Being customer centric is about having an underlying commitment to placing the customer’s interest at the centre of every business decision. This requires a consideration of the most appropriate sales and service strategies to fulfil on that commitment. Retailers, both large and small benefit from paying close attention to how they develop and put in place their strategies as in modern retail, the success of their business may depend on it.
To learn how to steer your success as a team leader, the ARA Retail Institute runs multiple workshops on leadership and team culture. Join the ARA Retail Institute in their latest workshop on conducting post-trade analyses.
Ensure customer requirements are met
How do we as retailers know when our customer’s requirements are met?
Do we wait for complaints and assume if we don’t receive any that our customers are satisfied? Do we ask our staff to listen in on customer conversation as they wander around our stores? Do we assume if a product has a poor sell through that customers didn’t like it?
It is important that we both measure performance via internal targets and understand the factors our customers use to measure our performance. Together they can give retailers a balanced view of whether customer requirements are met.
Internal measures of sales and service performance
Modern retailers can generate a report for almost anything with current technology. When deciding which reports to focus upon it is important to understand what each report is designed to measure and whether that measure is relevant to what you are trying to learn.
Total sales on their own have limited use but are an essential element in measuring store performance. Measures that can shed light on sales and service performance include:
- Sales – average sales / sales per transaction (SPT), units per transaction (UPT) both per store and staff
- Stock – stock turn, stock on hand, gross margin return
- Space – sales / profit per square metre
- Staff – revenue per hour / person
- Conversion rate – percentage of customers that purchase on the day
- Repeat business – percentage of customers who have purchased before
- Number of complaints – total, and as a percentage of total transactions
Remember that in this situation we are focusing upon understanding whether customer requirements are met. The reports above highlight service efficiency and sales expertise, allowing for comparison from staff member to staff member, store to store, and day to day.
There are many more extensive reports that give further insight into the profitability of a store, the cost of merchandise, markdowns, overheads etc. It is important to also be aware of the value those reports and do additional research to understand them better if required for your role.
How customers measure service
Retailers largely use quantitative measure to report on sales and service performance. They may use qualitative measures to observe and report on the expertise of staff with sales and service, yet this is generally data most useful to HR and learning and development teams to measure the success of induction and training initiatives.
When customers measure the performance of a retailer, brand or store on their sales and service a different set of rules apply. Each customer is different and they may have differing expectations of different retailers yet there are several consistencies in how they decide whether a retail experience was to their liking or not.
Ambience: store and sales staff appearance, merchandise display
Courtesy: warm welcome, friendliness of staff, respect and interest shown to customers
Recognition: recognising regular customers, providing individual attention
Competence: knowledgeable, informative, skilled staff, able and willing to answer customer questions
Credibility: trustworthiness of sales staff, return policy, guarantees, warranties, honouring commitments
Access: efficient transactions, convenient opening hours and location, manager available to resolve issues
Security: safety on store premises, protection of personal information, confidentiality of communications
Responsiveness: prompt service, returning calls in a timely fashion, following up as promised
Reliability: billing and transaction accuracy, performing service at agreed time
Interestingly customers are also often looking for consistency in their experience. They will benchmark a visit to a store with the last time they visited or a time they visited another of your stores, or a comparable competitor store. They may also compare it with an imaginary standard they have created for a ‘store like that’. More commonly nowadays, customers will have complex expectations of their first experience from the ways in which they have interacted and connected with your brand before ever setting foot inside a store. Word of mouth impressions from friends, impressions from marketing and advertising and visits to your website, even seeing your products in use on other people.
This is why brand and service alignment are so important to success in modern retail.
Seek customer feedback to improve service
Customers can be a source of valuable feedback on service. As discussed all customer have expectations consciously or otherwise and make judgements on whether their experience in your store or with your brand met their expectations and more importantly satisfied their needs and wants.
Feedback may come in the form of a compliment or a complaint but it is essential that retailers and their teams take the view that all feedback is an opportunity and a gift.
Obtaining and acting appropriately on feedback from customers can lead to improved customer satisfaction in the future and business increased profitability – two goals worth pursuing.
How feedback is gathered varies from retailer to retailer and is often determined by internal policy.
Methods commonly used in retail include:
- Surveys- face to face, telephone, mail, online
- Mystery shopping
- Customer suggestions schemes and comment cards
- Focus groups
- 1800 customer feedback lines
Regardless of the method chosen, customer feedback is undeniably an essential piece of management information. For the retail industry in particular, it can be a remarkably cheap source of market research that retailers are beginning to take advantage of. Acquiring customer feedback can highlight gaps in a store’s ability to satisfy customer requirements. Gaps of particular relevance to business viability include:
- What a business thinks a customer wants and what the customer actually wants
- What the business thinks a customer has bought and what a customer perceives has been received
- The service quality the business believes it is delivering and what the customer perceives is being provided
- Customers’ expectations of service quality and actual performance
- Marketing promises and actual delivery
Every effort must be made to prioritise areas of concern and bridge these gaps by reviewing to business practices and sales and service strategies to refine and streamline them for customer satisfaction.
Selecting a service approach
Customisation and standardisation are two approaches retailers use to develop a sustainable service advantage.
Successful implementation of the customised approach relies on the performance of sales assistants and service providers, while the standardisation approach relies more on policy, procedures, and store design and layout.
The customisation approach requires service staff to tailor their service to adapt to the differing needs of each customer and typically results in customers receiving superior service. The customisation approach is also more costly as it requires both a greater staff to customer ratio and more extensive staff training and development. Certain retail markets demand and expect customised service due to the high level of specialisation, quality and price of their products i.e. luxury cars, fine jewellers, some technology.
The standardisation approach is based on sales staff following a set of guidelines and in some cases concrete rules when providing service. Through the strict enforcement of these procedures, inconsistencies in service are minimised. This can be highly beneficial in the case of a global fast food chain like McDonalds where customers are looking for affordability, convenience, speed and consistency.
Store design and layout also play an important role in the standardisation approach. In many situations customers don’t need the services sales assistants provide. They know what they want to buy, and their objective is to find it in the store and purchase it quickly. In these situations the way in which retailers offer service is by providing a store layout and signage that enables customers to locate merchandise easily, by having relevant information in displays and by minimising the time required to make a purchase.
About ARA Retail Institute
ARA Retail Institute is Australia’s leading retail training provider for both accredited and non-accredited learning programs. For more information, please visit: www.retailinstitute.org.au