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Will $15/hour really change things?

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By: Bryan Pearson |

Posted on October 16, 2018

How much good service can a shopper expect from a retail worker making $15 an hour? The answer depends on the worker’s experience.

This is what shoppers will likely learn as more retailers raise their workers’ wages. Most recently, Amazon said it will hike its minimum wage to $15, following increases by Target, Walmart, Costco and others that are pushing their pay north of $10. (The federal minimum wage is $7.25.) Among the motivations for the hikes, retailers have said, is attracting and retaining the best talent as well as improving customer service.

But delivering better service really depends on the level of employee experience retailers already have, let alone attract. And that can be a challenging task, as low unemployment rates, combined with seasonal holiday hiring, is making good talent harder to find.

Shoppers evidently do not have high hopes. According to a 2016 survey by Colloquy, which asked 1,500 consumers if they would expect better customer service if the minimum wage were raised to $15 an hour:

  • 59% said they should expect better service and overall experience.
  • However, 69% said they don’t believe they would receive better service.

Yes, improving the customer experience starts with well-compensated employees, but it requires an adherence to operational principals that extend beyond pay.

Stuck In the Middle

Central to whether pay increases result in better service is how those raises are being applied. Under the new pay structures retailers are announcing, inexperienced workers might make the same as those with a few years of practical service skills.

Economists told the Washington Post that despite requirements that employers pay more than the federal minimum wage in 29 states, those increases are not resulting in higher wages for mid-level workers.

“Poor wage growth has persisted even as we’ve hit 4% unemployment, and that’s particularly true for workers in the middle,” Josh Bivens, director of research at the Economic Policy Institute, a think tank, told the Washington Post.

Those middle workers are more likely to know how to troubleshoot unexpected issues, how to navigate operational hiccups and even recognize shoppers and predict their preferences.

[dropshadowbox align="center" effect="lifted-both" width="70%" height="" background_color="#ffffff" border_width="1" border_color="#dddddd" ]The shopper experience, in many ways, is as good as the employee’s experience.[/dropshadowbox]

Further, it’s not clear if retailers will cut back on the number of workers they employ overall to cover the cost of paying each worker more. If so, those middle workers, in addition to not getting a pay raise, could find themselves having to do more.

Putting $15 Worth Of Service In A $10 Bag

Consumers likely don’t think of worker pay while on a shopping trip, and they shouldn’t have to. If customers are not treated well, pay is a moot issue. It’s the brand that matters, and they should be treated well regardless of pay and regardless of whether they are spending $10 or $100.

Here are some basic principles for ensuring that worker compensation, whatever it is, pays off for the shopper:

Hire the right people, no matter where. It’s basic, but often retailers overlook their best prospects by not fostering the talent they have in place, and then promoting those workers. Publix, for example, promotes from within to fill all manager positions and most department positions. This is to ensure continuance of its standards and culture. Publix, which is repeatedly rated one of the best places to work, pays its cashiers nearly $10 an hour.

Invest in training. Ever been to a restaurant and the server couldn’t answer a basic question about a menu item? The same type of menu-level training should apply to retail, meaning employees should be familiar with the origin, operations and limitations of the products they sell. Some brands, such as Lowe’s, have furnished their staff with handheld devices so they can locate items on the shelves and review how-to videos. Best Buy, meanwhile, has altered its in-store systems and technologies, based on interviews with hundreds of employees, to smooth customer interactions.

Share data, to a point. Retailers can provide their employees with limited pieces of information to better inform them of common shopper behaviors. Reward program data and credit card data can help managers align their primary goals (for example, higher sales per shopper) with their highest-potential customers, identify those encounters that embody the brand’s value to those shoppers, and then modify employee training and participation to better serve the shoppers at those points.

Free workers to make service choices. Empowerment is among the best ways to foster employee loyalty. When retailers free workers to make at-the-moment judgements about how to improve a customer’s experience, those employees feel a sense of ownership in the brand, and therefore become more invested. Wayfair is among those retailers praised for giving its workers autonomy and encouraging them to take risks, which it supports through resources and trust.

Trust is perhaps the most important benefit a retailer can gives its workers. It is a necessity of loyalty, which can’t be bought. But so is respect, and a wage increase to $15 an hour won’t hurt on that front.

Bryan Pearson a Featured Contributor to The Wise Marketer and is the President of LoyaltyOne, where he has been leveraging the knowledge of 120 million customer relationships over 20 years to create relevant communications and enhanced shopper experiences. 

This article originally appeared in Forbes. Be sure to follow Bryan on Facebook and Twitter for more on retail, loyalty and the customer experience.