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Can retailers afford to have a higher customer service profile?
Through a special arrangement, what follows is a summary of an article from Retail Paradox, RSR Research’s weekly analysis on emerging issues facing retailers, presented here for discussion.
When launching its digital consumer bank, Goldman Sachs conducted a survey that found consumers want to find answers without assistance, but the ability to immediately demand a qualified banker if they have a problem.
“There’s high tolerance for self-service until it fails, and then there’s no tolerance,” according to a Bloomberg article, which details how branches are giving raises to tellers despite the arrival of ever-advanced self-service options.
Many retailers are likewise seeking ways to better manage labor, their most “controllable expense” in the store, amid margin pressures while recognizing employees should be at the very center of strategies to reinvigorate stores.
So, the question isn’t, “Do store employees still matter” but, “How can retailers afford a higher customer service profile?”
First of all, non-selling functions of the store should be hyper-optimized. That’s what task management solutions are all about, but technology-enabled collaboration and communication tools are also important for floor resets and other regular non-sellling tasks. With store managers often bogged down by paper work, enabling mobile alerts for managers about real-time operational conditions in the store can be particularly beneficial.
Secondly, new customer-facing functions related to omnichannel fulfillment should be proactively systemized. Technology solutions are available to optimize the extra labor required to handle BOPIS and online returns at the store level.
Finally, selling functions can be measured and optimized. Observing employee activities with their outcomes can identify those that work best. From there, a continuous improvement cycle can be established at each store, where an action plan is generated to support the achievement of the goals. Then, as the saying goes, “Wash, rinse, repeat.”
Stores don’t have to settle for a diminishing return on their efforts to win consumers’ share-of-pocket. Retailers should re-think what goes on inside the four walls of the store in the context of consumer expectations for relevance and service and use information and tools available now to drive performance to new levels. Employees do matter to consumers, but only if they are helping those consumers solve their lifestyle challenges.
Discussion Questions
DISCUSSION QUESTIONS: How can stores drive in-store labor efficiencies and create more opportunities for customer-facing functions? Where do you see the biggest opportunities at the store level?
Poll
BrainTrust
Min-Jee Hwang
Director of Marketing, Wiser Solutions, Inc.
Dick Seesel
Principal, Retailing In Focus LLC
One of the ways retailers can significantly improve labor efficiencies is by ensuring that they align staff resources to actual store traffic volume. Too many retailers today still rely on transaction counts as a proxy for store traffic, and doing so almost assures these retailers are misaligning their resources. With the benefit of actual traffic count data, store managers can adjust staff behaviors to be situational based on traffic volume – when store traffic is high, focus on quick touches, serving customers and transaction processing; when traffic is low, focus on tasking. As simple and basic as this sounds, many retailers are not doing it simply because they don’t measure store traffic – or conversion rates – in their stores.
The consumer banking sector is a great example of what all retail can do to evolve customer-facing roles. Modern tellers are really bankers now, and they should be able to answer any question and complete any transaction. This is a model taking hold in other industries, as in-store associates don’t just check out shoppers, but can help them along every step of their buying journey. Retailers should emphasize training to develop more well-rounded, experienced, and knowledgeable associates.
Start with knowns and unknowns. Replenishment items versus new ones. No help needed buying new socks. LOTS of help needed buying a dress shirt and tie combo that actually works with the new suit. No help needed in the paper towel or canned goods aisle. LOTS of help needed in new menu combinations. No help needed in focused purchases of known items. Lots of help needed in creating new combinations of products. Help people LEARN. Help them explore; Explore + Experiment = Experience.
The question should be, “How can stores afford NOT to drive in-store labor efficiencies and create more customer-facing experiences and functions?” Your in-store staff — your brand ambassadors — should be professionals and as professionals should be compensated as such. I suspect fewer professionals will not only get a better job done but will also account for more revenue.
Worker and in-store technology and productivity tools have their place, however in today’s experiential digitally-powered commerce world, the store associate is one of the most critical components and competitive differentiators for brick-and-mortar retailers. There is no one solution for each and every retail segment, yet retailers would be hard-pressed to keep their customers coming back for more without an enhanced in-store experience, powered by informed and empowered brand ambassadors.
Retail is undergoing a rapid evolution from multi-channel, to omnichannel, to assortment curation, to experiential retail and perhaps ultimately to the store serving as a place to once again have a genuine human and community connection. The more and more technology algorithms automate things, the more we desire to have a place to connect with our community.
A different way to ask the question: Can retailers afford NOT to have a higher customer service profile? But there is not a single definition of “customer service” — it depends on the kind of store and the customer’s expectations when shopping there. Expectations at a high-touch store like Nordstrom are not the same as at Target, where the “customer service” goal should include efficient checkout and in-stock fixtures. Either way, the best customer service needs to exceed expectations.
Technology can be used to automate tasks that add little direct value to the consumer. So, something like restocking shelves – while vital – does not require a human touch. This automation should free up staff to do tasks that add real value, such as engaging or talking to customers.
I’ve never believed that AI or robotics will replace humans in retail. I think they will just change the nature and focus of the work that is done.
The biggest opportunity for in-store labor remains what it has been for decades: Effective training and leading by example. This is an oversimplified view, I realize, however if store management set the tone and gave ongoing coaching and feedback, more store staff would feel comfortable providing value-added service that doesn’t cost the retailers anything additional.
The self-service model is popular. And as the article mentions it’s great — until it doesn’t work. The fallback is a human-to-human interaction. When self-service fails, that H2H fallback must happen quickly to avoid any more frustration or disappointment than the customer has just experienced. That’s why you’ll see an employee near self-service check-outs. That’s why good websites will have a button that reads “Click here for live support.” It’s a balance that each retailer has to discover to properly staff and be as efficient as possible for the company and effective as possible for the customer.
All the data and technology will continue to be thrown into physical retail just like every other industry. It will still require humans at the coalface to interpret and to leverage the data and insights. The same holds true within the customer service function of the store. The real issue is that not a single physical retail worker is trained or developed at the level needed to be able to do so. Folks talk about “omnichannel” like it’s a destination, and that because you do BOPIS you’re somehow an “omnichannel” retailer. I think it’s a buzzword beyond measure.
Simple test? Is your phone system within your retail store integrated with your CRM and POS? You’re not an “omnichannel” retailer then. We are in a teething phase of physical retail as all of these separate channels are slowly becoming integrated, and therefore easier to manage within the store environment, but if the education element isn’t there it will continue to be a painful experience for many.
The biggest opportunities to drive customer service efficiencies start with an understanding of what shoppers need. Understanding how and when shoppers seek information, from who, and what they need should drive decisions on customer service and staffing. I’ve seen multiple studies from fashion, home improvement and even fresh meat show that store associates are not always initially sought for help — but when a question cannot be solved by other means associates must be available and knowledgeable.
Motivate, equip, and train employees is step one. Most stores fall flat on the basics, high turnover and low pay incentives to keep employees on board. Retailers like Walmart and Target have improved basic pay and retailers like Costco continue to pay a premium, earning low turnover rates for employees. Walmart uses their training academy to shuffle over 150,000 employees through multi-day training, plus incents employees with a $1 pay raise for participating in their Pathways training. Motivation is more than pay — but at this level, it starts there.
In the store, the tech being introduced is not all self-service, much of it is to remove redundant tasks — like stock counting and availability or reducing workload. A rep a few years back would be manually counting shoes on the shelves. Today, they walk through the aisles with a smartphone and count shelves faster and in the future a robot will walk through and count it even more accurately. The rep will be freed to work on enhancing the customer engagement — whether it’s offering up the right products through a tablet recommendation device, providing a human “hello, thanks for shopping here” at the door, or being creative with in-store displays.
The first opportunity to improve will be in knowing the customer and analytics in all their stores (online and off). Employees can then be routed, trained in customer engagement or refocused to be sales focused and brand ambassadors.