What retailers can learn from latest UK consumer survey
“My daughter… is a brilliant customer service assistant and was recently reprimanded for spending too much time with customers!!! Not much else to say really is there?”
That’s just one of the comments made by a parent whose daughter works in one of the ‘worst retailers’ as voted by over 14,000 consumers in a recent Which? magazine survey.
One interesting finding from the survey is that all those companies rated the worst for customer service have large customer-facing workforces – while all those rated the best have small ones.
The conclusion from the article is that ‘small chains good, big chains bad’. However, the author then goes on to add… ‘Which is fine… until you start to ask how the big chains got to be so big and profitable in the first place.’
A conclusion not shared by us here, as we shall see…
Retail has Sunrise and Sunset industries too!
The first misunderstanding made by the author is that those at ‘the top’ – the ‘smaller scale’ operators – are less profitable than the ‘big boys’ at the bottom. But looking at the data, this is simply not true.
The top six retailers in customer hearts include Apple, Richer Sounds (selling audio equipment), and Lush (specialist soaps).
Of these companies (and arguably of every international retailer), Apple is the most profitable when you take into account the operating margins it commands on its finished products (not though the profit margins at the point-of-sale). At a time when Apple has overtaken Microsoft in company capitalisation, it can hardly be called a ‘small player’ in the retail space. But it does have a laser-like focus, as we shall see, on the one difference that counts.
Now let’s look at the companies nearer the bottom – big supermarket chains like Tesco, Electronics retailers like Dixons (ironically little different to Apple in terms of store staffing), and magazine and stationery retailers like WH Smith’s.
One characteristic these ‘big players’ (many employing 12,000 frontline staff or more) have in common: operating profits approaching half that of the top players.
The ‘big players’ may have been ‘big and profitable’ for a decade or more, but in the world of retail, this is changing – fast.
The One Thing the top players do to succeed
So what is this ‘One thing’ that the top players are doing that others – lower down on the list – are not?
In a nutshell – they deliver a branded customer experience.
Branded does not mean bland. It is clearly defined. Look at the photo of the Apple store above. Does it look familiar to you? Probably not. Because not all Apple stores are the same. Yet when we visit an Apple store, we know what we are not going to get – a visit to an electronics store. And we know what we are going to get – an experience unique to Apple.
A customer experience also means just that – an experience for the customers. Yet so many multinational (and larger) companies spend their time figuring out ways how to ‘standardise’ their offerings.
When you think about it, what they’re really trying to do is to make their own experience of managing the company and delivering profits easier… but in so doing they are really mediocritising their own customer experience, and destroying their company’s long term profitability as their brand is commodified!
This in turn usually leads to a low profitability ‘doom cycle’ where concepts and contexts reinforce each other in endless rounds of costcutting until all value is finally destroyed.
Instead, an effective ‘customer experience’ means localising your brand, understanding your customer on a local level, and working Outside-In (not Inside-Out) to create an emotionally-rich customer experience based on their preferences.
What you can do to become a more profitable retailer
Creating an emotionally-rich customer experience is a long-term investment worth making, as the payoff from doing so is returned in higher sales, higher customer loyalty, and higher customer Word of Mouth (or Say – Stay – Spend as we call it).
The process begins with identifying the emotions you need to evoke in order to solicit the above behaviours. It does not matter how big your company is. What makes the difference is being able to personalise at every touchpoint.
Would you like to find out more? Then simply check the ‘customer experience’ box of our feedback form here.
Talent Technologies helps Thai and Asian companies create outstanding customer experiences, in a way that can be empirically linked to top-line sales.