Companies of all types, sizes and flavors—from utilities to hotel chains—are more deeply exploring their roles in retail. While these companies are already customer-facing organizations, as retailers they are progressing into a more direct “channel” relationship with their valuable customers. As a significant part of that, they’re identifying what additional products and services their customers want or need them to offer.
Should your consumer-facing company be a retailer? The short answer is yes. The longer answer is still yes: By looking at your organization through a retail-focused lens, you have the ability to understand how your company can establish much deeper roots with your customers by solving their pain points through the introduction of new products and services. The benefits of doing so far outweigh the potential challenges and hardship the process entails. And it is a process, not a revolution. While some companies seemingly jump into new areas out of nowhere, the preparation for doing so was likely months or even years in the making.
Let’s take a look at a well-known example of how an entire industry moved, albeit slowly, into the retail world. When mobile phone retailing started in earnest more than 25 years ago, all business was done through indirect, third-party retailers who had a core competency in running retail stores. Mobile carriers initially were technology companies that bought spectrum and licenses, built towers, and provided the infrastructure. Building a retail channel was the furthest thing from their minds. If you asked the average Joe customer who Verizon or AT&T was, they would have labelled them as the companies who owned the mobile networks.
Flash forward to today, and that same average Joe customer would call them their mobile phone company. What changed? There were several things a third-party retailer could not execute that required carrier infrastructure. Carriers found a significant portion of the customer experience relied on deep integration into customer systems for billing, bill payment, putting customers on the right plan, and so on. By putting the retail aspect into the hands of a third party, carriers had control of the systems but not the customer. A subpar customer experience was causing significant customer turnover, or churn as it is called in the telecommunications industry. By taking control of the customer and solving their pain points, carriers eventually became successful retailers. They’ve made that end-to-end connection with the customer.
In our work with the largest cable providers and public utilities, we’re seeing similar themes. Cable companies and public utilities have the same set of customer pain points that could be better addressed by strong online ecommerce experiences as well as direct physical retail space. Call centers alone cannot solve the direct and personal high-touch interaction needs of customers. Cable companies have moved from swapping cable boxes and bill paying to curating and merchandising their service offerings and bundles so their customers can easily understand them and make decisions on devices—a much more high-touch relationship.
Should you be a retailer? The logical place to start the process is with existing customers, and by answering two simple questions:
1. Will customers give you the right to be in retail?
In other words, will they give you permission to offer them new goods and services? For some, this is a no-brainer. We recently worked with one of our utility clients to survey their customers about their interest in new products and services from the utility. Unsurprisingly, customers were overwhelmingly interested in doing so. Why? The products and services were natural extensions of what customers were already receiving. What gives you the right? You can uniquely solve and address customer channel pain points better than their current methods.
2. What are the pain points you could address by entering retail?
In last month’s column, we amended the definition of a retailer to “a business that through its direct relationship with the customer uncovers their pain points and provides a solution in the form of a product or service.” Using the example above, pain points for utility customers might include:
- Dealing with rising electricity rates
- Interest in becoming more energy efficient
- Difficulty in determining what types of light bulbs to purchase, and where
- Interest in learning more about Smart Home, IoT and home security solutions
Being able to solve these pain points for customers puts utilities squarely in the retailer camp.
How will you know if existing customers will give you the right to sell directly to them and solve their problems and pain points? ASK THEM! Conduct simple customer surveys or just experiment. Put things out there in front of customers. Iterate with live customer experiences such as online curation and drop-shipping or via a simple retail pop-up store, something we call a “lemonade stand”. Take certain elements of the online experience and create a dialog on social media to see if customers find it a natural relationship. As they iterate, companies can turn offers on and off, and modify the value propositions on the fly based on reactions. In the case of utilities, getting started might be something as simple as a lightbulb program, testing a subsidized program online or in a physical store.
Word of caution
My philosophy on testing is not pass/fail. The traditional corporate philosophy of “we tried this and it failed, so kill it” and “we tried this and it worked, so scale it” doesn’t necessarily fly in this process. Becoming a retailer is continuous improvement and iteration to finding the right answer over time. It’s a process of understanding your company’s competencies, knowing the outside pressures and expectations, identifying the pain points and unmet needs of current and potential customers, and determining the adjacent opportunities. It’s a long path, but one most definitely worth traveling.