Why more retail businesses are turning to customer success

In the run up to Christmas, like many people, I’ve made quite a few purchases online.  Convenience, ease, speed of delivery (and return), as well as great pricing have changed my shopping habits.  The thought of shuffling along the high street, in the cold and wet, fighting through crowds in the vain hope that the store still has my preferred size and colour in stock seems archaic.  Instead I shop online, in the comfort of my own home, even for items such as clothing that I might historically have felt the need to try on before purchasing.  If I don’t like it, the return is as easy as dropping off the item at a nearby convenience store or post office.  So with the new habit of online shopping firmly set, I have noticed a shift in the way the online retailers communicate with me, and that is around leveraging customer success.

Margins on the sale of physical products are variable – for some, it’s about making the highest margin possible.  To achieve this, you need a niche product hitting a targeted market.  This is tricky to do, and with technology acting as such an enabler, it’s never long before someone else comes along with something similar or better, eroding your market share.  For most, it’s easier to target a solid product at a wider audience.  Whilst the margins might be smaller , if the product achieves product market fit, with some clever marketing, viral growth ensues and high volumes of sales deliver the revenue.

The downside of this model is the perpetual effort required to drive new business.  The flames have to be constantly fanned in order to keep the fire going.  Virality also usually requires incentives – discounts, promotions, nudges and nurture to get your existing customers to promote your products to their friends and family.  It feels like a never-ending cycle of rinse & repeat.  For businesses that offered a recurring service, such as gym membership or mobile phone contract, there is at least the continuous revenue stream for the duration of the contract.  And that is where many online retailers are now heading.

As I shopped for Christmas gifts this year, I noticed a marked shift towards subscription offerings – from fresh coffee deliveries to underwear, from razor blades to Amazon subscribe & save, retailers are now encouraging and incentivising me to not only make a one-off purchase, but to sign up to recurring purchases.  It’s a clever strategy, tying together the elements mentioned earlier in this post plus adding the learnings from recurring service businesses.  The subtle difference in this new model is, unlike gym memberships and phone contracts from a few years ago, modern retailers don’t try to ensnare you in a 12, 24 or 36 lock-in contract.

Instead they use their customer success toolkit to build a credible relationship.  Responsive service, listening to feedback, using data to spot the signs of disengagement and effectively managing your customer journey is the way they keep you as a customer.  It’s certainly not easy, but the loyalty established is more tangible, and of course, with an open relationship between retailer and customer, as well as the products you already purchase, they can continue to cross-sell other services and nurture advocacy.  This is because they earned the right to sell to you.  So thinking about the experience you deliver to your own customers or clients, how far along this evolutionary journey have you come?

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