Much to our amazement, Santa Claus recently sat down with one of our writers here at Customer Think
CUSTOMER THINK: Santa, I must admit, we were all surprised when you agreed to this interview. You’ve shunned contact with the media for centuries. Why surface now?
Santa Claus: Because I can! You need to understand that I run a huge operation. It involves everything from the all the logistics involved in building untold numbers of toys to maintaining the naughty and nice lists. Thankfully, I’ve automated most of this. If I weren’t an early adopter, I wouldn’t have lasted this long. I love technology! Heck, we couldn’t do this interview if it weren’t for Skype, especially during my busy season.
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CUSTOMER THINK: But why Customer Think?
SC: Your readers handle the issues every day that only affect me once a year.
CUSTOMER THINK: What triggered your latest technology adoption?
SC: In the end, for me, it’s all about getting the right gift to the right kid for the right reasons. With the possibilities offered by today’s online shopping and real-time personalized offers, I found that I needed to change my approach. Even Santa can feel Amazon closing in.
Now let’s face it, I’ve always known exactly who wants what by what date – kids aren’t exactly shy about letting you know their desires – but because of the sheer volume of work, I used to use the information only to manage logistics and inventory control, focusing on the transaction, not the recipient.
I’ve transitioned from a transaction-centric to a recipient-centric focus. This way, I can better optimize the personalized information to reach my primary goal: delight everybody– the children, the parents, the grandparents, and the local retailers who supplement my offerings.
CUSTOMER THINK: How do you approach personalization & optimization?
SC: You know what makes me go, “Ho, Ho, Ho? Big data!
Let’s consider Bonnie and Carl. Bonnie asked for a new bicycle, and Carl wants an Xbox and a skateboard.
First, I analyze the geographic region and demographics, much like your retailers finding a customer’s primary store. For example, Bonnie lives in rural Texas in a single-parent household. Carl lives in suburban Chicago with his parents. Both children have Christmas at home, so everything needs to have a local focus.
Then I examine the relevancy. To Bonnie, a bicycle means freedom, that she can ride to school, to her friends’ houses, and to grandma’s. Carl simply wants what all his friends have. While I know exactly who wants what, does it serve my and their long-term interests to deliver it?
Last year, I gave Bonnie a new doll, and her mother got her a new winter coat. Grandma got her an arts and crafts set. Her expectations are not high, as her mother cannot afford a bicycle. If I give Bonnie a bicycle, this year, I make not only Bonnie happy but also delight her mother, assuaging her guilt that a bike just isn’t in her budget.
Carl’s requests are reasonable for a child who looks to his peers for validation, which dictated his requests from last year. However, my data indicates that he already spends too much time playing inside and not enough outside. For Carl’s mother, the optimal gift is the skateboard.
Sometimes when I look at my retailer peers, I can only imagine how they solve these problems with millions of customers and hundreds of thousands of products, 365 days a year. My optimization problems are nothing compared to what they face every day.
I use big data analysis of all previous Christmases to review expectations for this year as compared to previous years. Did I deliver exactly what they asked for last year? What is their overall level of satisfaction regarding my performance year over year, and what do I need to do to meet or exceed those levels? To that end – back to Carl – I need to analyze if I’m better off making Carl or his mother happy. Perhaps she was frequently disappointed as a child, and by making her happy now, I can bring the joy back into Christmas for her.
CUSTOMER THINK: I know you’ve said you dropped your transaction focus, but what about delivery?
SC: Of course, delivery channel is also a consideration, everyone knows I have the best team of flying reindeer on the plant, but even they can only do so much. Plus, chimneys are no longer available in many locations. Should I use UPS, FedEx, or simply have an elf sneak into the parents’ closets to deliver the gifts? All carry certain risks, expectations, and delivery concern, everything from December 26 delivery to needing to bail out an elf for breaking and entering.
Retailers working with customers every day benefit from the fact that everything is digital – the impact and response are immediate.
I also need to manage my own channels so I continue to receive their feedback, as well. Email and text are everyone’s primary communications tools, but the postal service is still my largest supplier of children’s request.
I am still analyzing this year’s data to determine how my channels may evolve into the 2017 season.
CUSTOMER THINK: How do you approach product substitution and brand loyalty?
SC: Children generally receive their non-Santa gifts from their parents and their grandparents. I need to ensure that the toys delivered do not duplicate what the others have purchased, so I need to analyze the overall market basket as well as gauging brand loyalty. Carl asked for an Xbox. Would he be just as happy with a Wii? He’ll also become a repeat customer to many other retailers as he and his family members purchase other games to supplement the original system. How many other business objectives would I reach by fulfilling both of Carl’s requests?
The skateboard gift also generates supplementary and complementary purchases. While I’ll include a helmet, it will be up to his parents or other relatives to get him other protective gear. Once he owns a skateboard, his friends can buy him stickers for special occasions for the next 12 months, again, creating a ripple effect to drive a long-term increase in the Carl-related market basket.
As for Bonnie, what brand bicycle should I give her? Schwinn? BMX? Who has given me the best cooperative dollars, which I used to subsidize gifts for other children, of course?
Even the few cooperative relationships I have are next to impossible to manage. I don’t even want to think about how retailers with hundreds of different brands and private labels handle their CPG relationships. Good for them!
CUSTOMER THINK: What are you doing for the long-term?
SC: You’ve heard about my list making and checking it twice. With my big data personalization and optimization tools, I don’t need to do that manually any more. In fact, automating this means that the rooms full of nice/naughty ledgers have been converted to more manufacturing and storage space. The continuous measurement and analysis of my results – checking to ensure the right combination of personalization, optimization, and delivery channels – ensures that I get closer and closer each year to achieving my long- and short-term goals of customer delight with an ever-increasing client base.
CUSTOMER THINK: Santa, we know you’re really busy, so thank you for your time. Just one thing – you’re obviously really into technology, haven’t you ever heard of Fitbit?
SC: I know someone who’s getting a lump of coal this year, tough guy.