Your Customers Are Valuable. So How Are You Valuable to Your Customers?
The Human Disposition
Have you ever wondered why humans walk on two legs? Well, around 6 million years ago, we figured out it took a lot less energy to walk on two legs rather than four limbs — around a quarter of the energy required to be slightly more exact. And in an economy back then when you had to hunt, kill and gather food and water for energy, all reserves were a precious commodity.
Fast forward through the next 6 million years and you’ll see an array of discoveries and inventions designed to conserve our energy more and more despite becoming less and less reliant on high expenditure, low availability sources of energy. The wheel was the real game changer. Now we don’t even have to walk. We can drive, ride, segway, rollerskate, whatever our heart desires to save our legs those extra steps and conserve the energy we so desperately don’t need to save.
So what has it become that we are trying to conserve by rolling around if not energy? What is it that we are so desperately trying to save for our wellbeing? It’s what everyone is now short on; time. Time has become our most highly regarded commodity and we are still in an evolutionary fight to save more and more of it.
Saving vs Savvy
We haven’t come that far over the 6 million years since we got up on our hind legs and took our first steps when it comes to our drive to conserve what is precious to us. Time and energy are not things we take for granted. If something is going to take too much of either, we’ll opt for the simplest option. Think of when you go to the supermarket. Do you go back up and down each aisle every time you visit looking at every option, weighing up the pros and cons of each before making a selection? Probably not. You probably pick up the same products you do nearly every time you make that trip to do the grocery shopping without much thought. And if you pick up something new, it’s probably something you’re familiar with (thus supporting the value of brands and traditional advertising in customer acquisition but that’s a whole other blog post).
The reason we do this is it saves us time and energy. We’ve already spent both making the original decision however many moons ago, so we continue to roll with it until we’re in a situation where we can’t. And then we start the process again and while you may think you are making the decision based on rational thoughts and reasoning, I’m sorry to tell you that again you’ve not come that far from your ancestors. You’ve still made that decision with your ‘gut instinct’; the feeling that it’s the right decision, that inherent sense that it’s a good choice. The rational arguments like saving money by getting a bargain or discount, or saving face or guaranteeing quality by buying a well known brand, are merely supporting the decision you’ve already made without ever realising it.
So while you may think you’re a savvy consumer, in reality you’re just another human looking for a saving.
A Relationship Made in Value Heaven
Before you go feeling too badly about your lack of evolution, let’s look at what all that means for the relationship between your brand and your customers.
It sounds like one of those things that could never truly exist in the retail world. Yes, the brand will always need the customer to hit sales targets and improve profits, but how can it be the customer sees the need for a brand? Referring back to the two commodities held dearly by humans, it often comes down to time and energy.
Customers have experiences with brands on a daily basis through a series of different interactions. Those interactions may be within a store and the team on the floor, or with a product on a shelf, or digitally via social media, the website, or the brand’s app. It might be with the customer service team on live chat, email or over the phone, or it may be with advertising on their way to and from their home on their daily commute. The sum of those interactions is the customer experience and the importance of that experience being simple, consistent and valuable has never been more clearly understood than it is today.
There is literally hundreds of ways to save someone time as part of your customer experience. We’re moving from a one click to zero click economy very quickly. Brands like Amazon are dominating the eCommerce space by finding ways to intuitively make fast purchases, and repurchases, on behalf of their busy customers. Echo and Alexa can make purchases on voice command. Amazon Dash makes purchases at the touch of a button. Amazon Go allows for purchases without a cashier and Amazon Fresh allows customers to make purchases online and have them packed and delivered in their car in just minutes without so much as stepping into a store.
Other retailers can replicate the tactics used by Amazon to an extent, but their real strength lies in their power to create mutually beneficial relationships between their brand and their customers. Across the US, UK, France and Germany, almost 60% of shoppers use Amazon as a starting point, 22% admit if they find a suitable product on Amazon they won’t look anywhere else, and 51% will go to Amazon looking for comparable products to buy even if they’ve found what they want on another site¹. And the reason underlying these stats is the popularity of the Amazon Prime loyalty program which is in roughly half of all American households and has led to the retailer accounting for more than 40% of all online sales², leaving other retailers like Apple and Walmart in its dust.
The Power of Love (And a Lot of Data)
What Amazon has done more successfully than it’s other American counterparts is use the customer data it has collected as part of it Amazon Prime membership program to its advantage. It is not only examining how its customers look, it is looking at how they behave and they are doing both collectively and by segments, including segments of one — the individual customer. And the scary thing when you look at that, is that they are not even necessarily using that data well, just better than their competitors. But where they have succeeded, it is because their business is gradually moving from a product centric company — remember they originally were exclusively a book seller — to a customer centric organisation. In doing so, they identified a key behaviour of their valuable customers (those who love the brand and create advocacy, those who have higher transaction values, spend more frequently and have a higher customer lifetime value) being that they were all searching for ways to save themselves time.
So by creating initiatives, such as fast home delivery that doesn’t require customers to be home, pre-ordering their groceries to be dropped directly into their car, buying lunch without lining up to pay, or reordering without even the click of a button, they found ways to be valuable to the customers that were valuable to their organisation. As a result, they naturally acquired more customers who value time saving, and in turn those customers became of high value to the organisation. Now all they need to do is keeping looking at their ever growing customer base to find those insights. They need to continue to shine a light on who their most valuable customers are, and define ways to ensure they are creating value to them and the cycle of life (or in this case customer centric commerce) continues.
With Amazon, what they uncovered is not unique to their brand. We’ve established that time is important to everyone. What they did successfully was use their customer data to find this insight and how important it was to their customers before anyone else. And that gave them the competitive advantage, as they then set about solving this fundamental need faster and with greater innovation to essentially cast their net wide and create a strong value association — Amazon saves customers time and energy — but both can be replicated in market. Their challenge now is to continue to use their customer data to identify their most valuable customers, their needs and their wants, and consistently provide better ways to serve them. By doing so, they’ll always have a competitive edge beyond the replicable initiatives like stores without checkouts.
Know The Basics, But Don’t Be Basic
So, we’ve established we all share some innate traits as humans. We all need air to breathe. We all need food and water to sustain our bodies. Over time, we’ve evolved to find increasing ways to save ourselves energy for something we feel worthy to expend it on, and businesses have supplied us with ways to do that too. And now we want to save time and businesses that are finding ways to do that for customers are winning customer share. We’ve got the basics down and that’s important.
But with so many ways to save customers time, it’s hard to know where to start. You could spend hundreds of thousands of dollars launching and supporting new initiatives to save customers time. And you could just do what Amazon does since they’re so good at it, but they also have a huge amount of money and resources that not everyone has available. The answer of where to start is much simpler.
Start with understanding your customers. Not ‘the customer’. Your customers. You know their basic needs because their share them with most of humanity, but you need to know what they need from your brand in order to provide them true value that cannot be replicated, nor surpassed with advertising no matter how deep your competitor’s pockets. If you don’t do customer research, start. If you don’t collect information about your customers, you need to. If you’re answering the question ‘who are your most valuable customers?’ with demographics then you don’t really know. If you can’t calculate your customer lifetime value then you’ll need to take a seat. Because now you have the basics, you need to understand your customers and that’s a whole other kettle of very valuable fish.