Who needs "New Customers"?

I worked in 2 organizations’, which had a “sense of urgency” about existing customers. I was the head of Marketing for Shoppers’ Stop and later for HDFC Bank.

 

The CEO himself led the “sense of urgency” in both companies! At Shoppers’ Stop we built a base of Loyalty program customers (over a million customers) contributing to over 60% of store revenue and at HDFC bank we reduced cost of acquisition by cross selling to existing customers using analytics.

 

But generally I do not see the same urgency across companies and industry and so I was quite amazed to see this bold statement from the Macy’s CMO Peter Sachse in his keynote speech at the Retail Innovation & Marketing Conference talking about a shift in company focus. For Macy’s, “What we don’t need to do is get new customers,” Sachse said. Instead, “we realized that all we need to do is take care of those who already love us.”

 

Here’s how it all started: Last year, Macy’s embarked on an intense research project to better understand their current customers. They conducted dozens of focus groups. Talked with nearly a thousand people walking out of their stores. Combed through all of their transactional data to find themes in buying patterns and shopping habits.

 

The company has set out on a goal to encourage each existing customers to visit the store one more time each year. “Half the battle is won if we can get them to walk into our store,” Sachse said. “And if we convert them during that visit, our comp store sales will explode.” To accomplish that goal, he said, “We had to get a lot closer to the customer,” which has led to the company’s new strategy of customer-centricity.

 

Here are some tips from Peter Sachse on how Macy’s is making decisions with the customer in mind:

 

• Make merchandising decisions with the customer in mind. Macy’s used to let buyers make merchandising decisions strictly with P&L statements. Today, the company layers customer insight over the sales metrics, which helps buyers make more holistic decisions over how pulling a product might impact customer behavior and overall sales. The product is no longer king anymore, said Sachse. Instead, the customer is queen. (Or king, of course.)

 

• Start all meetings by asking “what will our customer get out of this discussion?” At Macy’s, Sachse says, “If there’s no answer, the meeting is over.”

 

• Create a customer-champion team. Macy’s Chairman and CEO Terry Lundgren calls himself the chief customer officer. Who’s the customer champion in your company?