Unhappy Shoppers
By George Anderson
Attention retailers: Your shoppers are not happy with you.
According to the University of Michigan’s American Customer Satisfaction Index for retail (online and off) and financial services, consumers’ overall satisfaction level was down last year. This was in direct contrast to the previous three years where consumers expressed increased satisfaction.
Scores were based on surveys conducted with 20,000 consumers who rated retailers based on their pricing, quality of merchandise and levels of customer service.
The director of the University of Michigan’s National Quality Research Center, Claes Fornell, blamed much of the drop on consumers’ unhappiness with paying higher prices at the gas pump.
Consumers’ demand for low prices may be putting retailers in a Catch-22 position, according to Professor Fornell.
“While high levels of customer satisfaction typically lead to company growth, it is not always the case that business growth leads to satisfied customers,’ he said. “Through heavy discounting, the (2004) holiday season did bring in more buyers for both traditional and online retailers. But because some companies also cut costs, resources to serve the increasing demand were sometimes lacking, resulting in crowding, longer lines, and slower service.”
Moderator’s Comment: What factors (price, customer service, etc.) do you believe are most important in satisfying customers? What is the difference between
companies that satisfy consumers and those that do not?
Professor Fornell expressed concern with the drop in customer satisfaction ratings. “Consumer spending, which represents nearly 70 percent of gross domestic
product, grows at an annual rate of about 3.8 percent,’ he said. “But when customer satisfaction drops (by 0.3 points or more), average consumer spending growth declines to 3.2
percent, a difference of roughly $46 billion on an annual basis.’ –
George Anderson – Moderator
Like any relationship, the retail-consumer relationship is based on “trust” and the ability to interpret and meet needs. And then there’s the element of surprise to keep things fresh. Retailers that set an expectation, deliver on that expectation, demonstrate an awareness of what their customer needs in their merchandise selection and how those items fit into their lifestyle. And then do something surprising…surprisingly good service, or surprisingly innovative merchandise or merchandising. Don’t take the customer for granted. Maybe because yesterday was Valentine’s Day, this relationship analogy is resonating…but that’s what it comes down to. Like a relationship, it’s not always easy. But it’s also not rocket-science. A concerted, consistent effort goes a long way.
I think Karen is heading in the right direction. It is about value. But value is an equation. It’s not one factor … like price, quality, or service … it’s the sum of these. And it truly is all about expectations.
Retailers too often set unrealistic expectations that do not meet their ability to execute. Unfortunately, retailers aren’t punished by consumers often enough to cause real change. That’s a difficult word, isn’t it? …punish. For the most part, consumers speak of their dissatisfaction levels, yet reward those same behaviors with the opening of their wallets. That ‘value’ equation has far too many variables to work out the same quotient each time it’s calculated. The challenge is managing those variables well enough to escape the ultimate punishment. Although far too often ‘good enough’ seems to be the satisfactory expectation. I don’t know what that says, or what to think about that.
One big difference between companies that “get” customer service and those that don’t is the way they train and hire. Often, you can tell in the first few seconds of an interaction with an associate whether he or she cares. First step is to discipline your company to only hire those who are really willing and capable of interacting with customers in positive ways. Second step is enforcing standards, monitoring interactions, and taking specific time out of each day or week for further training. The usual suspects do a great job, — Trader Joe’s, Stew Leonard’s, Nieman-Marcus, Nordstrom, Costco, etc. Bass Pro shops also come to mind.
While walking the NRF convention this year, I met two young women who were standing outside of a throng of people listening to the sales pitch of a tech company. As I tried to pass around the crowd, one of the two approached me and asked where I was from and what I thought of the show. I replied to their request and then asked them the same in return. Turns out they were from an HR firm and walking the show to find out what retailers needed.
I applauded their attendance at NRF, citing that people/customer service is the greatest challenge facing retailers today — not only where to find good service oriented employees, but how to train them to be great customer-centric representatives of the company’s brand.
Without a doubt, I think the degrading customer satisfaction numbers are directly related to customer service. A good staff person can speak to the customer about price, quality or location problems, but if you don’t have good customer service/employees, who speaks for the retailer?
It’s about value and managed expectations. When consumers’ experiences do not match their expectations, they are unhappy. People are happily shopping in dollar stores with very little service because of the perceived value and no expectation of good service.
When department stores and supers reduce the service they provide without offering a concurrent increase in value, people will be unhappy. And the problem lies not just in the number of workers available to provide service, but in the reduced investment in their training. Even when store personnel are available, too few of them know how to provide gracious service.
It has to be balance and choice. Balance of selection that is appealing and tempting with prices that the customer considers reasonable, i.e. good value for money, and service which doesn’t need to be fawning but does need to be intelligent. All things being equal, these are the stores in which I believe customers would prefer to shop.
First, a little clarification. And then, a little heresy.
To clarify the study, it combined customer satisfaction for both in-store and online retailers, and threw financial services into the mix for grins. Further, much of the drop in customer satisfaction was attributed to high gasoline prices. What a mess! How can one take anything meaningful away from that? For all we know, the tabs in the study might show an actual increase in customer satisfaction in non-financial, non-petroleum-based, in-store retail businesses.
Here’s the heresy: What’s so great about customer service? The keys today seem to be having the product, have it out on the sales floor, and have it clearly displayed. Employees are there to keep the displays full and clearly labeled, and to be in a position to take customers’ money at the checkstands.
Think about online sales, where the definition of customer service is totally different. How, in questioning shoppers for this study, can interviewers distinguish between online service and in-store service? The standards and customer expectations are totally different. But, there is one shared customer service standard: Online retailers enjoy growing popularity because they always seem to have the product, have it on display, and have it clearly marked.
As an associate/owner of the company ranked highest on the ACSI index for Grocery Service, it would be comfortable to sit back and bask in pride. However, everyone knows that we’re only as good as our associates were this afternoon. I firmly believe everything in surveys like this relates to how associates handle customers, not managers. Many people were so frightened about the economy in the last 3 years that service was like a gun held to their head…it was do or die. Perhaps things have relaxed a bit now that we are moving ahead as a whole.
I’m proud to be highly ranked, but what I do does not matter…it’s what my associates do. That’s what customers get every day. My job is to lead, inspire and motivate. If I hire the right people, that will get executed. It’s not easy, but then again, what determines success? Associates have to drive it; we’re only as good as the worst customer they serve…
Two key points have been made here: (1) “Value” is an equation, not a single factor and (2) the attributes that give you a positive score in that “Value Equation” need to be monitored (research in its many forms) and fed back to the frontline players. And may I add that “Consistency” is the variable that assures the “Value Equation” actually holds up over time.
Also, depending on the type of business, one should be mindful that not all products/services or purchase occasions benefit equally from that equation. “Time & Trouble” may matter much more for certain kinds of products or situations while “Expertise” matters more for others, and so on. The Owner/CEO down to the stockperson should know how these variables interact. It’s research and communication.