Get ready for interview guest to challenge everything you thought you knew about customer centricity!  Peter Fader is the Frances and Pei-Yuan Chia Professor of Marketing at the Wharton School of the University of Pennsylvania, and the author of the book, Customer Centricity.

Peter works with firms from a wide range of industries, such as consumer packaged goods, interactive media, financial services, retailing, and pharmaceuticals — and his expertise centers around the analysis of behavioral data to understand and forecast customer shopping/purchasing activities.

In this interview, Peter:

• distinguishes between customer-friendly and customer-centric companies
• outlines the problems with providing “super-super customer service” to every customer
• describes the difference between growth through customer equity and brand equity

Take a listen and then check out the book.  Also you can continue the dialogue with Peter via email at faderp AT wharton DOT upenn DOT edu or through Twitter @faderp.

other interviews:

• Martin Lindstrom on Marketing Manipulation
• David Aaker on Brand Relevance
• John Gerzema on Connecting with Today’s Consumer

The folks at Deloitte recently released, The Next Evolution: Store 3.0,  a report on the readiness of retailers for the store of tomorrow.  Although the report offers a somewhat limited and biased perspective since it is based on a survey of only 39 current retail executives, it raises some important questions about the requirements of the future store.

One point caught my attention: the role of the sales associate.  “As customers’ purchasing behaviors evolve, the sales associate role must evolve with them,” the report rightly stated. It laid out primary salesperson tasks/skill sets:

• POS assistance
• Purchase selection assistance
• Specialized product knowledge
• Technology savvy
• Brand ambassadorship

“Today the top three most important responsibilities and skills of the sales associate are POS assistance, purchase selection assistance, and specialized product knowledge,” reported the survey respondents.  “As we look to the next three to five years, survey respondents pushed specialized product knowledge and brand ambassadorship to the top of the list, ahead of POS assistance, as a store employee’s most important roles.”  And the report predicted that, “Five or more years from now, the sales associate is expected to become a technologically-savvy brand ambassador with specialized product knowledge.”

While this direction is absolutely on-target, there are some key tasks/skills missing from the report’s list of qualifications of the sales associate of tomorrow:

salesmanship – Retail salespeople need to be skilled in the art of selling, i.e., establishing rapport, explaining value, overcoming objections, etc. This may seem like a no-brainer, but with the current trends like reductions in training and moves away from commissioned sales, salesmanship at retail is becoming a lost art (see another post of mine on this subject.)

customer relationship building – In retail, salespeople are a critical piece of a company’s customer relationship management program.   A robust customer database is only valuable when it’s used, and not only by corporate folks.  Salespeople on the floor need to understand who their customers are, what their specific needs/wants/preferences are, how to provide personalized service, how to foster continued loyalty, etc.

customer ambassadors – Salespeople glean valuable insights about customers since they’re interacting face-to-face with them every day.  As such, they can serve as customer ambassadors to the company.  Fast fashion retailers like Zara use input from salespeople to inform product design.  Store layout, service policies, product quality, and assortment are other areas where salespeople’s perspectives are invaluable.  Companies need to train salespeople so they know how to integrate customer insights with company priorities when giving input, and they need to develop processes for incorporating salespeople insights into the company’s strategies and plans.

Rising labor costs are squeezing already thin margins and so retailers may feel a need to scale back on sales floor coverage, salesperson training, and infrastructure enhancements that help salespeople do their jobs effectively.  And with shiny new objects like mobile devices, augmented reality, and social shopping apps, retailers may be tempted to favor technology investments over people ones.

But it would be shortsighted to discount the importance of sales associates in the store of tomorrow.  The Deloitte report closes with a strong exhortation for retailers to revive their talent management strategies:

“As customers increasingly demand a more personalized experience, your sales associates become even more critical in achieving that goal. That means investing in your employees by providing the necessary skills, training, education, compensation, and career-development options to increase product and technical knowledge, among other skills. It also means equipping them with the right technology so they can easily and conveniently provide customers with instant product information, purchase history, or customer preferences. The renewed investment in the sales associate as a brand ambassador will bring back the confidence in retail as a profession, and convert browsers to buyers.”

In other words, a skilled salesperson could quite possibly be the final bastion against the showrooming trend that looms large over brick-and-mortar retailers.

related posts:

• retail tensions
• 12 truths to guide retailing in 2012
• retail evolution

The series on brand value creation continues today with a look at how brands create value for companies in their Internal Business Processes.   Although a brand’s ability to create value from the Financial and Customer perspectives is probably the most important, its impact on Internal Business Processes is the most fundamental.

Let me back up a bit.  As a reminder, we’re using the Balanced Scorecard as a framework for identifying all the different ways brands create value for companies.  The Internal Business Processes section of the Balanced Scorecard is intended to help leaders evaluate how well their business is running and whether its products and services conform to customer requirements.

A brand lends itself to such an evaluation if the company has adopted the “brand as business^TM” management approach.

What is the “brand as business” management approach?  It is the deliberate and systematic management of the business around the brand — thinking of the brand as the business.  The “brand as business” management approach is based on using your brand as a management tool, not simply a marketing asset.  It’s about operationalizing your brand — integrating your brand and your core company’s operating system.  (The American Management Association recently published an article of mine which explains “brand as business” in more detail.)

OK.  So that was all to set up the discussion on Internal Business Process brand value creation.  When the “brand as business” management approach is employed, the brand impacts the three primary processes of any business:

• product development
• supply chain management, and
• customer relationship management

– and the resources that drive each.

Processes.  To the business processes themselves the “brand as business” management approach contributes focus, efficiency, and power.

• For example, in the product development process the brand focuses R&D on target requirements and value delivery as articulated in the brand platform.  And the brand is used as a filter at each juncture of the stage-gate process.  Evaluations of the fit and viability of new offerings happen faster and more easily with the brand providing a clear, consistent standard.

A strong brand also reduces the cost of new product introductions and improves the success rate of line extensions, cross-selling, and up-selling by stimulating trial and adoption among existing customers.  As noted in my post on Customer brand benefits, customers are more likely to try a new product if they already have a relationship with the brand.

• In the supply chain management process, a strong brand can give a business more negotiation power with suppliers, manufacturers, and distributors.  Having the upper hand in negotiating inventories, logistics, and payment terms is certainly a desired advantage in the constraints of the current business environment.

• Brands impact the third primary business process, customer relationship management, by helping the company to establish relationships with customers in the first place.  Over time strong brands engender trust, and when customers trust a company, they are willing to give the company information like personal data, insights about needs and preferences, and usage information which enables the company to create better customer contact and service strategies.

Those advantages then help businesses retain customers by fostering relationships which are valued by customers.  And instead of having to rely on instituting switching costs which deter existing customers from defecting to a competitor but which may also pose barriers to customer acquisition, companies with strong brands simply enjoy brand loyalty — which by definition prevents brand switching.

Brands also make customer relationships more profitable — an increase of 5% in loyal customers in some categories delivers 95% greater profitability over a customer’s lifetime, according to brand loyalty expert Robert Passikoff who founded and heads up Brand Keys, a research consultancy specializing in customer loyalty.

Furthermore, Passikoff’s research indicates it takes 7 to 10 times the cost to acquire a new customer as it does to keep an existing one.

Resources.  At the resource level of Internal Business Processes, a brand-driven management approach is about optimization.

• A strong brand optimizes your human resources, for example.  You can experience better results in recruiting because a strong brand attracts a larger and/or better applicant pool.   One fast food restaurant chain experienced a dramatic increase in responses to its help-wanted ads simply by adding visual elements from the brand identity to its advertising.

Companies which employ the “brand as business” management approach use the brand as a means for screening candidates, on-boarding new-hires, and training employees more quickly and effectively.  In “The IBM Way”, former IBM marketing executive Buck Rodgers explains the approach his company adopted, “IBM begins imbuing its employees with its…philosophy even before they’re hired, at the very first interview…Basically, anyone who wants to work for IBM is told:  ‘Look this is how we do business…We have some very specific ideas about what that means.’”

By using the brand to inform, inspire, and equip people, companies produce a workforce that is aligned, focused, and motivated.  In turn such a workforce produces more efficient operations, higher quality output, and increased employee retention.

• A strong brand also optimizes your technology resources and other tangible assets by facilitating relationships with other companies from whom you acquire or with whom you develop these resources.  The greater your brand equity, the more desirable your company is as a customer or partner to these other companies.

Internal business processes and the resources which they draw upon are beneficiaries of a brand that is well-established and well-leveraged.

Make sense?

My next post will be the last in the series — Brand Value Creation — Learning & Growth.  Stay tuned.