Creating customer value is the key to any business. The way to win customers often involves a basic understanding of how to create an offering that consumers value more than competitors' offerings. Something that meets their needs, at a better price, is bound to draw them in and create incremental growth for your business.
The key is figuring out the formula that works for your business and the ability to consistently deliver against that formula.
We've been working to turn around a technology retailer, in a heavily competitive market. Their target consumers make decisions every day about which store to stop into, whether to buy in the store or online, and whether to shift between our client's offerings and those of its competitors.
In the course of our work, we focused on two relevant trends that are driving their retail performance, trends that Ander and Stern highlighted in the book, Winning at Retail: Developing a Sustained Model for Retail Success.
- Consumers shop at places they believe offer the best value
- In 1989 Americans spent more money in department stores than at discount stores; by 1999 they spent 3 times as much money at discount stores
- Consumers shop less often than they did 10 years ago, and want to shop even less
- A survey of two-income families show that 71 percent do their shopping on weekends; 9 of 10 reported they would like to spend less time shopping
- In 1980, shoppers spent 10 hours a month at a mall; by 2000, that figure had plummeted to 3.5 hours a month
The retail environment has changed dramatically, with customers seamlessly moving between brick-and-mortar and online shopping channels. But the basic fundamentals of retail success remain the same. Here are three important keys to creating customer value in the retail environment:
- Determine where you have the "right to play", but deliver more than your entitlement
- Are you a value-oriented offer, a convenience offer, or a luxury offer?
- What does your target customer want, and why would they choose you over other alternatives?
- Can you become the No. 1 or No. 2 choice for a set of customers?
- Determine what you can be best at
- Whether it's the most important element in the minds of customers or not, it's important that you are positively differentiated in one or two aspects of the experience
- It helps to be on par at the other elements as well
- Tune your 4Ps toward attracting and maintaining the target customer
- Product: Do you have the products they want?
- Price: Is it at the right price?
- Place (Distribution): Are you offering it in the channel and location they desire?
- Promotion: Are you getting their attention through effective promotion?
Being a "me too" retailer doesn't cut it in a competitive consumer environment. Focusing on these three elements can help you to create an advantaged offering for your customers.
Share your questions about building customer value. We can be reached at firstname.lastname@example.org.