FreshDirect’s Secret Ingredient: Customer Focus

For the rest of the December 2009 issue of CRM magazine please click here.

As businesses in every sector work toward recovery from the recession, they must achieve an intense customer focus. The businesses that will rebound more quickly are the ones that will find ways to get close, or closer, to customers to provide them with experiences that are motivating enough to drive positive behavior. This is especially true because we’re all likely to see curtailed consumer spending for months to come.

If you and your company want to seize the opportunity to create that inviting, influential customer experience, there are two critical components: 

1. Give customers greater value through your products and services; and
2. Use consumer data to enhance their likelihood of transacting with you. 

Value is an essential characteristic for consumers who are looking to spend more carefully. By offering value, you can increase loyalty. Companies such as Wal-Mart, Amazon.com, and Costco are perfect examples of retailers that possess a good price/value image, which stands them in good stead in harder economic times.

But actually using better information to target and enhance a customer’s buying experience remains a challenge for most businesses; few companies know their customers all that well. However, by effectively leveraging the Internet, you can get to know your customers in much greater depth and transact with them on a real-time basis. 

This requires having a relentless strategic focus on the customer experience, constant internal communication on accountabilities and results, and the technology to support this mission. Today, technology can give many companies the ability to quickly obtain and utilize detailed data about current and potential customers to dramatically shorten marketing timelines and to help them run their businesses with intense customer focus.

GETTING TO KNOW YOUR CUSTOMER

At FreshDirect, we went through our own learning experience building—and then rebuilding—our business to be much more customer-focused. We created best practices that have earned us healthy sales growth during a time when most companies are suffering. That said, the key to our intense customer focus is data—collecting it, analyzing it, and using it to create the ultimate customer experience. 

Working with intensive customer focus begins with a daily meeting among our senior managers. We use a daily operations report to review our business yesterday, today, and tomorrow against a series of metrics that extend from the market through the various aspects of our fulfillment (plant, transportation, service, and marketing) and assign individual accountabilities. We use this to take immediate action where we have problems, and also to identify areas for longer-term program improvement.

To grow and keep our database fresh, FreshDirect surveys customers in great depth both weekly and monthly, using a research tool called Linescale. The weekly surveys focus on key metrics for success, broader aspects of loyalty, a few key product categories, and relevant “issues of the day,” such as the economy. The monthly survey concentrates on product and service components (30 or so, tracked monthly among both total and core customers), and also asks questions about some of our intended product improvements, as well as price and value selection. The responses are helpful in digging deeper into likes/dislikes on an individual basis.

PUTTING KNOWLEDGE INTO ACTION

With the information gathered and our internal analysis, FreshDirect has been able to develop initiatives that answer customers’ wants and needs. We also demonstrate that we listen to their concerns and are dedicated to making their experience with FreshDirect a happy one. As we put it, “Our food is fresh. Our customers are spoiled.”

For example, our data analysis process helped us realize that customers were concerned that they were unable to personally inspect produce and seafood products purchased on our site. To resolve this issue, FreshDirect repurposed our production process and hired produce and seafood experts to rate these products daily. More than 60 percent of our customers tell us they now use this rating system when they buy from us.

Additionally, we keep a detailed record of every customer’s historic relationship with us and are able to leverage that data in real time to enhance the customer experience. For example, FreshDirect reminds customers of their five most frequently purchased items so they can easily add these products to their cart. Using this same principle, FreshDirect has improved our cross-sell feature. When a customer orders a steak, for instance, our site has always recommended cross-sells. More recently, we added the ability to remind customers exactly what they ordered in the past when they ordered that steak (or what customers like them ordered). This feature immediately doubled usage of our cross-sell feature. These two items together have increased our revenue by 10 percent, because we’re using our superior data, in real time, to give our customers a better experience. As importantly, no one who walks into a store today can receive a similar experience.

These efforts and other programs designed to improve our loyal customers’ experience have improved the share of our business conducted by those customers from 25 percent to 60 percent in the past year. This loyal base has allowed us to continue to grow on a monthly basis as we have pushed through the recession, and to make money doing it.

THE BOTTOM LINE

Approaching your operations with an intense customer focus will not only help you keep existing customers coming back, but it will also turn new customers into loyal fans. Almost everyone today says they know they should be close to their customers, but few are using these new tools to manage the customers’ experience with day-by-day intensity.

With that in mind, rather than approach the economic recovery as simply a chance to get back to business as usual, look to accelerate. Find new and interesting ways to acquaint yourself with your customers, because the better you understand their needs, the more value you can provide. And, most important, pick up the pace of your marketing—no more leisurely annual marketing plans: Make a commitment to changing and improving every day, based on the more-demanding customers you have to serve. You will not only set yourself apart from the competition, but better position your business to withstand the next downturn.