SURVIVING HARSH ECONOMIC TIMESWoodridgeandscott
Harsh economy pressure is putting a lot of challenges on retail companies, forcing most into the difficult position of cutting back on service levels that customers have come to expect in recent years. Retail shops are being closed, operation hour have been reduced, and staff laid off to reduce cost. Still faced with rising costs, arising from inflation, they are forced to increase prices, either overtly or through fees. As a result, customer satisfaction scores are reversing and corporate performances are dropping in a number of Companies.
How can retail companies make necessary investments in service while facing the pressure on revenues and costs?
One key step is to minimize wastage while learning also to invest in the drivers of customer satisfaction. Specifically, companies should look critically at their service levels to know what customers really want. Companies that closely manage their customer experience have taken a rigorous approach to resetting service levels and, in some cases, are saving money without degrading them or customer satisfaction. These companies have carefully measured the breakpoints to find their customers true sensitivity to service level changes. From our experience, most companies that analyze their service levels carefully, have found that eliminating some wait times is more important to customers, than over-staffing to hit service targets, which costs more money and customers don’t care about them.
A second key step is to eliminate over-investment in capital and technology. Investing in technology to improve user experience would not necessarily improve customer satisfaction, an upgrade of ATM for example, by a bank to improve the user interface and adding screening barriers around the machines to enhance user privacy, would not drive customer satisfaction as much as ensuring the consistent availability of cash in all machines.
Finding those areas of wastages and plugging them would require rigorous customer experience analytics:
the collection of customer-level data,
matching survey responses to actual behavior, and
statistical analysis that differentiates to the extent possible between correlation and causation.
It will also require, a willingness to question long-held internal beliefs, reinforced through repetition by executive management. Executive management needs to have the courage to raise these questions, along with the instinct to look for ways to self-fund customer experience improvements. Companies that figure out what matters most to customers, eliminate the investments that don’t matter, and finance the ones that do, will thrive. These Companies, may find themselves, when the economy returns to normal, with fewer competitors.