Pass the P’s and the big data please

Pass the P's and big data please. How small retailers can still win.

Pass the P’s and the big data please

11 May 2018

Big data is no longer an advantage for only the big guys. Just ask Heinen’s.

As I wrote in my previous article, being truly loyal to customers is, above all else, about creating a better store experience. Naturally then, the role of big data analytics (customer science) must be to improve the traditional ‘4 P’s of marketing - so that customers better find the right products, at prices that shout better value for money, and in promotions that more clearly deliver exciting value. 

Typically, the costs and complexities of harvesting insights from big data to improve the 4 P’s have shut out smaller retailers. But today’s cheaper cloud computing and open source technologies can now enable big data advantages to small companies. Data has been ‘democratized’ in a way that size of retailer no longer matters. To wit: leading the application of big insights in small spaces is Heinen’s, a 23-store chain headquartered in Cleveland, Ohio. 

If you want to see an amazing store experience born from inspired retail art together with applied customer science, you’ve got to see the Heinen’s store in downtown Cleveland. You are sure to notice that Heinen’s have transcended the traditional 4 P’s to add 3 new P’s of Customer Engagement – People, Place, and Personal – and have thereby become even more loyal to their customers. There’s a link to a special video feature about this incredible store at the end of this article. 

In the age of Amazon, it pays to think big when you’re small

These are dangerous times of disruption and of tectonic shifts in structures, formats, and channels for both retailers and brands. A new epoch of retail has arrived, wherein, once again, only those most agile / most adaptable to change will survive. The challenge is even more acute for smaller retailers.

“The brick and mortar solution won’t survive very well unless we up our game and create an even better experience for customers than we have in the past.” - Tom Heinen

And the way to create an even better experience? Use Customer Data Science to understand customers better than in the past, and apply insights to improve the store itself. I contend that deeper, truer loyalty can be better earned by responsive regional and smaller operators because they have a natural head start as ‘local’ puts them inherently closer to their customers.

The paradox of disrupted retail is that the big companies must think small, and the small must think big. Those bigger to become more local and personal, and those smaller to embrace the advantages of big data. 

Speedboats vs. cruise ships

As the saying goes, it’s about the size of the fight in the dog (and not the size of the dog in the fight). In Tom’s words, “Being small when you deal with data is actually an advantage. Big companies are like driving a cruise ship; we’re a speedboat. What levels the playing field for smaller companies is, in fact, good data-driven decisions.”

The principles around using customer data to better engage customers are applicable regardless the size of your business, and no matter the channel - convenience, traditional offline, online, e-m-or v-commerce. These are the universal customer principles of retail:

  • Loyalty = Trust + Value. Customers define what ‘trust’ and ‘value’ mean to them, personally. This loyalty is a thing earned, not expected
  • Relevance is everything
  • Customers leave for a reason – they are usually pushed, not pulled away
  • Those most adaptable to change are those most likely to survive

To Chris Foltz, Heinen’s Director of Operations, survival today is about investing in data science, and the benefits thereof are simple; “…to find insights that enable us to engage customers differently. We need to better change to meet their changing needs and find new ways to delight them”.

3 P’s of Customer Engagement

Chris and Heinen’s understand – and practice perhaps better than anyone – that engaging and delighting customers goes far beyond executing on only 4 P’s. I see three more P’s in their brilliant operating model; the human P’s, if you will – People, Place (in the sense of Ray Oldenburg’s Third Places) and Personal.

People: Heinen’s have energised and empowered staff by giving them ownership of the customer and the superpower of trust to satisfy customers using their own best judgement. Upskilling is not only about how to do a task, but also about the applications of good judgement and warm behaviours of empathy, dignity, and respect for shoppers. One store, one person can make a big difference for customers.

Personal: Treating all employees with dignity and remembering that each employee is an individual with different needs and aspirations teaches employees that all customers deserve to be treated with respect and individuality (what I call true ‘personalisation’). Heinen’s employees, following the example of their leaders, learn how to build up relational bank accounts with customers – earning credits for giving recognition, appreciation, thanks, kindness, dignity and respect to shoppers as individuals. When it comes to empathy and respect, the apple doesn’t fall far from the tree at Heinen’s.

Place: Oldenburg describes spaces at the heart of a community’s social vitality a “third place”. In contrast to first places (home) and second places (work), third places allow people to put aside their concerns and simply enjoy other people and the space around them. Heinen’s downtown Cleveland store stands as a model for grocers to create this very human and psychologically important third space, and demonstrates again how Tom and Jeff Heinen are loyal to their customers and to their community.

For a look at this amazing place and the loyal application of the 4 P’s to enhance the customer experience, please watch the video

Implications for retail leaders

  • You don’t have to be big to benefit from big data
  • The principles of earning loyalty from your customers apply regardless of the number of stores, or of format
  • Retail art must be informed by customer science if you want to win in the age of Amazon
  • In the age of artificial intelligence, it’s the human intelligence that wins customer engagement

 

This is the sixth in a series of LinkedIn articles from David Ciancio, advocating the voice of the customer in the highly competitive food-retail industry.

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Senior Customer Strategist