Know thy customer, a ‘me too’ does not work in today’s world — Supermarkets
Its become a norm in today’s market for customers to seek promotions, discounts and other goodies. As a business what drives you to give these goodies to your customers?
If you answer an abstract “To keep my customers happy” or to “To keep my sales intact” or “Just because others give, I have to do the same”; you are mostly going to end shooting yourself in the face.
I have always believed that promotional sale is a surgical operation (either one time or periodical) that requires precise planning, simple yet effective execution and ample of retrospective with a sole purpose of attaining sustainable growth.
Whats happening today?
I am reminded of the recurrent big bang sales that Amazon and Flipkart do almost on overlapping days. I don’t remember who started it first, but am sure the other one just followed suit because the first one did so. I am a very regular shopper to both those two websites, but till date I have never purchased anything during those sale days.
2 top reasons include:
1. What I require never seems to be up for sale? Even with my abundant purchase patterns, don’t these guys know what I need?
2. There is no stock, do you expect me to wake up at 12 at night and make a purchase? WTH? Insanity! I am not an owl!
While each claim massive success at the end of their sale, I have personally found it very disheartening till date — earlier I used to at-least look at whats on sale, but not anymore.
While I cannot dispute some of the success numbers they claim post the event(the truth being a matter of The X-Files), I cant help but question the sustainability especially when they don’t seem to know what their customers want?
What should it really be?
How many times have we heard this? —
Your customers are like babies, make them feel at home, make their experience with you as personal as possible, given them candy. They are sure to love you back!
But in reality — its more like a full basket a month, keeps the customer near!
Being a supermarket, your growth mantra depends on your ability to consistently and recurrently capture the monthly baskets of your customers.
The trick is to use customer engagement either via promotions, sales, loyalty to ensure that you not only sustain but also grow the number of customers how recur monthly purchases with you.
While no business can be 100% attrition safe, businesses should make sure that it does not become a dwarfing factor.
The Tale
To understand better lets listen to a story of 5 unique people visiting a store.
Your supermarket is the hero of the story and the key to your superpowers lie with 5 people namely Jack, Jill, Humpty, Peter, Mary and Little Bo.
Once upon a time, all these 5 people used to come to your store to buy their monthly purchases. They were happy and so were you.
Jack and Jill are best pals, Jack is a gadget freak, give him the internet and he needs nothing else, mostly an indoor being. Jill on the other hand does not mind going out from time to time.
Little BO has just moved in from another town and is finding her way around in the new neighbourhood. Humpty, Peter and Mary are long timers in your neighbourhood.
6 months passed by, business has been rather good. Lets see how our 5 people have been doing:
- You see Humpty and Peter regularly every month walking out of your store happy with big bags of purchase(bigger every month). Better still they also bring in their friends to your store.
- However you notice that its been quite a while that your store has seen Jack. Jill still comes monthly however she is not the same, she spends very little time at your store and her purchases have reduced to a trickle from before.
- Little Bo being the new to town is also a regular visitor and you see her regularly
- Mary on the other hand has a very different behaviour, you see her the most — sometimes even twice in a day.
Moral Time
Well, sales in on the rise however do you have the right to be happy? Are you really growing?
20–25% of your overall revenue is lost due to shrinking baskets and lost monthly purchases.
- Take the case of Jack, if you would have paid attention say 2 months into our story, she would have been a Jill.
- Jill at the current moment is on way to become another Jack.
- Mary is a strange one as she is regular, though her loyalty lies somewhere else, your supermarket just fills the gaps when she is in quick need of something.
Just as the Humpty(s) and Peters, bring in their friends; the Jacks would also take their friends away.
So the next time you grow by 10%; there is a high possibility that you could have grown 25%. We call this the 10–25 rule of customer relations.
An average super market in a tier 2 town has about 15K customers, how do you find the Jacks, Jills, Mary(s) and others in this mix? The solution to that hidden 15% revenue is the identification of these groups and running periodic specific campaigns to engage personally with these segments.
Campaigns and promotions are just not about giving discounts but its also about wowing their target audience with a unique experience at the store.
For E.g. I walked in to a first cry store sometime back to get some basic stuff for my baby son. The average time I spend at the store is about 5 mins. There was a section of toys my son usually likes that I was browsing over. I took the names of few thinking that I should perhaps purchase them online(cross checked a few of the prices too). My 5 mins was done, so I got what I had specifically came for and went to get it billed. The store staff was with me all the time as there were not many customers. While billing; she did something very simple. She told me the bill amount and said, we are running a sale and because of that sale you have gotten 30% discount on your bill and each item earned you so much discount. Sounds very basic right? That exchange converted my online purchase(yes I did buy the toys) and made me who was a 5 min shopper to spend 25 mins at that store.
I did tell the store manager to have a better display of a sale for the other customers, however overall I was happy with the experience.
There are many supermarkets who get this basic wrong and you have to browse through the bill to even know that you have been given a discount.
- The Jacks and Jills need a ‘Come back home campaign’. Further; these customers need a little more of a nudge. Remember that something drove them away from your store in the first place and that perception has to be broken. Just a discount would not do. Your store staff should be better trained to identify them and give them a warm experience at the tills, This can also be something like as simple as greeting them, telling them some achievements your business has made (like if you have opened new stores) and make them realise that they are special.
- The Mary(s) have to be converted into The Humpty(s) and Peter(s). Discounts on larger baskets may help them come back to you.
- You are already doing a lot of things right for the joyful segments (Humpty(s) and Peter(s)). Make sure that you continue the same both with merchandising and experience.
- The Little BOs are the freshers and they would soon fall into one of the other segments. Effective conversion into the happy segments is the effect of you getting the various elements of your customer engagement bang on!
More Retrospection
You need to make sure that there is always a good in flow of Little BOs else probably there is no more growth to service in the locality your store is in.
Just like babies, customers within the segments can be run by different emotions, some cranky, some angry, some happy, some opportunist, some just perception. While you cannot be 100% attrition proof, a surge in the loosing segments should be strategically analysed and actioned upon proactively.
Surge in these spikes can also be a part of the merchandise that you are currently selling. May be there is a new store that has come up recently near your supermarket and people have started to prefer that store’s private label over yours? Or it also may be a quality problem thats creeping into your merchandise.
All it takes is one rotten apple in the basket to start the decay of the entire basket
The harsh reality with today’s market is that even if you get product variety and availability 80–90% right, there is a good chance that the customer will walk into competition. All your competition has to do is get it right 70–80%. Yes, its sad that ‘The grass always looks greener on the other side’. This is where in-store interaction and experience should fill the gap.
The role of machines
In today’s over competitive market place, managing to effectively plan this fine level of customer analysis and engagement is tough, engaging personally with each of your customers and tracking their experience index is unthinkable if you run a chain of stores, worse still if you are across geographies.
This is where, I believe that the businesses of today have to look up to machine learning and artificial intelligence to drive these processes and retrospectives.
The Tsunami of data is at shore, its upto the businesses of today to either ride the wave of get blown away by it.
So what are you waiting for? Start understanding your customers like never before. Don’t aim for a participatory growth, aim for the sky, aim to be the best!
Target customers for what they are and not for what your competition does.
P.S. Yes I know I said 5 people but actually mentioned 6. There is something strange about Humpty and Peter. I leave it to you to figure out what it may be :)
