By John Lofstock, Editor
Convenience store retailers not in touch with the needs of their customers risk far more than losing repeat business and sales. They risk extinction as customers gravitate toward chains that provide superior service and anticipate their needs.
That was the key message delivered by John Goodman, vice chairman of Customer Care Measurement & Consulting. Goodman provided expert customer commentary with his session on Six Big Ideas from Strategic Customer Service.
His insights included:
1) A store’s staff doesn’t cause most customer dissatisfaction. Marketing, inferior products, company processes and poor conflict resolution lead to the greatest amount of dissatisfaction among new and existing customers.
2) It is cheaper to give great service than to just offer good service. The revenue payoff for outstanding service is 10-20 times the cost.
3) No news is not good news. If you are not getting regular feedback from customers you are missing opportunities to improve. The old saying that you cannot fix 100% of the problems you do not know about applies here.
4) People are still–and always will be–paramount.
5) Use technology to improve the customer experience and to communicate with them.
6) Sensibly create a remarkable delightful experience every time you engage your customers.
“What is the payoff for customer engagement?” Goodman asked. “Quite simply, 75% of the customers that don’t complain will never come back. Retailers may not realize or appreciate this. The largest revenue hemorrhage is from customers that never tell you that you have a problem.”
Furthermore, problems increase sensitivity to price. “If a customer has one problem with service in your store, their price sensitivity doubles. If they have two problems with service, it doubles again,” Goodman said. “You don’t want your customers thinking, ‘I am not going to overpay and get bad service.’ That is a perception that is very hard to overcome.”
Cost of Bad Service
Customers, especially in the age of social media, love to talk about a bad experience. According to Goodman, if you are serving 10,000 customer per week and 80% of your customers are satisfied, the 20% that were dissatisfied can easily offset your hard work. For example, of the 10,000 customers if:
* 10% were delighted they will tell 2% of your audience or 200 people.
* 70% were satisfied they will tell 1% of your customers or 70 people
* Of the 20% that were dissatisfied, they will tell 60% more people, up to 1,200 customers.
Goodman suggested other payoffs for a better customer experience, including:
1) Marketing. Retain good customers and capitalize on their word-of-mouth advertising.
2) Finance. Slight margin adjustments and cost reductions can go a long way toward retain customers in a weak economy.
3) Human Resources. Smarter hiring practices leads to fewer problems and happier frontline employees, which also accounts for lower turnover rates.
4) Product Development. Conduct market research with your customers through panels and surveys. Get their feedback on their likes and dislikes and respond accordingly. Never ask for their opinion unless you are truly ready to act on it.
To effectively engage customers, Goodman recommended seven steps to fully understand what they want and what will keep them coming back to your stores. These steps include:
1) Proactively engage and communicate your mission to provide outstanding service.
2) Acknowledge customers from the moment they walk in the store. Make eye contact and anticipate their needs.
3) Equip frontline employees to be successful with clear believable expectations.
4) Celebrate great service using ‘victory sessions’ where you have employees talk about a great service moment in front of other employees.
5) Educate store managers on the payoff of customer engagement and offer them incentives. “Greed works,” Goodman said.
6) Aggressively solicit customer complaints and suggestions via all available channels.
7) Create a broad voice of the customer service process using employee and operational data so you will always have a record of what worked and which employees are getting it right, Goodman said.
Taking Control of the Future
NACS Chairman Dave Carpenter teed up the 2013 Leadership Conference buy identifying three key areas where the industry can –and should–define its future: engaging customers, shaping the payments landscape and addressing the future of fuels.
“You can’t really talk about the future — whether it’s fueling or payments or just retailing — without also talking about how we engage customers,” he said. In the payments area, Carpenter stressed that the industry will continue to pursue legislative and legal options to address card fees — the industry’s second-largest expense — but will also look more at innovation “to find game changers that deliver better and cheaper ways to accept and process payments.” And for fuels, new technologies and consumers demand will continue to shape our transportation energy market.
Attention to Payments
During the Future of Payments general session at the NACS Leadership Forum, Don Kingsborough, vice president of retail services for PayPal discussed how mobile is changing shopper behavior, and how retailers should seize opportunities to reinvent their relationships with their customers. The ball started rolling in 2007 when Apple launched the iPhone, and there’s no looking back. Each day more iPhones are purchased than babies are born.
“One of the first rules of business is that you have to fish where the fish are,” Kingsborough said, “and today, that means mobile.”
Kingsborough said that there’s been a lot of smoke in recent years about mobile payments, but not a huge fire. In fact, some companies have added to the confusion about when adoption will become reality with very little to show for it. PayPal, meanwhile, is realizing that success boils down to three requirements, and without all three, “consumers will pass you by”:
1. A large consumer base,
2. A network of merchants, and
3. Ecosystem partners.
NACS also announced the formation of The Fuels Institute, a non-profit, research-oriented think tank dedicated to evaluating the market issues related to consumer vehicles and the fuels that power them.
“Our industry sells 80% of the fuel purchased in the country,” said John Eichberger, NACS vice president of government relations. “It is our responsibility to communicate how issues affect the fuels system, especially at the retail level, so that decisions can be made that ultimately benefit consumers and, by extension, retailers.”
To read CSD’s coverage on The Fuels Institute, click here.