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.

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. 

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.

Customer Loyalty Up in the Air

Imagine a time when the battle for consumer loyalty becomes so intense that even the airlines begin to focus more on the customer experience. Amid many recent horror stories from passengers, and a movement to pass a passengers bill of rights, it appears that even this traditionally unresponsive industry is beginning to warm to the idea of treating its passengers like valued customers.

A Wall Street Journal story documented a survey of airline managers world-wide. In the survey, the managers listed, “customer loyalty and retention,” as third behind fuel costs and competition as top challenges for the industry. This was a big jump for consumer mindedness over a similar survey two years ago.

Digging deeper into the story, we find an even more important epiphany. In the search for the elusive loyalty and retention, about half of the respondents identified the customer experience and communication with customer as even more important then the airlines celebrated loyalty programs.

Of this same group of managers, 86% picked customer loyalty and retention as having a positive impact on an airline’s business, more than any other issue.

Only time will tell how this industry will apply this wake-up call, but it’s a positive sign. At a time when winning customer loyalty is more difficult than ever, delighting the customer should at all times be the focus and the reason for our being.

Putting a Value on a Highly Satisfied Customer

If you were told that a highly satisfied customer will spend $30 more per visit to your store, no matter what business you were in, wouldn’t you go the extra mile to make sure that customer had a great experience? It is hard to quantify the exact value of a satisfied customer, but a recent story in Progressive Grocer reported on a study that does just that. The J.D. Power and Associates 2009 National Pharmacy Study, which gauges customer satisfaction with brick-and-mortar and mail-order pharmacies, ranked Wegman’s best in the supermarket segment and Target tops in the Mass segment.

The study used seven factors that contribute to customer satisfaction at retail: non-pharmacist staff, store convenience, medication availability and information, store layout and design, cost competitiveness, remote ordering convenience, and pharmacist.

Beyond the retailer rankings, perhaps the additional findings of the study are more interesting. The study found that high satisfaction scores are financially beneficial to pharmacies in three ways:

1. Higher rates of loyalty. A highly satisfied customer is three times more likely to return to the store/pharmacy.

2. Higher rates of advocacy. That same customer is seven times more likely to recommend their pharmacy to others. With the power of social media, that positive review can be increased exponentially.

3. Increased revenue per visit. On average, a highly satisfied customer generates $30 more in pharmacy revenue per visit than those who are less satisfied. To extrapolate, a pharmacy with 1,000 customers each month can gain an additional $360,000 in revenue annually.

It is probably true that you can’t please everybody, but most of the factors that lead to deep customer satisfaction are well within grasp. This study shows proof that measuring and managing those factors produces great returns.

Service Driven Loyalty

A combination of marketplace and recession driven dynamics have converged to create a very different world in terms of what it takes to maintain and gain brand loyalty. Customers now easily find information about competitive products, so switching is easy and the barriers to switching have been reduced. For evidence, refer to the recent success of low pricing strategies and the emergence of private label. But there is another factor even more important than price in the battle for consumers’ hearts and minds. A recent article in the Harvard Business Review suggests that customer service and the overall customer experience is the most important factor in building and maintaining strong brands.

In the article, “What Service Customers Really Want,” authors Dave Dougherty and Ajay Murthy build a compelling case for placing the customer experience at the top of your list of concerns.

According to the authors’ research, when customers are seeking service, they want knowledgeable employees and immediate problem resolution. But when it comes to metrics, most companies follow outdated practices like tracking time spent on hold and minutes per call. Techniques that encourage rushed calls and solutions that further inconvenience the consumer.

The impact of a bad customer experience is dramatic and immediate. Dougherty and Murthy say that 40% of those who have a bad experience stop doing business with the company. The remedy is an integrated approach taking information from a variety of customer/employee touch points such as satisfaction surveys, behavioral data and recorded conversations. Using this information, companies can revise processes to provide front-line employees the latitude to provide a satisfying experience upon first contact. This data, gathered from all channels, can then be applied upstream to the root problem, be it manufacturing, distribution, packaging, etc.

The new consumer reality is that customers will no longer tolerate dissatisfaction in exchange for long-held loyalty to a brand. They will simply and without warning go elsewhere. Compared to this harsh result, a little service goes a long way..

Role of Brand Loyalty

Everyday you make purchase decisions. Some of which are based on brand loyalty. Stop and think abut when you became loyal to a specific brand. Childhood? College? Constant availability on the grocery shelves? You and millions of other consumers make the decision to purchase a brand over and over. This is loyalty.

Fostering Brand Loyalty
In a dream world, brands would love an abundance of loyal customers. Unfortunately we are in the real world which requires brands to foster loyalty with consumers. One of ICC/ Decision Services experts, Terry Vavra, has coauthored “Loyalty Myths: Hyped Strategies That Will Put You Out of Business and Proven Tactics That Really Work“. The authors found consumers who had high involvement levels with their brand where more loyal. So how does a brand engage consumers?

Taken from “Loyalty Myths” , customer involvement can be fostered by:

1.Increase the purchase’s importance for the customer
2. Adding emotional significant to the purchase
3. Associating the purchase with an ongoing interest
4. Associating the purchase with a relevant reference group.

All of these considerations are directly related to the customer’s experience. Significance can be added by brand’s promoting their top benefits. For example, take laundry detergent. Military members are a niche market whose uniforms require laundry detergent with no certain additives. There are very few brand which fill this need. These brand should ensure availability in every grocery store which surround military installations. This takes the importance of purchasing the right brand within the reach of the customer.

The only way for brands to foster involvement is to know your consumer. Proactive consumer and industry research provides important insight to consumer needs, interests, and emotional attachments. Brands should know which benefits they offer their customers. Whether it’s being gluten free, organic, or offer an advantage over the competition, this is the information consumers are looking for. This is information that needs to be visible at the retail shelves.

The point of purchase is the last place and the most important place brands can reach a customer. How is your brand using point of purchase to foster customer involvement? Do you offer coupons? Free samples? There is not one right answer for all brands. Brands who research and ask customer’s for feedback, will know what are the most effective ways to foster customer involvement.

What are the techniques brands get you, as a consumer, involved? Does it help foster brand loyalty?

Starbucks pulls a U-Turn back to loyal customers

Imagine your brand is a car driving along picking up customers on the way. In your journey you expand product lines, store, and different marketing campaigns. Next thing you know, the loyal customers are hearing advertising which claims your brand is too expensive. You stop and make a U-Turn back to your loyal customers.

This is what Starbucks new marketing campaign is focusing on – loyal customers. The past year, Starbucks has been the target of media claiming the brand is too expensive. Providing an opening for competing brands to market as the cheaper coffee choice. Starbucks is aiming to change that assumption.

Starbucks new strategy is to focus on it’s existing customer experience. The company opened a store in Seattle with a new look that resembles the golden era of a “coffee house.” The brand is not touting frozen drinks but putting the good old Starbucks coffee blends in the spotlight. Coffee promotions and store layouts will be focused on what attracted Starbucks first customers: the coffee.

In an article by the Wall Street Journal, Howard Schultz, CEO is quoted ” The issue at hand … is the cost of losing your core customer…It’s very hard to get them back.”

Loyal customers will be the ones to carry you through tough times and be your evangelists in good times. It’s always important to listen to your customer’s voice, they will be the ones who will tell if your headed off track.

Customer Experience: Retailers Need to Differentiate

I came across an interesting article discussing how department stores have differentiated themselves in the past, what they should focus on now, and what they should focus on in the future.

What happens when the majority of department stores sell similar brands at competitive prices? Retailers then need to start focusing on customer experience and customer satisfaction as differentiating factors.

For instance, retail electronics giant Best Buy offers in home tech support with Geek Squad.

Can you think of any other examples?

For More Information Click Here.

Consumers Say Product Labeling Needs Improvement

A survey of 1,110 consumers by Deloitte found that consumers think there is plenty of room for improvement when it comes to product labeling. Consumers want to make informed decisions when they go shopping and many feel that the information on product labels are inadequate.

I think that for some who have allergies, improved labeling would provide better service. Also, in general, people are now eating healthier and are more interested in what they are putting into their bodies. However, most labels are hard to understand and read. If a company can make the effort to make labels easier to understand, then they will have a competitive advantage.

For More Information Click Here.