“Any colour you like as long as it’s any colour you like”
Martin Hayward, dunnhumby white paper, 2009.
If you know what customers want then you can it sell to them or give them great service. Of course there’s the small matter of producing and supplying. But however sophisticated your capabilities are you first need to know what they want, need or are interested in – even if they don’t know it themselves.
The problem is that each individual customer has different needs. You could give them some off-the-shelf product or standardised service – a sort of ‘shotgun’ approach – and it might work for a lot of them. But it would not be a perfect fit for many, you would never satisfy some segments and you will always run the risk of a niche competitor poaching some of your customers.
This is because the greater the fit between your product and the individual needs of a customer then the more they will value it. This applies to everything people use or consume from groceries and clothes to delivery and information services. Fit can be in terms of all product and service attributes: size, colour, look and feel, materials, form, price and all the wraparound services like advice, support, delivery and brand.
Get the fit right and you will get a perfect customer satisfaction score because the customer experience will be great and your product or service will do exactly what that customer requires. But it’s hard because each customer requires subtly different things.
Worse still, what people want changes from second to second. When I’ve had a coffee I do not immediately want another – although my wife will happily chain-drink mugs of tea.
So your understanding of what your customer wants has got to be different for each customer and it must be timely.
So how do I know what each customer wants and when they want it – even if they do not.
Most firms use a mixture of CRM and Customer Loyalty data to get a better idea of what different customers want, whether it’s new products, general product improvements or just things that only apply to the current transaction.
Loyalty programmes, like Tesco Clubcard and Boots Advantage Card, combine loyalty card data with CRM data and bought-in data to segment customers by type and – this is the clever bit – by life stage. For example, if they guess that you are expecting a baby then they invite you into giving much more detailed information (like when the baby is due), in return for much more specific advice (like product suggestions and advice that fits the exact stage of pregnancy that you are at). Sainsbury’s uses Nectar Card data to do a similar thing and IKEA uses Family card data to help people with specific home projects, like a new kitchen.
Key point: loyalty programmes only indirectly tell you what a customer is interested in because they only tell you what customers buy. They tell you nothing about the rest of the customers’ lives – its like trying to study customers lives through a key hole.
But you can use loyalty data to ‘open the door’ and get customers to tell you a lot more about themselves – if you give them something in return. Which does not have to be money-off bribes.
But loyalty cards are changing into loyalty apps. Smart phones provide a massive opportunity to leverage much more personalised data because they are natural platforms for individuality, real-time relationships and location-based interactions. I’ve talked about the opportunities here.