Grocers need to put customers at the heart of their business

The penetration of smartphones and growth of social platforms has enabled a large number of innovators to change their relationships with customers. Companies like Uber and Airbnb are engaging in dialogue with them, soliciting opinions and feedback. Now, entire industries are following suit.

But while others are racing to put the customer at the centre of their business model, retailers have struggled to keep up. A new study from Forrester found that improving customer experience could drive an extra $572m (£461m) in annual revenue for retailers via additional purchases, churn reduction and word of mouth. The global survey of 200 grocers and retailers, commissioned by Dunnhumby, reveals that they need to adopt a new approach to unlock the true financial value of being customer-centric.

For grocers in particular the report found customer experience plays an important role. More than a third ranked improving the customer experience as a top three business priority, compared with less than a quarter of other retailers. Grocers were also found to be more likely than other retailers to prioritise increasing customer interactions and retaining shoppers with better experiences.

Despite this, many grocers struggle to think beyond existing loyalty programmes. Given the lucrative potential, grocers must now ask what they can do to better position customers at the heart of their business.

The first step is to approach customer experience strategically rather than tactically. This means ensuring customer experience is led by the CEO and the business, and for strategies to be shaped around improving it. Currently, however, strategy is still set by the CMO at the majority of retailers, with the CEO taking a back seat. Even though the value of customer-centricity is recognised by marketing departments, it’s not receiving the same focus from company leaders.

Secondly, grocers need to effectively use the enormous volumes of purchasing and behavioural data they have amassed. The survey revealed that 66% of retailers feel hampered by a lack of internal analytics, which contributes to their inability to successfully leverage their data assets and create the personalised experiences customers expect. This is a particular challenge for grocers. Grocers were also found to be far less confident about the maturity of the personalisation techniques they use than other retailers, hindering their capacity to unlock valuable insights.

In order to make effective use of data, it’s paramount grocers invest in data capabilities. Rather than keeping their analytics and personalisation strategy execution in-house, grocers should leverage partners to solve data woes and advance customer experience efforts.

As consumers increasingly expect personalised experiences, there is no room for grocers to simply pay lip service to customer-centricity. Ultimately, the grocer that turns its customer data into insight and uses it to drive customer-centric initiatives and strategies will find itself at a huge advantage.

Marc Fischli, chief client officer at Dunnhumby