Thursday, November 27, 2014

The importance of customer service for retailers

The importance of customer service for retailers

A unique shopping experience is becoming a significant factor of success for retailers, according to a “Future of Retail” study by Motorola Solutions. Customer service is extremely important in cultivating a good shopping experience. This can be done with better store employee support through real-time access to product information as well as a trend-setting development of IT systems to help retailers keep abreast of retail competition. Recognizing the need to deploy advanced techniques, retailers will increase technology spending on BI and analytics from 15.6% of IT budget in 2014 to 23.3% of IT budget in 2017, representing a 14% compounded annual growth rate*. With the help of video analytics solutions, retailers would be able to make good business decisions as well as allocate retail staffs wisely.

Better service leads to better sales
High levels of customer service can be costly, but good customer service is worth an investment because it keeps customers coming back and generates positive word-of-mouth which attracts new customers. In fact, sales increased by 25-50% when assisted by knowledgeable retail staff. Nearly 85% stated they would spend more, 84% would leave the store more satisfied and more than 93% of indecisive shoppers are likely to make a purchase.
With 70% of buying experiences based on how the shopper feels they are being treated, it would be wise for retailers to reduce unhappy customers. 86% of customers will not do shop again at a store they experienced dissatisfaction, however 70% would return if the complaint is resolved in the customer's favour. Dissatisfaction is most commonly due to poor customer service, with 40% of complains relating to it. Unhelpful or unfriendly retail staffs were stated as the primary cause of poor service followed by poor knowledge, outweighing other factors including poor fulfilment, lack of choice and inefficient returns processes.

Be quick in responding
Patience is a dying institution and let us be honest with ourselves, none of us enjoy waiting. In fact, 69% of shoppers define good customer service as receiving a quick resolution to a reported problem. Retail associates who will be dealing directly with customers should have adequate training and a certain level of authority to offer solutions right away. Be open-minded and understanding towards the situation and take an optimistic approach towards the problem by focusing on what can be done. For example, if a product is currently unavailable, instead of saying “I can't get you that product until next month”, rephrase it by saying “That product will be available next month. I can place the order for you now and make sure it is sent to you as soon as it reaches our warehouse”.
In certain occasions, retail associates with neither the authority nor the ability to resolve the problem would direct the problem to another associate with better product knowledge or the store manager. However, do address the problem and take it down before directing the customer to another associate. The information of the problem should then be related to the other employee. Avoid having the customer re-explain the problem over again to another retail associate as it is both an aggravating and frustrating experience. 72% of shoppers blame their frustrations with having to address an issue to multiple employees.
Respond properly to customers as failure to do so might negatively impact a business’ bottom line for years to come. There would be a decline in repeat sales with 75% of shoppers stating they will not return to the store for at least 2 years while 39% of shoppers will not return to the shop for an even longer period of time. This is especially so for B2B businesses as well as women and generation X shoppers.

Clear communication
As mentioned in our previous post, 91% of shoppers were likely to leave a store without buying if they are unable to find a product they wanted. Good customer service hinges on signage and verbal communication. Be alert to offer help to customers who are trying to find a specific product and place clear signage around your shop. It would be an irreversibly bad shopping experience if an in-store customer made an incorrect assumption. This experience would heighten if your store adopts a no-return policy for certain items. Be succinct in your marketing materials and in-store signage, with important terms and conditions written clearly. To add, ensure that all retail staff is aware of on-going store promotions, business adjustments or new policies. With clear communication, the shopping experience improves, minimizing the number of complaints and shoppers see transparency in your business transactions.

Many employers believe that one of the best ways to raise their profit margin is to cut labour costs especially during an economic downturn. However, having such a fatal view would lead to a vicious cycle. Underinvestment in workers can result in operational problems in stores. This lead to decrease in sales and low sales would cause companies to slash labour costs even further. Maintain staff levels and retain great employees by emphasising on training and cultivating a positive work environment. The cost on training, recruitment and employee-centric activities may be hefty, however, investing on employees make business sense with its great intangible and tangible return of investments.

*Source: EKN 3rd Annual Analytics in Retail Study, 2014