The Value of Knowing Your Customer

Last week while traveling I found myself in line at a Starbucks. The woman behind the counter knew just about every customer's name and, amazingly, what they wanted. For example, she would say, "Hi Stacy! An extra-hot caramel macchiato with soy?" I made that up, but you get the idea; she knew her customers and their preferences. People like that barista are worth their weight in gold in the retail world.

The online retail world has spoiled us all by tracking our behavior, knowing what we want and making us feel like old friends when we come back to the website. Some sites offer products that other shoppers who match our profile have purchased. This can either be helpful or a little creepy, depending on one's point of view.

For most people, shopping in a local brick-and-mortar store is quite a bit different from either of these examples. No one greets you as you enter (even Wal-Mart has cut back on that), and they certainly don't know your name. If you happen to find someone in an aisle and ask a question, chances are pretty high that he or she will be absolutely no help whatsoever, unless you're asking where the bathroom is. And once you get to checkout, it's a toss-up as to whether you'll get a smile and a friendly hello or a grunt and a scowl — or any acknowledgment at all. Little wonder we're shopping more online.

Brick-and-mortar stores fret about the growth of showrooming — the relatively new practice of looking at a product in-store and then ordering it online (usually for a lower price). Some brick-and-mortar retailers have taken a Draconian approach of trying to ban cellphone use in-store, or even creating "unique" products with different UPCs than those that appear in online stores. Shoppers will always find a way around these practices, and often the response is to stop coming to the store at all.

A better solution might be to combine the benefits of online shopping (e.g., customer recognition, product information and use tips) with the benefits of brick-and-mortar (e.g., instant gratification, no shipping costs, a local resource for help post-purchase). Taking this approach requires investment in both people and technology.

For many years, retailers have taken steps to reduce labor costs, which is logical as labor is generally their single largest controllable expense. But too often this focus has cut to the bone, leaving stores with minimal help for stocking shelves or customer service. In addition, many of the employees have no knowledge — or interest — in the products being sold. Much has been said about the success of the Apple Store model, and there have been many attempts to copy it. But the success of the Apple Store isn't about the glass and wood and stainless steel, it's the fact that the people Apple employs are passionate about Apple products and bring in-depth knowledge that they share with consumers. That's what other retailers should be copying.

As for the technology side, there are two basic steps required for increasing customer knowledge: integrate the online and offline experiences, and track shopper activity across both formats. While this seems like a logical step, it's exceedingly rare in the retail industry, and customers take notice when the two halves aren't connected.

There are some who continue to predict the decline and ultimately the disappearance of brick-and-mortar retail. That's not only apocalyptic, it's not even realistic. Retail stores as an entity aren't likely to disappear in the foreseeable future. However, many stores will cease to exist by trying to ignore or prevent the changes in how people shop. Activities like showrooming are only going to grow. Rather than fight them, it's time to embrace and empower shopper behavior inside and outside of the store.

Jeff Weidauer is vice president of marketing and strategy for Vestcom International Inc., a Little Rock, Ark.-based provider of integrated shopper marketing solutions. Jeff can be reached at jweidauer@vestcom.com.