5 Questions Retailers Must Tackle to Attract and Retain Customers

Most companies want to be customer centric. The biggest roadblock to achieving that goal is breaking down the silos that exist in most companies. Sometimes these are lines of business, divisions, departments or regions. It may be as simple as your organization structure and who reports to whom. If your company is looking to overcome this challenge, then this set of five questions to ask and answer is for you.

1. Do you believe your customers are an asset or cost center? Many companies really don't think about the lifetime value of their customer. Rather than thinking about the long-term value, managing their customers as an asset, they might nickel and dime that customer with a $50 service charge or a $200 fee for something created from a policy that might have made sense made inside of a silo, but when you realize that you might be driving away a $5 million customer or a $20,000 customer, that decision doesn't make sense.

Zane's Cycles is an example of a company that really does embrace managing customers as a true asset. You can go into its Branford, Conn. store and ask to take a $4,000 bike out for a test ride, and all they say to you is, "Have a great ride." It doesn't ask you for any collateral, your identification. Zane's wants you to have a great ride because it knows that a customer, if the relationship is managed properly, is worth $12,500 over their lifecycle to the brand. Now that's a lot of bikes and parts. Zane's doesn't want to get in the way of starting that relationship — and very profitable revenue chain — by questioning a customer's integrity. This policy has served Zane's well. It's grown to be a very profitable company and, most importantly, it only loses about three bikes a year.

2. Do you really know your customers? Do you know what pushes their hot buttons? Do you know what makes them buy? Do you know what's important to them as you're building your product mix and operationalizing your products and services?

Zara has built its business around understanding its customers’ incentives to buy. By investing in product speed and fulfilling its customers’ needs, Zara has developed customers who, on average, visit its stores 17 times a year. The retailer sells 85 percent of its inventory at full price.

Zara understands that its customer is the fashionista who has less money in her pocket, but a thriving desire to have the newest fashion. It knows its customers are constant shoppers who want to wear the newest, latest trends. Zara has 200 people in Spain who are constantly creating product, and the brand turns its inventory every three weeks to lure its customers back into its stores.

Because Zara understands what drives its customers, it's decided to spend less on advertising and more on product development and product speed, which is what its customers really want. Knowing your customers and using data to understand how and when they buy and their buying behaviors can give you insight on where to invest and what to operationalize.

3. How proactive are you? Do you examine every interaction you have with your customers? Are you proactive in understanding when you disrupted their day, their week or their month because your processes aren't up to par? You're not delivering to your customers at an optimum level when you're not actively looking at your data, understanding where the failures occur, and reaching out to your customers before they reach out to you.

Southwest Airlines is a great example of a company that gets this right. Every day Southwest Airlines looks at every single flight that goes out because it wants to know what customers had their day interrupted, whether it's from something that the airline caused (e.g., an electronic failure) or simply weather. Every morning it convenes a morning overview meeting. In that meeting are meteorologists, operations people, flight staff and someone The New York Times has dubbed the "Chief Forgiveness Officer." This team looks at every flight from the previous day, and based on the disruptions to a customer's day, they send out personalized letters to customers apologizing. Before a customer picks up a phone they've heard from Southwest.

In some cases when the issue is big enough, Southwest sends out something its calls "Luv Bucks," which customers can use towards purchasing another flight. In what I call an "everyday" company, you have a financial person who is looking at the cost of those Luv Bucks and saying, "Why would we do that?" This is too expensive. But for Southwest Airlines, those Luv Bucks actually pay off and grow its business. Being proactive in reaching out to customers first has resulted in 70 percent of Southwest's customers bringing other people with them in repeat flights. The net positive revenue increase of its Luv Bucks program exceeded $1.7 million in 2011.

4. How do you stay connected and relevant with customers? A lot of companies view social media as a campaign, as something they need to go get. They think of social media as another piece of their marketing strategy. Contrast this with what most "beloved companies" (a term that I use to define businesses where an emotional and strong connection with employees and customers grows the business) do, which is to engage social media as a way to continue and advance a two-way, transparent dialog between themselves and customers.

Zappos.com, for example, started using Twitter before a lot of other companies. In fact, Tony Hsieh, Zappos’ CEO, and I were at dinner and he was tweeting away. I asked him, "Tony, what are you doing?" He told me, "Jeanne, you have to do this Twitter thing. I'm telling somebody where we are for dinner." Well, the way that Zappos started out and why it has so many followers is that it didn't use these Twitter conversations to send marketing messages, but to create relationships.

Hsieh's early tweets were things like, "I'm at the barbershop." Those tweets created a personal connection between the world reading them and the people at Zappos — they call themselves "Zapponians." People reading Zappos’ tweets connect with the brand, and as a result it's built a customer base because consumers want to buy products and services from individuals they can relate to.

Out of this plain talk, of connecting with customers as humans, as parents, as family members, Zappos.com has achieved over $1 billion in gross merchandise sales and over 2 million Twitter followers.

5. What pushes your "yes" button? Is everyone in your organization clear on that? Do you really have clarity around what you're trying to accomplish? About how you intersect and improve your customers’ day? For example, do you have complete clarity as people are making decisions across your organization about when something is ready to send to market so they can optimally serve customers? About what conditions must exist before a product or service is ready to go?

Ikea sells products for people who have less money in their pocket and more energy. It knows its customers are willing to save a bit of money by putting their own furniture together. Its clarity of purpose is to serve the budget conscious. What Ikea knows is if you're just out of college or one of those people who don't spend a lot of money on furniture, you might want to spend, let's say, $199 on a chair. It knows that if your mom is coming to visit for the first time, you rush out to buy a chair.

That's why Ikea designs the price tag first, then the product. That's why, for example, its Lillberg chair has the arms the way that it does — so that it can fold into a flat pack. And that's why the cushions are a certain depth, so that chair can fit into a box of a certain dimension and be stacked in a warehouse. Because Ikea has such laser focus, it's managed to grow in an economic downturn to become a worldwide presence.

Jeanne Bliss is the founder of CustomerBliss, a consulting firm to help executive teams unite their actions to drive customer growth.