November 29, 2016

Expert Insight: The Race for Volume, Part 5: Operations

7 Elements

How customer experiences can drive traffic or put you out of business

By Ian Thompson, Executive VP, Global Solutions Consultancy

At the beginning of this series, I introduced the analogy of the convenience retailer as a finely tuned performance car in a race for fuel volume. In the past four installments, we have considered the importance of appropriate pricing, accurate and insightful data, monitoring competition and the right facilities profile. In this article, we will take a closer look at operations and how this element enables success.

Previously we discussed how pricing is often seen as the best way of driving volume. I contended that while it may not be the most appropriate long-term lever to maintain or gain market share, it is understandable why retailers use pricing in the near-term to entice customers.

Operations are similar. Kalibrate’s analysis has shown that the impact of enhancing operations can be more profound than simply lowering prices. A change in operations, which can happen relatively quickly, can have a significant, positive impact that can provide sustained benefits in both the medium- and long-term.

I think of operations as where the rubber meets the road. It's the point at which the human element of a retail engagement comes into play. The most clearly articulated and communicated strategy can be compromised by a single, poor customer experience. On the other hand, a positive retail experience can go a long way in creating a loyal customer. Operations are the driver and the pit crew of our racing car. We are reliant on that team to deliver the success that our organization craves. Unless the quality of the team and their service meets our customer's expectations, then we will likely fail.

Think of the last great service experience that you had, where you felt appreciated or, better still, recognized and made to feel extra special. I still recall the time that I walked into my local coffee shop; I had bought coffee there no more than half a dozen times. It was on one of those visits that I had chatted with the barista about an upcoming business trip. The next time I was in—without any prompting—the barista not only recalled my normal order but asked how my trip had been. Not only did that experience make me feel incredibly special, but that coffee shop now gets my business no matter what.

A poor service experience can have the opposite impact. I fly a lot; in fact, I am a million-miler with one airline and have elite status with three others. Recently, I pledged to never again fly with one of those airlines and it had nothing to do with its flight schedule, its on-board service or its pricing. It was because of the lousy way the airline handled a service issue. The story is long, so I won't go into the intricate details; however, because of the poor handling of what could have been an uncomplicated remedy, I almost missed an important family event. The lifetime revenue the airline has lost will be significant.

So what are the best retailers doing to reach their goal of performance-driven operations? A good start is to employ those who have the right mind set to deliver great service. Most people can tell the difference between a person who is faking it and one who is genuinely keen to help. Employ service-oriented people; train them and institute a repeatable training program that emphasizes the importance of great service.

In addition to the customer first mind set, reinforce the importance of getting the basics right. Operational scorecards, secret-shopper programs, clean restrooms, an unparalleled focus on cleanliness—Find the slogan that will drive change and then back it up with genuine financial rewards. Don't make it a “flavor of the month” activity, but embed it within your organization's ethos.

Make great service an intrinsic part of your organization, and demonstrate it in meaningful ways that provide a clear indication to your team that they are crucial to the company’s success. Don't be one of those companies that “says” its people are the most important asset but then demonstrate a behavior contrary to that belief!

The importance of great operations is clear: It can have an immediate short-term impact on your whole company, not just in the KPIs (key performance indicators) that are measured on a day-to-day, week-to-week basis, but also on the morale and sentiment within an organization.

Companies that treat their team in the right way, recognize (often publicly) staff members who are behaving in the right way (however you define that) and improve their customers’ overall experience will be winners in the race for volume.

Original article series first appeared in CSP Daily News

Coming in Part 6 of “The Race for Volume” series: Merchandising. 

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