Customer segmentation has been an essential business practice for ages. In fact, the age or age ranges of various customers have always been one of the more obvious ways in which merchants and other service providers could slice and dice their potential consumer and business targets. Gender, geography, graduation levels, income levels and other broad parameters could be distinctly and differently identified and addressed in bulk. Credit, race, political views and other less politically correct characterizations also made their way into the calculations as often as not.
But, as with everything else today, new and better personalization data and other measurement and location-sensitive identification tools are rapidly changing the game and the ground rules for sales success. It's not enough to know who I am and what I'm interested in -- although that's a decent starting point. Mass customization is the minimum goal and very little will be left to deal with in grossly simplistic terms, or in bulk, because every consumer today wants to believe that they're being treated as individuals. They want to make their purchasing decisions by the bite or the byte on a one-off basis. One size no longer fits almost anyone and the greatest sin of all is to take any of your customers or prospects for granted.
At the same time, what is still somewhat surprising in this all-digital, all-the-time world is that -- in addition to the new learnings that data can now provide about each customer's desires and objectives, which will further increase our ability to customize offers -- many of the consequences, strategies and prescriptions growing out of the latest research are primarily physical in nature rather than digital.
Think of this as the latest version of "retail revisited" -- not as a fad or even a trend, but as a major shift in the ways that traditional retail space will need to accommodate new customer requirements. (See The Future of Self-Service. We'll be building new and different spaces containing smaller, more personal, environments that will best suit the new mobile and constantly-connected customers whom we expect to attract. These new spaces will also permit us to adapt on the fly to the desires of each and every entrant -- new or returning -- based on their immediate needs.
Comprehensive use of demographic data will be useful, but no longer a competitive differentiation. And even basic "interest" and social information (far more critical today than mere customer attributes) won't be sufficient to win the battle because the new behavior drivers won't be uniform or consistent, even on an individual basis. Some expected, routine and consistent behaviors that are fairly reliable will be ascertainable, but the real winners will understand that -- each time a customer now appears -- it's essentially a brand-new day dictated and determined in the moment by the customer's then-dominant and most pressing desires.
Customers will continue to fall into new distinct categories, but the categories will vary over time in significant ways. My shorthand for these variable behaviors is to think of them as "objectives." What's the customer's goal and how can the environment and the staff best facilitate the success of the customer's quest to achieve it? (See What's Wrong With Retail And What Does It Mean For You.) In a sense, this is simply an effort to peel the consumer onion a little more and get tighter and tighter views, but at the moment no one is even thinking about looking at the customer through this new lens.
And while some "goal" creep and overlapping or inconsistent desires are certain to occur for some customers, once you start organizing your thinking around this new perspective, you're going to find that it's fairly easy to understand and appreciate its importance, but very complicated to execute in store. It's simple to see because it's absolutely applicable to you and me as well as to everyone else, but it's hard to address all the different requirements of the various individuals.
Here are some of the competing profiles and customer expectations that the retail environments of tomorrow (which actually means right now) will need to accommodate. Now's the time to start thinking about how your business or service can address them.
1. Mission (In and Out) versus Discovery (Time to Explore & Learn)
Time is the scarcest resource of all today and mission-driven shoppers want to be in and out of the store as quickly as possible. It's instant gratification and it demands express checkout lines manned by real people. Shoppers hate self-checkout systems, which they know takes twice as long as manned ones for the few items they have purchased. ATMs are a whole lot faster and easier than tellers, but scanners are still slow and difficult.
Explorers, on the other hand are willing to commit the time to find new and unusual offerings, experiment with new choices and learn about new alternatives. They're the pioneers of the entertainment economy, where the experience is the most important aspect of the encounter. These are the ripest targets for in-store sampling, demo stations, special offers and even videos. They're in the food lane, not the fast lane. And it's a phenomena that's by no means limited to groceries. You know the times are changing when the quality of a new car's sound system and its WiFi connectivity are as (or more) important to the purchasing decision as the car's performance.
2. Choice (Super Selection) versus Convenience (Front and Center - Grab and Go)
A significant amount of research has explored the paralyzing effect of too many choices. The so-called tyranny of choice often results in no choice at all -- and this problem sets up another challenge for retailers. Overwhelming the consumer with massive displays and emphasizing selection works for some folks, but it can be very off-putting to the brand-loyal customer who knows just what he or she wants. We're going to see mini-stores within the bigger boxes, but not ones dedicated to marketers like Microsoft or Samsung or P&G. The minis will be choice-constrained and filled with the most frequently and consistently purchased items so I can grab what I need and get out. Using the back walls of the big box for dairy products to pull the shopper through the stores is a strategy that just won't work any longer for a significant segment of the audience. In fact, more and more customers will be ordering bulk items and commodities through online subscription or fulfillment services and not trying to drag the same stuff home from the market every week.
3. Click and Pick (Drive-Thru) versus Park and Party (Time to Kill)
Same day delivery is coming soon (one hour delivery for Amazon Prime customers is already rolling out), but it still may not be fast enough to beat what's exploding all over Europe. Click (buy online) and pick (drive to the store to get it) has become amazingly popular -- especially with moms who'd rather throw the kids in the car and make three quick pickups at her favorite stores, without parking, instead of sitting at home and hoping for the delivery guy to show. Several major retailers' reported that more than 30% of holiday sales last season were in-store pickups of goods ordered online and the trend continues to accelerate. But again, that approach only serves some shoppers. A different set goes to the store because they have nothing else to do. They're anxious to lose themselves in a store because they've got time to kill and nowhere else important to be. They'll be quick to grab a bite at in-store food service operations -- not because they're famished -- but because they're anxious to get off their feet. Locating the snack shops at the front of the store -- beyond the registers and post-checkout-- is another design idea whose time has come and gone.
There are plenty of additional examples and there's not a business around that won't do far better by adapting its space to accommodate all these variable demands and -- at the same time -- adapts its sales approach to each customer's specific goals. Figuring out what's driving each customer isn't that hard, but if you aren't focused on finding this out, your customers will quickly find someplace else that has.