BrainTrust Query: How Consumers Killed Customer Service

Discussion
Dec 29, 2009
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Commentary by
Doug Stephens

A recent Brandweek article
titled "Retail Customer Service Stinks" reported the results
of The Retail Service Quality Index, released by consulting firm The SALT & Pepper
Group. It stated that the service received by shoppers in over 1,000 retail
interactions in the study rated 48.2 out of a possible 100 points. It’s
a flunking grade, but the fact that
"service stinks" is entirely our fault – we consumers, that is.

We demanded
the lowest airfare wherever we flew. We went to the buy-one-get-one sales.
We made Walmart what it is today. We camped out for Black Friday. We built
the dollar store channel. The bottom line is that we voted with our wallets
and customer service lost.

The consequence
of our lust for cheap stuff combined with the retailers’ hunger for profit
is that there’s barely a working wage left in it for most retail employees.
And yet with most retail workers at or near minimum wage, we somehow expect
them to sweep us off our feet and treat us to a profound in-store experience.
We expect them to dazzle us with their knowledge and helpfulness. It’s
delusional.

And our preference
for price didn’t only erode wages, it trimmed recruiting costs, eliminated
training budgets, slashed worker medical benefits, and put a virtual moratorium
on employee corporate mobility. We made it so. We demanded it.

Despite the
devastating effect of discounting on the market in general, there are still
some remaining vestiges of service. The Apple Store, Lululemon, Nordstrom,
and Publix Super Markets are a few names that consistently rise to the
top in discussions on in-store experience. Their closest commonality apart
from superior service is that none of them have staked their reputation
on price; they haven’t allowed us to drag them into the mud like so many
others. They prove that in a world of price promotion, it’s still
possible to differentiate and create remarkable brand experiences that
people will pay a premium for. Rarities like Southwest Airlines that manage
to combine low price and great service are exactly that – rarities.

The question
we need to ask ourselves the next time we’re confronted with bad service
is: would we pay more to have a great experience? Would we literally reach
into our pockets and pay an extra 20 percent or more for excellent service?
It’s not as easy a decision as one might think.

If all we conclude
from this study is that retailers scored 48.2 and "service stinks" then
we lose again. The real story here is that there are 51.8 points of unclaimed
turf for smart retailers who want it. The service gap has never been larger.
Never have the opportunities to shine and create remarkable customer experiences
been more abundant.

As far as I’m
concerned that’s good news for the future of great retail.

Discussion
Questions: Are consumers largely responsible for any deterioration in
customer service at retail? To what degree would better compensation
for store associates solve most issues? Are most consumers near a point
where they’d likely pay a premium for better service?

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36 Comments on "BrainTrust Query: How Consumers Killed Customer Service"


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Dr. Stephen Needel
Guest
11 years 4 months ago

The last paragraph in this story makes a great point–there is a lot of space to be had in customer service. The key, I think, is to do it right, not just give lip service to customer service. The premium one pays for better service need not be large. We are Publix shoppers and yes, we pay about 5% more for our groceries there than at Kroger (here in Atlanta). And yes, it’s worth it. And every employee in the store appears to be focused on “How can I make your shopping trip better?” That’s an attitude, not a pay rate.

Warren Thayer
Guest
11 years 4 months ago

I agree with the basic gist of this, and it’s one reason more people are shopping online, especially for high-ticket items where a bit of product knowledge (found on the internet, but rarely in stores) is important.

As for supermarkets, I visit a lot of stores all over the country, and find truly excellent service at places like Publix, Wegmans, HEB and a few others. I think that comes in large part from a culture that is set by senior management, with pay scales that are a bit better than the competition’s. It doesn’t take much more to attract significantly better workers, IMHO. But I think the corporate culture is equally, if not more, important.

Richard J. George, Ph.D.
Guest
11 years 4 months ago
I would argue with the premise that “consumers killed customer service.” Consumers have always demanded a reason to shop at one retailer versus another. When retailers stopped providing any modicum of customer service, consumers responded by simply demanding a better price. In essence, she said, “If you are not going to provide me with customer service and expect me to do the work in your stores, then you will have to compensate me by lowering prices.” If you give the consumer two equal choices and the only difference is that retailer A offers a lower price than retailer B, retailer A will win the sale every time. Our goal in marketing is to never give consumers equal choices, differentiated only by price unless we have a functional cost advantage. As noted, Apple and Publix have done a terrific job of using customer service as a real differentiator. The irony is that we do not have to ask the consumer to dig deeply into her wallet to provide “tie breaking” customer service. Remember the equal choices… Read more »
Dick Seesel
Guest
11 years 4 months ago

I’ve noted before that “customer service” can’t be narrowly defined by the old model of the traditional department store. After all, most traditional retailers have allowed their own service standards to decline, to the point where consumers have ended up voting for more value-centric models such as Walmart and Costco…and this has been going on for at least 25 years. Retail analysts need to define “customer service” differently in a value-oriented big-box store, by focusing on speed of checkout, ease of store navigation and in-stock execution.

Speaking of execution…it’s no accident that Nordstrom (more than any other retailer following the “traditional” customer service model) has continued to gain share and a national footprint by maintaining better service standards than any of its department store competitors.

Joan Treistman
Guest
11 years 4 months ago
I don’t believe that consumers have voted for poor service. I believe that consumers have demonstrated that in some cases, price outweighs service, but not always. Hence, Apple can charge more, Nordstrom retains loyal customers and shoppers are disenchanted with Saks. All year round, consumers buy private label cranberry sauce. At Thanksgiving and Christmas they invest in Ocean Spray, the national brand they trust and want to serve their family guests. It’s a decision as to when paying a little more makes a difference. Dollar stores and Walmart offer a distinct value proposition that many competitors do not. Shoppers choose the value and implicit is that service is not required for the bargains received. Once there is an even playing field in terms of value and products, service becomes a differentiating factor. We’ve discussed training for staff many times, but I’d urge retailers to think of another resource for creating dedicated and motivated staff…good working conditions. I’ve observed the dirty lunch rooms; the smelly bathrooms without toilet paper and the scarce amenities (even air freshener… Read more »
J. Peter Deeb
Guest
11 years 4 months ago

Consumers have definitely segmented the places that they get good service and I think that will continue as price has become more important to more consumers. However, as the economy recovers, there are definitely opportunities in many retail arenas for a strategic change. In the supermarket business there are plenty of markets where a company can step up and be the Wegmans or Publix model. It will be interesting to see which companies recognize this and fill the void.

Joel Warady
Guest
Joel Warady
11 years 4 months ago

I’m not sure we can place the responsibility of poor customer service on the customer’s quest for efficiency and low prices. The fact that consumers expect prices to remain low while companies expand their use of technology, and run a more efficient organization, does not mean that they have forced poor employee training.

Companies have an obligation to do a better job of hiring, training, and most importantly, providing a proper corporate culture that encourages pride resulting in better customer service. The CEO, whose compensation package has not diminished during the “low-price” consumer quest is the person responsible for poor service levels, not the consumer. When the CEO “gets it,” shops his or her own store and understands what consumers want, and then learns how to give it to them, then and only then will the customer service levels improve.

Let’s make sure that retail executives are not allowed to shirk their responsibility. Their job is to satisfy the customer’s needs; both on price and on service.

Gene Hoffman
Guest
Gene Hoffman
11 years 4 months ago

The consumer world is full of different-minded segments that have been trained by culture, income and also by retailers in regard to their shopping desires and expectations.

Good, friendly customer service is highly desired by many customers, such as those who shop Publix, Wegmans, HEB, Coach and others, and they are willing to pay more–if necessary–to receive better customer service or products. Such retailers know how to consistently please that large segment of consumers.

But not all customers prefer pampering over price, premium over provincial. That’s why EDLP, warehouse clubs, down-and-dirty 3-for 1 sales and highly promotional pricing gimmicks are sought by even more consumers. That’s how many retailers can stay in business and that’s why Wal-Mart sits up on top of the retail mountain.

Ben Sprecher
Guest
Ben Sprecher
11 years 4 months ago
Amen! This is an excellent article that points the finger right at one of the core culprits in the decline of customer service–consumers. In fairness to the consumer, however, there is another driver of this mad rush to the bottom–Wall Street. The relentless focus on making the quarterly numbers has led numerous retailers to mortgage the future of their chain to reap short-term gains. As an example, Circuit City’s investors noticed that they paid their employees much more than Best Buy did, and that margins were lower as a result. Never mind that many of the most senior Circuit City employees actually knew enough to be helpful to the befuddled customers, unlike their competitors’ staff. So, what did management do? They fired their only competitive advantage. 19 months later, they filed for bankruptcy. I am reminded of the saying “what you measure is what you get.” Most retail consumers measure prices (and it’s hard not to, since that’s the main form of messaging at the shelf), so we get low prices, at the expense of… Read more »
Ian Percy
Guest
11 years 4 months ago

Living systems in the natural world always reach their highest potential. Living systems in the man-made world almost always operate at the lowest common denominator. Lesson: oak trees are smarter than many people.

There is no point in discussing ‘who’s to blame’ for all of us wallowing around in retail’s LCD. The correct answer is ‘all of the above’. All of us pointing to someone else means nothing will change. So many have forgotten not only the joy of serving someone well, but also the joy of being served!

Marge Laney
Guest
11 years 4 months ago
Are there consumers who like a bargain and are willing to give up service to get one? Absolutely! Are there consumers who like to be wowed and are willing to pay more for knowledgeable and attentive service? Absolutely! Can one person be both of these types of consumer? Absolutely! Successful retailers know who they are and what their customers expect. Walmart is all about price and their customers know it and relinquish service to get it. Nordstrom’s is all about service and their customers know it and are willing to pay more to get it. But, what is great retail service in the mind of the retailer? To some, great service is fully stocked shelves, automated price checkers, and self-service checkouts. Others see their people as the vehicle for the great service experience and dedicate the time and money to make that happen. Ultimately, the consumer chooses the retailer that best aligns with their expectations for a particular product or service. A retailer’s success or failure depends upon their ability to attract enough consumers with… Read more »
Ryan Mathews
Guest
11 years 4 months ago

Ian is spot on. The fault lies in cultural changes not merchandising strategies. There is a general decline in civility in the U.S. that impacts every social interaction we have. Triple prices and service will still suffer. The problem isn’t in the price point, it’s in the people.

Robert Craycraft
Guest
Robert Craycraft
11 years 4 months ago

Our definition of good customer service is evolving, as is only natural. 35 years ago, when I started in retail, it was measured in things like quality (“real”) pasteboard boxes, layers of tissue, hand-written sales receipts, etc. Today’s affluent consumer could well look at those same items as environmentally wasteful and slowing her day needlessly, and instead measure customer service as convenient safe parking, efficient sales help, and an increasingly clean store environment–especially in fitting rooms.

100 years ago it would have been published prices and free delivery and a fair return policy. “Customer Service” shouldn’t be looked at as a frozen list of services and benefits, but a fluid description of what your customer wants today.

Bill Emerson
Guest
Bill Emerson
11 years 4 months ago
The one missing element in Doug’s otherwise excellent discussion is the “what,” as in what is being offered to the customer in terms of product assortment. If the products are the same, over-stored retailers will resort to lowering prices, at which point it becomes an IQ test–“let’s see, I can go to this store and pay $20 for the product or that store and pay $15. Gee, which one should I go to?” Once one retailer lowers price, they all must and the downward cycle begins that ends up in lousy products and lousy service. Personally, I think this is not about the customer, but about a deep deficit of innovation and product leadership on the part of retailers. Looking at the example of Apple, they are consistently offering innovative products that are ahead of anything else in their category and that delight their customers. They don’t have to resort to price promotions to drive sales. This results in the margins that fund exceptional service and product development, further enhancing the product experience–producing a positive… Read more »
Roger Saunders
Guest
11 years 4 months ago

Tough to buy into the issue that “Consumers’ killed Customer Service”, or if customer Service is truly “dead.” Standards shift, and each of us have our own interpretation of what defines service–e.g.–is it fast, good, loyal, friendly, convenient, high standard (clean, kid-friendly, etc.), value-oriented, fit our need (do you bank online or go to the bank to deposit/withdraw–and which method equates to service for you?), Timing/availability, etc.

The consumer is SMART. Set your service standard, and drive to perfection in executing upon it. The consumer will recognize the value, determine if they want to pay for it, and both retailer and customer will find a way to make it fit their satisfaction levels.

Christopher P. Ramey
Guest
11 years 4 months ago

It is the responsibility of the supply chain (retailer and manufacturer) to provide reasons for a customer to shop at their store and to earn the margins necessary to provide service as expected. Consumers are still emotional and their decisions are rarely purely objective.

Blaming consumers for poor service is absurd. Successful retailers recognize the challenges and opportunities, and find the proper balance.

Paula Rosenblum
Guest
11 years 4 months ago

The thing is, when customer service is promised but not delivered, customers say “The heck with you” and go for the low-cost provider.

REAL customer service is ALWAYS appreciated.

Too many retailers get credit for customer service that is not truly delivered, and then they wonder why customers vote to go elsewhere with their wallets.

Li McClelland
Guest
Li McClelland
11 years 4 months ago

It’s all about the hiring of the right people and the training. The price of the items sold is irrelevant towards a store having engaged employees providing smiles, courtesy, a swept floor, and efficient, accurate checkout. In these particular areas a least, our local Goodwill store provides far better customer service than our local Macy’s.

Herb Sorensen
Guest
11 years 4 months ago
When retail moved from personal selling to SELF-service 100 years ago, it was a part of a massive societal shift in efficiency: mass production, mass distribution, mass retailing (self-service) and mass media. Certainly some vestiges of retailer service remain in the system, but even Nordstrom is largely self-service, as are all the other emporia maintaining a good service reputation. The key to a return to “personal” service at self-service retail is the movement of the internet into the stores, beginning with VideoCart, MediaCart, Modiv Shopper and others, and evolving to the iPhone, PDAs and other cellular computing devices. This doesn’t mean that staff on the sales floor will become irrelevant, but just that a more efficient way of having meaningful “personal” communication with shoppers will involve both retailer direct conversation with the shopper, as well as ubiquitous online social media. Remember the railroad building, steel driving, John Henry’s competition with the steam drill? Well, John Henry better “get him a steam drill too!” (A nod to the Smothers Brothers.) PDAs are the modern “service” steam… Read more »
David Livingston
Guest
11 years 4 months ago

I think the government is somewhat to blame for having such high taxes that it requires many households to now have two breadwinners plus having to pinch pennies. Still, we are all greedy. As a consumer, I can make someone give me good customer service. It just depends how bad I want it.

Gene Detroyer
Guest
11 years 4 months ago
Cross industry analysis of customer service can be very misleading. Customer Service is not a standalone issue, though we seem to want to treat it as such. Across the retail industry, Walmart may get poor grades for customer service, depending on the questions. But, if we measure customer service “expectation” or “satisfaction” as a function of the shopping experience, Wal-Mart is likely to rank very high. Maybe as high as 100%. Where would the typical department store rank? 50%? 40%? 20%? Lower? This is not anybody’s fault. High levels of customer service are not a requirement in every retail model. What was the most successful retail model this holiday season? Online retailing! By traditional definitions of customer service, most would say they have none. By level of satisfaction, most would grade them very high. We have family in France. We bought all of their presents at Amazon.fr. No international postage! No customs forms! Quick delivery! Even gift wrapping! How do I define that customer service? OUTSTANDING! Customer service is not how well a sales associate… Read more »
Mark Leventhal
Guest
Mark Leventhal
11 years 4 months ago

I have an rule for businesses I consult with. Ask your customers what they want. There are three parts to doing business with me. You can only have two…pick the two that you want:
Quality products;
Fast delivery, or;
Price.