Monday, August 26, 2013

When Employees Create Personal Connections, Both Customers and Retailers Win

Recently, I demonstrated how small retailers can improve and emphasize their competitive advantages over national chain stores. This week, I came across an interesting research project that took this philosophy to the next level.

Ashley Verrill, a CRM analyst and managing editor of Software Advice's Customer Service Investigator, launched a research exercise in Austin that she called "The Great Retail Experience Race: Local vs. National."

20 secret shoppers conducted 200 site visits of at least 15 minutes each to five national chain stores and their local equivalents. The breakdown:

Starbucks vs. Jo's Coffee
Nordstrom vs. Maya Star
Panera Bread vs. ThunderCloud Subs
Barnes & Noble vs. South Congress Books
The Apple Store vs. Austin MacWorks

Verrill looked at three metrics: 
  • Did employees up-sell, cross-sell, or tell customers about a deal?
  • Did employees create an emotional or personal connection with the customer?
  • How long did it take for an employee to create an emotional or personal connection?
The results were surprising. Four of the five national chains performed better in the up-sell category than the local shops, while all five smaller stores did better in creating a personal connection. The time for the connection was split 3-2 in favor of the boutiques.

So even though employees at smaller shops were interacting more (and more quickly) than at the national chains, "the small businesses simply didn't take advantage of these opportunities to up-sell at the same rate as the national stores," Verill writes.

Verrill drew some conclusions from this research and also brought in customer service expert Shep Hyken for his take. They both agreed that great customer service starts with employee training and a culture of service.

"Let's operationalize customer service. You train it, you reinforce it, you recognize people when they're doing it right," says Hyken in his video interview with Verrill. "You try to get them to recognize themselves when they're doing it."

I absolutely agree. Independent stores may not have the selection or low prices of a national chain, but they have the intimacy to create personal connections. While such "people skills" can be found in many retail workers, it's much more effective to train them to "ask really specific questions," as Verrill advises, and to "be consistent with deals at the register," where a lot of up-selling occurs. 

And that may be why national chains outscored the smaller stores in the up-sell category: their scale requires training manuals and consistent procedures, ensuring all employees are trained the same way. At smaller stores, customer service training can be much less formal -- if it occurs at all.


Of course, customer service goes beyond training. Hyken says that once an owner or manager sees an employee providing great service, "you recognize that and you celebrate the success with them. That might mean having a meeting with all the employees and...everybody applauds everybody for doing a great job."

I've often said that employee recognition is a great way to engage employees, which itself leads to higher productivity and profits. It can also create better customer service as well.

Customer service gives a smaller store a competitive advantage, offers a path to a more engaged and productive workforce, and leads to loyal and higher-spending customers. I thank Ashley Verrill and Shep Hyken for providing such valuable insights. 

Want to learn more about employee training, recognition, or engagement? Write to me.

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