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Typically, brands discuss technology as if it is a disruptive force, a thing that, by itself, radically changes the customer loyalty space. When company representatives talk about AI and machine learning, or about data management platforms, they often emphasize how innovative the technology is in and of itself. Essentially, the idea that technology is disruption is a commonplace in the industry.
Recently, Loyalty360 sat down with Suman Sarkar, author of Customer-Driven Disruption: Five Strategies to Stay Ahead of the Curve, who believes that this idea isn’t necessarily true. Instead, Sarkar argues that customers are the main drivers of disruption. He offered a detailed explanation to support his viewpoint.
His first example came from generational differences. He said, “Millennials are becoming a bigger buying group with better information. They aren’t brand loyal. They value quality and service. In Japan, for instance, millennials are very thrifty. They don’t buy cars or watches, and these are the new social norms. This isn’t how their parents acted at all.” His point here is that changing behaviors, not technology, have created the need for companies to change.
“Tech enables disruption,” Sarkar continued, “but it isn’t a driver of it. It doesn’t disrupt per se. Customers do. Take self-driving cars, for example. They don’t really meet critical customer needs for transportation such as speed, safety and cost, so they’re not having much effect yet. It’s the customer need that disrupts.”
This is why Sarkar believes that the true work of brands hoping for customer loyalty should be delivering customer needs better than competitors. He said, “Brands lose focus on their customers if they focus on technology. You’ve got to use tech to deliver customer needs, but you shouldn’t be focusing on it in isolation. Today’s organizations are not structured well. Their culture isn’t customer focused. Executives have to figure out how to become customer focused both in their culture and operations.”
Sarkar believes that, to achieve this goal, brands need to do a couple different things. First, they have to figure out what customers need, and then they must deliver that need better than anyone else in the market. In turn, to deliver needs better, brands have to figure out how to do so in a way that’s cost effective. He discussed men’s shirts to illustrate.
“A brand can make a shirt that is custom tailored to an individual,” he said, “but it will cost, at minimum, $250. To make a tailored shirt that will appeal to a range of buyers, you’ve got to get the price range down to the $20 to $50 area. To do this while remaining customer focused, brands have to be very flexible, with flexible supply chains that do different things for different demands. If you don’t have a template for all your shirts, then your risk increases, and you’ll need sophisticated software to minimize waste.”
Sarkar’s solution to this problem is for brands to know who they’re targeting. “You have to figure out what to do for a specific target,” he said. “For example, in the apparel industry, consumers are concerned about fit, fashion, fabric, and affordability. So, to operate with a focus on the customer, you’ve got to target a specific segment, like a fashion-conscious teenager. That way, you know what you have to do. You don’t have to customize a great deal, which means you can respond to demand very quickly.”
He continued, “If you target an office worker, then you’ll know that fit and fabric are very important, and affordability is less important. This means you’ll be able to take a more personalized approach, one that takes more time. When companies struggle, it’s because they drop the ball in knowing who their target is.”
To conclude, Sarkar pointed out that the brands that customers are most loyal to (Apple, Chick-Fil-A, Trader Joes, and Amazon were his examples) are so successful because they deliver customer needs better than anyone else. Amazon, he said, provides unparalleled service, while Apple offers innovative products that are easy to use. Chick-Fil-A provides superior quality in the QSR space, and Trader Joe’s offers healthy and gourmet grocery items at an excellent price point. He believes that brands that want to succeed should follow the example set by these companies.
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