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The Toronto Star, 07 / 09 / 2004
Serving service to customers
Originally published at:
http://www.thestar.com
A recent report says retailers who hope to survive U.S.-based department store Target's takeover of Hudson's Bay Co., should rumour become reality, need to improve customer service now, before it's too late.
And that applies as much to small retailers as to large ones--and perhaps more.
'Our research applies to any business that has a customer,' says Paula Courtney, president of The Verde Group, the Toronto-based consultancy that issued the report. But small retailers are particularly at risk from the arrival of Target: when Wal-Mart came on the scene in Canada in the mid-1990s, many small retailers found they couldn't compete and went out of business, she says.
According to the report, which is the result of 26 studies over the past five years in which 25,000 customer responses were analyzed, 14 per cent of revenue is tied directly to the customer experience but that experience is often not good.
The study indicates about 60 per cent of customers have experienced at least one problem with a company's products or services in the past six to 12 months, but less than 30 per cent are satisfied with the company's resolution of their problem.
Often the dissatisfaction is due to the lack of customer-focused return policies many small retailers have, she says, so the first step towards improving customer retention is making that process easier for the customer. It's expensive to handle returns and exchanges, she says, but it actually can cost up to five times more to acquire than retain customers.
And while unhappy customers might not tell the retailer how they feel, they have no problem sharing that with friends and family. 'Customers will tell at least four other people about a problem they had, and many small businesses live and die by referrals,' she notes. 'And when they lose a customer it hurts more.'
The report also advises retailers not to play 'the price game,' trying to compete with other retailers by holding seasonal sales.
'It is true a large portion of the world is lured by low prices, but that's not the majority of the world,' says Courtney. 'There's another significant portion of customers who look for value, which is quality over price.'
Diane Briseboise, president of the Retail Council of Canada, a non-profit association representing the retail industry, agrees. Briseboise says in order to survive in retailing in Canada, small retailers need to identify their niche market and provide superior personalized service.
But that's something Canada's small retailers are already very good at, she argues.
'They're able to do that because of their size and they can take the time to provide that value-added service to the customer,' she says.
Briseboise says her association's small members don't expect the arrival of Target to have the same impact Wal-Mart's arrival had because they believe it would take over the existing department store market, as opposed to the small retail market.
'The other difference is Canadian retailers today are generally operating much more efficiently, and that includes small retailers, not only because of Wal-Mart, but because it's a very competitive market with very savvy consumers. So both small and large retailers in the country are in a much better position to compete with a new retailer,' she says.
According to the Verde Group study, one of the key ways to improve customer service is by hiring the right staff and training them to provide great customer service.
Recruiting the right staff is frequently cited by small businesses as one of their greatest challenges, but it doesn't necessarily require so much more money as it does time, says Courtney.
'What's really amazing is it doesn't take huge salaries; you don't need to spend a lot of money to hire the right attitude,' she says. 'Often it's not so much that I need to pay a lot more to hire somebody who's good with the customers. It's that I need to hire the right person, so spending more time interviewing front-line staff to make sure they are already predisposed to have a customer-first attitude is huge, and they might be making the same amount of money as someone without that attitude.'
That has been Jane Hall's experience. Hall, who with partner Ian Levack has been operating The Voice of Color, a retail store/interior design consultancy for three years, had a staff of eight a month ago. She's now down to three, and is looking, as she puts it, 'to hire two people. I want to have fewer people more highly qualified. It's a much better use of money.'
Hall, whose business won the ARC Award for best retail concept in Canada shortly after opening her doors, says she has engaged business consultant Anne Dranitsaris to help her through the process of hiring the right people. She has spent weeks interviewing candidates, whom she now requires to take the Meyers-Briggs personality test--a big change from the way she used to hire.
'The way I did it in the past was someone came in and if they looked like they had some experience and they looked OK, I hired them. Now I'm being more stringent. I'm making it much more business-like.'
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