Great customer service won't save Retail
If the corporate slashies (consultant/ guru/ blogger/opinion leaders) are to be believed, great customer service is the great saviour of future retail.
There is a paradox at the heart of retail that must be managed, and consequently great service will not be the silver bullet. (Lipstick, pigs and all that.)
Retail is a large, mature industry with multitudes of competitors in every imaginable niche. This predicates slim margins, which demands great efficiency and productivity. That in turn requires great ‘systems; the better systematised the business is, the more scalable and the more profitable it is. This is why (good) franchise systems can produce an efficiency dividend that allows franchisors to share in the improved margin.
If you want speed and efficiency and the saving in resources that comes with that, the system needs to work well most of the time.
Customer service; at least that brand of customer service that proclaims you should delight & surprise customers, and the type that claims you should go the extra mile, is by its very definition INCONSISTENT. You need to break the standard operating procedure if you want to surprise the customer.
If you decide to give the customer an extra treat with their morning coffee, or decide to give them 10% off just because ‘surprise’, these activities are by their very nature not routine.
If these activities are systematised, customers get used to i and expect it, because customers are people after all.
Just like when a parent starts giving a child ‘nice’ gift as a surprise, pretty soon they end up with the latest shoes, game or device. As soon as they have everything, they (a) expect to be continued to be gifted those special items, and (b) the entitlement grows as they increasingly expect more.
So, the paradox is that you can’t build a system that continuously delights (they become accustomed and entitled), and without a system you don’t have consistency and efficiency that produces scale and profitability.
There are of course exceptions at the extremities: the one man artiste does not need a system because scale is not an issue. And Amazon (e.g.) does not have to surprise or delight because it is so dominant in scale (and therefore variety and price) that customers effectively have fewer options, because they choose to value price & variety above surprise and delight.
But for the eighty percent in the middle of the curve, this paradox is a strategic conundrum that is difficult to solve.
Great experiences are exceedingly difficult to systematise, and if you succeed, you make it routine anyway, removing the ‘delight’ and feeding the entitlement. The more you ‘service’ the customer, the more demanding they become. The more demanding they become, the more expensive they become to serve. Then you either raise prices and become vulnerable to lower-cost competitors or you go broke.
The single most significant business insight (since tortured beyond recognition) was Thedorore Levitt’s insight in 1963 which gave birth to the notion of ‘marketing orientation’. He articulated the idea that you should understand the business you are in (you’re in the transportation business, not in the railway business) and be certain to ensure that (your offer) matches what a customer needs, and not what you are good at doing.
For example; when a customer goes to a cinema, they may be delighted (initially) if you give them free admission or extra popcorn and welcome them with their own personal valet. When they get used to it, you go broke doing it.
Instead, understand you are in the business of ‘entertainment distribution’ (or something like that) which means customers have a need for entertainment, and the movie is the entertainment and you are in the business of getting those movies to the customers. Focus on removing the obstacles to their enjoyment. Make sure you provide the appropriate environment for the consumption of that entertainment. Give them the food and drink they like to consume and nice comfy seats and good audiovisual outputs. But, most importantly, show the movies they want to see, where and when they want to.
There is nothing more to sustained success than this: a great product that customers need, and ensuring they know about it, delivered to them profitably. That is, the right business model, executed well - is what ensures longevity, not faddish proclamations that sounds great when taken on face value.
(I’ll address the difference between customer service and customer experience in a follow up post at another time, but you won’t be surprised to know that ‘delivering the experience’ is not all that it is cracked up to be either.)