customer service: role in the value c hain
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Customer Service: Role in the Value C hain. July 26, 2013. Agenda Today. A Quick L ook at Value Value Oriented Retailing The Significant Impact of Customer Service A Framework to Design Customer Service Strategy Strategy to Tactics. A Quick Look at Value. Channel Perspective : - PowerPoint PPT PresentationTRANSCRIPT
Customer Service: Role in the Value Chain
July 26, 2013
Agenda Today
• A Quick Look at Value
• Value Oriented Retailing
• The Significant Impact of Customer Service
• A Framework to Design Customer Service Strategy
• Strategy to Tactics
A Quick Look at Value
What is Value?
Channel Perspective:
Value is a series of activities and processes (the value chain) that provides a certain value to the consumer
Customer Perspective:
Value is the perception the shopper has of the value chain
It is the view of all the benefits from a purchase made versus the price paid+ % …..
Wear the shoes of a customer for a moment?
How often does each of us talk about receiving excellent customer service?
AND
How often do we recount horror stories of bad customer service?
Retail Value Chain
Represents the total bundle of benefits offered to consumers through a channel of distribution
• Store location and parking, retailer ambience, customer service, brands/products carried, product quality, retailer’s in-stock position, shipping, prices, image, and other elements….
Value Oriented Retailing
Value-Oriented Retailing Involves Defining
it from a consumer perspective a clear value/price point a value position that is competitively
defensible what are expected and what are augmented
value chain elements a distinct market segment to which it is
targeted a process to communicate the value-oriented
approach effectively to the target market ……. customer satisfaction goals ways to measure customer satisfaction
levels periodically
Common MISTAKES in building a Value Oriented Retailing Strategy…
• Planning value with just a price perspective• Providing value-enhanced services that
customers do not want or will not pay extra for (understand your customer!!!!!)
• Competing in the wrong value/price segment (identify your customers!!!!!)
• Believing augmented elements alone create value (know your customer!!!!!)
• Paying lip service to customer service (assuming that the customer is stupid)
The Significant Impact of Customer Service
What happens when Customer Service falls short..
In 2012, SMG, a customer insight agency, found in the UK that :
• Retailers lose out on an estimated £45.38 billion a year by not giving their customers the best possible experience in store
• A survey of over 100,000 UK retail and leisure customers discovered that improved interaction with the customer could increase average spend per person from £23.36 to £32.47- close to 40%!
In this world of High-tech:
we all crave High-touch!
And Retailers are Responding…% Respondents who stated:
Perishable/ Food
Durable/ Hard goods
Fashion/ Short Life Cycle
“We offer a high touch customer service strategy and think skilled employees are critical
50% 63% 64%
“Employees play a critical role but do not require special skills or training”
50% 38% 27%
Source RSR Research, December 2012
The Stated Importance of Customer Service in their Value Chain Clearly Impacts Performance….
% Respondents who stated:
Retail Winners
Average Performers
Laggards
“In the last 3 years our workforce has become more important in enabling customer service”
83% 85% 73%
“We offer a high-touch customer service strategy and skilled employees are critical”
66% 47% 53%
Source RSR Research, December 2012
In this world of
high-tech: we all crave
high-touch!
Successful
Retailers
recognize the
Role of Custome
r Service
and Invest in
it
A Framework to Design Customer Service Strategy
Patronage
Builders
Patronage Solidifiers
Disappointers Basics
Customer Service
Approach
Value of the
Customer Service to
the Shopper
Cost of Offering the Customer Service
Low
High
High
Low
Patronage Builders
High-cost activities that
are the primary
factors behind customer
loyalty
Examples: Credit, Gifts
Patronage SolidifiersLow Cost “little things” that
increase loyalty
Examples: courtesy, referring to the customer by name, Magic Words, Suggestion Selling (BCCSM Skill Set)
Disappointers
Expensive activities that do no real good
Examples: Weekday deliveries for dual-earner
families
Basics
Low Cost activities - “naturally
expected”. Do not build patronage,
but absence can reduce patronage
Examples: Free parking,
in-store directories,
store hygieneCustomer Service
Approach
Value of the Customer Service to
the Shopper
Cost of Offering the Customer Service
Low
High
High
Low
Strategy to Tactics in Making this Fail-Safe Investment
Fundamental Decisions What customer services are expected and
what customer services are augmented for a particular retailer?
What level of customer service is proper to complement a firm’s image?
Should there be a choice of customer services?
Should customer services be free? How can a retailer measure the benefits of
providing customer services against their costs?
How can customer services be terminated?
Fundamental Decisions
How can store managers be empowered to ensure consistent delivery of the chosen customer service configuration?
How can each customer facing store associate or employee be empowered to ensure consistent delivery of the chosen customer service configuration?
How can the cost and benefits of the empowerment be measured: Training? Process monitoring? Decision making?
Fundamental Decisions
How can technology be leveraged to support processes that deliver chosen customer service elements: Consistently? In a scalable manner? With a quick turnaround?
How strong is your Customer Service Link?
Even Mothers often need to be reminded by their crying child..
Is it time for a little attention?
Strategy &
Planning
Logistics &
Supply Chain
Merchandizing
Store Operation
s
Marketing
Customer Experience