Retail TouchPoints: 3 Key Tenets for Retailers to Win the Customer Race
By John Gaffney
Through
a special arrangement, presented here for discussion is an excerpt of a
current article from the Retail TouchPoints website.
As chairman and president
of automated feedback solution provider Mindshare, Rich Hanks simply wanted
to publish a book that contained usable information for executives struggling
with the practical applications of customer service and how that service
hits or misses with customers.
Now that
"Delivering and Measuring Customer Service" has hit its second
printing, and counts Stephen Covey, Harvard’s Clayton Christensen and CarMax
chairman Bill Tiefel among its fans, the former
EVP at Marriott is applying his simple approach to a complex set of economic
conditions.
"Sometimes we want
to do the coolest stuff or try the latest marketing fad, but maybe we need
to stay with the basics right now," he said.
For retailers, he comes
back to three main customer strategy tenets that he firmly believes will
provide the best chance to compete and win.
The first is customer
retention. Regardless of the numbers consulting companies will apply to
this concept, such as Mr. McKinsey’s famous "customer acquisition
is ten times more expensive than retention," Mr. Hanks believes the
overarching importance of this argument involves loyalty. Even in the current
retail environment in which customers have most likely shopped outside
of their patterns to hit discounts, he stresses retention above all.
"Do everything in
your power to keep current customers," he said. "If retailers
are looking at spending money on TV for example to get new customers, I
would say you need to revisit that spending. Don’t be extreme about it,
but unless you’re a brand new company, that customers you have are going
to generate the stories and recommendations that become your best acquisition
tool."
His second principle
is the imperative of delivering customer service and measuring its effects.
Unless a retailer is at the low end of pricing (Walmart) it’s the only way to win. Surprisingly, Mr. Hanks
recommends a mix of qualitative and quantitative information to measure
customer satisfaction. The automated part of that data equation must be
accessible to everyone in the company, he said. The qualitative part can
be delivered by empathetic executives.
"At Marriott every
new hire worked in a hotel for two weeks," he said.
"Empathy means you have the ability to see something from the other
person’s perspective. It’s an essential skill."
Mr. Hanks’ third takeaway
is based on execution. Good strategy is fairly common when it comes to
customer service; good execution is not. The key is front line employees,
who make $10 per hour and are the face of your company, are the key to
that execution. "Hire friendly and teach the skills, as Bill Marriott
used to say," he said.
Discussion Questions:
What do you think of Rich Hank’s three tenets for customer service? Of
the three – customer retention, measuring customer satisfaction and front-line
execution – which is most important during tougher economic times? If
different, which is most underemphasized?
Of the three tenets–retention, satisfaction and execution–I would start with execution and use it as the foundation for the rest. Without good execution of the store experience (efficient checkout, friendly associates, competent replenishment), it’s impossible to achieve a satisfying shopping experience. And without the shopper leaving the store satisfied, it’s difficult to deliver the kind of commitment among your best customers that leads to loyalty and retention. McDonald’s well-documented turnaround in the past several years was driven by a focus on execution (and an outreach to new customers), more than a focus on satisfaction “metrics” or retention.
These are valid tenets regardless of good times or bad. It’s too easy to get sloppy about good execution (and the satisfaction and retention that follow suit) when the overall economy is growing, but at some point retailers who fail to execute are going to lose market share regardless of the economic climate. If the current downturn has any benefit, it focuses the minds of the “survivors” on better execution rather than growth for its own sake.
While there is no question about the importance of customer service and execution, if you don’t retain your customers, those capabilities are irrelevant. The business case for investing in existing customers, even at the expense of acquisition, has long been proven out. Yet as Mr. Hanks points out, many companies continue to over-invest in mass media and under-invest in customers.
The three tenets though are fully linked. Customer retention and loyalty only exist where companies provide at least adequate customer service and execute a sound plan. Just like advertising, customer retention strategies don’t work if it’s a bad product or service.
I agree with all three, but one point stood out in the article to me: make quantitative customer satisfaction data available to everyone in the company. It amazes me how little that information gets used beyond the “customer sat” group, which more often than not is reporting on a trend over time for the store manager’s bonus.
Promotions is an area that is a perfect example. Who owns promotions at a retailer? Merchandising negotiates them, operations executes them, and marketing communicates them. Considering how critically important it is for retailers to get promotions right (you’re giving away margin in order to get customers in the door), I am simply amazed at how bad this process is for the average retailer. Now layer on customer satisfaction data. Has a retailer ever asked a consumer if they LIKED the offer they received? If they wanted more offers like the ones they got? That’s the true missing piece–not redemption–that can tell a retailer if they’re delighting their customers or not.
The tenets are deceptively simple, deceptively “common sense.” But awfully hard to execute well.
Customer service is important all the time, not just in economic downturns. Showing customers respect and solving their problems is never out of style. The key is teaching the company’s core story to frontline personnel. Management must do this and then back up its words with its own “customer service” to those employees.
Mr. Hank’s points are all correct (who could argue with such an ‘apple pie’ argument?). Of the three, it’s the third (execution) that seems to be the area of greatest opportunity for retailers.
It’s rare to find a retailer that doesn’t understand the first two tenents, but it’s also equally rare to find one that can execute on the service promise. Go shopping in your local mall today and just watch the ‘service’ you’ll get.
This solution is all about MORE: More time spent on hiring, More time spent training, More time spent coaching.
I think it’s a sad state of affairs if business executives need to read a book like this. This should be basic business 101 stuff. If top-level execs don’t know this stuff, they shouldn’t be in the positions they’re in.
Just one more reason accountants make lousy CEO’s. All companies should be run by marketing and sales people, for only they truly understand the importance of building client relationships.
Front-line execution is the most critical of these 3 key points because you MUST execute in order to retain your current customers/clients. While measurement can tell you whether or not you are executing the front-line training and monitoring will deliver good numbers when you do measure.
When you do a good job of execution, new business can come from many sources including your current satisfied customers.
I would think front-line execution is the most critical because without it, all other measurements would suffer. So we need to fix that before we look at any other aspect of our business.
Who on RW could argue with these three? Execution, follow through, whatever you call it, is key. Best intentions produce nothing.
A company called RightNow has a self-assessment form that retailers can use to see how well they communicate with customers across channels. It’s fascinating to see how low most retailers score themselves on the assessment. This is the area that retailers will need to concentrate upon, because as one CIO recently noted, “if you don’t have a customer culture, you’re already dead.”
Companies with the best employees and managers win.
To have the best you must attract, hire, and retain the best.
The question about which is most important should not even need to be asked. If you want to retain your present customers and deliver great customer service you are going to need a great front-line employee.
It will be interesting to see if most retailers ever wake up and realize they get what they deserve and what they pay for.
Most retailers will not pay for a front-line that is motivated and professional. Even if they were willing to do so they are not willing to pay for managers who are able to manage a quality workforce.
Of the three, execution is the most important and the hardest to accomplish. Terrific service strategies, the latest and greatest CRM software implementations, and quantitative analysis are conjured up at home offices around the retail world all the time. The biggest challenge is consistent implementation and execution across the brand. The stores in the backyard of the home office are usually where you find the best execution of the model because there is greater visibility.
Retail winners realize that the successful implementation of any initiative depends solely on the buy in from the field with field leadership leading the way. Often multiple initiatives are implemented too fast and furious which results in field leadership and associate fatigue. This fatigue leads to poor implementation and follow through of even the best strategies because they are constantly wondering “Ok, so what’s next?”
I stand with Nikki on this one. What get measured gets managed. Tracking customer satisfaction and intent is a crucial activity. Making the results known across the length and breadth of the organization is fundamental to front-line performance and customer retention.
Yes Kevin, Hanks’ arguments are “apple pie” and unfortunately a bit generic for my taste. It’s not the emphasis on customer retention that’s non-obvious, it’s the HOW. It’s not the emphasis on front-line execution that’s non-obvious, it’s the HOW.
In my writings on customer service I consistently return to the mantra, “It’s The Practice!” Setting abstract goals is fine for executives isolated in their corner offices, but success comes from a combination of enablement and measurement.
Meeting customer expectations of customer service. Customer expectations are different with each class of retailers. Target does a great of running clean, well-merchandised stores that are easy to navigate and are in-stock with very good customer throughput at the point of sale. Nordstrom on the other hand is legendary for sales associates going the extra mile for the customer.
Nordstrom is great at meeting the one on one customer service expectation compared to like retailers. Target understands the one on man strategy through design, merchandising, and point of sale.
Just as a point of reference, Lowe’s is one store that struggles with the one-on-many concept of customer service as well as customer throughput at the point of sale. You are never going to find help in the plumbing department and you can count on a lengthy checkout line.
I am curious as to what expectation Lowe’s operate under as it pertains to the discussion….
Its all about execution. Why? Because nowadays, it is all about word-of-mouth. Primary target for retail MARCOM? The Associate who is the front-line brand steward. Sure it’s not easy to change the paradigm. But, Retail ain’t for sissies!
Nikki Baird hits the nail right on the head–you can’t improve what you can’t measure, and many retailers are sorely lacking in the analytics and measurement arena. Whether you want to focus on retention, satisfaction, or execution, you will be driving blind if you don’t have clear, consistent, and *accessible* measures of your company’s performance in those areas. And the importance of accessibility can’t be over-stated: many a company has been seduced by the siren song of analytics only to find the reports under-used by management and the tools relegated to a few specialists in IT.
There are several significant obstacles for most retailers to achieving widespread adoption of analytics throughout the enterprise. For one, the tools available today are still expensive and require the “care and feeding” of a technical team. IT groups are already stretched thin, so embarking on a large-scale data warehousing integration project is not an appealing prospect.
I think the future of analytics is clear: smarter, simpler tools delivered using the Software-as-a-Service model will give everyone in the retailer visibility into their operations–right from their web browser–without an associated burden on IT. Once that foundation is laid, chains can embark on the any or all of the 3 retail tenets using real data, not guesswork.
To a large degree, these three tenets could be called the three “duhs” of retailing. Especially the execution tenet. C’mon.
The biggest piece of the puzzle to turning a company into a customer service organization is hiring. You must hire people that love your product and actually love talking to and dealing with people. Southwest Airlines puts it best with their “hire for attitude, train for skill” slogan. Right! And look at their people/service compared to any other airline.
Starbucks is another great example of solid hiring practices–in any actual Starbucks store (not the ones run by other companies, like the Host-run units in airports) you’re likely to find a crew that has fun addressing people and just plain glad to be there.
So, let’s start at the beginning and get the right people in the right place. You’ll have to worry a lot less about the three “duhs” if you do that.
All three tenets are logical, rational and quite familiar to anyone who is truly focused on customer service. Nothing new here. But the ‘measuring’ part, that’s the challenge. I see so few companies have a way to understand how well they are doing in the minds of the customer. Customers don’t always want to tell you what they really think. In Asia, research says here customers don’t want to be recorded saying something bad about a company–what research should you believe?
Anyway, I’ve not read this book but I am interested to learn if the measure quotient of his suggestions really work. If so, than all companies should use a version of that program and regularly track it, just as we do every other retail dashboard gauge.
Rich Hanks’ suggestions for three main customer strategy tenets provides a useful general goal, but leaves much unsaid.
Customer retention, Rich’s first tenet, is much misused in today’s customer service industry. A rash of books and articles in the ‘90s all claimed that retaining customers is more efficient than winning over new ones. But, in the intervening years a lot of contradictory evidence has been collected proving that customer retention isn’t always the ideal solution. It turns out the maxim is far too oversimplified to be a universally actionable goal. It boils down to what kinds of customers do you want? And, how many of these target customers does a business currently have?
Further, Rich seems to predicate much of his reliance on retention to the word of mouth loyal, satisfied customers will generate for a business. This reliance may be overdone as well. In many industries and in many situations customers just don’t bolster good companies that much. But, don’t tick them off, because customers are motivated and devastating when dispensing negative word of mouth!
Rich’s second tenet, deliver excellent service and monitor its impact is another platitude. There are just far too many pundits advocating superiority in all phases of a service business with little or no know of the impact of any of the service components. It does a business no good to excel in serving customers on an aspect of a service that has absolutely no perceived value for them. The tenet works much better in reverse, study the impact of many of the elements of your service before improving any of them. Once you know which are the key drivers of your service experience, then focus on those. This is where customer experience audits can play a contributing role. By experiencing the service as a customer, the business executive can more appropriately direct campaigns for excellence.
Rich’s third tenet is an admonition to service providers to not only get the strategy in customer service right, but to excel in the execution as well. It’s here, as Rich suggests, that most businesses fail. They fail because the frontline people are wrong hires, who are poorly trained, inadequately prepared and equipped (to do the things management expects them to do), incompletely motivated and often not supported for performing the tasks they are charged to uphold. If there’s any aspect of the service encounter that really deserves attention, it’s the frontline.
I would like to add that in today’s state of affairs, it is not only the customers who should matter, but the employee at the front lines is key to the execution of the optimal customer experience.
While companies are slashing their workforces, are they paying any attention to the types of workers that are being hired and fired? Employee engagement is directly related to positive customer experiences and to not capitalize on your best employees and ensure they have the tools to execute your brand promise will leave both employees and customers out in the cold.
The current customer race will be won by business that empowers their employees at all levels to go above and beyond to ensure that every point of contact with the brand leaves a positive impression on the customer.
It is difficult to distinguish between the importance of front-line execution, customer satisfaction and retention, since they all play a critical role in the key objective of improving the customer base for long-term business growth.
Customer retention is the output from successful front-line execution that leads to customer satisfaction. If customer facing staff is not motivated and empowered to improve the customer experience, it is unlikely that you will have customer satisfaction. If your customers are not satisfied, they will clearly not be retained.
So these three factors are clearly difficult to differentiate. Note though, that when we talk about customer satisfaction, we are truly talking about referenceability and willingness to repeat. Satisfaction is not a predictor of retention–customer delight on the dimensions that customers differentiate your brand IS the best retention predictor.
Focus your efforts on the front-line staff–that is where it all begins. Make sure that that staff has the capability to deliver astonishing customer experiences, especially to your best customers. Take care of those two things, be competitive on price, and customer retention will take care of itself.