Automation’s Role in Customer-Centric Retail Operations with Doug LaBahn, Cin7
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The following was transcribed from a recent interview on The Agile Brand with Greg Kihlström podcast.
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Today we’re going to talk about automation, and how it is helping retailers stay customer-focused amidst a variety of challenges including supply chain disruptions and more.. To help me discuss this topic, I’d like to welcome Doug LaBahn, CMO at Cin7.
We’re here to talk about a few challenges that retailers are facing today as they struggle to stay customer-focused. So let’s start by talking about some of the supply chain issues that retailers face. Can you describe the current state of things and the strain this is putting on retailers?
Certainly. I think you’re on a key topic here. There’s a lot of stresses in the economy. So there’s inflation, and prices are going up. So we see that our customers, and we have over 8,000 customers, are thinking about their pricing strategy and how to be fair to the customers and create a great experience so the loyal customers continue that loyalty without feeling the pressure of inflation. We also see, at the same time, supply chain challenges. So one of our many retailer clients, a fashion designer, Meghan Fabulous – and you know fashion is very season-oriented, so they’re ordering product but it’s arriving after the peak season for that. So lots of businesses are struggling with the delivery of the product at the right time, when customers want to purchase it. And the third one, which I think we’re all thinking a lot about, is, is there a recession on the horizon? Will consumers close their wallets and stop purchasing, or slowing their purchasing? So those 3 factors are really coming together to create challenges.
So how can increased automation of inventory help retailers alleviate some of the challenges associated with supply chain disruption?
Well, I would start by dividing the world into two types of businesses. You have businesses that are established; they’re successful, but they’re running on desktop and server-based technologies. And we’ve done a study of 4,000 businesses in the U.S. and the U.K., and 86 percent of businesses still have a lot of on-premise, old software. Those businesses are really struggling because they can’t get real-time information about customer purchases, about their inventory and consumer changes.
The second type of businesses have moved to the cloud, and now they’re natively integrated, meaning they have direct connections to their online marketplaces, to their retail stores. They can see their inventory in a physical retail store and online at the same time. This second group of businesses are thriving in large part because the automation reduces a lot of the manual work and a lot of the manual errors.
So platforms like Cin7 can be used by retailers to help with some of this. Can you talk a little bit about how your platform works and maybe how it differs from some other solutions that might be available?
Excellent, I’ll use a couple terms that I think everybody will be familiar with. So a 360-degree view of your business, or a customer 360, being able to see everything about your customer, and those are long-term trends, and people are at various stages of maturity and achieving those. What we provide is a 360-degree view of your inventory. So you can know, at any time, you can open a browser; you can open a mobile device, and know exactly how many you have in stock, in what locations, in what colors and sizes, in your stores, in your 3PL warehouses, or somewhere in your supply chain. So we give that 360-degree visibility in real time to our customers.
So let’s talk about another challenge now, switch gears a little bit. Inflation: so how has inflation affected these companies, and what are the best methods that retailers can use to maintain profitability despite fluctuations in inflation?
Well, at a starting point, and it’s perhaps the basics, is a retailer can’t be successful if you sell a product for less than you paid for it, so the purchase price. What is hard for many businesses is also to understand all the handling costs and shipping costs that come from the point of location. So maybe you manufacture a product in Vietnam with contract manufacture. It’s shipped through Los Angeles. There are shipping delays in the Los Angeles harbor. And then you’re gonna put it for sale in your online stores, and you’re deciding between your own online store or Amazon, and how to price that.
First, my sympathy to everybody that struggles with that. That is hard. What can make it a lot easier, though, is understanding your total cost of the product and the total availability of the product. So if you know what’s available, then you can sell it to the most profitable channel. Sometimes Amazon’s gonna be more profitable than your online store and other times you’re gonna want to send it to the physical retailer. When you add inflation to that, you have to anticipate what your cost to replace that inventory is. So your prices today may reflect the inventory that you bought six months ago in a slow supply chain. So you can still, on paper, provide profit if you’re reporting to your investors. However, you can’t replace that inventory at the same price. So you have to anticipate how that cost flows through your supply chain and ultimately to the customer.
So we’ve talked about inflation. We’ve talked about supply chain Issues. You know, what else is there? That’s enough, in and of itself, but what other changes, trends or competitive forces have your customers been experiencing, and how have the most successful ones adapted?
I like both of your questions. The first one is the reality everybody faces is a labor shortage. So not only that, if you’re focused on delivering great customer experiences, you may not be able to hire the people that you want and not be able to staff in the right locations or find the digital marketing skills that you need. So there’s significant challenges. What I can say with excitement and optimism is, in our study of 4,000 businesses, we found about 10 percent of those businesses, they were growing 40 percent faster than the year before. Everybody wants to know what the most successful businesses are doing, so we double-clicked on that, interviewed a number of them, and looked at what were the common traits of those high-performing businesses?
And I would boil it down, the findings, to very simple things. The first one is they’re working with great technology, so they’re using modern in-the-cloud technology so that they can understand where their product is, as we’ve spoken about supply chain. But one of the surprising facts is that it is also a much more enjoyable employee experience to use modern technology. I suppose, pre-pandemic, all of us can remember when you walked into a retail store and you said, “Hey, I want to buy this particular size,” and the retail associate at the desk said, “Well, unfortunately, we’re out of stock; let me call around to other locations and see if I can find that.”
Well, if you have a fully staffed team and you don’t care about costs, you can afford to have a retail associate call all the locations, and think of how long you as a customer are standing there, and how much it was costing the business. With today’s cloud technology, they look at their mobile device; they tap it twice and say, “Would you like it delivered to your home this evening or would you like it tomorrow? There’s a $5 service charge for that, or we can deliver it two days from now at no charge. What would you like, dear customer?” Think of the employee experience there of waiting, making all those calls, getting the customer increasingly anxious about waiting so long, versus tap your device and have the answer. So great customer experiences come from these modern technologies that enable both a beautiful customer experience and an employee experience.
That’s so great, and I think retail is definitely one of those areas where the employee experience can be so closely related to customer experience simply because there’s frontline employees, and that sometimes face-to-face relationship is so important, so that’s great to hear. Let’s now talk a little bit about Cin7’s business as well. So how has the pandemic and all the related challenges affected your outreach and approach to your customers? Did you experience any significant pivots in direction or anything like that?
So that’s a good question, and I think, like many businesses, when the pandemic hit in March 2020, the concern was “What’s going to happen to the economy?” And there was a big push to the online, and our software enables a retailer to be able to quickly turn on an online store and to sell to the customers the way they want to buy. So if the store is closed, they were able to buy online. So that helped our business. And there’s a business called Pepkor Specialty, and they were a traditional retail store with physical locations. And they did not have a single online store. We were able, for that business, and this is a large blue chip business, to open five e-commerce stores in less than four months. So we were able to turn on these stores and create and deliver great experiences in a modern SaaS world for a business that had very old legacy software. So that helped us, kind of, Act One of the pandemic.
Act Two of the pandemic was people returning to store shopping. So now people have been selling online and go, “Wow, my Shopify store, my online store looks beautiful, but when I’m standing behind the desk and looking at my old point of sale system, it’s looking pretty old and tired, and, by the way, it’s not connected to my online store so I can’t tell what stock I have and what the current customer purchased last time if they asked me, like, ‘What size did I buy last time?’” So now we’re seeing, as the retail stores open, people want to modernize their point of sales experiences. And we help with that by bringing that 360-degree view of the inventory.
Now, I think the third act is all the uncertainty about what’s going on in the world; is there going to be a recession? And it raises the question for many people, “Is this the right time to invest in technology?” And we compete in an area which is closely aligned to but different than traditional ERPs. So if you go out and you shop for an ERP and you say, “Hey, I think my business is ready for that,” you’re going to get a price tag of, say, $100,000 a year for the software and, say, $300,000 to implement that. And businesses are wondering, “Is that a good investment? I see the return from that; I know it can create better customer experiences, will be more efficient, but what if the economy slows down, and we’ve just made that $500,000 investment?” That third act actually plays very favorable to us because our software and the implementation is less than $50,000. If the economy gets tight, we’re well positioned because we deliver great value for the dollar.
That’s wonderful, and along those lines, I think you’ve touched on this already, but how do you stay customer-focused, to really understand and anticipate? Some of what you’re talking about is, kind of, paying attention to the trends, whether it’s economic or otherwise. But how do you stay customer-focused so you can better understand other aspects and empathize with what your customers either were experiencing or are experiencing?
Greg, I’m glad you asked that because I skipped the second part of our big study of what distinguished those top 10 percent of performers. And I hope your audience has a lot of consultants in the audience because the second thing that stood out that was very different for the top 10 percent was their use of experts. So if you’re running a business and I’m the chief marketing officer of our business, I actually have five digital marketing coaches or experts that I work with. So I get the brain power of an army of smart people to run our business. And I feel for the person that’s out there, and the CMO, or the customer experience person that doesn’t have their network of experts. And I say this from a point of data where those top 10 percent had on average five different experts consulting for their business. So I think the first mistake you can make in your customer experience is to try to do it on your own or to try to run workshops internally within your business. The benefit of an expert and the speed to answer is so significant, that would be the starting point.
About the Guest
Doug LaBahn is CMO at Cin7. He is a very experienced product and product marketing leader with an outstanding track record of scaling companies by bringing strong value propositions and business models to market to rapidly grow SaaS revenue. I love collaborating in fast-paced, collaborative environments and enjoy leading and building world-class marketing, product, innovation and channel teams.Customer focus, insights, story telling, digital/field marketing and service design all play important contributing roles in scaling product portfolios within small business, consumer and mid-market segments. I’m also appreciative of being part of awesome teams that have led businesses through growth curves from ~$100M to ~$800M ARR several times in my career. World class sustainable growth is a team sport and I am looking forward to doing it again.
About the Host, Greg Kihlström
Greg Kihlstrom is a best selling author, speaker, and entrepreneur and host of The Agile Brand podcast. He has worked with some of the world’s leading organizations on customer experience, employee experience, and digital transformation initiatives, both before and after selling his award-winning digital experience agency, Carousel30, in 2017. Currently, he is Principal and Chief Strategist at GK5A. He has worked with some of the world’s top brands, including AOL, Choice Hotels, Coca-Cola, Dell, FedEx, GEICO, Marriott, MTV, Starbucks, Toyota and VMware. He currently serves on the University of Richmond’s Customer Experience Advisory Board, was the founding Chair of the American Advertising Federation’s National Innovation Committee, and served on the Virginia Tech Pamplin College of Business Marketing Mentorship Advisory Board. Greg is Lean Six Sigma Black Belt certified, and holds a certification in Business Agility from ICP-BAF.
