By Nikki Baird in cooperation with RetailWire
7/22/2008
RSR’s research into workforce management has found that while retailers say that employees are a strategic part of the customer service relationship, few retailers really invest in their employees as though they were assets to keep, rather than transactional-type bodies that are going to leave in few months. There are exceptions out there – Container Store, Costco, and Apple come up often in discussions about the “best” retail employers. Recently, Apple announced an even greater investment in in-store employees, both in the training they receive and in staffing levels for stores. RetailWire asked its BrainTrust for feedback on the investment – below is an excerpt of the responses. You can read the full discussion at http://www.RetailWire.com.
Each business morning on RetailWire.com, retailing execs get plugged in to the latest industry news and issues with key insights from a "BrainTrust" of retail industry experts. Here are excerpts from one of these unique RetailWire online Discussions, along with results from the RetailWire Instant Poll.
Apple's 'Service is Marketing' Mantra
By Tom Ryan, Managing Editor, RetailWire
As if they didn't already receive heaps of acclaim, Apple Stores in the last few months have been both boosting the number of "concierges" that meet and direct customers in its stores, and positioning them within a few feet of the doorway. Writing in Advertising Age, Pete Blackshaw, VP, Nielsen Online Digital Strategic Services, says he believes this subtle shift is only further enhancing Apple's "service" stance as a core "marketing" tool.
"Things once considered the dark side of Apple, such as tech support, are on the verge of becoming strategic assets, with the Apple Store's geek-stocked Genius Bar able to tackle just about any issue or concern you have," said Mr. Blackshaw.
Of course, it only works if it's done the Apple way. Mr. Blackshaw noted that the greeters "don't wait until you look utterly confused to ask you what you need. They intercept you -- though not intrusively and always with a smile."
Store employees are also extremely familiar with the product, seem to all like their jobs, and collectively have "a certain level of geeky yet accessible passion" that lures fans to the brand.
Apple's "service is marketing" mantra, according to Mr. Blackshaw, offered three lessons for other retailers looking to build loyalty by solving their customer's problems:
Service is marketing: "As marketers struggle to 'engage' consumers, service may well be the easiest and most gratifying starting point -- and one with high sales conversion potential."
Problems are opportunities: "Tech support is an emotional experience -- so why not capitalize on that insight by openly and enthusiastically solving problems, giving reassurance and showing compassion for the pain and frustration. A satisfied consumer might just buy something else while making the trip."
Employee authority and passion aids selling: "When employees 'walk the talk' in using the product they sell, credibility goes up -- and credibility drives persuasion. Passion and evangelism also move the needle."
Discussion Questions: Why does customer service seem to work so effortlessly at Apple Stores? What difficulties may other retailers face in replicating Apple Stores' "service is marketing" model?
RetailWire Instant Poll Results:
RetailWire BrainTrust Comments:
Their model and financials may allow this level of extra attention, but it no doubt is the most critical factor in their amazing success. I go to Apple stores because it is fun and informative and I leave happier and more knowledgeable than when I arrived...even when I don't make a purchase. Who thought such an experience was ever possible?
Dan Nelson, CEO, Leadership Resources
Apple service works so well because of the emphasis on training. The original Apple training was created by the company that does service training for Ritz Carlton. Since then the training programs constantly change adapting the training to new programs, new services, and new products. Training to update employees is also provided so training does not occur only when hired. This is an expensive proposition but the only way to ensure high level service is to invest in training and monitoring.
Camille Schuster, President, Global Collaborations, Inc.
It is very simple. As a matter of fact too simple for most to even think about it. Apple's service works because (1) senior management and local store management are committed to service and (2) Apple hires "people oriented" individuals for service jobs and then trains them well. While most companies see customer service as an expense, something to be cut, Apple sees it as an investment; a competitive edge!
Pradip Mehta, Principal, Mehta Consulting, LLC
It's easy to throw a lot of staff into a store when your sales per square foot are as high as Apple's are. Granted there is probably some point where the marginal returns on another person on the floor reach zero, but it does not appear that Apple has reached that point.
We saw a lot of other retailers waking up to those kind of economics last year in our study on workforce management--you can be in a vicious cycle where cutting labor leads to lost sales which leads to the need to cut labor, or you can turn it into a virtuous cycle, where adding labor boosts sales, which helps fund more labor. Looks like Apple is in the latter type of cycle.
Nikki Baird, Managing Partner, Retail Systems Research
I'm all for hiring great employees, training them well and inculcating a positive, can-do corporate culture. But the key enabler of of Apple retail success is its vertical integration.
Since Apple sells its products direct to the consumer and controls their net pricing, it has the flexibility to allocate the total profit margin as it sees fit. Subsidize retail wages? OK. Build architecturally unique flagship stores? Fine.
The more hardware units Apple flows into the market, the larger its iTunes business becomes. This is one reason why the faster second edition iPhone models can sell for half the price of the originals. Keeping customers becomes paramount in that scenario, which well justifies the investment in the Apple store environment and service personnel.
Under that rationale, the Genius Bars could be valuable assets even if they operated at a steep loss. Those iPod and iPhone units are consumption-enabling devices, gobbling up profitable sales byte by byte. Keeping them operable and their owners happily buying is everything.
James Tenser, Principal, VSN Strategies
Read the entire story and RetailWire discussion at:
http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/13094
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