Frustrations with CX today and NEXT-GEN approaches (Part 2)

The Problems with CX today: a recap

In the first part of this post, we cited the following reasons why current approaches to Customer Experience (“CX”) measurement and change management, have all but lost the attention of the C-suite…

1) CX programs, in general, FAIL to clearly and simply connect the dots to what C-level executives really care about: increasing revenue, reducing costs, and improving profitability.

2) Current approaches to CX do very little, if anything, to support rapid innovation and test & learn in-store, which is critical to success in a rapidly changing retail environment.

3) CX today promotes a very “reactive” approach which has the business constantly looking in the rear view mirror with slow developing insights and trends, as opposed to instilling an aggressive, offensive mindset that puts the organization on the front foot.

4) Even when combined with key driver analyses, today’s programs are deemed as NOT ACTIONABLE by store operations teams— who are often frustrated by stagnate scores, anaemic response rates and general poor visibility into customer perceptions at the individual store level.

Before we start to solution, it’s important to quickly discuss the current role response rates and key driver analyses play and why they are missing the mark for so many retailers.

The Feedback Gap

The traditional approaches to collecting feedback—whether receipt-tape invitation, email or SMS—have seen a steady decline in participation over the past several years, as time-poor consumers are simply not willing to take the time to engage with these cumbersome and often painful methods.  It’s pretty ironic that these are often referred to as “Satisfaction” surveys – talk about a bad customer experience.

As we explored in a previous post (What Retailers can Learn from the Last Presidential Election) the net outcome of this is low response rates, that tend to capture in most cases only extremely good or bad experiences.  This is especially painful for store operations teams and field management, as it leaves them blind to the majority of customer interactions.

The key to being recognized is to be 10% better than average all of the time”. – Shep Hyken

Continual improvement at the store level, requires customer feedback pouring in by the minute for each and every location, enabling ops manager to quickly understand how their execution and levels of customer engagement are impacting their sales while providing the ability to measure the immediate impact of corrective actions taken.

If the majority of stores can then begin to make these incremental improvements, week over week, month over month, the aggregation of continuously meeting and exceeding expectations is how retailers can systematically move the needle on fundamentally important KPIs, like same-store sales growth.

And if we really want to re-capture the attention of the C-suite, isn’t better to be able to show a 0.75% lift in same-store sales growth, as opposed to a 4 point lift in NPS scores?

So, what does NEXT-GEN CX look like?

Where today’s CX programs foster a primarily “reactive” mindset to CX measurement— waiting quarters for trends to develop often focusing on customer complaints and customer resolution—NEXT-GEN CX is focused on speed to insight and simplicity enabling retailers to be more aggressive, more precise and more agile. Exactly the traits needed to survive in a world where continuous evolution has become the new norm.

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NEXT-GEN CX In Action: Customers who answered YES, when asked if this simple associate behavior was performed, spend on average 24% more

Real-world example: “Did our associates offer to start a fitting room for you today?” is one of the simple questions asked by an apparel retail client of ours on the payment terminal during checkout.

With an 83% response rate, they learned in just three weeks that customers who responded YES spend 24% more versus those that responded NO, which also turned out to be the #1 driver of customer spend in-store.

Just as eye opening, this retailer quickly discovered execution on this behavior varied by over 60% across their 600+ stores, representing over $54M in lost sales over a 12-month period, just taking into consideration the impact to average transaction value (ATV) alone.

“While I wouldn’t say I was surprised by the result – that’s the reason we asked the question – it’s just that we could NEVER measure these types of behaviors with enough precision to do be able to do anything with it, much less predict the economic impact.”

—COO, apparel retail client

A Recipe for Success

If we break this down a bit further, there are several important takeaways from this example:

  1. SIMPLICITY is the ‘secret sauce’ of NEXT-GEN CX

Making it simple for customers to provide feedback yielded an 83% response rate, opening up this retailer to hear and learn from the once silent majority of customers.  Store managers know now exactly where to focus— which stores, which day(s), which shift(s), as well as how much money is being lost as a result of inconsistent execution.

  1. DIRECT CONNECTION TO SALES and items purchased is a MUST

The power and benefits of collecting customer feedback and perceptions tied to directly sales and items purchased, in the moment, cannot be understated.

  • First, it greatly simplifies the organization’s efforts to quickly pinpoint the key drivers of customer spend and repeat visits—key tenets for improving comparable sales. As opposed to waiting years, retailers can learn in weeks the specific behaviors and onsite conditions that truly impact sales and not just the customer’s fleeting perception of ‘satisfaction’ or ‘likelihood to recommend’.
  • Second, it greatly enhances buy-in at the store-level when it comes to driving change by enabling field and store management to quickly and easily understand the immediate financial impact based on their current level of execution. Many retailers are actually seeing this change the dynamic between field and store management, bringing both parties on the same side of the table, aligned around truly representative feedback from customers with a clear understanding of the economic impact.
  1. SPEED to INSIGHT

Enabling the retail organization to hear from the overwhelming majority of customers drastically truncates the time it takes to see patterns and trends in the data, which greatly enhances the organization’s capabilities in two key areas:

  • The ability to improve day-to-day operations due to dramatically improved visibility into execution and perceptions, most importantly, with the ability to measure the immediate impact of corrective actions taken both on CX and financial performance; and
  • The flexibility and speed to measure the immediate impact of single and small store test & learn initiatives and pilots, building the financial business case for investment and at the same time reducing time to market for new initiatives.

NEXT-GEN CX: A compliment not a replacement

NEXT-GEN CX is providing retailers the ability to surgically leverage CX measurement across departments, supporting continuous innovation and test & learn initiatives, while at the same time providing store operations teams with the tools they need to drive change at the, all-important, store level.

As opposed to applying a blunt force “CX club”, NEXT-GEN CX is providing retailers with a “CX scalpel”, including a level of fidelity and precision measurement that takes CX from being a simple pulse of the customer to an indispensable instrument that can help fundamentally change the trajectory of the company.

So, am I suggesting that multi-location retailers completely dismiss and throw there current CX approach to the curb? Absolutely not! But what I am suggesting is that retailers take a long hard look at how they currently engage and collect feedback from their in-store customers and honestly evaluate the value this is delivering to the business.

And at a bare minimum, keep an open mind to some of the more innovative approaches for collecting feedback from your customers and ingraining this into the DNA of the organization.

Read Part 1 Now. 

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We’ll be at NRF – if you’re heading there and would like to book time with us, you can do so here.

Alternatively please feel free to reach out to Sam via email or LinkedIn at anytime.

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