Being truly loyal to customers is, above all else, about creating a better store experience.
Naturally then, the role of big data analytics (customer science) must be to improve the traditional ‘4 P’s of Marketing’ – product, price, place and promotion – so that customers better find the right products, at prices that shout better value for money, and in promotions that more clearly deliver exciting value.
Typically, the costs and complexities of harvesting insights from big data to improve the 4 P’s have shut out smaller retailers.
But today’s cheaper cloud computing and open source technologies can now enable big data advantages to small companies. Data has been ‘democratised’ so that size of a retailer no longer matters.
Big and small thinking
These are dangerous times of disruption and of tectonic shifts in structures, formats, and channels for both retailers and brands. A new era of retail has arrived, where once again only those most agile and adaptable to change will survive. The challenge is even more acute for smaller retailers.
The way to create an even better experience? Use customer data science to better understand customers and apply insights to improve the store itself.
I contend that deeper, truer loyalty can be better earned by responsive regional and smaller operators. They have a natural head start as being ‘local’ puts them inherently closer to their customers.
The paradox of disrupted retail is that the big companies must think small, and the small must think big. Those that are bigger must aim to become more local and personal, and those that are smaller to embrace the advantages of big data.
"Being small when you deal with data is actually an advantage," said Tom Heinen, co president of Heinen’s Fine Foods, a 23-store chain headquartered in Cleveland, Ohio. "Big companies are like driving a cruise ship – we’re in a speedboat. We can change very quickly. What has really levelled the playing field for small companies is in fact good data driven decisions."
Heinen's Fine Foods is leading the application of big insights in small spaces. Their store in downtown Cleveland combines amazing store experiences born from inspired retail art together with applied customer science.
Heinen's Downtown is inside a 1908 landmark building that at one time was the Cleveland Trust Bank. The interior has been reconstructed as a modern food emporium, which uses space strategically. People can meet socially and buy food and drink, as well as their groceries.
John Williams, the architect for Heinen’s Downtown, explained how the iconic stained-glass dome formed a central part of this strategy. The circular shape of the dome room was not ideal for containing linear grocery aisles, and as beautiful as it is the green and yellow cast is not great for food display.
Williams revealed the decision to place the aisles in the rectangular 1010 building next door, leaving the dome as a communal gathering space: "When they walk in the first thing people do is look up at the dome. So why not do the seating there as the communal place, the forum, the gathering place?" he said.
3 P’s of Customer Engagement
Heinen’s understands – and practices perhaps better than anyone – that engaging and delighting customers goes far beyond executing on only 4 P’s. I see three more human P’s in their brilliant operating model.
Heinen’s have energised and empowered staff by giving them the superpower of trust to satisfy customers using their own best judgement. Upskilling is not only about how to do a task, but also about the applications of good judgement and warm behaviours of empathy, dignity, and respect for shoppers. One store, one person can make a big difference for customers.
Oldenburg describes spaces at the heart of a community’s social vitality a "third place". In contrast to first places (home) and second places (work), third places allow people to put aside their concerns and simply enjoy other people and the space around them.
Heinen’s downtown Cleveland store stands as a model for grocers to create this very human and psychologically important third space and demonstrates again how Tom and Jeff Heinen are loyal to their customers and to their community.
Treating all employees with dignity and remembering that each employee is an individual with different needs and aspirations teaches employees that all customers deserve to be treated with respect and individuality (what I call true ‘personalisation’).
Heinen’s employees, following the example of their leaders, learn how to build up relational bank accounts with customers – earning credits for giving recognition, appreciation, thanks, kindness, dignity and respect to shoppers as individuals.
The data has helped create more human experiences. Big data is really just a form of listening to the customer and being able to respond in a human way.
dunnhumby visited Heinen's Downtown. Watch the video below.
Implications for retail leaders:
• You don’t have to be big to benefit from big data
• The principles of earning loyalty from your customers apply regardless of the number of stores, or of format
• Retail art must be informed by customer science
• In the age of artificial intelligence, it’s the human intelligence that wins customer engagement
David Ciancio is global head of grocery and senior customer strategist at dunnhumby. David brings nearly 50 years of retailing experience as an operator, marketer, and strategist. As senior customer strategist, he helps dunnhumby clients around the world grow their sales and customer loyalty through customer-led organisational change management and creating better customer experiences.