The Retailers Who Are Winning Have the Best Customer Intelligence
During an earnings season of mostly dismal retail results, including dramatic changes from stalwarts such as Ralph Lauren, Ulta Salon stands out as one of the best performing companies across any sector. Stock market commentator Jim Cramer attributes Ulta’s ability to thrive and buck the trend to a deeper than usual understanding of their customers, that has allowed them to navigate a disruptive shopping landscape. Cramer explains simply,
It’s clear that Ulta knows what its customers want better than almost any other retailer.
How do you put a value on this deeper understanding of customer behavior? Well, as one measure, the stock price. Ulta has outperformed the Retail index (which actually includes Amazon) by 150% over the past 2 years. That’s a mind boggling outperformance.
We talked about the dangers of “losing sight” of your customers in this blog recently with the woes of retailer Tesco. Every industry goes through ebbs and flows, some are cyclical, where supply and demand run a predictable cycle of ups and downs, and then some are secular, like what we are seeing in retail. Perhaps the other industry facing a similar landscape of massive secular disruption and uncertainty is media. Where technology has dramatically changed choice and convenience – the two biggest forces in any consumer facing market.
With these secular shifting sands, no one can say exactly what the future of shopping will be. What is certain is that closely tracking your customer, and being in a continuous learning cycle about them will lead a company to a happy place. Most companies won’t do it. They won’t change how they do business quickly enough, and they will be the easy prey to the Amazon’s and Ulta’s of the world. Adapt or die – as we all learned in 10th grade science.
Technology is not an answer, nor is collecting data an end unto itself. Technology and sharing of data has shifted consumer expectations and preferences. That’s the critical insight every consumer facing business must accept. Millenials are at the forefront of this changed expectations game, but they are also influencing their parents’ generation quickly – so younger-focused brands aren’t the only ones to whom this argument applies. We speak to Millenial consumers who tell us they strive to share personal data because they believe it will lead to more customized experiences. That statement stuns most people over 40.
Most companies are somewhere down the road on this idea of deeper customer intelligence. They’ve grown their data collection, and expanded their analytics capability. But without properly organizing the effort around key questions, building core customer personas to frame the discussions, and creating a collaborative analytics culture, the data may just overwhelm the effort.
*Alert – shameless plug* – this is where Q’s customer intelligence tools can help. The answers don’t start with data, they start with good questions and frameworks – and they thrive when the data-doors are opened to your whole organization. The concept of the “lone genius” has been disproven. All great answers and ideas are born out of collaboration.
Give us a shout if you’d like to discuss: email@example.com.