How retailers are actually spending their customer service dollars
When companies describe themselves as having "excellent" customer service, the claim sounds user-centered but too often it's actually just a company-centered focus trying to position themselves as user-centered.
Those companies are generally concerned with efficiency and reducing costs first and foremost, and are just hoping to improve customer relations by osmosis, without actually doing the work to get there.
Questioning ROI on CX investments
Some retailers resist customer experience investments, believing they do not provide a significant return on investment.
However, Gartner reports that when it comes to making a purchase, 64% of people find customer experience more important than price.
Constantly trying to be the lowest-price provider of goods is futile: Competition is steep and low price is not an effective means of cultivating loyal customers, who are the foundation of success.
According to a Walker study, by 2020, customer experience will overtake price and product as the key brand differentiator.
Customers are loyal to a retailer because they believe they are getting a better experience, higher value and benefits than they would get from other brands.
In addition, a recent study from RetailNext found 57% of respondents said customer service is the only reason they go to a retail store.
Not selection, not price, but service.
Here are 4 pairs of categories in which retailers invest their customer service dollars. You decide which ones will actually create better customer experiences.
1: Self-service tools vs well-trained sales associates
Shoppers like that expect to find associates equipped with the information and training necessary to assist shoppers and close sales.
Too many retailers do not have that staff, so customers are frustrated and disappointed.
Today's shoppers want knowledgeable associates in the stores they frequent, as well as convenience. They also want to build a relationship with the retailer.
Retail management misreads customers’ disdain for associates as a desire for self-service.
But customers are happy to be served by well-trained, engaged salespeople. The frustration comes when the associate knows little about the product or has no enthusiasm.
Training goes a long way to fix that problem and helps build a sales team that is a contributing factor to customer loyalty.
2: Market saturation with new locations vs pop-up stores
While some brands focus investment toward market saturation via geographical expansion, others use pop-ups to build excitement about their brand.
Event-and experience-driven retail is becoming more popular, as department stores create pop-up locations or marketplaces in their stores and in hip shopping meccas.
Such temporary installations are smaller and more focused with their offerings and are replenished much more frequently, creating the impression of a “fresh” experience at every visit.
3: Promos to attract new shoppers vs rewarding repeat customers
Newvoicemedia.com reports that the top reason customers switch away from products and services is that they feel unappreciated.
Once customers have demonstrated their loyalty, it's important to reward them.
Too many retailers use incentives only to attract new customers. That, in effect, "ignores" loyal customers, leaving them frustrated and unappreciated.
4: Advertising costs vs experiences that drive WOM marketing
Nurturing existing customers and improving customer service can cost considerably less than launching advertising and marketing campaigns, but can have just as powerful an impact.
As Tony Hsieh, Founder and CEO of Zappos has said, “We take most of the money that we could have spent on paid advertising and instead put it back into the customer experience. Then we let the customers be our marketing.”
75% of Zappos' sales come from returning customers, and the company earns more than $2 billion in sales annually.
The Zappos's commitment to having happy customers and employees ends up being good for business.
Walking the customer service walk means more than just talking the talk.