The Power Shift
Customers Are in Control Like Never Before (Retail Point of View Paper)
Within the world of retail, the rate of change seems to be accelerating. Power has shifted from retailers to consumers. Consumers now have the ability to shop wherever and whenever they want. Consumers are more sophisticated and more knowledgeable than ever before (sometimes more knowledgeable than a retailer’s associates). With knowledge comes power, and consumers are much savvier in the way they determine where to spend their money. Brand identity is no longer as secure a source of advantage as it once was.
At the same time, economic realities aren’t changing fast enough. Consumer spending predictions continue to overestimate the pace of financial recovery. Shareholders and stock analysts show no signs of developing patience. They are quick to praise when performance meets expectations, but missing guidance brings an even quicker and disproportionate punishment.
Retail executives are constantly looking for ways to differentiate their brands to strengthen customers’ brand attachment. Today’s customers are focused on spending their money with brands they trust and brands that provide enhanced value—value that goes beyond the tangibles of product or price.
Retail leaders are fully aware that a differentiated customer experience means much more than a cheerful greeting at the door; it extends throughout and beyond the organisation to touch every link of the supply chain and every phase of the product life cycle. They know that meeting customer expectations for service consistency across multiple channels of interaction is a daunting challenge. Forward-looking executives see this challenge as an opportunity that can deliver handsome returns, strengthen brand loyalty, and increase the frequency and dollar amounts of customer purchases.
Build Customer Trust
Research continually shows that even in the face of a rapidly changing retail marketplace, there is one true differentiator that is stable, reliable, and differentiates a retailer from its competition—Trust. The organisation that aligns each and every interaction across the customer experience to consistently increase customers’ trust holds a reliable source of competitive advantage.
Two things are necessary to build a competitive advantage from the customer experience. First, leadership must provide vision and commitment. Second, the organisation must develop and deploy a core competency in establishing and increasing customer trust.
Even before customers consciously begin to shop for a product or service, they are already collecting impressions and setting their expectations about brands. They are forming both logical and emotional judgements that reflect how attracted they are to any given brand and whether or not they’ll shop and purchase from them. Their expectations are not just built on your marketing or advertising. They are created based on their service experiences across all brands and all industries. Retailers must realise they are no longer just competing against their traditional competitors but also against everywhere their customers shop.
Trust = Credibility + Empathy
Credibility is the customer’s logical assessment of a brand’s capability and reliability for delivering what is needed. Empathy is the emotional connection that enables associates to establish a high level of rapport with customers by understanding the emotional component of their needs and expectations.
Our research shows that customer perceptions of trust are determined by four supporting concepts; the first two address empathy and the last two address credibility.
- Commonality: Refers to the customer’s perception that you both hold things in common—interests, beliefs, and values.
- Intent: An open declaration of your interest in the customer’s success and well-being.
- Propriety: Expectations of business customs and the ability and willingness to meet the customer’s behaviors.
- Competence: The perception you create in the customer’s mind that you have the capability and experience to help solve the business problem.
In each interaction with each buying channel, customers are forming and re-forming their assessment of trust, perceived value, and willingness to do business with an organisation’s brand.
In the fast-moving world of retail, the requirement that trust be at the heart of every customer interaction doesn’t vary by channel or trend.
Many retailers tend to focus on and develop the “back wheel” or “hard skills” of the credibility side of the equation at the expense of the “front wheel” or interpersonal skills of the empathy side of the equation. Back wheel competence in operational and merchandising capabilities is necessary but insufficient to reliably cause customer trust to grow.
What It Takes
Aiming every customer interaction at building trust requires more than customer service charm school. It takes vision, widespread commitment, and alignment within the entire retail organization.
- Be the source of a compelling vision for excellence all across the customer experience
- Develop strategy that funds and aligns operations with serving the customer experience
- Provide consistent communication
- Hold managers accountable for performance
- Manage to specific performance benchmarks that support excellence in the customer experience
- Provide communication, training, staffing, and operational support
- Evaluate, coach, and support associate performance across the retail organisation
- Demonstrate buy-in to the strategic vision
- Acquire and practice new skills
- Demonstrate commitment to improving individual performance
- Understand their role in producing or enhancing customer trust at every interaction
Empower Customer Trust and Capture Customer Loyalty
In the rapidly changing retail marketplace, one clear source of competitive advantage appears when strategy and tactics are aligned with growing customer trust in each and every interaction. This is not a one-size-fits-all solution but one that must be aligned to each brand’s value and desired customer experience. In every case, it will require a deep understanding of how customer trust is earned, increased, and leveraged to build durable loyalty to your brand.
Organisations must realise the power has shifted. Consumers are now more educated, and more strategic, about where they will spend their hard-earned money. No longer will purchasing decisions be driven by the tangibles of merchandise, pricing strategies, or floor sets. The only way to acquire, retain, and grow your customer relationships is to admit that customers have the power and provide them with a trust-building customer experience that will help them open their wallets.
How Wilson Learning Can Help
Wilson Learning guides organisations to success by inspiring, developing, and transforming their greatest investment—their people.
We help our clients navigate the complex path of creating solutions that will enable them to achieve real business results. For example:
- A renowned luxury retail store realised a 30% increase in sales from return buyers.
- A specialty retailer increased conversion rate by more than 3%.
Our work frequently guides organisations by integrating their culture, brand experience, service, and sales through simple, elegant, and highly customised performance solutions.
Wilson Learning . . . Helping Others Become Industry Leaders