Target Sells a Service Experience with its Electronics

Even during the recession, the electronics business continues to be hot as customers consider things like cell phones a necessity.

As the electronics business gets more competitive with discount stores like Target and Walmart fighting specialized stores like Best Buy for a larger customer base, stores realize they need to do a lot more than just stock shelves with the products customers want–and need. In an effort to become more of a destination electronic store, Target announced new services for electronics shoppers.

Among the new offerings, Target is adding a free telephone technical support service for purchases, an electronics recycling program that offers store gift cards and more wireless phone choices.

“Electronics are getting more complicated and more of us are connected to the Internet and wireless,” Senior Vice President Mark Schindele said. “Guests want a seamless experience.”

Like Best Buy’s Geek Squad and Apple’s Genius Bar, Target’s new services hope to bring more traffic to the store. Time will tell whether consumers will buy what Target is selling.

Sam’s Club to Gift Wi-Fi This Holiday Season

When Sam’s Club begins offering free Wi-Fi in its stores this November, the retailer hopes shoppers will be more likely to purchase electronics, specifically new Internet-connected television sets.

“It is an intimidating category with lots of complexity,” said Sam’s Club Chief Executive Brain Cornell in an interview with The Wall Street Journal. “This will allow a member to walk up to a Samsung LCD Internet-enabled TV and see how to find his Facebook page or stream video from Vudu.”

Wi-Fi will also improve customers’ in-store Internet access on their smart phones and will allow them to easily find more information about a product and do comparison shopping within the store. Sam’s Club isn’t concerned about its customers doing price comparisons with its competitors. Consumer electronic analyst Stephen Baker from NPD Group, a market research firm, confirmed Sam’s Club has little to worry about in that respect. “[Retailers] know they are not going to lose customers over a few dollars, and many retailers have price-match programs.”

Retail analysts agree Wi-Fi access is especially important in stores like Sam’s Club, a place that is known for low prices and not necessarily for its customer service. One of Sam’s Club’s competitors, Best Buy, is also developing a mobile application for its customers this holiday season. Many other stores are sure to follow suit.

The Real Customer Service Story

Upon entering a retail store, the customer knows what’s coming next: it’s the standard greeting, followed by the current sales promotion and then the question, “Anything I can help you with today?” According to recent research published in the Harvard Business Review, that answer is often, “No.”

Corporate leaders dramatically overestimate how much the customer wants to talk to a customer service representative. They believe customers value live service twice as much as self-service. HBR’s data shows customers are significantly indifferent to that claim, and they value self-service just as much as they value using the phone. More interestingly, that indifference doesn’t change across their demographic, issue type or urgency.

It’s an interesting predicament: what should your company do to improve its customer service when the customer prefers self-service? And what’s compelling the customer to repel real-life interaction? It could be argued that with the rise in social networks, people don’t like to engage in as many face-to-face conversations with others. Maybe fascination with technology has won out and the lure of fancy, powerful machines are more attractive than the sales associates. Or, now, everyone considers themselves a control freak and dislikes relying on other people to get something done.

Or maybe, customers haven’t wanted the relationships companies have been pushing all along and this rise in self-service finally gives them the easy way out. That’s not a comforting thought for retailers who build their company on the promises of quality customer service. So, what should those retailers do?

It’s a simple task in the world of automated customer service recordings, information computer stations and high tech self-service cash registers: have customer service reps be real people. Too often, customers blow off the sales associates because they sound like robots reading from a script. If customer service practices create authentic experiences by individualizing how each customer gets served, it’s a good bet that customers will again appreciate that friendly face that greets them right when they walk through the door.

A Modern Day Customer Service Parable

Too often you hear stories about people’s customer service nightmares and commiserate with them as you talk of similar experiences. The Virgin Group founder Richard Branson recently shared a story about customer service himself, but the story ended with a satisfied customer and not a disgruntled one.

A Virgin Atlantic customer’s free limo failed to pick him up at his hotel (apparently the customer waited at the wrong door). So, he called a cab and arrived at the airport angry, running late and nervous he would miss his flight. A Virgin agent spotted him and tried to calm him down, apologized for the limo mix up and rushed him through the security staff lane to get him to his gate. She even reimbursed his taxi fare out of her own pocket. The passenger boarded the plane on time thanks to the Virgin agent’s ability to turn a negative customer experience into a positive one.

Unfortunately, when the agent later recounted this story to her supervisor and asked to be reimbursed for the $70 taxi fare, her supervisor asked if she had a receipt and refused to repay her without one. Branson pointed out that had any Virgin employees learned of the agent’s trouble with the supervisor, they would be unlikely to act in similar manners when other potential customer service issues arise. Agents would hesitate to steer from procedure to help customers if they knew their jobs would be at risk. That’s definitely not a good thing for Virgin’s customers, and therefore, not a good thing for Virgin.

Luckily, the airport manager heard about this story and intervened. He informed the finance team that he approved the reimbursement and educated the supervisor on the merits of “catching people doing something right.”

Branson writes, “Good customer service on the shop floor begins at the very top. If your senior people don’t get it, even the strongest links further down the line can become compromised, as the story shows.”

Train your employees well enough and instill faith in them that they can always act in a way where they’re “doing as they would be done by.” When your employees are happy, your customers are happy, and therefore, your company is happy as well.

Mobile Applications Can Do More for a Retailer

Shoppers are on the move, and they’re taking their mobile phones with them.

Forbes Insights published a study that surveyed leading U.S. retailers’ use of mobile applications in enhancing consumer’s shopping experiences. Researchers discovered many retailers–almost fifty percent–are hoping to capture first-mover advantage as their customers go mobile. The levels of sophistication in mobile design and application vary depending on the retailer and its goals. For many, the mobile features are a scaled-back version of their website. Others have ventured into offering transaction-based and customer-oriented applications that use powerful GPS technology to pinpoint an individual customer’s needs.

Whether you want to try to increase e-commerce sales, give out coupons or suggest products to your customer, mobile applications must be molded to fit your store’s demographic and mission in order to be effective. American Eagle Outfitters, a specialty retailer that caters to 15-25 year olds, was one of the earliest adopters of mobile technology when they launched their mobile website in August 2008. They recognized their customer base was highly engaged in mobile technology and made sure to capitalize on that activity by going to where there customers spent their time: on their mobile phones. Since the experiment began, the store has seen several hundred thousand customers opt in and contribute to sales through the mobile site. Vice President Michael Dupuis cites their success to consistency across all channels. Customers can access all the same information on their mobile phone that is on American Eagle’s website. Similarly, The North Face built applications that use GPS technology to determine the location of skiers, bikers, rock climbers, runners, and more. The mobile phone users can then access information about terrain they soon will face and read suggestions for how to tackle the trails. The possibilities for what kind of mobile application a retailer develops are endless, and it’s important to figure out what your customers want in their hands.

Retailers should know that mobile technology is not a passing fad. Soon, customers will expect stores to have mobile applications. Like a website, mobile technology will be just another part of the shopping experience.

Using Storytelling to Keep the Customer Coming Back to the Store

When people’s time is precious and transportation costs are high, retailers can’t rely on the thinking that if they build stores, people will come. Instead, retailers must offer more than just a physical space that stocks merchandise. They need to entertain, educate and engage consumers to bring them to the store and make them never want to leave.

PSFK advised retailers to think of all store locations as flagship stores and treat customer visits as opportunities to tell the story of the brand. Disney stores executed this idea by remodeling their stores to become a family entertainment hub where kids can interact and play with the merchandise. The New England grocery chain Stew Leonard’s organized their stores by stocking merchandise needed for certain occasions together, such as a barbecue or birthday party. Customers then buy items for an experience and possibly pick up a few things they didn’t think they needed, like birthday hats or corn on the cob holders. Stew Leonard’s stores also have animatronic farm animals kids can play with, flat screens that show feeds of their own daily cows and bountiful offerings of free samples.

The important thing to remember is that the store is an extension of the brand and thus offers a unique opportunity to create an immersive brand experience for the consumer. Apple stores capitalize on this opportunity by keeping their design aesthetic relevant to their brand and by offering product testing stations and optional education classes for customers. Lance Armstrong’s bike shop in Austin, Tex., is meant to be a hub for the diverse biking community, whether people are beginners or almost pros. Mellow Johnny’s even has a coffee shop, showers and bike storage systems to encourage more people to join the cycling community. By creating a community and not just a software store or cycling shop, Apple and Mellow Johnny’s make a visit to their stores not just another stop on an errand run but a place to spend an afternoon browsing and talking with others.
 
It’s also important to note that the stories retailers tell require scene changes. In order to keep up with shopping and cultural trends, retailers need to continually reinvent the shopping experience, all the while still keeping the brand’s core message and story in mind. Product displays and merchandise need to be rearranged and transformed to give the customer a reason to return.

Using Technology to Get Consumers to the Store

No one doubts the claim that the Internet and rise in mobile technology hasn’t transformed the retail industry. It’s the thought that people are no longer making trips to the stores that should be up for debate. The truth is that people still shop in stores. Technology is used to get them there and to make their experience more enjoyable so they keep coming back.

PSFK highlighted some great ideas of how retailers can leverage technology and drive consumers to their stores. For certain retailers, it may be helpful for the customer if they post wait times, store maps and inventory lists on their website. Google has launched an initiative to begin posting pictures of the insides of places on Google maps. Retailers can set up an appointment with Google photographers to get their interior shot and added to the Google places site. In the meantime, stores can post updated interior photos themselves and even set up a web cam so customers can watch a live stream of the store’s activity any time they want. This way, customers can time their visits based on whether they think the photos and videos show it’s a good time for them to shop.

Once a customer gets to the store, employees can use technology to create a more personalized shopping experience. Sales staff can use handheld devices and iPhone and iPad attachments to make transactions on the floor, freeing them from the desks and increasing interaction with customers. iPads stationed in store can run applications that help customers find what they’re looking for or get more information about a product when they don’t want to talk to a sales person.

Stores can also encourage its customers to share their experience on social networking sites by building a station where they can upload a picture or message in store. Diesel in Spain equipped their stores with a kiosk and camera so customers can upload photos to their social networking sties and ask for friends’ opinions as they try on outfits. This summer, JC Penney embraced user-generated content and had kids create YouTube back-to-school haul videos, showing friends what they bought when they shopped at JC Penney. The department store hopes the viral videos featuring ordinary teens will influence followers and friends to make similar purchases.

Technology will continue to be a welcome addition to the physical store environment. It’s a valuable asset in helping retailers create a destination shopping experience through storytelling and product education.

The Future of Retail is Still the Store

According to a recent study by the U.S. Census Bureau, the majority of sales still come from in-store purchases. Certain categories, such as books, clothing and electronics, see high percentages of e-commerce sales, but the overall message for retailers remains the same before the rise of the Internet: attention to the physical store should be a top priority in an effort to attract and keep customers.
 
That doesn’t mean retailers shouldn’t welcome changes to their stores. Around the same time of the release of that report came another study that revealed people are happier if they spend their money on experiences and not material goods. So what’s a store that makes and sells material goods to do? Create an experience around shopping, like B. Joseph Pine II and James H. Gilmore suggested in their 1999 book The Experience Economy. In short, Pine and Gilmore state companies must create memorable events for their customers so the memory becomes the product instead of the tangible good they purchase. It’s why you see more roller coasters springing up in shopping malls and more cafés attached to bookstores and even home goods stores.
 
Online shopping contributes to retail sales, but offline shopping offers an opportunity to create a lasting memory that turns a consumer into a loyal customer for your brand. How do you transform your store into an experience? PSFK, a trends research and innovation company, proposes that successful stores are the ones that leverage technology and push the boundaries of storytelling, product testing and education, two ideas that will be explored in upcoming posts. 

Wal-Mart’s Project Impact has a Positive Impact on Sales

Wal-Mart remains the world’s largest retailer, even after cutting back on the amount of items stocked on its shelves.

The retailer that boasted more than $400 billion in store revenues in 2009 launched a store remodeling initiative named Project Impact in an effort to boost efficiency and sales. The project started in 2008 and is on track to have reached about 32 percent of its stores by the end of 2010. Forbes reports that the remaining stores should be remodeled by 2014.

Project Impact was put in place to declutter stores and highlight popular merchandise while discontinuing unpopular items. Reduced inventory and improved inventory turnover supports Wal-Mart’s goal to be the low price leader and helps attract customers and increase sales. Many believe the remodeling strategy was a way to appeal to consumers who frequent the retail stores Target and Costco.

Project Impact is reportedly yielding positive results. New customer data shows that Wal-Mart is attracting more upscale customers with higher household incomes and has driven a sales boost of between 1.2 percent and 1.5 percent. Even after bringing back several product categories that were initially cut, Wal-Mart still decreased its inventory volume by 6 to 8 percent, improving its working capital position.

In this volatile economy and fast-paced digital age, retailers can’t afford to be static fixtures. Wal-Mart’s renewed attention to customer service, consumer experience and store management has proved to be a winning combination for the retailer, reinforcing the idea that not all change is bad.

It Pays to Have Good Customer Service

The American Express Global Customer Service Barometer reveals 61 percent of 1,000 American consumers surveyed value quality customer service amid economic instability and will spend 9 percent more at a retailer that offers it.

TheStreet points out that the survey echoes a 2006 Journal of Marketing study regarding the American Customer Satisfaction Index (ACSI). That study revealed the top 20 percent of companies in the ACSI combined outperformed the Dow by 93 percent, doubled the S&P 500 and nearly tripled the Nasdaq.

This year, Nordstrom saw increases in its ACSI as well as its net earnings, and it currently leads all department store retailers. It boasts an ACSI score of 83 out of 100, up 6 points from 2009, and saw a 44 percent boost in net earnings, a 17 percent jump in net sales and a 12 percent increase in same-store sales in the first quarter that ended May 1.

Jim Bush, American Express Executive Vice President for World Service, thinks some companies should rethink how they view customer service. “It’s important to see [it] as an investment, not a cost.”

It’s an investment with an infinite payoff. According to the survey, 75 percent of consumers claim good customer service will make them spread the word about a company that treated them well. Today’s digital age makes that easy for them to do. Reward your customers, and they will reward your company.