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Through analysis of dunnhumby’s second Customer Centricity Index (CCI), a compelling and emerging piece to the loyalty puzzle is emerging: Brands need to make an emotional connection to their customers.
Emilie Kroner, dunnhumby’s Head of Consumer Markets Organization Engagement, told Loyalty 360 that from the CCI it’s clear that retailers are starting to receive feedback from their loyalty programs.
“We’re seeing emotional loyalty to a brand is becoming more and more important,” Kroner said. “Companies are creating functional loyalty and creating an emotional connection that leads to emotional loyalty.”
The end game, Kroner said, is retailers want customers to shop and they want to understand why they shop – and engaging with them through pricing, promotions, and relevant communications makes them emotionally connected.
“The total customer experience is critical,” she said.
Research for the dunnhumby Customer Centricity Index includes the opinions of more than 40,000 customers from more than 400 companies across multiple industries. Customers were asked to rate more than 15 retailers over a period of nine months on more than 40 customer-centric attributes based on the “Seven Pillars of Customer Centricity.”
Retailer scores are based on a weighted average of those results, relinking factors of customer- centricity to loyalty and likelihood to recommend. Respondents were classified as customers based on trips occurring at the retailer within the previous 90 days.
Kroner listed the “Seven Pillars of Customer Centricity” as: product assortment, price, experience, feedback, promotions, loyalty, and communications.
“The Customer Centricity Model is unique to the industry in that it allows customers to rate retailers on how the company meets their wants and needs,” Kroner said. “The model takes a weighted average of 40+ customer centric attributes that link to both claimed loyalty and likelihood to recommend. The Seven Pillars of Customer Centricity uniquely allow a company to understand what drives current customers to both recommend the retailer to their network of friends and family, and also continue their loyalty to that retailer.”
The Home CCI report and rankings focuses on the areas of home improvement and housewares retailers. Menards was the top-ranked home improvement retailer, with The Home Depot a close second. Lowe’s, Ace Hardware, and True Value rounded out the Top Five.
In housewares, IKEA scored highest among a total of seven retailers followed by Bed, Bath & Beyond, Williams-Sonoma, Home Goods, Crate & Barrel, Pottery Barn, and Pier 1 Imports.
Dunnhumby found that retailers with higher CCI scores also led the competition in comparable sales growth over a three-year period.
Kroner said that, according to its customers, Home Depot is excelling at providing shoppers with a strong, flexible assortment that meets their needs, as well as the ability to provide feedback and create dialogue with the retailer.
“This strong score may be driven by The Home Depot’s emphasis on both associate product education and its “Customers First” program that empowers associates to provide exceptional customer service,” she explained.
Here are some key findings from the dunnhumby Home CCI:
· The leading retailers in each category displayed a strong price-to-value-proposition.
· Menards, No. 1 in the home improvement category of the Home CCI, scored high in price and was cited by customers for providing flexible rebates and relevant promotions that meet their needs.
· IKEA, No. 1 in the housewares category, leads retailers in both price and experience – a rare combination. With 8% comparable store sales growth over the past year, its customer centric focus has lent itself to robust business.
“Retailers look at how customers feel about total shopping experience and this can provide them a roadmap of where they want to strategically focus,” Kroner said. “Customers should help drive strategies for brands in helping them become loyal.”
Kroner said that The Customer Centricity Index isn’t dunnhumby rating retailers on their performance or operations.
“Rather it is really allowing the voice of the customer to set benchmarks for how effective that retailer is in meeting their needs and wants as a shopper,” she said. “Many companies want to understand their customer better and think about how to meet their needs, but few know where to start – or know what will make the most impact against their competition. The CCI brings the customer to the table in determining strategic focus areas that can be acted upon to make meaningful impact with customers.”
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