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Why It’s Not Enough to be Consumer Centric

Today, the rules—and tools—of marketing have changed. Shoppers are inundated with messaging all day, so only those that make them feel valued and stand out in an oversaturated marketplace will win.

That fact has led may retailers to adopt a customer-centric mindset. But even so, few are delivering at a level that meets expectations.

In a Forrester Consulting whitepaper commissioned by digital marketing automation platform Listrak, data indicates that retailers overestimate the customer-centricity of their marketing, leading to missed opportunities in revenues and the ability to boost customer lifetime values. The report centers around retailers’ perceptions of “customer-obsessed” marketing, which Forrester characterizes as using consumer data to provide meaningful experiences and increase customer lifetime value. 

Retailers were measured against Forrester’s Customer Obsession Assessment, a maturity model based on a survey of 200 retail organizations in North America, focusing on decision makers in e-commerce and marketing. The consulting firm also surveyed 502 online shoppers about their shopping habits and brand perceptions.

Shoppers, according to the report, are much more likely to shop at retailers that personalize communications like emails and push notifications, rather than using basic data points like age or gender to determine marketing content.

The results reveal a discrepancy in retailers’ perception of their customer-obsession level and actual optimization of the idea: 94 percent of retailers surveyed agreed their firm “embodies customer obsession,” but only 9 percent qualify as being customer obsessed under based on the assessment model.

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Brands clearly understand the value of customer-obsessed marketing tactics, but overestimate their own participation in the practice, the survey found. Retailers in the study were categorized into three groups: Customer-Novice, those with the lowest scores; Customer-Focused, those in the middle that are making progress; and Customer-Centric, those who are customer-obsessed or quickly closing in. Only 9 percent qualify as “customer-obsessed,” and while the report doesn’t specify which percentage of respondents fell into the other two categories, it does indicate significant differences between levels.

For example, retailers that reached the grade of Customer-Centric were more likely than Customer-Novice retailers to track key metrics like customer lifetime value, acquisition, engagement, and conversion. Additionally, Customer-Centric firms reported higher satisfaction with features they had implemented than Customer-Novice brands. One question gauged retailers’ satisfaction with the ability of transactional messaging to improve business outcomes. In that area, 65 percent of respondents at Customer-Centric brands reported being very satisfied, while only 13 percent of Customer-Novice firms were very satisfied. The report suggested companies that track metrics around the effectiveness of their tactics are more satisfied with their outcomes and better able to capitalize on the things that are working best.

That idea is one of the major findings of the report. Retailers reported that tying features explicitly to business goals delivers better innovation, revenue growth, efficiency, products and customer satisfaction. Further, retailers that developed ideal outcomes and quantifiable benchmarks for their marketing and customer experience strategies before deciding on tech solutions to support those strategies saw consistently better outcomes across the board. The report warns that many retailers put too much focus on technical requirements when deciding on customer-facing features—tools that may be cutting-edge but don’t support the primary objectives of the organization.

As retailers continue to explore exactly what “customer obsession” means for their brands, companies that blend customer-centric tools, like hyper-relevant e-commerce search and in-store mobile tech, will be able to find their footing, the report concluded. And it’s up to retail marketers to understand that having a customer-obsessed mindset isn’t enough: customers notice when key customer-centric features are missing. It’s up to retailers and their marketing partners to take an honest look at their customer centricity and understand the best way to optimize shoppers’ needs in line with business objectives, rather than hoping those benchmarks will set themselves.