Customer is King!!!
Alright! So after a long hiatus, I am back to blogosphere, penning down my thoughts.
Not so many days ago, my marketing professors used to chant one word pretty frequently - Customers. In fact, there is even a framework called Stakeholder Framework sometimes used by Strategy makers with Customers being one of them. So we have several Jargons that you would typically hear when you happen to be in some board room meetings of marketing honchos - Customer Acquisition, Customer Retention, Customer Attrition, Customer Churn and last but not the least, Customer Relationship Management. The last one has also brought fair bit of moolahs to several organizations within this industry.
Well, even a layman can possibly answer what value does customers bring to any organization or for that matter to anyone who has got goods or services to offer. So what makes me bring this topic to this forum?
Well if we have a look at the broader picture, whenever an entity deals with a customer, certain process is always involved. Be it Customer Acquisition or even managing Customer churn would involve certain set of processes. And in this era, when business users are paying a whole lot of attention to optimize / automate processes to yield better ROI, how can we neglect BPM whose USP is to give you better ROIs in terms of process results.
So where can BPM fit in the customer processes, if I am allowed to call it that way. Let's start with Customer Acquisition and try to fit some elements of BPM into it. Okay, so I go to Shopper's Stop (a department store chain operating Pan-India). I do some shopping worth INR 2000. I go the billing counter and there he asks for my mobile number. On inputting the same he finds that I am not a First Citizen card holder (Loyalty Card system). So here the counter person's discretion comes into picture. Should he or should he not offer me the loyalty card? So what can BPM do here? Bring some automation. Change the process. Get some business rules. Okay, so this person has spent more than 2000 Rs every time he's visited Shopper's Stop in last 3 months. Throw an alert on the screen and offer the customer a platinum loyalty card (of course if such a thing exists).
Taking it further, how to handle Customer Defection or Churn. There is a minor difference between the two theoretically with churn rate being ratio of customers lost and new customers gained while defection rate being percentage of customers leaving a business in a year. However, the bottom-line is, every business wants to minimize churn. Let's understand this from a call center scenario about how BPM could possibly help in minimizing churn. Since MNP (Mobile Number Portability) has kicked in pretty recently in our country, which has done nothing but empower the customers to choose what is best for him or her, I would try to correlate with telecom sector. So one fine day, I call up my existing operator contact center regarding some discrepancy in my mobile bill. I am absolutely furious about the additional charges they have levied. So the agent takes down my request. However, I have every right not to feel happy about the entire episode. Thankfully, the issue is taken care of and all the additional charges are waived off, quite correctly so. So the question is would that make me feel happy. I would say probably not. Mind you, I am satisfied but I am not delighted. In this fiercely competitive world, customer satisfaction is now a point of parity. Organizations should aim to delight the customer. So how the process should be tweaked so as to bring maximum value to the customer as well as organization?
One possible way is to automate the offers process where in what offers a customer is eligible for is calculated based on his past disposition, customer lifetime value as well as customer's propensity to use any particular offer. However, this is just a vague solution, just to give you a whiff of what could be possible if we tweak our processes a little bit here and there.
With this, I would bring this piece to an end. Since this article doesn't focus heavily on technical aspects, I solicit responses from BPM evangelists to share their experiences in this forum that would benefit newbie like us immensely.
Comments
Hello,
Since Arup solicited feedback on "The Customer is King" topic, I'll put in One Consultant's Opinion:
Remember when the biggest buzz in retail was, “Macy’s Doesn’t Tell Gimbels?” As if these two North American retail titans would be forever locked in an epic clash of classified assortments and promotions, with no other developments superseding them?
Well the “hush, hush” between these rivals of the 50s and 60s has exploded, via the Web, into an onslaught of information. Only this time it is the customer who is the all-too-willing recipient of what was once considered classified information: pricing, assortments, inventory levels, even promotions. Just look at all the Web sites delineating “Black Friday” specials (the Friday after Thanksgiving in the U.S.) up to two weeks in advance!
This massive transfer of information and power to the customer would alone be a big enough change for retailers to accept. But on top of this change came a confluence of economic mismanagement: foreclosures, bankruptcies, collapsing financial markets, and depressed home values, which all contributed to a far more cautious economy than what retailers had been enjoying. In pugilist terms, if “the Web” was a straight right to the chin, the economic collapse was a staggering left cross. Household-named retail chains continue to go out of business at an alarming rate, with many of the rest near that economic precipice.
So what can retailers do? Well let’s start with what they can’t do. They can’t make fiscal policy. They can’t prop up the precarious housing, financial and manufacturing markets. What they can do and must do is take better care of their customers. This is a zero-sum game in which retailers find themselves. There will be those who live and those who perish. But forward-thinking, customer-centric retailers need not disappear alongside their less-insightful competitors.
Foremost, retailers must formally, culturally acknowledge that this near instantaneous flow of information to customers is here to stay, and they can either “make friends with it”, or "fight it to the death" and sink into the tar pits with the other dinosaurs.
So what are some ways successful, thriving retailers are “making friends” with this information flow?
* Tighter integration between customer-facing applications and business processes, including POS, CRM, and multi-channel customer recognition and interoperability between systems;
* Content-rich web sites with increasingly essential features, such as purchase recall, cross-sell and up-sell suggestions, “search” functionality, customer reviews and feedback, and web 2.0 “immersive” technologies such as social networking and dynamic content management (i.e. streaming video);
* Exception-driven, role-based management dashboards to ensure greater in-stock percentage, faster inventory turn, increased promotional lift and a transformed company culture that views customers as “their reason for being there” rather than impediments to operational compliance;
* Creating personalized, customized assortments by store, by store cluster, or other aggregations;
* Develop “Loyalty 2.0 programs” that, in fact, engender true loyalty and deeper customer affinity, as opposed to what most grocery stores use, which should more appropriately be called, “Margin-eroding programs.”
These are but a few initial steps. But they're an important beginning to thrive in Retail 2.0 and beyond.
Ben Ream is a retail technology analyst and consultant with nearly 20 years’ experience in the retail value chain. Companies for whom he has worked include IBM, AMR Research/ Gartner, Aberdeen, Staples, Macy’s and Target. Ben holds a BA from The University of California, Berkeley, and an MBA from The University of San Francisco.
Posted by: Ben Ream | March 30, 2011 1:53 PM
Hi Ben,
A very thought provoking article indeed. And India being at the cusp of Retail Revolution with only 6 % being attributed to Modern Trade channel is expected to see lot more activity.
One point that specially captured my attention was your point regarding 'Loyalty 2.0' programs versus 'Margin Eroding' programs. What I feel is that the primary reason for falling into that trap would be me-too kind of attitude of retailers. What might work for Walmart might not work for Carrefour?
So when the margins are tight, business process improvement attains a special importance and could help in saving thousands of dollars with one small tweak. And as they say, every penny saved is a penny earned.
Thanks Ben for the delightful insight.
Cheers!
Arup
Posted by: Arup Guha | March 31, 2011 6:08 PM