How retail analytics ensures customer satisfaction in the service industry

Today’s retail paradigm has shifted to focus largely on people rather than on the product. The success of retailers is to a larger extent determined by how a product is sold rather than the product itself. Particularly for traditional retailers of brick-and-mortar stores, face-to-face interactions and relationship building have become the key differentiators in making sure customers keep coming back. Whereas customers mostly shop online for convenience, they shop in-store for a good customer experience.

Customer service, Customer satisfaction, Customer loyalty

And how do retailers ensure a superior customer experience? By providing good customer service. According to a study, (Dr. Emel Kursunluoglu, 2011), customer satisfaction and loyalty are invariably related to customer service and the quality of staff interaction. By ensuring that your customers are happy and satisfied, they may come back and may even be willing to chip in with a little more. In fact, 9 out of 10 (U.S.) consumers say that they would be willing to pay more to ensure a superior customer experience (FreshDesk, 2018).

To further illustrate the benefits reaped from a superior customer service, the following graph shows the effect of positive staff interaction on customer satisfaction, grouped by different types of retailers:

It’s particularly in Fashion retail that positive staff interaction turns out to be a key contributor in creating satisfied customers – with a whopping 73% increase in customer satisfaction! Overall, there is a potential increase of 33% in customer satisfaction waiting to be obtained simply by investing in better customer service. In terms of costs, retaining customers are also known to be less costly than acquiring new ones (McKinsey, 2006) – So not only is there an incentive for retailers to increase turnover by converting more regular customers into loyal customers, they also benefit from cost savings by not having to resort to acquiring new, costly customers.

What makes up a good retail customer service experience?

According to an article from Freshdesk, there are several essential elements, which must be in place for retailers to ensure a superior customer service. These are the following:

  1. Competent service representatives and sales people
  2. The ability for customers to get information and solve problems on their own
  3. Personalization
  4. Engaging at a time convenient to the customer
  5. Predictable and customer friendly processes and experiences
  6. Manage expectations with timely communications

Overall, it’s about having trained sales professionals that know how to service customers with what they need, in the right way and at the right time.

How does people counting and retail analytics contribute to better customer service?

Now, one thing is to know that customer service is important, another is to act on it. How do we ensure that we are catering to the needs of all customers? And more importantly, how do we measure our progress?

People counting and retail analytics solutions provide retailers with a hands-on tool, which they can use to respond in real-time to customers’ needs. Furthermore, they also provide them with a database of historical data to look back to and to make predictions from.

Shift scheduling according to peak times in footfall
By subscribing to a people counting solution, retailers can access data about when traffic levels in the store are expected to rise and fall during the year, month, week and day. With knowledge about historical trends, they can plan ahead and make sure to schedule shifts so that there’s always a sufficient number of staff deployed during peak times. This would not only reduce stress for staff members as no-one is overburdened with having to service too many customers at the same time, but also increase customer satisfaction, because each customer would receive the full attention of the staff members on duty.

Measure queue length and wait time
Our people counting solution also provides retailers with information about the average queue length and wait times of each customer. By enabling real-time alerts attached to the live data, retailers can react immediately and reduce wait time by e.g. opening another cash register. This would undoubtedly be considered as good service for customers. Time is money, and by reducing customers’ wasted time spent on waiting, retailers convey the message that they also think of their customers’ time as being valuable.

Customer interaction time
With our staff detection and engagement solution, retailers can measure the amount of time customers have to wait before they are serviced as well as the time customers spend interacting with the staff. If the historical data shows a positive correlation between interaction time and number of transactions, these measures would be informative indicators of good customer service. If the opposite is evident, it would be good idea to investigate the underlying reasons.

 Personalized customer service
Good customer service is also about adjusting one’s communications to match each customer. With our people counting solution, information about the distribution of age and gender in the store would give staff a clue about how to act depending on what the target group is during different times of the day. Based on this information, retailers can also ensure that their staff gets the appropriate specialized training to cater to the preferences of each specific target group. Another way of using the data for timely communications is to make screens and displays directly interactive with the live demographic data, so that customers currently inside the store will receive information appealing directly to them.

In short, while customer service is indeed made up of many different factors, which cannot all be solved by solely relying on technological means, people counting and retail analytics solutions still provide a good fact-based foundation for ensuring a positive staff interaction and ultimately, happy customers.

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What’s next for retail?

While e-commerce is becoming increasingly more prevalent among private consumers, most of the sales are still made in physical stores. In Denmark, e-commerce sales made up 12.5% of the total sales last year (Dansk Erhverv, 2018), which signifies that the days of brick-and-mortar stores are still yet far from over. However, 84% of the Danish population were reported in 2018 to have made purchases online (Dansk Erhverv, 2018), so a steady growth in e-commerce is to be expected over the years – keeping traditional retailers on their toes.

So what’s the deal with physical retail stores? The on-going prophecy of the impending death of physical stores may be true for stores that maintain the status quo and refuse to re-invent themselves to match the needs of the future consumers – the digital natives. However, it is our experience that retail managers who think big, innovate and experiment are here to stay.

Retail re-invented

According to a study by Deloitte (Deloitte, 2019), there are particularly two important themes to anticipate for the year ahead.

  1. In-store revolution
  2. Re-inventing retail

The in-store revolution shows a tendency for traditional retailers to reduce the number of stores while at the same time going full-scale on opening large concept stores. Retailers take on much more risk by innovating at scale and experimenting with customer experience. The re-inventing retail theme illuminates how the retail model adapts itself to consumer trends such as:

  • Sustainable models of consumption that focuses on recycling products
  • The need for each consumer to express their individuality through personalized items
  • And finally, the rise of social influencers.

The Realms of Experience

Most of the re-inventions of retail mentioned above center around experience: The experience of the customer and how they relate to the spaces of retail stores. According to the following model (1998, Harvard Business Review), there are 4 dimensions to experience, the 4Es.

In terms of store layout, it is important to design your store so that it incorporates the three realms of entertainment, escapism and esthetic in particular. Why? A visually appealing store is not only memorable for the customer and entices them to share the experience with others – it also creates a space for the customer to escape into. Esthetically pleasing store fronts have been a hit on social media, to the credit of influencers, whom are quick to shoot and share their in-store experiences online. Another element of escapism is storytelling: In order to construct an authentic experience that is believable, the story you tell should make sense and should be reflected in how you choose to design your store.

Now that was escapism and esthetic. What about entertainment? The term retailtainment was coined by George Ritzer in his book, “Enchanting a Disenchanted World: Revolutionizing the Means of Consumption” (1999) to describe the use of the five senses to influence the customers to getting into the mood of buying. Make sure to engage all five senses in order to improve the customer experience and keep the customers pleasantly surprised with exhibitions or merchandise that encourages the customer to interact with the store.

How do we measure experience?

With that said, how do we actually go about measuring experience? How do we evaluate on the effectiveness of our visual merchandise and their ability to capture the attention of customers? While it is always an option to resort to surveys and asking customers directly, e.g. in exchange for a gift card, there are also less obtrusive ways to obtain knowledge about customer experience that are equally valuable.

Tracking – Using industry standard sensors, retailers can get a full, stitched overview of their store, which enables them to accurately track each customer and get insights about their walking patterns. This could be relevant to determine whether the store layout has been designed appropriately. Does the customer tend to avoid certain spaces? Do the product placements have to be adjusted?

Dwell zones – Other useful metrics are those related to occupancy zones within a store, e.g. dwell time and the number of people in certain zones. One way to use these insights is to determine the hot and cold zones in a store. Another way to use this information is to evaluate on whether certain marketing initiatives work as intended. For instance, if one were to incorporate fragrances in a particular area of the shop, does it in fact make customers stay longer or does it have an adverse effect?

Keep in mind that a customer has limited memory of their experiences in-store. In fact, according to a study by Daniel Kahnemann, “When More Pain Is Preferred to Less: Adding a Better End” (1993), who coined the term Peak-end rule, a customer only remembers the experience in snapshots – the Peak, and the End. By tracing the customer’s journey throughout the store and noticing where they stop or rush through, retailers can either adjust their “peaks” and “ends” to match that of the existing, observed walking patterns or they can change up the layout of the store in order to directly manipulate the customer’s journey throughout the store.

Overall, while the two above mentioned methods alone do not provide direct measures of the customer experience, one can combine the information along with other qualitative sources to infer useful insights about how customer interacts with the story, told by retailers.

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This article is delivered to you by Vemco Group A/S. Should you have any inquiries, contact us for more information.

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