The Extractive Business Model of Fast Fashion: A Colonial Critique by Kanika Meshram * [47]

The concept of value creation revolves around aligning the interests of customers, stakeholders, and the organization itself. A successful business model effectively leverages these values. Central to this framework is the business model canvas, which outlines nine key elements such as customer segments, value proposition, and revenue streams. A robust supply chain, underpinned by strong partnerships, is essential for delivering this value proposition.

Fast fashion brands have become adept at responding to market demands through agile business models. However, this speed comes at a significant cost. A voracious appetite for textiles, coupled with declining garment utilization, has severe environmental implications. Furthermore, the industry’s reliance on low-cost labour in the Global South raises ethical concerns.

The Fast Fashion Value Proposition: A Disposable Culture

Fast fashion brands have revolutionised the clothing industry, offering trendy styles at rock-bottom prices. This seemingly irresistible value proposition, however, comes with a hidden cost. By constantly churning out new designs – Shein adds 2,000 daily [1], Zara produces 500 weekly [2] – fast fashion cultivates a culture of urgency, detachment, and ultimately, disposability towards clothing. This focus on fleeting trends disrespects the craftsmanship and longevity that garments can possess. It fosters customer value in “wear-once-and-discard” proposition that generates mountains of textile waste. The burden of this waste disposal, however, falls far from the trendy wardrobes of the Global North.

The fashion industry was built on the promise of cheap labour in the Global East. As wages in developed nations like the UK rose, brands shifted production to countries offering lower costs [3]. This pursuit of profit came at a human cost. To maintain low prices, companies chipped away at garment worker rights, suppressing wages, utilizing exploitative short-term contracts, and creating conditions akin to modern-day slavery.

This exploitation has deep colonial roots. The fashion industry frequently leverages state power to stifle labour unions and worker movements in the Global South. They justify these actions by painting a bleak picture – claiming these are the best opportunities available for workers in Global South, who might otherwise face even harsher realities. This logic maintains an exploitative system where Western companies reap vast profits while workers toil in unsafe environments for meagre wages.

Reimagining the Business Model: A Call for Responsibilisation

Most fast fashion business model doesn’t account for the lifecycle of its products. The responsibility for discarded clothing falls on the consumer, often leading to donation piles that end up in overflowing second-hand markets of the Global South. Places like Ghana’s Kantamanto Market and Kenya’s Gikomba Market become dumping grounds for world’s unwanted clothing[4]. This burden goes beyond logistics. The influx of cheap, trendy garments disrupts local economies in Global South and devalues their traditional clothing craftsmanship. Consumers in developing nations feel pressured to adopt Western styles, further perpetuating colonial power dynamics. So, demand for such types of clothes come from a system of colonialism where western style dresses will get you ahead in life perpetuating the notion of power and white supremacy.

The environmental impact is equally staggering. Unsold garments end up in landfills, contributing significantly to the global carbon footprint considering the long journey these clothes take to reach developing countries.  As it turns out, managing this dumped clothing comes at a cost to these countries. For example, the municipal government of Accra, Ghana spends over US $1 million annually on tipping fees for second-hand clothing waste in landfills alone; this includes expenses like fuel, maintenance, and labour. Imagine the burden if the world kept dumping clothes on your doorstep and your tax money was used to clean it up!

As the Figure illustrates, I utilized the H&M business model as a framework to illustrate how the model can be adapted to prioritize clothing circulation over landfill disposal. My suggestions are preliminary and do not comprehensively address the complexities of the issue, particularly the relentless pursuit of new styles. To shift the business model from an extractive, colonial approach to a more responsible operating model, three key areas for improvement are proposed.

Product Take-Back Programs: Retailers can partner with other stores or supply chains to collect used clothes. E-commerce platforms can inform customers about these drop-off points. Incentives can be offered to encourage participation.

Rewear and Upcycle: Brands can offer repair services for damaged clothing, extending their lifespan. Vintage sections in stores can give pre-loved clothes a new lease on life driving product extensions.

Repurposing and Recycling: Unsold clothes can be creatively transformed into packaging materials, cleaning cloths, or even new clothing lines. This requires collaboration with suppliers in the Global South to develop innovative recycling techniques.

__________________________________________________________________________

[1] https://www.gittemary.com/2022/07/shein-is-much-worse-than-any-other-fashion-brand-here-is-why.html#:~:text=Shein%20reportedly%20adds%20over%202%2C000,%2Dday%20period%2C%20for%20comparison.

[2] https://www.thefashionlaw.com/fast-fashion-sustainability-is-about-more-than-the-fabrics/#:~:text=As%20the%20largest%20fast%20fashion,20%2C000%20different%20styles%20a%20year.

[3] https://www.amazon.com.au/Consumed-Collective-Colonialism-Climate-Consumerism/dp/1538709848

[4] https://earthyroute.com/blogs/slow-fashion-series/4-places-where-our-clothes-end-up-when-they-are-discarded

 * Dr. Kanika Meshram is a Lecturer in Management and Marketing at the University of Melbourne. She may be reached at kanika.meshram@unimelb.edu.au. Note: the inspiration for this blog comes from Aja Barber's book, Consumed the Need for Collective Change: Colonialism, Climate Change and Consumerism. Read Professor Meshram's other posts on customer centricity [43, 31].  

---

Meaningful Consumption – Consumer Behavior Concepts and Applications by Aditya Gupta * [46]

 

What makes a purchase meaningful? Reflect on the things you spent money on recently. Perhaps, bar tabs, gas, groceries, rent/mortgage, takeout boxes, Starbucks and Ubers? While some of these purchases were made from sheer necessity (you need a roof over your head), others were made for pleasure (a Frappuccino on a broiling summer day? Yes please!). But how many (if any) of these transactions would you classify as meaningful?

For the longest time, consumer behavior researchers have invested considerable effort in understanding what makes a purchase useful (the utilitarian perspective) and what makes it pleasurable (the hedonic perspective). In contrast, there’s been scant research on what makes certain purchases – i.e., the products, services, and experiences we buy– meaningful to us. The research I undertook with my colleagues enables me to answer the question as follows: 

Ø     > A purchase is perceived as personally, deeply, and enduringly meaningful if it can enable at least one of three key experiences: rejuvenation, expansion, and consolidation.

The question of meaningfulness arises from a third perspective, eudaimonia. Introduced by Aristotle’s writings, eudaimonia explains how to lead a virtuous, purposeful, meaningful life. These days we see several related concepts in popular culture – flow, flourishing, holistic well-being, and self-expression. Meaningfulness is one of these facets and, as I describe below, it is possible to find through the time, effort, and money spent by consumers. There are three key themes associated with meaningful consumption: rejuvenation, expansion, and consolidation.

      1. Rejuvenation

Consumers are likely to find a purchase meaningful if it can provide a sense of renewal to them. This can happen in two ways: repair and reconnection. The key idea underlying repair is one of escape and healing from the stressors and strains of modern life. Whether it was a vacation getaway or a daily retreat to the gym, people valued experiences that enabled a temporary relief from the many demands of day-to-day life and allowed them to rest and recharge their batteries. In contrast, the central idea behind reconnection was about renewing relationships. People spoke fondly of annual reunions and basketball game tickets because those experiences were instrumental in helping them keep integral ties of family and friendship alive.

2. Expansion 

Many of us are likely to start finding life dull if there are no new horizons to explore. We saw several examples of how consumers would often seek out intellectual, pragmatic, or relational expansion. Simply put, consumers find meaning in purchases that enable them to broaden their intellectual horizons, learn or sharpen a skill, or forge new relationships. People enthusiastically recounted finding meaning through purchases of books on topics they were interested in, DIY furniture that they learned how to assemble, and thoughtful presents for loved ones as a way of building relationships. As can be seen, the central idea underlying expansion is that of growth, and purchases which can help bring that into consumers’ lives are more likely to end up being meaningful to them.

3. Consolidation

The final experience linked to meaningful consumption tries to capture how certain purchases lead to a deeper and richer understanding of who we are and the larger world we inhabit. We term the former crystallization and the latter contextualization. Much as how crystals form through a slow process of solidification, certain purchases lead consumers toward a better understanding of their own selves, strengths, weaknesses, and achievements. In essence, such purchases helped consumers to better crystallize their own sense of self. In contrast to this relatively more inward perspective, examples of contextualization underscored a more outward perspective as seen in certain purchases which allowed consumers to get a stronger grasp on their position relative to the larger contextual aspects of their existence such as the passage of time, the world they lived in, and even the cosmos. Several such examples originated, perhaps naturally, from experiences during travel. People recalled how visiting now-defunct mining caves gave them an eerie inkling of what life must have been like for miners who used to work there many decades ago. Others spoke of how seeing a rapidly diminishing glacier made climate change that much more vivid to them. Given how a lot has been written about how many of us wish to move toward a greater understanding of ourselves and our place in the world, it was no surprise that such purchases ended up resulting in cherished memories because of their consolidative nature.

Marketers Can Create Superior Value and Deliver Meaningful Consumer Experiences

Services (e.g., bike rentals, gyms, higher education, restaurants, spas) and experiences (e.g., amusement parks, concerts, marathons, theaters, travel packages) lend themselves well to building meaningful consumption. Such marketing applications imply that there will be active buyer involvement and co-creation of value opportunities. A great example of this is the tremendous success of Airbnb vacation rentals which disrupted the hotel sector. Under its ambit, a wide variety of meaningful classes/workshops, walking/food and wine-tasting tours, and interesting or exotic trips are offered to consumers worldwide.

You will find rejuvenation, expansion, and/or consolidation and breathe a sigh of relief as you get away from the office for a few days.  Perhaps, learn candle-making or glass-blowing or be inspired by the splendor of a natural wonder at the end of a hiking trail.

Companies should consider revising their value propositions to go beyond utility and pleasure motivations. To what extent can your company provide meaningful consumption experiences for their target markets? Goods, services, and ideas can be redesigned/ repositioned to increase the likelihood of customers finding your products truly meaningful. In turn, such gratitude will be highly rewarded with increased loyalty, word-of-mouth/word-of-mouse promotion, and enhanced business performance.

*Aditya Gupta, Ph.D., is an Assistant Professor of Marketing at Illinois State University. He may be reached at agupt16@ilstu.edu

1. 

3    

5 Think BIG Disruptions by Thomas Ferleman * [45]

 In the next two years, the most innovative companies will take advantage of 5 THINK BIG disruptions impacting the workplace, consumers, and sellers across nearly every industry. These changes are being played out now, and will reach their zenith by 2025. 

1. Renting Things Instead of Owning Them

Many large value purchases will not be sold as long-term capital expenditures, but rented as operational costs. The automobile and insurance industry will be greatly impacted by this change. Vehicle ownership will move from individuals with long-term bank loans and high insurance premiums to corporation investments. Smart vehicles will become safer and more reliable, thereby reducing the need for repairs, and necessitating changes in traffic laws.

Even home ownership will be impacted, as younger consumers increasingly want to work where they live, instead of being rooted in a cul-de-sac neighborhood. The benefits of a home mortgage as equity may shift to alternative investments with greater liquidity. GenX and GenZ increasingly see retirement as a novelty. They prefer to think of post-work life as an adventure. They will have less need for a fixed location and greater need for rental experiences. 

Computer usage will continue to become a utility. The most innovative companies will not own software, but rent it as-needed. Individual computers will become more standardized and less powerful, as compute power moves to the cloud and consumption is variable. Meanwhile, land-line bandwidth will be obsolete as low-earth orbit internet becomes ubiquitous.

2. Commoditizing Data as Bundled Offerings

With an overwhelming bulge of data from IoT devices, the most innovative companies will harvest targeted segments of information and build data lakes of specialized topics that can be analyzed and re-sold with device level accuracy at the point of presence.

Every transaction made by anyone, at any time, will be available for purchase. Privacy concerns will give way to consumer convenience. Marketers, sellers, and data analysts supported by software developers, will use these data lakes with predictive analytics to influence decision-making on every product, political campaigns, and personal purchases.

The mobility of data means that the consumer's location is no longer relevant. Data bundles will follow the consumer based on device location, and change as vendors earn trust and vie for their attention. Consumers will care less about who makes the product and more about who delivers what they want, when they want it. The postal address will become less important than the consumer's physical location.

3. On-the-Go Consumption

The most innovative companies will find ways to package products and services into smaller-and-smaller form factors. Purchase labeling like QR codes will become obsolete as just-walk-out technology eliminates the need to wait in line to check-out and drone delivery makes its way into our everyday life.

Foods and other ingestible products will move to capsulized form and condensed packaging, where the value is weighted by time and convenience. This change will be felt most acutely at fast-food restaurants, the corner convenience store, and legal psychoactive drugs dispensaries, where consumers just want to get in and out quickly. This change lends itself to automation with the increased use of robotics based on pre-defined and re-sold algorithms that need less customized training.

This, too, will be impacted by the mobility of data. Ordering pizza and beer on the beach will become more common. In fact, the bundling of data will ensure that your favorite New York slice is also available in Malibu; delivered on the sand without even choosing options.

4. Quality of Life 

People will no longer work to achieve a good standard of living; quality of life will be seen as a right, not a privilege to be achieved. The most innovative companies will recognize the value of talent; those that don’t, will struggle to retain top performers and eventually become obsolete. The power of work will continue to move into the hands of the worker. Employment packages, ultimatums, restrictions, contracts, and agreements that control the boundaries of work will no longer ensure talent doesn’t go somewhere else.

Employers that demand butts-in-seats and fixed office locations will be seen as out of touch. People will work where and when they believe it will provide the greatest quality of life. The five days a week, eight-hour work day is dead. Some companies will struggle with time-zone differences, but the most innovative companies will learn to flex worker options and collaborate anywhere and at any time.

Even governments will be forced to adopt flexible work schedules. This will impact the competitive landscape for large, multi-year contracts. With location no longer a requirement, companies will continue to diversify their workforce and leverage regional cost savings. Those that centralize will stagnate. New specializations in human resources and corporate law will emerge to manage employment requirements and taxes at every local level.

5. Automation Everything

Any repetitive task or manual sequence will be a candidate for automation. The most innovative companies will mechanize everything, driving workplace tasks to higher-value outputs and lowering human touch. These companies will dramatically reduce error rates, lower costs, and increase speed to delivery. The smart ones will transfer savings to customers and deepen trust with consumers, resulting in higher profits over extended horizons. Others will look internally to benefit and see only short-term gains that eventually lead to stasis.

Job categories like human resources, legal, administration, manufacturing, and the entire supply chain will become increasingly automated through self-serve functionality at the edge. Quick-click enabled by AI/ML solutions will automate the delivery of a laptop, the selection of benefits, the agreement of a contract, and the movement of goods and services. Human-in-the-loop will move from highly educated subject matter experts, to full-stack software developers able to code and review algorithms that drive high-value, low-cost outputs.

Robotics will become common with modular specialization being rented as commodities. New robotics companies will build specialized platforms for fast food restaurants, big bulk store stocking, last-mile delivery, household services, and medical care. A build once, rent many approach to the use of robotics will drive down costs and make implementation much quicker and easier. The workplace robot will become as standard as the copy machine.

Conclusion

The widely available compute capacity, no-code/low-code development, and AI/ML, Robotics, and Space advancements are making choices more available and easily consumable. The value proposition is now in the hands of the consumer at the edge and not the producer at the build point. From new-venture startups to long-standing big-caps, and from cultural discourse in the public square, to the mom-and-pop shop down the street, we are living in a time of unprecedented change. If you thought the Industrial Revolution was something, just you wait. The band is still warming up.

 

* Dr. Thomas Ferleman is an Enterprise Transformation specialist at Amazon.com, where he leads Digital Innovation engagements using Amazon’s innovation mechanisms like, Culture of Innovation, Working Backwards (Design Thinking), Innovation Pulse Check (Lean Six Sigma/DMAIC) Roadmap, and SMART Solution Design (Agile) to identify specific end-user problems or opportunities and build customer obsessed solutions. He is a Professor, Data Analytics Engineering (DAEN) Master of Science Program, George Mason University College of Engineering and Computing. He specializes in a broad range of data analytics algorithms, tools, and processes for solving a wide range of real-world problems. He holds a Doctor in Strategic Leadership from Regent University, and MBA, MS in Management, and Bachelor of Science from University of Maryland Global Campus. This post was reprinted by permission from the ALL THINGS INNOVATION blog. For more insights from Dr. Ferleman, go to https://ferleman.com

 

A Metric That Matters - Why Corporate Marketers Embrace the Net Promoter Score (NPS) * [44]

 Frederick Reichheld’s seminal article “The One Number You Need to Grow” noted that companies waste much time and resources attempting to measure customer satisfaction via complex surveys which suffer from poor response rates and ambiguous meaning. Building on pioneering work at Enterprise Rent-a-Car, the author found that a single “would recommend” question is a useful predictor of growth, focuses employees on the right corporate priorities, and captures true loyalty rates which clearly affects profitability (Reichheld, 2003).

Doing business today requires accountability for marketing performance tied to financial outcomes. Top executives, board members, and shareholders demand accountability for new and established marketing programs. Superior customer value means knowing customers’ behaviors and buying patterns. Metrics are an important part of the strategic marketing process to understand how successful the organization is now and what it needs to accomplish to become even more successful in the years ahead. Companies employ loyalty and retention initiatives which directly impacts business performance and maximizes long-term value for customers.

A major issue for debate in an organization is what metrics to collect and evaluate. The choices are wide-ranging -- from a single metric such as the Net Promoter Score (NPS) or North Star Metric (NSM) to literally hundreds of potential marketing and performance variables. For example, one leading book on the subject claims that there are 50 marketing metrics that matter related to the marketing mix, profit margins, customer profitability, share of market, the web, and other key areas in business (Faris et al., 2006). Clearly, a focused approach is best. Marketers should choose a limited number of strong industry-specific measures that make the most sense for an organization within the context of a relevant customer value metrics framework.

Measuring Customer Loyalty via the Net Promoter Score

There are many ways to evaluate customer loyalty such as customer satisfaction scores and indexes, repurchase intentions, recommendation intentions, etc. The NPS measure has capture the attention of marketing managers. 

A single-item, 11 point-satisfaction scale -- the Net Promoter Score (NPS) – is used by Enterprise Rent-a-Car, JetBlue, Intuit (manufacturer of Turbo Tax software) and thousands of other companies. It is an easy-to-use and insightful metric to monitor business performance over time. Due to its simplicity and explanatory power, the Net Promoter Score (NPS) has been widely praised by marketing practitioners as the best metric for assessing customer loyalty and a company’s ability to grow.

A Net Promoter Score (NPS) is calculated as follows (Satmetrix, 2011).

 1. Following the service experience, ask each customer one simple question:

2.      Based on your last experience with Company X, how likely would you be to recommend Company X to a friend or colleague? (Customers respond on a 0-10 point rating scale where 0 is not at all likely and 10 is extremely likely).

       2.  Respondents may be promoters (9-10), passives (7-8) or detractors (0-6). 

T    3. The % of customers who are detractors is subtracted from the % of who are promoters (passives are not considered in the analysis) to compute your NPS.

      Example: 78% of JetBlue customers are promoters, 12% are passives and 10% are detractors. Jet Blue’s NPS is 68. This is then compared to the competitive set. For example, Southwest Airline’s NPS is 62, Delta Airlines and the industry average is 38, and United Airlines is 10.

Mike Gowen, Co-founder of Delighted, says that NPS scores should be assessed absolutely and relatively. He suggests five ranges of customer experience: a negative number is poor performance, <30 = lots of opportunities for improvement, 31-50 = quality experiences are delivered, 51-70 = excellent customer experiences and 71+ is world class customer experiences. From a relative perspective, the software industry has an average NPS score of 41; a low score is 28 and TurboTax has a high score of 55 (Gowen, 2017).   

Enhancing Your NPS Program

While the potential real-world advantages -- long-term value creation, customer loyalty, and corporate growth -- of a well-executed NPS initiative are clear, researchers are concerned that this single-item metric is subject to measurement bias, lacks validity, and may be inferior to other customer satisfaction and loyalty measures.

Here are three ways you can improve and adapt the NPS approach. First, the psychometric properties of the scale can be reevaluated. While an 11-point (0-10) point scale is intellectually appealing, consider using a 3-point (detractors, passives, or promoters) scale or the standard 5 or 7-point Likert scales. NPS research has been found to fare well on test-retest reliability -- a recent study reported an r =.75 which exceeded satisfaction with the brand r=. 70 and attitude toward the brand, r=.69 (Sauro, 2018). Further work is needed for other forms of reliability and validity.

Second, the idea of the customer may be extended to other stakeholders such as employees, suppliers, affiliates, and so forth. In response to management’s reliance on NPS, United Airlines flight attendants pushed back by introducing a weekly FPS (Flight Attendant Promoter Score) to evaluate management practices. The early returns were not good as flight attendants gave airline management a minus 95 week one (Murphy, Jr., 2022).

Third, employees in many industries are reported to be stressed from increased pressure to achieve excellent numbers. A more balanced view which would include NPS as part of a battery of key metrics is recommended. For further reading on customer value metrics, see blog posts 13, 18, 25, 36 & 38.

References  

Farris, P.W, et al. (2006). Marketing Metrics: 50+ Metrics Every Executive Should Master, Upper Saddle River, NJ: Wharton School Publishing.

Gowen, M. (2017). What is a good Net Promoter Score to have? Response (May 19), www.quora.com/What-is-a-good-net-promoter-score-to-have/

Murphy, Jr. (2022). United Airlines flight attendants just made a big announcement and basically nobody is happy, Inc., August 6.

Reichheld (2003). The one number you need to grow, Harvard Business Review, December.

Satmetrix (2011). Calculate your Net Promoter Score, www.satmetrix.com/net-promoter/

Sauro, J. (2018). Measuring the reliability of the Net Promoter Score, Measuring the Reliability of the Net Promoter Score – MeasuringU

* Art Weinstein, Ph.D., is the blogmaster and a Professor of Marketing at Nova Southeastern University. He may be contacted at art@nova.edu

 

 

 

 

The Value of Customer Centricity: Listening with the Head, Heart, and Feet by Kanika Meshram * [43]

           

          The pandemic has upended how brands create customer value. As marketers continue to think what's new and valuable to customers, I have three brands that just got this right.

Ø  Airbnb, we all missed travelling during those dreadful lockdown periods. This meant Airbnb was nowhere near as popular as it used to be, but this brand differentiated their value position. They offered 100,000 stay places for healthcare workers and first responders around the world. They also waived all fees for healthcare workers [1].

Ø  Would we survive without Amazon.com in the early days of lockdown? I certainly did not. As a world leader in e-commerce, Amazon became the emergency anchor for those desperate to stock up on vital household goods and products to protect them from Covid-19, like hand sanitizer, face masks and disinfectants. How did they do this, read on.

Ø  Stagekings, an Australian live event stage design company, practically shut down overnight due to ban on public gatherings in the pandemic. Jeremy Fleming, the Managing Director of Stagekings decided to write an open letter to people. In his letter he wrote, “we want to keep our specialist tradespeople off the streets and our factor lights on, so tell us what is it that you guys need now that you’re stuck at home?’ His compelling open letter went viral and helped him launch IsoKings, a work from home furniture making company— reporting a profit of 1.5 million in less than a year.  

If you look closely, all these three brands have an important connection—customer-centricity an almost difficult to define concept as it is to achieve. Lamberti (2013) defines customer centricity as putting customers’ interests at the centre of a firm’s actions. Yet, 85% of brands fail at achieving just that thus, value creation. [2] Let’s unpack this dilemma for a moment. Most brand have a customer centric value proposition —defined as promise that summarises why consumers should buy a firm’s offering (Payne et al., 2017). But when the pandemic hit, something became very clear; most companies had shallow knowledge on their customers because of which they couldn’t adapt their value offerings quickly enough to cater to the evolving needs of their consumers.[3] Then, for those that were getting close to customers were accused of invading customer privacy. [4] But then how did Amazon, Air BnB and Stagekings managed to create a customer centric business model which is built on the heart, head, and feet?                         

Customer centricity starts from the heart, as does organisation culture. In case of Airbnb their business model delivers a welcoming and inclusive work culture throughout employee journey from recruiting and onboarding to physical facilities, and food. [5] In an anonymous employee satisfaction survey conducted by Glassdoor, 90% stated that they would recommend Airbnb to others. The company also significantly invests in creating partnerships between their employees, customers, and Airbnb host. Pre-Pandemic, the three co-founders of Airbnb consistently visited and stayed at the homes of key hosts around the world, an experience that likely built significant loyalty (Sundararajan, 2014). Thus, through Airbnb we learn the valued role of organisational culture in deploying empathy by walking into the shoes of the customers.                                                              

Another universal truth is that value is not just about winning customers’ hearts but also their head (or minds). Customers care about value —both price and time. Hence, in the lockdown period, Amazon leveraged machine learning to forecast when customers are going to place next order based on their buying patterns. According to David, the vice president of global customer fulfillment at Amazon, “machine learning models running in the background gave us different scenarios that allowed us to plan consumer spending patterns, when different cities conducted different styles of lockdowns.” [6]. Now not everyone knows how to use AI to interact with customers. But the benefit here is that customers are almost always interacting with AI. They look at their phones up to 150 times a day checking Facebook, comparing prices, researching travel, or paying bills. At any given moment a customer could be engaged in multiple interactions — transactional, personal, or even non-intentional. Some will be pleasant and entertaining, some rife with friction and frustration. But the key takeaway is that customer value creation is not only evolving, but increasingly fragmented and highly individualised. Which Amazon learned sooner than other brands.                                                                                                        

Finally, customer centricity should be the feet—the purpose of your brand existence. In market orientation literature, the underlying assumption is that a company is a repository of resources and competences. They develop products and services as their core value proposition, then the company acts on them or modifies the offer to meet customers’ expectations (Galbraith, 2002). But consider IsoKings, a brand launched out of desperation to survive the extensive lockdowns in Australia. From the outset, Jeremey Fleming had no money nor the inclination to use direct marketing to sell his furniture. Instead, he focused on direct communications with customers via social media and product reviews. Jeremy asked customers what furniture they needed, people would respond, we want a shoe rack and then 100 people would agree. So, he made a shoe rack. Then he had 1,000 people ask for a cat tower. So, he did a post and said if 400 people like or comment on this, we’ll make a cat tower and they did, so they did. Keeping customers at the core of their value delivery system IsoKings was able to expand his product line from a single work from home desk to 170 home furniture products in the lockdown period. Reflecting on these brand example, a critical learning curve for customer-centric business models is to create value by listening to customers from the head, heart, and feet.   

---

[1] https://news.airbnb.com/en-au/airbnb-hosts-to-help-provide-housing-to-100000-covid-19-responders/

[2] https://www.lbbonline.com/news/its-not-you-its-me-why-brands-fail-at-customer-centricity

[3] https://www.forbes.com/sites/garydrenik/2021/09/21/85-of-products-fail-when-companies-dont-talk-to-consumers--this-company-is-changing-that/?sh=70364a7d2aa2

[4] https://www.forbes.com/sites/dbloom/2022/03/15/consumers-want-privacy-data-protection-from-brands-but-still-love-email-too/?sh=455604548ea4

[5] https://www.livingroomanalytics.com/how-airbnb-became-the-worlds-best-place-to-work

[6] https://www.mccormick.northwestern.edu/news/articles/2021/02/how-amazon-moved-faster-than-ever-during-the-pandemic.html

References

Galbraith, J. R. (2002). Organizing to deliver solutions. Organizational dynamics, 31(2), 194.

Lamberti, L. (2013). Customer centricity: the construct and the operational antecedents. Journal of Strategic marketing, 21(7), 588-612.

Payne, A., Frow, P., & Eggert, A. (2017). The customer value proposition: evolution, development, and application in marketing. Journal of the Academy of Marketing Science, 45(4), 467-489.

Sundararajan, A. (2014). What Airbnb gets about culture that Uber doesn’t. Harvard Business Review, 11. 

 * Dr. Kanika Meshram is a Lecturer in Management and Marketing at the University of Melbourne. She may be reached at kanika.meshram@unimelb.edu.au. Professor Meshram has written this blog post from her research on customer centricity and interview with Jeremy Fleming from Stagekings, Australia.

Designing Your Customer Engagement Strategy by Laura Patterson * [42]

How would your customers categorize their experience with your firm? A Forrester Research study that shared the findings from interviews with more than 4,600 U.S. consumers about their interactions with 133 companies across a variety of industries revealed that ONLY 13 firms received “excellent” ratings, while 45 were rated either “poor” or “very poor.” Clearly the results suggest improving customer experience and customer engagement will drive better business results.

Defining Customer Experience

Forrester categorizes the customer experience as the sum of three elements: meeting needs, being easy to work with, and providing customer enjoyment. The more complex your internal processes and the more interconnected technologies you have, the greater the opportunity to negatively impact the experience. Companies who are too internally focused, struggle the most with improving customer experience. To affect customer experience and engage customers you need to be a customer-centric organization. Customer-centric organizations evaluate processes, technologies, personnel, and decisions in terms of the impact on their customers and recognize that customer experience and engagement can be a valuable differentiator in the market.

How do your touch points impact your customer’s experience?

Earn High Marks

Companies who achieve high marks for customer experience generally have invested in cross-channel alignment, established customer-centric metrics, and have a customer-centric culture. These organizations recognized that a positive experience is the responsibility of everyone in the organization. The organizations objectives, strategies and metrics are aligned in order to facilitate the customer experience.

Customer-centric companies have mapped all the customer touch points and are committed to improving touch point effectiveness. Studies suggest that few companies are good at mapping their customer touch points. Mapping customer experience across all touch points has a tangible impact on the ability to engage with customers. Companies who have mapped the customer touch point process feel this approach has positively affected the success of their customer engagement strategy. Mapping customer touch points is something any company can initiate.  Improve your touch point effectiveness with our Touch Point Effectiveness Workshop.

Four Key Elements to Delivering the Ideal Customer Experience

When it comes to metrics, customer-centric companies monitor customer metrics such as engagement, loyalty, retention, growth, and on-boarding for new customers.  Research suggests that the ideal experience fulfills four key elements:

1. Convenience: An enterprise needs to deliver on ease of contact, short wait times, through any channel the customer prefers
2. Competence: Humans or self-service tools need to have fingertip access to all necessary information and be consistent across all channels
3. Personalization: Companies and their web sites must recognize and remember the customer, and use existing information about them appropriately
4. Proactivity: A company must proactively reach out whether by phone, text message, or other channels. The topics range from a simple follow-up to informing the consumer about relevant products and services (while still respecting the need for permission and being mindful of customer preferences).

While improving customer experience and engagement won’t cure all the problems your company is facing, it is a pivotal opportunity. Customers are becoming increasingly intolerant of poor customer service. Customer engagement is seen as being about creating relationships which result in value both for customers and for organizations. Research by E-Consulting and Cscape found that a customer engagement strategy increases long-term customer value and the value delivered to customers.

Develop Your Strategy

After you take a look at your current capabilities and map your customer touch points, you can begin to develop a strategy that will enable you to create the ideal experience and improve engagement with customers. To deliver an ideal customer experience, it is important to have a well thought out customer experience and engagement strategy. To be successful the strategy will need to address customer interaction in all its forms (web, phone, etc.), personnel skills, infrastructure to support customer-centric processes and data collection, business process, and customer-service and engagement data.

* Laura Patterson is a marketing practitioner, consultant, writer, and speaker. Contact her at  laurap@visionedgemarketing.com. Also, check out Laura's other articles [22 & 38] on the Customer Value in the Now Economy blog.