FEATURE1 August 2011

Improve your focus


The mood on the high street might be grim but retailers can still succeed. James Verrinder looks at how they can sharpen up their understanding of customers and respond quickly to their needs.


Times are tough on the high street as purse strings – tightened in response to the recession – remain taut. The latest footfall figures from Synovate Retail Performance show that shopper numbers fell 4% in May compared to last year, and April numbers were down 3.4%. Recent weeks have seen Focus DIY, Jane Norman, Homeform and Habitat all go into administration, while Mothercare is to close a quarter of its stores.

The situation is undeniably grim. But growth is not impossible in such an environment. Satmetrix international managing director Robert Salvoni says that it’s “critical” for firms to get inside their customers’ heads in times like these to keep shoppers happy and keep them returning to stores. Market research has an “important” part to play in better understanding the consumer, but Salvoni warns that “research on its own won’t fix things”.

Changes must be made within businesses. A culture of customer listening is imperative, but that “is only the first stage”, Salvoni says. It’s vital that brands collect consumer feedback and data – but crucially, they must do something with it.

“Zara carefully monitors sales of new lines and captures unsolicited feedback from its stores so that around half of its clothing collections evolve and adapt during each season”

Philip Graves

Looking the part
In the fashion retail sector, Zara is a prominent example of a brand that has taken consumer feedback and made it central to the way the whole business is run. The brand is part of the Inditex group, which operates 5,154 stores in 78 countries – 1,745 are Zara outlets. Between February and the end of April this year, Inditex notched up a 10% rise in sales to £2.6bn, and managed to open 110 news stores across 29 different countries, including its first branch in Australia.

Examining the Zara business model in a recent report, consultant Andrew Pearson attributes Zara’s success to having found “differences that matter to customers” and “performing key activities differently”. It keeps stock shipments “small and frequent” which in turn compels customers to make frequent trips to stores to see what’s new. The way it has structured its supply chain makes this possible. Just under half of its clothes are manufactured near its head office in Spain. Compare this to rival H&M, say, which sources 75% of its goods from Asia.

Alongside this, Zara constantly monitors how its product lines perform so it can quickly react to customer demand. Consumer behaviour consultant Philip Graves explains that “it carefully monitors sales of new lines and captures unsolicited feedback from its stores, to the extent that around half of its clothing collections evolve and adapt during each season”.

Graves says that the firm’s marketing, design and manufacturing functions are “tuned to respond” to this feedback, allowing successful ranges to be continued and promoted more prominently, while those that are not can be quickly taken off the shelves.

Like its competitors, Zara analyses electronic point-of-sale data to understand what’s going through the tills. But its research doesn’t end there. A recent business profile in the Financial Times says that “store managers hold daily staff meetings to discuss hyper-local trends, such as which colour of pastel trousers are selling well in Dubai, or what hemlines are appealing to the women of Bogotá – information which is then fed back to headquarters”.

These “empowered retail managers” are the “eyes and ears” of the company, Pearson says, providing “word-of-mouth information on customer wants and preferences”.

Getting people talking
Tasking retail employees with understanding customers – and encouraging them to share that knowledge internally – is a savvy move, and one way to ensure that customer service carries with it an element of the personal. It’s an approach that’s worked well for shoe retailer Zappos, which was bought by Amazon for $928m in 2009.

Zappos claims to have “aligned the entire organisation around one mission: to provide the best customer service possible”. Its call centre takes thousands of calls a day and customers are invited to ask customer service agents about anything. One often-repeated tale has CEO Tony Hsieh encouraging one of his suppliers to call and ask for directions to the nearest pizza parlour. The agent obliged.

This level of service – going above and beyond what might be expected – gets people talking. People like Nora Tickell of online research community firm Communispace who recently blogged about her experience with Zappos. Interestingly, her blog was full of praise for the business despite the fact that her call to the company helpline was because they had mailed her the wrong pair of socks.

So company error led to customer complaint, which was turned into a positive customer experience and positive word-of-mouth. It’s the best end result a company could hope for – but for companies not built around this model it’s a difficult process to replicate. For instance, Zappos’ call centre agents don’t work from scripts, meaning customer interactions aren’t so closely managed, a prospect that would horrify many customer service managers. But like Zara’s store staff, they are trained to listen, understand and respond.

A measured response
Companies committed to responding to customer wants and needs, however, must strike an appropriate balance in what they respond to and how they react, especially when it comes to online customer comments. Oliver Lucas, head of customer insight at fashion chain New Look, says that social media is a particular danger point.

“You will go nuts as a business if you’re acting on every bit of information. You have to trust in your insight team to be responsible in how they interpret it”

Oliver Lucas

“It’s important that as an insight professional you view social media as another source of data in your feed or arsenal,” he says. “But you look at it alongside what’s coming out of your other data sources and if you think there’s something real emerging there you can choose to draw the business’s attention to it.”

It’s a matter of being “responsible” with the data, Lucas says. Social media data is a good “temperature check” for a business but not something that should be used as the sole driver of strategy decisions. After all, he says, you wouldn’t flip your business on its head based on the outcome of just two focus groups.

What consumers say about your brand is important, Lucas says, “but you will go nuts as a business if you’re acting on every bit of information from a store manager, from Facebook or customer comments. You have to trust your insight team to be responsible about how they interpret it.”

Making sense of the mass of data companies have access to is as big a challenge as having an organisational structure that allows an effective level of response. But as our next article shows, the rewards for getting it right are more than worth the effort in terms of customer experience.

1 Comment

11 years ago

The concept of leveraging customer feedback for growth is extremely relevant as well for e-Commerce. Feedback gathered online can not only be used for optimizing user experience, it can also provide an excellent source for lead generation and targeted marketing. Companies like Experian Hitwise have used feedback software to help their clients understand what their own customers wanted and needed. In the UK, companies like Clarks, Liverpool Victoria and the British Museum all use customer feedback to increase their overall growth. This field is growing and it's very exciting to be a part of it!

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