Hello Friends,
A very interesting reading on the changing customer profile called Customer 3.0.
A very interesting reading on the changing customer profile called Customer 3.0.
Customer profile is changing over times. From the over
demand to over supply era of past. Today it is more customer driven situation
is arising where customer preferences are set around information, comparison
and value proposition of the offerings. Differentiations are created through
innovative product, merchandise, promotion and social networked awareness.
Different platforms are used to lure customer. This is different world .. Read
the following article and have a look on a good webinar on the subject at HBR.
What if the current retail recession is about more
than the overall slowdown of the global economy?
In our view, there's more here than meets the eye. Put another way, when
the good times are back, our bet is that many retail businesses will still be
wondering where their customers are.
Customers, like products, evolve through releases. We've really seen two
major customer releases to date (call them Customers 1.0 and 2.0), and we're
now encountering another release (3.0).
Rest assured, these aren't soccer moms or the creative class. So what
are they?
Customers 1.0
The birth of managerial capitalism created the first customer
"release" in the late 19th century. At the time, the twin innovations
of mass-production and mass-marketing, fueled by the transportation revolution,
opened up national and then global markets for consumer goods.
The U.S. economy witnessed the rise of retail innovations such as
department stores such as Macy's and Wanamaker's and catalog retailers such as
Sears and Montgomery Ward. In practical terms demand outstripped supply,
because there were so many newly affluent consumers facing a range of products
and brands that was quite limited.
Customers 1.0 were dutiful consumers of mainstream messaging and one-size-fits-all
goods. They would gladly drive miles out of their way to visit retail outlets,
they readily leaned heavily on advice from retail clerks in making their
selections, and they happily bought goods from among arrays of pretty generic
offerings. They put up with long lines and poor service, because retailers had
the power and their customers were just grateful to get the goods. This release
came into its own with the post-war prosperity of the 1950s and the go-go era
of the 1960s.
The retail mania of the era created many a retail fortune, shaped
corporate America profoundly, and produced myriad gloriously famous brands
among durables and consumer packaged goods.
Customers 2.0
Customers 1.0 were superseded by a
new release in the 1970s as retailers continued to expand their presence and
manufacturers produced ever more goods and brands. The resulting competition
for customers gave rise to category-killer and ultra-niche retailing, Wal-Mart
Stores Inc.(US:WMT) and warehouse discount clubs, the
proliferation of hyper-specialized catalogs, the expansion of consumer credit,
and online retailing.
Consumers had gained power, and they were becoming more demanding. Many
retailers catered assiduously to the high-touch service requirements of this
new release, while others gave up pricing power. As brand proliferation took
off, Customers 2.0 became more sought-after, growing more fickle in their
tastes, less accepting of poor service and high prices, and less willing to buy
from a brand that was not "easy to do business with."
Shopping as an experience was born, return policies became more
generous, and the mall established its role as the new town square. Later, many
businesses also responded by providing services 24/7; opening new channels; and
deploying Web sites, call centers and automated voice-response units.
Retailers enabled customers to order online and pick up in stores;
airlines enabled travelers to check in and print boarding passes at home; fast
food restaurants enabled patrons to summon (and pay for) their meals using
mobile phones and pick up in drive-thru lines. Customer focus became the
watchword of the day. Every retailer worth his or her salt knew that power had
shifted through them from manufacturers to their customers. And, with that
power, Customers 2.0 were buying from retailers very, very differently.
Customers 3.0
These days, the latest release, Customers 3.0, has entered the market in
force. With a seemingly infinite array of companies, brands and products vying
for scarce customer time and attention, Release 3.0 was a near inevitability.
Now, customers dictate how they will purchase and consume -- where,
when, and how much -- using a variety of channels largely, if not exclusively,
configured by them: They are using community-based online tools (social
networking, social book-marking, and social shopping) to guide one another,
which has made dot-com darlings like Amazon.com (US:AMZN) look almost quaint compared with
media-meets-commerce-meets-community start-ups like Glam.com.
They are populating social networks, composed of the people they trust,
and their networks -- their social ties -- are rapidly becoming key
distribution channels for retailers' marketing and promotion. They populate the
online world with ratings and reviews, videos of what they've bought or
consumed, and comments on corporate reputations and consumer brands, making
Shopzilla or Pricegrabber more valuable than Consumer Reports or JD Power.
Major retailers can only hope to influence what is, in effect, a
chaotic, uncontrolled conversation among their own consumers. No longer is
there a balance of power between supply and demand. Demand has the upper hand.
In this era of Customers 3.0, you might say that customers now own the
retail world; businesses just live in it. It's no longer enough for retailers
to say that they will be customer-focused, media-agnostic or multi-channel.
These new customers are rewiring the retail world to design their own buying
processes that fit their specific needs.
In so doing, they are altering both channels of influence and
distribution. Put simply, these new customers are choosing to buy in
fundamentally different ways. Winning retailers must find ways to rethink,
redesign, and reorganize how they go to market based on these new buying
processes. That means it's time to start with an understanding of where the
power lies.
Winning
by innovating
You could argue that many of today's winners are companies (retail and
beyond) that have developed go-to-market strategies in large measure by
listening to, and creating value with, their customers.
Release 3.0 customers fuel many of
today's most innovative businesses: Google Inc.(US:GOOG) builds search intelligence based on
algorithmic refinement of its users' own search results. Facebook creates value
derived from the content, networks and communications created by its users.
Auction site eBay Inc. (US:EBAY), of course, built a giant retail business by
outsourcing key functions, like merchandising and distribution, to its
customers.
And Apple Inc. (US:AAPL) has realized extraordinary success not
only by creating breakthrough products but also by re-conceiving the buying
process for its offerings. The result is Apple stores: the most productive
retail chain as measured by sale per square foot in the United States. While
Tiffany Inc.'s shops (US:TIF) log around $2,800 a square foot, and
"big boxes" like Best Buy(US:BBY) do around $800, the average Apple retail
stores does over $5,000 a square foot.
Anyone who's spent time in one of Apple's now nearly 300 stores knows a
striking truth. This is not your mother's department store. It's a store format
-- a combination of personal services, retail automation, mobile
communications, and integration with online assets -- that's largely unlike any
retail formula we've seen before.
Just a week ago, Apple inaugurated its newest retail store in Boston's
Back Bay. By the time the doors opened, there was a line of Apple enthusiasts
several blocks long. Most stores are designed to help customers get more out of
their products.
"But really," Ron Johnson, Apple's retail chief, explained to
The Boston Globe. "It's to help you get more out of yourself."
It's a mistake to think that retailers can catch up just by
reinvigorating their creative execution or media mix; thriving with Customers
3.0 requires retooling service processes, breaking down walls between touch
points in the buying process, and rethinking incentives in order to make it
possible to maximize return on customer rather than ROI by channel.
So, when consumer confidence starts ticking upward again and the economy
gains momentum, the question is: How many retail companies do you know that are
ready for a complete redesign of how they sell to consumers, and how consumers
buy from them?
Retailers take note: Customers 3.0 are here. And, like Microsoft's (US:MSFT) Windows Vista, this release is not
backward compatible.
Also refer a good insight on customer 3.0 by HBR webinar, Jeffrey
Rayport
Happy reading..
Sanjay
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