How Customer 3.0 Is Changing Retail

When Marketspace’s Jeffery Rayport bounded on to the stage at the Retail Innovation & Marketing Conference it was immediately evident a high-energy and detailed keynote was certain. Rayport delivered an extremely valuable presentation, beginning with an analysis of the consumer. Rayport believes that retail has seen three “releases” of the customer throughout American consumer history. The best way to understand Rayport’s perspective is by viewing the consumer through the balance of supply-demand.

In the 1950s and 1960s demand from consumers was extremely high, but relatively few businesses existed, compressing supply. According to Rayport this timeframe featured Consumer 1.0. In the 1970s and 1980s Customer 2.0 surfaced along with a closer balance between demand and supply. Rayport argues that our society is now in the Customer 3.0 phase where a glut of brands exist, price transparency is inherently mandatory, and community is a business driver – causing a complete reverse in the supply-demand balance from Customer 1.0. Shoppers are smarter than ever before. This model illustrates the reality that consumers are in control, because the demand side of the equation is dominating.

Rayport continued by providing five steps toward engagement. The steps were interesting, but the real intrigue for me was in identifying the organizing principles behind them. To Rayport, the retail consumer demands an information based experience. The reason that business and social media blend at all is because consumers are constantly seeking out new, different information to guide their purchase decisions.

If the consumer is in complete control it is vitally important marketers do not waste their time. If consumers demand information, and do not feel beholden to geographic restrictions, then mobile marketing must be a part of any marketing mix. That means coupons and offers, in-stock alerts, loyalty programs, etc. must all be offered to integrate the digital world into the brick-and-mortar experience – and mobile is the easiest, most cost-efficient to achieving that goal.

One last interesting point from Rayport was his assertion that “CRM” is an outdated principle, and that the new principle is “CMR” – customer managed relationships. It makes sense. If the consumer is in control, retailers and their marketing partners must do what is necessary to allow the consumer to effectively manage their relationship with their brand.

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