Customer delight is often conveniently defined as a great purchase experience. There’s no debating that a great experience inside the retail store — finding exactly what you want, enjoying the ambiance, and receiving friendly service — is a genuine joy. Shopping inside the retail crate, whether it’s a brick-and-mortar store or online experience, can be a lot of fun. However, it is far from the only joy or challenge in life.
Retailers who see their customers as genuinely three-dimensional people and can act on this rich contextual insight — who customers are, what problems they are trying to solve in their lives, who they are solving these problems with and how they define value — have the opportunity to differentiate themselves in a compelling way. This is good news in a crowded marketplace, because as stores become ever more polished, a fine shopping experience will become an increasingly commoditized part of the business.
Really engaging with individual lives requires thinking outside retail’s four walls.
Beyond Stick Figure Customers
Since the advent of mass market retail, retailers have cast customers as groups of one-dimensional stick figures, with simple, easy to understand needs, fitting into neatly drawn segments. The retail store replaced the custom creations of individual craftspeople with a pre-defined product to be sold to as many people as possible. Even as organizations work to build 360-degree views of their customers, these perspectives are often constrained within the narrow boundaries of stocking and selling products.
Even a decade’s worth of purchase history and an up-to-date reading of a customer’s family, home and financial profile creates a stick figure view of someone’s life. This wealth of Big Data has little to say about what next Tuesday morning will look like for them or how their needs shift moment to moment.
The retail crate was founded on the efficiencies of scale that came from serving a broad market in roughly the same way. Much of the investment in so-called personalization has been about getting a better fit between unique individuals and the preset choices available to them. Programs that delivered targeted offers were really more of an operational improvement to the mass market business model — good for the retailer and the coupon sponsor, but hardly transformational for the customer.
“Others who bought this also liked this” types of recommendation are only marginally better. The mere fact that someone looks at a book on cooking for diabetics is just one data point. What a three dimensional customer genuinely desires will vary dramatically depending on whether she is doing a report for school (“Please help me pass my class”), looking for a gift (“I want to show that I care”), or buying it for her own use (“I’m worried and really need some support”).
Personalization Grows Up
Real people’s lives are about more than just buying a thing. They have shifting, complex and messy definitions of value, which demand a deeper kind of understanding. Ultimately purchases are not about the acquisition of a “thing” but about the role those things play in our life:
A pair of new shoes is not just shoes. It’s an outfit.
It’s not just an outfit. It’s a personal statement.
It’s not just a personal statement. It’s your dramatic entrance at an event.
It’s not just an event. It’s a memory.
If a retailer’s only goal is to put a coupon in someone’s hand, there is little value to understanding a customer more deeply. However, if retailers are willing to escape the crate and actively involve themselves in each customer’s unique life, then there are almost immeasurable opportunities to create micro-markets of one, each with their own metrics for delight. Success will be driven by the ability to create unique brand experiences, products and services that customers perceive as valuable.
How might narrow retail services be extended? Think about what you might expect from a friend who knows you. That friend might enrich your life by:
Curating: Almost everything works together with something else. If your friend has a sharp sense of style or in-depth knowledge, they would be the one you seek out to find the right combination for your personal style and life need. Fashion is an obvious area where this matters hugely, but it is just as relevant to someone undertaking a new home improvement project, preparing for the birth of a child or even trying to figure out how to prepare for a new career.
Discovering: As choice explodes in every aspect of life, individuals have a growing desire to discover new possibilities and stretch their world. Exploration is a highly personal act. A genuine friend would draw on more than your purchase history and a few mobile phone data points to help you discover new possibilities. They would be aware of the kinds of personal questions and aspirations that underlie your interests: Who am I? Who do I want to be? What things have fallen by the wayside in my life? What’s new and exciting?
Tailoring: Remember the custom craftspeople and tailors of yore? Their products were custom crafted to the needs and preferences of each customer. Consider the power and promise of custom crafting what you offer to the individual. Let’s revisit the diabetic book example. Imagine you were a friend who wanted to help. You might propose radically different types of aid (Can I help with your research this weekend? Do you want me to gift-wrap that while you go pick up the kids? Would you like me to hook you up with a support group my sister attends for people who are managing their diets?)
Note the common theme with all these strategies: they are all about creating unique improvements in individual lives. None focus on selling products inside the retail crate.
Real-Time Context: Life In Motion
When you enter a store, time stops. Whether it’s opening an app or walking through big glass doors, a customer’s life is put on pause while she shops. This of course can be a good thing, a welcome respite from the bustle of real life. But it also places the retailer in an isolated bubble separate from the real business of living.
Real life is in motion. The best opportunities to create unique differentiated value are tied to changing moments of experience. Everyone knows that the shopper is more than a demographic data point who enters a store or types a URL. But what does this mean, and how many retailers truly embrace the concept of the shopper as a unique, three-dimensional individual?
Context as viewed from a customer’s life is rich, diverse and changing. We process a dizzying array of inputs all the time as we determine what really matters to us in any given moment. If you’re running late, it matters if there is a meeting first thing in the morning. The importance of stopping for a coffee may be linked to how late you were up the night before. Your patience for the traffic backup on the road ahead is deeply influenced by whether the children are fighting in the back seat.
Context produces intense but fleeting needs. They dominate our daily lives and create opportunities impossible to fulfill within the mindset and physical constraints of traditional retail. Choosing to serve these needs grants permission for wild thinking. How about a drone that dips into the traffic jam with your specific coffee preparation? Talk about context-dependent delivery!
Bigger Big Data
For all the terabytes of information that have been gathered, this is still a technology in its infancy. Traditional retail business, with its focus on simple product recommendations and targeted offers, provides a small stage for Big Data’s performance.
Personalization and real time engagement change all that. When retailers engage richly-drawn individuals when and where they act, there are enormous opportunities to apply sophisticated and nuanced insights. Big Data can finally strut its stuff.
Ecosystems of Data: The network of data can grow well beyond the simple tracking of purchase history and personal demographics. Many of these diverse real time sources will lie outside the retailer’s own systems.
Real Time Thinking: Offer and recommendation based personalization has relied on offline processing for the heavy lifting. That works fine if your goal is to assign a coupon to a customer. However, real impact comes from assessing context and shaping a sophisticated individual response in real time. Expanded machine learning capabilities will further open the door to dynamic evaluation and recommended courses of action optimized for the specific circumstance and moment in time.
Deeper Brilliance: Big Data is not just about the data. The real power lies in the ability to choose a course of action that is genuinely appropriate to the moment. More data and richer problems are creating a fertile environment for these more sophisticated and elaborate insights.
People have been talking about a 360-degree view of the customer for some time now. We believe that it is not the 360-degree view that matters but rather a context-dependent view. Improved analytics and integrated omnichannel capabilities will allow retailers to map customers across their path to purchase. Beacon technology in-store coupled with the geolocation on customers’ own mobile devices will allow retailers to deliver tailored communications and support, based not only on where customers are in their path to purchase but on their physical location as well.
Dan McClure is the Innovation Design Practice Lead at ThoughtWorks. He likes to blow up the status quo and has spent 30 years as a hands-on practitioner of disruption, designing and applying new innovation practices across multiple industries.