Customer Service

What Is Great Customer Service

By David Krug David Krug is the CEO & President of Bankovia. He's a lifelong expat who has lived in the Philippines, Mexico, Thailand, and Colombia. When he's not reading about cryptocurrencies, he's researching the latest personal finance software. 10 minute read

It’s a given that every business out there places a premium on satisfying its clients. However, few businesses actually comprehend the customer service model they advertise, let alone provide the level of support that is promised. 

In fact, a survey by American Express found that 78% of customers surveyed had abandoned a purchase due to bad service, and 60% of buyers would switch to a different brand or company if they were assured of receiving better service elsewhere.

Retailers can set themselves apart from the competition via their dedication to providing exceptional customer service in a market when all competitors provide identical product ranges, brands, and low pricing. 

The question then becomes why average or below-average customer service is the norm and what can be done about it by upper management.

The Retail Industry Today

Understanding Customer Service

Walmart, the largest company in the world, is at the head of a pack of large corporations known as category killers and mass discounters that control the retail industry. Constant rivalry and small profit margins make cost control an imperative need. 

As a result of Walmart and other successful businesses, two distinct customer service models have developed:

  1. Affordable costs and handy location. As consumers have shown a general preference for low pricing when they regard products to be the same or comparable, this model has become more prevalent. What’s the real difference between Kleenex, Puffs, and Kimberly-Clark facial tissues, anyway? Implementing this model successfully calls for meticulous cost-cutting efforts, careful monitoring of stock levels, and innovative store layouts that encourage customers to help themselves. The model is used by many large retailers, such as Walmart, Target, Walgreens, and the redesigned JCPenney locations.
  2. Customized attention to detail. The mom-and-pop shops that were common before the mid-20th century are sometimes held up as an analogy for this type of business. Even though they have fewer things available, they place a premium on the quality of the customer service they provide and the relationships they foster with their regulars. It may be necessary to provide some sort of pre-use training for these products because of the increased complexity and variety of functions they offer. The additional costs of keeping a consistent, well-educated staff are reflected in the price increases. Home Depot, Apple shops, Nordstrom, and Men’s Wearhouse are all excellent examples of this type of business structure.

Why Do Bad Customer Experiences Happen So Often?

Although technology and global sourcing have made all of this customer service approaches possible, they all still require a dedicated team of people to put into practice. A company’s technical prowess is less likely to be to blame when customer service falls short of expectations than the human element. 

Employees in the retail industry have been negatively affected by fewer jobs, less upward mobility, and lower salaries, while consumers have benefited from the greater selection at lower prices made possible by more efficient technology and sourcing from around the world. 

Therefore, morale is low and turnover is high. Despite this, these workers frequently operate as the first point of contact for customers.

In 2010, 14.6 million Americans were employed in the retail sector, making it one of the major industries in the country. But in 1999, the U.S. Bureau of Labor Statistics reported that the industry employed about 23 million people. 

The previous 30 years have also seen a dramatic decline in earnings, and part-time work has replaced full-time as the norm in the retail industry. The result is that people with varying levels of education, experience, and desperation are flocking to retail as a last resort.

Managers are faced with a growing population of under-educated employees who have little loyalty to their current employers and whose low morale is exacerbated by working in an industry that many see as a dead end. 

Many employees also lack the rudimentary English language and literacy abilities necessary to carry out all of their job responsibilities due to limited English proficiency (LEP).

In most retail establishments, managers must constantly adapt to a new team of workers, as annual turnover rates of 200% to 300% drain the resources of human resources and training departments. 

According to some analysts, the retail industry and other service sectors will be dominated by a new breed of migrant service workers who go from one retail job to the next without acquiring any new competencies and seeing minimal salary increases.

Tips for Boosting Customer Service

Depending on which of the two customer service models is desired, different measures will be made by management to enhance the customer experience. 

And these factors will influence our final decision:

  • Prospective Client Profiles. PricewaterhouseCoopers predicts an increasing gap between the haves and have-nots in terms of wealth, education, and technological literacy in their Retailing 2015; New Frontiers report for the following decade. While the richest 10% of households will take in a larger and larger percentage of the nation’s income, the younger generation will become more tech-savvy, accustomed to self-service, and less interested in personal connections. A savvy store owner will analyze these and other demographics to determine which customer base to focus on for maximum profit, and then design her store’s products and services accordingly.
  • Accessible Tools and Equipment. The just-in-time connecting of all aspects of the production chain, the elimination of arduous, error-prone counting of products in stock, and the improvement of graphics, automatic scanning, and change-calculating registers are all examples of how technology has influenced the retail industry. In a few years, a centralized computer will control all of a corporation’s price tags and signs, allowing for instantaneous updates to all locations across a territory or company. However, there is a hefty outlay of capital when first implementing or updating technology, with returns accruing over a long period of time. Extreme reliance on technology is crucial to winning in today’s ultra-convenient, ultra-low-cost market.
  • Funds at One’s Disposal. Access to cash is often a determining factor in a company’s ability to modify its profile, whether that be by sourcing from new international suppliers, expanding the company’s product offerings, revamping its retail outlets, or implementing new technological solutions. Companies that are significantly larger than their rivals typically have access to a wider range of funding options. Obtaining the size required to make use of contemporary technology and save money through bulk purchases is challenging without a considerable capital outlay.
  • Vision, Mission, and Objectives of the Business. One of the most important factors in a store’s success is the level of competition in the area. The local retail economy in many small towns has been devastated by Walmart’s aggressive market share grab. Businesses that aim to compete with Walmart but lack the resources available to the behemoth retailer have historically failed. However, in a market large enough to accommodate several providers, there are some extremely successful businesses that are comfortable with a position as number two or three, where they can still compete on the basis of low prices and advanced technology. Others in the industry would rather offer a high touch, high level of human contact service in order to attract a smaller but more lucrative customer base.
  • Competing on the basis of excellent service can be achieved in two very different ways, each of which has significant practical and managerial implications. Too many managers’ detriment, customer service models are lumped together and their employees receive a diluted and ineffective set of metrics as a result. A focused and disciplined strategy that permeates the entire business is necessary for understanding what the targeted client wants, whether that be a low price or customization, convenience, or relationship, and delivering his or her objectives.

Model 1: Reasonably priced and practical

Frontline workers have little to no say in day-to-day operations under this approach, which places all authority with upper management. Employees should be provided with clear policies and processes, as well as measurable and easily monitored performance metrics.

Physical layout, signage, and well-known brands are relied on more than store staff to help customers find what they’re looking for. If interacting with customers is crucial, you can typically find a team of highly trained specialists working on the market floor. 

Employees in this category typically receive greater pay and have opportunities for promotion within the company. They need to be able to work well with others, be adaptable, and solve problems effectively, all of which become increasingly important as they rise up the ranks.

However, most workers are involved in back-office activities such as inventory receiving, stocking, counting, and replacement rather than interacting directly with clients, therefore turnover is high. 

In spite of their critical importance, the tasks of recruiting and hiring are relatively low-skilled, call for minimal training, and can be picked up quickly on the job. As a result of the low job satisfaction that would result from the absence of progression opportunities, many prosperous businesses instead use temporary or seasonal staff.

Those who value efficiency and economy should do the following:

  • Make it simple for customers to find the goods they’re looking for by using a combination of overhead, aisle, section, and shelf signs to demarcate distinct product categories. The focus is on self-service, with speedy checkouts and few lines as perks.
  • Stick to well-known names in both product and packaging and those for which installation and use can be completed with minimal assistance from sales staff. Use price tags and/or descriptive signs to set apart products that seem to be identical in function and appearance.
  • Promote your online store and social media pages as much as possible to attract customers who would otherwise never hear of you and who would never set foot in your physical location. To increase traffic, you should offer specials and discounts on your website that are on par with, if not better than, those offered in-store.
  • Employee efforts should be concentrated on the product of the following area receiving, product placement and replacement, floor inventory monitoring to reduce outs, price adjustments, and defective product returns to ensure maximum vendor recovery.
  • Incorporate quantifiable performance metrics into employee evaluations and dismiss underachievers.
  • Keep on the lookout for new personnel, as turnover is higher than usual. New entrants to the workforce or retirees who are still physically able to do the job’s essential functions will likely stay longer than more seasoned workers who are on the lookout for more meaningful employment opportunities.

Model 2: Personalized, Extensive Service

Customer service in this environment is more likely defined by the quality of the interaction between employee and customer than by the speed or expense of the purchase transaction. 

While inventory management remains important, the number and diversity of products in personal service, high-touch stores is usually less than found in a mass retail, self-serve environment.

Employees are trained to fully understand the capabilities and limitations of each product, provide instructions or explanations for their use, and promote sales by providing answers since customers are less likely to a have predetermined product in mind as is usually found in a self-serve milieu. 

In other words, their visit to the store is prompted by a need for a yet-to-be-discovered solution.

Store employees in this service model usually have specialized training, a degree of autonomy, and positive attitudes, as they likely earn above-average wages and are likely full-time with benefits. 

Few of these characteristics are found in mass discounters. At the same time, employees are often required to meet higher sales goals while continuing to perform inventory and pricing tasks. 

If you have elected to provide high in-depth service in a high-touch environment, you should:

  • Plan your store layout so that people will feel comfortable exploring and buying related items. The layout and furnishings are meant to entice customers to stay for longer, rather than to maximize productivity like a discount store would.
  • Organizations like IKEA and H-E-Central B’s Market division do a great job of guiding customers through their stores and exposing them to a wide variety of products.
  • Products that are more difficult to produce, more expensive, or more widely sought after should have dedicated specialists employed to facilitate conversation between the company and prospective buyers. Employees are expected to provide continual product demos in an effort to draw in potential customers.
  • Create a Preferred Buyers Club and email list of clients you want to contact about upcoming events, promotions, and specials. In order to foster a long-term relationship with the business, salespeople should be pushed to cultivate their own group of special customers. Price reductions for repeat customers or subsequent visits to the store are one type of promotion. A consumer who spends $100 might get a voucher for $10.00 off their next purchase, rather than at the moment of checkout.
  • This method will result in repeat business and a stronger connection to your brand.
    Store salespeople should be required to do as little physical work as possible so that they can devote their full attention to increasing the store’s overall sales volume.
  • Choose a staff that exemplifies the image you want your store to project to your target audience. If middle-aged and above make up the bulk of your clientele, it seems to reason that your sales force should mirror that age range. You should implement rigorous recruitment, evaluation, and hiring procedures to hire the most qualified people available and invest in their training if your typical consumer is a tech-geek wanting the latest and greatest technological innovation. 

Each person is worth more to the company the longer they are employed there, thus it’s in everyone’s best interest to keep them there as long as possible. When possible, promote from within the organization to increase employee buy-in to your ideas. 

To get the most out of your staff, you should put in the same amount of time and attention to cultivating connections with them as you do with your customers.

Bottom Line

The point of doing business and the final source of income for everyone involved in the production chain is retailing or the sale of things to customers. This is both the crowning achievement and the national disgrace of American industry. 

Products of diverse shapes and sizes are manufactured all over the world and are enjoyed by consumers everywhere because of their accessibility and low cost. However, the pressure to reduce expenses and increase productivity has led to depressingly bad circumstances for most people working in retail.

It is hoped that the mundane, repetitive chores typical of a retail worker under the Walmart style of customer service would be automated away in the near future. 

If this happens, the retail industry will once again become the standard by which American companies are measured, providing Nordstrom’s employees with the kind of long-term jobs and job satisfaction they currently only dream of.

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