GE Capital: ‘Innovation Means Better Service’
EDITOR’S NOTE: The following is an article authored by Caroline Steele, Growth & Innovation Leader, GE Capital, Americas, and Jeff Malehorn, president and CEO of GE Capital, Commercial Distribution Finance, on innovation in today’s retail marketplace.
To most dealers, innovation means having fresh new products to stock in their showrooms. But innovation can also occur by serving customers better, enhancing their experience and bringing them new value. Retailers of everything from appliances to lawn and garden equipment to recreational vehicles have boosted revenues using practical and relatively inexpensive ideas that can be as powerful as new product introductions.
The Innovation Investigation
Broadly, innovation is the development of new ideas but it can also be defined as the process of applying current thinking in fundamentally different ways, resulting in significant change. Apple’s Genius Bar and Best Buy’s Geek Squad are prime examples of the creativity retailers are capable of when they look at their operations with fresh eyes.
Retailers can look for innovation opportunities throughout the value chain but customer interaction may be the most obvious place to start. Define the customer experience as a journey with three stages, each of which offers innovation opportunities. Awareness is when the customer first learns about a product, service or brand. Commitment is when the customer chooses to buy it. Usage is the actual use of the good or service over time.
A company might ask: What is the current customer experience with our product in the awareness stage? Perhaps raising awareness involves direct mail, event participation, advertising, cold calling, or social media. Next ask: What are the customers’ frustrations with this experience? Maybe your company doesn’t have an efficient way to route incoming calls so consumers can reach a human quickly; maybe they receive too many pieces of direct mail; maybe sales reps call at inconvenient times.
Probing further, a company exploring the awareness stage might ask: How do customers want to learn about our product or service? It’s possible that consumers want a single point of contact to call with questions. With this groundwork complete, the company can finally ask: How can we fulfill that desire? In this case, the solution might involve building a web page with the local representatives’ contact information. Or maybe the phone system can be re-programmed to route calls according to consumers’ zip codes.
Non-product innovation can take many forms but there are three areas that dealers can tackle easily and relatively inexpensively: Marketing and selling through the Internet; promoting a lifestyle/mood around a particular product or brand; and aligning with affinity groups.
Non-Product Innovation #1: Selling over the Internet
The Internet is how many customers want to learn about products and services. One RV dealer who embraced Internet sales grew revenues from a few million to $100 million in just seven years. He turns over his inventory at more than twice the industry average and has increased his credit line more than ten-fold during that time period.
This kind of success requires more than simply building a Web site. It requires analyzing the entire shopping experience both in-store and online. This particular RV dealer has a team of sales people dedicated solely to handling questions and orders coming in over the Web. The dealer also pays for various search engine optimization techniques that return its listing in relevant Internet search results.
Retailers that don’t want to go to the expense of enhancing their own Web sites are selling their wares on high-traffic Web sites such as eBay and Craigslist, which are proving to be an efficient way to move older or difficult-to-sell merchandise.
Non-product innovation #2: Promote the lifestyle
The RV industry fully embraces the concept of experiential marketing with mock campsites in-store so potential customers can absorb the experience. RV dealers also understand the importance of extending their promotional activities beyond the showroom. Participating in events such as home and garden shows generates buzz around their lifestyle and run rallies create a clubby atmosphere. Some RV and marine dealers even establish relationships with specific campsites and marinas to give customers preferred access to hot spots.
Non-product innovation #3: Find affinity groups
Instead of marketing directly to a target audience, dealers can build relationships with those who might influence their targeted consumers. For instance, one Texas-based dealer of luxury appliances invites local real estate agents to cooking demonstrations in its showroom so he can highlight his products to those who might provide input to new homeowners planning kitchen remodeling projects. These agents are likely to be friendly with area contractors too – another affinity group.
A long-time appliance dealer in Montana launched a store that sells the newest electronics such as Apple computers and iPads. By appealing to a young, technologically savvy demographic, and by subtly promoting its nearby appliance store brand, the company hopes to cultivate a new generation of appliance consumers.
On the Internet front, consumer brands such as Victoria’s Secret and The Gap and retailers such as Sears are realizing the benefits of building relationships via social media, especially Facebook and Twitter. Creating a digital community of local enthusiasts for your products may attract younger generations. To encourage online interaction, some retailers offer a small prize or a limited-time-offer discount.
Ultimately, doing business in the 21st century means new players and new rules. Dealers have realized they can’t rely solely on manufacturers to deliver innovation in the form of new products. To create a true strategic advantage, they must continually pursue innovation in their own showrooms.