If Scandinavian chains are to become as customer-oriented as Amazon, they must listen to those who decide
Scandinavian retail chains want to be customer-oriented, but lack effective tools for measuring success, writes Ole Martin who is an angel investor and co-owner of Lipscore.
How to use customers’ own experiences to implement a customer-oriented and data-driven business strategy – without large and risky investments?
I will reveal the secret soon, but first let me list what I think are the most important drivers for chain success:
- Satisfied customers
- Quality products at the right price
- Good shops with skilled employees
- Websites with online store
This should not be very controversial. But how to measure this in practice?
Many chains do this today with the help of mystery shopping, market research, store visits, employee interviews, web analytics, etc.
This is all well and good, but it is often time consuming, expensive and complicated – and unfortunately rarely provides data that can be used as a management tool in a hectic retail everyday life.
Systematic collection of customer data
Let’s look at an alternative approach.
After a purchase online or in store, you should send an email or SMS to customers and ask them to give 1 to 5 stars on the product, store or overall shopping experience. If the customer gives feedback, you should follow up with an open text field where the customer can justify their score. This type of customer data is often referred to as “user reviews”.
My recommendation is that you focus on the following three types of reviews:
- What does the customer think about the store or online store where he or she shopped?
- What does the customer think about the product? (often referred to as “product reviews”)
- What does the customer think about the overall service experience?
Customers do not bother to answer long surveys; each customer should therefore only be asked about one thing. Then you get the highest response rate – and thus the most valid data.
If you do this right, you get about 1 in 5 customers to give feedback. With thousands of transactions, with such a response rate, you get to know quite a lot about what customers think about your products, your stores and your ability to create good shopping experiences.
You must not put this insight in the drawer, but use it throughout the organization as an important management tool to become a more customer-oriented chain.
Many benefits for customers
Let me show you how to use reviews internally in the company, but first I want to give some examples of how customers themselves can benefit from other customers’ experiences:
- In the online store: Customers can go to any product on the website and see a large number of feedback from other customers. There may be quantitative and comparable data in the form of 1 to 5 stars, but also supplementary comments on, for example, size, fit, colors and area of use. Such product reviews are an important supplement to the company’s own product texts. If you also measure the level of service in the online store and publish this on the website, the customers can also read other people’s experiences with the chain’s ability to take care of their online customers, including delivery time, customer service, packaging, etc.
- In physical stores: Chains that focus on user-generated content often choose to display product reviews on posters and on electronic shelf edge labels. This will be a good supplement to the product knowledge of the employees.
- At customer service: If the customer contacts customer service to complain about a product or an online delivery, the employees will immediately see if the product or carrier that are complained about is a regular and be able to adapt the level of service to this.
For a customer-oriented chain, this should be good enough reasons to invest in user reviews. But let’s see how the data can also be used internally in the company across departments, regions and employees.
As a store manager or store employee, you are close to the customers and know a lot about the products you sell, but with thousands of products in assortments, it is impossible to stay up to date on everything, regardless of experience. With product reviews visible on both shelf edge labels and in the POS system, you as a store employee get useful product insight that can be used both in the customer meeting and when ordering new items.
If the chain also measures the overall store experience (“what do you think about your last visit to store X?”), You also get an overall key figure for the store’s service level, which in turn can be broken down into days of the week, time of day and each employee.
The regional leaders
With the customers’ own feedback, as mentioned in the previous section, you can measure the store’s overall service level and then break it down to find points for improvement. For a chain with many stores, you can also aggregate the same numbers up to a regional level and compare the different regions and identify stores and employees who under- or overperform according to the service level you have set.
Category and purchasing work is an important part of a chain’s success. Central are good purchasing conditions, campaign cooperation and an optimal range. In this context, user reviews, and then mainly product reviews, can be worth their weight in gold. If you have a well-functioning solution for collecting qualitative and quantitative data about your products, you can easily aggregate data and compare the quality of products, brands and suppliers. It can again be used in negotiations with suppliers, where those who supply mediocre products must grant large discounts or in the worst case be excluded from the range.
As a logistics manager, users’ feedback can be useful in several ways. The most obvious is to use the insights from product reviews to predict which products are most likely to be returned and implement necessary measures (for example, improve packaging or remove bad products from the range). If the chain also measures the total service experience for deliveries from the online store, you will quickly also be able to see if some package suppliers are underperforming.
It is also no secret that many chains struggle with inadequate routines for handing out online orders in physical stores, something you can easily get a better overview of with user data.
The marketing and brand manager
The job as marketing manager can often be demanding, as the effect of the work you put in is often difficult to measure. This means that you are easily challenged internally by others in the organization with strong opinions. With user reviews, this can improve dramatically. If the chain uses the full range of opportunities available in new technology, the marketing manager can regularly report on both service and product quality. In addition, the marketing manager also receives new and relevant product information that can be used in stores, customer magazines, on websites and in social media.
The customer service manager
If you call your bank or insurance company, you will often receive an SMS after the call asking you to provide feedback on your last call. Store chains should do something similar. If this is done smartly, you will be able to quickly identify the service level of the employees and find points for improvement. In aggregate form, the data can also be used upwards in the organization.
Online store manager
As an online store manager, user reviews, and especially product reviews, can be useful in many ways. The customer not only receives a credible supplement to the product texts, but the online store also receives input from customers on relevant product information that contains errors or omissions.
With a lot of product reviews, the online store manager will also get more traffic to the websites by both customers and search engines perceiving the websites as a portal full of live content. If done right, the product reviews will also contribute to a higher conversion rate.
All this again makes the job easier for the chain manager and the board
Running a chain with thousands of products sold online and in physical stores requires good management tools. There are many ways to approach this challenge, but user reviews will in all cases be very relevant.
If you manage to engage customers, you will get quality data that can be both broken down and aggregated in all possible ways. Amazon has been working like this for years. Now Scandinavian chains must follow. It costs little and gives a huge amount. Not only for the customers, but also for the board and management.
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