- Most customer-centric retailers today are still defined by their likeability, friendliness, and individualized engagement with their customers across different channels.
- Being customer-centric is not only about having a “think digital-first” mindset. Instead, retailers need to integrate business best-practices with marketing best-practices to profit from a holistic picture of their customers.
- We look at case studies from the likes of Nike, Amazon, Nordstrom, Burberry, IKEA, etc. that shows what make them some of the most customer-centric retailers out there today.
The average consumer today is empowered. As retailers, your customers assume that their shopping experiences will be personalized, streamlined, convenient, and unique. However, sometimes it’s not just about having the most innovative new technologies to facilitate these elevate shopping experiences. As we’ll see in this article, most customer-centric retailers today are still defined by their likeability, friendliness, and individualized engagement with their customers across different channels.
The true innovation of customer-centricity, therefore, lies in using data-driven insights and technology to understand what customers love about your products and optimizing the customer experience (CX) of your entire brand.
What defines the success of customer-centric companies?
With that in mind, here are a few commonalities that define the customer-centric approaches of these nine different retailers:
- They have the potential for self-disruption
- They invest in technology (startups, trending technologies – IoT, VR, AI, and data)
- They put the customer first (customer insights define campaigns, brand direction, and merchandising/manufacturing)
- They answer their consumers’ needs for immediacy with a speed-to-market approach
As you’re about to find out, it’s not about having a “think digital-first” mindset. Instead, retailers need to integrate business best-practices with marketing best-practices to profit from a holistic picture of their customers.
Let’s see how customer-centric retailers put this into action.
According to Peter Fader in “Customer Centricity”, Nordstrom has been keeping its customers happy since The Dawn of Time. Peter Fader didn’t say that exactly, but Nordstorm did start in 1901, which is well before The Dawn of My Time. And yet, over a century later Nordstorm is still delighting their customers:
With their friendly return policies, personalized thank you cards, app enabling customers to find products based on images, and legends about Nordstrom employees “going the extra mile”, Nordstrom is the traditional company whose customers keep coming back for more of these intimate experiences. And despite their recent store closures, Nordstrom is actually doing better now after investing in digital initiatives.
Nordstrom invests in data and analytics for smarter marketing
At the MarTech conference in 2019, Jason Mestrits (senior data science and analytics officer at Nordstrom) shared how leading marketing organizations are winning because of their renewed focus on data, customer analytics, and AI-driven innovations.
This shows how data-driven Nordstrom has become, especially concerning innovation in CX and personalization. Whilst they remain in the eyes of their customers a traditional company they still get ahead of the curve by investing in advanced retail analytics and customer data.
Key takeaways for retailers
- Focus on serving customers, not as channel-based shoppers, but as people – Nordstrom’s New York men’s store is tailored to the busy New Yorkers with new offerings around returns that enhance speed and convenience.
- With that in mind, tailor your approach to your local markets for hyper-personalization on a demographic level.
- Continuously evaluate feedback, test, and use data to enhance your personalization efforts, being nimble and open to change.
Founder of Amazon, Jeff Bezos, has the goal to be the “most customer-centric company on Earth”. This ambitious mission-statement drives all of their innovations from delivery drones to Amazon Prime. They start with the customer and work backward. Amazon’s customer-centricity is well documented, but I wanted to cover it here because of how they use data to drive innovation.
“Earth’s most customer-centric company” using data
Having a fully integrated UX team, Amazon datafy’s every customer interaction to enhance online shopping experiences. They provide appropriate recommendations and reviews that are served on the right products, at the right time.
Everything about Amazon’s customer-centric approach is digital: the benefit of a pure-player eCommerce platform. Amazon capitalizes on customer data to personalize the webshop experience. They’ve now even expanded into brick-and-mortar using the same online data to inform which products they sell and what product tags they show.
Key takeaways for retailers
- Everybody knows that Amazon’s mission statement is “customer obsession”. This transparency has competitors either shaking in their boots or taking tips. If you want to achieve customer-centricity, a mission statement that focuses on the customer should be transparent both within your organization and externally.
- Make sure your customers are put first, whether it’s c-level decisions or service delivery from your backend to frontline workers.
- Invest in new technologies to stay ahead of the curve.
- Potential for self-disruption is characterized as the #1 trend identified by execs for 2019 (McKinsey, State of Fashion Report 2019). Amazon lives true to this with their constant experimentation, they have tried brick-and-mortar, delivery drones, and even an AI-powered grocery store (Amazon Go).
- So, consistency in your brand image is important, but risk-taking and disruption will differentiate you from your competitors.
3. Sephora – Thinking mobile-first
Sephora’s customer success is digital-first. In 2012, their mobile orders were 167%. Since then, they have built on this success by catering to their digital customers first and foremost (that is, prioritizing digital campaigns, targeting mobile customers, leveraging IG ads).
They also leverage AI and VR by allowing their customers to virtually try on makeup pre-purchase, have a huge and impactful presence on social media, and integrate technology within their brand to elevate the CX.
Sephora also has an innovation lab where they test a broad range of digital experiences designed to inform and enhance shopping across different channels. Cosmetics brands are famous for their Innovation “Hubs” (like L’Oréal). This represents their digital-first strategy, always keeping the customer at the forefront of these experiments.
Key takeaways for retailers
- VR, IoT, AI: these will be the buzzwords that determine the digital future. Nevertheless, I recommend starting small. Acquiring enough customer data to leverage A/B testing on your webshop, whilst contextualizing and interpreting this data are the first steps.
- A strong presence on multiple channels is a key takeaway here, meaning be consistent on social media, mobile, brick-and-mortar, ads, email, and other marketing verticals, (take control of your data stack for smarter marketing).
- Sephora is also an aggressive brand that is expanding across the globe thanks to its digital transformation. They are building partnerships with other brands for future distribution or acquisition, another innovative quality that marks their success with their customers.
In comparison, Zappos has a different approach to innovating customer-centricity. They turn inwards and break down departmental silos within the company so that everybody is working with customer data to improve CXs from the frontend to the backend.
Breaking down departmental silos with the customer at the forefront
For instance, Zappos employees work on projects that they care about, giving employees agency in their creative direction. This revolutionizes the corporate structures and gives a fresh perspective on traditional working environments. It also facilitates data-sharing across departments and therefore consolidates a more holistic picture of their customers.
Coupled with customer data, Zappos also does home-visits, self-report surveys, usability testing, and in-depth customer reviews to better understand who their shoppers are. All of these things point to one-on-one interactions with their customers and fashion a 360-degree view. They also have a customer research group called Voice of the Best Customer, which was initially a grassroots initiative that is now transformed into a working group.
Key Takeaways for retailers
- Technology is great, but don’t forget those indispensable one-on-one human interactions to understand how people say they interact with your products and brand.
- Break down traditional departmental silos so that customer data is accessible across the business, and CX is carried out successfully by all groups.
- Innovate the working space, because happy employees will transfer their friendliness to customer interactions (Zappos’ call center is well-known by their customers as having a festive culture, and this translates to how the brand is perceived).
With only two physical stores globally, Glossier has a D2C approach, owns its entire sales funnel, and distributes its products independent of resellers or department stores. This means that a third of Glossier is digital, and they engage exclusively with their customers on social media and other digital platforms. Glossier communicates effectively with their millennial consumer base, allowing them to build at scale.
Key takeaways for marketers
- Stay “in the know” by carrying out market research, tracking trends and user-generated hype.
- This means understanding who your target audience is, what they like, where they shop, and who they are as individuals.
- Again, social media firepower is important to help your customers engage with the voice of your brand (For Glossier, Instagram provided the springboard for their explosive growth).
- Digital technologies have made it easier for smaller brands to build awareness and sell to customers and capture a distinct share of the market. Capitalize on these for differentiation in the market.
Did you know that Burberry was the first retailer ever to allow customers to buy online and pick up in-store? It seems like an obvious choice for most of us digital consumers, yet many retailers still don’t have this option in place. This is the first step towards omnichannel retailing, a cross-channel shopping experience that today’s consumers demand and Burberry pioneered.
Who wants to buy your product and why?
Burberry’s luxury trench-coat was originally thought to be marketed to the “upper class”. But actually, their established target base is millennials. By targeting millennials, Burberry seizes an opportunity in young, working-class professionals. This disruptive strategy has proved strategically beneficial to them.
Now, Burberry has gone from selling beige coats to being a leading voice on trends, fashion, and beauty in general: The Burberry Beauty Box is their concept store in London and has a “Digital Nail Bar” to help select your nail color via an iPad.
Key takeaways for marketers
- Burberry has managed to make its products as interactive as possible, and this kind of tactile experience has gone a long way with their customers. Think of creative ways for your customers to get to know your products more intimately, for example, concept stores, pop-ups, social media campaigns, and personal stylings.
- Brand consistency is key here – if you have dreams of expansion, focus on what you are originally selling before filtering out into different niches and campaigns.
- Once again, know who your target audience is. Create a space where your product can intervene to provide a necessity, fill a gap, or counter a customer pain-point.
- Burberry developed a new logo and monogram under Tisci showing how even heritage brands who embrace forms of disruption will continue to delight their customers.
IKEA has always had an immersive in-store experience with its “vision-quest” that takes customers through the entire store. IKEA customers are allowed to touch, see, and smell all products whatever their age-group, shopping goal, or eventual purchase-intent. IKEA is aptly attributed to the psychological concept of the IKEA-effect, where an individual feels more attached to an object that they have built with their own hands.
Partnering with data companies for martech innovation
Additionally, IKEA innovates the online experience together with technology partners. In the Netherlands, IKEA partnered with Crobox, a data company that leverages psychology and AI to learn what customers love about retail products.
IKEA uses this technology to better understand what product attributes are most likely to drive purchase behavior so they can promote the best product benefits in their omnichannel promotion. For example, they can use this product data to create microsegments for email or social media marketing, showcase localized product messages in-store, or run retargeting campaigns.
IKEA also has an AR-app called “Place” that lets customers see how well their products fit within their interior living spaces and an “advice center” in London which is totally separate from its product warehouses.
Key takeaways for marketers
- Be the brand that people want to come to for information, as this will increase your customer-centricity and brand equity omnichannel.
- Integrate or forge partnerships with innovative technology partners to self-disrupt, as these usually have more advanced technologies or better data-capture capabilities that will serve to innovate the CX.
- Data-driven insights are key, and these can be optimized and elevated by understanding and/or applying consumer psychology.
Nike is one of those brands that use technology in such forward-thinking ways that other retailers must be thinking: uh-oh. Nike’s economic profit has actually doubled in the last 10 years. A lot can be attributed to how they foster brand intimacy on such a mass scale, as well as their investment in technology.
However, investing in technology is expensive and requires that a brand has the scope and appeal as Nike does. That being said, there are still a few subtle things that can be copied from this business brand behemoth.
Selling “why” vs. “what”
For example, early Nike strategies sold benefits over products. They sold the idea of health, wellness, and exercise, suggesting that things like their “air max” or “swoosh symbol” would help their customers achieve these goals. This strategy has stayed with them ever since, a vision that puts the customer’s health and lifestyle first.
Being a customer-centric company that is now more than just the products they sell, Nike also takes a stance on political and social issues with their commercial ad strategies. While digitizing their omnichannel CX, they have built a Nike loyalty App that serves product recommendations, as well as charting wellness and activity (once more highlighting their focus on selling benefits over products).
Key Takeaways for Marketers
- Be passionate about the product you are selling. Nike’s founder (Bowerman) had the ultimate goal of promoting running. If you believe in the benefits of your products, then your marketing will resonate deeper with your customers.
- Nike has been around for decades and is internationally popular because they are capable of change and capitalize on timely and relevant issues: be adaptable and flexible according to your customers’ desires, needs, and political inclinations.
- For mass-merchant retailers, modernizing legacy technology is important.
- In addition, cultural change and acquiring new talent is often a necessity. Nike copes similarly by evolving over time, staying ahead of the changes, and scaling advanced personalization (this generates loyalty).
Aside from Disney, Wegmans has been ranked as the most powerful word-of-mouth marketing company in the world. People love Wegmans. This food retailer is still known as a family-owned company, which commits to their staff in unparalleled ways – $50 million was contributed in 2017 to employee development.
Global data synchronization
Wegmans’ supply chain is unique because they control the entire distribution process. They also effectively sync their data with local and national suppliers, which means that their product data is consistent and harmonious. This leaks down to their customers, of course, because shopping at Wegmans becomes streamlined, the stock is always established, and there is never an unhappy customer. Wegmans also has community outreach donation programs, and they pride themselves in their physical presence (brick-and-mortar stores).
Key takeaways for marketers
- Build authentic relationships with your customers and employees to keep customers and staff loyal and get them talking about the trustworthiness of your company.
- Build your brand image as one that is credible and resilient (despite the suggested “death of brick-and-mortar”, Wegmans survives).
- More than this, keep your customer delighted. Data and technology are great, but these should be harmonized keeping the customer in mind.
Customer-centricity is key for any competing business. But innovation in customer-centricity defines the success of these bigger retailers. What these nine brands have taught us is that customer-centric approaches are a key defining feature in customer loyalty and retention, as well as brand equity and intimacy. What we’ve learned from customer-centric success is the following:
- Delivering highly connected experiences = higher revenue lift
- Continuously tailoring the shopping experience to individual customers by using data = increased loyalty, and customer satisfaction
- Don’t forget that human touch = brand equity, customer loyalty, more sales