How retailers should focus on creating experiences and services that both customers and employees love
News headlines continue to paint a bleak picture for bricks and mortar retailers, with a record 2,870 stores closing in the first half of 20191.
One of the primary responses from retailers has been to talk about a focus on the customer2. Creating great customer experiences has therefore become a priority; with many retailers employing customer experience teams3, and companies like Tiffany & Co and Virgin Holidays combining the digital and physical to create immersive in-store experiences for their customers4.
On the flip side of this has been a cutback of investment in employees, with rolling headlines of job losses5 and the slashing of employee perks6 (particularly as a way to mitigate the rise in the UK minimum wage). But is it really possible for retailers to do both?
Research shows how important employees are in providing customers with a great customer experience, with businesses that have happy employees scoring 20% higher on customer satisfaction surveys than their competitors.
The case study of Maplin also illustrates the perils of cutting investment in frontline staff, with cuts resulting in a demonstrable drop in customer experience and satisfaction7 – adding a final nail to their coffin.
It is not only ensuring that employees are embedded into the service retailers offer customers that is important, but that they are also engaged. Engaged employees can directly lead to improved customer experience and satisfaction and organisational productivity and profitability8. In the battle for survival on the high street, it is those retailers who embrace employees by creating services and experiences that both customers and employees love that will be best placed to survive.
To set themselves up for success, there are three key elements retailers must consider; courageous leadership, design agility, and investment in talent.
The Harvard Business Review recently highlighted the benefits of employing a Chief Experience Officer (CXO). Someone dedicated to bringing together customer and employee experience; uniting budgets, driving combined initiatives and directing a cohesive strategy9.
Displaying the courage to adopt new leadership positions with a joint customer-employee mandate can help organisations balance the ‘people’ element of an operating model equally between both customers and employees.
Having courage in the face of declining sales not to cut employees as a quick win to reduce costs is also key.
Cutting employees may give an immediate and measurable profit uplift, but the downsides of doing so tend to be long term and hard to measure. For example, when Home Depot cut staff levels and increased part-timers, costs were reduced, but it caused a significant dip in service and corresponding satisfaction and loyalty metrics10.
Leaders should have the courage to stand by employees and acknowledge that they are a differentiator that give bricks and mortar retailers an edge over their pure play online competitors.
Forward thinking retail leaders need to turn their strategy into action though. Deploying the right tools and techniques can give them and their organisations the agility to do this.
A technique being increasingly embraced is service design. “Service design improves the experiences of both the user and employee by designing, aligning, and optimising an organization’s operations to better support customer journeys.”11
The foreign exchange company Moneycorp recently used service design to rethink the service it offers customers. It redesigned branches and created a service that broke down barriers between employees and customers to provide a more informative and personal experience. The impact of this has been a 58% rise in Moneycorp’s retail revenues12.
Retailers can use service design to create in-store services that incorporate ‘front stage’ actions such as the role of store employees, ‘backstage’ actions such as fulfilment and wider support processes, that come together to provide customers with a great experience and journey.
Investment in talent:
Agile design approaches such as service design allow retailers to embed employees into the heart of their operations. This should be supported by training, development and investment at all levels, to cement engagement and retention.
Investing in more meaningful employee perks can attract employees and demonstrate that an organisation is genuinely invested in its people. For example, Starbucks recently launched a scheme to pay for UK employees’ tuition fees if they wish to study with a US college online.
Employee progression is also key to creating engaged employees. Trader Joe’s has adopted a policy of promoting from within and this focus on developing and promoting existing employees has resulted in turnover tumbling, with levels reaching less than 10%.13
Research has also shown that investing in retail employee training can result in more profitable employees. With findings showing that every hour a month an employee spent on simple online training, the revenue from that employee increased by 6%.14
Finally, employee flexibility must be a consideration for retailers. It is the second most important factor workers look for in a job behind salary, with work/life balance being a top priority for the Millennial generation. This has led to the need for companies to improve the way they manage their workforce by investing in digital tools to enable their employees to work flexibly.
Seeing employees as profit drivers rather than cost centres should be embraced by retailers. By investing in employee perks, progression, training and scheduling they can develop and retain value-adding and engaged employees.
Organisations with high employee engagement outperform their competitors by 147% and those that invest in employee experience are x4 more profitable than those who don’t.15
By bringing together the elements of courageous leadership, design agility and the investment in talent, retailers (and businesses more widely) can create great experiences for both customers and employees.
This is not to say that in tough times that retailers should employ more staff or keep staff levels the same. In fact, retailers can use data driven modelling16 to set the correct staffing levels required across their store estate, and then invest in and design services around those employees.
Those retailers that do will deliver a service and operating model that gives both customers and employees an experience they love.
After all, let’s not let love become a second hand emotion.
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