Poor customer service cost UK retailers £10 billion last year

As the age-old retail cliché goes: the customer always comes first. But the new version of the annual Consumer Action Monitor published by Ombudsman Services recently suggests that consumers in the retail sector – where putting the customer at the heart of the shopping experience is most crucial – are the most regularly aggrieved. To the tune of £10 billion in lost sales, no less.

This is, surely, a wake-up call. What works for you as a retailer is different to what works for another but these damning figures highlight the need for something to be done. Consumers are more connected than ever and they know the sky’s the limit when it comes to the shopping experience. So they need to be priority number one.

But retail is yet again the runaway leader of a league-table-of-shame it really ought to be bottom of. Of the 55 million complaints made last year, almost a quarter came from the retail sector – over 10% more than any other sector. Rectifying this should be something keeping retailers awake at night, not least because of the lost £10 billion.

Loyalty is hard to earn but easy to lose   

What the report doesn’t reveal are the causes for these record number of complaints. Whilst any retailer can suffer from customer dissatisfaction about their products or service, many high-street businesses have additional unique situations to content with that an ecommerce-only retailer will not. For example, customers might feel cause to complain about the length of time they have to queue for a changing room, or how they were served at the counter by a member of staff.

But that’s rather irrelevant to be honest. What is becoming apparent is that customers are increasingly comfortable taking to social media to air their frustrations and engage the retailer for a quick resolution.

41% of customers would use social media channels to make a complaint or share their bad experiences (up from 31% just two years ago).    

Not only do retailers risk eroding the hard-earned loyalty of a customer and along with it the chance to repair the damage, but there is a real risk of it putting off a far greater number of existing or potential customers who read about that bad experience. When so many retailers are measured by their Net Promoter Score, a single story of a bad customer experience can quickly go viral, resulting in far-reaching and costly influences on their brand reputation and ultimately their bottom line.  

An update to the CX strategy is required 

Whilst it’s important to reduce the triggers of these complaints in the first place, the way retailers respond to it is just as important. The next step of that customer experience is vital to get right as 75% of those polled said they’d return to a company if they felt the complaint was well handled.

If retailers are to minimise the long-term impact and find ways to turn a bad experience in to an agreeable one, then it’s time to take a fresh look at one aspect of their Customer Experience strategy.

If customers are becoming increasingly accustomed with using social media to vent their frustrations and expecting quick resolution, the obvious answer would be to invest in more resources on those channels. However, increasing the cost of customer support with additional agents is not an option for many retailers. There are more scalable, intelligent and innovative options now open to those willing to be an early adopter.

Whilst I’m not one for predicting trends for the coming year, I believe the potential of machine learning technology combined with automated customer services will play an increasingly influential role in helping to manage bad experiences quicker, with relevant personalisation and with greater consistency across your customer touch points.

The Rise of the Bots  

2016 was the year when a growing number of brands started to really explore the potential of ChatBots within their customer experience strategy. However, many were based on rather simple implementations through their Facebook pages which were pre-programmed to just handle common scenarios.

These early forays were limited to just helping customers deal with basic order enquiries or support questions when they are not in the store. Shop Direct have been investing in this approach across their retail brands with great success. Whilst many lacked the finesse and intelligence to deliver a completely satisfactory service to a wide array of common customer enquiries and complaints they did begin to reveal where the technology could add value to retailers when it’s scaled.

The key to successfully implementing a ChatBot is by combining the latest breed of Machine Learning technologies to improve the natural language experiences with the rich customer purchase data to personalise the style of engagement.

The real opportunity for these Bots will be realised when they are consistently implemented across other digital channels, such as mobile apps, SMS and email. This will allow customers to quickly find a solution to their issue whilst still on the shop floor, whether that be to locate an alternative product, find a free changing room or resolve a complaint about a bad experience with a customer service agent.

There is still a need for the human touch

ChatBots are unlikely to become a replacement for human customer service agents but the real trick will be in knowing when to seamlessly introduce into a conversation when the complaint or problem cannot be easily resolved by the Bot.

Real engagement with a customer service agent can still make the biggest difference in resolving the issues with the greatest satisfaction. In many cases, recognising the mistake and making an apology can go a long way – as acknowledged by 52% of those polled in the survey. However, ‘sorry’ can only go so far in minimising the damage and ensuring the customer returns in the future. 

The future of Conversational Commerce    

A £10bn sized hole in retail sector profits each year because of poor service should be alarming but a customer-centric approach to your business’ vision and investments in innovation will see that number drastically fall. Whilst automated customer support technology will not resolve the challenges on their own, the technology has far greater potential to change how customers shop and engage with your brand in the near future.

The power and flexibility of Amazon’s Alexa or Apple’s Siri is already revealing the potential of ‘conversational commerce’ and how consumers will be using natural language Bots to buy and engage with a brand. The technology is maturing fast, so sitting on the fence and letting your competitors work through the teething problems is not an option, so just as I began, I’ll finish with another cliché. Innovate or Die.