Putting the customer at the heart of the business is easier said than done but can reap results. Customer-centric approaches to service and retail help retailers stay relevant to loyal shoppers while also winning new business. Here are successful approaches deployed by IRUK Top500 retailers
#1 Make the customer a priority
Putting the customer first has to be more than a slogan and traders that make its shoppers a real priority are seeing measurable results at the bottom line.
Under chief executive Dave Lewis, Tesco [IRDX RTSC] has explicitly focused on putting the customer first and has seen its sales lift as a result. “The entire Tesco team is focused on serving shoppers a little better every day,” said Lewis, in the supermarket’s latest half-year results.
To achieve that, the retailer has cut prices, improved its range and ensured better availability and customer service. It also received widespread attention and acclaim in the recent high-profile ‘Marmite-gate’, when it resisted Unilever’s efforts to raise the price of the yeast spread, among other products.
All of this is paying off. The supermarket reported revenue of £27.3bn in the first half of the year, 1.4% up on the same time last year. Group pre-tax profits of £410m were 124% up on last time, although exceptional costs related to business restructuring and redundancies as well as provisions against PPI claims related to historic events meant bottom line pre-tax profits of £71m were down by 28.3% on the £99m reported last year.
#2 Think new technology
The latest technologies are enabling retailers to make customer service ever-more efficient at scale. This increases shoppers’ chances of getting faster answers to queries.
Online grocer Ocado [IRDX ROCA] is using artificial intelligence (AI) to understand and prioritise its customer emails by introducing a machine learning-enhanced contact centre. At its heart is an AI model that parses the email, adding a summary and priority tag. This cuts out work for customer service staff, leaving them free to focus on solving problems.
“We strive to deliver the best shopping experience for all our 500,000 plus active customers,” said Debbie Wilson, Ocado contact centre operations manager, at the time the innovation was unveiled. “However, working in an omnichannel contact centre can be challenging, with the team receiving thousands of contacts each day via telephone, email, webchat, social media and SMS. The new software developed by the Ocado Technology data science team will help the contact centre filter inbound customer contacts faster, enabling a quicker response to our customers, which in turn will increase customer satisfaction levels.”
#3 Improve web speed
Speed matters, whatever device a customer is using to visit a website, although shoppers may be more impatient on mobile devices. More than half (53%) of mobile web visits are abandoned if the site takes longer than 3s to load, according to DoubleClick in its study. The Need for Mobile Speed. Its analysis of more than 10,000 mobile web domains also found that the sites loaded in an average of 19s over 3G connections.
In a recent InternetRetailing webinar, Andy Davis, associate director, web performance at NCC Group [IRDX VNCC], explained why. “Being fast is not about being fast for its own sake but about reducing friction for people visiting your site. It’s about showing them the experience more quickly, making their life easier.”
Schuh’s responsive website stands out for the speed with which it loads. Stuart McMillan, deputy head of ecommerce at the shoe retailer, speaking in that website, said: “For most sites, there are a small handful of things that [retailers] could do that would take not much time to improve… They need to commit to understanding the importance to user experience and to the bottom line.”
#4 Understand what the customer wants
Understanding what shoppers really want goes some way to ensuring they are likely to buy. Rather than simply asking customers what they might like to buy, some retailers are interrogating data to be confident that what’s on offer will fit the bill.
Very.co.uk used that data to produce its V by Very womenswear collection. It drew on customer insight to produce styles that would be relevant for its target demographic of women aged 25 to 44 and came up with a collection that Shop Direct group fashion director Zoe Matthews described as “quality, feminine fashion that’s about style and inspiration combined with ease and convenience”.
“We saw a clear opportunity to create a strong own brand that recognises and serves the many roles our customers play day-to-day,” said Matt Dixon, group product director at Shop Direct, when the collection first launched in June 2016. “We’re not only tracking the latest trends and catwalk styles but every day we’re listening to our customers’ views and looking at how they shop. We’re creating a data-driven fashion brand that is truly relevant for them. It’s this relentless focus on relevance that will help to create new opportunities to expand womenswear, menswear and childrenswear, and help V by Very become a success.”
The retailer is backing the new range as a ‘hero’ brand that it believes will help grow its £850m turnover. Shop Direct chief executive Alex Baldock said: “We’re building a world class online department store and now we have an own-label fashion brand to match our ambition. We’ve created this new collection – and this new brand – alongside our customer. She’s told us what she wants and by listening to her, V by Very can become a major force in British fashion. We’re backing it big time.”
#5 Engage on social media
Responsive retailers engage with customers on the channels that customers themselves choose. This goes well beyond providing a phone number or an email address. UK shoppers have taken social media to their hearts, so now expect fast responses to their enquiries via Twitter and Facebook, the two channels that are most relevant to customer service. InternetRetailing research found the average response time for IRUK Top500 retailers to a Facebook query was under 9h, while the average response to emails was 27h.
Leading retailers performed more strongly. John Lewis [IRDX RJLW], for example, replied to an email query in just over 2h, while The Perfume Shop’s customer services team handled a Facebook query in 1h 24m and WHSmith resolved a Facebook issue in 1h 6m.
#6 Think about how customers prefer to buy…
Shoppers are moving quickly towards mobile shopping. Earlier this year, etail trade association IMRG released figures suggesting that 51% of online sales took place via mobile devices in the three months to the end of January 2016. At the time, 49% of sales took place over a desktop or laptop, 33% via tablet computers and 18% over a smartphone. Since then, smartphone sales have been growing at a much faster rate than those via tablets.
Mark Felix is director, online trade at John Lewis, which was among the first UK department stores to introduce free wi-fi for its customers. Commenting on the news of rising smartphone use, he said, “Mobile is becoming the glue between our shops and online. Increasingly, customers are using the two channels combined and, for example, use their mobiles to check ratings, reviews and further product information when in-store.”
Other retailers may find their customers use devices in different ways, depending on the products they sell and the demographic they serve. Looking at analytics and customer data will be part of any customer-facing sales strategy.
#7 …and how they like to take delivery
In the past, shoppers may have preferred to save their money and opt for standard delivery services. But figures this year from the IMRG MetaPack UK Delivery Index suggest that next-day delivery was used more frequently than standard delivery for the first time. It found that some 36.7% of deliveries were sent using next-day delivery, while 33.8% use standard delivery.
At the time, IMRG head of e-logistics Andrew Starkey said that the change was not unexpected: “Some retailers see delivery as a differentiator and are offering next day as standard, others offer it if the customer’s basket value is above a specific threshold and for others, the charge for next day is smaller than it has been on average in previous years.”
Retailer Next, a leader in the IRUK Top500 Operations & Logistics Performance Dimension Report, is among those that offer next-day delivery as standard for orders placed by midnight, at a cost of £3.99.
#8 Build the experience around the customer
By starting with what the customer wants, retailers are more likely to provide the service that meets its customers’ needs.
When multichannel sofa brand The Lounge Co launched this summer, its parent company Sofa Brands International (SBI) designed the company around the way it believes customers want to buy sofas.
Julian Neal, director of SBI, whose brands include Parker Knoll, and chief executive of The Lounge Co, said he had seen the furniture market go through “significant structural change” but that at heart, consumer behaviour had not changed at all.
“People use the internet to research our products and expect speed, ease of use and extremely high-quality content,” he said. “However, customers who are investing significantly in an item of furniture they’ll own for a decade or more want to experience the product first.”
Shoppers with The Lounge Co can research and buy online, through a local store or over the phone, but the emphasis is on the offline channel, through showroom ‘galleries’. Each features one each of 15 styles of sofa, as well as two touchscreen kiosks where shoppers can configure their own version from the 18,500 combinations available. “We invested a significant amount into this technology as part of the in-store experience because customers need to be able to visualise their ideal sofa before they buy,” said Neal.
Sales will be attributed to the local gallery, which has an exclusive catchment area, no matter how customers choose to pay for their sofa. “Ultimately, it shouldn’t matter where customers want to pay for their products,” said Neal. “They still need to be given the same excellent customer service across every touchpoint and we want our partners to be rewarded for their contribution.”
#9 Make sure it works
Having the latest technology is no consolation for customers who can’t benefit from it because it’s not plugged in or even working on the day they visit a store. Speaking at IRC 2016, Leif Bode Nielsen, head of omnichannel EMEA at Lego, said “zombie-channel” solutions were no solutions at all. “We’ve so often seen people who had omnichannel store solutions that wowed us when we saw them online but weren’t actually working when we went to see them.”
#10 Enable shoppers to see what previous buyers thought
Reviews and ratings can have a powerful effect in encouraging shoppers to buy. BrightLocal’s 2016 Local Consumer Review Survey found that 84% of people trust online reviews as much as they do a personal recommendation.
When Figleaves.com introduced customer reviews in the UK using the Bazaarvoice solution, it found that six months in, products with reviews had a 12% higher conversion rate than those without. For products with more than 20 reviews, that figure was 84% higher.
Low star reviews can be as valuable for retailers as those with five stars, since they may identify problems with products, problems that can be addressed and fixed.
#11 Take away the customer’s pain
Smart retailers smooth the path to purchase by tackling the friction points that might slow up or even divert the shopper. That makes it more likely they’ll not only complete their mission but also return to buy in the future.
Debenhams said in its latest full-year results that one key priority for it over the coming year would be to tackle some of these key customer pain points. The department store, a Leading retailer in IRUK Top500 research, has a ‘fix list’ that includes making returns and refunds simpler, improving service in its restaurants and making it easier for shoppers to pay in-store through both mobile and contactless payment solutions.
#12 Think loyalty
Loyal customers can be powerful advocates for any retailer or brand. They’re likely to spend more, particularly if they shop across channels, and technology has given traders new ways to encourage such shoppers to remain loyal.
Loyalty schemes now run across channels, enabling shoppers to collect points that entitle them to discounts and rewards regardless of whether they buy online, in the store or through the app – which, when it includes the loyalty scheme, can replace any plastic cards. Customers using the House of Fraser iOS app, for example, can scan their Recognition loyalty cards from the app when buying in-store but can also manage their accounts from the app. Even the act of downloading an app can itself demonstrate loyalty, since shoppers who make space for it on their phone are, it would seem, more likely to use it.
Other internet-driven subscription or membership schemes include Amazon Prime and Ocado SmartPass, where shoppers pay a fee in return for discounts and free delivery.