Retail Focus: Cost Reduction and Improved Customer Interactions. Is That On Your 2018 To Do List?
As the post-Christmas trading analysis shows there are some significant challenges at play in the retail sector and 2018 will most likely continue in the same vein with cost pressures intensifying. Several of our most recent assignments have allowed both customer and operational improvements in parallel with cost reduction – combining these views can magnify the benefits and bring the customer and cost lenses together in stereo. Let us share a few more details.
The dust has now settled after a hectic Christmas trading period where there were some clear winners and losers. Peak trading re-enforced some themes that have been emerging for some time and who the winners are this year will depend very largely on how retailers respond to these challenges:
- The traditional middle-market department stores such as Debenhams and House of Fraser continue to struggle – is the proposition still valid in a market where breadth of choice and competitive pricing is delivered more effectively online?
- The top-end bricks and mortar stores such as John Lewis continue to struggle with margins performance – good sales growth but heavy discounting to compete with online (64% of retailers discounted goods at Christmas)
- The grocery market continues to be a battleground driven by price – the discounters continue to grow share and increasingly customer satisfaction, whilst the big 4 rely on discounting to secure sales growth
- Fundamentally it is very hard for traditional retailers to compete against the internet in terms of product width
- It is hard to compete on price against the discounters
- It is hard to compete on service against the top end
Combined with this there are external factors including a weak pound, weak consumer confidence and the ever-increasing strength of Amazon that make this an almost perfect storm, driving retailers to ‘cost out’ approaches and potential consolidation in the market. Compounding this is the necessity to deliver a genuine omni-channel approach that delivers a consistent customer experience across offline and online channels and devices and reflect the way consumers want to communicate.
So as the major retailers embark on cost reduction programmes targeted at establishing lower cost operating models (HQ staff cuts, store rationalisation, increased self-service and reduced store staff) does this have to be at the expense of delivering great customer service and is the customer contact centre next in the sights?
Cost reduction can play an important part in business streamlining or even at more critical times of business survival. If this is at the expense of customer service, customer lifetime value or delivering the brand promise, then this can be a short-sighted view. Ensuring the customer lens is superimposed on the business remains important and is arguably more critical in a climate of cost reduction.
So how can a customer contact centre balance cost reduction whilst delivering a great customer experience? In our view there are a number of ways:
- Utilise the opportunity from process automation, online self-serve, web and messenger interfaces as well as auto voice to aid call direction to assist in headcount reduction
- Consider the merits of outsourcing such services or how to more effectively use customer service partners at peak periods
- Use the available data, case studies and reference sites to create a solid business case to deliver greater value, reduce costs, reduce headcount and provide a better service and increased value to the customer
- Establish a single vision for the customer experience across all channels and touchpoints, increasing accountability and reducing internal call volumes
A service centre that successfully adds significantly to increased order values, repeat purchases or additional referrals and recommendations can be far more valuable than reducing headcount. The critical part of this equation is to review all the facts with hard data and reach a balanced view and perspective.
A ’cost cutting agenda’ for the customer management operation need not deliver a reduced or inferior service, nor a reduction in the overall quality. It can be good for the customer, the business and even your CV!
Within Ember, we have some of the most talented professionals in the industry and would enjoy understanding your challenges in this area and exploring how we can help you succeed. The team is available to provide support and guidance on any of these matters, so for a no-obligation chat with our in-house experts, contact us now.