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When It Comes To Business Models Retro Is The Future

Over centuries and decades, technological progress either built new businesses models or buried few. Earlier, starting a business meant high entry barriers and slow rate of change, now the market is becoming a level playing field and rate of change is very high.

Traditional enterprise models approached the market through cycles of forecast, production, sales, delivery, customer service and companies had some time to go through these steps as the major communication was between the company and its customers in a one to one or one to few basis.

Such models are facing a threat from the digital disruption due to tablet, smartphone proliferation as they snow-ball the interactions amongst customers, and companies are getting sidelined as they are unable to ‘sense’ and ‘serve’ the needs in time.

Walmart & Amazon –

Let’s take an example – 50 plus year old Walmart, the largest retailer in the world with an online sales forecast for this year as 2% of its overall annual sales ($450Bn).  Amazon, a 19 year old e-commerce company, the biggest online retailer in the world, reported $61.1 Bn annual sales last year, which is approximately 7 times Walmart’s online forecast for this year. Facing increased competition from online retailers, Walmart uses delivery firms FedEx and also its own same-day delivery service called Walmart-To-Go.

Acknowledging the cost, scale-up and management issues with this model, Walmart is now toying with the idea of crowd-sourcing home delivery – the company is inviting in-store customers to deliver packages to others who made online purchases. Though there could be legal and customer satisfaction obstacles, with the crowd-sourced delivery members requiring personal liability insurance and sometimes delivery delays affecting the quality of some goods etc., it might be a step in the right direction to test and find a workable solution by leveraging the customer-to-customer ecosystem.

Community delivers again:

Prior to the days of large scale retail companies, when local shops were more prevalent people used to easily buy goods and those who couldn’t go to the shops due to time constraints or health issues would ask their neighbours, friends, family to buy/deliver the goods for them. Now with large stores being centralised in towns and with packed weekdays and other reasons, the whole concept of such community delivery has disappeared.

For today’s large and medium retail companies that have a growing home delivery customer market, having in-house employees and logistics partners to fulfil the opportunity may not be effective in the long run, hence companies have to go retro and leverage the old practices – community delivery.

Brand evolution is back:

Before the advent of modern branding, the (brand) promise would evolve from the products/services experience and marketing was more interactive (in-person), this was possible when the shop was local, it was a small customer group and there was a community connection.

Today, with the ‘web of voices’ brand managers are slowly losing control over the messages which are moving to the hands of the customer’s – back to how it was in the local shop situation. Brand managers are moving towards becoming enablers and aggregators of customers’ emotional perception and product messages.

Word of mouth transforms into web of voices:

Word of mouth was and is a very strong influencer and local community shops have a direct connection with their customers, hence pay attention to customer voice to immediately fix issues. Despite various efforts the large, centralised retail companies over years have somehow lost that direct touch of being in-sync with their customers’ voice.

Again technology, social networking and crowd-sourcing delivery can help large retailers to form local (and virtual) customer communities to get back to the starting-point of customer satisfaction – Know your customer. Web of voices is both offline and online.

The power of precision marketing:

In a local shop scenario because the shop owner knows the customer so well, they can make tailored offers only for that customer and they’d know whether they accept or reject it and the reasons. Also if they had stock imbalances they’d make a good deal for few customers and cut their losses. In the centralised model marketers run many campaigns, sometimes the advert shows up in the wrong time ( say 7 months before a car insurance renewal) or the coupons given are either irrelevant or people forget to bring it along to claim.

Similar to the local shop scenario, when a customer enters a retail store – by linking loyalty programs, shopping data, social to the power of mobile using geo-fencing, systems can configure relevant offers, present the offers when the customer is in a particular aisle and is using in-store mobile app to locate the products. Usage of mobile during check-out then shows the marketer the difference between the offers made and offers accepted, so that next time it’s more relevant (leveraging data just like in programmatic buying in the advertising industry).

Taking cues from the retro models, today’s marketers and businesses can re-start customer experience in four steps:

  1. Leverage customer community: Some customers tend to know more about a company’s strengths and weaknesses than some of the employees; companies need to listen more, tweak their approach and customers can contribute towards building or re-building the company when it is a win-win scenario. The early days of experimenting with social media programs are over; the focus now is not only about fans and followers but also about customers and advocates
  2. Leverage employee community: Just like the employees in a local shop, corporate employees tend to have rich information through various sources and can amplify, arbitrate messages within their spheres of influence (communities); with a strong internal program, marketers can leverage ‘web of positive voices’. Best buy trained 2500 tweeting employees to respond to simple customer queries online. In today’s fast and connected world, when there is a delay, a simple problem that quickly gets precipitated leads to negative customer experience despite best efforts by customer services agents.
  3. Think and act like a start-up: Successful start-ups continuously seek information and ‘external’ validation from their customers and do course-correction in order to start-up, stay relevant and grow. Unfortunately, large enterprises sometimes can slow-down due to various reasons including employees seeking information and validation in order to stay relevant ‘internally’ and grow within the organisation. George Foreman, Founder of Kodak, picked a new service on two occasions even though it cannibalized existing services but successive CEO’s didn’t.
  4. Do what you say and say what you do: In the ageof ‘web of voices’, if you (businesses and marketers) don’t follow this simple rule, your customers (and communities) will say what you do, which might go viral, and your competitor might just do what you say, which might put you on the defensive. Imagine how life in the community would be for the local shop owner if there is a big gap between the brand promise and the product/service experience by customers.

Keen to hear your views. Follow me on Twitter @Ramesh_Ramki, Google +, website .

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