In my previous article, I discussed how traditional metrics—like comp sales performance—often work against retailers in their efforts to improve store performance. Continuing that conversation, we now take a look at how customer-centric metrics empower corporate leaders, field leaders, store managers, and individual associates to more proactively help their customers buy more and more often with a higher sense of satisfaction through quality in-store interactions.
Defining “What Right Looks Like”
Let’s face it. Retail is a highly emotional business. The best retailers have found ways to create a certain magical shopping environment—every day and in every store—through artful store layout, creative in-store design, and innovative product placement that energizes the buying emotions of their customers. Consistent replication of this store environment is typically ensured by a quantitative, detailed, and specific definition of “what right looks like”—rigid standards on product assortment, signage, and other visual merchandising standards that collectively define the emotional in-store experience.
Emotion isn’t just a customer phenomenon, however. It is mirrored by the other human element in the retail equation—store teams. The way a skilled manager-on-duty and store associates guide the customer through the store with a personal touch is perhaps the most important element in creating memorable experiences. Yet many retailers feel this human interaction is immeasurable, unlike product mix and merchandising.
In our experience, retailers struggle to define “what right looks like” when it comes to customer interactions, and even when they do, it’s not translated into specific staff behaviors that can be easily replicated.
Until retailers define their customer experience expectations and set measures against them, 20% to 30% of revenue will continue to walk out of their stores. The enormity of this lost revenue should be keeping all of us up at night!
Traditional retail metrics contribute to the problem. By viewing sales primarily through a product lens — focusing on units-per-transaction, product mix, product sell-through—retailers overlook the importance of the store team and customer interactions in generating sales. But sales can also be viewed through two other “human” lenses.
Measuring the Customer Experience
A unified framework that integrates all three dimensions—customer, staff, and product—can be a powerful tool to identify actionable performance opportunities. We call it Return-On-Visit or ROV. By combining a customer, staff, and product perspective into one metric, ROV connects store activities to customer opportunity. It is a cultural metric that motivates all levels of the organization—from the CEO to the store associate—to focus on the value of delighting customers. This enables a higher level of sustainable retail magic, sparked by a positive emotional interplay between customers and store teams. The end result? More satisfied customers, more loyal customers, and increased profitability.
If linking emotions and metrics seems counterintuitive, let’s look at the Internet to illustrate the point. Dotcom retailers spend enormous time and energy optimizing their sites for navigational ease. They also collect reams of data on website visits, click-throughs, and conversion at each step in the purchase process. Whether they realize it or not, they are actually measuring their website’s success in interacting with their customers. Research from both Internet and traditional retailers has demonstrated that visit frequency and transaction size are positively correlated with customer satisfaction. ROV is the brick-and-mortar equivalent of website visits and conversion; plus ROV is a more robust and actionable barometer of customer satisfaction than traditional CSAT surveys.
Inspiring Store Associates
ROV can be an inspirational and motivational focal point for retailers to set targets, and align their management and field leaders around the value of each customer interaction within each store. We all should be very alarmed that across our industry, a significant portion of customers—often a majority—leaves the store without making a purchase! This is criminal, considering that each customer took the time to get in his or her car, travel to the store, and spent some time walking the floor….all with some “intention to buy.”
It’s heartbreaking—from both a brand and business point of view. Customers are precious—we all realize that. But we need to act on that understanding by doing more to inspire our teams to embrace the value of customer interactions if retail is to thrive in the Internet era. As a unifying metric, ROV can be an effective tool to help retailers become more customer-centric. The Yacobian Group has proven method-ologies to help retailers understand and incorporate ROV into their culture.
ROV provides alignment for everyone in the organization to drive sales; that’s what makes it simple. It is designed as a motivational metric, not a stick, nor a means to discipline. When retailers leverage the emotional needs of their associates to truly satisfy each customer who enters the store, the result is true retail magic that can’t be replicated on the Internet.
“ROV has helped our stores to focus on what’s really important to us—satisfying our customers. It has given us a new perspective about what constitutes good store performance.” Michael Martin, VP of Operations – Staples (US)
“What’s amazing is the opportunity…ROV identifies so many things we have control of and we can reach out and capture that opportunity every day.”
David Voight, VP Operations – Advance Auto Parts
Human interaction is what makes the brick-and-mortar experience unique. Successful retailers know how to tap into the buying emotions of their customers, but until they engage their employees with the tools they need to interact more fully with customers, they will fall short of their sales potential.