NRF's Shop.Org Digital Summit 2015, Day Two: Identify the Customer's Needs and Fill Them in Substantial Ways

PHILADELPHIA — To gain a competitive advantage in industries that will likely see widespread commoditization as technology continues to improve at bewildering rates, organizations must offer value in ways that will give customers reasons to stick with them over time. In many cases, long-standing customer loyalty is achieved through personalized customer experiences, speakers stressed throughout day two of the National Retail Federation’s Shop.Org Digital Summit here on Wednesday.

In his morning keynote, Justin Ferrell, fellowships director at Stanford University's Hasso Plattner Institute of Design, urged companies of all sizes to work harder to identify their customers' unmet needs. He prodded attendees to approach problem solving in ways that will yield opportunities they didn't realize existed. "You have to think really hard about how you frame a problem, and that means spending a lot of time [empathizing] with the people you are trying to serve," Ferrell said. "I urge you to go through a process that [searches] for the most possible solutions—you're more likely to come up with one that is unique."

It was by asking the right questions that RevZilla.com, an online supplier of specialty motorcycle accessories, was able to identify the desires of an underserved segment within its industry. According to Anthony Bucci, the company's founder and CEO, the idea for the company surfaced at around the time he purchased his first bike and realized there weren't many places that offered the kinds of products he was looking for. Bucci found himself wondering why there wasn't a "Barneys of motorcycle gear," that catered to a specific type of enthusiast who wasn't engaged in the "bar fights and babes" or stunt motorcyclist culture, and he crafted his operations around this concept.

To establish a dedicated following, RevZilla.com provides customers with "something of value to sell something related," Bucci said. The company has done this largely by offering informative content in engaging ways. Since it was formed, it has put much of its effort into fleshing out its YouTube channel and offering customers free instructional videos, complete with supplemental product information, to help them evaluate choices before committing to a purchase. The videos began as relatively low budget, but have improved in production value over time. Once a week, Bucci appears onscreen as the face of the company. The technique has been effective; customers identify with him as the brand spokesperson.

And as customers continue to expect tailored experiences from brands—particularly ones that take into consideration their privacy preferences and expectations for relevance—companies will have to connect with them on an emotional level, speakers stressed.

They will also need to be strategic about how they establish a relationship that is beneficial to both sides, said Chris Bye, CEO of Tonic Design, a company that focuses on digital product design and development. Because just as a person is less likely to stay loyal to a friend who doesn't give but only takes, the same logic applies to a customer's relationship with a brand, Bye pointed out.

Bye singled out Alex and Ani as an organization making moves in the right direction by leveraging technology to gather insights about customer values. A retailer that sells bangle bracelets, necklaces, and earrings, the company has developed an app that allows it to gather relevant data about its customers' moods and preferences to connect with them at the appropriate times with the proper tone. Within the app, a customer is assigned a color based on preferences, and when the customer enters the store, iBeacons activate LED lights that illuminate the products that will likely be of interest to her.

Such innovation will ultimately lead to lower customer churn rates. "We need to personalize the content, the cadence, and the channel because those that do will be able to be competitive and give the consumer the best experience possible," said Neil Capel, founder and chairman of Sailthru.

For The Clymb, these guidelines have been integral to its campaign strategy. "When people unsubscribe and disengage it's very hard to get them to subscribe again," said Craig Schinn, a former e-commerce strategy consultant at The Clymb. This is especially important to the company, considering that 95 percent of its future revenue is predicted to come from just 5 percent of current customers, Schinn mentioned.

To assure that customers return for more, it pays off to convince them that they can trust a company to consistently offer value. Stitch Fix has focused its entire business on the strength of personalized recommendations. "Most retailers assume that the customer likes to shop, is good at it, and likes to do it," said Julie Bornstein, chief operating officer at Stitch Fix; the start-up, now four years old, challenges such common assumptions by aiming to do all of these things for the customer. Through its Web site, users have the option of specifying the types of clothes they are interested in. The service then uses these algorithms, combined with the analysis of stylists, to package customized items for them. The customer receives a package of clothes in the mail and can buy what she likes or send back those items she is unsatisfied with. 

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