The customer experience
Colony Brands illustrates how today’s businesses must adapt to tech-savvy customers.
From the pages of In Business magazine.
In an age when consumers, especially younger consumers, are increasingly impatient with dysfunctional technology, a customer revolution is being driven by the proliferation of data and ever-higher customer expectations.
There’s no end in sight. By 2040, the world collectively will have an estimated 40 zettabytes of data — that’s 10 with 21 zeros behind it — so if you think it’s a challenge to gain customer insights now, just wait a couple of decades. In addition, there’s something to make note of regarding the class of consumers about to graduate from college — the younger consumers get, the more demanding they are of a seamless online experience.
“CEOs are swimming in an ocean of data about customers and employees, but we struggle to get value out of that data,” notes former Manpower CIO Rick Davidson, now president and CEO of Cimphoni, a Wisconsin-based technology-consulting firm.
Fortunately, customers are more than willing to come to the rescue, especially with brands they value, and businesses can cut through the data clutter by focusing on the people who buy from them. In this look at the customer experience, we spoke to business leaders from Colony Brands who are trying to keep pace with ever-changing customer expectations.
Fulfilling expectations
With formidable competitors like Amazon.com raising the customer-engagement bar, privately owned companies such as Colony Brands either stay on top of changing customer expectations or become the next victim of online business disruption. Colony Brands surpassed the $1 billion revenue mark in 2012 and CEO John Baumann reports that it has continued to grow since that time. However, it relies on more than top- and bottom-line performance to gauge whether it’s meeting what has become a daunting challenge in an era when consumers have more choice and convenience every day.
Now with 13 brands in all, Colony Brands is led by its flagship brand, The Swiss Colony, and its portfolio includes familiar brands such as Montgomery Ward and The Wisconsin Cheeseman. Some brands have been acquired while others are grown organically, but they are all directly marketed with both online and printed catalogs. The Monroe-based company has come to view its customers as business partners who provide valuable feedback to help it stay current in a time of fast-paced change.
Baumann says there are too many variables involved to pinpoint how one merchandising policy or change in the way customers are served can drive either top-line or line or bottom-line performance. That’s not to say Colony Brands isn’t constantly reviewing and changing its approach, but it favors constant phone and Internet surveying and focus groups. Surveyed customers typically opt-in and otherwise indicate a willingness to be surveyed about Colony Brands’ catalogs, its shopping experience, product offerings, and the like. “Not every customer is contacted all the time, but they are contacted on a random basis,” Baumann states.
Outside surveying services are used on occasion, but most surveying is done internally. “It’s a very extensive survey,” notes CIO Steve Cretney, “and many, many customers provide us with information and insights about their expectations and our overall experience, and they help us home in on where we need to make tweaks in our processes or make quality investments.”
An upgrade ideally will result in more revenue and profitability than otherwise would have occurred, but there are so many variables it’s hard to make a direct causal link. Baumann notes that no company works in a static environment in terms of customer expectations. “What we try to do is ask questions that give us metrics that are similar to what industry CSI [American Consumer Satisfaction Index] scores would be so that we know whether we’re making progress,” he explains. “It’s always a little bit tricky because some of those measures are imperfect. My own feeling is that in general customer expectations are going up so you can actually be improving your service but it may or may not always be reflected in your score.”
Asked whether Colony Brands cross checks survey data to see if higher scores correspond with improvements in revenue and profitability, Baumann says there’s really no good way for Colony Brands to match survey results with a good revenue month. “I don’t think we’re that sophisticated yet, but we certainly can look at other metrics,” he states. “Let’s say we’re focused on the fulfillment side. What is the accuracy of our orders? Has it gone up? How many days did it take to get the product to the customer? Did that meet the customer’s expectation in terms of what they bought and delivering the product on time and in good shape?”
If the answers to those questions are affirmative, the top and bottom lines usually take care of themselves.
The reason for ongoing rather than periodic monitoring of customer satisfaction is that if Colony Brands is going to make changes that can be either difficult or expensive to test and execute, it wants to make sure they pay off by delivering a better customer experience.
While its overall customer engagement is frequent, it takes steps to make sure no individual customer, no matter how willing, feels harassed. “We keep it optional and if someone has already responded to a survey or they decline to answer a survey, we give them a break period,” Baumann notes. “I couldn’t tell you if it’s a year or six months, but we’re not going to constantly go back and keep pestering people.”
Cretney says delivering an exceptional customer experience also requires a lot of coordination and collaboration between software vendors and other third parties. Today, you keep track of competitors not only by walking into a Wal-Mart or Shopko to see how they treat the customer and what their experience is like at the checkout, you also do it by buying products online to see if you’re on par or if there is something unique in a competitor’s shopping cart.
“It’s just a very involved, very complex process, and it’s constantly changing,” he notes. “The customer’s expectations are constantly changing as the market moves around, and they have different ways to reach us or to interact with us. So this is an area we spend a lot of time on.”
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To demonstrate just how much consumers are in charge, Cretney notes the industry change to a more proactive way to inform customers of their order status, including the projected delivery time. Instead of inviting them to click a link to find information, which is the previous method, retailers now provide a more direct text message that removes even this simple step from the process.
“It’s a really simple one but we put in place text messaging to allow the customer to opt-in to receive a message about the state of an order,” he explains. “Text messaging is a very convenient way that we all sort of use. So we’ll let her opt-in to receive a text message and let her know the order has shipped — that it’s been picked up, it’s been shipped, and so forth along the channel.
“They don’t want to do any work to find that out, and I think that goes to changing expectations in the market.”
The company hasn’t added a new brand in two years, when it acquired the infant and children’s products of One Step Ahead, but it continues to invest in the customer experience. Colony Brands spent north of $10 million to lease and modernize a new warehouse and fulfillment center in Sun Prairie, which opened last August with the express purpose of shaving time off its fulfillment process. Baumann notes that will take time because of the learning curve and the need to make tweaks as the company progresses toward facility optimization.
The former Famous Footwear site is used to ship Montgomery Ward products but the company plans to add other catalogs such as Seventh Avenue, as well. “I would say we’re still going up a learning curve because of the new technology in there,” Baumann explains. “We’ve got a new workforce so we are not where we want to be, but we are making improvement month to month. When we got into this, we figured it would take us a good two years to really harness the capability of what we’ve got in Sun Prairie.”
Saving time involves more than finessing internal computer systems to take, pack, and ship orders more quickly, and it takes more than inventory scanning devices to manage what’s on the shelves. Colony Brands also works closely with its carriers, whether it’s UPS, FedEx, or the U.S. Postal Service, who Baumann described as “very cooperative” because they are all competing along those same lines. They don’t necessarily have dedicated space in their facilities for Colony Brand products, “but they definitely know that we have x-amount of volume that we basically have to put in their hands, and we forecast to them where we’re at so that they can staff appropriately,” he says.
Tailored takeaways
While the order and fulfillment process is vital in building long-term customer loyalty, the company first has to make sure it has products or services the customer is interested in. In its attempt to source and merchandise unique products, which is an extremely important to its business model, it wants to gain a deeper understanding of its customers. Roughly 90% of them are women who happen to have the power of the purse and make the majority of purchasing decisions in every household. They range from 30-something soccer moms to more established professional women who prefer a bit more conservative apparel style.
Understanding whether a product is wanted “really depends on who your customer is and trying to understand her and live in her world,” Baumann notes.
That involves tailoring merchandising communications to very specific types of customers and developing what Baumann calls a consistent voice for each individual brand. “That voice represents a point of view that resonates with our customer and speaks to her needs,” he notes. “Our Monroe and Main apparel brand caters to young women on the go. These women are fun, confident, social, and active. They dress for comfort and easy-going style. Our merchandise, photography, layout, and copy all need to work together to tell a story that speaks to our customer’s needs.”
For Colony Brands, part of meeting high expectations is hanging on to a piece of the past in the form of its catalog business. Even as virtual catalogs meet a contemporary need, especially with younger shoppers, the print catalogs continue to be a mainstay for both company and consumer. Baumann knows there could come a day when printed catalogs fall out of favor, but it’s not on the horizon because they remain a customer expectation and they work in tandem with the online version. He notes that Colony Brands can still mail a smaller catalog highlighting some of its best-sellers and remind consumers that if they want to learn more about the products it sells, they can go to the website.
“I think for the foreseeable future, the printed catalog will be very much in play,” he states. “It’s still one of the easiest and most efficient ways to contact a current or potential customer in that everyone still
receives mail and they are more likely to pause to look at a catalog.”
While young shoppers are more likely to shop online, a fair number also like the “book in hand” before they go online to shop or place an order, adds Cretney. “They certainly come to us through Google or other search engines, but the feedback we get from customers,
almost regardless of age, is that we love to get your book, we love the pictures, we love the copy, and we love to have it in our hands and it’s very convenient,” he states. “She is guiding us in terms of mailing catalogs across generations.”
Instant technology gratification
One of the reasons customer expectations are changing so fast is because we’ve already reached the point when young people born into the technology boom of the 1990s have earned that first paycheck and have become full-time consumers. Completely marinated in technology, they have zero tolerance for anything that is technologically dysfunctional — to the point of hammering offending businesses on social media.
Fortunately, most organizations can gain consumer insights from their own millennial employees. “They are a walking, talking, internal focus group,” states Baumann. “We leverage them, as well.”
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