Money is only one of the many reasons for attrition. Cost of running retail operations is proportionate to the scale and complexity of the format – supermarkets make thinner margins than do department stores; but the costs of running a department store is higher than running a supermarket. Therefore, profitability in retail comes from an efficient management of costs – not from deprivation! Many retailers can only pay minimum wages to their salespeople and obviously cannot compete with high-margin retailers or other industries that pay more – BPOs etc. Balancing manpower cost as a percentage of total cost will continue to remain a huge challenge until the industry matures – where there will be quality manpower available in abundance and systems and processes will be well established bringing in cost efficiencies. Retailers can choose to keep their staff happy by paying them competent salaries and still be profitable; than by cutting corners and spending hugely on replacement costs (not to mention business lost due to poor service). Retailers can design attractive incentive schemes (that are variable according to the sales generated by each sales person) and make working for them more desirable. ‘Starbucks’; the Seattle based coffee-chain today boasts of over 17,000 stores in 50 countries manned by ‘partners’ (that’s how all employees are referred to as). Starbucks is known to spend more on employee benefits than they spend on sourcing their main ingredient – coffee! All eligible full and part-time Starbucks ‘partners’ (totaling about 80,000) are offered comprehensive health coverage and stock options in the company. Little wonder that Starbucks ranks on the top of the World’s most ethical companies in its category.
Tuesday, December 20, 2016
Tuesday, September 20, 2016
I dutifully took the noisy grinder to an outlet of a major electronics retail chain that I had bought it from. It was out of its warranty period, and I was obviously willing to pay for fixing it. I had left it with the retailer for over a week - along with the warranty card for whatever it was worth! I had to make several calls during that period to check the status of my mixer. My patience was running out as they kept promising that it was being sent from one service center to an other. Surprisingly, the brand of grinder didn't demonstrate any eagerness to fix it, much less the retail chain that sold it to me.
Electronic retailers in India are notorious for hiding behind a licentious fact that servicing of an electronic appliance or gadget (sold by them) is none of their business! and that it is only of the brand's service center. What the salesperson will do with a lot of finesse though, is that he/she will quickly tear a corner of a newspaper and will hand it over to you, with the telephone number of the service centre - not necessarily toll-free - illegibly scribbled on it! This they consider to be a benevolent act of generous service to the already suffering and legitimately frustrated customer. What they don't seem to realize is that they are indeed telling the customer that "you have bought the product at your own risk (peril)". If you notice closely, the salesperson is at least twice as eager and intense in handing over that piece of paper than he was when he actually sold you the product!!
Now, this is the point where any trace of 'customer service' the retailer is capable of, goes clearly into the trash can!!
On the 10th day of my depositing the broken mixie, I kept getting repeated calls from a landline number that only my truecaller identified as that of the retailer. I was only greeted by annoying busy tones the several times I tried returning the calls I had missed during the busy day. I finally landed up at the retailer's outlet after work; partly frustrated and completely angry!
My first encounter at the service desk was made with this very unassuming, un-uniformed guy with a genuine smile. All my frustration of having waited for over a week and having made several calls to check the status, vanished on seeing him. When I inquired about my mixie, he told me how he had unsuccessfully tried to reach me several times during the day. I apologized for not being able to take his calls and inquired about it. He deftly pulled out the bag that contained the fixed appliance. He volunteered to explain what had gone wrong and how it was fixed. I requested him to demonstrate by running it, so that I could convince myself of its recovery. While doing so, he continued to speak to me about how good it was now and that the mild noise emanating from the whirring motor was only temporary and would disappear after a couple of days of use.
Finally, when it was time for me to pay for it; I inquired how much I was due and was pleasantly surprised when I was told the damage was all of Rs.140!! I handed over two currency notes of Rs.100 each. It was while waiting for the balance change that the truth was let out by his colleague...That, when the service centres had returned the mixie under the excuse of "No spare parts"; Tapan had voluntarily taken it to a small-time mixie technician near his home and had it fixed; paying for it from his own pocket.
This revelation left me speechless and astonished for a few moments. I did not see any reason for Tapan to have taken this upon himself to fix my broken appliance. But he had...and how? At that moment, I was convinced that I couldn't possibly pay for his genuine attitude of service..and that no amount would qualify as appropriate.
Still in amazement, I called him aside for a quick chat..and he reluctantly stepped out of his station, behind the service desk. When asked what motivated him to take this proactive step; he shyly replied...that he had just put himself in my shoes and imagined how I would feel very disappointed to learn that my mixie was not repaired even after a long wait...and that he just went ahead and got it fixed, risking paying for it from his own pocket...whether or not I agreed to pay for it.....now, how can I define this service, if not but DIVINE?
I then discovered that Tapan, who hails from Odisha, was a diploma holder in automobile engineering. Considering that he was barely a fortnight in employment with the retailer, and knowing how retailers in India operate; I was almost certain that he had not been subjected to any training whatsoever. He also definitely wouldn't have seen his first salary yet!
What motivated Tapan to act in the spirit of unalloyed service, spending his own money to have the customer's problem solved, when he had no apparent incentive for doing so...and risking the fact that his spend may not be reimbursed...is supremely energizing and divinely uplifting.
I'm still wondering whether "Customer Service" is really a trainable trait!
Monday, September 10, 2012
Thursday, March 10, 2011
The December quarter has ended on a happy note for many Indian retailers. Some retailers have reported growth in top-lines of over 25% and growth in net profits of close to 50% over same quarter last year. That is indeed a very loud reaffirmation of the strengthening consumer sentiment across the Indian subcontinent. Thankfully for wise economic governance; the Indian economy has remained largely isolated from the global meltdown, and even the whimpering cries of slowdown have been silenced by the rapturous excitement in our malls and high-streets.
When retailers begin focusing on same-store growth; one of the challenges they are bound to face is being able to assign clear and unambiguous levels of ‘Accountability’ across their retail operations.
Corporate vision and strategy will always determine annual goals. However, those goals can be reached only when there are right behaviors demonstrated across the entire retail value chain. Loosely translated, a ‘Right behavior’ is any and all behavior that is required for the moment. A sales person – no matter how tired he or she is - walking the customer to the back of the store to identify what the customer wants, is the right behavior for the moment. Just as the store manager having to make a trip to an other branch or to the warehouse to get the promised merchandise for a customer - instead of hiding behind disrupted warehouse delivery schedules to justify why he is letting the customer down on the promised delivery.
Whatever the growth that retailers are aiming for in the next fiscal; they have to find ways to assign goals ‘fairly’ to their ‘responsible owners’ at all levels – both at the back-end and the front-end. ‘Fair allocation’ of goals at the store level could mean that the store is given sales goals commensurate with its location and performance history; while ‘fair allocation’ at the individual sales person level would take into account an individual’s inherent and trainable strengths and his or her commitment to the store’s goals. In fact, it is the ‘willingness’ of the sales associate to do whatever is required of him to meet the store goals; that determines whether he is being a ‘responsible owner’ or not.
In their anxiety to reach goals, the ‘corporate’ often believes that an individual sales associate’s innate capabilities are adequate; and in this false belief, overlooks the need to equipping them for accomplishing it. It is like an army general issuing instructions to his battalions to charge into uncharted territories of their enemy and pitch the flag of victory – in barefoot; with no arms and ammunition and with no protective gear; only to later moan the shameful defeat and occasionally mourn his dead jawans!
Executives at the national level will have to arm their teams at regional and store levels with skills required to reach their goals. A wise investment in training – to overcome the limitations of innate talent and unharmonious application of wisdom, is a good place to begin.
After all, only right behaviors will beget right results. Any shortfall in reaching goals, under closer examination, will reveal either the ignorance (lack of training) or negligence (lack of willingness) to apply the right behaviors. And the extent to which the team remains farther from its goal is in direct proportion to its excessive and brazen use of wrong behaviors. Numbers, in and by themselves cannot be changed. And numbers will not eternally continue to look encouraging in spite of the limitations of retail staff.
Poor numbers have their levers in store staff either not being ‘capable of’ or ‘unwilling to’ perform as desired. The store staff’s ‘inability’ can be overcome by transferring the skills through proper training and strengthening the right behaviors through constant practice.
However, there is not much that can be done about a salesperson’s ‘unwillingness’ to perform. People who are unwilling to perform despite training, are a liability. In fact, they are a bigger liability than people who leave the organization after training – the latter being one of the major concerns of retailers.
Store managers and team leaders will have to take on the responsibility of not only reaching their own numbers but also helping their teammates achieve theirs. Positive and regular coaching is indispensible in this collective responsibility towards delivering numbers. Retailers should train their managers to become responsible coaches of their teams. Just as professional sports coaches are always on the field watching their wards; store managers have to make themselves available to spend more and more time on the sales floors observing their teammates. They will have to either be ‘praising’ right behaviors demonstrated by their sales teams or be ‘coaching’ them for right behaviors. In that spirit, ‘coaching’ becomes a ‘duty’ more than a responsibility.
In the back-end too, ‘Merchandisers’ should realize that their accountability is never complete without their proactive ownership of what they choose to carry in their stores – the styles, the colours, the designs, the quantities - in short, the whole assortment and merchandise mix of any retailer, is the sole responsibility of merchandisers – until every single unit is sold, preferably at full-price! ‘Buyers’ own the responsibility of ensuring that right quality of the defined SKU are bought in right quantities and in collaboration with the ‘Sourcing’ teams, will ensure that they are bought at the right prices from the right sources. Together with ‘Logistics’ and warehousing, the onus of reaching the desired quantities to the right places at the right time are all different components and degrees of accountability shared across the back-end of the value-chain.
The cycle of accountability for the customer-facing end, thus seems to complete itself when store managers begin to coach their sales staff; and in turn be coached by their area or district managers; who in turn are guided by their national level executives.
Leaders on both sides of this ‘infinite 8’- at whose cusp the ‘Corporate’ it its magnanimity and wisdom meets its ever-demanding and hard-to-satisfy ‘Customer’- have to ensure that accountability is clearly defined; fairly allocated, meticulously managed and generously rewarded.
Wednesday, January 12, 2011
I spent most part of November and December in Istanbul, Turkey; training about 80 sales associates, store managers and retail managers in our customer services skills and store management strategies. It was a rewarding experience, both for my client and me. The client, a chain of Health and Beauty stores; has a rich pedigree and is committed to staying ahead of competition by offering superior customer service in an increasingly competitive market. Organized retail in Turkey is mature and one can see international brands and home-grown labels jostle for market share blurring boundaries between mass merchandisers and niche retailers. Our client’s appetite for growth is supported by their burning desire to excel in all aspects of retail and customer service.
We began with the fact that my trainees were not conversant in English. But the seemingly obvious reservations about the language barrier – was demolished from the word ‘go’ as the simultaneous translators did a fantastic job of seamlessly conveying my English words to the ears of my Turkish listeners and effectively relaying their thoughts to me in English – all in miraculously real time. My jokes resulted in instant ruptures of laughter as the deep insights found their ready adaptors. Every single role-play turned out to be lively and each batch of trainees left fully motivated, determined and eager to put their new skills to practice. I never once felt that I was in a foreign land training people who don’t speak the same language….and yet understood every word I spoke and reciprocated by sharing their real life experiences serving customers.
I came back with many fond memories and strong validation of some of the inevitable requirements for success in retail - A clearly defined retail offering; peopled by retail staff with an attitude to serve; mature in their understanding of customer service and willing to learn and sharpen their skills to excel in their roles. This was set in an ambiance conducive for bringing about individual accountability with objective performance management systems.
This unique experience also validated the fact that right attitude coupled with right skills can work wonders when used appropriately. Each of the 80 odd sales associates and managers went back to their respective stores fully inspired and committed to accomplishing their goals – both individual and store goals. What followed was some spectacular outcomes from each of those stores – sometimes glaringly obvious; and at times, supremely magical.
Yasemin was mostly silent during training and spoke only when asked to. She never volunteered for any of the role-plays either; maintaining a low profile over the three days when she was in my audience. Little did I imagine that she would go back into her store and create history? Her store, all of a few hundred square feet, is situated in a largely residential locality with limited traffic of customers unlike a highstreet or a mall.
It was a lazy Sunday afternoon in early December and Yasemin had come in for the second shift. A customer in her mid-thirties had walked in with no intention to buy, and was perhaps browsing the store to get some ideas for a gift for her expectant sister. Yasemin had approached her with a warm smile and a gentle greeting complementing her hand bag, thus striking a friendly conversation with the customer. She had made the customer feel so much at home that the customer had dropped all her resistance that most customers harbor against sales people. As they spoke, Yasemin took the customer around the store, helping her understand the different product categories. They instantly bonded like friends and Yasemin had successfully built a person-to-person rapport with her customer as she continuously probed to understand her customer’s needs.
Knowing the purpose of her visit – to get some ideas to gift an expectant mother - Yasemin helped her customer to baby shampoos, creams, moisturizers and everything else that a mother would need for her first child and things that she would need for herself before and immediately after child birth. Yasemin didn’t miss the opportunity to make the would-be aunt feel special. She reminded her that the arrival of a new member into the family is also a wonderful reason to celebrate her ‘aunthood’. Not to mention, the aunt-to-be ended up helping herself to some goodies. The customer had not broken into a sweat even after 60 minutes and four baskets full of personal care products for her expectant sister; the baby and herself.
When the bill was made, Yasemin had created history. She had created the single highest transaction in the history of the chain – a transaction that came to be twice as big as the highest single sale ever - a sale equivalent to $550.
The customer not only had left the store singing praises of how Yasemin had bonded with her and indulged her in the moment, but also had helped her choose the right products.
Stories such as these abound in the weeks that followed; individuals and stores, out-performing their earlier highs in all key statistics - total sales; average ticket sizes and number of transactions. Another store beat its highest number of transactions by 30%; while a sales associate in a different store has bettered her average ticket size by 20% and consistently maintained it.
Obviously, we are continuing to work with the client; helping them create such magic in their remaining stores.
Accountability in retail begins with giving each customer service associate a reasonable goal and giving her the required tools and techniques to achieve the goal. For all this to happen at a systemic level, it is essential for the retailer to imbibe fair and objective ways of setting goals; measuring performance by rewarding the right behaviours and correcting the wrong ones through dedicated coaching.
Tuesday, September 14, 2010
The monsoon showers will hopefully help wash the red off retailers’ balance sheets! It’s time to cheer. Cheer that EOSS for most retailers has gone well; and for those that pretended to be giving away a lot but meanly held back; their customers just showed them who is smart. It’s time to ship all their unsold merchandise back to their warehouses. Make way for Autumn Winter ’10.
Retail has come a full circle; hasn’t it? I mean, look at what happened in the last three or four years – Retail catches the imagination of large corporations; they hire some big names in consulting who tell them that retail will grow at 35% -40% annually and create some two million jobs. Some large business houses go all out and devote a few thousand crores; they assemble armies of people who could barely spell ‘retail’. Blue prints are drawn; executives from different industries are poached with the lure of obscene salaries. Having put their money; retailers go berserk in signing up real estate. Developers and landowners lord over their fiefdoms; extort insane rents and go put all that money in stocks. Retailers fill their stores with container loads of ‘made in china’ and recruit thousands of warm bodies to populate their mushrooming stores….and both, retailers and their employees, all wait in feverish anticipation of that elusive customer! The going is good for a while and then suddenly, our banker friends across the Atlantic belatedly realize that they have been financing non-existent assets and suddenly all their balance sheets are soaked in blood. Every street from Wall street to Dalal street is in the red! Credit dries up; Banks refuse to lend, let alone restructure the mess. Some retailers become history. Curtains close on Retail 1.0.
Welcome to Chapter 2; to all those lucky ones that survived the cloudburst and some that barely made it by the skins of their teeth! You deserve a place in this world. It’s time to pitch your tents; hoist your flags and blow the battle horns once again.
Now that the curtains are up again, is there something that we need to do differently that will certainly spell success in retail? Yes, there is.
Sutra # 1: It is important for retailers to establish ground rules for every single activity or process that is critical to their business. Beginning with getting the merchandise mix right to sourcing and buying the right products. Having ground rules here means to resist the temptation of creating standard ‘one-size-fits-all’ merchandise mix across stores. A sharp focus on localization is inevitable. Moving on into store operations; retailers will do well to establish store policies related to receiving goods; VM; replenishment; exchanges and returns. Who does what, why, where, when and how? It is equally crucial to keep these policies both customer and employee friendly as possible. In trying to please the customer, retailers often err on the side of over-complicating policies making them almost impossible to practice. When policies exist in writing and are communicated widely; there is no scope for individual interpretations and attendant inconsistencies. Any retailer desirous of giving their customers a consistent experience across its chain of stores has to invest time and resources to getting the first sutra right. Put it in black and white, because you don’t want to see any grey!
The second sutra is the most critical of the three. In fact it has two parts to it. 1) To indentify; hire and recruit the right people at all levels. It is common thinking in retail that regardless of how unsuitable or untrained the rest of the sales staff is, it is important for the store manager to be ‘seasoned’. ‘Seasoned’ frequently translates into someone who’s been doing things (not necessarily in the right way) for a long time. Therefore, an ideal store manager candidate typically is someone who’s been on the sales floor for long as a senior supervisor or department manager. Remember; practice does not necessarily make a man perfect; it makes the ‘practice’ more ‘permanent’! So, if your manager is someone who’s been doing things a certain way – his/her way in most cases - because he/she has not been educated on how to do something, then that’s the only way you will get it. So, teach your store manager what is important for your business and how to monitor it. 2) A fact that cannot be over-emphasized is the need for the store staff to be adequately and periodically trained. My organization has studied patterns in individual and store performance over the last 30 years and we’ve been able to conclude with certainty that trained staff are consistent in converting ‘shoppers’ into ‘buyers’. They are confident about their product knowledge and their abilities to communicate benefits to suit customer needs and are often found selling higher priced products in any given category, over their untrained counterparts. Trained staff also add-on successfully in at least 60% of selling opportunities and the added product is often of significant value that takes the average basket size up by 15% to 20%. I’ve heard some retailers site attrition to be the reason for not training their staff or making a perfunctory ritual of any little training that they undertake. I have just one thing to say to them. Every garment we wear gets wrinkled by the end of a few hours and that is no excuse to wear wrinkled clothes! Untrained staff have been found to lose more selling opportunities that would otherwise have been converted to sales. Often the opportunity lost is bigger than the investment required to train them. Panic not. Help is at hand!
The third sutra for success is to instill a sense of commitment in every customer service associate that their roles as sales persons is two-fold; a)to help every customer buy (buy more and more often) and b)to consistently sell, thereby moving the store inch-by-inch towards its goals. Any salesperson who has difficulty accepting this fact of their lives; is no salesperson! That’s easier said when individual contribution is not being measured on an equitable and fair scale and/or not being rewarded fairly and adequately. This is why it is important for retailers to have an enterprise-wide system that helps set fair and consistent individual goals; track them consistently; reward the right behaviors and coach the inconsistent behaviors towards meeting the desired levels.
For some retailers, it is a question of life and death to have good ‘mystery shopping’ scores that they have outsourced agencies perform periodically. They believe in doing everything possible to get a favorable score. So much so that, they have uniform incentive plans for their store staff, lest disgruntled staff get de-motivated and offer unacceptable customer service. They are also wary of setting individual goals and rightfully rewarding each sales person for his or her contribution; as they suspect that competition to achieve individual goals will cause conflicts between staff. Well, think of it; each time all sales people in a store get rewarded equally; the non-contributors feel encouraged to just piggy back and not make any efforts to contribute; On the flip side; contributors feel frustrated that their efforts rewards laggards while they themselves are not adequately so. Missing the forest for the trees, if you will!
It is strange that while retailers are ready to compete with one another, store for store; they shy away from instilling a spirit of healthy competition among their staff.
In the next three to five year horizon ‘store profitability’ and ‘same store growth’ will be the only two factors that will make a difference between a successful retailer and the one that isn’t. What that means is that the first surest way to go out of business is to open stores just to add to the store count without aiming for breakevens and profits. The second surest way is to be under the fond illusion that one is on the growth path when most of the growth is coming from new stores and not from existing ones. It’s a classic ‘catch 22’ for retailers. They ‘should not’ expand if they are not sure that each of the new stores will themselves be profitable within a reasonable time frame. And yet, while new stores are set in the profitability orbit; they ‘ought not’ take their eyes of exisiting stores to ensure they are sweating the daylights out of competition to consistently grow at or over industry growth rates.
30% or 40% overall growth will mean nothing if each store is not in and of itself profitable and that, stores that have been in existence over one year are showing healthy growth from their last year numbers. That’s all that matters. And the only certain way to ensure this is to devote company time and resources to getting the three sutras of Retail 2.0 right.