By Brian Walker – The Retail Doctor

Customer service has been the topic of many books and articles over the years with popular movements in management theory evolving to the point where we identify the term “customer service” being part of our everyday business nomenclature.

So what is the effect of all this management theory and literature on retailing customer service as we see it in our daily roles?  Perhaps it is not having the impact we might imagine as the following would reveal.

The retail journey commences with the customer

“We strive to exceed customer expectations” or “Our mission is that the customer is king “and similar sayings permeate the business atmosphere yet in our Retail Doctor customer satisfaction surveys (2006/07) studies we find that up to 70% of businesses do not measure the customer experience of their retail offer nor do they shape their business point of difference with a robust understanding of the customer they are targeting.

We have also seen that many retailers define customer service as they would expect or perceive that the customer would want it to be.   Often this is the start of the impasse between good customer service and truly great customer service.

‘Don’t tell me what I need or want – please ask me what it is that would be truly great for me as a customer.’   This is the first lesson to master in delivering exceptional service, (and a recurring theme in our yearly customer service survey findings)

After all it should always be the recipient that defines what constitutes superior customer service therefore any significant customer service program needs to commence by researching and understanding the desired customer.  Understanding the evolving customer psyche, customer behavior patterns and identifying needs and wants in advance are critical aspects of delivering stand out customer experiences.  This approach coupled with a robust customer feedback loop ensures that both evolution of this understanding with innovative solutions are at the heart of this companies DNA

Treating customer service as a ‘product push’ strategy typically produces an average, robotic customer service experience and this  lack in true customer passion is usually a highly transparent veneer to all concerned (mostly the customer)

Customer service or lost opportunity?

Recently, I ordered a product from a retailer who dutifully ordered the product and had it delivered to my address in a very efficient and pleasant manner.  Now I would say that this retailer would be justifiably satisfied they had delivered great customer service.

I thought it was a good level of customer service and nothing more or less than this company’s competitors could or would do (and certainly no more than an on line ordering process would deliver).

Phoning me personally to advise of delivery details, inviting me to join a loyalty club, understanding a little more about me, advising me of similar products and services, with a follow up call to ensure that the product and service met my needs would all be examples of steps to first class customer service.

Virtually every retail manager would agree that one of its companies most vital asset base is its customer base – the lifetime value of its current and future value. Yet, how many of us truly understand the present and future value of a customer and its impact on the financial sustainability and growth of the company.

Do you often wonder that perhaps the on-line growth is so accelerated, in part, because the physical retail ‘moment of truth’ is not as powerful as it possibly could be?  After all, one of the great differentiators of the physical retail experience that we are in a position to create is a richer, personally satisfying customer experience in the retail shop through a face to face relationship with the customer

One of our clients, as an example of enhancing that “moment of truth’ with their customers and to deliver a consistently great customer experience , has developed the customer service “magic” program which has a number of customer practices to it including.

  • Regular  CEO roundtable with randomly selected customers
  • A mixture of Mystery shopping and customer exit surveys combining to a service score linked to management remuneration.
  • A management KPI of 3 innovative customer service ideas per quarter per line manager
  • Linking the increase in transaction numbers (customer numbers) to their business key result areas.
  • Their buyers operate as buying agents for their customers and ensure that every negotiation is creating customer value (as distinct from short term margin)
  • A oldie but a goody: Senior managers have a pre determined allocated time on the retail  floor with customers and this where they typically find the inspiration for their “magic”  customer service ideas
  • Examples of customer service magic are “heroed”  in the business and the recipients  and the staff member are  a glowing part of the celebration

Another client plans out their yearly customer experience calendar to ensure that their customer innovation and momentum continues in much the same way a yearly marketing and promotional calendar is planned.

The difference between product quality and service quality

Once we know more about what our customer would like we then need to decide how they would like it.  Customer service has two components to it which are – product quality and service quality.

Product quality is the ‘what you get’ component of the customer’s experience and service quality is the ‘how you get it’.  Our 2007 customer service survey revealed that almost 80% of the identifiable reasons as to why customers left retail companies had nothing to do with the product!  In fact only 20% switched because they found a better functioning or cheaper product.

The prevailing reason for customer dissatisfaction was the perception of a low level of customer service with the consistent customer feedback being that they weren’t understood or appreciated as customers. (The how you get it)

As we consistently see, it is far less about the product in the customer service experience, rather the people interaction that is the vital differentiating part of the customer service experience

This continues our theme of customers being wanting to be understood.  Retailers that provide both high quality products and even higher quality service ultimately win the customer service race.

Are all customers created equally? 

The adage that all customers are created equally also bears some further investigation.  Whilst it is important to deliver an unparallel customer service to all customers it is equally important to segment your customer profile (behind the scenes) through understanding their shopping profile with you.

Understanding your customer behavior, purchase cycles, what and how they buy and what they like is very important information to gather. The other alternate is a comparatively unprofitable “one size fits all discount what we have over bought and can’t sell” strategy.

It is almost universally true that 20% of customers contribute over 80% of the profit of most department and specialty shops and conversely, the other 80% of the customers contribute less than 20% of the profit of those shops.

The reality is that your customer segmentation profile will look something like:

One group of customers who are the top 10 to 20% contributing the majority of your profit.  Love these people, know them, and treat them as your best friends.

The second group is the next 40 to 60%, who have the potential to move up in profitability. This is your growth opportunity and every effort should be made to grow them into the first group!

The third group is the balance who typically shops you at sale time and as a result is less profitable.  Provide great service, communicate with them, understand them although focus your the bulk of your customer service segmentation strategy on groups one and two.

You can reward your most profitable customers in group 1 & 2  for their good behavior (spending profitable dollars in your shop) by sending them thank you letters, giving them first notice of new arrivals, sending them gifts, anything that will increase the likelihood of them repeating that behavior.

Understanding why these customers shop with you in the first place is an important part of rewarding their behavior and our surveys show that it is usually for reasons beyond price and you need to reinforce those reasons.  Find out what they like about your offer and give them more of that. .Your customers like being asked what they think of your business through research or in store and mailed questionnaires. Customers will generally respond with good information that you can use to enhance your offer.

There is also a strong benefit in a quality customer relationship management (CRM) software program.  Being able to record customer details, shopping habits, frequency, preferred tastes and product preferences is important.  Of most importance, however, is tailoring this information into a valuable, ongoing relationship between you and your customer.

Consider how you will manage your customer relationship management program and how it will grow and be maintained.  Consider that, on average, up to 15% of Australians move each year so management of the database is an ongoing task.  Done well, this CRM package will evolve your retail shops offer from a shopper impulse to a customer destination and a must visit on your customer’s list.

So what can you do right away?

So let’s discuss some operational tips to lead you to renowned customer service.

Create a customer service ‘magic’ culture in your organization actively rewarding both staff members for outstanding customer service that goes the extra mile and customers with outstanding customer feedback.

Have all levels of your organization contribute at least one customer service idea each month.  Implement the idea and publicize the winners at every opportunity

Regularly invite customers into feedback sessions and get their input as to what was great and what could be improved.

Change those windows, merchandise displays and the look and feel of your shops regularly.  Nothing is as uninspiring as the same windows and displays day after day (as much for your staff as it is for your customers)!

Change the staff rosters. The same shift, hours and time week after week with the same people can be numbing and make it very difficult to maintain a high level of customer passion.

The Nordstrom motto of “Hire the smile, teach the skill” is as true today as ever. Recruitment people with smiling, outgoing personalities who are clearly “people persons”. Look for this personality in your advertising, recruitment and operational practices. These are people who believe that we can’t do enough for the customer and the problems start when we do too little.

The truly great customer service legends in retailing simply put their customer service ambitions as an input to their strategic process and not simply as an output. This coupled with a culture of great staff going that extra mile and walking the talk is the recipe for true customer service leadership. 

Are you effectively communicating and connecting with your customers? Come to The Retail Doctor’s ‘The Connected Retailer’ Breakfast Seminar this March to find out how to improve your business fitness and be more connected with your customers.

For more information and to register, visit or contact or 02 9460 2882.

Happy ‘Fit’ Retailing

The Retail Doctor