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eCommerce Blog – Opportunities in US and India (by Darpan Munjal)

Sears – Winning the crowd by crowdsourcing?

Posted by Darpan Munjal On August - 16 - 2009
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It was about 5 years ago but I still remember when my refrigerator stopped working two days after I ordered it from Sears. It took me more than 8 phone calls to get the situation addressed. I remember calling different customer service hotlines and finally getting a resolution after contacting some internal departments. All this happened when I was working at Sears!! I shared my experience with the appropriate groups in the hopes that others wouldn’t have to go through similar frustration. However, at that moment, I couldn’t help but empathize with the situation of other customers who had no good means to “escalate” the issue within the appropriate internal departments. .

Fast forward 5 years – enter the connected world! I recently visited and was amazed at the community involvement! Even though you see customers occasionally venting about product issues and their experiences, what is really impressive is that Sears has taken a bold step to let it all out in the open. They have provided an online platform where Customers are free to post their experiences. This is bold because it demonstrates leadership as well as compassion that Sears not only cares about listening to their customers, they are also not afraid of letting customers openly talk about their experiences online, however negative they might be. Interestingly, there is a group “Sears Cares” that addresses the customer service issues posted on the website. I think this strategy will definitely pay off in the long run, as long as the customer issues are addressed in a timely fashion and there is a feedback loop where customers are then able to share how their issues were resolved. In today’s world when there are so many forums and discussion boards where customers can vent about their experience – why not invite them to your own backyard and address the issues head on! MySears also has a section for customers to submit new ideas, and vote on other submitted ideas. Although this level of transparency will definitely improve the level of trust across Sears’ customers, the question is – is this enough?

Multi-channel retailers such as Sears or Walgreens have been focusing on traditional retail for more than 100 years. Although I think it is impressive that retailers such as Sears are able to leverage the online channel to win back one customer at a time, this approach is still reactive. What is more critical is to change the mindset of every single employee in how they think about leveraging the online channel. In today’s world, retailers need to stop thinking about a one-way means to push messages and product assortment to the customers. No company can outsmart or beat the collective intelligence of millions of users even if they spend millions of dollars every month. The online channel offers means to harness this collective intelligence that can help in making the right decisions for the target customers. Everyone talks about it, and yet, when it comes to making decisions, those decisions are generally supported by internal executives’ intuition vs. objective data that is collected from the customers. All the money that is spent by the retailers in marketing campaigns, assortment planning, merchandise planning, product design, store signage – how many of these decisions are based upon real customer feedback at the ground level?

Perhaps it is time to reinvest some of these dollars in platforms where customers can help make these decisions. Perhaps it is time to put the customers in charge – if they matter the most, shouldn’t they be the ones helping make strategic decisions? Why are retailers not investing in building an online portal where customers can collaborate on what assortment to carry in the store? Where customers can vote on what kind of promotions to run in the store? Where customers can rate the performance of the store associates that they interacted with? Where customers can not only help design the marketing campaigns, they can also become part of driving these marketing campaigns? Where customers can participate in designing cool apparel outfits or voting on the designs submitted by others?

I can go on and on but at a broader level, I think there is a significant need and opportunity for retailers to start outsourcing (or “crowdsourcing”) their internal decision-making to their own customers. The concept of Crowdsourcing has been around for few years now and yet only a few businesses have been able to take true advantage of the power of online communities. Multi-channel retailers stand to gain most from the power and wisdom of communities – learning from the customers using the online channels, and applying those ideas in the stores. Yes, it will require some sort of incentive to get the customers to participate in these kinds of communities. It is, however, amazing to see how eager customers are to participate and collaborate as long as their voice is heard and as long as they are able to achieve some sort of reputation/ expert status in the online community.

There are several retailers who make sure every new corporate employee in the company spends few days in a store when they start. I think the companies should also make sure that every corporate employee spends one week understanding the customer analytics that are being collected from the online channel. Every decision should be supported by some objective information that was collected by the online channel. I am not promoting the online channel just because I am biased. In this day and age, especially in a struggling economy, every single dollar that is leaving the company should be based upon a true customer insight – and the online channel offers a perfect means to not only capture those insights but also engage the customers in testing the ideas at a significantly cheaper cost.

An excellent example of leveraging the community in product design is – a web-based startup launched in 2000, which has become a poster child for how customers can actually create a company. Threadless sells t-shirts, but it does not design them. That’s up to its customers, who submit designs and stand to win small prizes if their submissions end up on a product. Then there is Polyvore, where people can combine fashion pieces into outfits they call “sets.” The interesting thing about fashion is that no item really stands alone — they are always combined into outfits. So instead of selling individual articles of clothing and accessories as most retailers do, combine them into outfits. And better yet, let customers do the creative work and then decide which outfits are most popular. The concept of crowdsourcing is now slowly being adopted by traditional companies. Whether it is My Starbucks Idea or Dell’s IdeaStorm or P&G’s Collect and Develop or Campbell’s Ideas for innovation, they all have one thing in common – they believe in the value of customer involvement in product design, and they have begun using the online channel to collect insights that would have been almost impossible to collect in the past.

What Sears has done is a good starting point – and is certainly more than what other “successful” retailers have done so far. Case in point – Target which still believes that the online channel is just another channel to drive sales therefore they don’t see any downside in outsourcing their entire online channel to Amazon. Wait a minute – did I just read that Target announced to end its pact with Amazon and build its own online presence? There are signs everywhere that multi-channel retailers are now seeing the online channel as something more strategic than just a revenue opportunity. However, I am rooting for the under-dogs like Sears who have recognized the strategic value of online channels and taken initial steps in directly engaging their customers. The true winners will however be the retailers who implement practical means to collect meaningful insights directly from their customers and then reform their internal processes to make and evaluate all tactical and strategic decisions based upon these insights.

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One Response to “Sears – Winning the crowd by crowdsourcing?”

  1. Keith says:

    Excellent Article! I never imagined a retailer like Sears doing so much in the online space. Despite all of this, they still seem to struggle with defining a clear value prop for the customers. May be the online channel will help them better reconnect with their customers.

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