June saw another Customer Engagement Network Directors’ Forum event in London take place, this month it focused on customer engagement in the retail sector. The sector, as we can see both on our high street and online, is in a state of considerable change. The squeeze on consumer spending is taking a demonstrable toll on high street stores with increased vacancy rates, while the online sector is still booming in many areas. We can see that some well known iconic retailers have disappeared. However, the brands with strong multi channel customer engagement strategies across both online and ‘bricks and mortar’ seem to be avoiding the worst of the current economic climate.
At this month’s Forum, we were treated to the wisdom and experience of a wide range of commentators and experts from across the fields of e-commerce, high street retail, industry analysis, and review and reputation management. The speakers included representatives from Henley Business School, Gallup, Screwfix, Confirmit, Reevoo, Planet Retail, Marks and Spencer and the Local Data Company.
June’s key learnings were:
The retail market has changed, and perhaps found a ‘new normal’ We will all have noticed how the high street has changed in the past few years, with vacancy rates for retail space running stable at 15% since the end of 2010, an increase of over 10% since 2008. Interestingly this isnt getting any worse, 15% seems to a a ‘new normal’ as key retailers move out of town or increasingly online. According to data from the Local Data Company this shows a change in the way our town centres will be used in the future, with the average age of the big spender increasing, companies like John Lewis are gaining from more transient fashionable retailers. Their data also shows that 75% of all retail space is now lies out of town, and with 50% of all retail leases due to expire by 2015, how will this ‘great clearout’ change our high street and how we use town centres in the next decade?
In an ‘onmi-channel’ world, customer effort is as important as customer satisfaction. How easy do we make it to do business with us? You will be aware of the waiting time frustration of call centres, of course: but what about experience of unboxing, or making a complaint, or downgrading your account. In the world where reputation is increasingly defined by the social space, we have to think very carefully about how we treat our customers across all touchpoints. Work done at Henley Business School strongly suggests that customer effort is more of a driver of loyalty than customer satisfaction or promoter indications. Brands like Apple and Metro Bank at the forefront of defining new experiences for customers, where they are focusing on using customer’s names, understanding context, and being more ‘human’ at key points… lowering both physical and ‘emotional’ effort.
Core to making this successful is an understanding of the context of each touchpoint and what this might mean for your customer as an individual. It’s worth noting that that the transactional activity will heavily influence the tolerance a user has of effort – an example would be a mortgage application against a change of address for your bank – customers will expect something as important as a mortgage application to take a few calls backwards and forwards (as long as each has value), but something like a change of address or balance enquiry should be a simple self service affair.
The science of emotion plays a critical role in customer decision making, and it seems it is at last being recognised. The ‘new rules’ of customer engagement described by Gallup used HBR’s Human Sigma model of understanding how decision making is affected much less by rational thought as we might choose to think. This extends into the way we make management decisions in the corporate world too, with some commentators even suggesting that the drop in interest in behavioural sciences in the 1970’s and 80s could be a contributing factor behind a lacking in understanding in the decision making which lead to the banking crisis in 2007.
The term ‘omni-channel’ is important as it reflects that users want the same experience no matter what the channel is, and not necessarily a different experience according to channel. While versioning the content experience is important – to ensure its appropriate for location, context, screen size, etc – the qualities the experience offers should be consistent. If you are known for quality personalised service, how will that manifest when they contact you via a mobile website? This concept of customer effort is being explored at Henley Business School, with a white paper due out later this year. Smart companies are ensuring their CRM, call-centre and digital marketing systems are integrated to to best deliver consistency across channels.
The power of social was also highlighted through the effect or customer reviews on purchasing decisions. Revoo explained to us that reviews and recommendations from your customers is rapidly becoming a ‘can’t ignore’ issue. According to Fly Research 95% of people read reviews before making some or all purchases and more interestingly, those seeking out bad reviews on your products could be your best prospects, as they are exploring why they shouldnt buy… which is a very good indicator that they might. Also, as founder Richard Anson explained, 70% of shoppers trust reviews more when they see both good and bad reviews, and a product with only good scores are suspected by 9/10 people as being fake or censored.
This new transparency extends to pricing as well, as Planet Retail explained: Customers with a new focus on value are interested in not only the best offer, but also how prices are calculated against their competitors. Smart retailers are using the web to engage with shoppers on many levels with Starbucks, Walmart and Tesco all recruiting shoppers online to help develop products, choose what’s in store and recommend to friends.
This new ‘openness’ works in bricks and mortar stores as well. Several high street stores in the UK offer free wifi to shoppers and do not discourage price comparison with online retailers. If they know this is a common behaviour (particularly for high street electrical and whitegoods) they are starting to realise that its better for the customer to make that decision when in store, and they can be shown all the value added they get from buying in store (delivery, face to face service, after sales, etc).
If you are local, use it as a competitive advantage. Retail headlines seem to focus on the trend busting growth of Amazon, who have shown growth of 35% in the last year and have got it right in terms of choice, delivery logistics and price, it seems. Of course, retailers of all kinds can learn something from e-commerce giant, but to compete on their terms is a dangerous game., better to know your value in your locality – local knowledge, face to face and a memory for your customers – so shouldn’t lose their unique approach and ‘personality’. Make a visit special and memorable. Convenience stores have seen great success by focusing back into their local communities, and brands have been supporting this with local community initiatives such as ‘transform your patch’.
Another aspect of the marketing decisions you need to make refer to how you want your brand to be perceived, as explained by Jo Moran from Marks and Spencer. More channels mean more resources spread more thinly, so be careful of the expectations you set. You also need to match customer experience with employee empowerment to drive human interactions in the social space. Screwfix found that when they relaxed the rules around their customer contact centres and store touch points, and allowed people to reflect their personality more, they found a significant rise in satisfaction. Simple clear rules on governance which were developed in partnership with staff at grassroots rather than as dictat from management, ensures that your front line have the tools they need to provide consistent service while having the ability to make sensible decisions themselves on behalf of your company. This has been one of the most talked about issues across this space for some time.
Podcasts to follow shortly.