Podcast | What it means to be Customer First
Dave Clements (00:09): Okay. So welcome everyone to this dunnhumby podcast series, which is all about the importance of putting your customers first, whatever retail setting you happen to be in. My name is Dave Clements, and with my colleague David Ciancio, we’re going to be hosting a series of bite sized podcasts with experts from the retail and data world, exploring the importance of putting customers first with lots of practical examples, techniques, and lessons for retailers and brands.
So in today’s first episode, we’re going to share our own stories briefly, and bust a few myths on what customer first means and why it’s so important to us. So welcome David.
David Ciancio (00:59): Thank you, DC. How are you today? Welcome.
Dave Clements (01:04): I’m great. Thanks. So let’s kick off and talk a little bit about what customer first means to you, and however your time in retail it’s meaning has changed.
It’s more than a focus on or an obsession with customers
David Ciancio (01:15): Sure. Thanks. Well, let me say right from the top, and I want this to be very clear as we go through all of these conversations, but customer first is really a sales driving mechanism. It is a profit growing approach, so far beyond just a warm idea or a fuzzy philosophy. This is about a gritty and proven way to sustainably drive sales and profits. And it’s been done many times. We’ve had Forrester collaborate with us at dunnhumby to look at companies that are customer first. And they’ve graded those companies as performing about three percent better than just doing business as former or business as usual. So there’s about a 3% lift in sales for those companies who practice this approach, and about a 7% market share growth for those who do it best in that top quartile of customer first kinds of organisations. So that’s what I meant by being proven.
Now, in my time in retail, I started with a company that was very customer focused and I would say very customer service driven, which are steps toward being customer first. But customer first goes beyond just a focus on customers, goes beyond just maybe even an obsession with customers.
It has three foundational principles, and this is how it’s changed over time. Those foundational principles to me are, first, that every decision is better when the customer is involved. And that means using customer insights to inform retail decisions like pricing and promotion and assortment or range. So every decision is better, number one.
Two is, in terms of principles, that loyalty is a thing that’s earned by an organisation, by a retailer. When you do more of those things that are relevant to customers, when you improve the experience, when you improve the value, et cetera, customers will give more of their custom, but loyalty is a thing earned, as a second important principle.
And I think the third important principle is that this thing called customer is really a problem shared, meaning that it’s an opportunity to collaborate in a new way with suppliers, with partners of the business or the organisation, software suppliers, really everyone, but particularly the consumer package goods community. In a way, that at grows sales and profits for both by focusing on the customer and the consumer. So that’s what it is, and that’s how it’s changed a little bit.
Just one more note. Over time this has been simplified, it’s been refined and proven over and again. So I’m really quite strong, quite bullish on customer first as a solid philosophy for a business.
Dave Clements (04:32): Yeah. Some great principles there. And just thinking about myself, I’m glad you talked about how it really does drive results. It’s not just a nice thing to do. It really is about driving measurable and results, which drive a competitive advantage.
MY own reflection, firstly, is very much about that deep understanding of customer behaviour. Not just behaviour, but also motivations. And to do that you’ve got to really listen to customers through the right focus groups, the right research, the right social listening, but also analyzing all their shopping behaviours over a sustained period of time. So if you get that understanding, then the next thing is you can take on that insight systematically, both in strategic ways, but also everyday decisions. And that’s where it really requires a big transformation of your people and processes, so that the right data and the right use cases are applied. Because it’s pretty easy to say being customer first but hard to do, often because of short term financial measures, often makes sure you want to point in a different direction. But you’ve got to tip that balance to make the right decisions. So just slightly in terms of the customer favor, so you can keep charting the right progress.
David Ciancio (05:59): And I’m so glad you mentioned talking to customers and actually listening to customers. Going beyond just the behavioural data, or the transactional data. I think that’s critically important.
Dave Clements (06:10): Yeah. And David, when you work with retailers and brands, I know you do a lot of that at dunnhumby, what do you look for when you meet those businesses to see if they’ve got a customer first mindset? What are some of those cues?
The structure of a Customer First business
David Ciancio (06:28): I think for me first, it’s really trying to understand their customer focus and their customer service attitude. And I can usually see that when I walk the store. I can see it in some of the policies that the business represents to customers. Things like return policies. Things like even access, how easy the store is to shop, but there’s a set of policies and just the body length language of the business. I look for those kind of things. I look to see how the store is set to see if it’s easy to shop. That includes clutter, but it also includes helpful guidance in finding products, in setting products on the shelf according to customer need, rather than to brand blocking. So I start with the store Dave, number one.
Then two is I think I really looked for a retailer’s appetite for growth, its level of commitment and how sincere that is to be in favour of customers. So I try to measure at least a little bit what the customer service, or what the customer obsession looks like. I listen to how they talk, I look at shareholder reports, those kind of things that are available to the public to see how often they talk about customers.
And then third, I think I look at how they talk about the is relative to the competition. So that reveals to me their appetite for growth a little bit, it reveals their mindset, their readiness to do the right thing for customers. It tells me who they regard as the most serious competitors, and how those competitors win. And if they tell me that their competitors are winning because they’re closer to the customers, then I rate that highly.
So that’s for me. What kind of things do you look at?
Perception is more important than reality
Dave Clements (08:30): Yeah, I think two things I was going to add that we’ve talked about quite a few times, is seeing that they’ve actually got a customer language in the business, which really means that they can describe the different types of customers. You know who they are, they’ve probably segmented them, but it’s not just a segmentation. It’s something that all parts of the business know the different customers, who are the most important customers. And there’s a real language about the types of customers and how to engage them in the same way that retailers have their own language about retail skews and bog offs and all of those things, a real language of customers is used in the business.
And linked to that language, really focusing on customer measures. So having some measures around their loyal customers, how many they’ve got, how they’re growing. But also customer perceptions and highly valuing those. Because perception is more important than reality. If customers perceive to be more expensive, or perceived that the range isn’t easy to shop, that actually matters very much. So they obsess about understanding customer’s opinions and measure that rigorously. Those are a couple of the areas I look for.
David Ciancio (09:49): I think those are great. Who do you see that does that really well?
Dave Clements (09:54): Well, I’ll make no apology for being biased and saying Tesco, where I worked for over 20 years, and still we support them a lot today. I think the passion and extent which they put themselves into the customer’s shoes, through things like classifying the different types of families and their needs, is really important. And then they’re not afraid to make big bets based on following the customer. Be it, “Let’s go after online. Let’s go after plant-based foods.” But also being brave to reset policies such as simplifying the ranges so they’re much easier to shop for customers. Or more recently actually resetting their promotional strategy to make it more effective and not being afraid to change old ways to do the right thing for customers. So Tesco for sure is one.
And the other one, I have to say, is Amazon. And the way they drive amazing loyalty through speed, convenience, low prices. But at the center of that always bit of a flywheel of being obsessed about providing more value back to the customer through things like Amazon Prime, which I think is one of the best examples of a retailer being loyal to their customers, as you said early on. Not expecting it the other way around, really trying to drive more and more value and benefits to the customers all the time.
How about yourself? Where would you hold up being great at customer first?
Champions of the Customer First ethos
David Ciancio (11:25): Well, I’m going to underline and agree with you on both Tesco and Amazon. I really think that in this seismically changed world recently through COVID, that Tesco really demonstrated its customer first credentials and its priority, perhaps better than any retailer on the planet. Certainly any bricks retailer. Its commitment to, for example, finding those customers who are most vulnerable to provide delivery slots, it’s focus on value, it’s really focus on helping customers through the pandemic I think was really premier. Best in the world. And then Amazon elevated its game as well.
But in addition to those two, and again, looking at some recent kinds of changes in the industry, I like the work that Zappos is doing. It’s now an Amazon company, but really they’re a customer service company that just happens to sell shoes. The way they respond as a pure play e-commerce merchant, the availability of their customer service agents, the ability for customers for easy and free returns is really extraordinary. Here in the US there’s a quick service restaurant chain called Chick-fil-A, which is very focused on customers.
And another I noticed during the pandemic that I thought was brilliant was a company called Slack, which is a team community platform, not unlike Zoom and others, but Slack really, really came to the aid of their customers to make that platform really workable during the pandemic.
And then finally, I’ll add some honorable mentions back in the world of retail and hospitality. I put Trader Joe’s on the list of honorable mentions. A grocery called Heinen’s, client of ours. Hilton Hotels and Ritz Carlton round out my list of the best that I’ve seen so far.
And you know Dave, I was just talking about the pandemic and how that changed the world of retail a little bit. I referred to that. Do you see that customer first has changed much during the pandemic, or what was manifested or materialized? What worked?
Being Customer First in a COVID-19 world
Dave Clements (13:46): Yeah, well it’s certainly those retailers who’ve really focused on customer first, I think, have been those ones that have outperformed. Firstly, those that acted really quickly and put colleague safety and shopper safety first have certainly benefited and gone out of their way to deliver whole new ways of shopping, and extra safety, and really invested that no holds barred, and gone into that. And that’s actually required listening for customers throughout, and adapting policies and practices regularly, daily if needed, by having their finger on the pulse of how customers are feeling throughout, and not being afraid to move quickly on adapting policies. So that’s one way.
And I think obviously those retailers that really went the extra mile to expand supply for online and click and collect, no matter what the consequences, really showed they were in it for their customers. Often, as you said, providing priority slots for vulnerable customers, food parcels, those sorts of things. But also just expanding that capacity for more and more customers so they could get that speed and access to shopping much easier. And that’ll stick. That certainly will stick and grow further.
And I guess the final thing is behind a lot of their success on the shop floor and those customer first businesses is them basically empowering their colleagues to serve customers and do what is necessary. Not be bound by policies and things, but do the right thing in the face of adversity that customers are seeing. And I think that’s really paid off, that empowerment of people’s staff.
David Ciancio (15:34): Yeah, and we’ll talk about this maybe more in another one of the series, but the paradox of customer first is of course that operators have to put their staff first, so their staff can put customers first. So that’s a real interesting twist and a topic to be explored later, I think.
Dave Clements (15:54): Yeah. And just briefly David, as we close, as you look ahead to the year ahead, what do you think are going to be some of the most important customer first initiatives that retailers and brands are going to need to focus on in 2021?
A pivot to digital is essential
David Ciancio (16:10): Well, first and foremost, I think it’s a focus on value for customers and consumers. Look, lots of people are struggling. This has been an extraordinarily difficult time. And customers’ needs to find quality at a good price is elevated more than ever. So retailers have to respond with value solutions in many forms, not just prices. But that could be quick ready meals, it could be value in terms of making that experience really easy and simple and safe, as you mentioned earlier. But let’s think of value mostly about just getting the prices right, and getting good quality at good prices.
To do that, retailers will have to find ways, I think, save money. They’ll have to find some new revenue streams. So that becomes a big priority. One way they can do that, and I’m seeing a lot of this in industry press, is about just reducing the number of skews they carry, making their inventory more efficient, reducing the number of touch points along the distribution and supply chain so that costs can be saved for the purpose of lowering prices. Fortunately, there’s some great customer data science that helps with that, helps retailers make the right choices because customers are giving their input through that data science. So that’s number one is value.
Number two is, briefly mention it, we both have. Is making the experience easier, removing touch points, adding those safety elements. So that to me translates into a digital experience, Dave, number two. Digital meaning click and collect and home delivery as part of it. But also it means for the in-store experience, enabling a digital app experience for not only shopping and personalized coupons, but also payments, self checkout. I think that the scale and scope of what digital means and how quickly retailers have to convert and transform to digital has really, really accelerated in the last eight and months.
So let’s put those things at the top of the list. Value number one, and digital number two.
Dave Clements (18:35): Well thank you, David, and thank you everyone for listening today. We hope you found it useful insight into being customer first. And next time we’re going to be exploring consumer preferences, and the key drivers of success for North American retailers, from our recent retailer preference index study. And you’ll be able to find details of that podcast and listen to this podcast again at dunnhumby.com.
Thank you everyone, and look forward to meeting you again next time.