There's good news and bad news in the world of retail.
The bad news is retail customer satisfaction dropped for the the second straight year in the American Customer Satisfaction Index (ACSI). It fell 2.6 percent between 2014 and 2015.
The good news is the current score of 74.8 is still slightly above retail's long-term average of 74.6.
This post highlights key findings from the ACSI's 2015 Retail Report. You can also download the complete report.
Here's a brief overview of the report before we dive into the findings.
ACSI generates their reports by interviewing approximately 70,000 customers in the United States. Scores are measured on a scale of 0 - 100, with 100 being highest.
The Retail Report looks at six retail sectors:
- Department & Discount Stores (Nordstrom, Target, etc.)
- Specialty Retail Stores (Costco, Bath & Body Works, etc.)
- Supermarkets (Trader Joe's, Kroger, etc.)
- Health & Personal Care Stores (CVS, Walgreens, etc.)
- Internet Retail (Amazon, eBay, etc.)
- Gas Stations (Chevron, Mobil, etc.)
The report also breaks out sector-specific data for all the sectors except for Gas Stations.
Interestingly, Gas Stations was the only retail sector to enjoy an increase in customer satisfaction, climbing 2.7 percent to 75. ACSI speculates that this increase is attributable to a decline in gas prices.
There are three areas that retailers should focus on if they'd like to improve their scores.
#1 Speed up the checkout
This was the lowest rated dimension for all of the physical retail categories.
In some ways, this is a very real problem. Many retail stores are cutting hours, leaving their registers short-staffed. Getting customers checked out is also a logistical challenge that retailers have struggled with for years.
In other ways, speed of checkout is a perception issue. One study found that customers can overestimate the time they've spent waiting by an average of 36 percent. Companies would do well to follow a few tricks to improve their customers' perception of wait time.
#2 Fix the contact center
The contact center was another common gripe for retail customers. Among service dimensions, it was at or near the bottom for internet retail, supermarkets, specialty retail, and discount and department stores.
I was able to identify some external data that highlights some of the problems.
- 86% of contact centers don't fully empower their employees (ICMI)
- 55% of contact centers take one day or more to respond to email (TPS)
- 67.2% of tweets are ignored by retailers (Socialbakers)
Here, retailers also face a perception problem. There are other companies that are absolutely nailing contact center service.
These outstanding service experiences set the bar higher for contact centers everywhere.
#3 Physical stores are an opportunity
Having a convenient location is one of the top customer satisfaction drivers.
Unfortunately, a lot of retailers struggle to get it right. In the 2015 UPS Pulse of the Online Shopper report, consumers rated their satisfaction with physical stores at 62 percent compared to 83 percent for online.
To make it worse, a lot of retailers closed stores in 2015.
Wal-Mart, Sears, and Albertsons were just a few of the retailers that recently closed locations or announced store closures. In my neighborhood, for example, the closure of an Albertsons created two problems. First, it made grocery shopping less convenient for many people who lived near the store. Second, it made grocery shopping more of a hassle at other stores in the neighborhood that absorbed for Albertsons customers.
The challenge for retailers is paying escalating rent and salary costs while prices have remained relatively stagnant.
It's not completely hopeless. In her book, The Good Jobs Strategy, Zeynep Ton profiled retailers such as Costco, TraderJoe's, and Quick Trip that use outstanding customer service and operational excellence to wring consistently high profits out of their retail locations.
The Big Opportunity
When everybody zigs, it's time to zag. Retailers have to think differently to improve their service.
For checkout, think Apple Store where the associate who helps you also rings you up without you ever having to wait in line.
For contact centers, think REI where you consistently interact with helpful representatives who are empowered to solve your problem on the first try.
For physical locations, keep an eye on Whole Foods, which is launching a new small-store concept that will allow them to put stores in more neighborhoods.
My biggest advice of all would be to focus on doing two things really, really well.
First, empower and train your employees to making personal connections with customers whenever possible. Second, make sure your customer experience is remarkably consistent.
These two factors are why your local Starbucks has a line of people every morning who are willing to pay $2.00 for a basic cup of coffee.