Forget the price war, customers rule the roost now
It was recently reported that Tesco pumped £300m into discounts in the first two months of 2015. Despite Tesco reporting a 0.3 per cent sales increase in the past year, grocery retailers have hit the headlines in the race to the bottom. Readily flaunting their low prices and even lower opinions of each other, grocery retailers are stuck in a stagnant game of top trumps.
What we have actually seen throughout this process is that price isn’t the only metric customers are looking for when it comes to choosing their retailer. Customer experience and service is becoming the new battlefield of the UK retail industry. It was reported late last year that consumers complain about brands over 879 million times a year on Facebook and Twitter, and 10 per cent of those complain every single day. Indicating that never before have brands had such direct exposure to their end users.
The John Lewis Group has been at the forefront of customer service in the UK: traditionally putting the customer at its heart of the business. In recent months however their customer service/experience has left much to be desired. In fact, The Guardian recently reported that longstanding customers have been shocked and disappointed at the service levels in recent months.
On the other hand, Sainsbury’s seems to be moving towards a customer first way of thinking by incorporating ‘regular pricing’ and beginning to trade on consistent value and high level of customer service. A good move, when quite frankly retailers could soon be pricing themselves out of the market.
So how can grocery retailers bounce back?
Firstly, retailers must appreciate the full effect of social media. No longer is Tripadvisor the only place consumers can rate their experience; Twitter is a key platform in which a bad review can go global in a matter of minuets. Having online communities where the retailers and consumers can interact, rate products, solve issues to a representative will turn the customer sentiment from bad to advocate
We’ve seen the detrimental effects that bad social media reviews can have on brands, British Airways being a perfect example: a bad review was re-tweeted over 77,000 times. It is therefore its difficult to understand why most of grocery retailers are failing to put the customer at the heart of their operations. It’s not enough to have cheap products: they must be quality and have a sales representative attached to it.
Secondly, retailers need to understand the value of a brand advocate. Receiving third party endorsements from happy, loyal customers is worth more than any advert and research has indicated that nearly 75 per cent of companies view customer service as a competitive differentiator. Ensuring that the time and effort has been put in to making sure the customer is happy will cost a lot less than trying to repair irreparable damage such as loss of trust.
Given that 43 per cent of consumers expect a response on social within the hour, grocery retailers must lastly be proactive when dealing with customer complaints. Waiting (as British Airways did) until hours if not days later will expiate the situation and ensure the customer won’t go back.
Grocery retailers are at a critical time. As Professor Leslie de Cherantony said: this should be the year grocery retailing changes forever and customer’s are put back into the heart of the operation.
Katy Keim, chief marketing officer, Lithium