• October 28, 2003
  • By David Myron, Editorial Director, CRM and Speech Technology magazines and SmartCustomerService.com

The Loyalty Factor

A little bit of love goes a long, long way. Walker Information yesterday unveiled a national retail study that maintains customers are willing to pay more for good customer service. The report, "The Walker Loyalty Report for Electronics, Home Improvement, and Drug Stores," cites four areas that when neglected contribute to lower loyalty among customers: wide product assortment, ease of product location, sales associate professionalism, and fast check out. According to the study, which included more than 3,600 respondents, 90 percent of customers say they are at least satisfied with their retailers, but less than 50 percent can be considered truly loyal. Loyal customers are likely to shop more frequently, increase their purchasing, and recommend the retailer to others, the report states. Yet despite this high satisfaction rating, 43 percent consider themselves trapped. "Many customers are satisfied wherever they go. They may look at two comparable stores and say, 'Both are great retailers and meet my needs, and I don't see any difference in them.' But, the truly loyal customers say, 'That's my favorite store' and refuse to consider buying from a competitor," says Bob Kizer, Walker Information group vice president. It is the truly loyal customers that retailers fight for. "We asked consumer-electronics customers to pick the brand that they shop at most regularly. We asked them, of the last 10 times, how many times did they shop there? They shopped at their favorite story only four-point-five times out of ten, meaning they're playing the field. That tells me there is a lot of money left on the table because of the lack of loyalty," Kizer says. "A surprising number of retail shoppers are trapped," said Jeff Marr, loyalty expert and Walker Information group vice president, in a prepared statement. "They're locked in for one reason or another. For some, it may be habit, for others it could be location that trumps the dissatisfaction of the shopping experience in the short term. But if retailers don't become more focused, it's only a matter of time before customers go around the corner to a competitor that can provide a better shopping experience." A significant factor in customer loyalty, the report maintains, is the ease of finding products and the time it takes to check out. About 40 percent of customers surveyed say they had a difficult time finding the products they wanted, while 45 percent say they were unhappy with the time it took to check out. Not surprisingly, home improvement customers were the least likely to be pleased with the availability of sales staff while consumer electronics retailers fared the worst in the check-out time category. Kizer offers some advice on how to improve check-out times: Retailers should study traffic flows and conduct time-and-motion studies to determine what kinds of routines cashiers go through that may slow down the checkout process. "Many are looking at checkout opportunities to try to sell other things. That slows down the whole process," he says. "Other reasons include the merchandise is not properly checked, or the scanning equipment doesn't work." So what is compounding the low loyalty score problem? Kizer says it has to do with overloading customers with choices and product options. "That's important--that's why we have the retail environment we have today, but customers can't find what they're looking for," he says. "Customers walk into a large retail store and don't know they need to walk to Aisle 27 to find the product they need." Another factor contributing to lower loyalty scores is employee attrition rates. "In our national study retail has one of the lowest employee-loyalty rates to their employers, which has to do with the employer's inability to compensate and train employees," Kizer says. He estimates the national attrition rate for retailers averages 2.2 years. Despite these obstacles Kizer maintains that the message to retailers is straightforward: You have to make it easy for customers to find what they want and help them make the right choice for their needs.
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