SAG_LinkedIn_MEME_913x560__Coddle_your_CustomerCustomer centricity is considered the most important competitive differentiator for any consumer-focused company.

From your customers’ initial browsing session (shelves or website), to point of sale and beyond, a retailer has to create an experience that is not just positive but also memorable. You want them to come back - and to tell others about you.

At Software AG’s Innovation World 2015 two weeks ago, recognized retail industry analyst Nikki Baird from RSR Research led a session about the future of customer centricity. The crux of her talk was that any consumer-focused company has to consider shifting away from being product-centric, to being more customer-centric in order to succeed.

In her event summary, Nikki said: “It’s a hard shift to take.”

That is because retail used to be defined by the products a company sold. So-called “merchant princes” decided which products were the right ones to sell, said Nikki. “All of a retailer’s knowledge about customers was encapsulated in that merchant prince’s gut feel for what would do well and what would not.”

Today, customer centricity is at the top of most retailers’ to-do lists. It is imperative to understand what customers want and then give it to them in a manner that satisfies, but also coddles them. This can only be achieved when you have organized your company to deliver on your promise.

As Nikki says, the merchant prince is being replaced by the data scientist. “The right product at the right place, price, and time is a function of math, rather than gut feel,” she added.

Software AG has long recognized that a customer-centric focus is the way forward and that technology is the key enabler. Yet retailers have historically resisted IT investments as they were considered a support cost, says Nikki, preferring instead to invest in the areas that they felt could grow the business. This meant opening more stores and largely ignoring technology.

When it became obvious that IT was critical in moving forward, many retailers “had a tendency to claim they were too special to be supported by packaged solutions,” Nikki said, with a tendency to build instead of buy, or buy point solutions instead of integrated suites. “Personally, I have said to retailers many times, ‘You’re not a software company. Why would you build instead of buy?’”

Then, as their businesses fell behind, business-line leaders: “went around the CIO,” buying quick internet-delivered solutions that they could implement themselves. Some of the solutions were positioned as be-all, end-all technology that could solve every retailer’s problems.

What was really needed was a Digital Business Platform that could help them to make sense of their information about products or customers and turn it into something valuable. Software AG believes that the future of business is all about information.

To attain value from information, technology investment is paramount. Every company needs to be an IT company.

Nikki said this is relevant to retail: first, they became more customer centric, but that may not have been driven by digital. “I believe that digital was merely coincidental to customer centricity, not central. Retailers were feeling the heat from Walmart at the turn of this century, not from Amazon.”

While Walmart had a grip on price differentiation, other retailers began to focus on the customer.

“Thus customer centricity was born,” said Nikki.

With e-commerce, retailers realised that technology is the enabler and the differentiator and must be part of the business, not an add-on.

There is still a long way to go “If it was hard enough for retailers to make the shift from product to customer (and there are many retailers out there that are still in denial about even that transformation), it will be nothing compared to the internal revolution needed to navigate from physical to digital,” said Nikki.

Retail winners are those who will make that transformation happen–and sooner rather than later. Software AG is dedicated to helping them to innovate, because business and IT are intertwined–thus creating customer centric solutions where technology is the key enabler.



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