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[13 comments]

Are retailers ready to own the last mile of the customer experience?

January 13, 2014

You've probably heard the term "last mile" in the context of wired phone service. It's that last mile of wire that connects to a customer's home and makes phone calls possible after all the complex infrastructure has done its job.

The last mile exists in the realm of retail customer experience as well; it's the final part of the purchase/product usage experience. It might include delivery, product registration, installation, support, or warranty repair, and sometimes it's handled by a third party vendor, like a delivery company, installer, or support/warranty provider. The precarious part is that, to many customers, there's no distinction between merchant and supporting vendor. For them, there's just one end-to-end shopping experience. So what happens when the last mile breaks down?

Recently, this concept was severely tested when Amazon, the wunderkind of everything e-tail, didn't get last minute shipments to customers in time for Christmas. As the story goes, it really wasn't Amazon that faltered. It was reported that a large end-of-season sales upturn coupled with bad weather conditions in a number of regions overwhelmed the e-commerce giant's delivery services, UPS and FedEx. Rather than shy away from its disappointed consumers or point the finger of blame while disavowing itself, the company did the right thing and took ownership. They quickly acknowledged the problem, offered affected customers a $20 gift card, and waived shipping charges. Walmart, Kohl's and 1-800-flowers.com took similar steps.

While we don't know what manner of finger pointing went on in private between these colossal companies regarding the issue, none of that's relevant. What matters is simple: Amazon recognized that a hitch occurred in the last mile for a number of their valued customers and sent a clear message that they are responsible for their customer's happiness. Period.

It's a cue that's lost on many retailers — physical or digital, large or small — who choose to find an easy exit and offload similar problems on vendors and customers. Ostensibly, they don't realize that the covenant between seller and buyer is sacred, regardless of who participates in the purchase cycle.

Most significantly, many don't see breakdowns as an opportunity to demonstrate brand value to shoppers by turning lemons into lemonade and disgruntlement into respect, even after they've gone most of the distance, right up to the last mile.

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Discussion Questions:

Are many retailers underestimating the potential risks to their brand when turning to third-party vendors for delivery, support, repair and other post-purchase functions? Are gift cards the answer and enough to offset customer experience shortfalls?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How much of the blame do retailers get for customer experience shortfalls caused by third party vendors around delivery, support, repair and other post-purchase functions?

Comments:

Here is the bottom line: "Amazon recognized that a hitch occurred in the last mile for a number of their valued customers and sent a clear message that they are responsible for their customer's happiness. Period."

This is the attitude that will drive a global upending of retail. Retailers basically take little or no responsibility for the final mile in-side the bricks stores, assuming they have already taken care of that part by building a nice looking store, with a great deal more merchandise than the shopper will, or could, ever be interested in.

Retailers accept little or no responsibility for the inefficiencies or "delivery" snafus occurring in the final mile inside their stores. But stores that do provide a more efficient process for the shoppers in their stores are pulling ahead of the pack. Who cares? Not many. Because nearly everyone is obsessed with what THEY are doing to be more efficient themselves, and figures the shoppers can figure it out for themselves. So the final mile of delivery INSIDE THE STORE remains a mess.

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Herb Sorensen, Ph.D., Scientific Advisor TNS Global Retail & Shopper, Shopper Scientist LLC

Problems happen. It's a fact of life. The question is what do you do with the problem and how you respond. Amazon, Walmart, Kohl's and others did the right thing when they took ownership of the problem, rather than yelling and finger pointing.

It's rarely possible for a retailer to own every step of the post-purchase functions, but it is possible for a retailer to own consumer consequences.

Moving towards gift cards is not the answer, many consumers like shopping for a special gift, and despite their growth, feel that gift cards are too impersonal.

By showing consumers that they care, retailers take a big step towards winning consumer loyalty and respect.

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Max Goldberg, President, Max Goldberg & Associates

The holiday delivery debacle certainly demonstrated the importance of the "last mile" in the supply chain to all parties concerned.

Online has been the recent darling of retail. The breakdown in delivery of gifts to a consumer's door, during the most important shopping season, points out that there are some chinks in the armor of ecommerce. It is not invincible, inevitable or a foregone conclusion for the future of all retail.

What many retailers seem to be missing is that the future of retail will be all about the relationship with the consumer, not today's sale. Ken Lonyai absolutely nails the issue with his words ... "they don't realize that the covenant between seller and buyer is sacred."

The "last mile" is now the "last connection" with the consumer that shops anytime and everywhere.

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Chris Petersen, PhD, President, Integrated Marketing Solutions

Consumers are going to hold the party they elected to do business with accountable. They made a purchase from a retailer and will hold the retailer responsible for all aspects of the purchase including the last mile, regardless of who the retailer elects for fulfillment. When it goes well, the retailer will get the credit for a great purchase experience and when it doesn't, then they will get the blame.

Amazon understood this and took immediate action to lessen the impact on their brand. Does getting a gift card make up for not getting the gift in time for Christmas? No, but it does lessen the sting. It also helped that the media placed the responsibly for the late deliveries on the carriers and not Amazon or the other retailers. The impact was also mitigated because the carriers acknowledged it was their responsibility, while laying some of the blame on the weather.

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Steve Montgomery, President, b2b Solutions, LLC

Let's separate what belongs in this discussion and what doesn't. When circumstances beyond any reasonable control (things we normally blame God or evil people for) prevent an expectation from being fulfilled we just need to grow up and show some maturity. Someone not getting the product you ordered late exactly when you expected it, in the middle of a blizzard where people died and hundreds of thousands were without power for a week, is no reason to be whining and it certainly should not be part of this discussion.

So now the blame game. The real challenge is how to align the energy of every touch point in the purchasing process. The time to do that isn't Dec. 23. Simply assembling the "parts" won't do it, especially if you're committed to the lowest price vendor.

Step 1: What is the highest possibility you imagine for your customers?
Step 2: Find the right players who get as excited about that possibility as you do.
Step 3: Recognize that each player is as responsible for the performance of the other players as for their own. My goal has to be to make the the hand-off to me and the hand-off from me work beyond expectations.
Step 4: Practice. Practice. Practice...until it becomes one thing, one single experience where you'd never know there were third party vendors involved.

Is the answer the admission that we'll never be able to do that, so let's really add excitement to the gift experience by selling gift cards requiring no thoughtfulness or creativity? If waking up with the family early Christmas morning to check your emails excitedly looking for a gift-card attachment is your thing, then, yes, there's your answer.

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Ian Percy, President, The Ian Percy Corporation

Third party vendors pose a potential risk to retailers when they perform delivery, support repair and other functions for retailers. When things go wrong in the process, gift cards are not a satisfying answer for customer experience shortfalls.

In the war-like competition that has evolved in recent years among retailers that has been aided by powerful technology and desperate greed, we have seen the wisdom in doing all these things right, and as the retailer promised.

What do they think the board rooms of many retailers, including Amazon, Target and Neiman Marcus, are fretting about this morning? It's the impact of the last mile of the customer experience.

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Gene Hoffman, President/CEO, Corporate Strategies International

Amazon must rely on partners, and acts of God will happen. Taking swift and decisive action to show apologies can turn a negative into a positive. Amazon did the right thing.

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Joel Rubinson, President, Rubinson Partners, Inc.

The customer doesn't care who the third-part vendors are for a retailer. If the retailer promises delivery by a certain day, the customer really doesn't care if it is UPS, FedEx, USPS, etc. They only care that the promise was kept. That goes for support, repair, etc.

Regarding gifts not showing up on time, gift cards are an option as they can be sent via email and mailed in an envelope. Sounds like a reasonable solution, but the customer may not want to give a gift card. Some customers want to give what they want to give, showing they put thought and care into the gift selection.

Customers are being educated to the problem. They will start ordering sooner for online purchases to be delivered during the busy holidays. Or, they will visit a store and purchase the item in person.

Retailers are also being educated. They need to be sure their third party vendors will deliver - and pay for any missteps.

Consumers have short memories for this type of thing, unless it becomes a pattern. Retailers have the next ten to eleven months to figure out a way to ensure that their customers don't experience a repeat of the delivery debacle that happened this past holiday.

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Shep Hyken, Chief Amazement Officer, Shepard Presentations, LLC

Are many retailers underestimating the potential risks to their brand when turning to third-party vendors?

Absolutely! Though, I am betting fewer than were before the holiday issues arose.

Are gift cards the answer?

They are AN answer - there are perhaps others, though that at least acknowledges their commitment to owning the issue and apologizing.

On a different note - I was struck by the use of the phrase about the relationship being sacred between buyers and sellers. I actually think the issue is exactly the OPPOSITE.

I went to Wikipedia and captured the following descriptor of sacred:

(considered worthy of spiritual respect or devotion; or inspiring awe or reverence among believers in a given set of spiritual ideas)

I think because the relationship is NOT holy and can be "easily" fractured because the reverence is tenuous at best - it is essential that the retailer do nothing to lose the current positive feelings a purchaser/buyer may have. Once that bond has been broken, attempts need to be made to repair it. Precisely because it is NOT sacred and cannot be expected to overcome temporary challenges. The buyer will choose to "pray in a different pew" to remain consistent with the analogy, far too easily.

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David Zahn, Owner, ZAHN Consulting, LLC

The public is mostly forgiving for errors that occur in any transaction. Generally speaking, they will listen to whatever reasons there are for the error(s). Always remember, they do not understand FOB, freight on board, anything. The only one responsible for the shipping issues is the retailer they bought, whatever it was, from. Failure to understand this is not an option and accepting their opinion is a must for successful customer service.

So when discussing the shipment carrier be careful that the public doesn't think your saying "not our problem" or "we didn't screw up, they did." Those comments will almost guarantee you will never see the customer again.

'gjarnoldjr'

Amazon offers a feature that notifies gift-receivers of their gifts and their impending delivery. If the gift doesn't arrive at the time anticipated for whatever reason, the receiver can still enjoy the anticipation that comes with a gift notice from Amazon. After all, what difference does it make if a gift is delivered late? Not to diminish Steve Montgomery's comment that "Consumers are going to hold the party they elected to do business with accountable," would that be like they hold their elected officials accountable?

Can the delivery drones fly through snowstorms?

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M. Jericho Banks PhD, President, CEO, Forensic Marketing LLC

In terms of underestimating risk, simply, yes.

The consumer electronics industry brick and mortar retailers typically use third parties for service and repair; this is not the ideal scenario. Vendors are selected based on who accepts the "fees" as opposed to who can meet quality standards. Other potential vendors are weeded out due to conflicts of interest in selling the same brands or as a direct competitor for the same customer base.

On the whole, when third parties are involved, store personnel are in an information black hole; third party processes and services status such as delivery and support are not part of the retailer's systems. So the customer who comes to the store to voice a concern is, more often than not, not given the proper information or given incomplete information at best.

With potential "drone" deliveries, Amazon is attempting to take full control over, at least, a part of the (delivery) process. Don't count out Jeff Bezos when it comes to delivering to apartment rooftops as well. There is a future solution to this obstacle. Don't count out Jeff Bezos as well, in purchasing the huge money-losing USPS, as a solution, and turning it into a well-oiled machine.

Alan Cooper, Contract Trainer/Training Consultant, Independent/Freelance

I think the issue is less with underestimating the risk of outsourcing those functions as much as it is abdicating responsibility for them when they have been outsourced. The risk analysis between doing it themselves or outsourcing it would be different for every retailer depending on their capabilities, infrastructure, and a host of other factors. Regardless of the risks, retailers need to know that no matter how they choose to run the purchase/delivery cycle, they need to take responsibility for it from top to bottom. I thought the article put it quite well: "Amazon recognized that a hitch occurred in the last mile for a number of their valued customers and sent a clear message that they are responsible for their customer's happiness. Period." If every retailer took that approach of full responsibility, they could stand to achieve the same results in terms of reputation and loyalty.

As for whether gift cards are enough, it would depend on the customer and the situation. For example, it may take more to offset my disappointment if my child's toy wasn't under the tree for Christmas morning if I were waiting on a non-urgent book. Either way, it does go a long way to show that the retailer is aware of the hassle they caused and concerned about their customer's satisfaction. That said, the most sustainable and profitable approach is to continuously improve processes to the point where issues do not occur in the first place (or much less frequently), rather than trying to patch things up by sending mollifications after the fact.

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Alexander Rink, CEO, 360pi

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