A Major Improvement In Customer Service!

I’m a pretty humble person but I have to toot my own horn once in a while. This is in reference to my post dated Sept. 8, 2011. Click here The store I referenced in that post happened to be JC Penny’s. What an irony!

At least one of the big boys has apparently “run out of gimmicks” and seen the light. I’m reading the Yahoo News  Site and I run across the following: JC Penny gets rid of hundreds of sales. Wow! Do you think they read my blog? All kidding aside, here’s the article:

NEW YORK (AP) — J.C. Penney is permanently marking down all of its merchandise by at least 40 percent so shoppers no longer have to wait for sales to get bargains.                 

Penney said Wednesday that it is getting rid of the hundreds of sales it offers each year in favor of a simpler approach to pricing. Starting on Feb. 1, the retailer is rolling out an “Every Day” pricing strategy with much fewer sales throughout the year.          

The plan, the first major move by Apple executive Ron Johnson since he became Penney’s CEO in November, is different from Wal-Mart’s iconic everyday low pricing. Unlike Wal-Mart, Penney’s goal isn’t to undercut competitors, but rather to offer customers more predictable pricing.                 

“Pricing is actually a pretty simple and straightforward thing,” Johnson told the Associated Press during an interview ahead of the announcement at the company’s Plano, Tex. headquarters. “Customers will not pay literally a penny more than the true value of the product.”                 

Penney’s plan comes as stores are struggling to wean Americans off of the profit-busting bargains that they have come to expect in the weak economy. The move is risky, though, because shoppers who love to bargain-hunt may be turned off by the absence of sales.                 

“The big question on investors’ minds will be: ‘How customers will react to a single price point versus a perceived discount under the old strategy?’” says Citi Investment Research analyst Deborah L. Weinswig.                 

Here’s how Penney’s pricing strategy will work:                 

Sale prices become everyday prices. The company will use sales data from last year to slash prices on all merchandise at least 40 percent or lower than the previous year’s prices. So, a woman’s St. John’s Bay blouse regularly priced at $14.99 could have the “Every Day” price of $7.            

— Fewer sales. The retailer will pick items to go on sale each month for a “Month-Long Value.” For instance, jewelry and Valentine’s Day gifts would go on sale in February, while Christmas decorations would be discounted in November. Items that don’t sell well would go on clearance during the first and third Friday of every month when many Americans get paid. Those items will be tagged “Best Prices,” signaling to customers that’s the cheapest price.                 

— New tags. The retailer used to pile stickers on price tags to indicate each time an item was marked down. But now each time an item gets a new price, it gets a new tag too. A red tag indicates an “Every Day” price, a white tag a “Month-Long Value” and a blue tag a “Best Price.”                 

— Simpler pricing. Penney will use whole figures when pricing items. In other words, you won’t see jeans with a price tag of $19.99, but rather $19 or $20.                 

New advertising. Ads began airing Wednesday with a shopper screaming “No” to discounts as they look in their mailboxes, a pile of coupons and big sales signs. The company also has a new spokeswoman (talk show host Ellen DeGeneres) and logo (a red outline of a box that features JCP in the corner.)  And a 96-page catalog will be mailed each month to 14 million customers, along with other promotional efforts.                 

The strategy, unveiled at Penney’s investor meeting on Wednesday, comes as the retailer tries to turn around its business. Heavy discounting has hurt department stores like Penney. The group generates an average of about $200 per square foot, less than half the $550 or $600 stores like Victoria’s Secret and Lululemon make per square foot, according to John Bemis, head of Jones Lang LaSalle Inc.’s retail leasing team.                 

But Penney has been a laggard even among department stores as its core middle-class customers have been among the hardest hit by the weak economy. It’s also failed to attract younger customers even though its added hip brands like Mary-Kate and Ashley Olsen’s teen clothing collection called Olsenboye. The stores also have been by Johnson himself describes as “tired.”                 

For the 11 months through December, Penney’s revenue at stores opened at least a year — an indicator of a retailer’s health — rose 0.7 percent, while competitors like Macy’s Inc. rose 5.4 percent, and Kohl’s was up 1.1 percent. Penney posted a loss in the third quarter and cut its fourth-quarter earnings outlook after a disappointing holiday season when it had to heavily discount to attract consumers.                 

The new pricing caps months of speculation about what Penney’s future might look like under the leadership of Johnson, a former Target Corp executive and the mastermind behind the success at Apple Inc.’s stores.                 

Johnson, who joined the company’s board in August, already has put his stamp on the retailer. He has tapped former colleagues at Apple and Target to join him at Penney. That includes Target’s top marketing executive Michael Francis to be Penney’s president.                 

Johnson also is borrowing from the playbook of Apple, which shuns discounting and focuses on selling products and offering services.                 

In December, Penney said it will have homemaker doyenne Martha Stewart develop mini-shops starting next year. And during Wednesday’s meeting, Penney executives outlined plans to in the next two years add Main Street, a series of 80 to 100 brand shops in stores similar to the Martha Stewart ones. It also plans to open areas in all stores called Town Square, a place that will offer services and expert advice, similar to Apple’s Genius bars.                 

Perhaps the biggest challenge for Penney is to sell shoppers on its new pricing. For years, Penney, like many other stores, has propped up price. The intent: to make it look like shoppers are getting great discounts when items go on sale.                 

Penney has been an especially big promoter. Last year, the company, which offered 590 sales events last year, nearly three-quarters of its revenue come from merchandise that was discounted by 50 percent or more.                 

That’s more than double the retail industry average. According to an estimate by management consultant firm A.T. Kearney, a typical retailer sells between 40 and 45 percent of its inventory at a promotional price, up from 15 to 20 percent a decade ago.                 

The increased discounting has been a vicious cycle that only feeds into shoppers’ insatiable appetite for bigger and better discounts. In fact, whereas it took 38 percent off to get shoppers to buy 10 years ago, it now takes discounts of 60 percent, Johnson says.                 

At Penney, the regular price on an item that costs $10 to make rose 43 percent, from $28 in 2002 to $40 in 2011.  But because of all of its sales and other promotions, what it actually ended up selling for rose only 15 cents, from $15.80 to $15.95 during that same period.                 

“I have been struck by the extraordinary amount of promotional activity, which to me, didn’t feel like it was appropriate for a department store,” Johnson says. “Once you start to promote, the only way to beat a promotion was to make it bigger.”                 

Walter Loeb, a New York-based retail consultant, says Penney’s new pricing is “visionary” and revolutionary.”                 

But Charles Grom, a retail analyst at Deutsche Bank, says it will be difficult for Johnson to change shoppers’ buying habits. Macy’s, for example, cut back on coupons a few years ago, only to reverse courses after sales fell

I’ve known for a long time that this had to happen. I watched them create the discount monster and I’ve been watching them stretch reality further and further to keep the monster fed. They finally hit the point of diminishing returns with the percentages they can discount and still be believable and, quite frankly, profitable.

Don’t be fooled by their statement in the article about customer’s insatiable appetite for discounts. The big retailers absolutely 100% created those insatiable appetites over the years. Customers at one time were very happy with seasonal sales and occasional promotions. And during those times, they were getting true value for prices paid.

Notice in the article also how the new CEO states that customers won’t pay 1 penny more than the true value for merchandise. To me that implies they have been marking the merchandise above true value. Whoops! Gee, I wonder if the others do the same thing?

I think what is bringing this out is the current state of our economy. The middle class shopper has been hardest hit by the current economic trends. They are being more careful about spending their money and it’s making them analyze their expenditures more carefully. They also don’t want the headache of figuring out those complicated discounts as I mentioned in my previous post. Their lives are being complicated enough in this economy  and they don’t want more complication when doing something as simple as shopping.

The retail consultant in the article that said Penny’s new pricing is “visionary” and “revolutionary” is correct in reference to today’s world, but don’t be misled, it is not a new concept!

Anyway, it’s a major move forward towards improved customer service. The big question is; do they have the patience, and guts to hang in with this new policy long enough for customers to change their buying habits back to where they should have been all along? It sure would be nice if they did!

By the way………I Told You So!

  

              

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Customer Service And ROI?…..Are You Kidding Me?

I often read statements or articles about customer service policy and ROI.

If delivering customer service requires you to consider the ROI it will give you, you’ve got serious problems with your concept of “customer service”!

Customer service is innate in a business. It comes with the package. You must give service whether it’s good, bad, or somewhere in the middle. Service is as mandatory as having a key to the front door. So I would suggest you stop looking at customer service as an add-on. You don’t make an extra investment in it and consider what you’re going to get in return. But if you do it right, you will get a great return. The return of your customers because your excellent service has earned their loyalty.

The only way you can know for sure if you are creating loyal customers is if they come back and spend more money buying what you offer. Not if they “say” they will be back, Not if they “promise” they will be back, but if they actually return and buy from you again.

So how do you assure they will come back? You don’t assure anything! Don’t waste time looking for any assurances. Customer satisfaction is a moving target. It’s ever-changing. It’s at the mercy of moods. You can’t change that fact no matter what you do. If you do figure it out though, let me know so I can cash out everything I own to invest in your business!

What you can change is your own skills so you’re better able to hit that moving target. It takes just a little practice. It’s much easier for you to improve your marksmanship at hitting the target than it is to change the target.

This takes patience. That’s spelled P A T I E N C E. Not because it takes a long time to develop these skills, but it does take some time. If you’re not worried about ROI you should be ok with the patience part. Remember, most of the time patience does pay off.

So where and how do we apply this patience?

You must always, 100% of the time, give customers…..attention, respect, and appreciation. From the time they walk in your door to the time they walk out that door. If you give those 3 things authentically to customers, the rest will fall into place. If you understand your business, which we will make that assumption, and you truly understand your product, which includes more than features, you will have your best chance at making sales and creating customer loyalty. This is the built-in synergy of sales and service. What makes it work most effectively is the mind-set of caring which manifests the attention, respect, and appreciation.

Does this sound too simple? Is it not complicated enough to justify wasting all of that brain power you’re paid so much for. I dare you to try it! This is the best foundation for a policy of exceptional customer service. Foundations are so plain and boring I know. But I also know that all the rest of the complicated structure above that foundation is totally worthless without the boring part! It just won’t stand up!

If you do the above, you won’t sell, satisfy, or create loyalty 100% of the time (which we know is pretty much impossible anyway), but I assure one thing…….you will be way, way better than average!

Customer Service And Those….Demanding, Unreasonable, Moody Customers!

You big retailers out there must remember one thing about those demanding, unreasonable, bargain hunting, price conscious consumers your stuck with ……You Created Them! Not only that, you pulled many of the smaller retailers into your vortex.

You did it with deceptive discounting, too many coupons with hard to figure out discounts,  26 hour shopping days, and 8 days a week to shop! Sorry, but I’ll bet you’re working on those last two things. Good luck!

To do all of this, you took away from those shoppers THE most important thing they are looking for when they visit your place of business….someone to help them make an informed decision. You took away personalized customer service. You traded your service “soul” to the discount “devil”. Guess who won in that transaction? Now you have to keep your numbers up for the stockholders and deal with the monsters you created.  You’ve exhausted all of the honest discount options trying to “buy” your customers and you’ve found it difficult to come up with legitimate pricing ideas. Ah!, you live by the discount, you die by the discount!

I dare say many people out there don’t believe they are really getting 60%-80% discounts on as consistent a level as you make it seem. I know I don’t. Which leads me to think the prices are set too high to begin with. But what causes my biggest distrust in you is that by doing this, you make it hard for me to know the true value of the products you sell. You also force me to have your silly coupons with me to receive those erroneous discounts. Otherwise, I’m the sucker who pays the spurious regular price or I go home without what I came for. How should we rate that as customer service? I’ll tell you one thing though; “don’t even waste time in meetings trying to figure out customer loyalty”. If you don’t change your tactics customer loyalty will be a word you’ll forget how to spell before you’ll get any”!

You see, you violate Knockout Customer Service Rule no. 9. DON’T EVER CONFUSE THE CUSTOMER! When you confuse customers, they won’t make a decision. they even get upset because you have confused them. They keep their money in their wallet and go somewhere that’s less confusing. Having said all of this, I realize you are making sales, albeit with thin margins, but I can assure you that you’re not creating loyalty. And don’t fool yourself, people aren’t lazy. You can get them off the internet and into your stores if you give them the right reasons to do so. One customer service impact report out there showed that 85% of shoppers are willing to pay 5% to 25% more for products if they can get superior service. So, if they don’t get great customer service, they might as well stay home and shop.

In my 38 years dealing with the public, I haven’t seen any significant changes in what shoppers really want. You guys complain that the customers have changed. I say “you guys changed the customer”!

So now you have to suck-it-up and deal with your monsters or change them back to the way they were from the beginning. And how was this? Just consumers with a need or desire to purchase something and an expectation of a little service to help them make that decision.  Do you think you have the brain power in your organization to pull this off? You certainly had the brainpower to dig the hole you’re in!

Customer Service Is A Verb!

Smiling while you “point” me in the right direction to find a product in your store, is NOT customer service.

If you want to impress me with your customer service, take me to where that product is located. Then, when we get there, make sure that it is in-stock and on the shelf. After all that, you might even ask me if there is anything else you can help me find. This is the very least customer service you should offer me but I find even this hard to receive in most stores I go into. A lot of web sites aren’t much better either.

“Customer service” is a VERB! It is not a noun. It’s action, it’s doing. A written list of steps for providing customer service is meaningless. People may take the steps or they may not. When your “culture” is service oriented, by example, your employees will adapt to that culture. They will also develop a creative attitude toward service. That’s why man is at the top of the food chain. He’s the most adaptable life form out there. If the people you hire really want to work for you, they will try very hard to fit into your culture. And if that culture happens to be oriented towards excellent customer service….you win!

It’s ok to have a written customer service policy as long as it is a general guideline. If this written policy is too dogmatic, it will become useless. When you give employees inflexible rules to follow, you give them “purpose tremor”. Purpose tremor is excessive feedback that makes decision-making hard. It creates fear of taking action. It’s the same type of fear one might have when they won’t jump off a diving board into the water. This fear can arise out of real or imagined consequences. Dogmatic “rules” create the fear of making the wrong decision. This doesn’t work very good when you are dealing with me and my ever-changing moods.

When employees have flexibility, they will be creative when giving me service. When that creativity comes from an attitude of wanting to help me and not just sell to me or save the company money on an adjustment, they will tend to make the right decisions more often than not. It really does work this way if you give this mind-set a chance to become your company culture. Even if it ends up where I am not fully satisfied, I will not REGRET going into your store and I will be much more inclined to return and try you again. Remember, sales take care of themselves if you give exceptional customer service!

If you’re going to spend any of your time on developing a customer service policy, spend 95% of that time on creating a “culture” of service. A culture is imbedded into the attitude of an organization. Attitudes get perceived and copied. Rules are just “things to do”. They may or may not GET done. If you set the right example (create the culture) everyone in the organization will be concerned with helping and satisfying customers. The key here is that these examples must come from the top down. The people in charge must set the tone. If they don’t have true empathy towards customers, their employees won’t either.

Think on this:   The smartest guy in the room at running a business, does that business no good if he upsets customers. And many times it’s that “smartest guy” making customer service policy. Also, that “smartest guy” can’t, I’ll repeat that word, can’t, learn real customer service until he has been on the firing line, face-to-face dealing with customers. There are just too many changing variables when dealing with people to ever think you’ve heard it all or that you can be credible dictating service policy without the experience. I say this from my own experience. You are always learning!

If owners or managers don’t have face-to-face experience handling customers,  how can they possibility “empower” the “troops” with this responsibility. Stuff written in a memo or manual is useless in the real world. Experiential knowledge is useful. Without this knowledge what are you going to “empower” your employees with? It’s a non sequitur. You can’t empower people with something you don’t have!

The people in charge must learn how to swim in relation to customer service. You can only learn to swim by jumping in the water. No one in a business has a pay scale above learning how to treat customers well. If you think your’s is then your whistling in the dark. Oh! And by-the-way, good luck with your customer satisfaction ratings and customer retention!

Here is a little insight as to why consumers keep rating customer service low even as many businesses spend more time and money implementing improved policies.

They Do The Wrong Things! It’s been said, and quite accurately, that whatever you are doing, if you practice doing it wrong,  you will get very good at doing it wrong!  Discounts, coupons, 24/7 shopping hours, free parking, and buyers clubs that make me pay to belong to aren’t exceptional customer service. Below is the list of everything a customer wants when they walk into your brick and mortar store or click on your web site or call your phone service center. If you can give a customer everything on this list when you come in contact with them, you will be most of the way home to a successful transaction with them. Write this list down and study it for a week. Then apply it when dealing with customers. I promise you it will make your life much easier. Sharpen your pencil and here’s the list!

When customers come in contact with you here is everything they are looking for:

ATTENTION

RESPECT

APPRECIATION

Do you think you can memorize all of that?

Please don’t get a headache while studying. You are allowed to take breaks!