It is difficult not to roll your eyes when you hear executives talk about “putting their customers first,” especially when their businesses behave like their customers are more of a burden than a blessing. Interestingly, companies that truly do put their customers first continue to benefit from an advantage that their competitors’ lip service fails to erode.

The truth of the matter is that customer-first as a discipline continues to be misunderstood and underestimated, but it’s a legitimate and highly effective business strategy. Enabled by the evolution of customer data and customer data science, businesses can leverage their execution as a strategic and competitive advantage. How, you might ask? By scientifically identifying what matters most to customers and quantifying the ROI of delivering it to them.

To bring this to life, I’d like to shine a light on food retail — perhaps the toughest consumer market in the world, even more so in light of the news in 2017 about Amazon’s acquisition of Whole Foods (a dunnhumby customer) — and show how product-driven strategies and metrics deliver inferior results when you ignore customers. In the end, the best metrics in food retail, as well as other industries like tech, focus on the customer.

Percentage Margin Versus Dollar Margin

In retail, there are two fundamental metrics that dominate thinking when it comes to profitability: Margin and profit and loss statements (P&Ls). With either metric, being customer-first provides the retailer with a distinct advantage.

Let’s start with margin. It is common today for many in the retail sector (including but not limited to food) to reward merchants on the percentage margin they deliver on the goods they sell. This is particularly true when times are tough and top-line growth is hard to come by, as is the case in today’s ultra-competitive retail environments. Unfortunately, this approach fails to take into consideration a broader view of the business that takes into account customer metrics like:

• The incremental and quantum dollar profit that a product delivers

• The associated dollar profit a product delivers (what else do people buy with it?)