BrainTrust Query: Start a Customer Service War
Commentary by Doug Fleener, President
and Managing Partner, Dynamic Experiences Group
Walmart, Target, and
Amazon.com have spent the last few weeks locked in an ever-escalating
price war. Although consumers may be short-term winners in the price
war, the long-term cost of selling products below cost will be high —
impacting other retailers, authors, studios, and other companies associated
with the products.
Forget price wars: I want to see a customer
service war. I want to see companies try to one-up each other over who
can deliver the best service. Instead of dropping prices by a penny,
add another something you do for the customer.
Of course the big discounters
will never do this because they don’t really focus on service. It’s not
their competitive advantage. But it is the competitive advantage for
smaller, specialty stores. Shouldn’t they be starting a customer service
war? As a matter of fact, shouldn’t specialty retailers be starting one
every day?
To win the war they obviously have to be
better and more consistent than the competition. Here are some things
the local shop might be able to declare:
-
We warmly welcome every customer. We’re happy you’ve come to
our store and it shows. -
We treat customers like old friends. Many of you are.
-
We call customers by name and are happy when they know ours.
-
We make our customers comfortable by sometimes serving drinks
and snacks. -
We understand our customers needs and wants before we recommend
products. -
We provide a great experience for the entire family, including
the children. -
We offer unique and interesting products at competitive prices.
-
All of our employees are product experts. More importantly,
our employees are customer experts. You won’t find a better staff
anywhere. -
Our store is fun. One thing you’ll always find in stock is a
smile. -
We make shopping easy. The same holds true for returns and exchanges.
-
We offer special touches that our competition doesn’t. This
might include free seminars, free gift-wrapping, special delivery,
charitable events, etc. -
Our checkout process is fast and efficient, but more important
it’s enjoyable. -
We’re thankful for our customers and we prove it with thank
you cards, follow-up calls, and invitations to future events. -
No matter how busy the store, our employees are able to work
with multiple customers and still give individual service. It’s
an art and we’re good at it. -
We understand that we’re not going to be a customer’s only retailer
but we’ll do whatever it takes to be their favorite retailer.
I say let the big box stores duke it out over who can sell the farthest
below cost. That’s a war that none of us can ever win and, unless you’re
Walmart, Target or Amazon, you’ll be a big loser if you try.
Win the customer service war. That’s a war worth fighting.
Discussion
Questions: To what degree can customer service help specialty stores
survive or thrive in an environment increasingly focused on price?
What aspects around customer service should smaller stores
focus on?
Over the years, price as the deciding purchase factor has ranged from number one to number three in supermarkets. Clearly we are in a tough economic period, so price has moved back up to number one.
As we move from mass marketing to target marketing, the next evolution is individual consumer marketing. This we see with all the social networks. Considering the number-one complaint against supermarkets is that they offer a boring shopping experience, the idea of real customer service can make the difference…and we see it. Many people equate great customer service with high prices. In many cases, the products being sold are higher value. This does not have to be. Making the shopping experience pleasurable and enjoyable does not have to cost a lot of money. Costco does a great job as does Wegmans. Since not everyone is feeling this recession, great customer service can make a difference.
Small specialty stores are just as focused on effective payroll management as the “big box” stores…or they should be. So their focus in terms of customer service ought to be the quality, not quantity, of their sales associates. Great training on how to connect with the customer and how to communicate product knowledge is a critical task in this environment.
But there’s more to “customer service” than the traditional definition of “plenty of good sales help,” and technology can help achieve broader results. For example, does the small retailer make cost-effective use of CRM methods to ensure that the “best customer” is identified, encouraged to make repeat visits and to increase her average purchase? Does the small retailer have good supply-chain disciplines that allow it to keep most-wanted items in stock and flowing regularly?
Doug is right: The small specialty retailer who tries to win on price is likely to get run over by the big-box stores. But, at the same time, winning through customer service is a much more complex challenge than in the past.
When running down the competitive checklist for retailers, it would seem that service is about the only thing left that can differentiate a smaller retailer. The list above is great, but here’s the problem: most independent retailers think they provide great service when in fact, most don’t. They spend more time complaining about Walmart than focusing on how to win and keep more customers.
Yes, there are some great independents out there. But unless more pick up their game, we’re all going to get lost in this never-ending “price is everything” nonsense.
Doug Fleener’s suggestions are perfect. He recognizes what the big box stores’ positioning is on target, how they would focus on their business, and recognizes how those who can’t compete at their level must satisfy their customers. Too often, value is defined only by price, but value has many components including service and connections with customers.
Many of the Madison Avenue shops including Stuart Weitzman and LaPerla seem to take their salesperson training right out of Doug’s list. What are most impressive are handwritten notes from salespeople thanking the customer for a sale and advising them when something new in merchandise comes in that they might like.
But this doesn’t have to be limited to high-end Madison Avenue boutiques. Every specialty retailer should be subscribing to Doug Fleener’s Commandments.
Of course, that leaves a huge gap between the specialty stores and the big boxes. What do they do? Their future might be projected with the fact they don’t have an answer.
Doug has it absolutely correct. Smaller merchants cannot compete in price and volume. My blog post today talks about the unique selling proposition and how it’s a critical factor for success for small business retailing. Smaller merchants need to decide what sets them apart and build their internal culture based on that. Customers do see value in the shopping experience and I believe we will see a strong resurgence of the small merchant as consumers give up on big box for certain categories.
I want to stress how important it is to have your team on board with your USP as well. One thing that never changes in retail is the consistency that customers look for.
Doug, thank you for bringing up this topic and opportunity. Retailers like Target and Wal-Mart are so focused on low price that they are leaving behind product quality and customer service. In my opinion, Americans are now less concerned with low price and more interested in shopping experience, customer service, and quality products.
Small stores have a huge opportunity in 2010. Consumers are going to be buying less and focusing in on quality and shopping experience in the coming year. Some thoughts on what smaller stores can do to take advantage of this shift:
1) Focus on Customer Care – Not with just signs and advertising, but with action. Invest in training for your employees and give them the authority to make key decisions that will enhance the customer experience.
2) Cheap stuff from China is out in 2010 – Quality items made in America, Canada and Europe are in.
3) Create customer events – I have a good friend that owns a retail store in Greenwich, CT and she offers wine and cheese on Friday evenings for shoppers. It’s the small details in 2010 that will make a huge difference.
4) Sourcing local is in – Americans are finally interested in global warming and their carbon footprint. Help educate your shopper by carrying items that are made locally or that are made in countries that are concerned with the environment and pay a fair wage to their employees.
I think it would be very interesting to see a consulting group develop a study related to a store’s sourcing. What percent of products in the store comes from what countries? Then publish that report and let shoppers decide where they are going to shop, moving forward. Target, Wal-Mart and Christmas Tree Shop–I would be very concerned if this type of report is created in the coming year.
Target and Wal-Mart are always going to be around. That is the great thing about America and the free enterprise system. However, that does not mean they will be the same company in two years. Consumers have the ultimate control over retail. They speak with their feet and wallets.
The big box retailers simply do not have a cost structure to allow them to engage in a customer-service war. Customer service can only help specialty retailers survive or thrive in an environment increasingly focused on price only to an extent that their stock assortment is somewhat similar to that of big-box retailers, so that customers may be tempted to go to the specialty retailers instead of big-box retailers for better customer service.
Now, if customers know that certain items will be available at only specialty retailers, customers have no choice but to go to specialty retailers, regardless of their customer service! Now you see why customer service is not a priority for many retailers!
Then again, in today’s financial environment, customers may be willing to forego customer service in favor of hard savings, so why focus on customer service?
Slugging it out on price, especially if Walmart is involved is a loser strategy for specialty retail, large and small, and they are starting to realize it. A recent survey conducted by Vovici as part of their CE IQ Study “showed that 55% of respondents say that customer experience is a core differentiator that distinguishes their business from others in their market.”
Small retailers have a lot of unique opportunities to connect with their clientele on the in-store experience side and on the community involvement side. If they take advantage of these opportunities, they can build a profitable, loyal customer base.
In the case of the medium-to-large-chain specialty retailer, however, the trouble comes when trying to determine ROI on service initiatives, especially technology, and getting them implemented across the enterprise. The use of technology that reduces costs is a no brainer for most retailers, but when it comes to implementing technology that requires capital investment to drive top-line sales, they get uncomfortable, and ROI is not always easy to determine. Until the specialty retailer embraces the concept of implementing technology platforms with measurable performance standards to manage the in-store business processes, the experience for both the customer and the associates will remain inconsistent and frustrating.
I am reminded that when you give the customer two equal choices, retailer A & retailer B, and if A’s prices are lower than B’s, the rational customer will always select A over B. The challenge is to never give the customer an equal choice and customer service is a great way to shift the balance.
While a number of useful recommendations are made to delight customers short of price alone, permit me to share the top-line findings from my research on what customers believe are the important variables related to customer service in food retailing.
I asked people to identify what aspects of customer service were important in their selection of a food retailer. The top ten most important attributes are as follows:
1. Accurate check out.
2. Speedy check out.
3. Uncluttered aisles.
4. Easy access to parking lot.
5. Prices visible when scanned at check out.
6. Accurate shelf tags.
7. Complaints quickly and fairly responded to.
8. Shopper friendly store layout.
9. Sale prices honored without the need to clip coupons.
10. No products on shelf after “sell by” date.
While supermarkets have always focused on the ante, namely, low prices, cleanliness, and quality of products, addressing the above attributes can result in delighted customers, raving fans, and most importantly–profitable, continuous purchases.
Thanks, Doug! I think all of us wish we’d written that piece.
I spent a delightful hour in Trader Joe’s yesterday, entranced by the wide variety of products, clear labeling, complimentary coffee, tasting station, and great prices. (Bananas for 19 cents per pound?) It was clear that other customers lingered as well. That happy environment practically demands return visits. When stores foster a relaxed and happy attitude, customers feel it! First recommendation to retail executives: spend more time in stores; yours, and others’.
The idea of a service war is really interesting and certainly the bastion of specialty stores rather than large, mass merchants. For the latter, mass equals low price, though Amazon is the exception. Specialty stores absolutely can and should own the service province but only if they pursue a customer-centric strategy.
Therein lies the challenge for both mass and specialty retailers: is being customer centric a core strategy? Certainly it is for Amazon, Nordstrom and even perhaps Publix. Macy’s is pursuing a strategy that it describes as customer-centric, though it is in the context of assortment, which I still think is only a semi-customer-centric commitment. It’s really a merchandising strategy that factors in the customer (thus…semi!).
Thus, specialty stores that typically can’t (and shouldn’t) compete on price can win on the dimension of customer service, ideally through extending customer focus not just in “servicing” them, but also in communicating with them, rewarding them, and being more relevant to them though data-driven insights and creating value around those, regardless of touchpoint.
If you can’t compete on price, and you’re slugging it out in the same mall with a bunch of other specialty stores and 2-3 department stores, then you are really only left with 2 levers to pull: product and the in-store experience.
Customer service is simply one element of the in-store experience, albeit a VERY important one. The power of the Lululemon brand extends beyond the physical characteristics of the products they sell. The brand is all about wellness, balance and positive energy…and their friendly and knowledgeable sales associates are excellent ambassadors of the brand, complementing the unique aesthetic of the stores.
In this day and age, it would be foolish not to try to raise the bar and deliver superior service. This creates the type of customer stickiness that all retailers crave, and it helps convert a larger percentage of the retailer’s customers into happy and loyal mega-customers (who also double as brand advocates).
The previous comments focus primarily on in-store activities while my arena is on the providing competitive advantage for warehouse and delivery activities. Customer pickup at your store or warehouse and delivery at customer homes should also be a delight.
The service should reflect your store image. Well maintained trucks and crews should dressed appropriately. Crews should know their job as well as the basics of customer service. If there is a problem, immediate action should take place for solution.
Doug Fleener makes good comments about how some thoughtful customer service can make for a very novel point of differentiation!
Specialty retailers have never competed on price. They’ve competed on unique assortment and selection, customer service, and customer experience. This recession has carried with it the same financial realities for specialty retailers as it has for the national chains, however, and they’ve also had to manage inventory levels and assortments very prudently.
That leaves customer service and customer experience as the primary points of competitive differentiation. Putting a finer point on customer service and customer experience wasn’t as critical when there was a lot of disposable income floating around. Clearly, things have changed.
Specialty retailers need to reach out to customers now in just the ways that Doug suggests in order to strengthen existing relationships and forge new ones. Every sale must be truly earned right now, one customer at a time. That’s the mindset that will begin to rebuild traffic counts, and sales volume.
OK, ten or more commentators have so far, to a person, agreed that customer service is a great way for smaller retailers to battle price. Fine. So do I.
Now please allow me to add a follow-up question to Doug’s.
“How do you effectively advertise ‘better customer service’ in a compelling way that will cause shoppers to choose you for any given trip in the first place?”
The discussion seems to revolve around three core elements of what I’ll term “shopper value.” Price, Product and Service. The first two can and are advertised in succinctly credible and compelling ways.
“I have Bounty paper towels and they don’t.”
“My Bounty paper towels are $0.99 and theirs are $1.19.”
Now try this….
“I will smile twice as often as they will when you buy Bounty paper towels in my store.”
Or…
“I will double bag your Bounty paper towels and carry them to your car faster than they will.”
Just doesn’t have the same ring to it–does it?
My point is, as usual, pretty simple. Customer service can certainly be a competitive lever and should be–especially for the smaller retailer. But it is essentially a loyalty lever. It cannot effectively drive trial or outlet switching in the short term. With the average shopper using 5+ outlets regularly, and them being bombarded with price and product messages relentlessly while making each individual trip decision, service is an understandably tough sell.
Another great topic in which I am fully engaged, every day. Customer service isn’t an option for which we should charge extra, it is who we are as an independent.
I am a small, one-store supermarket in a rural poor area, and I have dealt with a Walmart supercenter (4 miles away) and a SuperK (4 miles away) for 10 years. I believe you must engage them vigorously in perishables, which you can win every day of the week. Trying to butt heads in dry goods is not the answer, as they can run you over with pop and chip deals.
Custom cut fresh meats, a real nice homemade deli-bakery, great produce, and timely deals in a well-stocked, frozen and dairy department, have kept me in business without giving the farm away. Be a very good listener and deliver on what you say you can do, and you’ll retain your customer base, plus grow through word of mouth.
The big-box stores are handing you the opportunity to compete, if you’re willing to put time, effort, and some capital into great perishables; and the customer service we should provide at no extra charge. Hang in there, and the customer will always appreciate great service.
Doug’s right, customer service is THE difference maker. It’s one thing if you’ve made your brand, from its inception, all about price, but for everyone else, you can only fake it for so long before you lose to the real price players. So, the notion of focus on service is clearly the path to success long term. People like to be treated well when they’re spending their money! That goes for all of us.
Having said that, you still have to be flexible enough to deal with both short-range and long-range issues. The service mantra should always be there. That’s not a short-range issue. But you’ve also got to be smart enough to know what’s top of mind for your customer and address the immediate needs as well. And sometimes, that’s price. You just have to know when to turn it off (unless you’re Walmart).
It is a bit surprising to see just 61% of poll respondents feel customer service can be an important differentiator for specialty retailers. With the majority of comments here agreeing that it is an uphill battle to compete on price, customer service becomes THE point of differentiation.
In scanning Doug’s list of how a retailer can leverage service, you’ll notice a common theme: “warmly welcome,” “friends,” “understanding,” “fun,” “unique,” “special touches,” “thankful,” “individual service,” “doing what it takes,” etc. That theme is AUTHENTICITY.
For the most part, American retail is dreadfully lacking in genuine, authentic customer-centric values. Mediocrity is everywhere.
Indeed, retailers who consciously choose to authentically engage with their customers and deliver a consistent, intentional experience, can achieve significant new levels of success.
Though I think Doug’s ideas are nice, there’s a reason that price is the standard for advertising (George Zimmer and Tom Shane notwithstanding): it’s objective, easily measured and easily communicated; it’s hard to communicate “service” (or whatever) in a 30 second spot or quarter page ad…sure, everyone will claim they offer it, but too many don’t follow through; and this let-down diminishes the efficacy of all such claims.
Superior customer service is always a differentiator and one that small merchants should use to keep consumers shopping their stores. It’s simply impossible to create the same type of welcoming and enjoyable shopping experience in a big-box environment. Many of the items indicated in this article are great ways for small merchants to begin to create a better customer-service experience.
Because Walmart, Target and other low-price leaders dominate retailing in the recession, every discussion about competition drifts toward price. But small merchants need to remember that consumers do not always interpret “value” based on “price.” The consumer’s value equation is “value = price + incentive,” where “incentive” is the motivation for patronizing a brand that goes beyond price. I don’t mean incentives like 50 cents off coupons or 10% discounts. Rather, it’s an incentive like superior customer service that can keep small merchants in the “value” game.
I really like Doug’s list. In fact, I’m going to add it to my ‘keeper’ list. Why not a customer service ‘one-upmanship’ contest? The only thing to add is to resubmit the content of a sign I understand hangs in the Customer Service Department of L.L.Bean. Great stuff!
What Is a customer?
A customer is the most important person ever in this office…in person or by mail (or phone).
A customer is not dependent on us…we are dependent on him.
A customer is not an interruption to our work…he is the purpose for it. We are not doing a favor by serving him…he is doing a favor by giving us the opportunity to do so.
A customer in is not someone we argue or match wits with. Nobody ever won an argument with a customer.
A customer is a person who brings us his wants. It is our job to handle them profitably to him and to ourselves.
It’s a great article by Doug.
I remember a piece here sometime back about the ‘Wow’ experience–a rarity. Just like with those experiences, customer service is subjective. It’s subjective to the point that some will define it by getting the lowest price and by doing so, the retailer will have ‘served’ the customer well.
Doug’s points are all great ones as are many of the other comments as well. Leaving out the fact that there is not a ‘clear’ definition of customer service or service in general, either way, it boils down to execution.
On a recent trip to Nordstrom’s, arguably one of the best in customer service, and located in one of what may be the most upscale malls in the Midwest, I was stunned. The store was lackluster and lacking customers. It was poorly merchandised. It seemed even dirty–yes visibly dirty. Even the best fall sometimes. It was a huge disappointment to say the least.
Delivering on service requires incredible persistence in managing execution. Few do it well and changing to or creating that environment is not done by a single memo sent out to stores. It’s a daunting undertaking.
Our visit the same day to a smaller store, Brighton Collectibles, was exemplary in service. I don’t think it has, however, anything to do with its size. It has everything to do with the culture of the retailer.
The reason we don’t see service wars is it isn’t easy. If you advertise towards it, you could lose big if you don’t deliver. Case in point; Farmer Jack in the Detroit area is no longer alive. One of their biggest failures years ago was a ‘You’re next in line’ campaign. The problem was–you were never in line. The negative customer backlash was amazing. Anyone willing to put it out there on customer service has to be willing to challenge their ability to execute. You may not get a second chance.
If you miss the mark on price, there is always next week. And the fact is, you never miss by too much to look too badly. However, if you tell the customer you’re the greatest in customer service, be careful…you may get crushed worse than you can imagine if you don’t deliver.
Delivering takes work. Most aren’t willing to do the work or will not expend that precious labor dollar to do so. That’s likely why it doesn’t happen. It’s not easy. Sadly, the rewards are far greater than the effectiveness of price. Wal-Mart is successful just for that simple reason. No one is willing to work on the formula necessary to challenge them. Given no reasonable alternative with a measurable value, the consumer will chose price. It’s that simple.
Just like my experience this past weekend. Nordstrom’s fell down from the pedastal quickly, in my eyes. Why should I shop their regular store when I can buy the same a their ‘Rack’ store for less? Regular consumers make those same judgments daily. My judgment was not over a $10 price difference, it was a judgment over experience.
I couldn’t agree more with your list. That’s the kind of service most of us would like and that we once received from our local hardware store, book store, fish market, etc. But consistently delivering that kind of service even in a mom and pop business is difficult, unless mom and pop are literally there all the time to serve or oversee each customer interaction. Once the staff grows, or the shop opens a second or third outlet, those serving the customers often don’t have a vested interest in long-term success, and providing the level of service you have suggested becomes much more challenging.
In difficult economic times, it may seem that price is the only thing that matters. Even retailers that deliver all the customer care you mentioned will lose customers, or at the least may see a reduction in share of wallet they have enjoyed from their existing customers. Keeping good staff and that welcome smile may become more difficult, but identifying and delivering on what customers’ value most within their total experience is the best hope for the future.
I love this idea. I’m a big proponent on the value that is delivered through customer service, not only price. Retailers can actually survive with relatively higher prices if they are able to deliver a higher level of customer service through face-to-face interactions, enticing assortments, inviting in-store environments, friendly sales policies and product knowledge. This doesn’t have to mean higher payroll costs or more hours, it just means that retailers have to invest in dedicating themselves to the customer experience.
Doug says it perfectly in that the customer service war is a war worth fighting. Though big retailers like Walmart, Target and Amazon.com can do well by offering a competitive pricepoint, specialty retailers cannot always compete on price alone. While value is often determined by price (as Gene Detroyer points out), value can definitely mean a lot more–notably with the experience a customer has at an establishment, and product quality. Specialty retailers, in particular, need to develop appropriate strategies surrounding their connection with customers.
Specialty retailers, as they have a niche product or service, are best served to likewise concentrate on niche marketing. This means making sure the customer recognizes that you’re helping them solve a problem, or providing a product/service specifically geared to meet their needs. The personal connection and one-on-one marketing model really comes into play here.
Generally speaking, consumers do tend to opt for the lowest-price retailer in today’s economy. Service, however, can be the one deciding factor in instances where two competing products/services have similar pricepoints.
Enhancing your customer service will certainly help encourage more loyal customers down the road. Low prices usually only last for a short time, failing to provide a customer “experience,” whereas a quality product and great customer service can make a lasting impression.