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The service deficit

News
5th October 2014

David Turner, CEO of Webhelp UK, analyses why UK’s retailers are failing to meet customer expectations.

Retail growth is back.  In April this year UK retail sales grew by 1.3% – the biggest single month leap in a decade. And it doesn’t seem to be a flash in the pan brought on by the arrival of Spring and a sunny Easter. On an annual basis, according to the Office of National Statistics, sales are up 6.9%, the highest annual growth since May 2004. So, it would appear that the good times have returned and its time to focus on sales, sales and sales!  Perhaps not. Or, at least, not exclusively. New research indicates that consumers are growing frustrated with retailers who seek to maximise revenues by selling to them over multiple channels, while allowing the service experience to wither for lack of investment. Today’s shoppers say they are experiencing a service deficit, when the sales promise is let down by the service experience.

It’s hard to fault retailers for focusing on their multi-channel sales effort. They are doing it, after all, in response to customer demand. Consumers’ appetite for shopping online continues to escalate. Online sales of non-food items rose by nearly a fifth in December 2013, according to the UK Retail Consortium. In the grocery market as much as 15% of UK sales (worth £900m), were booked online between 20 and 23 December 2013 alone. So, naturally, retailers have prioritised sales channel development, making sure consumers can shop when, where and how they want to. Increasingly that’s online, via mobile and tablet, and at odd times of the day. Savvy retailers are seeing new sales peaks in the early morning (shopping from bed) and 8pm in the evening when the family are relaxing. Some would even say shopping is replacing TV as a family ‘at-home’ leisure activity.

Any time, any channel

So, consumers want to shop over any channel at any time, and the industry has responded well to that desire. But customers also expect to receive service across any channel at any time – and for that service to be fully connected. The truth is, on this point, retailers have been slower to move. Research carried out by brand consultancy Loudhouse, reveals that 80% of UK consumers believe – based on their experience – that retailers are putting more effort into multi-channel sales than multi-channel service. It’s easy to see how that could give rise to resentment and frustration, when the ‘promise’ of the sales experience is let down by the reality of failed deliveries and poor responses to questions or complaints.

80% of UK consumers believe retailers pay more attention to generating sales across multiple channels than to providing an integrated customer service experience.

Adjusting priorities

There are two reasons – both very understandable – why retailers are failing in this regard. First, during the long years of recession and slump, the fight to win sales was a desperate one.  It’s not surprising then that opportunities to open up new sales channels or routes to market were given priority. Second, because, while opening up a new online sales channel is relatively cheap, building the infrastructure to support excellent delivery and service follow-through is more expensive, takes longer and generates no obvious revenue return.

It is, however, time to adjust those priorities. Retailers can hardly blame customers for thinking ‘if you can sell to me over multiple channels, surely you can serve me that way too.’ Nor should they be surprised if their failure to do so erodes future sales performance. In the Loudhouse research 33% of consumers said they would spend more with a retailer or brand that provided good customer service, while 78% said that a company’s service reputation had a significant impact on their buying decisions.

The customer journey

The secret to unlocking successful sales and service is to stop thinking about customer transactions and start thinking about customer journeys. The customer’s journey may well include a euphoric high when they click to add that much-desired object-of-desire to their online shopping basket, but it doesn’t end until that object has been delivered and proves to meet their expectations. The challenge for retailers now is to make sure there is no disappointment at any point in that journey.

So what’s to be done?

1. Sell – then deliver

For every non-store purchase delivery is a crucial element of the customer journey. What customers value most in this regard isn’t so much speed (get it tomorrow!) as certainty. Think how many times a website has promised you a three day delivery only to deliver in five days (by which time you’re probably hassling the contact centre for an explanation). However, it can be just as frustrating if the delivery takes place in one day. If the parcel isn’t letterbox-sized and you weren’t at home waiting for it, you’ve now got the hassle of going to a depot to collect it or calling to arrange another delivery attempt. Frustrating.

Smart retailers view delivery as an intrinsic service element associated with the sale. They will agree precise rather than general delivery commitments with their service providers and use proactive notification via text or email to provide accurate delivery information and advice (we’re delivering your washing machine at 10am tomorrow, so make sure you clear space in your kitchen this evening). Linking your delivery partners to your service operation so that you control information associated with delivery is a big step but a vital one.

2. See the customer

Three years ago the American retail giant, Sears, invested in technology that would give its contact centre agents – 6,000 of them in 17 centres across two continents – a 360° view of the customer. It resulted not only in a massive increase in customer satisfaction, but also a $4 million revenue increase and $12 million decrease in operational cost within three years. Now, when customers call, agents can see their purchase history, their preferences and their open orders. They can provide an immediate, personalised and responsive service immediately.

Naturally that 360° view will be invaluable in a sales environment, where it will help to identify the sales propositions most likely to entice that particular individual. All well and good. But that’s only the first step. Today’s customers don’t just expect that responsiveness from your contact centre agents. They expect highly personalised service across all channels. Naturally then, for example, agents handling social media must also have a 360° view. In this respect it will be useful if that 360° view includes an analysis of a customer’s ‘social influence’ – an indication of the strength and extent of their social networks and the degree to which those networks may be influenced by their positive or negative views of your brand. Organisations have long appreciated the value of cultivating advocacy among their customers, it is only logical to invest the greatest effort where there is the greatest opportunity for return. In digital channels we are even seeing developments in which a 360° view is being extended to online virtual agents. Technology integration allows them to access customer account information to provide personalised responses as consumers self-serve online.

3. Focus on self-service
The importance of self-service can’t be underestimated. The Loudhouse research tells us that over half (53%) of consumers want to resolve service enquiries themselves without recourse to a contact centre agent. The figure is even higher (60%) in the up and coming 18-34 age group. So, personalised virtual agents and FAQ’s are emerging technologies worthy of serious investigation.
The use of video is also becom
ing common place a service medium. The phone retailer Carphone Warehouse, set up its ‘Eye Openers’ YouTube channel to provide short video clips that answer questions about the functionality of different phones and address common technical difficulties. Within a year it attracted around 6 million hits. Online communities, facilitated and encouraged by brand, allow your customers to answer questions for each other and create a hub for crowdsourcing.
Remember, too that self-service is something you should want at least as much as your customers, since it is a considerably cheaper service channel.
4. Consolidate
I recently bought a new bed from a well-known High Street retailer. I went in store to do so, since I think a bed is one of those things you really do need to try before you buy. I found what I needed and was assured it would be delivered in eight weeks – someone would call a few days before to agree the time. Fine. Nine weeks later, no bed. So, I went online to get a number to ring their customer service line. Only to be told that they couldn’t help me – they could only deal with orders placed online. Since I’d ordered my bed in store, I’d need to call the store.
This degree of un-connectedness is simply not acceptable. Consumers expect to get consistent customer service across all service channels irrespective of how or where they made their purchase. Quite simply retailers must not only achieve a 360° view of the customer, but integrate their channels so that they can provide absolutely connected services. Unfortunately, according to the 2013 Global Contact Centre Benchmarking Report, this is something only 9.5% of retailers have so far managed to do.
5. Plan the journey
It is ironic that my disappointing bed experience (they finally delivered two weeks late on the third delivery attempt – the first time they couldn’t find my house and the second they’d failed to load the bed onto the truck) was with a retailer that has won considerable plaudits for its omni-channel approach to customer engagement.  Evidence if ever it was needed that retailers striving towards omni-channel are thinking ‘sales’ not ‘service’. The minute the purchase is made, the whole system begins to creak and fall apart.
To my mind a retailer can only truly claim to be omni-channel when it has achieved true integration of both sales and service across all channels, appreciating that a successful sale is reinforced by excellent service which, in turn, will encourage subsequent purchases and long term loyalty.
If that’s a journey you want customers to take with you (and I’d struggle to think of a reason why you wouldn’t) you can’t rely on it to happen by chance.  You have to use what you know, and what data analytics can tell you, about the way customers want to interact with you and then design a unified sales and service operation that make it possible for them to do so.  Wouldn’t it have been great if my bed buying experience had gone like this…
In store: I order my bed and get an estimated delivery time of 8 weeks.
 
Text: I get regular text updates on progress – order has arrived in factory, bed is made and ready for despatch…
Phone: At seven weeks a service agent rings me to tell me their logistics partner will deliver on the date expected and agrees a definite delivery time.
Delivery: Not only do they deliver my new bed, they take the old one away for disposal – a real value-add!
Email: Next day a personalised video email offers discounts on a range of bed linen and bedroom accessories. Already I’m contemplating my next purchase…
Things might be looking up for the UK’s retail market, but we have still seen disappointing financial performances from some big players.  Almost without exception, there’s been a correlation between poor performance and a failure to adopt new channels successfully.  Adopting channels and integrating sales and service across them is the only route to success.
Contact David on LinkedIn with your questions or comments.

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