Results Count ... everything else is conversation.: The elephant in the room no one is acknowledging in retail

CX requires critical KPIs for performance and the performers

Image Credit: Courtesy of Chris Petersen

Everywhere you turn you see the term "omnichannel". And, for those of you following this blog, we have written several posts on how today's consumers are transforming their shopping behavior. Omnichannel shopping means that consumers have unlimited access to product information and pricing. Yet, the majority are still going to stores to make their final purchase. So, what does that mean for the future of retail? Consumers will increasingly have very different expectations for their store trips. They are voting for stores that can provide personalization and service after the sale. In short, the consumer expectation for the store of the future is more than a showroom with wait staff. The real elephant in the room is whether retail stores will invest, measure and recognize the performers that make a difference.

Why this is important: In the "Differentiate or Die" scenario, store associates are a key critical success factor. Yet, most retailers have few, if any, metrics to track peak performers or reward them for their performance that consumers highly value.

The pending disaster of treating store associates as a "labor expense"

In the heydays of product centric retailing, hypermarkets used larger assortments, breadth and availability as key differentiators to drive traffic and sales. Building a "bigger box" became synonymous with beating your competitors. Walmart, Kmart and Target were all built on the premise that bigger hypermarket stores were better – they offered everything you needed in one stop, with greater selection, and often at a lower price than specialty retail.

In order to compete on even lower prices, big box retailers focused on taking out "costs". One of the most expensive operating costs for stores is staff. If product and price are king, labor was viewed as an expense to be reduced to the lowest cost. In a race to the bottom on price, US retailers moved to hourly wages, often part-time minimum hourly wages. The end result has been that many US retail stores still retain the big box model of paying labor on the lowest hourly wage possible, with the premise of being able to compete on lowest price.

Omnichannel is the new normal … It changes consumers dramatically!

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Omnichannel is NOT about retail store chains suddenly waking up to sell online (although that might be a requirement for many!) Omnichannel is about how YOU and I shop. The internet and ecommerce has enabled us to shop anytime and everywhere! We shop from our office, on planes & trains, from home and even in our bathrooms. The ability to shop omnichannel has changed the nature of consumer dynamics and shopping forever:

Consumers are better informed than most staff in store on products
They compare prices at multiple places online BEFORE coming to a store
They literally have millions of items available online, not just store stock
Price is very competitive online, if not cheaper than in store
Consumers can have the convenience of delivery to their door for free!

So in many cases, the consumer no longer has to go to the store to do research, or make a purchase. Whether the purchase be a computer or diapers, stores are simply not the end all be all showcase of what is possible like they were in the past. Yet, while 80+% of consumers shop online, almost 80% still elect to go to the store to make a purchase. So, what's the problem for bricks and mortar retailers?

CX is changing everything about the future of retail, and success factors

While consumers are still going to stores to make purchases today, the consumers indicate a far different shopping scenario. They are not necessarily going to stores to research products or to find the best selection. They are going to stores for the "experience". They want to see, feel, and touch the products. Most importantly they want to have assistance in helping them buy what is right for them!

We have written previously about the value and importance of Customer Experience (CX). The core differentiator for stores over the internet is the experience they can't get online. And, the most important conduit and facilitator of the customer experience is the store associate! These highly informed omnichannel shoppers have new expectations for store associates:

The expect personal, courteous service
The expect associates to be able to demo or help them try products out
If products can't be demoed in store, they expect associates to provide resources
They expect associates to consult on what is best for their life style
They expect associates to help them find what they need in store or online
They expect associates to recommend everything needed to make something work
The expect someone to be able to talk to if they have a problem

Consumers are increasingly expecting a personalized, high value experience when they visit stores … and retailers are trying to minimize labor expenses.

The Elephant no one is talking about … and why it will trample many

With the shift to hourly pay, many of the associate performance metrics of the past have simply disappeared. Indeed, many retailers today cannot measure associate performance or identify peak performers. You can't manage and improve what you can't measure.

If retail stores continue down the path of just managing efficiency of hourly labor, they will die. You can NOT expense your store to profitability. To grow top line and profits, you must also manage and measure the critical associate behaviors that earn repeat business and sales from the most loyal consumers who value their experiences.

5 Things that must be done to confront the Elephant of mediocrity

The bottom line is that the elephant in the room is that retailers have largely abandoned measuring and rewarding individual associates. To survive in an omnichannel world where consumers place a premium on their experience, retail stores must address 5 critical success factors in order to survive:

Identify, quantify and hire talent who can deliver a personal consumer experience. Apple calls it hiring for smiles. Retailers have to do better than hiring a warm body to fill a time slot.

Metrics to measure individual performance that matters to consumers. There are a host of ways to do consumer satisfaction surveys and mystery shops. The key is measuring the critical behaviors and experiences that consumers' value.
Metrics that measure individual value to the retail store. Retailers will not survive by merely paying for time on the floor. They must start measuring sales by employee. Not just total sales, but sales by hour as well as sales per transaction (market basket).
Reward and recognition for individuals. Top associates typically outsell the bottom by 700%. Shouldn't they be rewarded for their financial contribution and success of the store? If not bonuses or commission, retailers must start recognizing both peak producers, as well as outstanding examples and leaders of consumer experience.
People tend to do what is inspected, more than what is expected. The corollary is that what gets measured can be managed. Associate performance needs to be made visible on scorecards for store managers, who are ultimately accountable for both consumer experience and the resulting sales.

The elephant of mediocrity is growing larger every year. It will trample those retailers paying hourly for time on the floor. Future success in retail stores will require measuring AND rewarding individual associates for sales and service performance.

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