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Special Report: Catering to the Ever-Demanding Customer

Fast, free, personal — and seamless: That’s what shoppers want from customer service in the increasingly competitive omnichannel world.

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Nordstrom is consistently cited for its excellent customer service.

Nordstrom is consistently cited for its excellent customer service.

Courtesy Photo

Nordstrom is consistently cited for its excellent customer service.

Nordstrom is consistently cited for its excellent customer service.

Courtesy Photo

Fast, free, personal — and seamless.

That’s what shoppers want from customer service in the increasingly competitive omnichannel world. And they want those characteristics wherever they shop, whether it’s in a brick-and-mortar store, on a smartphone or online.

“Customer service is very fluid and, at the moment, it’s very transparent,” said Blake Nordstrom, president of Nordstrom Inc., which is renowned for its service. “As a business, you’re not controlling the story or the message. The customer is in control. You have to ensure that with your actions and functionality, the customer is telling your story. We built this business on word of mouth and reputation, and more than ever, there are so many channels to communicate good and bad.”

An NRF Foundation/American Express Customer Service survey this year polled consumers with the open-ended question, “Thinking of all the different retail formats (store, catalogue, Internet or home shopping), which retailer delivers the best customer service?”

The top 10, in order, were Amazon.com, L.L. Bean, Zappos.com, Overstock.com, QVC, Kohl’s, Lands’ End, J.C. Penney, Newegg.com and Nordstrom.

Wendy Liebmann, chief executive officer and chief shopper at WSL Strategic Retail, has polled American consumers about what was important to them when they shop. At the top of the list were shorter lines at checkout, well-lit parking areas, knowledgeable staff and easy-to-navigate stores. Encroaching on all these more traditional service areas is “I want customized coupons directly to my phone, or Web sites that make buying online easy, or access to information when I’m in the store. The technology or the digital component now, from the phone or the computer, has begun to encroach on some of the traditional formats,” said Liebmann.

Shep Hyken, author of “Moments of Magic,” “The Loyal Customer” and “The Cult of the Customer,” is also the creator of The Customer Focus program, which helps clients develop a customer service culture and loyalty mind-set. He believes the customer has different expectations depending on the type of store they’re in. For example, a customer shopping at Marshalls or Nordstrom Rack doesn’t expect the same high-end service they’ll get if they shop at Nordstrom. “But the one expectation that doesn’t vary ever? When they need help they want it, they want it now and they expect to be treated well,” he said.

But there remains lots of bad service — and customers are becoming ever-more vocal about revealing it on retailers’ and their own Facebook pages, via Twitter or Instagram or simply through word-of-mouth. According to the American Express Global Customer Service Barometer, 79 percent of Americans cited one of the following “Big Four Gripes” when it comes to customer service: rudeness from an insensitive customer service representative (33 percent), passing the buck (26 percent), the waiting game (10 percent) and being boomeranged (having to keep following up on an issue, 10 percent.)

“Customer service across channels can be a source of big frustration for customers,” said Tim Calkins, clinical professor of marketing at the Kellogg School of Management at Northwestern University. “Many people now get information and shop across channels, and the problem is very often they expect similar policies and service across the channels, but often companies don’t deliver that.”

One of the big problems arises when a customer buys something online and is unable to return it in a brick-and-mortar store. “The problem is people don’t draw lines between online and physical presence,” said Calkins. “When a consumer thinks about a brand, it’s all the experience associated with that brand. Consumers logically form their opinions based on all these different channels. Inconsistency can really damage your brand long-term.”

Calkins noted that people’s expectations are shaped by the big players. “Amazon has a big impact on how people think about buying online across all sorts of categories. Amazon’s policies create norms that other companies need to follow or respond to,” he said.

Nor is retailers’ competition in customer service restricted only to companies that sell fashion or beauty — it’s everyone. “People are comparing them to Amazon,” said Megan Burns, principal analyst at Forrester Research. “They are comparing you to Zappos. Even if you are an insurance company or a bank, the expectations are there.”

According to Forrester, for the third year in a row, retailers and hotels had the highest average scores for customer service across all respondents in its Customer Experience Index — an 81 for retailers and a 76 for hotels. Once again, health insurance plans (55), TV service providers (56) and Internet service providers (56) were at the bottom. For the first time in the five-year history of Forrester’s CXi, the top scorer was not a retailer. It was USAA’s banking business, with a score of 89. Joining USAA in the spotlight were retailers Kohl’s (87), Amazon.com (86), and Costco Wholesale (85), which scored the three remaining spots in this year’s excellent category. And unlike last year when nine of the top 10 scorers were retailers, this year’s top spots included hotel chains Hampton Inn (84), La Quinta Inn & Suites (83) and Courtyard by Marriott (83) as well as credit unions in the banking industry (83).

Asked how the fashion industry and department stores rate, compared to other industries, WSL’s Liebmann observed: “I think the fashion retailers are doing a better job.” She cited Nordstrom with their app, and some of the things Macy’s is doing. “You’re certainly seeing in the department stores a more aggressive use of technological enhancements for service. You also see it, in beauty, what Clinique does. Clinique has a very interesting service model now. If you go to Bloomingdale’s, you can pick up a basket like a drug store; that says, ‘Don’t bother me, I’m going to do it myself.’ Or, you can choose to use the iPad or you can ask the beauty adviser to help you. Some of these models are changing the way you think about service,” said Liebmann.

Unquestionably, certain companies set the standard when it comes to customer service.

“I think the companies setting the standard are companies that have a bit of a religious aspect to them,” said Paco Underhill, founder of Envirosell, a market research and consulting company. “That somehow the experience is evangelical. I like the Container Store, it’s the religion of being anal compulsive. I love walking into the Bloomingdale’s flagship. Trader Joe’s….You walk into Trader Joe’s with no expectation of service and generally have a friendly interaction with people.”

One of the key aspects of people’s customer service satisfaction level is what their expectations were walking in, versus what was the experience they had once they got there, he said. He also noted that if someone is assisted too quickly, and the service is too aggressive, that’s a negative. “We know that if you’re offered service at the first minute that you stand at a cosmetic counter, it has a negative impact on your conversion,” said Underhill.

“One of the things we’re very adamant about is you should be greeted first and offered help second. When someone comes up to you and says ‘Can I help you?’ that is a question that can be answered, ‘No.’ The essence of a good associate is someone who can start the customer talking. So if he comes up to you and says, ‘What a beautiful day it is. It really feels like fall,’ this is getting to one of the evolutions of the customer service model,” said Underhill.

Underhill thinks customer service has gotten somewhat better over the years. “People are recognizing, especially at the department store level, that customer service is a differentiator. What we know is that both ends of the retail spectrum seem to be doing reasonably well. It’s the middle that’s very troubled. Bloomingdale’s, Nordstrom and Saks have been able to focus on customer service. There’s a customer who’s walking in the door who can afford it. At the lower end of the spectrum, the Targets, customer service isn’t just about associates, it’s about good signage systems. Target has a very effective signage hierarchy which often helps people negotiate the store,” said Underhill.

Even as Nordstrom is praised for its customer service, the retailer does not take anything for granted and is constantly trying to raise the bar — both in its stores and online, executives said.

Blake Nordstrom told WWD, “We’re always really sensitive of potentially sending a signal that we have it figured out and we are the experts on service, so if we’re talking about it, we’re not doing it. We’re very humble on this subject, and we’re reminded daily from customers about the many opportunities we have. It is our number-one goal, and every year we try to find ways to improve.”

He said the company is always trying to improve its service, whether it’s in-store or online, and he doesn’t see one trading off on the other. Rather, he sees synergies between the two.

“You may not be interacting with a human being online, but there’s still a service involved, both good and bad. How the customer defines service needs to be something front-and-center for us, and we’re trying to get up to speed on that,” said Nordstrom.

He said customers’ expectations online run the gamut from the site itself (Is it easy to navigate?) to the search functionality (Is it easy for the customer to zero in quickly on the things that they want?) to providing product knowledge, more intuitive filtering, bigger imagery, a wide assortment of products, the best brands and someone who is able to answer questions seven days a week, 24 hours a day. Other expectations relate to the speed of delivery and how easy it is to return, he said.

“We learned many, many years ago that those businesses that stood behind their goods and services and had a fairly liberal return policy garnered trust with the customer,” said Nordstrom. In September 2011, the retailer implemented free shipping and returns online. “If we want to be competitive online, they demanded it and expected it and it was a price of entry. The customer responded accordingly and the customer likes free,” said Nordstrom.

Last year, Nordstrom also introduced mobile point-of-sale devices to all its full-line stores. This year it is rolling them out to all Rack stores as well. In August, Nordstrom also introduced an iPad shopping app, which has a dressing room feature to help customers browse and put together different looks. Nordstrom noted that the retailer is working hard on the subject of personalization online. “Our folks in the store do a good job with that, and we need to translate that online.” For example, having a feature that suggests, ‘If you like this, you might like these other items,’” isn’t new, “but is something we need to improve upon,” said Nordstrom.

In-store, Nordstrom’s philosophy is to empower its salespeople and have them treat customers as they would want to be treated themselves. They need to make decisions one customer at a time. “Our rule book says, Rule number one, use your best judgement. Rule number two, go back to rule number one.”

Erik Nordstrom, president of stores at Nordstrom Inc., told this story at the company’s annual meeting in May, which reflects the retailer’s commitment to customer service: A customer left her package in the Nordstrom parking lot at the Westfarms, Conn., store, and drove out to JFK Airport. Someone had been trying to contact her on her cell phone, but she didn’t recognize the number so didn’t answer the phone. As she boarded the plane, she was paged by TSA telling her that someone had found her package. It was a Nordstrom employee from the housekeeping department who had found the package with $800 worth of merchandise, tried unsuccessfully to contact her, and drove from Farmington, Conn., to JFK to deliver it. (Her cell phone number and airline information were in the package.)

“Every day there are acts of human kindness,” said Blake Nordstrom. “We’re just really fortunate to have roughly 60,000 people that are extending themselves to our customer, whether it’s online, or a catalogue, flash sales at Haute Look, a full-line store. If we do that right, the customer wins, and if the customer wins, we’re going to reach our goals.”

Great customer service will occur if a retailer can anticipate consumers’ needs, such as the way Zappos operates, said Frances Frei, professor in the Technology and Operations Management Unit at Harvard Business School, the senior associate dean, director of faculty planning and recruiting and coauthor of “Uncommon Service: How to Win by Putting Customers at the Core of Your Business” (Harvard Business Review Press).

She explained that buying shoes online might have been a terrible experience and it might have been much better in-store because of the ability to try on different sizes. But, she said, “Zappos has done a magnificent job of pouring that experience to online. Off-line shoe [retailers] will have to bring it to the next level. Zappos lets you order as many as you want and you don’t feel guilty.” Same-day delivery is also a game-changer. “I’ve ordered things from Amazon, and for $3.99, they’ll deliver that afternoon,” she said. “Generally, it’s for a subset of the items, such as books and bubbles — a lot of things for the kids.” Wal-Mart Stores began testing same-day delivery of online orders in a few U.S. cities this month, shipping merchandise from nearby stores.

Frei said the definition of service excellence is being “best in class” in some things and being “worst in class” in things they value least. “Well-intentioned, energetic people typically drive organizations to try and be great at everything. It also reliably will lead to exhaustion and mediocrity. The obstacle is, what am I going to be best in class in, and what will I give up?” She believes that Apple has brought up the level of what’s possible in customer service. “Before Apple, you could almost think that the industry was successful in colluding about not giving good service. But then with Apple, it’s like it’s possible.”

In her opinion, what’s the biggest turnoff when it comes to customer service? “Marketing makes promises that operations doesn’t deliver on,” she said.

Jordy Leiser, cofounder and ceo of Stella Service, which rates online sites for customer service, believes certain companies in the retail world are setting the standards. For social, it’s Fab, Gilt Groupe and Nordstrom who are making it a priority. “When it comes to the shipping experience, Ralph Lauren makes the entire process an experience to remember, much more so than their peers in their category and department stores, and on the help side,” he said J. Crew stands out and “Diapers.com is just so quick and so thorough.” He said there continues to be a lot of dialogue around same-day shipping. “Amazon has really set the tone. We see service performance always trending toward wherever the innovator is headed,” he said. “Once Amazon set a stake in the ground that they’re going for incredibly fast speed,” others followed.

He noted that Amazon had never used Twitter for customer support until late September. “Companies were blowing them away. Companies like Fab, Gilt, Nordstrom and HSN have done really well leveraging Twitter for communication,” said Leiser.

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Alison Loehnis, managing director of Net-a-porter, said, “What’s been fascinating is to discover how social media has become, not just a conversation tool or a sales tool, but a customer care tool.” She said the company recognized early on that people were communicating with the company through Facebook and Twitter. “They’re commenting on products, on posts, the brands and their orders. The expectation from the consumer has evolved considerably. We’ve staffed ourselves accordingly. We’re not only available at a specific 800-number or specific e-mail address. We’re constantly monitoring social [media] to make sure customers have an access point so we can get back to people with specifics. The same thing goes for mobile. We’ve seen the percentage of sales coming from mobile increase steadily.”

One thing Net-a-porter spends a lot of time focusing on is the language piece. “Because we’ve been global since Day One, and we’re speaking to women in the better part of 170 countries, we need to be able to speak to them. We’ve got 23 languages within the team right now,” she said.

Elizabeth Francis, chief marketing officer of Gilt Groupe, noted that one of the things they do well is recommend other products to their customers who are shopping their Web site. She said Gilt spends a lot of time focusing on sizing, and putting resources into product photography.

Gilt Groupe has expanded into Europe and has hired customer service reps in Ireland. The company has 24-7 live-person coverage available, in Ireland, New York and Portland, Ore. “I think what customers expect now is a customer service rep who knows the product and is empowered to help them. We invest a lot of time in training and empower our reps to help our customers shop,” said Francis. Gilt has a distribution center in Louisville, Ky. “One of the things we’re invested in is giving the customers options around shipping. They have four different choices when it comes to shipping for apparel. If they don’t need it right away, they can say, ‘Take a week, I’d rather not pay $7.95, but rather pay $5.95.’ Some people really need to have it tomorrow and say, ‘Overnight it to me.’”

Social media is also an important tool at Gilt.

“For us, Facebook is such a fantastic extension of our whole customer service experience. It really is a place where we have conversations with our customers. It’s great to see our own Gilt Groupe customers interacting about products. We have an entire team dedicated to working on conversations with our customers on Facebook. We want to be responsive and quick if we ever see a question. Positive and negative, our customer rep will respond immediately to clear up questions,” she said.

For all retailers — online and brick and mortar — the key to customer service today is to think about every channel in which they sell. “Everybody is striving to make the customer experience seamless between all the different channels — brick and mortar, catalogue and dot-com,” said Arnold Aronson, managing director of retail strategies at Kurt Salmon. He said it’s been scientifically proven that the customer who’s a multichannel shopper spends five to six times more than the customer who only uses one channel.

“The customer today has a choice of mixing and matching how she interfaces with a store,” said Aronson. “She can shop on her laptop and look at what she likes and go to the store, or vice versa; she can stop in the store, and then if she likes something and if she doesn’t have the time, she can go back and order it on her computer. There’s a lot of price-checking you can do before you have to make a decision.”

The speed with which customers receive an item is critical. “If she shops in the store, and they don’t have her size, she wants to get it tomorrow if she can. Stores have to be prepared to order it from someplace within their system, including dot-com. Or, the customer, if she’s ordering from her house, she wants to know she can get it as fast as she could have gotten it if she picked it up in the store,” he said. “The fulfillment becomes a very important issue of getting what you want, where you want it, when you want it, and you want to assure yourself that nobody else has gotten better service than you by using the other channel. That’s the story and the challenge.”

WSL’s Liebmann said retailers still tend to think of online and mobile as two separate channels, not as one. “But as I become more used to using my mobile, it’s not a division between what I want online and what I want from a store; these things blend into how she or he likes to shop all the time,” said Liebmann. “It’s the integration of the newest service tools. How people get information when they shop, where the person in the store fits in versus the manufacturer’s Web site, where the reviews fit in as service vehicles, the social aspect people think of as service.”

In fact, a Kurt Salmon and Prosper Corp. survey of 8,000 consumers showed that 70 percent of consumers ages 25 to 54 with smartphones use them to comparison shop, up from 62 percent a year ago. Aaron Shockey, vice president of digital marketing and advertising at the Neiman Marcus Group, recently told the WWD Digital Summit that traffic to stores from mobile devices is increasing at an exponential rate. More than $2 out of every $5 of Neiman Marcus’ customers’ apparel, accessories and shoe spend is now done online. Mobile has been the biggest game-changer. More than 50 percent of Neiman’s customers use smartphones in stores.

“By 2016, smartphones will influence roughly 20 percent of U.S. sales,” he said. “Roughly 75 percent of Neiman Marcus customers report relying on multiple channels when making a purchase.”

A BIGinsight survey asked consumers what was most important when it comes to shopping online. The quarterly survey found that in order, the most important things were low prices (90 percent), free shipping (82.8 percent), a flexible return policy (79.3 percent), Web site easy to use (78.7 percent), pick up or return at store (65.8 percent) and a toll-free “live” customer service person (61.4 percent).

Pam Goodfellow, consumer insights director at BIGinsight, noted that in the past year, with the explosion of mobile devices, people have become more independent in stores. “We’ve got showrooming, and we know how to price-check things. I’ve been in stores where the sales rep says, ‘We don’t have it.’ But I get on my phone and check their inventory online, and their Web site says they have 15 in stock. We’re helping the store.”

“Retailers have been in a crunch the last several years to cut costs, and you’ve got these less-invested sales associates, so customer service has taken a downturn,” she added. She explained that since the recession, retailers have tried to cut back. “You’ve got these part-time minimum-wage [earners], we’re going to see a renaissance of customer service as the economy gets a little bit better.”

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