Over the weekend, my family and I dropped in to a big box electronics retailer to pick up a copy of the Wall-E DVD. After a fruitless search of the shelves, we finally tracked down an employee who advised us that their system suggested they had two copies in inventory, but he had no idea where they were. Frustrated, we picked up another item we needed and checked out. Nobody asked us if our shopping experience had been a good one. I went home and bought the DVD on Amazon, and therein lies the story of an existential crisis in retailing.  By the way, this wasn't a story of Circuit City, who on Friday announced that they had lost their fight to remain solvent and would liquidate - eliminating 34,000 jobs in the process. In an ironic twist, circuitcity.com is now pointing to a URL with the word "closed" in the title and showing only a letter to customers, not the usual commerce site. It was, after all, the internet that put them out of business.

Back in the early days of the internet, plenty of Silicon Valley types (I include myself in that characterization) predicted the disruption or destruction of numerous industries. Just about every type of business would be turned on its head, we heard. Ten or so years later, it’s coming true. Well, at least in some places.

Sure, the newspaper business has been pretty much pulverized by the internet. But that’s small potatoes compared with the impact on bricks-and-mortar retailing. Over the next 10 years, large sections of the retail industry will face their own “ultimate question”– do we need you at all?

Retailing provides a basic value creating function: distribution – getting products into people’s hands. It’s about breaking bulk.  The problem stems in no small part from the fact that for a significant number of products, online sales has significant advantages in distribution and can neutralize other advantages that physical retailers have in merchandizing or immediacy. Sure, you can’t tell what the fabric feels like on that shirt over the web, but you can read a lot of customer reviews and get detailed specifications from your kitchen table.

Furthermore, retail has its own supply and demand problem. America has been on a building spree, based on a fundamental misjudgment about both the volume and nature of future commerce. We have built malls and we have built retail banks. Everywhere. You know that we are in trouble when cities are forced to regulate the frequency of high street bank branches, Starbucks coffee shops and big box stores.

As I have suggested in the past, a recession has a habit of sorting out winners and losers, and retail has another issue. In too many cases they don’t care about the customer experience, don’t know about it, or both.  The National Retail Federation's survey of customer service puts L.L.Bean at the top, as they have been the last few years. But #2, #3 and #4 are internet-only retailers. And this understates the trend.

Online retailers are rich with behavioral data. They know who you are, what you bought, perhaps even what you liked. They can get feedback from you – both in the form of NPS but also through behavioral data such as when you abandon your purchase.

Retail is data poor. In a worst case scenario, someone walks into a store, pays cash for a product and walks out. The retailer knows absolutely nothing about them.

This data paucity spills over into NPS. Most retailers today simply don’t know if their customers had a good experience or not, and they certainly don’t have the mechanism for taking immediate action around it. You also have to seriously question their intent. Try volunteering information to an employee at your local clothing chain and see what he or she does with it. Is there evidence that they are trained to handle customer feedback? And that’s the easy part. If ONLY customers truly volunteered information. What retailers really need is an ability to measure each transaction.

You might be thinking this is an implementation problem. Sure, multi-branch operations have their unique issues but let’s not forget that Enterprise – that icon of Net Promoter cast studies – solved the problem for frontline employees in car rental.  You have the ask yourself, is it really that hard? Apple has clearly cracked the code in their Stores, partly through a focus on building data about customers and not simply viewing a sale as an anonymous transaction. Verizon Wireless makes it work. Hint: keep your eyes on our NPS benchmark to see how that worked out for them. OK, so theirs is a technology product, but their customers cover some pretty broad demographics – why wouldn’t this work in other operations?

Worse supply chain economics coupled with poor customer experience. If I could buy my latte over the internet, I’d be worried that we could see the end of the high street altogether.

We all know with the New Year upon us that it is time for the annual ritual -- that of the New Year's resolution. How many times have you and I made them only to let them peter out by spring, if not earlier? Well, this year I have made some resolutions and I promise to keep them! As of the January 6, I am already well on my way.

The tradition of the New Year's resolution goes all the way back to 153 B.C. Janus, a mythical king of early Rome was placed at the head of the calendar. The Romans named the first month of the year after Janus, the god of beginnings and the guardian of doors and entrances. He was always depicted with two faces, one on the front of his head and one on the back. That way he could look backward and forward at the same time. At midnight on December 31, the Romans imagined Janus looking back at the old year and forward to the new.

Businesses can also make resolutions through both their short-term and long-term strategies. Think for a second about what resolutions your company could make to your customers. After working with many organizations, I have my short list, and I will start with 3 because we all know if you make too many resolutions they fail. Keep the list short and you have a fighting chance.

Resolution 1: I promise not to treat every customer the same.

In loyalty lingo this would mean truly understanding the unique experiences that your customers want and desire. Technically speaking, it would also mean that you have developed a good segmentation model that is driving your customer strategy -- taking in to consideration your market, and the strategic value of different types of customers to your business. We discuss this in some detail in the Net Promoter Certification Course, both from the standpoint of your customer economics as well as recruitment and sampling strategies.

For B2B businesses this can mean truly understanding the value of different types of accounts to your business and the value of the individuals within that account -- identifying the decision makers, purchase influencers, end users, etc. In a B2C setting, this would mean identifying the unique demographic and psychographic qualities of various segments, or the combination of segments that define groups of customers that have similar expectations.

I would argue that many companies today put very little effort into customer segmentation, or have created such a simplistic segmentation model that it is almost useless. Many organizations find it very difficult to create strategies and deliver experiences specifically geared toward a particular customer segment. Most feedback is insufficiently segmented to provide the necessary detail -- so all customer strategies end up looking alike.

Resolution 2: I promise to get good information about my customers, once and for all!

Cleaning up a customer database is an ongoing exercise, and often an ongoing exercise in frustration. When I discuss trustworthy data in our certification courses, I typically ask the class what percentage of the data in their customer database is accurate and reliable -- on average participants have less than 50% confidence in this data. I did once have a participant say he was 100% confident in his customer database. As a start up they only had 7 customers! But incomplete data is much more common. The most accurate piece of information typically is billing information -- good to be able to collect money from customers, right? But it goes quickly down hill from there. CRM is used for a variety of purposes, from sales, to marketing to billing. Most CRM systems cannot easily handle the varying needs of complex businesses and multiple functions, so they have morphed into something with 3 heads and 10 arms.

So how do organizations get a handle on the problematic customer database? Well, unfortunately it takes hard work -- this of course is usually what makes a New Years resolution fail. If it were easy, you wouldn't have to make the resolution in the first place. Many organizations try to resolve the clean up of the customer database centrally. They believe that if they can just get a core team to take the time to clean it up, then everything will be OK. But we know that won't work -- it must be handled in a decentralized fashion. Getting sales, support, and other functions in your organization to take ownership for good customer data it is the only way to fulfill this resolution.

Resolution 3: I promise to get all my employees refocused on the customer.

At a time when we don't think we can get one more piece of bad news economically, companies need to keep their focus on their workforce. The Society for Human Resource Management (SHRM) in December released a new poll that shows 48 percent of organizations laid-off employees in 2008. Even worse, 60 percent of organizations surveyed said they expect to lay off employees in the next 12 months.

While many companies must take these kinds of measures to stay viable, they also need to keep their remaining workforce focused. Reinvestment in your workforce is a long-term strategy -- yes, a resolution that may need to last beyond 2009. Investing in employee training and realigning employee objectives to a customer-focused mission will mean that you can do more with the employees you have. Plus, it will keep them more energized around your organization's long-term goals.

Those are my thoughts as we leave 2008 behind and look forward to new opportunities in 2009. What are your company's top customer resolutions for the New Year?