The Changing Face of Retail: Part III: Staying in touch with your customer is key - Apr 2018

By Jim Dion

In the first two parts of this series, I discussed many of the challenges that you will face by competing with Amazon and shared some suggestions on how to prepare your company for this battle. In the second part, we spoke about all retail being local, which pointed out the importance of building strong relationships with your customers. Of course, every community is different. If you are competing in a mid- to large-sized market, you will have many more challenges than if you are competing in a small market. Your customers will share some characteristics and, in some cases, have very different characteristics. There is no “one size fits all” for building and maintaining customer relationships.

Yet, while establishing relationships with your customers is absolutely the key to beating Amazon, you must understand that winning their business will not be easy, even if you have invested time and money to do so, and knowing the right ways in which to build and utilize those relationships is essential. Knowledge of what you are up against is the first step in creating a successful answer to the threat.

The real advantage that Amazon has on almost all durable goods retailers-including flooring, electronics, appliances, furniture and other infrequently purchased items-is that familiarity does not breed contempt as the old axiom would have us believe, but rather it builds on a desire for convenience and repetition. Research tells us that slightly over half of consumers today begin their web searches for products on Amazon and not on Google. The implications of this for SEO and other tools that many retailers are deploying is likely that these tactics are not worth a lot of what is spent on them.

Consumers today are used to doing online research on purchases, and with the convenience of mobile devices, they can get a tremendous amount of information in a very short time. What used to take hours and days of driving to stores and reading newspaper and magazine ads is now accomplished in minutes. Amazon has pioneered the “Compare with similar items” feature that shows other products in a grid structure with features of the products as well as prices. As you can see below, the current grid for flooring is not yet highly developed, as there is no consistency in the product descriptions used to populate the grid. This will change as more information is placed online and more flooring suppliers put their products on Amazon.

There is a concept that we call horizontality, which describes how customers compare you not only to other flooring stores (vertically, as almost a silo experience) but also compare you to all shopping and customer service experiences that they have (horizontally, across all experiences). Remember, to consumers, shopping is shopping. They don’t expect that different shopping experiences produce radically different outcomes, take place in highly varied environments, or require a multi-step process, as flooring often does. That is something, by the way, that many flooring stores have difficulty with in this age of on-demand. Consumers do not like waiting weeks for an order to arrive. Just about everything that they can buy today goes out for delivery almost immediately, and they expect the same of all products. Consumers accustomed to comparing options and same- or next-day delivery will expect the same for all purchases.

You should be asking yourself, “With my customers likely visiting Amazon (and talking to Alexa) on an almost daily basis, how am I able to remain even close to top of mind with them?” This is a very important question. Because purchases of durable goods occur infrequently and purchases of non-durable goods occur almost daily, you should then ask, “What can I do to ensure that my customer will remember me?”

There is no guaranteed tactic that will make this a sure thing. The key to having a share of that customer’s mind is, quite frankly, tied to the recency and frequency effect, and with durable goods, the recency can be years, and the frequency is often one or two at most. Understand that, based on this fact, you begin your relationship with your customer at a severe disadvantage because they contact you infrequently, if not for the first time. The ball is fully in your court to maintain the relationship with your customer.

I provided some ideas for how to do this in my last article; specifically, emails should appear infrequently but always with a message that is personal and welcoming. Postal mail reminders of events, sales, warranty reminders and birthday wishes are all part of an ongoing commitment to maintaining the relationship without a feeling of too much or too little communication. Does this sound like what you’re doing in your company right now? If you make a sale to a customer and have zero contact with them after that sale, then you will be overtaken by better retailers and Amazon.

I can remember purchasing tile for my home about three years ago. We purchased it from two different companies. I can’t remember their names. I have heard nothing from them since I gave them my credit card number and took delivery of the tiles. What retailer should I seek out for the new kitchen tile that I am thinking of purchasing? I can pretty much guarantee that I will likely start with a search on Amazon and possibly go to a showroom to look at what I am interested in. Despite all my good intentions about supporting independent retail, I will likely place the order on Amazon because there will always be a record of what I bought and when and how much I spent. No, Amazon will not actively solicit future tile or flooring business from me-well, not yet anyway, but perhaps in the future.

You see, customers are not at all like busses; there is not another one coming in a few minutes if you miss the first. Ignore the threat of Amazon and other online merchants at your own risk. Simple steps need to be taken and can be easy to do. Begin building a good database of your customers; reach out to them just to stay in touch and provide information. Don’t overwhelm them with useless information or contact just for the sake of contact. Do not be a stranger to them and, at the same time, do not be a nuisance!

If you remember in the first part of this series, we talked about Amazon being responsible for almost 40 cents of every dollar spent on the web; well, in the four months since that was written, they are now up to 44 cents! Tick tock, there is not a lot of time left!

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