As a nation of shopkeepers, Britain should be well up on customer centricity. Yet companies, despite having more access to more data on customers than ever before, seem to be drifting further from their customers, not closer. On the high street, some companies have changed to fit the new context of consumers lives and others clearly haven’t. Last month alone, Gap announced the closure of 175 stores in North America. According to the Centre for Retail Research, nearly 300 retail firms have closed shop completely since 2007.

Why are customers not playing ball? One indication might be the result of a recent US study, which revealed that eight out of 10 customers feel that the average brand does not understand them as individuals.

Clearly, this needs to change – especially when industry analysts Gartner predict a ‘customer experience battlefield’ in markets where high levels of competition have led to highly standardised products and services. Nearly nine out of ten companies surveyed by Gartner saw the customer experience as the only way to differentiate themselves and prevent commoditisation.

So, while businesses know that they need to move closer to their customers and mould their offerings to what they want, they have not managed to make that leap.

More than noughts and zeros

This state of affairs is certainly not down to a lack of information about customers and their behaviour. Many organisations have developed a voracious appetite for data gathering and analysis. But numbers do not tell the whole story.

There are a couple of issues to consider here. To start with, data may be ‘hard,’ but as and of itself, it doesn’t carry any meaning. It requires interpretation, which means that whatever meaning we abstract from data is highly dependent on the interpreter’s bias.

Not only that, but the mere decision around which data to collect can affect what kinds of insights we can glean from it. Whether it is intentional or inadvertent, all too often data is gathered, analysed, and reported in order to justify corporate decisions rather than to serve customers.

Most importantly, knowing what consumers are doing – which is all that data can provide – is of little help when you need to understand why they are doing it. Data analytics alone can therefore not give brands a real insight into customer behavior and enable them to respond appropriately.

Back to basics

TV programmes like ‘Undercover Boss’ derive a lot of their entertainment value from the fact that today’s business leaders are far removed from staff and customers. Most have no true relationships with any of their customers.

Analytics presentations and the occasional focus group cannot make up for the value of listening to customers’ voices when it comes to unearthing critical issues and accelerating change.

For example, the recent woes of American Apparel and J.Crew were linked to not adapting to changing customer needs, but remaining static in terms of its offering and approach.

Those brands that do well understand the importance of building close relationships with their customers and getting under their skin, rather than merely staring at abstract data on their CRM system to make business decisions.

It almost feels like going full circle. Big brands aspiring to relationships and understanding harkening back to the shopkeeper or bank manager of old, who knew their customers at a personal level, not as spreadsheet data or solely parts of a segment. More and more clients are coming to us seeking to humanise their segmentation data within the business often through film, animation or in-person events featuring real customers.

Real relationships – online and off

Developing this sort of understanding requires bringing customers into the fold and getting them to share their perceptions and needs around the brand.

For example, after enjoying ten years of double- digit growth with its Activia yoghurts, Danone decided to involve its customers in creating new products and marketing approaches to maintain growth and enhance market penetration.

To do so, Danone worked with C Space to create the Activia Advisory Board, a private, online community of 400 women, including customers and prospective customers. Their ‘mission’ was to help Danone create brand new product concepts as well as providing in-depth lifestyle insights to base an advertising campaign on.

The result was Danone’s ‘Tummy Loving Care’ campaign, featuring actress Martine McCutcheon, which influenced a nine per cent uplift in base sales. The brand’s ‘Snack Pot’ and pouring yoghurt products were Danone’s highest-ever performing concepts at BASES quant testing, with the underlying insights rated as 82% more effective than traditional approaches.

It was the real-world learnings about the digestive health of the women on the Advisory Board – beyond the generalised facts and averaged figures about them – that guided Danone in connecting with women across the UK to make its products and campaigns a success.

From customer bug-bears to consumer loyalty

Customer relationships may not only guide product development and marketing, they can also show up where an entire industry may be going wrong.

Global Hotel Alliance (GHA) is the largest alliance of independent luxury hotel brands in the world, created to unite these brands and compete against the large global chains. To drive future growth of the alliance and its member brands, a strong consumer proposition was needed to prize people away from the chain brands.

To this end, GHA partnered with its customers to develop the world’s first co-created loyalty program. The objective was to create a scheme that would be attractive enough to convince travellers to step outside of their comfort zone and into staying at one of GHA’s independent properties rather than with a major chain.

Workshops with guests revealed, to everyone’s surprise, that points-based loyalty programs don’t engender any real brand affinity – but rather a purely transactional loyalty based on earning your next discount, not a more emotional brand-connected loyalty. There was opportunity to do more. Travellers want to be recognised and rewarded as individuals, not as nameless, faceless points and miles collectors. They wanted exclusive, authentic experiences more than discounts, freebies or room upgrades.

Together with consumers and staff, GHA co-created an award-winning global loyalty program that rewards travellers through one-of-a-kind local experiences. From ‘Panda keeper for the day’ in Hong Kong to creating a personal ringtone at the Microsoft Studios in Seattle, these types of rewards were not on offer from any of the major hotel groups. By 2013, the ‘Discovery’ programme had over four million members and had generated nearly £24 million in cross-sell revenue for GHA group.

“I’m free!”

Customer centricity is neither achieved by charts and spreadsheets nor by covert operations on the part of the CEO. In creating products and marketing campaigns, brands need to get as close and personal to consumers as they can. The 2014 Global Innovation 1000  breaks innovative brands into three groups: need seekers (who use consumer insights to drive new ideas), market readers (who create value through incremental innovation) and technology drivers. They found that as a group, need seekers outperformed their competitors because “because their whole ethos is rooted in understanding and being close to the customer, through direct exposure to the end-user, rather than on relying on market analysis or the views of intermediaries.”

This is particularly important when dealing with Generations Y and Z, who are virtually immune to traditional sales and marketing approaches – having been there, done that and got the t-shirt fairly much from the day they were born. They ‘filter’ marketing messages radically, are less brand-loyal and demand more of the brands they engage with.

Brands will need to use the power of the Internet as much as real-world interaction to get under the skin of their customer community, acting on the insights they derive and be seen to ‘give back’ to them as a result.

Phil Burgess

Phil Burgess