customer service evolution

The Evolution of Customer Service

by Phil Dorrell, Partner

There was a time when people working in retail were ‘in-service’ meaning that they treated the customers as superiors and offered good customer service by deferring to them. Then came a more egalitarian view of customer service where treating them more like a friend was the vogue. It would put the customer in a relaxed and trusting state in order for them to enjoy the experience and lead them to potentially spend more.

We have both these types of service in the British High Street. If I go to a high end retailer I can expect and will receive the former. At most smaller independent stores and well run larger retailer I get the latter. Unfortunately, they have been joined by the latest evolution of customer service, not a recent phenomenon yet a growing one. This is where the transaction is paramount and the customer is not; where ‘processing’ the sale is the service.

Whether by cost cutting, poor selection, poor training, poor management or even poor working conditions the element of treating that customer as an individual is vanishing. The winner in all of this is the online retailer who can process transactions faster, cheaper and more effectively than physical retailers and can build a pseudo-personality into their contact with the customer.

Having experienced all facets of the evolution of service in the last 5 days there are some simple rules I think are valid when looking at your own people in stores. It is not something that you can audit through a regular 3rd party service visit, find comfort in the red, amber and green scoring of service charts if you wish. They unfortunately do not tell the whole story.

The human condition is geared towards connection, we all seek to connect with another and feel like we have something in common. We want to be treated like an individual at the pub, at the restaurant, at the clothes shop and at the supermarket. That slight spark that happens when you look someone in the eye and say hello is not measurable, but is worth more than a mountain of reports on service. Some retailers get it.

I am always impressed by the colleagues at Pret á Manger who despite real time pressure and tight working conditions deliver a connection each time, even when I spend less than £5. Recent experience at Harrods was also excellent, slightly old fashioned but, again, a colleague who looks you squarely in the eye and really seeks to understand your needs. I spent over £350 in Curry’s recently and the transaction was completed, end of story. No eye contact, no help on a complicated device, just flat. I then observed this across all the contact points and it was equally flat, soul-less. It was all efficient and reasonably swift, I just felt it did not make me want to return, and that in a nutshell is what service gives you, returning customers and eventually advocates.

So when you review your latest monthly stats on service, give some thought on how your customers have been connected with, how they feel about it. Then ask yourself how many customers have you really spoken to, to discuss their experience? I will guarantee it is not going to be enough.

asda facia

Asda: time for Project Rethink

asda q4 2015-16

A year in retail can feel like a long time, particularly for Asda which will be glad this one is over. If losing market share to Sainsburys was bad, then losing sales and customers to the discounters was negligent. Then giving away good retailers in a restructure to contain costs and shore up margin, was just criminal.

The torrent of knee-jerk tactics all centred on price and cost cutting tells you all you really need to know about the leadership vacuum Asda is currently experiencing. Taking a scythe to the remaining structure feels like a Walmart memo rather than a clever decision. Having said that, the appointment of Andy Murray as Chief Customer Officer brings a welcome focus to its strategy albeit with a Walmart bias.

Project Renewal, scarily reminiscent of Tesco’s Project Reset, brings range rationalisation, or more accurately, range slashing with a heavy dose of prejudice. It also brings price cuts starting with £500m already announced. How this differentiates a retailer from its competitors is questionable however. We would like suggest the name Project Rethink instead, where you start from where you are, build on your strengths which in turn mask your weaknesses.

Andy Murray brings a fresh sense of perspective and strong marketing experience previously lacking. If Andy Clarke uses his talents wisely there could be a challenge to the ingrained price-led strategy of 5 years ago. Ploughing on, focussing on price against the discounters was a battle that it was never going to win. However investing in a more diverse offer, rebuilding confidence in George clothing, and attracting a customer who is interested in more than just price would have been a more compelling and ultimately more successful strategy.

Asda has a weak sales productivity position relative to its competitors and its ability to absorb inefficiency is lower. We want to see something that makes Asda stand apart from the increasingly convergent strategies of the grocers. Asda is not encumbered by over-investment in property so its profit line is not at risk from property revaluation, so has space to manoeuvre.

As we reported at Christmas when we visited the grocers, Asda is not a bad shopping experience, with some great offers and a comparable level of service to its competitors in the Big 4 despite a reduction in staffing. The down side is that it just feels soulless. Where is the retail excitement, personality and reason to keep coming back?

We don’t doubt that we haven’t heard the last of price investment which will continue to feature in the next few trading updates, or about a focus on online retail. But is this what will persuade customers to stop driving past to a competitor? Without a compelling reason to switch from the discounters, new or returning customers will be elusive.

We expect Roger Burnley to make a difference but he is inheriting a house built on sand with few seasoned team players and a leadership team who have either overseen the current strategy vacuum or have at least been complicit in its demise. He will probably spend his first few weeks coming out of meetings shaking his head contemplating the extent of the tough job he has in front of him. The good news is there are plenty of opportunities to make a difference. The bad news is where to start.

morrisons price crunch

A Year of Battles ahead in the Supermarket Price Wars

We are now in a the throes of what can accurately be described as a price war, a war that has been falsely claimed numerous times before, largely for the benefit of retailers and lazy journalists.

Now with the effect the discounters have brought to the UK market we are seeing serious and sustained price movement that is closing the gap on the new kids on the block in an attempt to stop the sales erosion.

The battle is however not as one-dimensional as people tend to report and if the big 4 believe that price alone is the cause of their sales demise they are missing the point. Differentiation between the Big 4 offers has been itself ebbing away over the years to the point of largely the same ranges being offered at similar prices and promoted in different cycles of the year.

Service has been hauled in and seen as a hygiene factor rather than a differentiator. Quality or perceived quality remains as a point of difference in fresh lines and own label, although not used as an advertised differentiating tool. We have been presented with arguments on price for the last few years; trying to give customers a reason to stay with them rather than drift to either a Big 4 competitor or, heavens above, a discounter.

Asda has found its price position has been most affected as it has concentrated on price above everything else. Its lack of foresight into its own customer’s needs and the inability to attract a broader demographic has landed Asda at the bottom of the pack in growth. How did Asda become so short-sighted?

Tesco has had more than enough problems on its plate and, instead of concentrating just on price, has recalibrated its supplier relationships and reviewed its range through Project Reset. Price has been a hygiene factor for Tesco, but not the be all and end all. Tesco seem to be on the right track, it’s just a long road for redemption.

Sainsburys has been honest, brutally so. It recognised the sales drift, treated price as a factor but not the differentiator and been very dynamic. Getting into bed with Netto and then buying Argos are moves made from a realisation that the customer has changed and Sainsburys need to change with them. At the same time reformulating its own label has been timely.

Morrisons is again concerned with being price competitive and we are yet to see the other factors or uniqueness it will be bringing in to play to retain and attract new customers. If we see nothing in the next 6 months then Morrisons will be heading down the same dreary path as Asda and frankly its recent operational improvements will mean little.

The benevolent dictatorship that seems to exist in Morrisons is perhaps a way to speed decisions through the business, it just means that you have to get the decisions right in the first place. At present we sit on the fence on this one!