Why A New Type Of Customer Is Eluding Traditional Companies - Forbes

Many years ago the great Peter Drucker wrote that the purpose of business was to create and keep a customer. Although he is revered as an expert on management, much of his philosophy of business was focused on the customer, stressing that what an enterprise thinks it is producing is of secondary importance next to what a customer thinks he or she is buying.

In this, as in so many respects, he was remarkably prescient. After years of neglect, while companies seemed a lot more focused on their processes than on the fundamentals, the customer is suddenly attracting a lot more attention. At the root of this appears to be a growing realization that — even in this age of constantly developing tools and techniques — technology is only part of the solution. As the authors of the book Beyond Digital point out, the business transformation required to compete in the new environment extends far beyond digitization. And a big part of that is the extraordinary shift in power towards the customer. This is partly down to the internet, of course, and the ability of anybody to carry out research on a product or service before they buy it. No longer do those selling have the monopoly or advantage over information. But it is also a result of customers realizing they have this power and refusing to accept that what is commonplace in one sector cannot be repeated in another. A customer service employee explaining to a dissatisfied customer that the company’s processes do not permit a refund or whatever will receive short shrift.

A fascinating glimpse into how this change is working in practice is offered in The Metail Economy by Joel Bines. He argues that the threat to conventional retail companies is not just the internet and Amazon, in particular. It is the fact that consumers have outgrown and rejected “the age-old company-customer relationship” and begun “behaving in ways companies still can’t quite comprehend.” Instead of being the reliable demographic clusters they were used to targeting — remember advertising gurus talk of As, Bs and Cs? — consumers have fragmented and then fragmented again into what Bines calls “Me’s.” He writes: “Me’s are constantly regrouping and changing according to social trends, identity politics, personal whims and even time of day, resulting in the atomisation of traditional demographic categories of factions of one, or a few, where individuals flow in and out of clusters unpredictably and, more importantly, can associate themselves with multiple clusters at the same time and change their associations over time.

This sounds like a nightmare situation in which it will be nigh on impossible for a company to win. But Bines suggests that this is not the case. As his term Metail implies, his primary focus is on retail, but his argument holds true for any customer-facing business. The key is understanding this changing consumer.

To make his point, he uses the U.S. department store group Target as an example. It is just the sort of big-box store group that might have lost out to internet competitors. But Bines argues it outperformed because after Brian Cornell became chief executive it decided on a strategy centred on “It’s about the customer, stupid.” It began to think deeply about “all the many ways customers might want to shop” and so was ahead of the game when same-day delivery and curbside pick-ups became highly popular during the pandemic. He concedes that Target could not have predicted the pandemic, but claims that its conscious decision to focus investment on consumer benefits played a significant role.

Obviously, Target had the resources to invest. But Bines insists that there are opportunities for smaller, less wealthy businesses to thrive even at a time when it looks like the future belongs to internet giants. In the U.K. during the pandemic, for instance, many farm shops and small markets won business away from supermarkets by offering drive-through pick-up and delivery services. Similarly, independent bookshops enjoyed a renaissance through offering drop-off services and remote author events that attracted crowds that would not normally have been able to attend. Conversely, those wanting to set up businesses at this time have found that — even if they have a product and a philosophy offering that appeals — they will fail if they are not open at the right time, say.

In Bines’s view the key is to fit into at least one of his six Cs for success — cost, convenience, category expertise, curation, customisation and community. He acknowledges that this could be difficult — “pretty much everything you have been doing up until this point has to be rethought” — but it is clear that customers are now in charge. And the task for leaders is to find among the range of possibilities in these six Cs the way to motivate Me’s to buy their product, support their cause or talk about their brand.

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Why A New Type Of Customer Is Eluding Traditional Companies - Forbes
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