Feature: How well do retailers really know their customers?

Getting to know and truly understanding your customers is widely acknowledged as a business essential. In order to sell customers something that they want or need, you have to understand their wishes and demands.

Yet, a disconnect between retailers and customers still appears to remain. Take the highly topical and dividing topic of returns: over half of UK consumers stated that they would not continue to spend online if no free postal return was offered but, according to Blue Yonder’s latest research, the vast majority (89%) of retailers have changed their returns policies in the past 12 months, either making them more expensive for consumers, or tightening the restrictions around returns.

Are retailers oblivious to the views and opinions of their customers, and therefore need better methods of communicating with them and analysing their responses, or do they just put business needs before those of their customers?

Actions speak louder than words

You probably won’t find a business out there that doesn’t claim to be ‘customer-centric’ or that ‘puts the customer first’. Everyone has heard the phrase ‘the customer is always right’ but how many retailers actually put these slogans into action? As Hugh Scantlebury, CEO and Founder of Aqilla, advises, businesses must “actively and regularly listen to customer feedback and use those thoughts and opinions to frame updates and releases throughout the year.

“Through their observations and feedback, we can gain valuable insights into their nuanced needs and hurdles that they are facing,” he continues. “This helps shape product development and, if necessary, allows us to address any immediate day-to-day issues. I encourage all business leaders to evaluate how well they understand their customers’ needs and preferences — and how often they respond proactively and positively to them.”

Whilst there are many days in the calendar to remind retailers to review their customer service efforts – the quarterly ‘Get To Know Your Customers Day’ or annual ‘National Customer Service Week’ for example – it should be an ongoing business process.

“If we want to support customers, we need to build relationships with them – and this is not a one-time tick-box exercise,” urges Richard Sampson, CRO at Tax Systems. “It is an ongoing activity that requires consistent monitoring of current situations and constant communication to determine varying needs and recognising when these need to change. By implementing both formal and informal ways to provide support, listening to problems and acting on feedback, that all-important trust is built.”

AI to the rescue?

 All retailers are under increasing pressure due to staff shortages, rising costs and supply chain disruptions, so it is all too easy for customer service standards to dip as there is very little time to invest into getting to know your customers. Yet, the customer service industry is undergoing considerable change, spurred on by the boom of generative AI over the past year. As AI becomes further integrated into the industry, it has the ability to take over some of the customer service requests, at all times of the day and night, providing instant support and a quick resolution, which improves productivity and efficiency as well as generating significant cost savings.

Whilst this may seem like it is removing touchpoints and putting further distance between retailers and their customers, it is actually a valuable tool in getting to know your customers quickly, without having to spend time speaking to each one.

“It is true that the use of chatbots and self-service methods reduces the number of customers that directly speak to contact centre agents, but this doesn’t mean that businesses should lose the opportunity to get to know and understand these valued stakeholders,” ​​Dave Hoekstra, product evangelist at Calabrio, notes. “In fact, according to Calabrio’s 2023 State of the Contact Centre report, 20% of contact centre managers said that its ability to predict and analyse customer actions and behaviours was the top benefit of AI.”

He explains that “using sophisticated AI and machine learning tools, a comprehensive workforce performance suite can make it easier to truly get to know your customer. Through a combination of speech, text, and desktop analytics, it compiles raw data from all interactions – whether chatbots, calls, emails, texts, or tweets – to capture a comprehensive story about each customer and transforms it into actionable customer intelligence. Using these insights, organisations can create personalised experiences that directly address each customers’ individual needs and preferences.”

Claire Rowland, head of client experience at Node4, agrees about the value of AI in customer service, adding that its ability to offer tailored recommendations, solutions, and incentives allows businesses to “prove to customers that their needs are known and understood, increasing customer satisfaction and loyalty.

“AI doesn’t need to be a threat to the customer service industry or put distance between businesses and customers. Embraced and utilised in the correct way, it can help us get to know our customers even better. The future is now, and we shouldn’t shy away from the latest developments that could put us on the path to success.”

It’s all about tech

It is not just AI, but technology in general, that retailers can and should be using to interact with and get to know their customers’ wants, needs and preferences. As the digitally-native Gen-Z rises into adulthood, and Generation Alpha follows behind, the demand for technological interactions will only continue to grow. Recognising this and putting it into action will push businesses ahead and enable them to stand out for their dedication to their customer base.

Pavlo Khropatyy, VP, global head of delivery, financial services and insurance at Intellias, recognises that “the proliferation of smart devices, the mass popularity of gaming, and the hobbies of tech-savvy millennials and Gen Zs” are key factors to consider when interacting with a younger customer base.

With this in mind, he champions the Gamification approach, noting its success in the banking sector. “Games appeal to people’s desire for fun, entertainment, simplicity, social interactions, rewards, and competition,” he adds. “These digital native generations expect everything to be available via smartphones and are naturally attracted to the Gamification approach. This is why Gamification apps in banking are becoming the latest and smartest technique banks are adopting to deliver the best customer experience, be connected with their customers and stay ahead of their competitors.”

New Year’s Resolution: Get to know your customers

The start of a new year is the perfect time to reflect on your current customer service strategy and identify ways to improve. If you haven’t spoken to your customers or asked for their feedback recently, now is the perfect time to reach out. If you have a lot of customer data but no way to condense and analyse it, invest in some technology to help you out. And if you have customer demands, make a change to meet their needs. It will all pay off in the long run!