Retailers Seek Converts
Commentary by Laurie Cozart, CPC, CEO/Co-founder, TeamSpringboard
(www.teamspringboard.net)
The most common of excuses for poor sales performance on any given day in retail stores across the country are “there’s no traffic” or “it’s so slow.”
Millions of dollars are spent every year trying to get customers inside retail stores. A lot of that money, however, is wasted as sales opportunities are overlooked and lost by inadequately trained, poorly motivated and/or overwhelmed employees. Every day, sales are being lost because of poor customer service and lack of employee accountability.
As a retailer, would you be shocked to learn that you sell to less than 20 percent of your stores’ (excludes grocery) traffic? In fact, in most mall-based stores, the conversion rate drops to 10 percent or less.
By improving conversion rates by just two percent, store sales could be increased by 10 percent or more. If your team could sell to another four out of 100 customers, your sales would get a 15 percent boost.
There are a few ways to build sales volume. You can increase the customer traffic to your store or convert a greater percentage of existing shoppers into actual buyers. You can also follow strategies and tactics that increase the average ring, as well.
Of these, which is the easiest and most cost effective?
Converting browsers to buyers is by far easier and much less expensive than attracting new traffic, and the principles that increase the conversion rate often lead to higher rings from existing customers, as well.
Still, retailers continue to spend millions each year on extensive marketing campaigns to get the customers in the door and then even more dollars on store design, fixtures, sound systems and lighting to improve the shopping experience. Has it paid off? If you research the leading retail indicators, the answer is no. Some stores may be attracting more shoppers, but few are capitalizing on the opportunity.
Right now, the average retail company spends less than $100 per year per employee on training. There is no wonder so many employees are unhappy at their jobs; they simply do not know how to do perform them effectively.
Research shows well-trained employees can increase a company’s overall productivity by 22 percent. By combining a comprehensive training program with continual mentoring, productivity can increase by as much as 80 percent.
There’s more… employee training reduces turnover and reduces the amount of time lost to tardiness and illness. It improves company morale and the simple act of demonstrating an interest in the professional development of employees can help achieve sales gains.
Just imagine what would happen if a tenth of a company’s yearly advertising budget was spent on employee development and education. Employees would be happier doing their jobs, customers would be grateful for the great service they receive and investors would be thrilled with bottom line results. This is a triple win situation if there was one.
So, what are you waiting for?
Moderator’s Comment: In most retail businesses, do you believe moving financial resources into employee training from other areas can achieve the kind
of productivity and sales results to warrant such an action being taken? –
Laurie Cozart – Moderator
Hmmm, employee training … what a novel thought. In case we’ve missed the sarcasm, a few observations:
1) Many businesses, retailers included, have a tendency of looking at manpower as an expense, not as an investment. Employees are the lifeblood of any organization. They are responsible for the company’s day-to-day operation, ensuring the environment is suitable for activity, and providing the interface with vendors, suppliers, and, most importantly, the customer. Even in the most automated of environments, employees still have the final responsibility of ensuring a quality product comes at the end of the assembly line.
2) In an era where retailers (see yesterday’s discussion) are looking for ways to compete with the big box stores and the Wal-Marts of the world, service and attention to the customers’ needs are becoming ever more important.
3) Consumers are demanding higher quality, better service, and are becoming increasingly willing to pay for it (which means higher margins)…. witness the phenomenal success of luxury automobiles, boats, watches, clothing, jewelry, organic foods, etc. etc. etc.
The key component for any retailer to take advantage of these trends, and to differentiate him or herself from the competition, is service, attention to detail, and a quality orientation. That happens only when your employees are properly trained. It is NOT a diversion of resources to spend more here, moreover, the proper application of resources.
OK, the goal is to increase average ticket and sales conversion rates as a percentage of store traffic. Sounds like a simple thing to do. We can spend some money on training and also attach monetary rewards to sales performance. Customers will get more attention. Staff will add knowledge and value to the process. Problem solved. Or is it?
In the short term, commissions and training might make an impact, but in the long term I don’t think so. Commissions will add a short term pop to sales, but in the long run it will not be sustained as customers decide to no longer shop the store because they get hassled by aggressive sales people who don’t know what they are talking about. If we train them and provide them with superior customer service and sales skills, then they will soon leave and find a better paying job. So we are back to ground zero hiring a newbie that takes up space and doesn’t know how to add value to the customer service process.
What’s the answer? Retailers need to focus on customer needs. They need to invest on building merchandising programs that make it easy for customers to acquire and assimilate relevant purchase oriented information. The interesting part would be that retail staff would train themselves as they interact and solve problems for customers who want help. The customer is empowered and so is the employee.
I would have to agree with David Zahn, that managers need to hold their employees accountable for their actions as well as be accountable themselves. Managers also need the support of their corporation. Case in point, the recently discussed donut shop manager who was trying to make a more comfortable environment for the customers by restricting employees having personal conversations in a foreign language while behind the counter–his company did not back him up though he was looking to improve the customer experience.
Customer Service is not difficult when approached with the proper attitude. The first basic rule is “treat people the way you would like to be treated.” No one likes to be snapped at, dismissed, or made to feel bothersome and yet this is what happens in stores, malls and offices throughout the country everyday.
The second rule is never say to a customer (at least initially) either of the increasingly popular and irritating phrases:
“I don’t know” — Too dismissive and very unimpressive. You should know, you work there, and not knowing is not helpful. Try and be helpful by offering the alternative, “Let me check on that for you.” For even if the end result is the same, the customer walks away feeling that their needs were at least addressed and that you tried to accommodate them. The employee needs to know that the saying, “I don’t know” makes them look stupid and unprofessional whereas the alternative makes them appear proactive and professional. Employees need to understand that their performance in the workplace reflects on them personally.
“Everything we have is out on the floor.” “No it is not,” the customer is thinking and whether all stock is on the floor or not, it easier and more beneficial to say, “Let me check on that for you” than to stand there and argue with the customer to try and convince them what you say is so, a behavior that only
results in negative feelings on the part of both parties.
So learn to say (and act upon) ‘Let me check on that for you”.
Sometimes you are able to locate the item or information the customer needs which generates satisfaction for both the customer (they got what they needed) and the employee (they feel a sense of achievement).
Another rule is never speak negatively about customers in the public workplace. There is little that is more off-putting than shopping in a store and hearing the help disparage another customer. The customer concludes that if they don’t respect and appreciate that customer than they probably don’t respect or appreciate me either. Who would want to do business and spend money with a company that neither respects nor appreciates their business? Few people, if any. I have witnessed this negative attitude to customers in a variety of shops and I have also witnessed managers looking on or even listening without saying a word and I think to myself, “that’s the manager and they don’t even have enough sense to put an end to the negative discussion on the sales floor or take the person away from the sales floor to hear them out?” In those cases, I find the manager to be at fault as they have the authority to control and correct a negative situation and don’t do so.
Another rule to remember is “The customer is not the enemy,” so don’t be arrogant or combative when dealing with them. Sounds ridiculously obvious and yet out in the world this is increasingly the attitude the buying public must face and deal with when shopping.
While some customers are impossible to please that is not the majority. Managers need to be accountable but so do the employees.
Training is certainly an important aspect of productivity but there are lots of ways to make sure employees enjoy what they do, feel well rewarded and then share their enthusiasm with customers. There is no point looking at one aspect in isolation. Some of the incentives suggested as motivation are well worth considering.
The supermarket chain that I always cite in these discussions is the one that is owned by all its employees. Each “partner”, no matter how junior, gets a proportion of any profits the company makes year on year. And whichever branch I have gone into, no matter how young or new the shelf stacking and checkout staff, they all know that they have a stake in making the business successful so provide an excellent, helpful and friendly service. Even if they have no intention of making a career of retailing and have little or no personal interest in the products they sell, they all know that their performance is important and will benefit themselves as well as each and every one of their colleagues. Looking at the recently released figures for this year, this particular company is growing at an excellent rate and making a very nice tidy sum for itself and its partners. Customers are happy, loyal and spending generously. They are an excellent example for any other retailer to study.
David Zahn has it exactly right. The irrefutable universal rule is, “How we are managed is how we serve.” Want improvement on the shop floor? Then get some ‘leaders’ who know how to inspire and coach others, rather than sit in the back room waiting for a customer complaint.
Many of us Pilot Fish to the retail industry have strong opinions on how retailers can increase its effectiveness, which are usually well researched and true. Well-trained employees are cardinal assets of any organization but in reading the intro to this topic I found myself a bit puzzled if this is an editorial or does it set up the training issue objectively?
While it is difficult to support the level of disappointing customer service available today, can we say with such certainty that retailers don’t pay sufficient attention and capital on training just because the end product may not be universally satisfying? Are there any other contributing factors to employee behavior?
If this subject had been constructed by an ad executive, or a packaging expert, could they have suggested that retailers were not concentrating enough time and money on advertising or packaging (as we have read in the past)? Yes, employee training is vital and must be a prime focus of retailers but the effectiveness of one’s advertising, assortments, Sense of Theater, pricing, cleanliness, convenience, and in-stocks are important too. So let’s not rob Peter (advertising) to paid Paul (training). Let’s concentrate on making our dollars on training become much more productive. I’m sure there are companies out there who can help accomplish this.
Throwing more money at the problem is not the entire solution. I am a great believer in training. But too many people are left to their own devices with online training programs that are boring, far too extensive and largely irrelevant. Or, new hires are being training by current employees who really don’t like their jobs.
Take a step back and look at recruiting practices and what you’re offering people who do join your organization. It’s all well and good to offer part time employment to what you think will be a steady stream of high school students. But the industry at large has yet to address its long-term strategy — that is, to create a career path for those who want it. Yes, people may have to work on weekends, holidays and nights just like any other retail operation. But don’t just sell the negatives or else you’ll end up with the same lower quality employee that has always been prevalent in this business.
This is an industry of great opportunity. Sell it as such!
In a word, yes.
I agree that it is a matter of what the store expects from employees and how it evaluates them. It is not enough to give lip service to good service, but to make happy customers the standard by which employees are measured.
Poor customer service is just about everywhere. For some reason, the concept of customer self-service is being translated into no or poor customer interaction. More training is not the answer. Retailers that do well with customer service start by hiring the right people. Only people that like to interact with customers should be hired. Second, they need to be trained on products, company policy and customer interaction. This is for everyone who could possible talk with a customer. Third, they should dress properly. And last, but not least, they should have incentives to encourage great customer service. American Airlines gives its best customers cards. When they encounter exceptional customer service, they give the employee one of these cards. Employees receive rewards based on the number of these cards they collect. Collect enough cards and the employee could get a new car.
Rather than move financial resources into employee training, I would recommend just transferring the financial resources to the employees. Put all employees on commission. The employees will train themselves. Look at the success of companies like Hy-Vee and Publix. It doesn’t take the employees long to learn that the better they treat the customers, the more money they earn. No employee in retail earning low wages is going to get too excited about customer service when there is nothing in it for them. They need a realistic incentive other than the threat of losing their job.
Surely it seems to make sense to ensure that retail employees are well trained and capable to opportunistically convert browsers to buyers. To refute that is akin to denying that the world is round. However (and this is being written by someone that makes his living training others), the issue may not be that retail employees don’t know WHAT to do, or HOW to do their jobs at all – but that management is not holding them accountable for doing their jobs or have created incentive systems that “de-incent” the correct performance.
Are retail employees more often evaluated on their sales skills or on their ability to “cash out the register correctly” at the end of the shift? If you tell me that my job depends on being within “X” % of the register tally, then that is what I will focus on (and while it is counterintuitive perhaps, it also is a subtle message that we don’t value too many transactions, since that is the cause of register errors!).
Is the sales person compensated for “educating” the shopper to make a better purchase or is the employee castigated for spending too much time with one shopper while others are left unserviced?
Every shopper has fumed at the seeming lack of skills exhibited by store clerks at some point – and training clearly is warranted – but I would start with the MANAGER first and train from there down.
Depending on the channel, around 50% of store shoppers prefer to be left alone…to figure things out for themselves. That means that improved employee training and financial incentives can only go so far toward creating greater suction into the store, engaging shoppers and improving closure rates. Investments in in-store design also need to be elevated, so that the store itself can work harder to communicate a retailer’s point of difference in the marketplace; answer shopper needs for guidance, knowledge and inspiration; and provide store employees with the physical and technological tools they need to help shoppers and to feel good about their value. Retailers and their brand company partners need to continue to re-focus their in-store efforts from an emphasis on appearance and brand recognition to an emphasis on improving in-store performance.
The customer service equation isn’t that elusive – just emulate the ones who deliver on the promise – Best Buy (I was greeted no fewer than four times on my last visit, twice more than the last time, which was prior to their female-friendly initiative), Anthropologie (unobtrusive, respectful but available – they know their customer), Nordstrom (they’ve always had service in the bag), Whole Foods, The Container Store … all success stories and the list thankfully goes on. What do they have in common? Some combination or strong single initiative involving commission, excellent benefits and/or training.
What sort of customer service do you expect to receive from someone who is being paid minimum wage to do their job?
I spend far more money shopping on retailer’s websites than I do in their shops, because on the web I can engage in illuminating and intelligent conversation about products I’m looking to purchase and research the pros and cons. Contrast that with the typical in-store experience where questions are usually met with blank stares or the old “this is not my department” answer… or even worse, with misinformation because the employee simply has no incentive to learn about the products he is selling – he’ll earn his $5.15 per hour paycheck regardless of what he sells.
I’ve seen training programs where a lot of money was spent to talk about values and the value of our competitors. But, the employees were not taught to connect those values with their decision making.
I’ve seen a lot of training on how to do the right thing. But, you get into the store and some people will do things the way they were trained, and others won’t. You will have a checker separating out the bread only to have a package person put it all in one bag indifferently. It’s always this way.
I’ve seen training programs that wouldn’t let you fail. I’ve seen trainers stress their own meta instructional rules that had nothing to do with the instruction.
Yes, without some classroom training, you’d be lost in a checkstand. But, now days, you throw the trainee on a machine by themselves and let the courtesy managers deal with the trainee’s exceptions. These exceptions frustrate the trainee. So until that trainee feels comfortable, customer service is going to be difficult. There is more to training than just how-to. The full spectrum of think, feel, do, be, me, and we needs to be addressed.
Training is generally the first thing cut and the last thing restored in any corporation in tough times. Think about it. When you are in a tough spot, the first thing you do is eliminate your future.
The issues really aren’t about more money, more training, etc. The issue lies more in each individual company’s intentions to meet short term gains or to level that tendency and secure even growth and a sustained future. In that event, you consider all of your assets – your employees being one of them. In fact, they are the most valuable.
It’s pretty easy after studying retail even at the surface level to determine which track most are on and which ones are on the other. Many seek to gamble on lower labor costs and accept the risk of higher turnover and the costs associated. A smaller percentage take a different route. Their results are bearing fruit in equal proportion to their efforts. You see, taking that fork in the road is harder. It takes work. Few in retail leadership today take the hard route, not because it wouldn’t work, but because they don’t know what to do. In that case, take the easy route, accept the risk and get on with it. (You gain millions either way right?)
Managing to expectations takes work. Even more so, building a team of employees that are capable of being managed to that expectation is even harder. However, don’t mistake that with impossible, unlikely, etc. (Just ask Costco, Trader Joe’s, and others.)
In the end, it’s less about shifting dollars within your company. It’s more like shifting priorities and philosophy and just about everything. That being done, the dollars rearrange themselves quite quickly and easily.
Frank Dell mentioned hiring the right people. How many managers including HR managers actually know how to qualify and hire good people? A poor hiring decision costs or loses money in so many ways and it is astonishing that so few companies prioritize a solid hiring process along with a great initial and ongoing training program.
In order to be able to train effectively, you must hire people who are capable of being trained to do a job in the way you expect it to be done. In large measure, this can be determined in the candidate and reference interview portions of the hiring process. That is, the best predictor of future behavior and performance is based on evidence of past behavior and performance. Admittedly, this is somewhat more challenging to determine with candidates with little work history, as is often the case with entry level retail employees. However, it can be done by asking well designed questions that allow a candidate to answer questions based on how they have behaved and performed in past employment, in school and other relevant experiences. (When possible, references should be interviewed with the same strategy.)
So, begin by creating a list of desirable attributes, qualities, characteristics, skills and capabilities that you consider ideal and/or essential to the position and then create questions that require the candidate to answer them based on real experiences. Most people can easily answer questions that begin with “how would you…” The more indicative answers are given to questions that begin with “how DID you…”
To learn how a candidate will treat customers, ask them to tell you about the most difficult customer they had to deal with in their last position; what made the customer difficult and how did they deal with that customer.
To learn if they are solution oriented, ask if they have ever encountered a policy or procedure that either made it difficult for customers to deal with their former company or made it difficult for them to satisfy customers. Ask them to elaborate and explain what they did about it. Did they suggest a change of policy or procedure?
To learn if and how they will sell, ask about a time they were particularly proud of something they sold. The answer could be as simple as telling you about selling Girl Scout Cookies, super-sizing fries at McDonald’s or something more spectacular.
To learn about their ability to articulate features and benefits, ask them about their favorite product in your store and ask them to tell you why.
To learn how they will take direction, ask about the time they were asked to do something that they had not been properly trained for, didn’t have time for or that was just plain wrong.
To learn about their ability to work well with others, ask about the most difficult co-worker and supervisor (or teacher, other student) they can remember; why these people were difficult and how they dealt with each of these people.
To find out what they value and if they have the ability to set and accomplish goals, ask what they consider their most important accomplishment.
When contacting references, ask similarly designed questions. Also, ask what the reference thinks you can do to help the candidate to grow and do well in the position.
Of course, most employers will give out only the basic information so look for opportunities to interview other references who might be more candid — perhaps, someone you know personally who also knows the candidate. Listen for non-employer names mentioned during the interview who may give you valuable insights without the fear of being sued.
Now that you’ve determined that the candidate you’ve hired is indeed someone who can be trained to do well in your organization, invest in training and watch your customers become “Raving Fans”!
A delicate balance of commitment that suggests culture change…top down and vice versa; coupled with exceptional employment training, advertising a consumer promise, and pricing/merchandising may be the solution.
Shoppers want to be engaged, heard and served, and the above balance of elements, all found in consumer marketing could be the formula for success.
For some reason, not all the parts of this delicate balance are done concurrently; or considered. Hmmmmmmmm…
The comments about poor customer service costing retailers significant business cannot be supported by unbiased research. We conduct two national shopping behavior studies every year that provide 1,200 consumers the opportunity to explain why they spend more or less money at various retailers. The questions in the study are open ended and do not lead or restrict the consumers responses.
In seven straight studies, service is a virtual non-issue for why consumers spend more or less. The dominant factor by far is stores not having the merchandise consumers or looking for.
Many of the most successful retailers in the world (Wal-Mart, Target, Costco, Walgreens, Kohl’s) have no service.
Our company sells traffic counters, a device which allows retailers to identify not only conversion rate, but also the ratio of staff to traffic. If there is too much traffic for the number of staff on the floor, the staff will be hard pressed to simply supply merchandise. There is no way they’ll be able to methodically proceed through the various steps of the sale as outlined by a professional training company.
Sales training is great — and one of the quickest, fastest ways to improve conversion rate — if there are sufficient staff on the floor. Otherwise, training dollars are largely wasted.
I, too, have been the recipient of terrible customer service, more times than I can count. But as a retailer, I have to tell you, the customer has changed dramatically over the past few years.
For over 30 years, our motto, as was every decent retailer’s, was “the customer is always right.” Our return and service policies were set for the 95% of customers who didn’t abuse our services.
Today, things have definitely changed. When it changed, I’m not quite sure, but it has changed. Our policies are now set for those customers who create 90% of the service issues.
Our typical complaint comes from someone who exaggerates, or even makes up a problem. Our customer service department regularly deals with phantom issues, that once we agree to take back or exchange an item, we find was totally made up. Our situation is that we eat the cost of the item, often donating it to charity or just disposing of it because the customer has abused it and we don’t wish to fill our sales floor with product that we did not intend for our floor.
We have been in business for over 33 years now and are searching for a way to reach just the customer that accepts responsibility for their errors or damages. To those people, we will always offer wonderful customer service. Our largest customer base is return or prior customers.
Just to let some of you know, sometimes poor customer service is a response to the problem customer, at the expense of the valued customer.
Staff Training – that old chestnut.
Well a bit goes a long way but here are some alternatives.
1: Customer training. There is no longer anything between brilliant service and self service – So engineer out the assistance unless you can make it brilliant.
The alternative – CUSTOMER TRAINING.
Why has IKEA got such high margins? Vertical integration, yes, but also the best trained customers on the planet . And it has worked at it. Hard.
2: Triage. If you design your store customer experience to allow customers to visibly demonstrate their predisposal to help, you can do 2 things.
* Let self selectors get on with it and give them tools they need
* Let staff focus on customer who need or justify assistance.
Pay As You Go phones are a classic example of a customer setting bad service where as the top 20% of PAYG customers spending £20+ ($35+) per month deserve a 10 min chat because they rightly should be on a contract phone. It will save them a fortune.
3: Staging: Designing the store environment as a walk in sales aid first and a customer venue second.
When I was a facer, I walked into the store at the end of the day and saw the blown out shelves as a good day. A fellow facer walked in and just saw work.
There was zero training for that job. Trying to convey a system of thought to hourly employees really isn’t going to work.
When I was trained to be a bagboy, the store manager picked out an employee to do it. There was no training program. That person taught me how to open the bag, how to bag, and that I was to carry on a conversation with my customers. The rest of how a customer really wanted things bagged I already knew.
When I went back to this same company some twenty years later, they had a huge and lengthy HR sponsored training program. It attempted to get across what the vision was and how to make appropriate decisions. I don’t think it worked. The store-level training was missing, as was any integration.
You can train your customers and your employees at the same time.
This is a content management issue. Seth Goodin called it curriculum marketing. He’s the permission marketing guru. Permission marketing is an email-based method of getting content to those that agree to accept it. It is not a direct mail scheme, and you have to be careful if you use an outside third-party to do your email campaigns.
As an example, let’s say that you have an inbound product that you need to train your employees on. The inbound product content would include catalog items, sales discounts, and co-branded advertising campaign information.
Once you get your content segmented, you would send each collection of information to your two stakeholders at the same time. Since many items would be inbound at the same time, you would want to collect like items and organize your “newsletter” or into themes.
You can tune this up if you actually capture customer contact info, and make the effort to survey them with short surveys incorporated into their newsletters. You could segment them into increasingly fine categories and customize the content even more.
You don’t necessarily have to depend on the employee if you’ve trained the customer as to what to ask about.