1. Customer Service: Role in the Value Chain
July 26, 2013

2. 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

3. A Quick Look at Value

4. 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
+ % …..

5. 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?

6. 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….

7. Value Oriented Retailing

8. 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

9. 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)

10. The Significant Impact of Customer Service

11. 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 £ close to 40%!

12. In this world of High-tech: we all crave High-touch!

13. 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”
38%
27%
Source RSR Research, December 2012

14. 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

15. In this world of high-tech: we all crave high-touch!
Successful Retailers recognize the Role of Customer Service and Invest in it

16. A Framework to Design Customer Service Strategy

17. Cost of Offering the Customer Service
High
Low
Customer Service Approach
Patronage Builders
Patronage Solidifiers
Disappointers
Basics
High
Value of the Customer Service to the Shopper
Low

18. Value of the Customer Service to the Shopper
Cost of Offering the Customer Service
High
Low
Customer Service Approach
Patronage Builders
High-cost activities that are the primary factors behind customer loyalty
Examples: Credit, Gifts
Patronage Solidifiers
Low 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 hygiene
High
Value of the Customer Service to the Shopper
Low

19. Strategy to Tactics in Making this Fail-Safe Investment

20. 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?

21. 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?

22. 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?

23. Logistics & Supply Chain
Strategy & Planning
Logistics & Supply Chain
Merchandizing
Store Operations
Marketing
Customer Experience
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?