Top 5 trends in retail for improving Customer Service and Advocacy Management
Posted on Friday, February 10th, 2012
As retailers navigate the “new normal,” they need to embrace technology to create emotional moments among shoppers and foster a culture of customer service.
The recent economic downturn has created a new “normal” for retailers, one that is changing the game when it comes to delivering superior customer service. Today’s shoppers are more cautious than ever when parting with their discretionary income, and in many cases, have even less to spend. Yet, they still expect a superior shopping experience — a challenge for many retailers as they struggle to maintain service levels with smaller workforces.
Savvy retailers are taking this opportunity to pick up the pieces and create “memorable moments” inside the store that not only elicit a positive customer service perception, but also drive loyalty in a volatile marketplace.
Ask retailers about their priorities and they agree: They want to increase the number of customer visits, grow basket size and create brand advocates. Between a slowly recovering economy and heightening competition from traditional challengers and new entrants, retailers are navigating the retailing landscape’s “new normal.”
Current economic conditions continue to take a toll on consumer confidence, with many shoppers still pulling back on purchases — and shopping trips. It is no wonder shoppers are not splurging, as only 22% of consumers were confident about the prospect of a strong economy in October 2011, a drop from the previous month’s 22.7% consensus, according to “The BIGInsight Consumer Intentions & Actions Survey.” Worse, this is a significant drop compared to October 2010 (28.5%) and October 2009 (30.4%).
In kind, lower foot traffic is forcing retailers to cut back on labor to reduce operating costs and protect their bottom line. However, these decisions are beginning to negatively impact the customer experience.
Shoppers are clearly more cautious about their spending, but when they do visit a store, they expect excellent service and an overall positive experience. They may not have as much discretionary income to spend, but they have not reduced their expectations.
While retailers are in the hot seat to step up their game, unfortunately too many are not responding to this demand. In fact, 58% of consumers across North America report that customer service is declining, according to research from Empathica. “Their senses are heightened, and they are only willing to shop at retailers that can provide a valuable, memorable experience,” said Bruce Warren, Vice President of Marketing for Empathica. “When they do have money to spend, they are not willing to compromise [on service].”
Another factor that is intensifying consumers’ scrutiny of customer service is their “constant connectedness.” Shoppers use their desktops, laptops and even mobile consumer devices while in-store to educate themselves before making a purchase by accessing online customer reviews and recommendations. In fact, several smartphone apps enable users to scan barcodes and compare prices for an exact same SKU. Armed with their findings, consumers expect retailers to deliver excellent service — as well as competitive prices. And they mean business. Shoppers won’t hesitate to put retailers’ reputations on the line as they use social media to share the good, bad and ugly brand experiences with their peers, all with the click of a button.
“The voice of the customer has never been more readily available, and consumers are increasingly turning to peer recommendations as a key part of the purchase process,” said Chris Cunnane, Research Analyst, Retail and Hospitality, Aberdeen Group. “Connecting with influential consumers is incredibly important as retailers seek to keep their customers engaged and the brand top-of-mind.”
With more information at their fingertips, it is no wonder consumers are shifting loyalty away from specific brands and toward an overall better shopping experience. In fact, 65% of retailers planned to emphasize customer service and the customer experience as anchor points in their 2011 business strategies, according to the 2011 National Retail Federation (NRF) “Retail Horizons” report. But what is the best way to create this experience?
With value and service as prerequisites, consumers are expanding the range of retailers they are defecting to. The top choices are those companies that have a niche that keeps them “counter-recessive.”
A break-out of counter-recessive retailers include:
- Discounters. This segment has become the retailer-of-choice during economic uncertainty, not only among frugal shoppers, but also among consumers who continue to protect their discretionary income by “trading down.”
- Cross-category Retailers. Retailers in this category are making a name for themselves due to their ability to seamlessly combine staple commodities with affordable luxuries. Many drugstore chains, for example, fit the bill. The strategy helps retailers maintain a balance of loyal shoppers in good times and bad.
- Value-centric Chains. These companies are upping the ante on in-store experiences, and are successfully highlighting value over price. For example, Bath and Body Works allows shoppers to “escape” as they wander the store, and pamper themselves with inexpensive luxuries.
Since not every retailer comfortably fits into these categories, and price alone will not win over the shopper, the vast majority of retailers are being forced to step up their level of service to stay in the game. The best way to do this is to add customer touch points that can create “memorable moments.”
Doing more with less is the new mantra in the current economic environment.
With a 30- to 60-second window to make a sale, you need to maximize an emotional connection to the brand, not the price. This requires retailers to serve smarter and build a memorable, positive experience.
Savvy retailers are using technology to further exploit the talents of their workforce, build an emotional connection to shoppers and tip loyalty in their favor. By integrating the following five best practices, retailers are paving the way to establishing emotional connections between shoppers and their brands.
- Leveraging Social Media to Drive Brand Advocacy
- Delivering Better Customer Service with Mobile Tools
- Collecting Customer Feedback and Shopping Data
- Labor Management/Employee Engagement
- Cross-Channel Opportunities
To read full details on the above top 5 trends, download Retail TouchPoints’ whitepaper “Top 5 Trends in Retail for Improving Customer Service and Advocacy Management”.
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