Retailers to react to consumers' value demands
As the UK economy continues to decline, retailers are using new techniques to react more quickly to their customers' changing expectations, according to Gary Topiol, managing director for customer management firm Empathica.
In a recession, customers look even harder for value, but value is a hard thing to define and retailers would do well to find better ways to monitor and respond to their customers' expectations. According to Topiol, "Value is about brand equity, convenience, quality, payment security, warranty details and perhaps most importantly the customer experience. Retailers that can create the perfect balance between all these factors, are armed with a key competitive differentiator."
But, Topiol warned, to do this, retailers must gather, read and respond to customers' expectations in order to improve their experience in store. The only trouble is that each customers' expectations are different - and those expectations are changing all the time. Worse still, in a recession, customers tend to be more unpredictable than ever, so many traditional approaches to measuring customer satisfaction are inadequate.
Retailers have been hampered in their search for store level feedback as common methods such as mystery shopping and exit interviews are budget busting for more than a snapshot. One mystery shop a month, or 100 exit surveys a year, can no longer give any retailer the full picture they need.
But retailers are now able to leverage technology to gain insight from dozens of customers in every location, every month. Using the common medium of the till receipt, retailers can solicit feedback directly from thousands of their customers every day. Pioneered in the US, voice of the customer is now being rolled out by major retailers in the UK. They are now talking to their customers and getting feedback via the web, over the phone and via text messaging.
Participation levels are generally high because customers appreciate being asked for their views and given multiple response mechanisms. They also appreciate the many prizes that can be won, or discounts offered for responding. Perhaps most importantly, customers who opt into the survey at a time of their choosing and utilising the methodology they want are prepared to invest time to improve their local store and favourite brands, giving insightful comments that traditional techniques can miss.
Data of this quality, depth and breadth can be used in a number of ways. Analysed at head office, the retailer can make decisions relating to customer strategy, marketing, staffing levels, store layout and staff training. At store level, the manager can be supplied with metrics about his store - feedback both good and bad - enabling him to make changes quickly. Retailers want to encourage good customer service from their staff and will reward individual staff members based on feedback received. In this way, employees are incentivised to ensure that customers come back.
Adopting techniques like this helps to move the loyalty agenda forward quite significantly, from customer segmentation based on socio-demographics to experiential drivers, enabling retailers to focus on delivering real value. Retailers that use "voice of the customer" techniques have reported a rise in customer satisfaction, higher return visits, higher like-for-like sales, and even higher spend per customer.
Customer expectations are continually changing and retailers can use customer insight to better understand how to meet their needs. At a time when the market is contracting retailers need to do everything possible to protect and even grow their market share. According to Topiol, these methods could have a marked impact on any retailer's ability to survive the downturn and come out even stronger and more in tune with its customers.