Why Retailers Must Leverage Customer-centric Innovation
Amazon has set a high bar for everyone in the eCommerce and retail space. Consumers now expect free and fast shipping, personalized recommendations, and limitless choices. Failing to meet these customer-centric expectations is a recipe for failure.
Customer expectations also continue to evolve. Home delivery, buying online, and pick up in-store (BOPIS), touchless payments, and enhanced customer experiences are the beginning of a retail revolution. It points to a future that goes beyond only providing good products and services. The big winners will be those that model their business around customer-centric innovation. This starts and ends with great data.
What Is Customer-Centric Innovation?
Customer-centric innovation consists of investing in tools and strategies to fully understand your customers to craft better experiences.
When you deploy customer-centric solutions, you can:
- Create brand equity and loyal customers
- Improve customer satisfaction
- Reduce churn rates
- Maximize customer lifetime value (CLV)
- Optimize each touchpoint throughout the customer journey
It also helps you anticipate your customer needs and expectations so you can grow your sales accordingly.
How Important Is a Customer-Centric Approach in Retail?
Customer centricity starts with a complete understanding of who your customer is. Having a complete understanding starts with data: enabling a complete, holistic view of your customer. Nearly 80% of customers say the experience provided by companies is as important as the products or services themselves. Knowing who your customers are as a whole is as much or more of an impact than what you sell.
You’re not just competing anymore against others in your industry or different price points, you’re also competing against all the alternative customer experiences. The fast delivery and easy returns from other eCommerce retailers, the product recommendations from Amazon, and even the personalization of companies like Netflix have and will continue to have an impact on customer expectations.
Here’s what research from Salesforce found:
- 68% of customers expect brands to demonstrate empathy, yet only 37% say it happens.
- 66% of customers expect companies to understand their unique needs and expectations, yet only a third say companies treat them as individuals.
Companies are falling short in meeting customer expectations. However, this creates an opportunity for retailers that can leverage customer-centric innovation.
When retailers shift their culture to put customer needs first, performance and profitability soar. Watermark tracked stock performances for companies that invested heavily in customer-centric innovation to improve the customer experience versus those that failed to do so. Not only did leading companies outperform laggards by 3X but the stock performance also outperformed the S&P 500 by 54%.
Customer-centric retailing starts with rethinking the shopping experience by shifting from transactional to transformative interactions. Only then will customers feel connected to brands in a tangible way that can help grow sales and build loyal customers.
Leverage Customer-Centric Data
Modernizing your eCommerce and in-store data approach helps you craft better experiences for your customers, from acquisition to activation to marketing. It also helps you increase the lifetime value of your customers while improving retention and building loyalty.
Rethinking Customer Experience
Business innovation requires rethinking the shopping experience for your customers and that takes a decidedly digital approach. Digital transformation to leverage technology can eliminate internal silos and provide the data you need to evolve and compete successfully.
Digital transformation can be challenging for many retailers because it may require reworking legacy infrastructure and tech stacks to provide greater agility and cross-functional data sharing. Fortunately, it’s not an all-or-nothing proposition.
Scalable, reliable, secure, and resilient systems can be built to grow with a customer-centric company and its customers. However, without this underlying infrastructure, it will be difficult to build a customer-centric retail organization, whether you’re a brick and mortar store, eCommerce platform, or support both.
Here are some of the top strategies that companies are deploying to improve their data analytics:
- Unifying customer data in a centralized platform rather than separate data silos, combining online, offline, and in-store behavior to create a unified customer profile.
- Utilizing real-time platforms for analysis and marketing.
- Leveraging predictive analytics, such as artificial intelligence and machine learning to create personalized recommendations and deep customer insights.
- Cross-channel and omnichannel orchestration help provide a more holistic experience to serve customers, regardless of how they engage with you.
Modernizing Commerce Platforms
At DMI, we’ve found it beneficial to take a step-by-step approach to modernize your operations using MACH architecture.
MACH stands for Microservices-based, API-first, cloud-native, and headless.
- Micro-services allow you to launch small, functional pieces that solve specific business needs without having to overhaul the underlying infrastructure.
- APIs simplify the process to integrate with other applications that may already exist.
- With a cloud-native solution, you have performance, security, scalability, and mobility.
- A headless solution creates a back-end infrastructure that supports any number of front-end solutions. Developers can build multiple solutions, apps, and customer-facing websites without worrying about the back-end operations.
MACH architecture helps future-proof your retail business while building the tools you need for the modern customer journey.
At DMI, we help leading organizations reimagine their products and service, rethink the shopping experience, and leverage technology to build customer-centric companies. Learn more about implementing a customer-centric innovation process to help grow your business and contact DMI today.