In Touch With Retailing
VOICE LESSONS: Learning to hear Changing Customer Demands
By Peter Wolf, Vice President of Marketing, Fujitsu Transaction Solutions Inc.
When your father stopped to get gas, chances are he expected to leave the station with a clean windshield, an oil check, the correct change, a little conversation and, of course, a full tank – all personally delivered by a service attendant he happened to know on a first-name basis.
With anything less, your dad would have left the station unsatisfied. Fast-forward to 2008, and now it’s your son who is stopping to get gas. Needless to say, his expectations are completely different. More than likely, he’ll want to fill the tank himself, pay for it at the pump and use a credit or a debit card to complete the transaction.
A cleaner windshield never comes into the picture. And in lieu of a conversation about last night’s game, your son might expect to hear a recorded message promoting the station’s loyalty program. If an attendant is involved at all, it’s only because your son has decided to buy something at the station’s convenience store.
With any other scenario, he might drive away as unsatisfied as your father would have been had he been forced to fill the tank himself. Fast-forward once again, and now it’s your grandson filling up. What will fuel his expectations in the years ahead? What will he consider to be a positive or a negative experience, and what will make him want to come back?
There isn’t a forward-thinking retailer in the world today who isn’t asking these questions in one form or another. No wonder. The evolution that already happened in the gas service industry is now taking place in every retailing segment – from department stores to specialty boutiques, from industry giants to local shops.
Consumer behavior and buyer preferences aren’t only changing, they’re doing so at an accelerating pace. No retailer, forward-thinking or otherwise, can afford to ignore the consequences. The challenge, however, isn’t to know what the consequences will actually be, it’s to determine which ones are relevant and which ones aren’t vis-à-vis the retailer’s own particular business model.
To make a clear distinction – and more importantly, to benefit from the knowledge learned – all successful retailers believe in the importance of monitoring current market trends.
But relevant information notwithstanding, analyzing the retailing environment isn’t enough. Unless the customer’s voice is also heard loud and clear in the planning process, trend information is nothing more than data.
GENERATION RETAIL
Never in the history of the retail industry has technology played a more critical role than it does today. The current generation of retailers is literally surrounded by a multitude of technology trends that not only impact their business directly, but are literally redefining – rapidly and fundamentally – broad-based consumer behavior norms. Consider a few of the technology trends that are presently impacting the retailing environment either directly or indirectly:
- According to a July 2007 report by the Aberdeen Group, titled “Reinventing the Customer Experience through Self- Service,” kiosk adoption is fast-approaching the tipping point. Not only have numerous retailers launched kiosk initiatives, many financial services, hospitality and airline companies have turned to kiosk solutions as well. Of the total, 25 percent of companies are currently using kiosks, and by the end of 2008, 42 percent will have adopted kiosk technology.
- By 2011, consumers are likely to be spending around $1.3 trillion a year at self-service machines, according to a study by the IHL Consulting Group. In 2008 alone, expenditures at self-service kiosks should grow about 18 percent over the 2007 total.
- Also by 2011, Juniper Research, a UK-based analyst firm focused on the telecommunications industry, predicts that more than 50 million consumers will be using their mobile phones to pay for routine goods.
- In the travel sector, a survey by SITA, the air transport industry’s leading IT provider, indicates that 39 percent of passengers now rate their ability to make travel arrangements on the Internet as an influencing factor in their booking decision.
- And in the QSR space, a recent study by the Foodservice Packaging Institute shows that only 25 percent of fast-food restaurant sales actually take place on premise today. Take-out orders now comprise 50 percent of the QSR business total; 20 percent is drive-through, and a little over five percent is delivery service.
Of course the list could go on. Regardless of the industry, the trend is clear – technology is changing consumer buying behavior and their resulting shopping preferences more dramatically and rapidly today than at any other period in history.
The priority for the present generation of retailers, however, is not how to meet the needs of a new generation of shoppers per se, it’s how to ensure a successful future without undermining the goals of the existing retail environment. In the words of Lou Carbone, co-writer of the seminal article on Engineering Customer Experiences, “The things that businesses do to make money need to be balanced against an enhanced assessment of what it will take to make and keep customers in tomorrow’s even more competitive global economy.”
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Carbone demonstrated additional insights into customers in his book, “Clued In: How to Keep Customers Coming Back Again and Again.”He presents an Experience Preference Model™ that divides the customer’s experience into three core “zones”:
- Rejection, whereby the customer’s experiences are perceived as negative enough to either spread unfavorable word-of-mouth or to avoid repeat purchases altogether.
- Acceptance, when the customers’ experiences aren’t strong enough to create more than a neutral impression.
- Preference, whereby the experiences make a strong enough impression to foster repeat purchases and positive word-of-mouth.
For every business, the goal is obviously to create a customer experience that leaves the participant firmly in the “preference” category. But for retailers, the task is doubly difficult. Not onlymust retailers create a favorable perception of their brand, their products and their services, retailers must also satisfy their customers’ perceptions of the buying process itself.
To complicate the situation even further, as buying behavior changes, consumer preferences and expectations of the shopping experience will also influence the way the retailer is perceived, either positively or negatively. Retailers in the preference category today have no guarantee of a similar advantage tomorrow – unless they know for certain their offerings will continue to create the kind of customer impressions that have made them successful in the past.
The good news is that retailers can do just that, and it’s their customers who will tell them how. Any new trend that impacts buying behavior is the same as a clear-cut statement of preference from the consumer. By adopting new behaviors, shoppers are in effect telling retailers exactly what they prefer today and what they will eventually demand more aggressively down the line. And based on current trend data, a new generation of customers is already telling us what some of their future shopping preferences will be.
In the voice of the consumer, growing Internet usage says: “I want my in-store shopping experience to be as customized to my own personal preferences as my online ordering is.” In retailing terms, the self-service trend says: “When the situation calls for it, I’d rather just check-out or order something myself than to complicate the process with a cashier.”
Movement in the mobile category translates to: “I prefer using my mobile phone to pay for a transaction instead of waiting in line.”
And perhaps most significantly, regardless of the technology in question, the explosion in loyalty programs tells us that tomorrow’s customers are already saying: “I want to be acknowledged, respected and rewarded for giving you my business. Period.”
Just based on these few trends alone, it’s safe to say that shopper preferences will change radically in the not-too-distant future, and continue to morph faster and faster as emerging technologies become de-facto industry standards. But don’t just listen to me. When all is said and done, in the retail business, it’s the voice of the customer that really counts.
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