"Back to the Future"

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"Back to the Future"

Post  Anand on Sat Aug 16, 2008 3:43 pm

By Harry J. Friedman Founder/CEO, The Friedman Group

For many retailers moving forward into this new century will mean taking a step back. It is becoming increasingly apparent that in order to survive and prosper, retailers are going to have to change the way they are doing business—they are actually going to have to go back to the future. Back to the days when the cus­tomer really was number one, when stores were filled with salespeople ready to go out of their way to help, when retailer's could count on their customers' loyalty.
In consulting with retail organizations for the past 30 years, I haven't changed my basic philosophies on sales and management. The principles that my programs are based on today are fundamentally the same as they were 30 years ago. What I'm teaching is not so new. What is new is the reaction I'm getting from the "old-timers" in the organi­zations we work with who have been around for a while. As we introduce our pro­grams, more and more often, I'm hearing statements like "that's the way it used to be," or "we used to focus on the customer," or "we used to care more about our customers."
The Customer As King
Something is definitely happening out there. Society today is placing much more em­phasis on customer service. After years of accepting mediocre, even poor service, to­day's consumers are becoming much more demanding. The mentality for customer service is increasing. Not only is today's consumer much more value conscious, they are much more conscious of the fact they have a choice of where to go and spend their hard-earned dollars. What is going to make them come into your store to buy something as opposed to going to a mass merchandiser or the Internet, where they can probably buy it for less? It's time to make the customer king again.
One organization that we are recently worked with is a classic example of the changing business philosophy that's starting to emerge in retail. The 145-store orga­nization has gone from full service to self-service and is now trying to get back to full service. They can longer afford to lose customers because there was no one on the sales floor to assist them. Of the many changes they are instituting, one is departmen­talizing. No longer will a salesperson on the floor be responsible for or, worse yet, have to worry about having enough time to get the stock work done. Each person will have one clearly defined position. Someone responsible for merchandising will not be responsible for selling. The logic and reasoning is simple whether you have one store or fifty—you need a sales staff whose sole purpose of working in your store is to be there for the customer at all times.
At the store management level, managers need to go back to placing more emphasis on individual customers. In the past a manager would want to know what happened with each and every customer. There needs to be an increased emphasis on sales techniques and satisfying individual customers. Today's managers seem to be more concerned with making sure their staff knows how to open and close the store and making certain that no one is stealing than with making certain their customers are being taken care of. It's as though they have lost perspective about what the real rea­son is for working in a retail store.
Personal Trade Demons
When I was growing up, my grandmother worked in a department store. She was good at what she did, enjoyed it and more importantly was able to make a living at it. She was an absolute personal trade demon. As her reputation for being courteous and helpful grew, so did the long list of customers that continued to come back to her. She simply cared about her customers and gave them the best possible service she knew how. They reciprocated by coming back and sending their friends her way. I see the issue of personal trade coming back in a big way. Today's customers are out there searching for salespeople like my grandmother. And when they find someone you can bet they'll continue to go back to them.
You Get What You Pay For
One of the problems with retail salespeople today is that they are not in it for the long haul and consequently just don't seem to care as much. In all too many instances, re­tail doesn't afford most people an opportunity to make a living. So what happens is you hire part-time people who are willing to work for less but who continually come and go. With few exceptions (you may get lucky every now and then) you get what you pay for. You get less effort than if you paid someone more for working full time.
While it stands to reason that you cannot pay huge salaries there is nothing wrong with paying people based on their production. Or, in other words, paying commission and giving people an opportunity to earn a living.
Not that long ago, allegations were brought against a large retailer with regard to their commis­sion policies and how they supposedly influenced how their customers were treated – or in some cases, cheated. The company gets caught and the blame gets placed on the fact that they paid their people commission. It is my firm opinion that it was not the commission structure that deserved the blame but management instead. This is a classic case of where the system suffered abuse and it has everything to do with management style—period. If your superior tells you that you must sell x number of units or eventually face loosing your job, you're going to do one of two things. Either sell those units or start looking. Being paid a commission has nothing to do with this at all and shouldn't. Whether an employee is paid on straight salary or straight commission should be of no consequence to the customer.
Let's say that you're the owner of a store that does just under a half a million dollars a year. You have three people—one that's good, one that's average and one that's just a warm body. Chances are you pay all of them about the same, maybe give or take 50¢ an hour. On a commission system the one person that's good will certainly be able to earn a living. The other two will eventually leave if they can't make a living, af­fording you the opportunity to replace them with two more people like the one good one.

Even before the negative publicity, a new trend we have seen developing over the last year is companies who are trying to get customers in their doors by advertising and promoting the fact that customers should come in because their salespeople aren't pushy because they don't make commission. Saturn, a division of General Motors, even promotes the fact that they have non-commissioned salespeople. There is no negotiation on the sticker price, just come in and a non-pushy salesperson will be glad to assist you. Granted they may not be working directly on commission but I find it hard to believe that their pay is not in some way linked to their production. If I sell twice as many cars as you do, and continue to make the same amount of money as you do, how long am I going to want to continue? OK, so they don't pay commission but isn't it possible that the person selling ten cars a month makes more than the person does selling five cars? Or maybe, they earn bonuses based on the number or cars they sell.
There is something seriously wrong if you have to communicate to the customer that your salespeople are not going to be pushy because you don't them pay commission. Period. The truth is that a store's atmosphere and customer service behaviors are the direct result of management's mandate on how they want their customers' served.

As consumers, we had much more trust in each other 50 years ago. As retailers we were just more service oriented. There was a lot more emphasis placed on doing what was right for the customer and in their best interest. A segment on the news show 20/20 brought a situation to the public's eye, which is a classic example of what I'm talking about. Eight repairmen were called in to look at a refrigerator, which was not working. Each was left alone to find the problem. What none of these repairmen knew was that the only thing wrong with this brand new refrigerator was an uncon­nected wire. Out of eight repairmen only one had enough integrity to point out the simplicity of the actual problem and not charge for the service call. Is it really any wonder that trust is seriously lacking in today's society? It's because of situations like this that John Smith finds it hard to believe Joe Salesman who is being sincere when he tells John he would be much better off in the long run with the more expensive item. John Smith has no reason to believe that Joe Salesman is looking out for any one's interest other than his own.

The Beginning Of The End For The In-Between Store

Another thing that I see happening is that there is a polarization occurring in retail. What this is doing is eliminating the in-between stores. Consumers will either be willing to spend the extra money to get the service from a high-end retailer or they will be satisfied with rock bottom prices and little service. It's going from one extreme to the other. As different things hold different value to different people, you'll have to determine where you want to position yourself in the market. Are you going to be the high-end store that can justify your higher prices by the expertise and service you can offer? Or would your customers be better served if you positioned yourself at the other end of the spectrum (assuming of course that you can afford to do so)?

It seems like people's expectations increase as the amount of money they are going to spend or cost of the item increases. For example, if you were to walk into Tiffany's you would expect salespeople to fall all over you. On the other hand, if you were to walk into Zales looking for the same item you would probably expect a lower level of ser­vice. Well, the truth is that the quality of service you should expect to receive at Zales should be no different than Tiffany's. The problem is that because customer's expec­tations are lower, too many stores just strive to live up to their expectations rather than exceed them. The general consensus is that consumers are just grateful if they can just get someone to wait on them. In high-end stores, they expect service and if they don't get it they are just as likely to go to a discount store. It may be nothing that anyone at the high-end store did—their indifference may be the end result of a culmination of the indifference and negative shop­ping experiences they've received along the way. They just don't have a reason to remain loyal to the specialty or high-end retailer.

Of course, you're probably saying to yourself that what I'm saying is nothing new. You may be aware that you need to provide high levels of customer service in order to re­ally stand out above the crowd. You know you need to do something that gets noticed. But how many of you really take the time and put forth the effort to make certain it gets done? Do you care enough to make sure that every customer receives a thank you card—not just when they buy something expensive?

A funny thing starts to happen when you start to be a sincerely nice person—people start to notice and appreciate it. Maybe grandma and grandpa who ran the corner store 50 years ago weren't so stupid after all. They may not have known anything about advertising, and they didn't have any fancy computer systems, but they sure knew how to treat their customers—they truly cared about their customers. They knew how to build relationships with their customers and keep them coming back. Maybe the answer to the future, can be found by going back to the past.


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Location : Kolkata
Registration date : 2008-08-15

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