Regardless of the sales channels, you need to make customers feel like royalty. The four steps of measuring customer satisfaction can show you how
Multichannel marketers must measure variables that affect satisfaction in a specific channel while establishing uniform standards across all channels
Many catalogers swear by the adage “If you treat your customers like gold, they will continue to fill your pockets with the same.” They realize customer satisfaction — the basis for loyalty, then retention, and ultimately, profitability — is critical to success in any channel.
But few take the next steps to measure satisfaction properly, determine areas of weakness, and make the necessary improvements to strengthen the bottom line. To be successful across multiple channels, catalogers need to use both channel-specific measurement tools and uniform standards for measuring customer satisfaction.
True, it’s a daunting task to compare customer satisfaction across channels. For today’s multichannel retailers, the online, catalog, and retail channels each require different measurement mechanisms. To attain uniform goals and standards for comparison, you must reconcile incompatible measurement systems, terminology, and individual channel goals — if possible. Channel-specific factors must be measured independently, rather than across channels.
For instance, when measuring checkout efficiency and speed in retail stores, a marketer would evaluate a sampling of transactions across multiple stores for error rates in keying items/prices into the register, how long transactions took, and how long customers had to wait in line.
Online, the same marketer would measure checkout ease and speed by examining the number of fields into which customers had to enter information, evaluating the number of clicks or pages required to complete transactions, the number of abandoned shopping carts during a period of time, and how long the average transaction took from start to finish. A print cataloger, meanwhile, would consider how many rings it took telephone service reps to answer calls and how long it took to place the order.
So you can see why making any comparable conclusions regarding checkout speed and efficiency across channels would be irrelevant: The processes are unique.
Customer satisfaction is difficult to measure accurately in any channel, let alone across multiple channels. For one thing, while you may hear — loudly — from very unhappy customers, you’re less likely to receive feedback from customers who are only mildly dissatisfied.
Marketers use a number of traditional mechanisms, such as phone and mail satisfaction surveys, customer intercept surveys, focus groups, complaint and suggestion systems, and secret shoppers to determine whether customers are satisfied. But most of these methods are geared to produce general ratings about the marketer’s customers’ shopping experience — with little qualitative explanation about the specific sources of opportunity or areas of success.
Survey results are often vague and do not identify areas the cataloger needs to improve. And if they do, there is no guarantee that these areas represent the correct changes to implement. Complaint and suggestion systems (such as the old-fashioned suggestion box), although much more qualitative, do not usually get to the heart of the issues and often tend to be outlets for customers to vent frustration.
In fact, a number of retailers that use suggestion boxes and the like remove them during the holiday shopping season, although 35%-50% of their annual traffic will come during that period. That’s because most retailers are more occupied with immediate concerns, such as reducing checkout times for customers, during the busy holiday season than with overall customer satisfaction.
The four steps of measuring satisfaction
Rather than implement tactics that improve ratings or survey scores, retailers should implement customer satisfaction management (CSM) techniques that highlight areas for improvement in the shopping process. The steps below will help you identify weak points and improve customer satisfaction:
Look through the eyes of your customer.
Rather than simply asking customers whether they are satisfied, catalogers should determine exactly which tangible, quantitative factors — from merchandise assortment to delivery time — shape a customer’s subjective impression of perceived value and expectation, and measure these factors.
Internally, you must look at the shopping process from the customer’s point of view, from prepurchase information gathering to post-purchase support requests, and compare it against your internal procedures that affect these processes, from sourcing of product to customer service.
Specifically, you want to examine four categories of performance:
Product- and price-related How diverse is the merchandise assortment that the consumer encounters, regardless of the channel? How high is the product quality? Are the prices competitive?
Service- and transaction-related How knowledgeable are the customer service representatives or floor sales assistants? What types of online features make shopping easier?
Operations-related How accurate is the order process? How quickly are orders taken, processed, and fulfilled?
Brand-related Did the customer enjoy the overall shopping experience? Did he experience consistency of services across channels?
Develop a standard system of measurement
Marketers such as L.L. Bean and Nordstrom know all about treating customers like gold. These companies are known for their strong customer guarantees, by which they will replace any goods that a customer is dissatisfied with.
Still, such catalogers could not possibly remain in business if they had to replace every customer’s goods. Instead, they have recognized the value in learning from the process and determining the appropriate business functions to target for improvement (such as stepping up product development and quality to reduce returns) so that satisfaction is improved.
In fact, L.L. Bean uses a “balanced scorecard,” a report card on company performance. In addition to reviewing profit-and-loss goals, inventory goals, and return on investment objectives, the scorecard reviews the factors that affect customer satisfaction.
It’s important that you evaluate internal performance measures, such as return rates from customers (an indication of product quality), an increase in new customer generation, and the percentage of revenue from repeat customers vs. new ones. This balanced scorecard sets a high standard for company performance; some retailers even base employee compensation upon how well these objectives are met, motivating employees to improve the shopping experience on an ongoing basis.
After identifying the issues that a customer encounters in his shopping experience, you must develop a model of pinpointing — then correcting — the factors that cause customer dissatisfaction. You should then conduct internal benchmarking of the appropriate performance metrics for all of the processes that affect the customers’ perceived value of their shopping experience.
Apply channel specific measurement standards where appropriate.
Not all CSM techniques are applicable across all channels. In some situations you’ll need to use measurement tools that are appropriate for each venue. For example, while it is more appropriate to measure product quality through return rates at the company level, it may be appropriate to measure new customer generation within each individual selling channel.
Another example: Lands’ End’s Website uses Lands’ End Live, an interactive chat feature intended to support the online shopping and checkout processes to get customers’ feedback about Lands’ End’s site performance. As such, it pertains only to the Website.
The Internet is a venue that by its nature encourages feedback. Chat technology, by definition, requires two-way interaction and skilled customer service staff that not only can assist Internet shoppers in completing an online purchase but can also query a customer for his thoughts on, say, how well the site is laid out for convenient navigation. The responses can then be documented, analyzed, and used to make specific improvements to the site, in such areas as e-mail response, site functionality and features, and shipping charges. Not only are these responses easier to obtain than in the offline world, but they are also easy for the online retailer to organize.
This particular measurement tool would obviously not work for a retailer, however. And although catalogers could easily log telephone conversations with customers in the context of complaints, suggestions, and desires, the Web, given its level of customer interaction, is the most appropriate venue for this type of survey.
For both print and online catalogers, operations and fulfillment issues such as delivery speed and accuracy, as well as service and support processes such as returns management, present a unique challenge not faced by store retailers. Also, appropriate service and transaction factors vary among channels: An effective Website design is different from a profitable catalog layout, which is different from a successful store plan. What’s more, all three channels have their own unique terminology.
Multichannel marketers must balance measuring variables that affect satisfaction in a specific channel with the need to establish uniform standards that apply across all channels.
Take inventory availability. Multichannel retailers constantly struggle with improving the service levels in each channel without jeopardizing the optimal inventory investment for the company. Dedicating inventory to specific channels may improve service levels within each separate channel, but ultimately increases overall inventory investment, since demand is not constant across all channels. Pooling inventory optimizes the inventory investment (and reduces chances of overstock at season’s end) but requires greater cross-channel visibility of inventory and more flexibility in transfers and allocation — and means it’s less likely that you will meet satisfactory service level expectations in all channels. Fulfillment of one channel, then, often comes at the expense of another.
Take action, evaluate results.
Armed with the results of how you perform within various categories, you can improve customer satisfaction. Having identified the factors that affect customer satisfaction, you can query customers on those factors relative to last year, for example. Then you can compare the responses to your actual internal benchmarks and identify specific areas that need improvement.
In the late 1990s, a large home-improvement retailer conducted a study to understand how much emphasis customers placed on price in determining which stores they shop from. In the process, customers also cited non-price-related factors, such as service levels, store layout, clear signage, and easy checkout, as areas that would increase their level of satisfaction. In response, the store implemented a new sales training program.
The point is that you need to consider the entire shopping process and all the factors that could conceivably boost or diminish customer satisfaction. You must look beyond any one isolated factor.
Whether you are a single-channel or multichannel marketer, your competitors likely have more than one channel, and your customers have many options to choose from when shopping. Today, more than ever, you’ve got to earn your customers’ business — and fight to keep it. That means treating customers like gold, and making them feel like kings and queens.
Terrence L. Foran is chairman/CEO and Arvin Jawa is manager of LakeWest Group, a Cleveland-based retail management consulting firm.
The Gold Standard
Jargon such as “satisfaction determinants” may be offputting. But improving customer satisfaction in each of the four categories of determinants can be relatively simple. Below, just a few examples:
Product- and price-related determinants: Upscale home products cataloger Frontgate offers 90-day price protection: If, within 90 days of buying an item from Frontgate, a customer sees the same product in another catalog at a lower price, Frontgate will refund the difference. Gadget Universe offers a similar price guarantee. But while Gadget Universe’s guarantee is good only for a 30-day period, it will send the customer a $5 coupon in addition to the price difference.
Service- and transaction-related determinants: Train your customer service reps to be more than order-takers. They should be able to offer product advice and suggestions before and after the sale. In its catalog, for instance, apparel and home decor cataloger/retailer Anthropologie notes, “If you are ever unsure about which size of a particular garment is right for you, call us…with your measurements. Our Shopping Experts will be happy to recommend the size you should order.” On the first spread of its catalog, crafts supplier Delphi declares, “Have a question about your project or a technique? Just give us a call. We know stained glass, mosaics, and hot glass!…Delphi’s experienced consultants are always willing to provide expert advice on your next project.”
Operational-related determinants: For gifts catalogers, the ability to ensure timely delivery is key to customer satisfaction. Marketers such as chocolatier Godiva and food gifts cataloger Zingerman’s promote what Zingerman’s calls “order now — ship when you’d like” service: Customers can place orders weeks or even months ahead of when they’d like the merchandise delivered, and the company will ensure that the gifts reach the recipients on time. Another way to increase satisfaction is to accept returns and gift certificates at all your sales channels, regardless of where the order or certificate originated.
Brand or general determinants: Value-added services are the way to enhance satisfaction here. Charnstrom, which sells mail-center supplies, offers a free design service; pet supplies cataloger Doctors Foster & Smith provides free phone consultations with staff veterinarians twice a week. Holiday Expressions, a RapidForms spin-off that sells corporate greeting cards, sends free samples upon request. And Frontgate strikes again: It provides batteries with all products that require them.