Approximately a year into the COVID-19 outbreak, retail stores across the country have made adjustments to create a customer shopping experience vastly different from what it originally was at the start of 2020. In addition, customers have adjusted their purchasing habits too. On Black Friday, consumers spent around $9 billion shopping online, a 21.6% year-over-year increase since 2019. Meanwhile, foot traffic in physical stores dwindled 52.1% from the previous year.
Some retailers have accelerated the rollout of services such as curbside pickup and BOPIS. This was in response to the changes in consumers' shopping habits. 59% of shoppers are more likely to use curbside pickup due to COVID-19, and orders fulfilled through BOPIS surged 208% last April. Post-holiday, the surge dialed back. However, it remains 67% higher in February 2021 than last year.
Businesses that are typically more cautious have accelerated their digital transformation projects and are now more open to testing ways to fulfill orders because they knew what was on the line. However, as consumers begin to expect more, retailers are left having to respond to problems they may not have the capabilities to solve.
"During the COVID times, we all kind of raised the bar on our expectations because e-commerce made it a lot easier to do things, and made it faster," said Manolo Almagro, managing partner for Q Division. "But when you still get to that fulfillment side, logistically, it's not there yet, or it has to be addressed."
With the introduction of these new digital services, making purchases is as easy as a few taps and swipes for consumers. And as more retailers provide faster fulfillment options, COVID-19 has set a new standard for customer expectations. "What we've seen is people's or customer[patience] levels are much lower," Almagro said, adding that unsatisfied customers will quickly move on to a different retailer if their needs aren't met. "You're battling for the loyalty."
There is a lot on the line for retailers that do not meet their customer's expectations. 73% of consumers will stop doing business with a brand after three or fewer customer service experiences. There is a gap between the patience customers have, and really where the digital platforms are. In addition, there are winners and losers, and the winners of e-commerce went up over 20% from their share of the marketplace.
Bad customer service experiences may also cost brands revenue without even knowing it. Less than half (44%) of respondents directly complain to the company. This is due to leaving feedback takes effort. Only those that have particularly strong feelings about their experience would do it. On the other hand, brands can use good customer service to drive customer growth in the long term. A Coveo report said that 53% of customers would tell family and friends about positive interactions with brands.
"It takes 10x the amount of effort in an industry to bring in a new customer than it does to serve an existing customer," said Brian McGlynn, General Manager of e-commerce at Coveo. Adding that great customer service may even prevent customers from completely shying away from a brand in the event of a mishap. "A lot of times when customers buy a faulty product but the service is excellent, they'll actually buy more."
Still, there are plenty of aspects retailers cannot control. Different generations, for instance, may have contrasting ideas of what good customer service looks like. It was indicated that 50% of Gen Z consumers would turn away from a brand if they can not access certain information themselves. Meanwhile the Silent Generation (39%) and Baby Boomers (40%) prefer to speak to an actual person.
Brands have an advantage when they are able to anticipate the needs of their customers. However, a Forrester report in February showed that only a few brands can respond effectively. Too many retailers still rely on survey-based approaches to acquire feedback. This might prevent them from getting a more holistic understanding of what their customers ultimately want.
"People want touchless. People want better design. So combining those two things now you see this collision of a ton of investment in digital, a ton of action and adoption, combined with expectations," said Kevin Neher, who co-leads McKinsey's global consumer experience practice. "That just means that people who are not on this train, people that are being slow on investing, are getting left behind at rates that are even further and more dramatic than we would have guessed."
The brands that can satisfy their customers are the ones that have the resources to justify build-out costs. Industry giants Costco, Amazon and Apple recently ranked the highest in customer satisfaction, a Verint Experience Index survey found.
Retailers are currently in a transitional phase. Brands are just recently investing in data tools that allow them to identify how much investment return customer satisfaction can bring, he said. "Only more recently have you really been able to say there is a link to value here: between customer experience and business outcomes," Neher said.
Those tools and customer service initiatives may come at a hefty price. Whether these features are financially sustainable all comes down to the priorities of the organization. Once retailers introduce a new customer service perk, it is going to be hard for them to retract that if it does not reap rewards. "The moment you make it harder [for customers], they will not come back, or they will find someplace that does it better."
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