Are You Ignoring The Greatest Revenue Driver In Retail? - StellaService

Are You Ignoring The Greatest Revenue Driver In Retail?

Here’s where many retailers are today:

  • They’re mired in the numbers.
  • They’re tightening their belts to maximize profits.
  • They’re using a variety of promotional tactics to boost traffic and conversions.

But all too often, when customers enter their stores, no one is available to help. The racks and shelves are in disarray. Customers are left alone, asked canned questions—Are you finding everything okay?—or bombarded with tone-deaf sales pitches. (We call this “retail assault.”)

The experience is worse than forgettable. Shoppers aren’t inspired to stick around or make additional purchases. In fact, many of them can’t wait to leave.

Low CX standards and/or poor execution equals high customer churn, which eats profits like a monster. The push to acquire new customers begins anew!

If you want to break this cycle and accelerate your revenue growth, you must focus on acquisition and retention. This means creating loyal customers out of first-time visitors—intentionally—by understanding what your customers expect and creating a brand experience like no one else’s.

 

Customer Lifetime Value (CLV): Go for the Gold!

Customer retention is the biggest revenue driver in retail. If you raise your retention rates by 5%, your profits will go up 25% to 95%.

Amazon has a 90% customer retention rate. Zappos’ is 75%. These industry giants didn’t get where they are by focusing on specific product launches or comp sales. They’re all about maximizing customer lifetime value (CLV).

Companies that operate this way are competing on an entirely different plane. Their customer experience and brand promise are one and the same. Customers see these brands as retail destinations—a pleasure (and a no-brainer) to do business with.

Many retailers believe any effort to replicate this kind of success is pie in the sky. So marketing keeps trying to entice new shoppers, and operations stays focused on converting sales. Between the two, there’s no unity of purpose.

But what if marketing and operations were on the same page—and customer engagement was their #1 priority?

This may seem a huge, uncomfortable shift for many retailers. But they all have the capacity to step back, find some way to be different, and go after it.

 

The 5 Keys to Increasing Loyalty, CLV, and Revenue Growth

In helping so many retailers make this leap—from focusing on quarterly numbers to increasing their CLV—we’ve watched them reap returns well beyond those that many companies aim for today.

Here’s how you can do the same.

 

1.  Get Inside Your Customers’ Heads.

How well do you understand your customers and why they shop with you? Your customer experience should mirror your customers’ goals and expectations. Start by creating and maintaining an up-to-date customer journey map (including the emotions that drive customer actions across all channels).

Over time, customer satisfaction surveys (CSATs) can reveal important trends. They’ll show you how well your customer experience and your customers’ expectations align and, over time, whether the gap is growing. Open-ended questions (What do you like best about us? What improvements would you like to see?) can lead to CX breakthroughs that might not have occurred to you.

 

2.  Know Exactly What’s Happening in Your Stores.

CSATs and mystery shopping are distinct CX management programs that, when implemented together, allow to you match customer satisfaction data with detailed, objective reports of store conditions and customer engagement. It’s the complete picture retailers need to solve pressing problems, make incremental improvements, and elevate their brands.

Brand consistency is key to building trust and loyalty. Are your associates complying with your customer experience directives across locations? Mystery shopping allows you to identify, with a high degree of precision, every misstep or gap in the path to purchase.  

 

3.  Aim High, But Be Realistic.

Nurturing customer loyalty is a long-term commitment. We tell our clients to think like idealists when it comes to designing the customer experience, but to be realistic about what it will take to implement (and how long it might take).

This is a slow and steady evolution, not an overnight transformation. Rome wasn’t built in a day (nor were Apple or Starbucks). Take it one step at a time. Start with a pilot program in a few stores. Be a tinkerer! Try different things in different stores. If something works, build on it. If it doesn’t, learn from it.

 

4.  Retool Your Associate Training.

Is your associate training centered on policies and procedures? If so, you need to do more to equip and inspire your associates to go out of their way to make every customer engagement great.

The goal for your training programs should be to instill:

  • Brand pride through shared values
  • A sense of community
  • Brand and product knowledge
  • EQ (empathy for customers; the ability to connect)
  • A knack for building sales through (unscripted, unforced) suggestive selling

Bear in mind, this isn’t a one-time fix. You’ll need to update and tweak the program regularly, based on your CSAT and mystery shopping results.

 

5.  Manage the Right Things at the Store Level.

Corporate must communicate to store managers, in no uncertain terms, what it expects. This is yet another benefit of a mystery shopping program, as long as it’s properly explained to store employees at the outset and they’re given the results on a regular basis.

Should managers emphasize store conditions? Should they encourage customer engagement? Yes and yes! You can achieve this balance if you take simple measures to create the right kind of in-store environment—one in which engagement happens naturally, no matter what’s on the daily checklist.

 

Yes, CLV Really Is “the New Black”

Managing the customer experience, with a principal focus on engagement, pays huge dividends over time. We’ve seen it happen for our clients, again and again. But many other retailers still need convincing.

Want to drive growth in your company through better service? Learn More About StellaService.
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