How Amazon Is Minting a New Generation of Customer Data-Obsessed Companies

March 15, 2018

Note: A version of this post originally appeared in Forbes.

No brand is safe from the awesome power of a superior customer experience. Consumers — particularly young ones — have shown that they will rapidly shift loyalties to brands delivering an overall experience that is more personalized and easier to use, both online and offline.

Amazon’s dominance is driving this revolution, its runaway success demonstrating that data needs to guide every decision within the customer-centric enterprise. Amazon has since its inception leveraged every bit of information about shoppers to strategize its next moves, from innovative new offerings (e.g., Prime, which redefined loyalty programs) to unprecedented fulfillment programs (one-click convenience) to market-moving acquisitions (its recent Whole Foods win) to whatever else its data says is going to serve its customers best. Every business decision contributes to the seamless, consistent and genuinely valuable end-to-end experience that has become Amazon’s hallmark — and every other brand’s nemesis.

Amazon isn’t the only threat, for that matter; an emerging spate of innovative, data-driven followers threatens to raise the bar even higher. Consider Airbnb, Lyft and WeWork, each of which has achieved billion-dollar valuations in the span of a few years. By rooting their businesses in customer data, these consumer-centric brands have discovered new ways to improve people’s lives and, in the process, shaped new ways to live them. (Who needs to call a travel agent, hail a cab or commit to a years-long office lease anymore?)

Given that 90 percent of the top 100 U.S. consumer brands have already lost market share to disruptive new startups and 62 percent of incumbents suffered falling sales, it’s no surprise that even brands that once thought they couldn’t be “Amazoned” are realizing that they are indeed vulnerable… and investing big to catch up. Marketers at the world’s top companies plan to more than double their investment in data analytics in an effort to improve their customer experience, according to a recent survey by Deloitte.

Walmart, for one, is stepping up to the plate by leveraging its ever-increasing data stockpiles to offer customers much more than physical retail (as its official name change from Wal-Mart Stores to Walmart Inc. stands testament). Improvements to its mobile shopping app, fulfillment strategies for online orders and investments in e-commerce (including a market-expanding startup shopping spree and a partnership with Google that offers Walmart products on Google Express and on Google’s voice-activated devices) have made Walmart a real contender in the digital space: its online sales rose 50 percent in the third quarter of 2017. In turn, these new and diverse sets of digital data, coupled with the retail giant’s already unrivaled amounts of in-store insight, are creating equally great experiences for a whole new set of customers: manufacturers and brand advertisers who are increasingly flocking to its nascent programmatic ad platform, Walmart Exchange.

Then there’s the granddaddy of neighborhood chains, Ace Hardware. Last fall it acquired a majority stake in e-commerce entrepreneurial site The Grommet (known for launching cutting-edge products like FitBit and SodaStream), setting up the near-centenarian hardware retailer for a much-needed reboot: using firsthand insights from The Grommet’s early-adopter, tech-enthusiast subscribers to advise more unique and innovative offerings. And keeping true to its busy DIY customer base, Ace is in talks with Kroger, the world’s largest supermarket chain, to operate as a store-within-a-store, opening up access to a slew of new customers while simplifying the experience of buying everyday home necessities like lightbulbs or furnace filters alongside more conventional grocery fare.

True, established companies like Walmart and Ace don’t have the advantage of entering the marketplace with a clean slate. But they do have the advantage of years and years of rich customer data that, if leveraged effectively, can generate stronger business outcomes. Working with the right technologies is critical, and as the aforementioned CMO survey indicates, customer data analytics solutions are already top of mind. But equally important is a company-wide commitment to believing that customers are truly the most important part of what an organization does and, as such, should lie at the heart of each and every decision. After all, no business exists without them.

Mike Sands is CEO and Co-founder of Signal.

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