What will make people commit to a store or become loyalty customers going forward? How does the digitalisation of everyday life and services affect customer commitment? What will the relationship between a store and a customer be like in the future?
In late September, K Group invited nine start-up companies around the world to Helsinki for a week to find answers to these questions. The start-up challenge yielded many new ideas as well as prototypes for new services – and one winner.
Below, K Group’s Chief Digital Officer Anni Ronkainen and Lead Service Designer Harri Nieminen discuss what the week taught K Group, and how digitalisation will affect consumer behaviour, customer experience and customer commitment.
Startup 8-Bit Sheep, photo: Hanne Kettunen
"You can become too accustomed to your own way of doing"
Anni Ronkainen: "The start-up challenge week was part of K Group's wider effort to identify aspects that will be significant in terms of customer loyalty in the future."
Harri Nieminen: "Customer behaviour is changing, and the trading sector is changing. How do we ensure that we stay relevant? Of course we already have plenty of insight into what works and what doesn't, but we wanted to be honest and admit to ourselves that outsiders can have valuable insight, too. As a big and stable company, we can benefit from small and agile start-ups spurring us on."
"As a big and stable company, we can benefit from small and agile start-ups spurring us on," says K Group's Lead Service Designer Harri Nieminen.
Ronkainen: "For several years now, we have been shifting thinking inside K Group towards placing the customer at the centre of everything and coming up with real solutions to the everyday issues our customers face. If you genuinely always strive to do what's best for the customer, you can't go badly wrong. However, if you focus on sub-optimisation, you can easily get side-tracked."
"If you genuinely always strive to do what's best for the customer, you can't go badly wrong," says K Group's Chief Digital Officer Anni Ronkainen.
Nieminen: "For start-ups to be successful, they must be able to quickly come up with solutions that benefit their customers. In big and stable companies, on the other hand, there is a risk that people get too comfortable in their own way of doing things and the stability. With start-up companies, you can sense how they constantly challenge themselves, develop and strive to ensure future success. Start-ups can teach us that you can achieve a lot in a fairly short amount of time by being agile and experimenting. If an idea doesn't work, at worst you lose just one week's worth of work."
Ronkainen: "If the alternative is to plan something for a year or two with still no guarantee of success, you have to wonder which approach is more effective."
"Customers are becoming more and more demanding"
Ronkainen: "At its most concrete level, the start-up challenge sought to find a solution to ensure our customers will continue to use their loyalty cards and register their purchases."
Nieminen: "Customers are also beginning to understand the significance of data and data-based customer insight, and how they themselves can benefit from us knowing them."
Ronkainen: "Going forward, the importance of data will only grow, as we strive to make the customer experience and services increasingly tailored and individual. I firmly believe that our customers will want to give us their data in exchange for something that is of value to them."
Nieminen: "People are more and more demanding when it comes to good customer experiences. We can use data and data-based customer insight to create better customer experiences. This means we are also obligated to tell our customers how we are using their data, and answer the question 'what's in it for me?'"
Startup 8-Bit Sheep, photo: Sami Kallinen
"Outsiders can see the possibilities"
Nieminen: "Nine start-ups took part in our challenge. Although different, they all focused on the same question: how can K Group bring added value to its customers, especially the most committed ones."
Ronkainen: "And how can we use that to increase customer loyalty?"
Nieminen: "Why should people choose K Group stores over others?"
Ronkainen: "Sometimes we overestimate just how interested consumers are in us, believing that they think about us morning, noon and night, while in reality they are focusing on their own lives. We must be able to create a selection of services that are truly relevant and bring added value to the everyday lives of our customers."
Nieminen: "The winning start-up company, 8-bit-sheep from Finland, came up with a prototype of a service for our customers that utilises a versatile set of data. Although only one company was crowned the winner, during the week we got to know all the start-ups and I think it's likely that we'll continue talks with many of them."
Ronkainen: "8-bit-sheep had excellent capabilities to handle product and purchase data, and they were able to come up with a functional demo over the course of the week. We had been pondering similar solutions ourselves, but thought we would not have sufficiently good data to back up the solution. Often, when ideas are discussed internally, the focus is on the limitations, while outsiders can see the possibilities. Here, 8-bit-sheep saw that our data was good enough."
Nieminen: "Smaller companies are good at this. Experimenting and evolving is part of the start-up culture, as everything depends on the ability to take off quickly."