Talking to customers about what they want from your store will take the business to another level
Wouldn't it be great if, like in the Mel Gibson film What Women Want, you could experience a minor lightning strike and instantly be able to hear what your customers are thinking? It could reveal why customers do or don't browse certain parts of a store, or why a particular new product or service you were convinced would sell like hot cakes is moving slower than a snail.
But it doesn't have to be about second guessing what your customers want - you could do a really crazy thing and just ask them. Plenty of independent retailers are taking the time to get into the minds of their customers using some simple measures that don't cost the earth. From setting up a suggestion box and incentivising customers to answer a few questions while they browse the aisles, to organising and holding focus groups, retailers across the country are finding out exactly what their customers want, to help them build a better business.
Mike Greene, chief executive of shopper research company HIM, which has organised focus groups for the likes of c-store chain David Sands in Scotland, stresses the importance of customer research: "A lot of retailers build a format by putting in what they want to see and what they want to sell, rather than what the customer wants. It starts and ends with the customer - the range you put in, the promotions you run, the store layout, the pricing - so if you haven't researched what they want, you shouldn't be surprised if the offer doesn't perform as well as you want it to."
Greene says that finding out what your customers want can be simple. "You can go the whole hog and buy into a full customer-wide programme like the Convenience Tracking Programme, but that's the Rolls Royce end. Simple customer groups work well - you can get a group of your customers together, provide them with a glass of wine, offer to donate some money to a local charity, and ask them 'what's important to you; what would you like to see sold here?'. Without knowing what's important to your customers, you won't know if you're satisfying all of their needs or shopping missions. You can't know that unless you ask.
"A customer can be schizophrenic in their shopping missions - they might want their newspaper on the way to work, something for dinner tonight, or shopping for a Big Night In with the girls. They might go to one store regularly, but might only see that store as credible for certain missions. By speaking to customers, you can find out whether you're delivering all the different missions, or where they're going for those you're not providing. How retailers can expect to get that information without speaking to customers is crazy. It's like trying to hit a goal that you can't see."
Jonathan James, who runs five Budgens stores - four in Cambridgeshire and another in Dersingham, Norfolk - is one retailer who's realised the benefits of talking to his customers. He has been organising focus groups and in-store questionnaires for about three years. He now employs a part-time community manager to act as a liaison between himself, his customers and the wider community. Jonathan's customer panel, which meets every two months, gives him the opportunity to air ideas and discuss what the locals want from his shops. His community manager, Sarah Stevens, also conducts regular questionnaires to gauge shopper opinion.
"We offer customers the opportunity to win a £30/£40 hamper in return for taking a couple of minutes to answer a questionnaire," Jonathan explains. "Questionnaires and focus groups allow us to dip our toe in the water before jumping in. The whole industry is good at guessing what customers need, but never takes the time to ask them. Our focus groups have really helped us with some pretty major decisions."
The customer panel is made up of a cross-section of the community - the old, young, middle-aged and mums - and Jonathan asks them questions, or they come up with ideas for the business. "We publicise the group as best we can so other customers know who they are, and they can liaise between customers and myself. We tend to get good and bad feedback, but we wanted to hear the truth about what our customers thought of our shops."
Jonathan incentivises the customer panel by making them custodians of a community fund. "I give them the opportunity to be custodians of a £1,000 pool, which we call the Community Chest, and community groups apply to them for funding.
"Members of the scouts, brownies and so on can apply and the customer panel dishes out the money. That allows me to take a step back, because I'm not personally deciding where the money goes."
Jonathan says it's impossible to put a figure on the benefits that doing such in-depth customer research brings to a business. "You can't put your finger on it because there's so many things we get involved in via the customer panel. I can't compete with the multiples on price or on marketing - I can't get the Spice Girls to advertise my shops - but by doing this, it's more about entwining myself with the community in which I trade. It works very well."
One idea that came from the customer panel has given a clear boost to turnover, though. The group suggested that they have a fresh fish van every Friday outside the Soham store. "They came up with the idea and even organised it as well. Now turnover is up £1,000 on Fridays."
Other retailers, like Nigel Owen, who runs a Londis store in Malpas, Cheshire, have used suggestion boxes to great effect. When Nigel and his wife Joanne revamped their store and extended their offer, they wanted to know that what they were putting in was what the customers wanted. "We put a hamper on the counter as a suggestion box to find out what our customers wanted us to stock," says Nigel. "The suggestions people made were phenomenal. Some things I'd never heard of, such as pearl barley, but 10 people asked for it and it's selling.
"We must have had 500 suggestions, and quite a lot of people said the same things. Some suggested unusual items that we thought would never sell but when we tried them, they did. It's important to let the community have their say. It's like carrying out market research without leaving the shop."
HIM's Mike Greene stresses that for customer research to be effective, it needs to be done regularly - not just as a one-off. "If you look back five years, you wouldn't have been able to go into a c-store to get a TV licence, or top-up your mobile phone in-store electronically, or assume the store would have an ATM, so it would be naive not to do research regularly. It should be done at least once a year, if not twice."
Speaking to a variety of customers is also important. "You need to listen to those who want to give an opinion, as well as those you have to tease it out of. If you take stereotypes, the middle-aged person who doesn't work may be willing to stop and talk, but you could be missing out on the young mum or professional who has limited time. They might not stop and speak in the street, but you could get them to agree to come along one evening as part of a focus group.
"It needs to be structured. The vociferous male can take over a focus group so you should aim to get a good mix of people. You need a minimum of six and a maximum of 10 per group and need to do three or four of them to get different age ranges and sex mixes."
Bigger retailers use technology to research their customers. Before United Co-op merged with Leeds Co-op and the
Co-op Group, it used in-store cameras to monitor shopper behaviour and high-tech virtual shops to come up with a 'Perfect Store', in partnership with Unilever. Cameras were put into the 3,000sq ft neighbourhood store in Bradwell to find out how customers shopped the store over three consecutive weeks.
The research found that most customers - 70% - walked up the first aisle towards the fresh offer at the end, but 20% turned off at a break in the gondola run which came before the fresh offer. This meant 50% failed to see the fresh and dairy fixture at all.
The two gondola ends in the first aisle break both featured promotions, but these weren't being shopped.
The research also revealed that the food-for-now products weren't being shopped as expected either. The food for now was in a 'cold area' of the store, despite being near the entrance and till point.
Analysis of the behavioural research led to a focus on three shopper missions - food for tonight, food for now and top-up - and the creation of three clear areas so that customers on a particular mission could find everything they needed to.
Rather than plough ahead with layout changes based on this research, Unilever commissioned a 3D virtual world of the proposed layout, as well as the existing one, to validate the proposal. Five hundred Bradwell shoppers were then recruited to shop on computers in the virtual world with a particular shopping mission in mind. The results were compared with shoppers' in the real world.
Penetration, number of products purchased, number of categories purchased and customer flow were all validated, and within about six months of the new-look store being launched, average weekly sales were up 10%, fresh food sales increased by 2.4%, and margins were up by 9.7%.
Wouldn't it be great if, like in the Mel Gibson film What Women Want, you could experience a minor lightning strike and instantly be able to hear what your customers are thinking? It could reveal why customers do or don't browse certain parts of a store, or why a particular new product or service you were convinced would sell like hot cakes is moving slower than a snail.
But it doesn't have to be about second guessing what your customers want - you could do a really crazy thing and just ask them. Plenty of independent retailers are taking the time to get into the minds of their customers using some simple measures that don't cost the earth. From setting up a suggestion box and incentivising customers to answer a few questions while they browse the aisles, to organising and holding focus groups, retailers across the country are finding out exactly what their customers want, to help them build a better business.
Mike Greene, chief executive of shopper research company HIM, which has organised focus groups for the likes of c-store chain David Sands in Scotland, stresses the importance of customer research: "A lot of retailers build a format by putting in what they want to see and what they want to sell, rather than what the customer wants. It starts and ends with the customer - the range you put in, the promotions you run, the store layout, the pricing - so if you haven't researched what they want, you shouldn't be surprised if the offer doesn't perform as well as you want it to."
question time
Greene says that finding out what your customers want can be simple. "You can go the whole hog and buy into a full customer-wide programme like the Convenience Tracking Programme, but that's the Rolls Royce end. Simple customer groups work well - you can get a group of your customers together, provide them with a glass of wine, offer to donate some money to a local charity, and ask them 'what's important to you; what would you like to see sold here?'. Without knowing what's important to your customers, you won't know if you're satisfying all of their needs or shopping missions. You can't know that unless you ask.
"A customer can be schizophrenic in their shopping missions - they might want their newspaper on the way to work, something for dinner tonight, or shopping for a Big Night In with the girls. They might go to one store regularly, but might only see that store as credible for certain missions. By speaking to customers, you can find out whether you're delivering all the different missions, or where they're going for those you're not providing. How retailers can expect to get that information without speaking to customers is crazy. It's like trying to hit a goal that you can't see."
focus groups
Jonathan James, who runs five Budgens stores - four in Cambridgeshire and another in Dersingham, Norfolk - is one retailer who's realised the benefits of talking to his customers. He has been organising focus groups and in-store questionnaires for about three years. He now employs a part-time community manager to act as a liaison between himself, his customers and the wider community. Jonathan's customer panel, which meets every two months, gives him the opportunity to air ideas and discuss what the locals want from his shops. His community manager, Sarah Stevens, also conducts regular questionnaires to gauge shopper opinion.
"We offer customers the opportunity to win a £30/£40 hamper in return for taking a couple of minutes to answer a questionnaire," Jonathan explains. "Questionnaires and focus groups allow us to dip our toe in the water before jumping in. The whole industry is good at guessing what customers need, but never takes the time to ask them. Our focus groups have really helped us with some pretty major decisions."
The customer panel is made up of a cross-section of the community - the old, young, middle-aged and mums - and Jonathan asks them questions, or they come up with ideas for the business. "We publicise the group as best we can so other customers know who they are, and they can liaise between customers and myself. We tend to get good and bad feedback, but we wanted to hear the truth about what our customers thought of our shops."
Jonathan incentivises the customer panel by making them custodians of a community fund. "I give them the opportunity to be custodians of a £1,000 pool, which we call the Community Chest, and community groups apply to them for funding.
"Members of the scouts, brownies and so on can apply and the customer panel dishes out the money. That allows me to take a step back, because I'm not personally deciding where the money goes."
Jonathan says it's impossible to put a figure on the benefits that doing such in-depth customer research brings to a business. "You can't put your finger on it because there's so many things we get involved in via the customer panel. I can't compete with the multiples on price or on marketing - I can't get the Spice Girls to advertise my shops - but by doing this, it's more about entwining myself with the community in which I trade. It works very well."
One idea that came from the customer panel has given a clear boost to turnover, though. The group suggested that they have a fresh fish van every Friday outside the Soham store. "They came up with the idea and even organised it as well. Now turnover is up £1,000 on Fridays."
Other retailers, like Nigel Owen, who runs a Londis store in Malpas, Cheshire, have used suggestion boxes to great effect. When Nigel and his wife Joanne revamped their store and extended their offer, they wanted to know that what they were putting in was what the customers wanted. "We put a hamper on the counter as a suggestion box to find out what our customers wanted us to stock," says Nigel. "The suggestions people made were phenomenal. Some things I'd never heard of, such as pearl barley, but 10 people asked for it and it's selling.
"We must have had 500 suggestions, and quite a lot of people said the same things. Some suggested unusual items that we thought would never sell but when we tried them, they did. It's important to let the community have their say. It's like carrying out market research without leaving the shop."
HIM's Mike Greene stresses that for customer research to be effective, it needs to be done regularly - not just as a one-off. "If you look back five years, you wouldn't have been able to go into a c-store to get a TV licence, or top-up your mobile phone in-store electronically, or assume the store would have an ATM, so it would be naive not to do research regularly. It should be done at least once a year, if not twice."
Speaking to a variety of customers is also important. "You need to listen to those who want to give an opinion, as well as those you have to tease it out of. If you take stereotypes, the middle-aged person who doesn't work may be willing to stop and talk, but you could be missing out on the young mum or professional who has limited time. They might not stop and speak in the street, but you could get them to agree to come along one evening as part of a focus group.
"It needs to be structured. The vociferous male can take over a focus group so you should aim to get a good mix of people. You need a minimum of six and a maximum of 10 per group and need to do three or four of them to get different age ranges and sex mixes."
Eye spy
Bigger retailers use technology to research their customers. Before United Co-op merged with Leeds Co-op and the
Co-op Group, it used in-store cameras to monitor shopper behaviour and high-tech virtual shops to come up with a 'Perfect Store', in partnership with Unilever. Cameras were put into the 3,000sq ft neighbourhood store in Bradwell to find out how customers shopped the store over three consecutive weeks.
The research found that most customers - 70% - walked up the first aisle towards the fresh offer at the end, but 20% turned off at a break in the gondola run which came before the fresh offer. This meant 50% failed to see the fresh and dairy fixture at all.
The two gondola ends in the first aisle break both featured promotions, but these weren't being shopped.
The research also revealed that the food-for-now products weren't being shopped as expected either. The food for now was in a 'cold area' of the store, despite being near the entrance and till point.
Analysis of the behavioural research led to a focus on three shopper missions - food for tonight, food for now and top-up - and the creation of three clear areas so that customers on a particular mission could find everything they needed to.
Rather than plough ahead with layout changes based on this research, Unilever commissioned a 3D virtual world of the proposed layout, as well as the existing one, to validate the proposal. Five hundred Bradwell shoppers were then recruited to shop on computers in the virtual world with a particular shopping mission in mind. The results were compared with shoppers' in the real world.
Penetration, number of products purchased, number of categories purchased and customer flow were all validated, and within about six months of the new-look store being launched, average weekly sales were up 10%, fresh food sales increased by 2.4%, and margins were up by 9.7%.
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