You often read about how to offer an extraordinary buying experience to clients and about the logic and the technology needed to reach this goal.
But, why is buying experience so important now? The answer is: because we, as buyers, are now more than ever aware that, when we buy a product/service, we are emotionally buying a brand story, a powerful experience which have an impact on our senses. Studies show that companies overperforming at the buying experience level can, given their specific product category, increase their income by 35% more than equivalent sized competitors.
What I really want to discuss here it is not how to develop an effective communication strategy or how to organize your costumer care or sales office but how Retail shapes its Vision, the starting point of your organization, by defining your values and your Mission to develop a business strategy which is coherent with your values, your goal and your purpose.
There are many business models you can choose and put into practice but the fundamental question you have to ask yourself and your business is: which quality decision do I have to make to gain the maximum value from my investment? And this decision can be made from a profit, brand awareness or social/environmental impact point of view either taken as a single element or mixing them.
You can’t simply “copy” a successful decision and/or strategy. Many believe in the “perfect recipe” myth, based on the belief that, if the launch decision worked for another business’s product, it will work for your business as well.
Most of the time, it is a wrong belief, because the success of such an action depends on different factors:
- Company culture
- Business organization
- Business goals
- Company Purpose
- You have a great competitive edge if you are the first to launch a product/service
A clear example of this is the macramé wristband produced by Cruciani. It sold by the millions and other businesses, following the success of this brand, copied the idea but picked only the bits.
Leaving this case study aside but remembering the lesson it can teach us, let’s now focus on a practical situation Retail entrepreneurs and businesses have faced.
There is a company with 1 brick and mortar store in 1 city and business is doing great. Management can make investments for a certain budget and, in success euphoria, their next goal is to open a second store.
Stratego Customer wants to understand if this is the quality decision to get the most value from an investment.
The question now is, following the Lean Decision Quality method: what are my alternatives?
In order to answer, we now define which strategic decisions to make, putting them in the Strategy Table, leaving out tactical decisions (how the store will look like, the features of the products, the marketing plan) and keeping in mind the company policy (e.g. a good name to protect)
The strategic decisions to make are: where we want to launch our product/service (geographical market), the kind of store we want to open (physical, virtual, franchising), our target (B2B, B2C, B2B2C), our price performance, any partnership which could make our business gain speed and the investments to influence the market to have our product/service bought.
Once strategic decisions are made each with its option, we moved to the creative brainstorming process (divergent thinking) which will produce some alternatives all sharing the following features:
- Being creative
- Significantly different
When the alternatives are produced, we will choose one option in each strategic decision of the Strategy Table.
Remember our goal: expand our business opening a new store. Which are the alternatives I have to reach the maximum value from my decision?
We then have built a rationale for each alternative, highlighting its greatest uncertainties, and its strong and weak points.
Alternative: Brick & Mortar store
Market is expanding in a new city, store model is “physical”, target and price performance are the same as the existing store, there is no need to sign a partnership, and marketing strategy focuses on being known in the new city with a medium-high investment.
Uncertainties derive from location, target, trained employees and successful communication.
Strong points: physical store, brand identity and a buying experience producing a real experience
Weak points: high investment to build and manage the store
Market is virtual expansion in our Continent. Target is the same, if not even larger, and price performance (in terms of experience as well) is good. The store could be managed internally or outsourced to specialized employees. Marketing strategy focuses on being known throughout Europe with a medium-sized investment (communication, management, etc…).
Uncertainties derive from effective communication, focusing on a given target and generating product appeal.
Strong points: the fusion of physical and virtual channels and expanded target
Weak points: build the digital image of the brand
Market is nationwide expansion. Store model is physical. Target is the same and price performance are excellent. There could be a partnership with stores selling complementary products, and the store could be managed internally or outsourced to the partner. Marketing strategy focuses on being known nationwide with a medium investment (communication, management, etc…)
Uncertainties derive from effective communication, focusing on a specific target and generating product appeal.
Strong points: geographical presence with small investment
Weak points: finding adequate location and partners
Market is nationwide expansion. Store model is physical. Target is the same with good price performance. Management is outsourced to the franchisee. Marketing strategy is being known nationwide with a medium-sized investment (communication, format definition, etc…).
Uncertainties derive from effective communication, finding the right partners, focusing on a specific target and generating product/store appeal.
Strong points: geographical presence with small investment
Weak points: no direct relationship with employees and reliable partners recruiting
The alternatives we produced could be incomplete with regard to a specific business needs, but they must not be seen as compartmentalized classes, you can combine the options of each strategic decision to create a hybrid solution, closer to the decision maker’s needs.
We are now in the phase where we collect Information for each alternative (what I know and don’t know) and then move to the analysis phase, through deterministic and probabilistic tools to define the Logical Reasons at work when we choose an alternative or another:
- Another physical store, in an internationally renowned city, greatly increase brand awareness and can catch foreign customers willing to spend more money.
- An e-commerce enables us to integrate physical and virtual channels, to offer our products to a wider audience, and an added value to our current clients
- Corners placed in strategically relevant cities enable us to increase brand value and catch not only our target audience but that of the complementary products as well
- Franchising enables us to outsource our brand and focus only on building the brand
After defining values and risks of each alternative, decision makers will have a clear view on which decision to make. Following the Lean Decision Quality method produces confidence and coherence with the decision you made. The decision allows you to realize the maximum value, either in terms of brand value, profit, social and/or environmental impact.
I would like now to highlight the attitude decision makers, but not only, have to have toward Problem Solving:
- check whether the business goal is coherent with your strategy and brand identity
- involve the various business units and the staff affected by the goal
- explore alternatives (divergent thinking)
- choose the best alternative in terms of values and risks (convergent thinking)
- commitment to action: allocation of human and financial resources to develop a plan to put it into practice
The question is always the same, for us as for any company: what I am and what I want to become.
Be Amazon, Macy’s, Walmart, Gucci, or something completely unique only your brand has. To be or not to be, that is the question.
Experiential-oriented product or pure experience: you choose! But always remember to be yourself, with your set of values and your goal.
Think Big, Start Smart!