Know Your Customer

11th July 2018

Retailers are frequently told they must know their customer, be customer centric, provide the kind of service customers can get online, etc. Great, but how do you do it in practice?

The first step is to develop profiles of your target customers. There are a number of ways of identifying who your target customers are including market research, analysis of your customer loyalty system or CRM database, if you have one, but these can be costly approaches and it often pays to start simple. If you want to have a fun two hours at a store manager’s conference or some other event, you can start with the Martec customer analysis game, which you can request here free of charge.

However you do it, you should end up with between 3 and 8 customer profiles. If you have less than three you missed the point. If you have more than 8 you have an unworkable number. It may be theoretically accurate but you can’t execute to it in stores. Best of all is 4 to 6 segments.

Each profile should have the name of a person that in most people’s minds conjures up an image of the typical person the profile represents and a set of images that depict the person in everyday life.

Know your customer

The images above show Pamela. She’s a representative customer in a US store chain selling car parts and accessories. Looking at the pictures of Pamela makes it easier to understand what kind of store experience Pamela wants. Why would someone like Pamela go into a car parts store?

One reason is that it’s raining and the windscreen wipers on her SUV aren’t clearing the windscreen well enough. When she goes into the store she knows that she wants new windscreen wiper blades but she probably knows nothing about brands, would have no idea how to fit them and no idea what the fair price is.

Knowing the customer is about training the store personnel to recognise people like Pamela when they walk in, then teaching them how best to serve her. In other words, get the right blades for her car, explain why the brand with the best margin for you is the best brand for her and fit the blades on her car for her. If you get a lot of customers like Pamela, make sure the ladies room is cleaned to the standards she expects, has the right mirror, hand towels, tissues and so on.

Separately, your buying team should make sure that you have the right assortment of add on items that ladies like Pamela would buy, namely things that make the car smell nice, the driving gloves and the sunglasses that she and her partner would buy. While the store colleague is fitting the wiper blades, Pamela may browse the fixtures and by an impulse item or two.

Another customer, Eddie, who knows a lot about cars and comes in in greasy dungarees, would probably not want store staff telling him what to buy, so he should get a different type of service. With 3 to 6 customer profiles, it’s not that difficult to teach the store staff how to personalise the service to each customer type.

The Martec customer analysis game will guide you on how to identify the segments and then how to build profiles that the various departments in your business can use to guide their performance better. With the results of the game as a framework, if you have a frequent shopper program with detailed customer sales history, you can refine the profiles more accurately to arrive at an even better result for your business.

A soon to be upcoming post in the Buying, Merchandising and Category Management section of our blog will focus on how to use the customer segmentation in assortment planning, to tailor the store assortments to specific customer segments on a local basis.

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