Customer Centricity in the Grocery Business According to Kroger CCO

As the sole C-suite occupant whose chief purpose is to champion the needs of the customer, a Chief Customer Officer’s job is a tough one.

Unlike financial stats and sales figures, which are cut and dried, customer needs are inferred - from behavioral data, research and interviews - and convincing a profit-conscious boardroom to change a product or service offering to cater to a hypothetical can be an uphill battle.

However, more and more companies are baking customer centricity into their culture - or at least hiring CCOs to shoulder the draconian task of reforming attitudes towards user-centered design. At Kroger, the nation’s largest grocer, customer centricity is a longtime obsession.

Why the grocery business needs a digital transformation

It’s easy to see grocery stores as legacy retailers whose fluorescent lighting and inherent unsexiness defy call-to-arms for digital innovation; customers will still buy milk from the corner grocer without ever demanding a mobile app.

But the Walmarts, Krogers and Costcos of the world that stock largely homogenous goods at low prices are clamoring for the loyalty of the discount shopper. These retailers are mining data, buttressing their ecommerce and mobile presence, exploring user-centered design - and hiring CCOs to push the initiatives through.

“I think it brings a unique focus back to, yes, we have business goals and at the end of the day we do need to deliver to our shareholders, but the way to do to that is to deliver to our customers and meet their needs,” says Kimberly Busideker, CCO at Kroger Personal Finance, a division selling mortgages, loans and even pet insurance at most of Kroger’s 2,800 stores.

Data at the heart of customer centricity

At the heart of Kroger’s customer centricity initiatives is its Kroger REWARDS World Mastercard program, a debit card which doubles as a loyalty card. The card allows shoppers to earn points and save on fuel and groceries, while their point-of-sale as well as third-party data is stored, mined and analyzed to deliver customers even more of what they want according to data science.

In fact, this data is such a competitive edge for the company that it established a dedicated consumer insights firm, the Cincinnati-based 84.51°, to study its more than 60 million customers and feed those data insights back into every Kroger division. The firm also consults with consumer packaged goods companies (eg: food and beverage, household products) to help them build tailored marketing campaigns targeting Kroger customers.

“They help us understand who our customers are using data from in-store purchases and other data sources so we can develop products and services that meet customer needs and solve their problems,” says Busdieker, who is slated to speak at the CCO Exchange in May.

Meanwhile, the personal finance arm, initially established as a side business, was a logical next step in cementing the loyalty program while allowing Kroger to collect even more data on its customers in return for providing a value-added service. Given the company’s pre-existing commitment to wowing the customer using data science, Busideker is focused more on strategy than customer advocacy.

She leads the marketing and digital teams for her division, who are responsible for executing marketing communications with customers and integrating customer data into product strategies to offer the right promotions, products and pricing.

“They’re asking for more data,” she says. “They’re developing ways to re-strategize using customer data and insights and they’re very hungry for it.”

Banking and groceries seem an unusual combination, but it’s common in the UK, where chains like Tesco and Walmart subsidiary Asda tout a similar offering. It also allows the grocer to offer a debit card that doubles as a loyalty card, where points can be earned when used at the retailer and elsewhere.

“Kroger is already the prime grocery destination for millions of customers across the country,” says Busdieker. “So many of our services are an added conveniences during their food and fuel trips.”

The ‘Restock Kroger’ program involves a huge investment in digital initiatives, such as the Kroger Pickup online curbside service, where customers who order ahead can have their groceries hand-delivered to their car, and the Scan, Bag,Go self-checkout app.

Busdieker says it’s these little conveniences that garner repeat customers. “Obviously, sample size of one here: but as a working mom I find a huge benefit from the digital experiences we offer.”

For instance, on Monday she can log into the Kroger ecommerce site and load digital coupons, start a shopping list and do some meal planning based on relevant recipes on Kroger.com. By the end of the week, she can arrange to pick up the items on her list over the weekend without having to enter the store and hunt for them.

“There are a million or more variations of that scenario for all of our customers, so investing in that robust suite of digital and in-store experiences is critical to meeting more needs and making a connection with customers,” she says.

Meanwhile, Kroger just announced a partnership with Microsoft to build the connected grocery store of the future built on the software giant’s Azure cloud platform. The two pilot stores - one in Monroe, Ohio, and Redmond, Washington - will exploit video analytics tools to notify store associates of items needing restock, as well as a digital shelving system that displays complete nutritional and dietary info as well as digital ad space for CPG brands.

The role of the CCO in making sure the customer is always at the table

Even within a company unanimously devoted to understanding and pandering to its customers, installing a CX professional in the C-suite ensures that customer centricity remains an active priority rather than an abstraction of corporate-speak.

“What’s important to keep in mind about the CCO role is that customer centricity and the focus it brings drives loyalty to and from customers but ultimately drives profitability as well,” says Busdieker. “It’s not a short-term fix but a series of strategic decisions that continually point back towards customers and meeting their needs.”

At Amazon, CEO Jeff Bezos insists on designating an empty chair at every meeting for the hypothetical customer, so that every time a decision is made, everyone in the room considers what he or she might say.

Likewise, Busdieker says that true customer centricity is like “a continued voice in our ear” that forces decision-makers to ask, What would the customer think about that? How would the customer respond? Why would the customer even need that product or communication?

“Bottom line: customer centricity and profit have a strong correlation when we listen to our customers and commit to doing it again and again until it’s part of our DNA.”