Sunday, November 14, 2010

Why are retailers afraid to look for the needle in the haystack when it comes to growing profits and growth?

Our CEO, Paul Pluschkell, shared this quote with us today about crowdsourcing:

""...finding the needle in the haystack is much easier when the hay helps you look."

http://twitter.com/#!/timoreilly/status/3861275117355008

Think about that for a second.  I live in Florida, and my family and I pretty much go to the beach every other weekend.  I've lived here for 7 years and was lucky enough to find a 17" whelk shell one day in the sand.  I look for one bigger every time I go to the beach, and have failed to find it's successor every single time.
The scary thing is that at the particular beach we visit. there are more than likely a few hundred, if not thousand bookshelf worthy shells hidden right under the surface.  I probably stepped on a few lugging my cooler onto the beach! 

Now consider Paul's reference.  If I could get sand particle to align themselves into little arrows to point me to the spots where one of these heirloom shells might exist, I'd more than likely have a pretty good shell business cooking wouldn't I.

Here's the thing.  Every business I talk to is looking for the next disruptive innovation in their space.  For retailers, that means they want to be the next Amazon or eBay.  They want to change the paradigm and give consumers the newest, latest, greatest in the ultimate shopping experience, and hope that their internal team of experts can sift through the surveys, the focus groups and the trials to figure out why offering earrings in the women's tennis apparel section will give same store sales a lift of 2.6%.

The problem with this is that sometimes, the needle draws blood because you sat down on it while you were looking somewhere else.  You, the merchandiser gets credited for a win, and you are now expected to repeat that performance again & again.  So why not ask the haystack (the customer), whether or not they would buy earrings while they were in the middle of purchasing tennis apparel?  Most retailers would say, whoa....that's kind of expensive.  The reality is that perception is simply not true.  With many of today's crowdsourcing tools, a retailer can ask their most loyal customers, that simple question, for the same cost as one focus group.  Getting customers engaged in helping you find solutions that they want to pay for seems like a no brainer, doesn't it?  So why don't retailers do it more often?

Here are a few reasons why retailers are reluctant to try, and ways to change that mindset:
  1. We have over 1 million customers, and we don't want to ask them for help because we are not staffed to acknowledge everyone's comments.   This is a legitimate comment, scaling customer insights is the reason that focus groups and trials exist.  That being said, today's innovation management platforms can ask specific questions from a large group, and the group can qualify the answer in front of the entire community, making the discussion completely transparent.  What this means for resource challenges staffs is that the crowd can qualify (and disqualify) ideas publically, absolving the core team from the responsiblity of replying to every post.  This gives the marketing staff the time to analyze real opportunities more completely, and deliver information to the business units they support faster and with more confidence. We have found that this kind of community interaction is scalable far beyond traditional marketing intelligence tactics.   A simple way to accomplish this is to set up an innovation community and ask your customer how they might solve the problem you are looking at fixing. You might be surprised at the results.
  2. The business units aren't compaining, so why should I bother?  This is a good one.  The pace of retail forces business managers to react to market demands, and as a result they marshall their teams forces to fix issues that crop up unplanned.  The business units themselves only care about the here and the now, and as a result never have time to ask for more complete customer engagement, even if they know in their hearts that would be helpful.  You might want to consider asking your internal customer what their goals are for the year, and what they think might be obstacles to making those goals.  Asking your customers about what you should do to overcome those obstacles, would not only give you more credibility with the business units you support, it would also help your team get ahead of the market and potentially introduce a disruptive product/service into the marketplace.
  3. Dude.  I'd love to do that, I just can't get out from behind my current responsibilities.  Hmmm. so what is this person saying?  To me it sounds like s/he recognizes their company has a problem, but s/he is not empowered to fix it.  If you are in this camp and feel this way, you are not alone.  You more than likely need help, and if you find the right innovation partner, you should consider asking them to help you.  The cost of their short term consulting will easily pay for itself because their expertise and extra personnel will easily return an ROI of 10X+.  You just have to ask!
In conclusion, it is important for retailers (and any other business for that matter), to add their customers into their product development mix.  If you can organize them to solve a common problem, not only will they help you find the needle in they haystack, they will also buy the needle!