Great article
in the New York Times about customer satisfaction. I wasn't even
familiar with the American Customer Satisfaction Index. It's a neat
idea, and despite not knowing how the index is calculated, the
contrasting scores reinforce my belief that the products retailers
choose to carry often differ from what consumers really want.
The
problem? Too many companies confuse selling clever gadgets at good
prices with delighting customers. When so many products get cheaper
every year, offering customers a great bargain will not necessarily win
their loyalty. Someone else is bound to offer a better bargain, and
besides, most customers have come to expect good deals. "Price has an
effect on whether you buy or not," Dr. Fornell says. "It has less of an
impact on whether you're satisfied or not."
Mass retailers perpetuate this problem. In fact, they may be the root cause.
It's virtually impossible to be a successful buyer for a major retailer today and be
primarily
focused on figuring out what customers want to buy and then carrying
it. That's only the beginning, a prerequisite perhaps. The buyer's most
important jobs are to:
- Consistently increase return on inventory investment year after year
- Grow top line sales every year
Bonuses
are earned and lost on these criteria. Getting vendors to provide
annual price reductions (typically referred to as "driving the
business" or "adding value") is now the norm. Therefore, product
improvements have become mere margin enhancements. "New and improved"
usually means that the product had to be changed in order to keep its
shelf space -- regardless of whether or not customers were happy with
it the way it was.
A buyer's worst enemy is the product that
customers buy year in and year out -- unchanged. It's very difficult to
grow margins regularly on a product that stays the same. The vendor
only has so much to give. Heinz ketchup is the perfect example. It's no
wonder that they have the highest customer satisfaction score. They
haven't messed with the product, and it continues to keep customers
happy! Duh!
Vermont Teddy Bear is a small company
whose impressive turnaround shows the power of creating a connection
with customers rather than competing on price.
This
connection is the relationship between the customer and the product.
Retailers either enhance this connection or they hinder it. Price is
only one of many elements that define the relationship with the
consumer.
Yes, the retailer is also its own brand, but I doubt
that has anything to do with the Heinz story. Maybe it did at one time,
but those days are long gone. The retailer as a brand is a separate
issue.
Why does Amazon produce such satisfied
customers? Low prices and wide selection play a part. But plenty of
retailers, on the Internet and at the mall, offer good deals and scads
of merchandise. The real secret, says Bill Price, a former vice
president of global customer service at Amazon, is the site's evolving
menu of features and services that make it more friendly, more reliable
and easier to use - little touches that personalize the site for each
buyer.
Amazon gets it. They understand that price is
an element. Free shipping is an element. But so are personalized
service, excellent communication, product reviews, wish lists, and so
on. Customers trust Amazon.com. They trust Amazon because the company
is reliable, remarkable and consistent.
There is always someone
with a lower price than Amazon, and some customers will always navigate
toward the lowest-cost provider. Most will stick with Amazon, though,
because trust doesn't cost much more.
Retailers need to focus
more on building trust and carrying what customers want to buy. These
efforts will grow markets and, frequently, market share. Healthy ROI
and top line sales will follow.