Customer experience has become the ultimate competitive advantage. The big retailers, with Amazon at the forefront, have served consumers so effectively that most people now demand high-quality, ultra-fast service for everything they buy.
Does that mean businesses with fewer resources are destined to lose out? Not necessarily.
Creating good customer experiences (CX) is top of mind for most companies. It has been years since Gartner first reported that most companies started competing primarily on CX. And, even now, the global CX market size is still expected to grow 17.5 percent annually from 2021 to 2028.
Why? Because customer service is the only area where you can gain a competitive advantage regardless of size or market. It’s much more difficult to compete on price, product variety, or number of stores — especially as bigger retailers can take advantage of massive economies of scale and are usually priority clients of manufacturers.
On the other hand, customer experience is where competition gets interesting. Smaller B2C businesses can get creative in ways the bigger brands simply can’t.
Take credit unions, for example. Although they lag behind in adopting digital channels and technology, most consumers still prefer them over big banks because of their superior customer service and ability to personalize experiences. And this seems to be true in every B2C sector.
Like we said, the big retailers have set a high standard when it comes to customer experience in more ways than one. They can:
In fact, a survey from Statista in 2020 makes it clear: fast, free shipping and a broad selection of products are the two most popular reasons that people buy from Amazon.
This is why you need to be smart in how you compete. To help you harness customer experience as a competitive advantage against retail giants, we collected a few tips to try.
This is your first step in taking on other retailers. Finding out about their strengths is easy — there’s no shortage of articles talking about how Walmart topped worldwide sales or how Walgreens disrupted the primary care sector. And, anyone who has bought from Amazon knows how they keep customers informed about their orders every step of the way.
There are plenty of ideas like these you can borrow from to improve customer experience in your own business.
What’s even more important, though, is to learn from the mistakes these companies make.
For example, Home Depot began its digital transformation efforts back in 2017 investing more than $11 billion. But at some point, they hit a snag because of outdated infrastructure. Let this be a lesson for your company — that if you want to launch your own digital transformation initiative, you need to account for any legacy systems.
So, try to continuously learn from competitors and apply those lessons to your own unique use case.
Stores aren’t going away. It’s true that people are becoming more digitally savvy (even more so because of the pandemic). But, that still hasn’t translated into online sales overtaking in-store, though. In fact, Forrester reported recently that over 70 percent of retail sales will come from stores in the next few years.
This may alleviate some concern about Amazon’s dominance in the retail market in the foreseeable future. But — unless you’re an exclusively ecommerce business — you still have to aim for better in-store experiences than Target or Walmart, companies with many established physical stores already in place.
So, take a look at how you can differentiate your in-store experience. Technologies like cashierless checkout can be useful. Also, it could be a good idea to equip your associates with tech that can help them service customers. According to a survey, 76 percent of respondents said retailers that use mobile technology, such as self-service mobile tools and mobile tools used by sales associates, provide a faster shopping experience.
If it makes sense for your business, consider investing in technology, such as augmented reality and virtual reality or adopt a phygital approach (blending in-store and online experiences). You can implement them on a small scale first to gauge your audience’s reactions and build your brand image as innovative and customer-centric.
The digital world is an important stage where retail competition takes place — online purchases are growing constantly, after all. And, it can be much cheaper to stand out online than in-store. You just need a few smart moves to optimize your website and omnichannel strategy.
For example, here are a few ways to improve your online customer experience:
Remember the 2020 Statista survey we mentioned earlier? The third most popular reason (65 percent) people shop from Amazon is that they’re a member of Amazon Prime.
This hints at something we already suspect: creating trust and loyalty with customers can do wonders for your market share. And luckily, small and mid-sized retailers are much more personable and trustworthy if they play their cards right.
So, you can shape the loyalty programs that work for your business over time. Try launching one on a small scale, and measure results. A card that accumulates points, discounts for frequent purchases, free shipping for purchases over a certain amount, gifts for people who have birthdays coming up, and more. It can be helpful to look at loyalty programs software and evaluate their offerings.
And of course, relationship building is something you can do far better than large companies. Consider the approach of drive-thru drink shop Dutch Bros — a company that started small, but has achieved steady growth over the years, going public last September.
The company focuses on cultivating a customer service culture of friendliness and positivity. This may occasionally get overwhelming for employees, so there’s definitely a balance to strive for, but the general approach is right: your stores should be places where people know they’ll be treated warmly. The company is also active in building communities and supporting philanthropic causes.
Ah those retail giants — love them or hate them, they’re certainly highly recognizable brands. The problem is, so many people actually do hate them. Or, more accurately, distrust them. Amazon especially, despite its steady popularity, has been extremely controversial over the years, and has come under fire for work conditions, pricing structure, and relationships with suppliers.
This means there’s room for your company to win over the hearts of customers. You just need to create an engagement strategy based on trust and transparency. This includes simple things like having clear and generous return policies, extended warranties, or responding to social media complaints quickly and consistently. Taking part in events and sustainability or DEI initiatives is also a good way to make your brand known (make sure you genuinely care about those causes though, because customers can always tell).
For example, footwear and apparel company Allbirds is building its reputation as a sustainable company that cares about the environment. They even partnered with a larger competitor, Adidas, in an initiative to help solve the climate crisis.
Your strategy may also mean you need to pay close attention to how you use customer data for personalization. People want personalized service, but there are many aspects of it they find creepy. And that has caused a certain distrust over how big corporations exploit customer information. In contrast, you can make sure you apply effective personalization techniques without crossing the line — earning a superior reputation in the eyes of customers.
The bottomline is: you have options. Large retailers apply a lot of pressure to the market, but that doesn’t mean they will always win on customer experience. Play to your strengths, like individualized service, differentiated product assortment (e.g. handcrafted or custom items and unique services), easier processes, and more.
And of course, don’t be afraid to experiment with promising initiatives. Just make sure to pay attention to their performance and apply tweaks when needed. This is how you’ll find your own unique competitive advantage.
Nikoletta is a Content Specialist at Acquire. She's a writer and editor with an avid interest in data, tech, communication, and the customer journey.