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.

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.

Pret A Manger…They Get It…Few Others Do

Pret A Manger

“My name is Evan Georges. I am the Manager at this Pret Shop.”

“My team and I meet every morning. We discuss the points you’ve raised, the good, the bad and the ugly. If we can deal wit it ourselves, we will. If we can’t, I’ll forward this card to Martin Bates, our president. I know he’ll do what he can. Either way, thanks.”

I guarantee few issues end up in Mr Bates office. The reason is simple…the stores are empowered to take care of the customer. Further, and perhaps most importantly they have clearly communicated this to their customers. BTW…As a customer, I had an excellent experience today. No surprise.

Customer Experience Synonymous with Operating Strategy

When you hear the term “customer experience”, what is the first thing you think of? Many think of marketing or sales, but how many think of operating strategy? Others immediately think of the expense of running a customer service department. What is often missed is the growth potential and stability of adopting the customer experience into every operational function and decision.

This story on CRM.com discusses the subtle, but very important differences achieved in giving the customer experience a high profile in your day-to-day operations. Here are a few of the major points:

It is true that the customer experience has a lot to do with sales and marketing, but to limit it to these silos is to miss the larger point. Everyone in your organization is a touch point to the consumer.

It’s also true that the customer experience reflects the emotions or feelings of your consumers. However, there are also tangible elements like contract clarity, financial options, web support, or even something as simple as the ease of transporting your product.

There are those who believe customer experience is a “tradeoff to profitability.” This “necessary evil” attitude is misleading. A healthier viewpoint is to see your operations as a means to solving your customers’ problems. The better you can do this, the more profitable you will be.

The truth is that there is a grain of truth in every attitude toward the customer experience. The only trouble is that many of these approaches are incomplete. Try thinking of the customers’ need in all phases of your operation.

Making the Promises Real in 2010

Many are seeing 2009 as a breakthrough year for efforts designed to raise the profile of the customer experience. There is growing evidence that the everlasting pledge to put the customer first actually got beyond lip service and into real and actionable tactics. With the progress made last year, even in very tough economic circumstances, 2010 should see the movement gain even more momentum.

An article on retailcustomerexperience.com offers the following advice as brand marketers and retailers continue to travel down this road:

“Drop the executive commitment facade.” Executives need to “put their money where their mouth is” with time, treasure and talent. If it’s a real priority, they will manage customer experience like they do financial results.

“Acknowledge that you don’t know your customers.” The means to truly knowing the customer does not lie in a long and drawn out marketing research project. Establish a “voice of the customer program” for a quick, ongoing and continuous dialogue with your customers.

“Keep from getting too distracted by social media.” Social media should be an important “listening post” in your efforts, not the end all and be all. Other listening posts include surveys and call center calls and other customer touch points.

“Stop squeezing the life out of customer service.” By measuring how well your customer service organization serves the consumer instead of using efficiency metrics, you can turn this necessary evil into a strategic asset.

“Restore the purpose in your brand.” A true brand is more than just your logo. It’s a promise that you make and keep with your customers at every transaction. Your raison d’être should be apparent in everything you do.

“Don’t assume employees will get on board.” When you announce your new customer experience initiatives, expect a good amount of eye rolling from your employees. It’s critical to sell them on why this is so important and engage them to participate in how to make improvements.

“Translate customer experience into business terms.” Develop a model that measures the direct impact of customer experience on brand loyalty. That number can help bridge the understanding gap among employees and engage the accounting department as to a tangible financial impact.