Retailer Customer Relationships -- Who Defines Who?

Long before we “came of age” and found ourselves somewhat arbitrarily labeled and grouped into generational silos, we were, first and foremost, individual customers.
As a society, we have come to rely on labels to categorize certain groups of people.
Baby Boomers – Generation X – Millennials – Generation Z. You have no doubt heard these before, and their origins are as varied as the people they purportedly represent. Baby Boomers were named based on a demographic trend. Gen X’ers can trace their label to a book called “Generation X”, written by Douglas Coupland, that defines the group as people born in the 60’s and 70’s and came of age in the 80’s.
The term ‘Millennials’ was created by authors and historians Neil Howe and William Strauss, and includes people born between whenever you think Gen-X ends to around 2000. And as I write this, marketers, academia and who knows whom else is trying to come up with the next label for post Gen X.
Regardless of generation, starting at a very early age, we begin to write the stories of our lives based on the experiences we have throughout our lives. Many of the connections are based on simple, surface-level engagements that are more likely to be forgotten shortly after they occur. But it is the instances that stand out in our minds, the ones that leave a lasting impression, that define who we are.
I’m a baby boomer.  As a boy, my earliest memory of being a customer revolves around a sweet old lady who sold penny candy from her porch to my friends and me on our way home from school. There were many things about her that stayed with me: her smile, her accent, her wrinkled hands. But as I look back, I realize that the she was tapping into one of the most primal elements of human existence, my senses. In this case, my taste for sweets.
So why do I remember this nice lady but don’t remember the person who sold me my last hamburger at Wendy’s or shoes at Nordstrom? The key to understanding this phenomenon is to realize the fundamental role that emotion plays in memory formation. Think about what you were doing when you heard about the terrorist attacks on September 11^th, or when Kennedy was shot. Now think about what you were doing the day before.
I remember the local drug store, sporting goods store and grocer my parents would go to as I tagged along. Each had a unique smell, sound or visual impact that was genuine and memorable. More importantly, the owners of these establishments knew my parents, by name.
Compare this to the “Millennials” or “Gen X’ers” whose first impressions of being customers came from going to Target, Walmart or Dicks Sporting Goods. These experiences are no less important or memorable, but their memories consist of bright lights, shopping buggies, a soft pretzel and endless aisles of stuff.
The mom and pop stores of years ago have all but vanished, replaced with big boxes that number in the 100’s or 1000’s of individual locations and online portals. I suspect that during the mom and pop days, neither the customer nor the owner defined the other, rather they defined each other.
In today’s retail environment, most if not all of the personal touch (better known as consumer engagement) that created the emotion that stamped our memory has been replaced with rewards and loyalty programs designed to keep us engaged and coming back to spend more.
How well do these programs really work?  For me, bringing out my loyalty card is an afterthought rather than a force that brings me into the store in the first place.  More often than not, I need to be reminded by the store clerk to scan my loyalty card as I am checking out.  That is far from engagement at an emotional level.
There are some retailers that do a great job of creating loyalty independent of rewards programs.  Spanish-based Zara, the world’s largest fashion retailer, is such a company.  In the last three years, Zara’s CAGR (Compound Annual Growth Rate) has been approximately 20%, due in large part to retaining loyal customers.
When asked how many stores Zara will open in a new market, spokesperson Jesus Echevarría states, “Honestly, I didn’t know. We must have a dialogue with the customers and learn from them. It’s not us saying you must have this. It’s you saying it.”
When Zara opened its flagship store in New York City in March 2012, the only advertising they did was a one-pager in the New York

Photo credit: Wikipedia

Times.  No promotions, no campaign. Echevarría continued, “The Company does not talk about itself. The idea was that the client was to talk about the company. It was not (for us) to say how good it could be. The customer would (talk about us) if it was deserved.”
Although many of the characteristics of my penny candy lady were memorable, by far the most memorable aspect was her genuine interest in what I thought. She would ask, “Did you like the candy you bought yesterday? Is there some other kind of candy you would like?” There was an intimacy, a bond, between us that made me feel special and…I told all my friends about her because she deserved it.
The group that most confounds retailers is the Millennial generation.  They represent enormous purchasing power, they are highly connected, yet they do not respond to ads and promotions in the same way as the older demographics.  They don’t want to be told what to buy… they want a dialogue.
Do we truly believe that those experiences that stimulate emotions that make memories are any different for Millennials as they are for Baby Boomers or any other “generation” for that matter?
The delivery mechanism may have changed, but the desired result is still the same.
So the question I pose is this: How can retailers and brands create memories, emotional experience and long-term, sustainable loyalty with Millennials in the digital age? Look for my blog next week addressing this challenge.