The Experience Economy: Are SA retailers ready?
by Nathalie Schooling. South African retailers are at risk of losing customers and market share to competitors who have a better understanding of the value of the experience economy.
by Nathalie Schooling. South African retailers are at risk of losing customers and market share to competitors who have a better understanding of the value of the experience economy. With sales hurt by slower consumer spending, the dinosaurs of the retail sector are ripe for the picking.
For too long, large retail brands have been paying lip service to the concept of customer experience. But stark changes in customer preferences and behaviours threaten to unseat brands that are not adapting to the times.
The biggest change has been the emergence of the experience economy, which aims to meet consumers’ desire to be at the centre of the buying experience. Not only do brands have to create amazing physical interactions, but they have to be at the top of their e-commerce game as well.
Doing this successfully demands a clear understanding of what customers want – and delivering that.
This is something that leading global brands have mastered. According to a recent PWC report, “consumers are willing to pay as much as 16% more for a great customer experience”.
Clear and present danger
This is bad news for local brands that are unprepared for competition from global brands with the budget, the technology and the experience to wow customers. Tech giants, for instance, have raked in customers by the hundreds of millions as their services easily cross borders at a pace and scale never seen before.
The speed of their advance has left countless industries – from the media world to metered taxis – lurching as they try to adapt. Uber, for instance, has run circles around the metered taxi industry, while opening up new opportunities for owners, drivers and commuters. Similarly, Netflix and other streaming services are battling for an audience who are only too happy to switch for the seamless convenience of watching movies at home.
Unlike the pre-internet era when a physical presence was needed to offer services to a local customer base, digital services are now being beamed in from anywhere. It’s hardly surprising that companies able to offer their customers what they want, when and how they want it, are the ones who are winning market share.
The profit motive
A study done by nlighten showed that a brand could see as much as a 30% increase in sales if it maintained consistently high levels of customer satisfaction. Which is a lesson that SA movie theatres, for example, could bear in mind as the convenience of online booking is overshadowed by the hiccups in the steps that follow. Who could blame consumers for preferring to cuddle up at home on the couch without any of that inconvenience?
Ironically, the movie-ticket booking example is but one of many where companies have digitised their processes, particularly customer-facing services. So, it’s not that SA companies are not trying, but all too often they see the technology as the solution, rather than merely the delivery mechanism.
Great customer experience starts with a strategy, from which an action plan emerges that should hopefully result in this becoming part of the brand culture. And this is the trick that too many companies are missing when looking to up their game. An organisation’s customer experience strategy has to be a holistic one that addresses a customer’s every touch point.
Fortunately, a successful customer experience plan represents the low-hanging fruit that brand managers can harvest to deliver bottom line benefits.
Nathalie Schooling is the CEO of nlighten. Following a career in marketing, Schooling founded nlighten in 2005. Since then, she has grown nlighten into one of South Africa’s foremost customer experience companies. Her greatest strength is helping build businesses that are innovative, have purpose and are able to optimise their human capital – every organisation’s most important asset.
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