insights! episode #43: 3 disruptive strategies - how retailers and manufacturers stay competitive

Joubin Rahimi: 

Great to have you back! My name is Joubin Rahimi. In the new episode of "insights!" it's about how you can successfully introduce customer experience in your company - with the help of three disruptive strategies. 

First I'd like to explain the term "disruption strategy". Disruption means strong change, but not necessarily destruction. It's about questioning established ways of doing things and taking new paths. In the customer experience space, there are two big areas among our client base: retailers and manufacturers. When we talk about customer experience, we're also always referring to the topic of "direct-to-consumer" (D2C). For manufacturers, D2C is mainly about the "2C", and for retailers it's mainly about the "D2" – they already have the C. Both have different starting points, but the target picture is the same: selling their own products and brands directly to the end consumer. The challenges differ, but the goal is the verticalisation of the value chain. 

That's why we call the first disruption strategy: retailers become manufacturers, manufacturers become retailers. This means that a manufacturer doesn't just make products and also generate part of the brand, which then reaches the end consumer via retail. Instead, the products reach the end consumer directly. On the other side, the retailer first has to build up this brand. This isn't just about retail brands like JA & Co. or Rewe Best, but about genuine brands that can also stand on their own. This poses a challenge for both companies. Ultimately, it's a verticalisation of the value chain, which benefits both companies. This requires a fundamentally different way of thinking. If I sell directly as a manufacturer, I suddenly have different requirements for my ERP system. I also have to think about how I approach customers, how I reach them directly and how I handle the whole process. How lenient am I with returns? These are things I need to think about and that need to be handled differently. So the first strategy is: retailers become manufacturers, manufacturers become retailers. The target picture is always the same, namely a complete verticalisation, not necessarily in terms of production, but above all in terms of the conceptual development of the product and the brand right through to sales to the end customer, whether directly, optionally via retailers or other sales channels. Ultimately, it's about verticalisation. However, both companies come from different worlds. Manufacturers aren't used to selling directly. They first have to learn that, since it works differently. Retailers haven't established their own brands so far. Brand building also needs to be learned. These are different disciplines requiring different skills, as well as different processes. Every company needs to be clear about that. This doesn't just happen on the side, it requires concentration and focus. It's no surprise that one company or another spins this off as a standalone project. One example of this is BabyOne, which launched with a new pushchair brand. A dedicated team independently worked out how to develop the product in order to then launch it independently as well. Of course, it will be available via BabyOne and other channels too. That's disruption number one.  
 
The second disruption strategy is to know your customer. That sounds very simple, but if I'm a manufacturer without a CRM system, it's relatively difficult. Even as a retailer with only a few customer retention tools or loyalty programmes, I ultimately have no real insight. Then the concept of "know your customer" is more of an empty promise. It starts with collecting data, of course. In today's climate, where the General Data Protection Regulation (GDPR) is taken very seriously, you have to weigh this carefully. But ultimately it's about collecting data and analysing it cleverly. Where is the customer heading? What genuinely interests them? How can I position my products better? Where should my brand be positioned? I can find all this out if I listen attentively to the customer, introduce a CRM system, turn market observations into data and evaluate the whole thing, in order to ultimately give it back to the customer as added value. 
 
The third area involves continuing to support products digitally and supplementing them with services. This is completely new for both types of companies. If, for example, I sell a product like a camera, and up to now have distributed it via platforms like Amazon, as a retailer I had no direct contact data or customer contacts. But how can I manage to establish customer contact? This is where digital services come in. For example, when buying that camera, you could offer cheaper photo books. Or if it's a tennis racket, there could be a tennis racket app that analyses playing style and shows opportunities for improvement. These additional digital services are crucial for improving and advancing the customer experience. They not only offer added value for the customer, but can also represent a revenue stream, since they can generate ongoing, recurring revenue. 

So these are three strategies that will help you significantly improve customer experience at your company and make your customers happier. If you liked these three disruption strategies, click "Subscribe" below or download our whitepaper to dig even deeper into the topic.