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Why the Customer Experience is King in Retail Survival

Updated: Feb 26, 2020

It’s a common catch cry that the future of retail is bleak. The start of 2020 alone has seen some major players in the Australian retail market close their doors for good. Widely known in media commentary as the ‘retail apocalypse’, notable big brands have become synonymous with the term voluntary administration – Jeans West, Bardot, Napoleon Perdis and EB Games to name but a few.

And contrary to blaming a gloomy economy, industry leaders propose that poor business practices and an inability to appeal to customers is the root of the problem. According to Kogan Chief Executive Ruslan Kogan, “there’s not doom and gloom out there, there’s just good retailers and there’s poor retailers. There’s businesses that are innovating, creating new products, listening to their customers, finding new ways to go into bat for their customers.” Mr Kogan went on to say, “Once a business loses touch with their customers and stops making customer driven decisions, they’re in trouble.”

Wait, what? Lack of customer attention is at the centre of retail decline? Who’d have thought it? It’s not rocket science that your business should be built around the needs of your customers, not according to your operational agenda. And guess what? Customers want more than a great product, they want to know you care. It’s not just about price, product and value, it's about the relationship.

When conducting our own research in 2019, Personally Recommended determined that when asked, customers indicated their primary reasons for buying were: 1) genuine and engaged, 2) listened to me and 3) made it easy for me. More evidence that customers don't just shop with their heads (best features, best value, best price); they shop with their hearts (they know me, value me, and listen to me).

What does this mean? Well it means that the current retail practice of competing on price alone is a downward spiral towards receivership. Referred to by Queensland University of Technology retail expert Dr Gary Mortimer as “lazy retailing”, a long-term strategy of extensive discounting eats away profits while costs continue to rise. It also educates customers that they should never have to pay full price for anything. When this becomes a retailer’s signature strategy they lose their brand value proposition and point of differentiation.

So, drum roll please, re-enter the often forgotten and overlooked customer experience. Yes, those people who are responsible for paying your wages and keeping you in business. They want you to like them, they want you to listen to them, they want to be treated like a friend and not an interruption, and they want you to make doing business easy. They want solutions that work for them, they want the experience to be personalised, they want to engage with you and your offering, and they don't want to be pressured into purchases they neither want nor need.

This seems to be a concept that few retailers are willing to really understand or execute, and it could be difference between closing the doors or staying in the game for the long haul. This is particularly critical when identical or similar products can be purchased across multiple retailers. JB Hi-Fi chief executive Richard Murray hit the nail on the head, “we sell the same box as somebody else so we need to sell that in a more authentic and better way than our competitors so people want to keep coming back.” He went on to add, “This is where the passion and knowledge of the in-store staff cannot be undercooked.”

Today, 89% of companies compete primarily on the basis of customer experience. This is up from just 36% in 2010. But while 80% of companies ‘believe’ they deliver a great experience, only 8% of customers agree. That means there is enormous opportunity to disrupt your competitors or gain market share.

So how do you know how you’re going? You measure! You ask your customers for regular feedback, you act on the feedback and you track the data. Quite simply, what gets measured gets done, so if you want real behaviour change in your business, start taking action now. Your customer experience is everything.


JB Hi-Fi cashing in on Austra;ia’s reliance on technology and digital products. James Hall. February 2020

‘Don’t know what they stand for’: Retail leaders say businesses not economy to blame for failings. James Hall. February 2020.

Customer Experience is the New Brand. Shep Hyken. July 2018

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