Table of Contents
Issues in the Market
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- Main issues addressed
- Main themes
- Abbreviations
Insights and Opportunities
Market in Brief
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- Customer service as a source of competitive advantage
- A good service experience is an essential element of a strong customer proposition
- Retailers are underdelivering on service – human factors a key culprit
- Best and worst – M&S ahead, electrical goods retailers underperforming
- The costs of delivering a bad experience – reversing the damaging ripple effect
- Leveraging complaints into business changing feedback
- Point of sale technology can create a more satisfying experience
Fast Forward Trends
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- Experience is all
- Definition
- What's next?
- Stop being so British
- Definition
- What next?
- Help I need somebody
- Definition
- What next?
Industry Insights
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- Service issues rising up the differentiation agenda
- Low service standards provide an opportunity to establish differentiation
- Tackling queues through self-scanning
- Tackling queues through workforce management systems
- Feedback strategies to include staff as well as customers
- Conclusion: Raising proposition awareness in staff contributes to service culture
- Emphasising service to establish an advantage
- Competitive environment creating pressure to raise service standards
- Key Points
- Service standards a key differentiator
- Key Points
- Low service standards create an opportunity
- Key Points
- Towards an integrated sales/service culture
- Service culture sits comfortably alongside a sales culture
- Key Points
- Engagement and interaction with customers stimulates both service and sales
- Key Points
- Good service should be delivered instinctively
- Key Points
- How online service standards differ
- Managing a multi-stage process
- Key Points
- Personal contact versus automated responses
- Key Points
- Putting it right when things go wrong
- Key Points
- Overcoming weak service delivery
- Bad attitude cannot be tolerated
- Key Points
- Intolerance of queuing
- Key Points
- Positive response to self-checkout technology
- Key Points
- Information delivery a vital area for attention
- Key Points
- No alternative to face to face contact
- Key Points
- Developing staff to deliver great service
- Employing the right people
- Key Points
- Accurate assessment of training needs
- Key Points
- Effective communication strategies
- Key Points
- Measuring performance
- Key Points
- Use of motivational and incentive schemes
- Key Points
- Developing the customer experience
- Focus on human factors
- Key Points
- Structured change
- Key Points
- Harnessing the power of complaints
- Key Points
- Delivering satisfaction for staff and customers
- Key Points
Internal Market Environment
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- Quality of engagement defines service standards
- Degree of emphasis on engagement is a prime indicator of a retailer’s commitment to service
- Identifying critical engagement points provides the opportunity to deliver great service
- Pre-purchase information gathering
- Staff engagement in-store
- Gaining information and getting help once in-store
- Discussing needs and using staff to help assess the options
- Completing the sale
- After-sales service
- Rising operating costs and service standards
- Delivering better service experience without increasing staff costs
- Integrated sales and service ethos
- Cutting service standards a risk
- Using technology to improve service experience
- Self-scanning delivering service improvements
- Pre-pay terminals option
- In-store access to product information databases
- Improving staff levels through back office technology
- Brand values and proposition development
- Service ethos of growing importance
- Establishing brand values and reputation
- Monitoring the dynamics of change
Broader Market Environment
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- Service standards in the wider context
- Is retail better or worse than other sectors?
- Are UK consumers tolerant of bad service or demanding of good service?
- National Customer Service Week – raising the profile of good service
- ICS launched a UK Customer Satisfaction Index in June 2007
- Competition and growth of online leaves no room for complacency
- Tightening economy likely to make it harder to win spend
- Growing presence of online shopping increases customer options
- Ageing population an opportunity for service-centric retailers
- Main source of population growth is the over 45s
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- Figure 1: UK population, by age, 2001-11
- Older people appreciate good service and will pay a premium for it
- Older people less inclined to use the Internet and will remain store-focused
Who’s Innovating
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- Tesco “one-in-front” queue busting cameras keeping it ahead
- Predictive monitoring by Tesco will assist queue management
- Asda’s Smiley Squad
- Bhs using customer feedback to recognise staff performance
- Lloydspharmacy automating dispensing services to create staff time for consultation
- Healthy advice
- Selfridges’ Wonder Bar
- Mamas & Papas bumping ahead
- Shopping centre acknowledging good service provision
Market in Context
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- Tesco
- Customer first ethos at the heart of its proposition
- “One in front” delivered through new technology
- Queues remain a target for attention
- J Sainsbury
- Principles of recovery
- Recent turnaround based on improving service levels
- Leading by example
- Asda
- “Common sense” retailing winning new customers
- Warm and Friendly way to service
- Asda’s Smiley Squad
- Self-scan driving service improvements
- Morrisons
- “The food specialist for everyone”
- Recovery phase being driven by operational efficiency improvements
- Business review highlights in-store service as key attribute
- Marks & Spencer
- Service standards an integral element of its brand culture
- Carried away by good service
- Healthy advice
- John Lewis Partnership, including Waitrose
- Unique ownership structure contributes to service culture
- Setting and maintaining high service standards
- Passion for selling
- Home Retail group, including Argos and Homebase
- Aiming for high customer service standards within a multi-channel operation
- Leader in use of point of sale technology
- Find & Pick Up and Instant Alert Service
- B&Q
- Lost in space
- Service squads targeting customer queries
- Recognition of its inclusion policies
- Woolworths
- Self-selection minimal staff contact operating model
- Faith in conga queuing
- Range extensions delivered through in-store ordering
- DSGi (including Currys.digital and PC World)
- Technical focus of these businesses creates strong need for sales and service skills
- Reserving items online for collection from a local store
- PC World launches fourth shopping channel in 2007
- Tech guys go national in July 2007
- Altering the mind set
- Comet
- Best price, best choice, best service
- Deliberate Customer Journey service initiative a key element of brand relaunch
- Advertising campaign focusing on staff training and service standards
- Comet on Call
- Boots
- Trust in Boots
- Longer opening hours to deliver enhanced pharmacy services
- Till receipts trigger customer feedback
- IKEA
- Product-led proposition
- Customers remarkably tolerant of low service standards
- Margin for improvement
- Market pressure creating change
- Amazon
- Pioneer of online retailing and continuing to set high service standards
- Paying for convenience
- Prime numbers
What Consumers Think of Service Standards
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- Satisfaction levels generally high but retailers not “wowing” many customers
- Results show extent of opportunities to develop the customer service experience
- Scope for “wowing” more affluent consumers
- Low levels of dissatisfaction characteristic of responsiveness of the industry
- Sizeable element of ABC1 shoppers up for grabs
- Conclusion – no room for complacency
- Majority of consumers satisfied with service received
- Majority of high spending customers are “generally satisfied” with service standards
- Relatively low numbers of “very satisfied” shoppers
- Relatively low numbers of “dissatisfied” customers
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- Figure 2: Satisfaction with customer service standards, June 2007
- Who are the most satisfied customers?
- Significant influence of peer group selling
- Stores’ influence on shoppers
- Who tolerates average service standards?
- Yet, more of those in affluent groups also gave negative responses
- Younger affluent shoppers open to persuasion
- Who are the least satisfied customers?
What Consumers Think of Service Standards – Detailed Consumer Demographics
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- Figure 3: Relative levels of satisfaction, by socio-demographic detail, June 2007
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The Makings of a Good Service Experience
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- Most desired attributes relate to interaction with staff
- Good product knowledge commands respect and wins sales
- Going the extra mile to answer queries
- Turning an out of stock into an opportunity
- Conclusion – targeting human factors will improve shoppers’ perceptions
- Observing common niceties appeals most
- Satisfaction starts with a smile
- Product knowledge defines staff’s role
- Helpfulness has to show through
- Going the extra mile
- Closing the sale properly creates impetus for repeat visit
- Online environment requires rapid response
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- Figure 4: Elements of a good service experience, June 2007
- Good attitude and helpfulness has widespread appeal
- High expectations of product knowledge among the more affluent
- Going the extra mile can win sales from competing channels
- Stores with pleasant staff
- More affluent online users expect prompt reaction to queries
The Makings of a Good Service Experience – Detailed Consumer Demographics
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- Figure 5: Most important factors contributing to a good service experience, by socio-demographic detail, June 2007
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- Figure 6: Other factors contributing to a good service experience, by socio-demographic detail, June 2007
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The Makings of a Bad Service Experience
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- Enough of the right people, in the right place, at the right time
- Attitude is everything
- Developing product knowledge, people engagement and communication skills
- Breaking the cycle
- Frequent small initiatives help maintain customer-centric focus
- Conclusion – staff need to know how customers expect them to behave
- Accurate staff scheduling will address negative issues
- Unopened checkouts when queues are forming is main grievance
- Staff must project a sales as well as service ethos
- Staff need to be visible and accessible on the shop floor
- Access to back up needed to enhance staff knowledge
- Lack of responsiveness a factor for online shoppers
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- Figure 7: Elements of a bad service experience, June 2007
- More affluent most sensitive to causes of bad experience
- Staff need to be attentive to older people…
- …but must not overdo it
- Men want staff that know about what they are selling
- More affluent families frustrated by lack of product knowledge
The Makings of a Bad Service Experience – Detailed Consumer Demographics
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- Figure 8: Most important factors contributing to a bad service experience, by socio-demographic detail, June 2007
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- Figure 9: Other important factors contributing to a bad service experience, by socio-demographic detail, June 2007
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- Figure 10: Least important factors contributing to a bad service experience, by socio-demographic detail, June 2007
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Service Standards – Best and Worst Retailers
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- Majority of retailers delivering adequate levels of satisfaction
- Modest numbers of satisfied customers suggests scope for improvement
- Marks & Spencer’s advantage likely to increase in future
- Electrical goods retailers have the worst reputation for service
- Conclusion – big impact with small changes
- Overall levels of satisfaction modest
- Research indicators employed
- Customers of leading retailers are underwhelmed by service standards
- Marks & Spencer marginally outperformed Asda and Tesco
- Marks & Spencer also has the strongest balance of responses
- A relatively small proportion of shoppers experience inconsistent or poor service
- Leading household goods retailers attracted most criticism for poor service
- Four companies have a negative balance
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- Figure 11: Retailers rated for giving good and poor service, June 2007
- Those viewing standards favourably reflect regular user characteristics
- Value of further analysis lies in who is not attracted to specific retailers
- Good but not exceptional numbers of regular grocery shoppers rate the service they get as good
- Many are tolerant of indifferent service standards or do not attach importance to them
- Men not as enamoured of service standards of clothing and department stores as women
- Marks & Spencer underperforms among young affluent shoppers
- Women less impressed with household goods retailers’ service standards than men
- Women also less impressed with online retailers’ service standards
- Superdrug has it all to do to attract ABC1 shoppers
- ABC1 families most vociferous about inconsistent and poor service
- Some shoppers are tolerant of poor service
Service Standards – Best and Worst – Detailed Consumer Demographics
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- Figure 12: Grocery retailers’ ratings for consistently good levels of service, by socio-demographic detail, June 2007
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- Figure 13: Clothing and department stores’ ratings for consistently good levels of service, by socio-demographic detail, June 2007
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- Figure 14: Household goods retailers’ ratings for consistently good levels of service, by socio-demographic detail, June 2007
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- Figure 15: Online retailers’ ratings for consistently good levels of service, by socio-demographic detail, June 2007
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- Figure 16: Health and beauty retailers’ ratings for consistently good levels of service, by socio-demographic detail, June 2007
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- Figure 17: Retailers’ ratings for inconsistent and poor levels of service, by socio-demographic detail, June 2007
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The Impact of Bad Service
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- Bad service changes shopping behaviour
- Strong ripple effect of bad service can be turned to positive effect
- Standards directly affect commercial success
- Conclusion – high business risk posed by bad service makes strong case for investment
- Impact spreads beyond those directly affected
- Direct impact of bad service is significant
- Bad service could cost a retailer half its customers…
- …but ripple effect also spreads to friends and beyond
- Considerable credibility gap
- Mixed reaction to online service standards
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- Figure 18: Reaction to bad service experiences, June 2007
- More women might defect but more men have actually done so
- ABs and older people more reactive to bad service
- AB families’ extensive networks compound the ripple effect
- Slight bias to ABC1s among those perceiving a credibility gap
- Online attracting younger consumers but frustrating them as well
The Impact of Bad Service – Detailed Consumer Demographics
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- Figure 19: Most likely reactions to bad service experience, by socio-demographic detail, June 2007
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- Figure 20: Other reactions to bad service experience, by socio-demographic detail, June 2007
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Customer Complaints and the Service Experience
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- Putting it right when it goes wrong
- Staff need to be empowered and encouraged to take responsibility
- Right response to right people required
- Conclusion – free feedback needs to be acted on
- Plenty of experience of complaints
- Only 20% of respondents have not made a complaint
- Generally good levels of satisfaction with response to complaints
- But many complaints not resolved at first time of asking
- Not all staff using complaints as an opportunity
- Negative approach by staff not widespread but neither is ownership of problem
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- Figure 21: Experience of customer complaints, June 2007
- Nine out of ten ABC1 families have complained about a purchase
- ABC1 families have high levels of satisfaction having complained
- ABC1 pre-family and family adults are most dissatisfied with complaints
Customer Complaints – Detailed Consumer Demographics
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- Figure 22: Most common experiences of customer complaints, by socio-demographic detail, June 2007
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- Figure 23: Other experiences of customer complaints, by socio-demographic detail, June 2007
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Future and Conclusions
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- Always room for improvement
- Operational shortcomings main cause of annoyance to customers
- Customers have modest expectations of retail store staff
- Bad service is bad for business
- The future – empowering staff with technology
- The future – delivering good service in a multi-channel world
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