Five Key Steps to Become a Consumer-Centered Business
Many people have been following our operations and asking what is the mysterious ingredient to move successfully a trade-oriented business to a DTC (direct to consumer) business model.
In reality, there are many factors in the mix for it to be successful; however, one of the most important aspects is understanding consumers’ psychology, what makes them tick. In order to explain what I mean, just think of these two questions: Have you ever wondered why your customers stop buying from you? Why do they say they buy your products based on price and then, in the end, they stop buying from you?
The difference between consumers that come back and consumers that do not is how they perceive value through brand experience. For example, if a company offers coupons, discounts, and other low-price strategies to get customers through the door, they will first get many consumers attracted by the price, but on the long run will lose them because they cannot deliver benefits through their low prices. Therefore, companies come up with more and more promotions trying to retain their clients. This actually turns out to be a dangerous vicious circle hard to get out of.
However, it is not impossible to change and create a different and profitable happy circle. What companies need to do is to focus on delivering consumer value through brand experience. Concentrating business activities on conveying brand value can reduce consumer acquisition costs simply because experiences are shared and spoken about. Knowledge and emotional engagement obtained through brand experience sells; most importantly, the same brand experience retains because it delivers value appreciated by consumers.
How can companies deliver better brand value? These are the main five steps we took to shift our minds from a price-based business to a consumer-centered business:
1. We first defined our business purpose. Describing “the what” of our business was easy, communicating “the why” was where the magic happened;
2. We turned the business focus outside in, rather than inside out, automatically placing the consumers at the heart of our activities. This meant understanding what their perspective was, what their understanding of brand experience was, and what value meant for them, not what we thought they were;
3. Started thinking of our clients as real people with real needs and emotions, instead of targeting segments. Segments usually do not provide details about consumer needs, goals, attitudes, behaviors, emotions.
4. We first delivered value through creating engaging experiences; customers loved that and automatically became brand ambassadors and loyal friends. We first gave them something meaningful, and then they started buying because they became emotionally engage.
5. We have been delivering value through personalized customer care. One-by-one, each client is pampered so that his/her brand experience lasts in time.
The wine industry is complex, extremely fragmented, difficult and confusing for both consumers and industry professionals; there is too much noise from critics, from the trade, from producers, and from the web. It is very similar to many other industries, with the difference that it loves putting itself on a pedestal and pretends to be unique.
Yes, maybe in some aspects it is not exactly like the dairy industry or the washing powder sector, but I strongly believe that the business basics are not that different because consumers are always the same.
When they go out to buy a bottle of wine the question is which brand will they talk about? The one that is always on sale or the one that makes them relive an experience? They might love both brands, but they engage with the one that delivers more value.
It is crucial that wineries understand that low prices are not perceived as value. They are seen as a bargain. There is a big difference between the two. It is of absolute importance to find out how consumers define value, what it means to them. Understanding the people consuming your products means knowing what their needs are, and comprehending how your brand can design a better experience for them is a game changer. Why? Because consumers are willing to pay more for products/brands that satisfy their needs.
Without understanding consumers, companies are just managing business as usual. We live in a world where people can judge brands by what they do; it is a time when being believed means far more than being noticed.
Originally published at www.harpers.co.uk. on 24 February 2015