Customer service lessons from the high street

A street sceneIt's tougher than ever on the high street. As consumers tighten their belts, they are cutting back on some things and looking for bargains everywhere else. Retailers need to respond to these changing customer needs if they are to survive, says customer service specialist Derek Bishop

Retailers need to be very focused on how customer behaviour is changing, what impact this will have on them where new trends may take them. Most importantly, they need to think very clearly about their proposition, and ensure this is in tune with changes in customer needs and demands.

Customer shift 1: Change in priorities for disposable income

Research by holiday company Thomson suggests that 88 per cent of people would rather cut back on eating out and home improvement than on their annual holiday. Retailers are having to fight for a share of lower levels of disposable income, yet things once considered a luxury (like a holiday) are now thought of as essential, and so sacrifices are likely to be made in other areas.

It is highly likely that retailers for home improvements will face particularly challenging times. Some customers will spend more as people are not moving house, yet many others will not spend, preferring to save for their holiday. Businesses do need to recognise these different types of customers as their shopping behaviour will be different.

Customer shift 2: Looking for lower-cost options

More customers are choosing lower-cost options and this trend is becoming even more prevalent. Customers are becoming more savvy when it comes to spending their money and, as Poundland chief executive Jim McCarthy says, "Even in tough times, shoppers can afford to shop where everything costs a pound".

What this illustrates for other retailers who can't compete on price is the importance of customer service and the end-to-end customer experience. A customer is prepared to save thousands for a holiday while choosing to switch to a cheaper store or brand in order to save a few pounds. They still have disposable income available, but you need to be able to deliver the service and experience necessary to encourage them to spend their money with you instead.

Customer shift 3: Brand reputation and the online experience

High street retailers are pulling ahead on their online rivals when it comes to Internet shopping, mainly because of their brand strength, as customers search for brands they can trust that offer value for money. The feeling is that multi-channel retailers can provide more options for shoppers, and the gap between high street retailers and online-only is likely to widen further still.

The key message here is that retailers (particularly traditional high street retailers) need to think about their online position, otherwise they will fail to keep up with the competition and lose customers. But in thinking about the online experience, they also need to pay attention to their supporting offline experience.

In high-volume businesses, organisations often drive for efficiency, in order to keep operating costs low, by standardising processes and service delivery models. A common assumption made by organisations in this situation is that all customers want the same thing and can all be served in the same way.

But customers have different needs, wants and expectations, so it is unwise to assume that all customers will be happy to interact with an organisation in the same way. Offering a joined-up, multi-channel approach is important - unless your proposition is clearly positioned as self-service online and you manage expectations around offline support service.

Another common problem is that staff who provide the offline support are not aware of promotions that are available online to customers. This creates a very disjointed customer experience and increases the chances of someone taking their business elsewhere.

Good communication links are essential for ensuring the proposition is embedded throughout the customer touch-points, and that promotions are fully understood. Good offline communication with customers is also essential for getting insight that can help future marketing. A well thought-through, end-to-end customer experience - both online and offline - will add significant value to your proposition. It will also ensure that poor customer service is not a reason for customer to switch to the competition.

Customer shift 4: The coupon boom

Coupon redemptions are rising as consumers look for more deals. Even brands like Starbucks that typically avoid money-off coupons are joining the trend in an effort to lure in more customers. Retailers need to think about how they can use coupons to engage consumers more and retain their business. In particular, they need to consider how they can make access to coupons easier, and explore opportunities through email, mobile phones and in-store to attract interest.

The cost vs service dilemma

With retailers being squeezed on margins, they will naturally be looking to keep costs minimal while striving to keep customers coming through the door. Sadly, what often happens is that costs are cut in the customer-facing areas, such as training budgets. This has a direct impact on customer service and is something organisations cannot afford to do.

Retailers need to find the balance between reducing costs and improving the customer experience. What all retailers must remember is that the customer will ultimately make or break the company. It is crucial that the needs of the customers are met and that retailers continue to find new ways to engage with their customers and to create stronger relationships with their existing customer base.