Report: Why Retail Customer Service is Dropping

A new report from the American Customer Satisfaction Index shows a drop in retail customer satisfaction. From department stores like Nordstrom to specialty stores like Bed Bath & Beyond, customers are less happy than they were a year ago.

How can this be possible in an era where customers are bombarded with survey requests and access to big data is at an all-time high?

The answers have to do with people. How people are staffed, managed, and the duties they are asked to perform all have an impact on customer satisfaction.

You can access the full report or read below to see the highlights and analysis. To kick things off, the chart below shows a comparison in overall satisfaction between 2017 and 2018 on a 100-point scale:

Retail customer satisfaction declined from 2017 to 2018.

Retail customer satisfaction declined from 2017 to 2018.

Trend #1: Courtesy and Helpfulness of Staff

This one is down across the board.

Courtesy and helpfulness from retail employees has declined.

Courtesy and helpfulness from retail employees has declined.

Staffing levels have a big impact on this category. Retailers routinely understaff stores in an effort to save money, but this leaves the few available employees running ragged trying to serve multiple customers and complete tasks like restocking and merchandising.

Another issue is the surveys that seemingly appear on every retail receipt. These should help retailers detect problems like unfriendly employees. But the dirty secret is many retailers don't actually use those surveys to improve. And many even manipulate the surveys to make the scores look better than they really are.

A 2016 report from Interaction Metrics found that 68 percent of retail customer satisfaction surveys were "total garbage."


Trend #2: Layout and Cleanliness of Store

There's a slight dip in this area.

Stores need to improve the cleanliness and layout.

Stores need to improve the cleanliness and layout.

Part of the challenge is staffing (see Trend #1). Stores struggle to stay clean and organized when there aren't enough employees to do the work.

Another is command structure. Many retail chains make store layout decisions at the corporate level, and don't do enough field testing to ensure the designs actually make sense. Last year, I did a comparison of my local Walgreens, Rite Aid, and CVS and noted important differences in the layout of each store.


Trend #3: Speed of Checkout Process

The checkout process was another area where satisfaction dropped across the board.

Checking out is too slow at retail stores.

Checking out is too slow at retail stores.

Here again staffing plays a role. We've probably all wasted time wandering around a department store, searching for someone to ring us up. And that's precisely why so many people would rather shop online—it's much easier.

Customer satisfaction with speed isn't just about the actual amount of time it takes. People are heavily influenced by perception. So a pleasant experience with a friendly cashier that takes five minutes will feel like a breeze, while an unpleasant experience that also takes five minutes will feel like an eternity.

Retailers could help themselves by studying these factors that influence wait time perception.

Take Action

There are three easy ways retailers can check these trends in their own stores.

Talk to employees. I have no idea why managers don't spend more time doing this. Employees will almost always be forthcoming about the challenges they face if you ask them sincerely.

Walk your stores. Spend time walking through your stores like a customer. You'll often discover unexpected problems that your customers encounter every day.

Use surveys wisely. Customer feedback surveys can be valuable tools, but you should use them wisely or not use them at all. This short video will help you decide why you want to run a survey program.

ACSI Report Reveals Three Focus Areas for Retailers

There's good and bad news for retail customer service.

In February, the American Customer Satisfaction Index (ACSI) released its 2017 retail report that tracks customer service trends in several retail industries such as department stores, supermarkets, and health and personal care stores.

The good news is some retailers are providing excellent customer service. Publix, a company I profiled in The Service Culture Handbook, was the highest rated retailer overall.

The bad news is some major retailers are struggling with customer service, particularly in the specialty retail and department store categories.

Here's an analysis of what's driving those ratings along with a sample competitive analysis of three popular drug stores: Rite Aid, Walgreens, and CVS.

Exterior view of a CVS drugstore.

Driver #1: Location

I once asked the CEO of a credit union I was working with to describe the one thing he wanted to do to improve service. Without hesitation, he replied, "Add more locations."

Convenient locations are incredibly important to retail. Customers need to be able to visit your location with minimal effort. Convenience also includes how easy the store is to get in and out of, such as parking or accessible entrances.

In my drugstore comparison, I selected three competing drug stores that are all located with a half mile of each other in San Diego. 

Rite Aid: This store was situated in a large parking lot with plenty of spaces. The parking lot had multiple entrances from three streets.

Walgreens: Like Rite Aid, this location was easily accessible from a parking lot that had multiple entrances from two streets. There was plenty of parking, but it was a little less convenient due to one-way routing around multiple medians.

CVS: Easily accessible with a large parking lot and plenty of spaces. The parking lot has multiple entrances from two streets.

The locations for all three stores were virtually identical, so it's probably a tie in this case.

 

Driver #2: Cleanliness and Layout

The customer service vision at Publix is, "Where shopping is a pleasure." Visit a Publix supermarket and you can see the stores have been designed with this vision in mind. 

They stores clean and neatly organized. Aisles are wider than a typical supermarket, making it easier for shoppers to pass each other with loaded carts. There are even helpful signs in the produce section that provide advice on selecting and storing various fruits and vegetables.

In my drugstore comparison, I decided to look for the same list of toiletries: deodorant, suntan lotion, hair gel, and a travel toothbrush. This time, my experience was different from store to store.

Rite Aid was modern-looking and well-laid out with excellent signage. The different colored flooring created a neater look and the visual contrast also seemed to make it easier to find my way around the store. There was also a Thrifty Ice Cream counter, which brought back some fond childhood memories. (Note to self: must go back for a cone.)

There are a few negatives. Some items were piled too high on top of the aisles, which made it difficult to see parts of the store. And the deodorant was oddly locked in a case, which meant buying some required assistance from an associate. (More on that in a moment.)

Inside a Rite Aid drugstore.

Walgreens was clean, though the white linoleum floors looked out-of-date compared to the Rite Aid.

Inside a Walgreens drugstore

One odd piece was the signage did not match the product selection in several places, which made it more difficult to find what I was looking for. The men's hair care section was on a completely different aisle.

Men's hair care sign hung over the shaving section.

CVS had the largest store of the three. Despite it's size, an open layout and helpful signage made it easy to navigate throughout the store. One small tweak that stood out was the omni-directional aisle signs, so they were easy to see from multiple angles.

Inside a CVS drugstore.

Driver #3: Courtesy and Helpfulness of Staff

Employees can make or break a retail experience. The right people can create a positive customer service experience, which in turn drives sales.

Apple is consistently the retail leader in sales per square foot. One secret to the company's success is employees who help customers confidently select the right products. I've managed to get fast, friendly, and helpful service even on days when the store appeared to be packed with customers.

The flip side of this equation is also true. Having the wrong people, or too many, can cost a business money. This is why retailers should consistently evaluate staffing levels and hours of operation.

There were some contrasts in my drugstore comparison.

Rite Aid had one cashier on duty. I had to wait less than a minute for assistance. She was friendly, albeit transactional. I did not encounter any associates on the sales floor, which was too bad because I was having trouble finding hair gel and would have needed someone to unlock the deodorant. There was also no one who greeted me when I entered the store.

Walgreens also had one cashier on duty. Like Rite Aid, this cashier was friendly and transactional. Also like Rite Aid, I didn't encounter any associates on the sales floor and nobody greeted me as I entered the store.

CVS stood out in three ways. First, the cashier gave me a friendly greeting as I entered the store, despite being busy with customers. Second, an associate greeted me while I was browsing and offered me assistance. And third, I witnessed the single cashier patiently help an elderly customer remove her purchase from the package after she mentioned she had trouble with it. I appreciated this extra kindness, even though it meant I had to wait an extra minute.

 

Conclusion

CVS is the clear winner in my mini-comparison. 

The locations are all similar, so these companies will compete on other factors. The store design at CVS made it easiest to find the items on my shopping list. Friendly employees made me feel welcome and were also available to help me find something if necessary.

Notice price isn't mentioned in this comparison. The prices at each store were similar and the reality is I could get better prices for everything online without having to drive to a store.

These physical retail stores need to offer something beyond good prices to attract and keep customers. In today's world, a generic, transactional retail experience won't cut it.


Why Retail Customer Satisfaction Continues to Drop

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.

Report Overview

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.

 

Top Findings

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. 

For example, I recently detailed how Verizon does an awesome job with phone support and Alaska Airlines really gets social listening.

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.


The Right and Wrong Way to Serve Retail Customers

Retail is one of those places where sales and customer service intersect.

The primary function for most associates is helping the store sell product. They do that by providing customers with services, such as answering questions or helping them find a particular item.

How associates approach their dual role can make all the difference. There's definitely a right and a wrong way to do it.

My wife and I recently experienced both ends of the spectrum on a shopping trip. We wanted to buy two new couches for our living room. Here's what happened.

Image courtesy of  Urbane Apartments

Image courtesy of Urbane Apartments

The Approach

Bill approached us the wrong way. 

He saw us looking at a couch and immediately descended upon the scene like a price hawk. A price hawk assumes that everything is about price.

Bill's opening line was "We're having a great sale on that couch right now." This was a huge turnoff since (a) Bill hadn't even said hello and (b) we had many questions to answer before deciding on the right couch.

Brian at Living Spaces approached us the right way.

He walked up to us with a big smile and introduced himself. He then asked if he could help us find the right couch. It's a big store and we had lots of questions, so we gladly accepted his offer.

 

Questions

Bill made things complicated.

It wasn't all his fault. The brochure for the couch we were looking at read like a code book. You could select six different options for the arm, six more for the legs, and three for the pillows. There was an intricate chart where you cross-referenced the code numbers for various options to see the final dimensions and prices.

It seemed to take a bit of higher math just to answer our most basic question. Will this couch fit our needs? Bill literally had to spend several minutes running the numbers.

Every other question we asked turned into an unnecessary symposium on furniture design. We learned plenty of things we didn't care about. It was tough sifting through all the irrelevant details to learn what we did want to know. Questions like "Will it last?" shouldn't require a college course on furniture design.

Brian made things easy.

He clearly knew his product, but he also used a simple one-page sales sheet for each couch to answer our basic questions. He immediately addressed our key concerns:

  • Will it fit in our home?
  • How long will it last?
  • How's it made?

Brian's answers were clear and direct. He also asked us a lot of great questions to get a better understanding of our needs. This allowed him to narrow down their huge selection and only show us the couches that were most likely to be right for us.

 

The Zone of Hospitality

Bill was focused on the sale. He gave us his card and left us to serve another customer as soon as it became apparent that we weren't ready to buy.

Brian was incredible. He practiced the 10 and 5 rule without breaking stride. At 10 feet away, he'd smile or give other customers a non-verbal acknowledgement. He'd greet customers verbally when they got within 5 feet.

Brian still remained attentive to us the entire time. He stayed with us and answered our questions until it became apparent we needed some time to think about our options. He then politely excused himself but told us he'd be available if we needed anything else.

 

Conclusions

We haven't bought a couch just yet. 

There are a lot of decisions to be made such as color, style, and delivery time frame. We're getting closer. When we do decide to by a couch, we'll be sure to go find Brian at Living Spaces.

Benchmarks Give Mixed Reviews for Retail Customer Service

How does your service measure up?

How does your service measure up?

You can learn a lot from customer service benchmarks. You just have to be willing to conduct a little analysis.

Two retail sector customer service benchmarks were published earlier this month. The results are a mixed bag. One thing is for certain - smart retailers will take note of a potential problem.

First, the good news. Retail customer satisfaction is up overall.

The 2013 American Customer Satisfaction Index for the retail sector was 77.9 percent, up 1.7 percent from 2012. This score was bolstered by supermarkets, drug stores, and specialty retailers all posting gains in satisfaction. Amazon boasted a 4 percentage point gain in satisfaction while Netflix continues making a comeback with a 5 percentage point gain. Then there’s Charles Schwab, whose satisfaction rating grew a whopping 9 percentage points.

There were also some ominous signs.

The 2013 Q4 Zendesk Customer Service Benchmark for retail customer satisfaction declined 6 percentage points from Q3. A slight decline in the fourth quarter is normal in retail when sales volumes and crowds increase with holiday shopping. However, the Q3 to Q4 decline was three times larger in 2013 than it was in 2012. 

Zendesk’s analysis pointed to growing agent workload as one potential culprit. 

They are a customer service software company, so they were able to analyze their clients’ aggregate ticket volume. (These interactions are typically contact-center based, rather than face-to-face in a retail store.)

Customer service departments typically get busier in Q4 due to holiday shopping. In 2012, the average number of tickets handled per active customer service agent increased 13 percent in Q4 from Q3. This spike grew larger in 2013 when the increase was 17 percent.

This bears repeating. In 2013, customer service employees had 17 percent more work to do in Q4 than they did in Q3. That's nearly a full day of extra work, based on a typical five day workweek.

Mo' work equals mo' problems.

Problems take longer to solve when workloads increase. Longer wait times lead to increased customer aggravation. Too many aggravated customers can cause customer service employees to feel burnt out.

Higher workloads for customer service employees can also lead to inconsistent service for individual customers.

Employees look to cut corners when they feel pressured to get more work done. Rapport-building diminishes. An emphasis on speed can actually hurt first contact resolution

It can become a vicious, self-reinforcing cycle that leads to even higher volumes.

Customer service employees often modulate their effort level during busy periods. They work faster when volumes are high, but they also work slower when volumes are low. Temporarily low volumes are seen as an opportunity to rest and recover before the next onslaught begins.

Managers have a hard time keeping up too. The extra volume means more issues demand their immediate attention, leaving less time for coaching employees and solving problems.

 

Will 2014 Be the Same?

It’s admirable to try to avoid the Q4 madness from 2013. So, what will you do?

I’d focus on three things if I were in your shoes: