The recently announced purchase by Amazon of Whole Foods shows clearly the intent and ability to mount a challenge in almost any aspect of retail. However, many retailers still struggle to put together a coherent answer to this challenge. Most default to ‘following the market’ and fighting Amazon on its own turf where for many losing will be almost guaranteed. As an example at the recent Hype innovation forum in Bonn, I asked an audience of 300 people from across Europe how many had the Amazon app on their phones. Almost every hand in the audience went up (including mine). I then asked the audience to keep their hands up if they had another retail app on their phone, about 50% of hands went down immediately. I continued to 3 and then on to 4 apps – just 4 hands remained raised at 4 apps, out of 300 attendees. Despite this lack of customer take-up many retailers continue to follow Amazon’s lead and plough their limited resources into apps. Other technologies such as tablets, kiosks, virtual mirrors or propositions such as stores of the future similarly often offer unclear value, other than a feeling of ‘keeping-up’. I’m not saying apps and the other technologies don’t have a place, but very often, how retailers are using them at the moment doesn’t convince consumers.
So how should retailers (in fact all B to C companies) think about mobile apps and other capabilities they may develop to beat their competition, including the mighty Amazon?
At Fujitsu, we have come up with a simple model that we believe can help. We will explore it at our World Tour event on Thursday 6th July in London. But I’ll give you a brief introduction here in the hope that it will help you design a better customer experience, and invest more wisely even if you can’t make it on the day.
Our model is purposely simple, so that every silo in a retailer can understand it. It also focuses on the one person who Sam Walton famously said can fire everyone, the customer.
In the Fujitsu CX model the customer is understood via just two dimensions
- Is the customer seeking the fulfilment of a visible need or invisible need? A visible need is one that the consumer is conscious enough of that they can verbalise it in some form; ‘I need a ¾ inch paint brush’ or even the less defined ‘I need to paint my window frames’ are examples of visible needs. On the other end of this same dimension are invisible needs. These whilst just as real as the visible needs, aren’t often verbalised by customers as they exist in their subconscious. These needs are for many categories much more powerful in predicting buying behaviour despite the fact that we remain largely unaware of them. These subconscious needs largely stem from an identity we have for ourselves (I am…a good parent, the cookery expert, the sensible one, the entertainer etc) or from a purpose we have with others (I want to…belong, be admired, be cared for etc ). Few people go into a car showroom and say ‘Can I have a car that makes me feel or look successful’ but it’s an invisible need that drives millions of new car sales for car dealers and manufacturers.
- Is the customer informed or uninformed in how to fulfil their needs? This second dimension encompasses how much the customer knows about how they might fulfil their needs. This touches not only on visible needs i.e. do I know the type of paint brush I need to paint my windows or not? It is similar for invisible needs i.e. do I feel safe knowing what I will get from this brand/experience or is it unknown to me? Whilst it’s trickier for customers to sense the information gap for invisible needs, they will feel or sense it as emotional discomfort. When done right the customer feels a sense of comfort and security – they feel at home. These are the people who hang around Apple stores looking at the same products week after week. This happens because at a deep level they are fulfilling an invisible need to belong or support an identity in a way that their brains expect. On the right-hand side of the model a customer’s subconscious doesn’t know the experience they will get. This however isn’t a moment of stress if they are taken on a voyage of discovery, surprise and even delight. Human beings are curious and new positive discoveries are welcome and valuable to us.
In each quadrant of the model the needs of the customer will be very different. In the top left quadrant the customer knows what they want, and they’re informed. They’ll be looking for a good price, convenience and assurance of quality. The need for effective and efficient supply chain capabilities therefore become critical in this quadrant. On the top right the customer knows the need but requires help in finding the correct solution. They’ll need advice, trust and to be listened to. Knowledgeable staff possibly assisted with staff apps, chat-bots, interactive displays with ‘lift and learn’ solutions or even mobile apps might be areas to investigate here.
On the lower left of the quadrant, the customers knows what they’re getting, they want to stay with this retailer as it fulfils an invisible need, usually around identity and belonging. What we need to do here is reassure them through what they see, hear, smell, touch and even taste that their subconscious is right. We could use digital signage, the language staff use or the clothes they wear, store design, social media presence, a glass of champagne and even the thickness of a till receipt to reassure a customer they are in the right place for ‘people like them’. In the bottom right quadrant the customer doesn’t know what they want or are unsure of what to expect until they see it in the store. Here we need to look at how we can drive the traffic to enable people to discover us, and then be surprised and delighted when they see the right thing that they didn’t even know existed let alone that they wanted. Lush, the soap retailer, is a great example of this. I’m sure many of their customers do go in for visible needs (either for themselves or as presents), but many will also just wander in which is why their stores tend to be in high-traffic areas. Soap was invented 5000 years ago by the Babylonians. Soap should be a commodity by now, but Lush by appealing to consumer invisible needs keeps revenues and profits growing.
For any customer, there are times when they are in any of the quadrants. A retailer should make sure that for any customer, they are able to act effectively and efficiently in every quadrant, but most simply don’t.
In my experience most retailers are highly focussed on the top left quadrant. Here they compete head on with Amazon (probably unsuccessfully). Apple and Lush have shown that the real margins lie in the other 3 quadrants. When people identify with your experience, or you can leverage an identity that they already have then you can increase retention and grow your consumer business. As a personal example I am an Amazon Prime customer living in Brighton, a seaside town 60 miles south of London with many independent retailers. Recently my feeling of being a ‘Brightonian’ was strengthened after attending some local community events, by a sense of pride in the local football team’s promotion to the top flight of English football and issues raised by a general election we were having in the UK. These events have increased my sense of connection to the local community. This slight re-evaluation of who I am deepened the slightly ‘dirty’ feeling I’ve always had from buying from Amazon. A feeling that largely stems from the reports of their tax avoidance measures. The uneven playing field they have against local retailers, their lack of support for local public services such as schools, healthcare and police upsets the ‘new me’. It upsets me enough that I have a list of 4 books that I’m waiting to buy in town that a few months ago would be on my bookshelf already. I’ll use Amazon for the customer reviews but now try to buy local. Not because I was told to, or asked to, but because my self-identity has evolved. Do I really need those books right now? Yes, it’d be nice, but people who care about Brighton (of which I’ve decided I’m now one) don’t do that. They’ll wait until they can get into town and meet other Brightonians and buy from them.
I think it is very possible that many retailers by following Amazon‘s lead have focussed on an experience that is transactional and focused on visible needs rather than human and focused on powerful invisible drivers. Customer surveys probably have a part to play in this also, as customers will by definition only talk about needs they are aware of i.e. visible needs – price, availability, assurance. The invisible needs by their very nature won’t turn up directly on surveys. Invisible needs can however be alluded too through watching customer behaviour. Do people visit your store in alone or in groups? If in groups is it because your goods are too heavy for one person to carry or because your customers want to ensure that they buy something that helps them belong within their peer group, or reassure them of an identity.
Retailers must think about the capabilities they’ll need to fulfil in order to meet customers’ desires in each of the quadrants, not just top left. Any retailer that isn’t actively developing all four quadrants is leaving a gap for others to exploit – is Apple’s recent lack of surprises and delight leaving a gap for Samsung to enter? The capabilities they’ll need could include mobile apps or a whole host of other digital technologies. Branding and operational changes may require no technology at all!
If you want to know more about the model, the opportunities and challenges it presents to retailers and how it can be used to accelerate your digital transformation in the right direction, then come to my break-out session at the free Fujitsu’s World Tour event in London on Thursday July 6th. It’d be great to meet you there, and continue any discussion that might come from this article. You can register for free here. Or if you’re looking to work on your customer experience feel free to DM me.