It's possible to increase both customer satisfaction and profitability, but careful planning is needed, write Usha Ramanathan, Nachiappan (Nachi) Subramanian and Guy Parrot

Nachiappan, Subramanian

Parrott, Guy

Ramanathan, Usha

LSE Research Online

Social	media	and	successful	retail	operations	in	thehyper-customisation	eraSocial	media	in	the	age	of	ubiquitous	computing	connects	people,	enabling	them	to	share	personal	andprofessional	experiences.	Back	in	the	beginning	of	the	21st	century,	businesses	did	not	pay	much	attention	tosocial	media,	considering	it	as	a	personal	space	for	a	network	of	people	to	hang	out.	From	2010	on,	social	mediaplatforms	have	elicited	attention	as	it	has	become	clear	that	shared	views	dramatically	influence	individuals’purchasing	behaviour,	preferences	and	attitudes.	In	addition,	technological	innovation	enables	service	providersto	customise	the	products	and	services	to	cater	to	individual	customers’	needs	and	preferences.	Suchindividualised	offerings	are	known	as	hyper-customisation.Social	media	and	linked	technology	are	two	major	considerations	that	challenge	businesses	seeking	tocommunicate	with	customers.	The	ceaseless	growth	in	technology	effectively	compels	retailers	to	introduce	moretailored	business	models	to	retain	customers	and	to	gain	a	competitive	advantage.	A	groundswell	effect	hasprevailed,	where	widely	available	and	shared	online	reviews	have	enabled	buyers	to	gain	greater	knowledge,access	more	information	and	increase	their	purchasing	power.The	retail	landscape	has	changed	and	continues	to	change	as	customers,	reviewers	and	market	mavens	canpotentially	jeopardise	entire	operations,	thus	diluting	the	marketing	of	the	company	and	products.	Some	reviewsmay	also	change	the	future	of	the	product	completely.	In	particular,	retailers	are	increasingly	taking	a	moreproactive	role	in	satisfying	customers.	In	doing	so,	they	are	under	tremendous	pressure	to	reconfigure	theirbusiness	models	and	to	gain	a	competitive	advantage	based	on	the	level	of	individual	customer	understanding.Contemporary	retailers’	challengesA	major	issue	for	hypermarkets	is	to	learn	how	to	make	use	of	technology	and	several	other	hyper-phobic	(active)sales	practices	in	order	to	survive	in	the	increasingly	competitive	scenario.	A	few	contemporary	challenges	are:To	what	extent	are	existing	sales	promotion	practices	(vouchers,	coupons	and	in-store	promotions)	helpfulto	retailers	in	the	age	of	social	media?Will	social	network	reviews	influence	buyers’	choice	of	store,	product	and	brand?Do	the	existing	loyalty-building	frameworks	still	work	in	the	technology-dominated	era?Are	fundamental	changes	needed	in	service	operations	such	as	service	quality	and	store	convenience	inresponse	to	social	media	reviews?How	should	service	operations	blend	with	marketing	efforts	to	utilise	and	maximise	customer	satisfaction?LSE Business Review: Social media and successful retail operations in the hyper-customisation era Page 1 of 3		Date originally posted: 2017-07-27Permalink: http://blogs.lse.ac.uk/businessreview/2017/07/27/social-media-and-successful-retail-operations-in-the-hyper-customisation-era/Blog homepage: http://blogs.lse.ac.uk/businessreview/The	above	questions	formed	the	basis	of	our	study,	which	collected	retail	customers’	views	on	weekly	groceryshopping	experiences	with	respect	to	various	features	such	as	loyalty	schemes,	convenience	and	price.	Weattempted	to	generalise	our	understanding	using	the	perspectives	of	heterogeneous	customers	based	in	theSouth	East	region	of	the	UK.	We	analysed	key	aspects	of	service	operations	(such	as	store	service	quality	andstore	convenience),	marketing	(such	as	brand	and	price	promotions)	and	social	media	reviews	(shop	reviews	andproduct	reviews)	on	customers’	satisfaction	levels.Research	findings	confirmed	the	importance	of	social	media	reviews,	marketing	and	the	interaction	betweenpromotions	and	service	operations,	which	enable	retail	networks	to	build	both	loyalty-based	and	value-basedmodels.	Based	on	customer	behaviour,	the	study	suggests	a	need	to	consider	operational	efficiencies	whenpromoting	sales.	Through	careful	planning,	customer	satisfaction	and	profitability	levels	can	be	increased.	Thissends	a	strong	message	to	the	retail	network	to	defend	their	position	within	a	very	competitive	business	market.Key	findings	for	retailersIn	the	age	of	social	media,	standalone	promotional	efforts	will	not	enhance	customer	satisfaction.Social	media	reviews	substantially	influence	customer	choice	and	satisfaction.Retail	chains	need	an	integrated	loyalty-and-value-based	business	model.Aligning	service	operations	based	on	social	media	reviews	will	increase	customer	satisfaction.Integrating	service	operations	and	marketing	efforts	based	on	social	media	reviews	will	increase	customersatisfaction	and	profitability.Hybrid	loyalty-and-value-based	business	models	using	integrated	operations	and	marketing	efforts	willenable	companies	to	convert	different	segments	of	customers	classified	on	level	of	satisfaction	andprofitability	such	as	“free	riders	(higher	satisfaction	and	low	profitability)”	and	“vulnerable	customers	(lowsatisfaction	and	higher	profitability)”	into	“star	customers	(higher	satisfaction	and	high	profitability)”.♣♣♣Notes:This	blog	post	is	based	on	the	author’s	paper,	Role	of	social	media	in	retail	network	operations	andmarketing	to	enhance	customer	satisfaction,	International	Journal	of	Operations	&	Production	Management,37	(1),	pp.	105-123.The	post	gives	the	views	of	the	authors,	not	the	position	of	LSE	Business	Review	or	the	London	School	ofEconomics.Featured	image	credit:	Real	wuerzburg,	by	Christian	Horvat,	own	work,	Public	domain,	via	WikimediaCommonsWhen	you	leave	a	comment,	you’re	agreeing	to	our	Comment	Policy.Usha	Ramanathan	is	a	Reader	in	Supply	Chain	Management	in	Nottingham	Trent	University,	UK.In	the	past,	she	worked	as	a	Senior	Lecturer	in	Universities	in	the	UK,	Oman	and	India.	Herteaching	experience	spans	for	over	20	years.	Usha	is	a	Fellow	of	Higher	Education	Academy	andChartered	member	of	Chartered	Institute	of	Logistics	and	Transport.	Usha’s	research	interestincludes	supply	chain	collaboration	for	sustainability,	role	of	collaboration	in	SMEs’	performance,Collaborative	Planning	Forecasting	and	Replenishment	(CPFR),	value	of	information	sharing	andforecasting,	e-commerce,	RFID,	Big	Data,	retail	customer	behaviour	and	loyalty	in	the	contexts	ofservice	and	operations.	She	has	published	in	leading	journals	such	as	International	Journal	of	ProductionEconomics,	International	Journal	of	Operations	and	Production	Management,	Expert	Systems	with	Applicationsand	Omega:	The	International	Journal	of	Management	Science.	She	is	a	reviewer	for	many	leading	journals.LSE Business Review: Social media and successful retail operations in the hyper-customisation era Page 2 of 3		Date originally posted: 2017-07-27Permalink: http://blogs.lse.ac.uk/businessreview/2017/07/27/social-media-and-successful-retail-operations-in-the-hyper-customisation-era/Blog homepage: http://blogs.lse.ac.uk/businessreview/Nachiappan	(Nachi)	Subramanian	is	a	Reader	in	Operations	and	Logistics	Management	atUniversity	of	Sussex,	UK.	Nachi	is	a	Senior	Fellow	of	Higher	Education	Academy,	UK	andchartered	member	of	Chartered	Institute	of	Logistics	and	Transport.	Previously,	he	worked	atUniversity	of	Nottingham	Ningbo,	China	and	Thiagarajar	College	of	Engineering,	Madurai,	India.He	has	17	years	of	academic	experience	and	2	years	of	industrial	experience.	He	has	publishedover	70	articles	in	refereed	journals.	He	has	guest	edited	several	special	issues	in	leadingoperations	management	journals.	His	research	interests	are	sustainable	logistics	and	supply	chain;performance	measurement	and	optimisation;	supply	chain	resilience	and	ambi-supply	networks.Guy	Parrott	is	a	Senior	Lecturer	in	Marketing	at	the	University	of	Bedfordshire,	UK.	His	teachingexperience	spans	over	23	years;	prior	to	this	experience	Guy	spent	9	years	working	for	severalblue-chip	clients	as	an	advertising	agency	account	handler.	Guy	is	a	Senior	Fellow	of	the	HigherEducation	Academy,	a	member	of	the	CIM,	a	member	of	the	Academy	of	Marketing	and	a	memberof	the	Emerald	Literati	Network.	Guy’s	research	interests	include:	Pedagogy,	Brand	Managementand	SME	Branding.	He	has	published	in	the	Journal	of	Small	Business	&	Enterprise	Development,The	International	Journal	of	Management	Education,	the	Journal	of	Entrepreneurship	and	theJournal	of	Fashion	Marketing	and	Management.	Guy	is	a	reviewer	for:	Sport,	Business,	Management:	anInternational	Journal,	The	Academy	of	Marketing-S.I.G.	Small	Business	and	Entrepreneurial	Marketing,International	Journal	of	Bank	Marketing,	Journal	of	Marketing	Management	and	the	Journal	of	Fashion	Marketingand	Management.		LSE Business Review: Social media and successful retail operations in the hyper-customisation era Page 3 of 3		Date originally posted: 2017-07-27Permalink: http://blogs.lse.ac.uk/businessreview/2017/07/27/social-media-and-successful-retail-operations-in-the-hyper-customisation-era/Blog homepage: http://blogs.lse.ac.uk/businessreview/

Social media and successful retail operations in the hyper-customisation era

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