This year looks set to be a bumpy ride for many leaders, with businesses and governments facing some sobering challenges.
The Australian Bureau of Statistics kicked off the year with the news that retail spending had been virtually flat from September through to November 2012. Western Australia was the only exception, with the boom state managing only modest 0.6% trend growth.
Trend figures for household goods and clothing show shrinking revenues. The sector is dominated by imported goods, so revenues are no doubt influenced by the high Australian dollar and continued price deflation.
The one bright spot on the retail landscape was grocery retailers, who have managed to buck the trend and achieve consistent revenue growth. Over the corresponding period, there were also a number of major insolvencies among Australian food manufacturers.
In response to the flat retail figures, the Australian Retail Association decided to embark on yet another puzzling crusade, attempting to blame poor retail performance on the “dreaded” carbon tax. The group’s fundamental argument appears to be that the federal government should now take responsibility for teaching businesses how to reduce costs through energy efficiency.
I suspect many ARA members thought that they were paying their annual subscriptions for access to retail industry expertise and training resources. If anyone is responsible for helping Australian retailers learn how to increase profits through efficiency, it is the ARA – not the Federal Government.
Unlike the carbon tax, customer satisfaction is a very critical issue that directly affects retail revenue and profitability.
The huge popularity and growth of online shopping is generating new expectations and service delivery heartaches for many organisations. Both traditional and online customer service channels should now be on the radar for all businesses and government agencies.
A November 2012 US survey showed that 60% of online shoppers experienced frustration or problems with online purchasing processes and had difficulty getting help. 50% of the people surveyed indicated that they wanted an easy way to request help from a human customer service employee while carrying out an online transaction.
In a separate survey of the US retail industry in November, Motorola found that while people are in a store shopping, a large proportion would rather find product information themselves online using their phones instead of asking a shop assistant for help.
The preference depended heavily on customer age, with 46% of Gen Y and 36% of Gen X shoppers preferring to avoid the sales assistant. In contrast, older shoppers were found to be four times more likely to increase their spending if directly helped by a shop assistant.
Interestingly, the same study indicated that 70% of US shoppers would buy something in-store that was out of stock – if the sales assistant could process the transaction on the spot, and organise home delivery. US shoppers also expect retailers to offer free basic delivery for online orders. Few Australian retailers have implemented either of these simple customer service measures.
Governments across Australia are also facing the challenges posed by rising customer service expectations.
The NSW government has regularly commissioned reports into community satisfaction with service delivery, with the most recent NSW community satisfaction report published in March 2012.
Consistent with previous reports, there were significant differences between the preferences and expectations of the general community and businesses.
In recent months, the NSW government has outlined a broad strategy to lift service satisfaction levels by creating streamlined customer service “one-stop shops” within the newly formed Service NSW. In addition to offering a single online portal for transactions with the NSW government, it is expected to operate a 24/7 call centre with a single contact phone number, and 18 shopfront locations around the state.
The consolidation effort will be very significant, with Computerworld recently reporting that current NSW government customer service efforts involve 380 shopfronts, 30 contact centres, more than 900 websites and 8000 published phone numbers.
To put the scale of the effort into context, the NSW government estimated in 2007 that 45% of its full-time employees were involved in providing frontline customer service.
Achieving long-term improvements in customer service involves a lot more than rolling out a great website and a well-run call centre. It needs a sustained effort to change the culture of the organisation, and involve every member of the team.
Customer satisfaction KPIs and measurements should be built into workflows and prominent on executive reporting dashboards. Everyone within the organisation should be directly rewarded when customer satisfaction targets are achieved.
Simplifying product and service offerings can be a key component in lifting customer satisfaction levels, while also offering opportunities to reduce ongoing costs.
For many organisations, the popularity of online shopping and phone technologies has already shifted their customers’ perceptions of what constitutes “excellent service”. Keeping up with these rapidly inflating expectations is likely to require significant changes to business processes.
Some US CEOs get directly involved in social media when customers raise specific complaints about services. Even Rupert Murdoch has responded via Twitter to customers running into difficulties with newspaper subscriptions. Leaders need to visibly walk the talk, and show they are serious about customer satisfaction.