I have been in retail marketing for over thirty years. My previous company, Retail Marketing Services, made its income from supplying in-store display and promotion solutions to retailers. Even so, what I saw here surprised me.
I had taken my daughter to see ‘Insurgent’ at the cinema. You can see our reflections in silhouette, as I took this photo of the store window. These shots were all taken, as I played with my new smartphone, in the space of five minutes and fifty metres. Here are eight of the major retailers, all offering massive, discounts mid-season.
The stores in the photos are clearly fashion, jewelry and accessories. This level of discounting may never happen in your category, but it did make me wonder, how much should you sacrifice to make a sale? Then, once you have paid that price, what have you won in return?
With competition as it is, if a store nearby drastically cuts prices, it might be impossible not to do the same. These stores are operated by retail experts, paying top rent in a premium centre. With 50%, 60% and even 75% off, they are either, genuinely sacrificing huge margin to promote sales, or risking brand integrity to clear stock, or a bit of both. I wondered, what customer experience is being created?
Discounting is, without doubt, a highly effective tool to tip a purchase decision and generate volume. In some categories the word ‘promotion’, has simply become a euphemism for ‘discount’. It is almost as though there is no other discussion to have with a customer. However, in terms of building customer relationships, if the cost of a discount only results in a one night stand, it must be a most expensive form of promotion. So if your go-to sales promotion tool, is expensive and returns either one-off sales, or discount-dependent customers, what activity or customer experience builds long term relationships?
Your business, as well as competitors in your category, are more transparent to shoppers than ever before. Engage the market and people will tweet about it and blog about it. They use price comparison and share great deals. People will even photograph your products and post or pin them on social networks to compare styles or get the opinions of friends. As retailers navigate the maze of changing customer capabilities and expectations, there is at least one certainty; today’s shoppers are more informed, better practiced and have access to more tools that guide their shopping experience than ever before.
In today’s mobile-empowered environment, people have actually become part of the communications channel. Considering the customer experience, is therefore not just some fad trend toward warm feelings and kindness.
Knowing your customers and investing to add value to their lives, is probably the smartest commercial strategy around which to build your business. Customer-centricity is a key pillar of omni-channel commerce.
So what has that got to do with the price of tomatoes for say, a Fitzroy fruiterer? She / He is possibly not an online retailer and may not even have a website that’s current. Surely omni-channel strategy is only for businesses that sell online and in-store? Well, Nikki Baird of Retail Systems Research, a leading U.S. consulting group, skips the buzz words and describes it as: “Putting the customer at the center of the business, and redesigning your business from that center outward, to enable a consistent experience, through whichever touchpoints that customer chooses to use to engage with you.”
If you remove the jargon, commerce is simply about finding effective ways to trade goods and services with people in exchange for money. An ecommerce store is a ‘touchpoint’ for a growing number of customers, in certain categories. Retail ecommerce sales in Australia will rise 14.4% to hit $10 billion this year, but in most categories, it still accounts for less than 7% of sales. So it might be okay, if you don’t have immediate plans to move your business online. However, research from the U.S. shows 84% of smartphone shoppers, use their phones to assist them in their shopping, while in physical stores. It is therefore definitely worth considering the touchpoints available to you – and how your business might engage shoppers, who use mobile devices as part of their lifestyle and shopping journeys.
As you look for ideas for your next promotion, ask yourself, “What type of customer experience am I able to create?” Your business exists for a reason. Its products or services offer a solution to a particular need. “How might that need be served in a way that adds value to people’s day?” Making people’s lives better, might sound a lofty ambition for a sport store or fruit shop, but if you put yourself in the shoes of the person, who has to fit out the kids and feed the family, all while juggling the work-life choices we all deal with, perhaps there is a conversation to be had around how you make your part in that day better, other than simply dropping the price of tomatoes.
In writing this, I asked myself, what benefit or value am I able to deliver to potential readers? What information am I able to provide that might serve your interests? Taking the time to share research, experiences and observations in a free article, is one example of customer-centric promotion. Many business owners differentiate their business, by staff training and skills. They might then also find ways to present their own knowledge and experience as the business founder or owner-operator.
In the event that these questions don’t hit the sweet spot of your circumstance, consider this. Our ever-present mobile connection, has changed communication and with it the structure of advertising and marketing. The boundaries of commerce have changed and the impact to business will be exponential. Like weather, some will explain the resulting changes in their business, as current seasonal, or local economic events. The fact is that globally, the climate in which business takes place, will never return to how it was last year, nor any year previous. Major retailers and brands understand this. They now use programmatic digital advertising, they engage retargeting agencies, SEO experts, content and social marketing specialists, data analysts, affiliate networks and digital publishers.
The good news is, that the digital marketplaces and social networks, carried in the pockets of all the folks that live or work near your business, are even more accessible to independent businesses, than the major media or advertising networks ever were. I suspect that an omni-channel, customer-centric focus plays well for smaller businesses. We have rarely had the luxury of leading in a discount race, so our customers’ needs have never moved too far from being top of mind when promoting our products or services. As for digital technology skills. There are trade events, specialist services and training available all year round. Perhaps you might run into me in your search. At least we can be clear on what it all has to do with the price of tomatoes.
Over to you. I invite your comment. Where do you see price strategy in omni-channel marketing?