Ceding Customer Control

As consumers take more digital control of their lives, they are changing how they engage and interact with retailers. Their increasing mastery is marching from reviewing items and peer-guided shopping to selecting which items retailers need to offer to earn their loyalty.

Retailers that want to keep ahead of this fast-moving evolution should look at four key aspects to encourage this development and begin playing by a new set of customer-centric rules.

Consumers  Are Taking Control Now
Face it, retailers have ceded control to consumers for years now, so don't stand in the way as they seek to exercise it through new technologies. The first devices that come to mind are ATMs, self-check-in at airlines and hotels, and self-checkout in supermarkets, home improvement stores and mass merchants.

Ceding control also changed how we listen to music, watch TV, and find news as well as book travel and handle money. That first wave changed a great deal and the changes kept coming.

Today, a second wave of technologies is giving consumers an active role in creating what they use at home, what they wear, and what they consume. Wikipedia has changed how we create and distribute information. Leading-edge retailing sites allow visitors to create digital persona, find like-minded friends, and influence people in ways Dale Carnegie never imagined.

Social networks have gained a growing role in creating and shaping demand. Jupiter Research reports that 47 percent of online shoppers stop at social network sites before visiting the merchant's Web site. And, 29 percent say they've made better decisions using social networks.

Consumer Control Is Widening
The extension of control by consumers is now moving into choices that influence product assortments and design. We remix and compose play lists of our favorite music and produce and distribute our own movies. That means millions of people are now doing what George Martin did when producing the Beatles and George Lucas did when directing "Star Wars" movies.

Two new retailers jumping on this trend already enable customers to design their own products. One is Threadless (threadless.com), which is an interactive self-design, online T-shirt shop. The other is Ryz (ryzwear.com) which does the same for sneakers. While both are startups, Ryz was founded by an ex-adidas American president, so this is definitely one trend retailers should pay close attention to.

Retailers are also enabling consumers to access kiosks in stores that not only provide in-store and online information, but also let consumers make purchases and have them delivered anywhere €“ home, the store where the kiosk is located, or another store. And some stores have begun to enable cell-phone orders, coupon redemption and promotion lookup.

Customers Lead, Experts Follow
Expert sourcing and crowd sourcing are two ways for retailers to approach outsourcing innovation, and they serve distinct functions. In crowd sourcing, customers drive innovation by coming up with game-changing products. The mountain bike is one example of crowd sourcing. A handful of Marin County California teenagers invented a new, sturdy, fat-tire bike that could take the pounding of riding down Mt. Tam at high speeds. What these teenagers invented, riders around the world now use.

In expert sourcing, engineers and other specialists develop the methods and means to make what customers want. IBM outsourced the task of developing the PC operating system to a fledgling group of experts led by Bill Gates and Paul Allen. The Linux standards community is another well known example.

In retail, the benefits of engaging both of these groups through interactive technology and social networking is clear, and it is the best way to ensure retailers can respond to the market quickly, launch new products, and expand into new markets.

The tools to make this happen are  already available, as Threadless and Ryz demonstrate. Social networks and Web 2.0 services also are growing for those retailers who have begun devoting resources to these initiatives.

The Customer Leverage PointIs Shifting

In the recent past, the consumer's leverage point was centered in post-purchase reviews. Today's leverage point is centered on pre-purchase shopping through social networks, affinity chat groups, online communities and unorganized groups of family and friends.

Shoppers seeking advice to specific product questions get it from their peers in real-time. These current trends are showing that consumers are heading down a path of increasing digital input and control into a retailer's core business processes €“ new product development, assortment planning, merchandising, pricing, and promotions. This could be a scary development to some retailers.

But those that embrace this development will win in the future marketplace by closely engaging their best and most active customers, and giving them the power to choose what they want most.

It won't be easy for some retailers to give up some of this control. It will take backing by store operations, merchandising and marketing teams to make it successful. But retailers have been paving the way for this shift for the past few years by re-organizing their enterprises around a customer-centricity strategy. Ceding customers more control through sophisticated technology is just a logical extension of a strategy already in place. 

This ad will auto-close in 10 seconds