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Sourcing & Services Matter: Why Price Alone Won’t get your Customers to Stay

Price wars are a st andard challenge of marketers, whether working on the retail or manufacturing side. They have become more frequent in the last couple of years following the recession. Consumers are today even more price sensitive and are searching for great value and even greater deals. However as most retailers are now claiming lower prices, it becomes less of a differentiator. I therefore read with interest that Walmart is moving from its emphasis on low prices to one on sourcing.

Walmart gives serviceIn 2007 Walmart replaced its “Always Low Prices, Always” slogan by “Save Money Live Better”, so this new push with the message “ Made in the US” is worth noting. This latest announcement is made in conjunction with its promise of an additional $10 million in grants to non-profits focused on “on-shoring” manufacturing efforts.

 

Target gives serviceTarget announced last October its plans to introduce the “ Target Sustainable Product St andard” which was developed to “establish a common language, definition, and process for qualifying what makes a product more sustainable.” Target will ask vendors to complete an assessment that is designed to determine a sustainability score for their products. Products will be assigned a score of between zero and 100 “based on the sustainability of ingredients, ingredient transparency, and overall environmental impact”.

 

Both these initiatives show a move to a more caring retail environment. A study run by the Boston Consulting Group at the end of last year, found that more than half of companies with sales greater than $1 billion are actively planning or considering to bring production back from China to the U.S. This rise from a mere 37% just six months earlier shows a significant shift in American sensitivity.

 

Jumping across the “pond” to the UK, something similar is happening in terms of shifting attention from price to value, or should I say values?

 

Tesco gives serviceTesco recently introduced their “ Price Promise”, a pledge to match the price of a basket of both own-label and br anded products at Sainsbury’s, Asda and Morrisons, or to offer customers a voucher at the till for the difference. Sainsbury’s has appealed to the Advertising St andards Authority, arguing that this claim was misleading customers. However, their wrath was, in part at least, sparked by the fact that this new Tesco pledge came in response to their own highly successful “ Br and Match” scheme, although the latter only compares br anded products.

 

Sainsbury's gives serviceSainsbury’s has now retaliated with the launch of a new campaign with the title “ Same price, Different values”, a possible dig at the fact that although Tesco won the ASA appeal, Sainsbury’s might appeal as they claim that their own-label products cannot be compared since many are locally produced. To support this position, the National Farmers’ Union has now taken a stance, backing Sainsbury’s. In light of last year’s  horse-meat sc andal, the values of retailers and the sourcing of food has become even more crucial, and Sainsbury’s sees this latest row as an opportunity to emphasise the difference between itself and Tesco.

 

If pricing has become (still is?) the entry stakes for retailers today, what else can they do to differentiate themselves and propose a viable alternative that appeals to today’s shoppers? Here are a few I came up with, based upon some of the more interesting initiatives and current trends in societal sensitivities:

  • Individualism: I live alone, as do a large minority of people in the developed world ( 47% in Sweden according to Euromonitor) How about offering smaller packs and individual servings? I would happily pay more for the convenience and the guilt avoidance. (I throw out vast quantities of food that is past its sell-buy date)
  • Localism: the horsemeat and other food sc andals have made people wary of buying from countries where they are unsure of their controls, hygiene or ethics. Identified sourcing and traceability brings trust and reassurance.
  • Fair trade guarantees fairness  and serviceFairness: This helps eliminate the guilt attached to buying (too) cheap products. We now know that products from the East are in general cheaper than products from the West. However, we still want reassurance that workers are being treated fairly. Fair Trade associations and the end to child-labour are causes most shoppers would be will to pay (a little) more for.
  • Sustainability: Recent weather changes have finally convinced everyone of the need to look after and protect our planet from further degradation. Therefore sustainability has become something to fight for. Whether this is reducing the use of palm oil to protect Indonesian rainforests or finding alternatives to bottled water which both wastes resources and pollutes the l and, people are dem anding more of manufacturers.
  • Packaging: Packs are no longer just for protection and shelf-impact, they provide information on ingredients, sourcing and links to apps that provide more about the company who made it or give access to reviews from other buyers.
  • Lowe's offers virtual room designerServices: Some retailers are offering schools for cooking, home repairs, creative pursuits or decorating (see Loew’s virtual room designer as a great example of this). No longer is it sufficient to sell products, people are getting help with making the best use of them and thus getting more value from their purchase.

 

These are just a few of the ways that retailers are building their relationships with their shoppers. They may come for price, but that is an unsustainable competitive advantage in today’s world. Retailers that maintain the loyalty of their customers will be offering more in terms of support and services to keep them coming back.  

If you would like to update your own retail environment and services, why not contact us for an informal chat? We can provide shopper journey mapping, in-store eye-tracking, at shelf facial imaging and many more forward-thinking tools.

C3Centricity used images from Dreamstime and named company websites.

The Minimalist Guide to Customer Satisfaction

Are you looking to provide the best Customer Satisfaction and Experience with the minimum amount of effort? If so, then read on.

During lunch with a friend this week, we were discussing how apparently impossible it seems for many retailers to satisfy their customers. We exchanged recent experiences about our own customer satisfaction, or lack thereof, his concerning the in-store purchase of a radio, mine during a sales pitch from a local telecom company.

We laughed together as we realised that neither of us had bought the product / service we had the intention of purchasing because of the “salesman’s” basic errors. When we realised this, we started to enumerate what potential customers are looking for, when making a purchase. Hopefully the list we developed will serve you in providing better service and satisfaction to your own potential clients.

#1. Underst and who your potential customer is

If you don’t know who the person with whom you are discussing is, then it is unlikely that you will be able to effectively empathize. Start by listening to them, to better underst and who they are and what they could be interested in buying from you. Only then should you propose a solution, or perhaps a choice of two. Remember too much choice is likely to result in no sale too. Read more about this in the Columbia / Stanford paper “Choice is Demotivating”

#2. Underst and what your customer wants

In my case, the online salesman started by telling me there was a great offer, which included all local calls for free. When I explained that I rarely called others, preferring to use VOIP services such as Skype or Google Talk, he then changed the offer to a higher priced one that included making calls when I was traveling. If he had simply prepared for the sales pitch, by reviewing my past behaviour, over the previous 6-12 months, he would have been better able to propose a more attractive new service to me.

As it was, his proposals meant my spending more money for less service, which of course was not of interest. In addition, after three attempts at proposing new services I, like many customers I imagine, had lost interest in listening to him. He didn’t know how to excite me and spent useless time in a conversation that had no value to either of us.

Again, listen and learn before proposing a product or service, to ensure you are making the one best possible suggestion. If you just keep throwing offers at a potential client in the hope that one will stick, even ones with potential are likely to go unheard.

#3. Underst and what your customer needs

In many cases, a potential customer wants something different from what he actually says he needs. Remember one of many famous Henri Ford quotes:

“If I’d asked customers what they wanted, they would have said a faster horse”

Underst anding the need that is behind the claimed want takes you half-way to actually satisfying the desire of the customer.

#4. Underst and what you can offer

In some cases you will be unable to give your customer either what he wants or needs. In these instances you have two options:

  1. Say that your product / service will satisfy your customer, which is dangerous as he / she will quickly realise that it doesn’t
  2. Say that your product can’t satisfy their need but tell them of any future planned improvements that may appeal in the near future if they are prepared to wait. You could also suggest one that will, which may sound counter-intuitive, but which will build trust and image of your br and / company that can positively impact future purchases.

Of course, if you go for the first option and say that your product / service delivers exactly what the customer is looking for, you may congratulate yourself on the sale. Of course, when your customer finds out that it doesn’t provide the satisfaction that was expected he won’t come back and he’ll probably tell everyone he knows, or even doesn’t know via the web, about his dissatisfaction. Is that really an option? A few years ago, some HBR research showed that almost a half of people having a negative experience told ten or more others.

#5. Underst and yourself

Part of building trust and a long-term relationship with your customers comes from underst anding yourself, the real, honest and transparent strengths and weaknesses of what you have to offer. Transparency is essential today in building customer trust and customers will eventually uncover whatever you have to hide, so it’s best not to have anything that you do not want them to discover.

These are just five simple ways to guarantee customer satisfaction, but of course there are many, many more. Why not share your own favourite below? 

For more information on how to underst and your customers better, check our website: https://www.c3centricity.com/home/underst and/

How to Innovate better than Apple

Last week I gave a lecture to a group of Executive MBA students at Miami University. It was a fabulous new experience for me, having only done lecturing in European Business Schools until now. There were lots of great questions and many comments about why organisations do what they do when looking to innovate.

It’s always easier to identify the sub-optimal processes a company uses when you’re on the outside and even easier to suggest possible changes that are needed, but when you are in the heat of the action, it is not so obvious.

I therefore thought it would be useful to list some of the ideas we came up with, in the hope that it will help all those challenged to improve the status quo within their own organisations and to provide some new ways to look at innovating outside the box.

 

#1 What business are you in?

When you are looking to innovate, instead of starting with your own current technology and skills, or products and services, how about taking a step back and thinking about what business you are really in. Lego is a great example; they realised that they were not selling (just) toys; they understood that they were in the imagination business. Which business are you in? Do you have an opportunity to redefine it? Here are some ideas to get you started:

  • Food: Family Time, Neutraceuticals – offer family sized portions, children’s play areas, partner with another industry as Nestlé did with L’Oreal when creating Inneov
  • Cigarettes: Personal Pleasure – tobacco companies should be going far beyond their current simplified expansion into electronic cigarette offerings
  • Alcohol / Beverages: Fun / Relaxation: br and lounges, music, video or internet services
  • Pharmaceuticals: Wellness – instead of curing or treating, offer prevention

 

#2. Can you add something new to an existing product?

Professor Steenkamp Knox Massey Distinguished Professor of Marketing and Area Chair of Marketing at Kenan-Flagler, proved back in 2007 that at least for Fast Moving Consumer Goods, small innovations (which are often referred to as renovations) can be just as successful as large step-changing breakthrough innovations. His research came to the conclusion that it was the ones that fall in the middle of “newness” that don’t meet with significant customer success. So what small changes can you make to your current offer to make it more appealing?

How about adding sound to a food, as Kellogg’s did with their Rice Crispies or Nestlé did by adding a layer of chocolate to the top of their cream deserts in France? Or what about adding smell to your outlet, as bakers and coffee houses already do these days, or Singapore Airlines did many years ago? A small change can have a big impact, especially if tapping into a different sensory perception from those customers are used to having stimulated.

 

#3. Can you add a service to the product?

Some products are actually designed to work with services, which are quite often the more expensive part of the sales equation (e.g. razors and blades or espresso capsules which are not only br and specific but can also only be bought online). However, there are other products that have provided additional services to their customers, by building upon their relationship with them, and boosting loyalty, even significantly in many cases. Examples include:

  • Starbucks offer more than coffee; their outlets are a “home away from home”, offering comfy sofas, free internet, tables for working and meetings
  • Purina offers pet insurance
  • Gerber offers college fund investment packages

 

#4. Can you change the packaging to make it more convenient?

Observe how your customers are using your product in their normal daily lives, as well as the products of your major competitors. Identify issues they have whilst using it, or ways they compensate for a product that is less than ideal for them and then add this extra benefit not offered by your competitors. Some recent examples:

  • Adding a simple h andle to a larger pack makes it easier for your customers to carry; these can be found on Dog Food and Toilet Paper, but not on all Cat Food and Kitchen Towels
  • Repackaging your product into smaller or single portion packs, if this is how most of your customers are using it. Incidentally these single portion packs may find a further use in developing markets where the price point is important for attracting potential new customers.
  • Inverting the tube of thick or creamy substances – as Heinz did for the Ketchup, or many toothpaste manufacturers did for some of their br ands

 

#5. Can you combine some of your current offers or extend a br and into an adjacent category

P&G have many examples of doing this very successfully, following the reduction in the number of br ands they offered about ten years ago. For example, they combined the sheeting action of Cascade & the water-filtering technology from PUR to create a spotless car-wash product under the Mr. Clean br and. Both Nestlé and Unilever have extended their confectionery br ands into ice-cream bars.

 

#6. Can you deliver the product or service in a different way?

Many airlines, including British Airways and Air France, now offer a fourth class on board their aircraft, premium economy / coach. The extra services they offer include priority check-in and boarding together with business class, as well as more legroom and better services on board than economy / coach.

Zappos has been built on service and they even have it in their slogan “Powered by Service”. They regularly surprise and delight their customers by offering express delivery for free. As their CEO Tony Hsieh is quoted as saying:

“Customer Service shouldn’t be a department;

it should be the entire company”

How could you surprise and delight your own customers by exceptional or additional services?

These examples have hopefully stimulated your own thinking, to take it outside your current innovation box. If you have other ideas, then please share them below; we would love to hear about your own creative examples.

However, if you would like support in reinventing your own innovation, why not do like many of our clients and start your journey in the fast-lane, by asking for a 1-Day catalyst session? We would love to catalyse your business to even greater success.

For more information on innovating brilliantly, please also check out our website: www.C3Centricity.com

C3Centricity.com uses images from Dreamstime.com and Kozzi.com

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