Wake up! At no point in history has your customer base been more vulnerable than today. In the 1960’s and 70’s neighborhood stores were decimated by the onset of big shopping malls. The malls were a novelty; large variety of merchandise, immune to weather and a great place to meet your friends for lunch. The neighborhood business at least had a chance to plan, adjust their products and service strategy in order to survive. Building a large mall took years and you knew it was coming. Today, your competition is everywhere and there overnight. It’s instantaneous and hiding behind every mobile device, third-party seller, and easily funded start-up.
If you think I’m pressing the panic button, let me explain:
- E-commerce: Retailers are reducing their physical store presence and selling a greater percentage of their products electronically. It’s convenient for customers and reduces a large outlay of capital. However, it is more difficult to establish personal relationships. Out-of-sight, out of mind.
- Third party seller: Third party sellers like Amazon and Google have become the first stop for many buyers. In the hotel industry, Orbitz is merging with Expedia. Why is the hospitality industry up in arms? According to an article in The Wall Street Journal, “hotel operators also bemoaned that online operators were developing their own relationships with the hotel guests and could offer these customers lodging at rival brands or properties.”
- Mobile devices: The explosive growth of mobile devices and connectivity has allowed customers access to more information, more quickly. Before customers purchase they have researched quality ratings, prices, and competitive products. Consumers are being pitched 24 hours a day, any place, anywhere.
- Global economy: While it’s not a new phenomenon, coupled with connectivity and technology, it’s just one more threat to your existing business model.
- Millennials: The largest generational group has been brought up with technology. They are impatient. They want it now. Data collected shows that Millennials are making less money than their parents did at the same age and have school debt. They are accordingly price-conscious and will go to Amazon first. The good news for retailers is that Millennials are more willing to pay for better customer service and also like to purchase from companies who are socially responsible.
- Start-ups: Money to invest in start-ups is easily available. Every day companies like Uber are popping up. Uber started in 2009. It’s now valued at $50 billion dollars. Just like Amazon, they are getting into related businesses beyond transportation such as same day delivery. Tomorrow, the next Uber might put your business out of business.
- Customer control: A large percentage of customers are potentially more knowledgeable than your associates about competitive products and services. They want to deal with companies who can provide them with the right products for their personal needs at the right price. They can easily spot incompetence and take their business elsewhere.
- Reviews are king: Companies are making it so easy to provide feedback that even those customers that may not have been predisposed to take the initiative are providing ratings and comments. I won’t go to any new restaurant or hotel unless I view a considerable number of reviews from other customers. I rely on these comments and recommendations. My favorite wine app, Vivino, always encourages me to rate wine I have just researched, was served to me at a restaurant, or purchased from a wine store.
- Speed: Same day delivery will become the new norm. Not only are Millennials impatient, once a baby boomer places an order and gets it the same day, their expectations have been set in stone. One and two week delivery times will put any business in a precarious situation. Drones will be dropping packages off at your door immediately upon placing an order.
- Artificial Intelligence: Amazon’s Echo and Kindle Fire and Apple’s Siri are now touted for entertainment and information. We have had our new Echo, her name, as you might know, is Alexa, for two months. Our family loves it. When company comes over they ask Alexa to play their favorite song, provide the latest sports scores or the weather. We like to watch their response the first time they talk to her. You can see their amazement at how artificial intelligence can be so fun. These applications, in my opinion, will be the greatest threat to any business. Soon your family will be watching TV and decide they need a larger screen. Just ask Alexa which manufacturer has the best features and customer ratings. Then the device will instantly take them to Amazon’s marketplace where the item can be purchased and shipped the same day. No need to go to a manufacturer’s site or physical store. These devices have your entire history, including questions, favorite music artists, sports teams, buying preferences, etc. Instantly, your family will be provided with a customized shopping – experience. It will be very difficult to compete.
When business is conducted electronically, customers are not going to physical stores and there is less opportunity for a connection with another human being, even if it’s an accidental one.
So what is the lifesaver? You can protect your customers by building a cocoon of human interactions and emotional connections to enhance the customer experience and relationship. It is the solution to generate repeat business and an opportunity to avoid massive customer attrition. It’s more critical than ever for companies to focus on what steps to take and execute in order to create a personalized experience on the web, in the store or with a mobile device.
Jack Mitchell, Chairman of Mitchells Family Stores in Connecticut and also author of Hug Your Customers, espouses, “it’s more important to know your customers than the company’s inventory.” When a customer goes to their electronic site, they are assigned a style advisor. That individual learns their buying preferences and history to create and maintain a relationship built on courtesy and trust. Yes, Mitchells Family Stores are part of the luxury market, but every business can learn from them. Knowing your customer and creating that human bond, tied into every person’s emotional needs, will help secure your business into the future. Each company has to figure out how to achieve that goal. But don’t take too long. If you wait, it will be too late. I guarantee it.