Article

As consumers spend less, they expect more from retailers

A focus on long-term relationships, customer advocacy can protect against price erosion.

September 27, 2010

It's becoming obvious to retailers that the business with the lowest prices isn't always going to draw the most customers. Value often makes sense in retail, notably when a mid-priced item compares closely with a high-priced one. But what happens to consumers who enjoy sharing experiences rather than just purchasing a tangible product? If they take their partner to the theater regularly or like to go out with family and friends for dinner, do they downgrade their expectations on these experiences when their disposable income declines?

In a difficult economic climate, consumer spending obviously does decline. However, what retailers need to understand is that counter to this trend, consumer expectations will actually rise. If a couple cuts their dining out visits in half (say every two weeks versus once a week), their expectations of good service and a memorable experience are heightened during this occasion. Declines in spending by consumers can understandably result in cutbacks by retailers and restaurants, but it is essential these are done with care in order to minimise their impact on customer experiences. The long-held business profitability adage of "do more with less" has translated into a consumer mindset of "get more with less."

Service game

Businesses must ensure they keep their employees focused on customer service, even in the face of cutbacks and compromises. It's essential that companies get staff working on the small yet important details that make service experiences memorable for customers. Staff must be held accountable for "romancing" their customers with thoughtful and helpful moments on every single occasion. For most retailers, this can be as simple as ensuring their staff makes thoughtful product recommendations instead of reciting word for word the "specials of the day."

It's important that staff stay engaged with customers and look to build rapport whenever possible. Focusing on their needs will help build an ongoing relationship. For example, if you're in a restaurant for the first time and unfamiliar with the menu, a quick tour of what others like, a personal favorite and/or pointing to something the restaurant is famous for, are all positive ways of welcoming and engaging the customer. It also serves to build anticipation of something tasty and in so doing, enhances the overall experience and perceptions of the product when it arrives.

Most notably, none of this "romancing" requires extra labor or dollars. Most moments of engagement and relationship building are just that — brief but important memories of someone taking an extra 30 seconds to listen and to say or do something thoughtful. Whether in a restaurant offering a menu recommendation or in a grocery store being walked to a product the customers is looking for, these small "moments of truth" can determine if a customer comes back or not. Creating these positive memories will not only keep them loyal to your product, but also win them over as advocates to others.  

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First class delivery

Multi-unit enterprises, both retailers and restaurants alike, need to strive not only for improvement (i.e., raising their standards) but also towards ensuring consistency in their day to day operations. In retail and hospitality environments, there are many details that need to be considered and decided upon to shape customer expectations. For example, is there a ‘greeter' at the entrance of the store or restaurant and if so, is this the most valued employee (e.g., a restaurant owner welcoming and hosting) or one of the least ("Welcome to Wal-Mart"). Furthermore, are recommendations thoughtful — "if it's your first time here, I have to tell you that a lot of people who like sweets love the …", or overly scripted — "do you want fries with that?"

It's also important to attend to moments of "pain" in the experience and to handle these correctly. The most obvious is the payment process, as no customer enjoys parting with their money. Notice how most retail and restaurant experiences end on this bad note? The customer pays and in too many instances, the server who has a talent for relationship building and service senses the discomfort and is evasive. Customers are routinely abandoned at the end of their experience and left to find their own way out. Yet we know from psychology that both first and last impressions are most remembered. There is some wisdom in the traditional Chinese fortune cookie served with a bill. In a small, but important, way it puts a smile on the guest to counter their "pain" of payment.

There are many other examples like this. In a survey of the check out process at more than 5,000 Hallmark stores, we determined the important final cue that produces such outstanding product loyalty: Their secret is as easy as offering affirmation of the thoughtfulness of the card and/or gifts being purchased and extending well wishes for the occasion. Looking for a final way to connect with the customer and ensure the last memory is a positive one will drive repeat business and recommendations for others to visit.

For fashion retailer Ann Taylor, the ability to know which customers want to be "in and out quickly" versus those requiring "what looks good on you" advice is critical. Again, providing great experiences has little to do with adding more staff and much to do with accountability on the sales floor.

Employee engagement and mindset is critical for all retail and hospitality enterprises. Women's apparel staffers aren't simply selling dresses and business suits, they're helping busy women be successful. Restaurant employees who understand they're not simply preparing food, but making someone's favorite meal, have a mindset that will govern differently the way they cook and present their food. The goal in each case is for businesses to harness employee engagement, create a heightened level of ownership of the customer experience, and win the day by bringing customers back with their friends.

Gary Edwards is the executive vice president of customer feedback firm Empathica. (Photo by Erin and Joe.)