Retail leaders are navigating an unprecedented digital transformation race, in the words of KPMG, with organizations “investing heavily in technology to address immediate concerns like falling revenue, interrupted supply chains, and long-term resilience.”
Given the speed at which we are moving, there’s a high risk of error, as we’re stepping into the future with an incomplete consumer insights picture. The trends that we observed during the worst days of the pandemic will not necessarily dictate what comes next, now that vaccines are available. But the world isn’t going to bounce back to the way things were, either, with the World Health Organization (WHO) anticipating effects for decades to come.
Retailers are making judgment calls with a less-than-clear picture of trends that they had been able to predict with greater clarity, in times past. The key to navigating this challenge is to focus on what’s timeless and known. The foundations of digital transformation were present long before the pandemic.
“It is likely that the pandemic will reinforce these pre-existing trends and increase the urgency of corresponding policy responses,” write Federica Saliola and Asif M. Islam, both economists for the World Bank Group for HBR.
Moving forward, in spite of uncertainty, means doubling down on the following:
1. Shifting from a reactive to forward-looking mindset
Human health and wellbeing is timeless and constant. In 2021, retail executives will need to shift from a reactive to proactive mindset to meet the needs of their customer stakeholders. Beyond the COVID-19 pandemic, the world is witnessing a rise in natural disasters and economic duress.
Consider the recent storm in Texas, where WalMart and Amazon needed to shut down their operations. In hard-hit areas, lines of hundreds of people formed to access basic goods like food and water.
Getting ahead of these challenges has very real, life or death implications. What is your company’s protocol for the unexpected?
2. Transforming human health constraints into new customer experiences
One of the most timeless principles of the corporate innovation movement is that constraints give rise to creativity. A lasting outcome of the pandemic is that people are putting greater value on public health — they’re thinking twice before going to store, overexerting themselves at work, and scheduling professional services appointments. So why not adapt to these concerns to create new customer experience opportunities?
“During the pandemic, we glimpsed at a kinder society that understood how much we are connected and how deeply we depend on each other,” says Mark Rowland, chief executive at the Mental Health Foundation in an interview with BBC.
At its core, customer experience is built on the delivery of kindness and building personal relationships with a brand. For inspiration, take a look at the boom in virtual styling services from brands like Nordstrom, Neiman Marcus, and Stitch Fix. These capabilities are features enhancing the customer experience, not setbacks.
3. Listening closely to customer signals
Customer centricity calls for enhanced listening and learning. What decisions are shoppers making in real-time? What are the driving forces behind the trends that you are observing?
“Often customers have difficulty articulating the problem they are trying to solve,” writes Sunil Gupta, professor of business administration at Harvard Business School. “Therefore, it is critical to dig deeper to understand the root cause of customers’ challenges.”
Gupta elaborates that while every company believes that they are customer-centric, they are not going deep enough. “To become truly customer-centric, company executives need to look beyond their products and services to the problem the customer is trying to solve.”
As an example, Gupta references a case study of Singapore-based DBS bank, which offers mortgages to homebuyers. The CEO encouraged his team to expand their thinking to understand foundational consumer motivations. What they found was that customers’ true excitement begins with finding a home, not applying for a mortgage. The end result of this exercise was a decision to build an app to support the house-hunting process, as a technique for generating leads for their mortgage product.
Being customer-centric means being able to explore new directions without a commitment to the outcome and end result. Consumer insights research, and product R&D will help inform this process.
Building customer-centric data models
With your customer experience strategy in place, how are your teams holding themselves accountable? Yes, you may be investing in initiatives to delight your customers. Maybe you can speak to your efforts and performance. But how are you performing against your objectives?
The key to a successful customer-centric data model is the story that you’re telling — is it about your company and team, or is it about your customer?
At a minimum, your company needs to be able to understand:
- The lifetime value of your customers
- Who your most loyal customers are
- What the lifecycle is of your customers
One of the first steps you’ll want to take is to get organized and wrap your arms around your customer records — to reorganize these insights into a master database that’s customer or client-oriented. This foundation will help your business units stay accountable to your customers. A real-time quantitative picture will help ensure that your business transformation strategy aligns with the needs of your market.
With the future becoming defined in real-time, now is the time to make bold moves — not sit back and wait.
“Past crises have taught us that early actors win,” writes Chris Briggs et. al for BCG. “The relative return on investment from a major retail transformation when started preemptively in a downturn can be as high as 50%. And companies that expanded business opportunities during a downturn often report purposeful growth that is 8% above those that retrenched.”
An agile approach begins with a commitment to constant and consistent movement into the next iteration of our global economy. The future-now of digital transformation isn’t theoretical. It’s happening right now. If you’re not ahead of these trends, you risk getting lost in the shuffle.
We would love to hear more about your priorities and how you are aligning towards your “North Star.” It is through industry collaboration that we will work together to evolve retail and provide the best experience we can for our customers and our employees! Contact us to connect with our experts to continue the conversation.
*Chris Daniel was the lead author in collaboration with Ritika Puri
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