UNO February 2018

How to become a “customer first” business

Almost all companies say they care about their customers, but businesses that genuinely put the “customer first” take steps toward deepening their relationships with loyal customers and investing more in them, more so than their competitors.

Dunnhumby’s Global Customer Centricity Index, which focuses on retailers, shows a direct relationship between client-centricity and increased revenue. Retailers who scored high in customer centricity on average increased their sales by 3 percent and their market share by 7 percent, while those with low scores experienced a 2 percent drop in sales and a 1 percent market share, proving that having a “customer first” approach yields better results.

“Customer first” businesses demonstrate customers are fundamental to their brand identity. They also show they are committed to a strategy that is centered on long-term customers, in spite of competitive threats or economic fluctuations. These businesses adapt to customers’ preferences and gain employees’ support for the strategy through metrics and rewards.

In addition, they analyze data to make changes beyond marketing and pricing, such as the supply chain or their store design. They use their point of sale, digital and attitudinal data to strengthen customer loyalty; they know their preferences, thus they are able to offer the right products at the right prices, create new campaigns based on market trends and customers’ shopping behavior and develop personalized communications tailored to individual needs.

Dunnhumby’s Global Customer Centricity Index, which focuses on retailers, shows a direct relationship between client-centricity and increased revenue

Businesses that wish to start this difficult but rewarding journey must keep the following five vital areas in mind to achieve a successful “customer first” strategy:

  1. Use data to better understand customers’ needs. Understand more than just what they buy and when they buy it, but also their needs in each step of the shopping experience—what influences their behavior? These steps are: discovery, visit, purchase and reflection. Companies can gain or lose customer loyalty in any one of these stages.
  2. Create and adopt a “customer language” within your organization. You will need to understand customers’ shopping habits and segment them by price and quality sensitivity, lifestyle, type of store they frequent, communications, promises, CRM, etc. The big challenge is constantly speaking this language with many people in your organization. Overcome this challenge by first creating a purpose and vision centered on the customer and express them both internally and externally.
  3. Involve everyone. Winning personnel’s hearts and minds helps create a powerful “army” that can execute the strategy and help the customer sense a difference in their experience. Unfortunately, most organizations provide employees—the face of the organization for customers—very little confidence and authority to solve customers’ needs.
  4. Show tangible changes in-store and in customer interactions. Customer data can be used to activate loyalty programs, but is rarely used to justify in-store changes. Product portfolios, supply, designs, prices, campaigns and customer service are part of the shopping experience and must therefore be based on loyal customers’ data.
  5. Align processes, systems and structures. This is the most challenging step—aligning business systems around the customer. “Customer first” organizations show a unique approach to loyal customers: growing this segment and increasing its value for life. They establish systems to retain and boost customer loyalty over time and track, measure and base their customer initiatives on customer promises and customer-centered KPIs.

Loyalty is not about customers being loyal to the company; it is about the company being loyal toward customers

Finally, it is important to note efforts to develop customer loyalty often do not produce significant results for three main reasons:

  1. Loyalty is not about customers being loyal to the company; it is about the company being loyal toward customers.
  2. Loyalty is not just a program; it is an approach that prioritizes customers in all business decisions.
  3. Loyalty is not just about CRM; it is about the store, product, price, promotions and interactions with customers.

Our and other organizations’ research shows there is a direct financial benefit for businesses that improve their customer service using a client-centric strategy. It may prove very costly to ignore this approach.

Juan David Giraldo
Director of Business Development for Latin America, dunnhumby
Giraldo graduated in Business Administration and for more than 20 years has conducted marketing, consumer and shopper research in Colombia and Latin America. Giraldo has worked at dunnhumby for seven years; prior to joining dunnhumby, he was business unit director at Ipsos Marketing for five years. Giraldo is specialized in international marketing from Eafit University and completed two years of Latin American Studies at the University of Kansas. Giraldo’s customers know him for his creativity, his full understanding of shoppers and his ability to help them turn knowledge into strategic actions. Colombia.

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