customer outcomes

NickB

Good news for Blue Monday: the High Street’s not dead – yet

(2 minute read)

Customer-centricity is the way forward

It’s that time of year when we have a succession of variously-coloured days: Black Friday pre-Christmas and Blue Monday today, allegedly the time of year when people are most depressed. To add to the spectrum there was a super blood wolf moon visible in the middle of the night for those Britons whose anticipation of the Monday blues was already giving them insomnia.

For beleaguered UK high street retailers and customers, the gloom continues. HMV the music retailer seeking a rescue package, has come under the radar of Mike Ashley, whose strategy seems to be to buy up any retailer heading for the rocks. For non-UK readers, Mr Ashley has built up a highly successful business – Sports Direct – selling cut-price sports gear to the public in the classic, low-cost, pile-em-high-and-sell-em-cheap model.

It takes a particular skill, in my view, to offer a poor in-store experience – confusing layout, multiple occurrences of similar products – and still achieve commercial success. This doesn’t bode well for HMV though: if the same strategy is applied, I don’t think it would succeed, since the competition for music/video content (these days a digital commodity) is different from that for clothing, a physical one, so no matter how high or cheap your piles of CDs are people have moved on.

I’m sure Mike Ashley realises this, but if he needs some further ideas he’d do well to take a look at the companies covered in a recent Marketing Week article who are bucking the trend by taking a customer-centric approach.

I’m glad to see Greggs included in this as I particularly liked their introduction of a vegan sausage roll to capitalise on the trend for “Veganuary”. In particular I liked their canny use of social media, when breakfast TV host and self-opinionated uber-bore Piers Morgan took exception to their “PC” behaviour. “Oh hello Piers, we’ve been expecting you” has to be one of the best (polite) put-downs of 2019. It’s possible to do low-cost with style and Greggs manage this as well as responding to customer preferences in a creative way.

Focusing on the experience is the way forward for arts and craft superstore chain Hobbycraft who at first sight would appear to be in danger of undercutting by the likes of Amazon. However, their stores provide workshops and how-to content online recognising that their customers outcomes extend beyond simply buying products. Customers want to feel part of a tribe (hobbyists, bakers etc) and acquire skills: playing to these outcomes moves the business away from being a commodity provider.

It’s this preparedness to think differently about the nature of a store that will distinguish winners and losers in the difficult times ahead.

For more thoughts about successful customer-centred practice sign up for our Inner Circle newsletter or, for more about outcome-based thinking. see our article The concept that will change your view of Customer Experience forever.

NickB

The death of high street retail? Bring it on!

The survivors of “retail hell” will be those that are prepared to change the way they think about customer experience

Reports of the death of the high street may have been exaggerated in the past but the decline in shop sales versus the increase in online sales reported over the Christmas period suggests that retail as we know it could well be in its death throes.

After my experience in the January sales in London I can only say the sooner the better.

What I learnt in a brief – but not as brief as it could have been – trip to Oxford Street last Sunday and a spot of grocery shopping on New Year’s Eve was that our tolerance of poor physical retail experiences is lessening, particularly when the online version is so much better.

What’s wrong with shopping?

Where do I begin? Let’s start with everyone’s favourite department store, John Lewis, on a Sunday afternoon. At the height of the sale season we were pleased to snap up a new mattress as a clearance bargain. We’d originally gone in to try out a Simba Sleep mattress – which you can buy online and return if not happy: now a standard with the new entrants (see also Casper, Eve and others) – but ended up with a different make at a clearance price which was more comfortable, albeit not covered by any guarantee should our in-store test proved to have been inadequate.

I get a bargain and a try-before-you-buy stage in the customer journey so what’s wrong? Well not that much if I’m honest, although I got a definite sense from the store assistant that he’d rather have been able to upsell to one of the many more expensive items on display (he could have helped me feel a bit happier about picking up a bargain instead). The trouble really started when we descended to the kitchen shop in the basement in search of a new pair of kitchen scales. As a keen cook and a bit of a kitchen gadget fan, I’ve previously spent happy times ambling through John Lewis kitchen shops, but something has changed since the last time I went to the Oxford Street “flagship” store. It proved tricky to find the right area and, when we did, the shelves were in such a mess that it took quite some time to work out what scales were available and how much they were.

On the basis of this second experience, online would have been much better – although it still took me a while to find the kitchen scales section on John Lewis’s website – and I could have bought my new mattress online as well, albeit at a non-clearance price.

Food, glorious food

Most of the time we shop online for food, via Ocado – it saves time and petrol cost – but it requires advance planning. In preparing for a New Year’s Eve dinner I needed to go to a local mall and that other bastion of British middle-class grocery shopping, Waitrose (part of the John Lewis Partnership). One missing ingredient required a trip to Sainsbury’s supermarket a short walk away. I found my missing spice but then had to wait in line whilst what appeared to be a large section of south-west London queued to pay at the self-service tills. There’s no way these are going to give you the kind of pleasant interaction on a standard check-out aisle that I’d had pre-Christmas in the same store – “unexpected item in bagging area” is hardly the basis for a great customer relationship. Most of the time I end up having to wait while a harassed assistant confirms that I am over 18 and can legally buy alcohol. My New Year’s Eve purchase was relatively smooth but the overall experience – albeit at peak time – was stressful.

Back to the Future?

There was a time when a trip to the shops was a relatively unhurried affair. Growing up in a small town over half a century ago I remember getting most of our food from a short trip to local shops. It wasn’t something full of magic moments as I recall but nor was it particularly stressful even when the local supermarket was involved. And my mother, who I was usually accompanying, would stop and chat to friends, neighbours and shopkeepers in the course of her expedition.

Of course, there was no competition from any other shopping channel in those days, just the choice between a few local shops so you can’t really compare it with our price-driven online interactions. However, leaving wistful reminiscence aside, the past has some lessons for the future of physical retail: shopping in those days was friendlier and less hurried. But if online can take away the need to stand in crowded shops or searching in vain for unavailable items what’s left on the High Street?

Café society

The answer is to forget about selling – at least in the same quantities as online – but to view the online and offline worlds as complementary rather than competing. Let’s look at a couple of retailers under threat from online competition: bookseller Waterstone’s (thriving) and music/video retailer HMV (filing for administration). I’m a customer of both, but in ways that illustrate this shift.

I spent a couple of hours in Waterstone’s Piccadilly branch at the weekend where I combined coffee, book shopping and a pre-dinner cocktail. The branch has three food/drink outlets and several floors of books and I based myself on the top floor café/bar with occasional forays to the book departments. So, my visit to the store is more about an overall leisure experience than a targeted piece of book shopping (which I could have done via Amazon or other online retailers). Waterstone’s still hasn’t integrated the online world very smoothly: one of the books wasn’t in stock and I declined the offer of ordering it as I figured I could do it online. However, I bought other books in the store so there’s no reason why the order couldn’t have been linked to my other purchases and offer a discount, securing more of my expenditure versus Amazon.

At HMV the threats are more extreme – we still like physical books for reading (versus eBooks) but are less enamoured of CDs and DVDs for audio/visual product – but the response has been less adventurous. My local HMV store also contains a branch of independent cinema chain Curzon. The cinema is one of the best in the area – a good choice of films, comfy seats, great sound and a good café/bar – but the degree of integration between the two is non-existent despite branding the venue as hmvcurzon. On the other two floors of the shop the offering is a traditional retail one: racks of CDs, vinyl and DVDs with various add-on products such as t-shirts.

Curzon is, as far as I can tell, thriving: the cinema experience is good and, as a distributor of independent films, it also offers a streaming service. Like many other cinemas it also offers live broadcasts of concerts, theatre etc. This move towards content and experience appears to have passed HMV by. Just as bands now make money from gigs rather than record sales it doesn’t require too much imagination to think how HMV might have evolved into a live experience provider – with links to related merchandise and streamed content – rather than remaining as a shop selling stuff that fewer and fewer people have a need for.

Entertaining outcomes

I’m not going to make any predictions for the future of high street retail other than to say that a better understanding of customer outcomes is required. If you view your customer’s outcome as “buy some stuff at an acceptable cost/convenience level” then you’re operating within the traditional retail paradigm. With online taking up an increasing proportion of shopping, that cost/convenience offer will need to be pretty compelling to cover the cost of high street property.

But if you view the customer’s outcome as “feel part of the community” (my experience of 50 years ago) or “have a great time with friends/family” (my recent Waterstone’s/Curzon experiences) then you might view the proposition you offer quite differently. In my little corner of south-west London, the number of coffee shops – both independent and chain – has doubled over the past 12 months and they are all busy: that points to a need that people have to get out into their community (even if it’s to sit hunched over a laptop with headphones on).

I’m not saying all shops should have a café attached. Retailer WHSmith provides a dire in-store experience (occasionally including a coffee vending machine) but it doesn’t prevent them achieving high performance, particularly given a focus on travel-related outlets (where leisurely browsing isn’t part of the experience). However, for most retailers, asking what’s missing from their customers’ experience and taking action to reinvent their outlets accordingly is the best hope to keep the high street alive.

It’s also a highly complex area and different solutions will apply in different localities – what might work in Wimbledon may not play so well in Warrington or Wigan. We’ll be returning to this theme in subsequent articles and inviting other people to contribute. If you’ve got direct experience in this area we’d love to hear your views.

NickB

When disruption strikes, will you be ready?

Best to assume it’s a constant feature of business

Picture the scene: an early 21st Century music industry boardroom where a young executive is trying to convince his senior management that a revolution in the way music is distributed is under way. The execs weren’t buying his vision of the apocalypse until this: when one commented that he’d heard MP3 recordings and they were rubbish (may not have been his exact word) and then demonstrated the poor quality by playing a track on his tinny laptop speakers, the young executive walked over with a jack lead and plugged the laptop into the sound system. High quality rock and roll filled the room, at which point the assembled execs realised that, unless they changed the way they thought about their industry they were doomed to extinction.

The young executive in question was Barney Wragg, at that time a senior vice-president with Universal’s eLabs who was one of the speakers at an evening on the topic of digital disruption organised by The Foundation. You’ll be able to go to their site and get a full write-up of the session in due course but there were a number of take-aways for me that I thought had relevance for companies trying to build a customer-centric organisation.

Disruption is not what it used to be

At around the same time as Universal was facing disruption from the likes of Napster I read Clayton Christensen’s definitive book on disruptive technology (The Innovator’s Dilemma) where he described cases in different industries where incumbent suppliers had been usurped by “disruptive” players: new technology initially offering more limited features but at a significantly lower price. These new products would initially seem unthreatening to the functionally richer incumbents but, over time, they would eat away at the incumbents’ market share.

Christensen’s examples included hard disk drives and earth moving equipment, but the pattern was clear and applicable to newer technologies. At the dawn of the internet age it was prescient, but since then two things have changed: firstly, the term is much more commonplace – if you’re in any newish business it’s de rigueur to describe yourself as disrupting something or other. Secondly, the pace of change means this:

Disruption is now a constant feature of business

That’s right, there’s no opportunity for rest or stability in business: the opportunities presented by digital technology are immense and if you don’t capitalise on them, someone else will. The question is: do you focus on defending what you currently are, or do you look at what your business might become?

Data helps you focus on customer outcomes

The growth of gig economy players such as Deliveroo and Uber has tended to focus on the employment implications for their riders and drivers – more on that later – but what struck me was that these disruptors are using data not only to manage their core operations but also as a fundamental part of forward strategy.

Lisa McDowell, Head of Brand Strategy and Insight at Deliveroo, also spoke at the event and described how they were using their data on what customers were searching for in geographical areas, leading them to take action to plug gaps in the supply side. In Battersea, South London, ordering data told them there’s a dearth of good Indian restaurants serving the area. Their solution: set up a unit with an upmarket Indian restaurant just to supply the area. Such “dark restaurants” worry people like me who grew up in brightly-lit ones but there’s no denying the trend towards eating good food at home without the hassle of cooking it or going out.

What’s important here is that Deliveroo’s business is not about delivery (what they do) but thrives on a detailed understanding of their customers’ desired outcomes (a wide choice of good food when I want it), leading them into new ventures that take them beyond their initial proposition.

The old values still apply

Disruption doesn’t mean having to turn everything upside down: you still need to keep your people on board. For Deliveroo this applies at the rider level: whilst they encourage riders to work for other services such as Uber Eats and Just Eat – a counter-intuitive approach to loyalty – they have also introduced incentives to ensure the best riders (the ones who do the most deliveries) prefer to ride for them. Good internal communication about any change and the impact on them was also highly valued.

At the senior level, Sarah Speake, the third speaker, previously CMO at mobile disruptor Trufone and formerly Senior Marketing Director at Google, emphasised the importance of nuanced peer-to-peer communication in getting senior executives to buy in to the change required as a result of disruptive forces. Confrontational approaches tend not to work.

Monetheless, all three speakers concluded that you needed “mavericks” on the board – or trusted by them – to be able to anticipate or manage disruption. Diversity of thinking style was also seen as important.

Disruption-proofing

With the threat of disruption ever-present, what can you do to protect yourself against new entrants and keep going towards a customer-centric future? The cynic might say nothing, but an optimist (that would be me) might suggest asking the following three questions:

  • Look at the possibilities afforded by digitisation in your marketplace: how do customers consume your or your competitors’ products? what channels do they use?
  • What data do we have on our customers’ behaviour and what does it tell us about current and future demand?
  • What are the outcomes our customers want when they use our products? How might digitisation, big data or other new technology approaches help deliver those outcomes?

The above isn’t intended to be anything more than a stimulus to start the debate at a senior level but if you’re not having the debate, it’s definitely time that you started.

NickB

Net Promoter Score – what’s the point?

It all depends on the context

An unwanted set of medical visits last week resulted in an equally unwanted set of follow-up texts.

My local hospital trust “would like me to think about your recent experience in the Emergency Department. How likely are you to recommend us to your friends and family if they needed similar care or treatment? Reply 1 for Extremely likely, 2 for Likely, 3 for Neither likely nor unlikely, 4 for Extremely unlikely or 6 for Don’t know. Please reply today, your feedback is anonymous and important to us and helps us to improve our service…”

There was no follow up question in their survey – clearly they were just wanting a number.

My GP’s surgery then did exactly the same.

Yes, the much-touted and widely-discussed Net Promoter Score (NPS) was at work again!

Well, actually the experience and the care in both cases were great but I didn’t reply, but because the context of the experience means that I think NPS has no significance in isolation. If I had responded with 8 but with no opportunity for follow-on comment how can they react? If the hospital looks at their scores how can they do anything meaningful unless they have some view of what aspect of my experience is not great in the my opinion.

No choice

It got me thinking what do people use NPS for? Picture the scene if you can: someone close to you is suddenly taken ill. The LAST thing you are going to do is say “Hmm, let’s take you to XYZ Hospital, they have a really great patient experience and I’d heartily recommend it!”

If you lived in my neck of the woods you would only have one choice in an emergency, assuming it didn’t require an ambulance: the nearest hospital. And that’s in London – an area not short of “competitor” hospitals; elsewhere you most likely wouldn’t have a choice.

Similarly, signing up for a GP is not like having a bank account or a phone service: you tend to sign up long-term and don’t like to switch unless you move house. You might recommend individual doctors within a practice to your nearest and dearest depending on your experience but that’s not the question.

I asked a GP friend of mine who’d moved from my surgery to another practice whether they were using a similar measure. “Oh yes” she said, “we do the scoring as specified and then we have to send the results to the Department of Health.” As far as I can tell there is no follow-up or any expectation to do anything differently. The score was being used little more than a traffic light to gauge the surgery was performing above a minimum threshold.

So, what’s the point of NPS?

Despite its misapplication in parts of the National Health Service, the measure is partially useful, but it does not deliver quite the impact it claims:

  • If I have a great experience from supplier A where various competitors are readily available, I’ll form an emotional attachment to the supplier that provided it. I might quite like Supplier A but part of the attachment is based on confidence they can do the job and trust that this will happen consistently.
  • I’ll be more much likely to tell someone that I recommend supplier A and much of the time I will give them a 9 or 10. In this scenario NPS accuracy is working.
  • I might be using NPS after a visit to a retailer. If I got what I wanted, and the assistant had smiled at me nicely then I would be more than happy to give a nice round 10. Then I would most likely forget I had ever been there and I never raise it in conversation again. The scoring system is not working so well.

Because it’s focused on measuring my reaction to specific events NPS is not a complete picture. The experience I have had needs to be part of a journey towards a particular outcome. To use my recent healthcare example, that journey won’t be complete until I have had a follow-up appointment and further treatment, if needed, a process involving referral and booking into the appropriate clinic. My satisfaction (not likelihood to recommend) won’t be determined until my desired outcome – good health, reassurance about future health concerns – is achieved.

And it still won’t involve me recommending any form of medical treatment, no matter how great the experience is.

Building on success

At NextTen we find it’s much more helpful to talk about customer success which we define as a combination of fulfilling the customer’s desired outcome and providing a good experience. Using these two dimensions we can build a customer advocacy matrix. High advocacy companies combine a great customer experience with a great outcome delivery, although it’s possible to achieve business success with an OK or even below-average experience as long as you deliver the customers’ desired outcomes as low-cost airlines continue to prove.

  • Ryanair and Spirit: poor customer experience but great profitability.
  • Kingfisher Airlines: great experience but went bust!

Context is everything

NPS can certainly tell you if you’re in the high advocacy quadrant of the matrix, but you’ll need additional qualitative data to understand why you’re there, or if you’re not, where you need to improve. And if your market context isn’t one where high levels of customer choice or switching occur then you would be better off measuring something meaningful like the number of and reasons for customer complaints.

NickB

Why the Sainsbury’s/Asda merger is short-termist and simply dumb

The old retail model is dying – consolidation merely postpones the inevitable

The news that UK supermarket Sainsbury’s and Walmart subsidiary Asda plan to merge may have been judged a great move by many analysts but it’s not. It’s short-termist. It panders mainly to the immediate shareholder value issues and, as so often happens, the customer – who holds the key to long term value and success – is insufficiently considered.

Sainsbury’s Chairman, David Tyler, has claimed this consolidation as the most “historic and pivotal move” they can make. History will judge this a short-sighted manoeuvre based on preserving a predominantly bricks-and-mortar player in an industry that’s dying on its feet – unless it changes significantly.

Vote with your clicks

If you’re a customer in a town where your supermarket options are Asda or Sainsbury’s ability get exactly what you want with minimised household spend (part of their model) will be limited. In addition, the time, effort, inconvenience and – in my case – sheer boredom involved will encourage me to search for other options. If you’re a customer in cyberspace you have more shopping options than you know what to do with. Its arguable that having 20 choices of grade, size, price and expiration date of a cherry tomato might add layers of complication and the illusion of control.

It might be simplistic to say that online will replace “offline” – the current low penetration of Amazon Fresh suggests that it will take time – because some elements of shopping remain resistant to online. This of course will surely change and as it does rapidly accelerate. Do you honestly see the bricks-and-mortar model being the same in 2025 as it is now? People who extrapolate based on prior behaviour might argue differently on the basis that the experience is not much different from 2011 but extrapolation arguments in a world of customer innovation opportunity are often TOTALLY wrong!

Yes, we’ve had online shopping for a decade or so and we still have plenty of physical spaces to go and buy stuff in so why panic? The trend extrapolators might have a point? Reality check: we’re already seeing the death of many high street retailers as they lose out to online operations so although the death of the high street has been a long time coming, it looks like it’s not only here but accelerating. The high street actually has a big part to play but not in its current guise. This is where customer success, experience and exposure to innovation plays a critical role.

Focusing on what I term customer success which consists of customer outcomes and related experiences (outcome and experience are different things) gets us away from this sterile “bricks v clicks” debate and opens up innovative new areas for growth.

My personal outcome for food shopping is to have my chosen fresh foodstuffs, delivered not only to my house but placed exactly where I want them in my kitchen. I don’t want to have to repeat my eggs, milk and bread order every time, but I do want the option to adapt it if I expect visitors. I don’t want to worry about being in the house when there is delivery, but I also want to ensure my property remains secure.

As a Customer Success expert, I know that there are many people who would want exactly the same, but I also know that there are a large number of variants – because we have levels of uniqueness which we expect to be actively considered. I am also aware that the distribution model for this type of shopping whilst lower cost than traditional bricks and mortar is still more expensive than say “click and collect”. For a few pounds reduction I might opt for a model which places my shopping in the boot of my car at a click and collect location such as a local petrol station.

Brick it

Does this mean the current bricks and mortar is redundant? Time will tell but I think that it does not have to be the case.

If I now live in a heady world where I don’t need to walk up and down an aisle why would I go to the “bricks and mortar” and spend?

What experiences around food would make you get of the house? Certainly, interacting with people and companies online will make many crave getting away from a screen – so what sort of experiences would make you move? Maybe it would be to experience something specific. Maybe it would be to learn something. Maybe it would be to better understand new ideas around nutrition. Maybe it would be meet your friends and do something. I certainly would not meet my friends to do a weekly shop, but I might go if a celebrity chef was doing a workshop which you could join in. Is that workable? Not sure, but I do know that a commodity process such as basic shopping will not be the domain of the high street but companies that offer the customer something different most certainly will.

You can start to think differently about the outcome and ask questions like:

  • How does the arrival of more intelligent devices change the ability to predict my demand for specific goods on specific days?
  • Could we use my social network to pick up shopping for me and automatically recompense them? (note that this could be of real benefit to people with mobility constraints)
  • What other delivery mechanisms might work? How can the principal online provider integrate with other local providers to optimise deliveries?

This is only a starter list – if I took a walk to the shops I might even think up some more…

Customer-centric strategy?

As Charles Bennett noted recently, building customer-centric companies is difficult, usually because customer-centric change must have a business case that stands up to scrutiny alongside other more concrete initiatives. When you get to the level of big strategic moves with tangible benefits (in Sainsbury’s case, assuming 73 stores can be offloaded, and other economies of scale realised) you realise just how far strategic thinking has to go to put the customer genuinely at the centre.

I’m hoping that somewhere in Sainsbury’s there’s a someone taking a creative view of what the future of retail might look like from a customer perspective and how the company might respond to it, but I’m not convinced. I think it’s more likely that the company will lurch, albeit elegantly, from one defensive manoeuvre to another – we’ve fended off the lower cost supermarkets (Aldi/Lidl) and we’re staying ahead of Amazon (for now, by removing one UK acquisition target from the game) – keeping analysts happy and, in the case of one senior executive, apparently staying “in the money”.

But it’s not the best outcome for customers and, ultimately, not the best one for the company.

NickB

“Customer Experience Day? That means eff-all to me!”

Did you have a good CX Day? You didn’t realise it was happening? Strange! I thought it was up there with Pancake Day, Mothers’ Day, Fathers’ Day and the Eurovision Song Contest as a red-letter day in anyone’s calendar. Well, maybe I’m exaggerating a touch, but the reaction – quoted verbatim above – when I mentioned to someone that it was, indeed, Customer Experience Day proved to me not that there had been a failure of publicity, but that the day itself possibly didn’t have much point if you’re not a CX specialist. Which made me realise that we can get far too obsessed with customer experience itself and lose the point of why it’s important.

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