My Customer, My Friend

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nishat-dunnhumby-usethis"Data-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.

Today’s column is written by Nishat Mehta, executive vice president of global partnerships at dunnhumby.

Consumers further consolidated the number of retailers they invested in last year, shopping at fewer stores than in the past, according to a study from PwC [PDF].

This finding surprised many observers because of the proliferation of online retailers in the past decade. Because we often overthink and complicate these types of issues, this news will likely create all sorts of reactions about the need for omnichannel thinking, real-time mobile interactions, location-based services, and anything with the word “social” in it.

I may be oversimplifying this, but while we can pursue numerous paths to address this trend, the best reaction to this is may be to review the lessons we learned from the way we make friends.

Friendships are built upon loyalty, sharing and trust. A business’s relationship with its customers should be no different. We all have people in our lives who ask a lot from us, but are nowhere to be found when we need help. This unidirectional relationship is unstable at best and destructive at worst.

Instead, friendships are bidirectional, with true friends showing loyalty to each other by doing what they can to help one another. When a customer chooses to give you their money, too many retailers believe that simply selling products is good enough to repay the favor. Customers who repeatedly purchase from you deserve more than that. Just as they have shown their loyalty to you, you need to show appreciation to your customers for being your “friend.”

Retailers like Zappos and Costco exemplify this type of behavior with generous return policies that thank customers for shopping with them. They forgive your mistakes by letting you return products you didn’t want or like.

Friendships are also dependent upon both parties sharing — in particular, sharing personal information about themselves. Aren’t your best friendships with people who truly care about how you are doing, know you well and will try to help you in any way you can — and for whom you can and will do the same?

Retailers can make friends by making a concerted effort to better understand their customers, not as geographic or demographic segments, but as individuals. As silly as it would be for me to assume that everyone living in New York is an Alex Rodriguez fan (there are a few, I’m told), I am surprised that so many retailers continue to communicate to me as a member of some segment, rather than as an individual.

On my birthday recently, StubHub recently “rewarded” me with a coupon for free shipping. However, I always choose the will call window over delivery because otherwise I’ll lose the tickets. StubHub has all the information needed to know that an equivalent offer would be a discount toward an upcoming Lakers game in New York — I’ve bought many from them — which would have been far more valuable and guaranteed my loyalty to them for future ticket needs.

If I’ve shared personal information with you, as a friend or a retailer, I expect you not to pretend you don’t know it in conversation. Their offer said, “Well, we could give you something you truly want if we could be bothered, but instead, have this.” I don’t have a lot of time for friends like that.

Lastly, if I am sharing personal information with a friend, the fastest way to destroy that friendship is for him to abuse the information. Trust is a critical component of any successful relationship, but is not often taken seriously enough by companies that collect customers’ personal information. As my parents reminded me growing up, trust takes a lifetime to build and a moment to lose.

Given that laws exist covering way companies leverage personal information, many retailers find it acceptable to do the bare minimum to meet their legal obligations. The best retailers must go further. Rather than hiding behind a privacy policy and using gimmicks to get customers to agree to share information, retailers must be transparent while creating a reason for customers to want to share their data. This requires not only faith that retailers will not abuse this data, but, more importantly, necessitates a belief that they will use it to benefit the customer through discounts, time savings, better information, relevant experiences and other valuable benefits.

In the spirit of creating a friendship of equals, showing that a customer can trust you has significant benefits to the retailer, as well. As the Internet of Everything and Quantified Self sensors proliferate, customers will be collecting quite a bit of information about themselves related to fitness, nutrition, sleep or travel, but it will remain unavailable to companies without active transfer from the customer. Retailers should focus on how to be so trustworthy in the eyes of customers that they voluntarily share data because they see value in doing so. Of course, this feeds back into the retailer’s ability to be more personal and relevant with their customers, reinforcing the virtuous cycle.

The corner grocery store no longer has a monopoly on the customers who live nearby. As retailer competition increases and shoppers become savvier, there are many complex tactics retailers can pursue to reward customers. Each tactic is only valuable if it supports the overarching belief that the best relationships — personal, professional or corporate — depend upon loyalty, sharing and trust. Focusing on that simple concept makes every other business decision much easier.

Follow Nishat Mehta (@nishatmehta), dunnhumby (@dunnhumby) and AdExchanger (@adexchanger) on Twitter.

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