Doing More with More in the Retail Industry
By K.C. Blonski, Senior Director, Travel, Leisure, & Retail Markets, AchieveGlobal
The current recession has brought about many changes in the American retail landscape—including fewer new store openings, slower customer traffic, and greater migration to online shopping. Experiences within stores have evolved, as well; the average store has fewer employees on the floor, longer lines, and less merchandise. These shifts in experiences are clear signals that in the recession many retailers have outsourced the retail experience to their customers.
When brands begin to allow their customers to determine their own experience, retailers put their success and viability at risk, because customers can experience inconsistencies in engagement and perception of the retail brand. Some retailers have recognized that consumers are looking for value beyond product offerings and sale items; it’s those retailers that know the only true differentiation is their ability to meet and exceed customer expectations by completely owning the customer experience.
Owning the customer experience is a balance between operational excellence and customer engagement. It means every employee must understand his/her role in providing excellent customer service and assume the responsibility of ensuring that each customer interaction strengthens a positive perception of the brand. By owning the customer experience, retailers can drive increased sales and sustain customer loyalty in our current economic quagmire.
Less Is Not More
Since the dawn of the recession, many retailers have responded to weakened consumer spending by cutting their investments in training, payroll, and staff, while imploring remaining employees to do more with less. While this has helped many maintain profitable margins and competitive prices, it has done little in the way of increasing customer loyalty, frequency, or engagement.
Gone are the days of front-line associates being perceived as “throw-away” employees. Those closest to customers are critical to preserve brand differentiation. Research from the Peppers and Rogers Group found that 81 percent of companies with strong capabilities and competencies for delivering customer experience excellence are outperforming their competition. While the idea of doing more with more isn’t new, as economic challenges continue to persist, it is beginning to seem like a smarter strategy for many retailers.
Increasing staff is one way retailers can help ensure they have the resources to better own the customer experience. However, even without staff increases, investing in employee development and training, and offering more attractive salaries (when possible) can lead to immense gains in customer satisfaction and loyalty. For example, brands such as Costco, Trader Joe’s, and QuikTrip are carrying much higher labor costs than their competitors while producing greater profits and more sales per employee and square foot. Many of these brands invest immensely in training. Even part-time employees at QuikTrip receive 40 hours of training.
It’s not just gas stations and supermarkets that are taking advantage of more and better-trained feet on the ground. One luxury retail chain enjoyed increases in its six-month sales comparables and a 30 percent increase in sales from returned merchandise. Sales converted from the return of items are particularly exciting as it shows how an engaged and properly trained staff can increase sales and service by better helping consumers navigate product options. These gains were achieved by investing in leadership development for regional and store managers and customer engagement training for front-line staff.
The Human Connection
Customers today have more choices and challenges than ever. They continue to ride the roller coaster of economic anxiety, unsure of when it will be safe to return to pre-recession spending levels. They have more choices in merchandise and can shop when and where they want online, decreasing the need to ever enter a store. Most importantly, customers demand value to open up their wallets. One way retailers can illustrate their value beyond merchandise and cost is to offer shoppers something they can’t get online—the in-person human connection.
Reminding customers and employees of the value of the human connection is a proven way to differentiate brick-and-mortar stores from their online counterparts, as well as various competitor brands. Being able to discuss the differences in products with a knowledgeable sales associate or receive guidance finding merchandise is no longer an expected service of retailers, but a valuable differentiator and touch point. Retailers can only capitalize and promote the value of the human connection, however, if they have appropriate staff levels and have provided their sales forces with the training necessary for success.
The case for loosening corporate purse strings and reinvesting in employees is strong. Research from global training provider AchieveGlobal found that truly owning the customer experience produced numerous tangible results, including increased revenue per square foot; increases in customer satisfaction scores; and with one customer, a 12.5 percent increase in average dollar sales. The necessity for investing and growing staff is further echoed in a recent study published by the Wharton School, which found that every dollar in additional payroll led to between $4 and $28 in new sales.
In times of uncertainty, sometimes the counterintuitive becomes the standard. When the recession hit, some retailers disregarded past lessons learned around the importance of customer engagement and cut staff in hopes of leveraging reduced prices to keep customers. With the recession dragging on, it’s time for retailers rethink their approach and consider shifting positions. While contrary to current recessionary strategies, enhancing employee investment practices, such as increasing education and staffing, will be the hallmark of companies that not only survived our economic uncertainty, but also thrived in it.
K.C. Blonski is the senior director of travel, leisure, & retail markets for AchieveGlobal (http://www.achieveglobal.com), which helps retailers strategically own their customers’ experience to drive results.