Consumer Centric Transformation in Fashion and Luxury. Stefania Saviolo, SDA Bocconi

Transcription

1 Consumer Centric Transformation in Fashion and Luxury Stefania Saviolo, SDA Bocconi

2 Customer Centricity is not new it is the customer who determines what a business is, what it produces and whether it will prosper Peter Drucker from Practice of Management 1954 it is critical [ ] to have five fingers touching the factory and five fingers touching the customer Amancio Ortega, Founder Inditex Group 2001 Today, nobody owns the customer. The customer owns you. J.,R. Galbraight from Designing the Customer-Centric Organization 2005 if the consumer is happy the shareholder will be sooner or later happy, Diego Della Valle, President TODS 2012 the key to serving our customers better is understanding them better Christopher Baileys, CEO Burberry

3 Why is customer-centricity hot (again)? SCENARIO Slow-growth environment and hyper competition Consumer Heterogeneity Brand identity across channels and formats Disruptive technology FIRM Organic growth by increasing customer lifetime value Outside-in approach Omnichannel Fast & customer-centered «activation» processes ISSUE A complex eco-system of data fragmented by department, channel markets. 3

4 Customer centricity? 4

5 Customer centricity? Which customer? Customers versus Consumers Customer Centricity versus Customer Focus Customer Centricity reveals how to increase profits from your best customers, find more like them, and avoid over-investing in the rest Consumer centricity is a mind-set that companies need to adopt throughout the entire organization, developing customercentric capabilities 5

6 Evolving business models in Fashion & Luxury Industry Designer Brand Retail Consumer Volume Creativity Identity Traffic Engagement

7 The value creation opportunity for luxury brands lies in developing and nurturing luxury attitudes across their customer base Source: Value Lab Analysis Customers tend to shop with a brand only once a year, with their purchases concentrated in a limited number of items per ticket, typically in iconic categories. On average, the yearly value of customers is only EUR1,500 in the luxury segment and EUR500 in the premium fashion segment 7

8 Converting one-shot customers into repeaters is notably the main challenge requiring luxury brands to engage with their customers within a narrow period of time (no later than 12 months) so as not to lose the value originated from their first purchase experience Source: Value Lab Analysis 8

9 Developing a dedicated engaging value proposition for each customer group, aligning merchandising and category management strategies Source: Value Lab Analysis 9

10 A radical cultural and organisational shift PRODUCT-CENTRIC APPROACH CUSTOMER-CENTRIC APPROACH CORPORATE APPROACH Sell products Serve solutions BUSINESS ORIENTATION BRAND POSITIONING ORGANIZATIONAL STRUCTURE ORGANIZATIONAL FOCUS Transaction Product features Product profit centers product managers product sales team Inside-out market share growth customer relations are issues for the marketing department Relation Consumer benefits Customers segment centers, customers relationship managers, customer segment sales team Outside-in customer loyalty and retention employees are customer advocates, clienteling METRICS Number of new products, profitability per product, market share by line, n editorials Customer s share of wallet customer satisfaction, customer lifetime, NPS, n of shares SELLING APPROACH By channel & by media How many channels/customers can we sell this product to? Omnichannel & transmedia storyselling How many products can we sell this customer across channels and media? Adapted from The Path to Customer Centricity Journal of Service Research,

11 Best cases in fashion & luxury Barneys Chelsea flagship features a custom clienteling system using customer-centric personalization to connect the online and offline behavior and preferences of Barneys core consumer base. Mining available data for use by sales associates will help Barneys better serve consumers on a daily basis. Barneys it is also the first luxury department store to launch ibeacon technology within a bricks-and-mortar space. Burberry is highly successful at connecting online and offline channels, with click-andcollect representing 15 percent of its ecommerce sales. Click-and-collect is not only a service to customers, but an opportunity to up-sell and capture additional sales from the online client Yoox Net-A-Porter Group is fostering omni-channel innovation through the creation of a long-term partnership with IBM. The goals of this collaboration include planning a single technology platform to power all multi-brand and mono-brand stores in the Yoox Net-A-Porter stable and furthering ingroup efforts to reinvent and improve the consumer experience. 11

12 Omnichannel and the wholesale partners 12

13 Barriers to the customer centric trasformation The offer is not coherent with customer segments Store performance is not correlated to customer segments Marketing campaigns, selling ceremony, customer service are one-size-fits-it-all Functional silos Culture not aligned (i.e. wholesale driven) Missing key technology platforms to manage data No expertise in business analytics Lack of online training for sales associates 13

14 Developing a «consumer-centric balanced scorecard TM» for fashion and luxury companies Map the customer journey and lifestyle Refine the business model to enable Customer-Centricity Customer feedbacks incorporation into new product and processes Key metrics ConsumerCentric Transformation Culture building and transfer from top to bottom Internal top engagement management Key targets definition 14

15 Stakeholders involved Luxury business analysts, law firm, banking and private equity Value Lab Italian and International research institutions and business school Fashion and Luxury companies SDA Bocconi Knowledge Center Luxury & Fashion 15

16 Grazie! 16