The Metrics of Customer Service
By Brett McCall
Why are Metrics Important?
As Head Coach of Charlotte Express-AUDL Expansion Team, I don’t look at the scoreboard. The scoreboard doesn’t tell me enough information. What does a pilot do when they are in foggy conditions? If he simply trusts his special awareness or gut, he will crash the plane! Pilots are taught to trust the instruments and as a retail owner you want to do the same.
Instruments are detailed and impersonal. You don’t take the information from the Altimeter and think, “Why does it have to be so mean telling me I am at 9,000 feet?”
First, we are going to look at five key metrics that many a sophisticated retailer are already measuring. We will explore the story behind those metrics, as well as a few metrics you probably aren’t tracking, and finally some metrics that you probably never considered as part of the measure of customer service.
Expect to get pushback when introducing this measurement mindset. The way you deal with pushback is consistency. Collect the metrics, make them public and review them on a regular basis.
Many of these metrics require your salespeople to confront the ways they fall short when effectively connecting and building long-term relationships with your customers. Metrics take the squishy feelings out of the picture and allow your staff and you to examine their performance realistically. No one wants to admit they are falling short in a relationship, but metrics tell us what’s happening from an objective standpoint; you can’t deny the facts.
Back to the airplane… the altimeter isn’t enough alone. You need to know your altitude and your airspeed, at least. And it is helpful for actually navigating if you know where you are heading, your vertical speed and if you have a radio on board.
As owners and managers of salespeople, we need to know who and what to coach. We need to understand the details of their performance on specific levels, in order to reevaluate and improve the store as a whole.
The 5 Key Metrics of Customer Service:
· ATV (AS)
· # of Transactions
· Total Sales vs LY
· Return Rate
These numbers are all available through your POS. You may need a formula to plug into the spreadsheet, but it’s fairly simple to get Units Per Transaction, Average Transaction Value, Number of Daily Transactions, Total Sales vs Last Year and Return Rates.
How many of you are measuring these companywide? How many of you are measuring these per individual employee?
How do you know who to coach if your UPTs are down by 20%? You might have eight of your ten employees who are actually up to an average UPT of 3 and two others who are down to 1 unit per transaction. If those two are doing the majority of your transactions then your company wide averages will not help you see who needs to understand how to engage your customers in more meaningful ways.
A typical customer comes to your store because they trust your brand for one reason or another, but you cannot trust that your customers know what they want. I am a perfect example; typically I go into a retail store knowing what I want, what isle it’s on, how much it will cost me and it’s like a race to see how quickly I can get in and out of the store.
Looking at return rates per employee will help you understand how effective your individual salespeople are at creating ownership and appealing to your customers’ specific needs and interests.
Next, let me challenge you with these:
· Email capture rate
· Employee retention
· Employee satisfaction
Email capturerate? How does this tell me anything about customer service? Now you are really going to get push back from those on your sales floor who are going to blame this measurement mindset for transforming your company into a gimmicky, sleazy used car sales floor. So many salespeople take the mindset of, “It’s just an email address man.” But this number will go up considerably with a great customer service experience for two reasons:
1. Your staff will be happy to ask the customer and
2. Your customer will be happy to hear from people like your staff again.
Any retailer should consider ways to capture customer contact information to stay in touch with them. Who wouldn’t want that? You could do that through the web or on social media, which tells you about your brand promise, but not necessarily how that promise is translating on your sales floor. The moment of truth in relationship on the sales floor is that moment when you ask for this email address. You will be able to gauge how much trust was created in the interactions during that transaction.
In the same way you can measure your pickup lines… did you get her or his number at the end of the exchange?
Many sophisticated retailers (i.e. REI, Starbucks) have created membership opportunities and at the cash wrap they are looking for converted members. This ISN’T a new idea in retail… its simply overlooked.
What does employee retention tell you about customer service? Well, first we have to explore what retention tells you about anything on your sales floor and then we can look at the impact it has on customer engagement.
How long does it take for a new salesperson to become fluent in your store? How many months of training does it take to get up to speed on all the products in your store, the questions to ask and to develop their own personal stories to tell about their own experiences with those products? Now add to that life-long techniques like forecasting and listening… how long do you speculate it takes for your staff to become confident and comfortable in the sales process?
About 6 months for fluency? Yes?
Now, if your store is turning staff within the year you are looking at fluent staff for less than 6 months at a time. “But how can I change that?! The people we are hiring just don’t stick around for years at a time.” Studies prove that people don’t quit because of money or the work, they quit because of their manager. But that is another discussion… all I am saying is MEASURE retention as an indicator for customer service. Consider it as another gauge on your dashboard; having it there will help you steer the ship.
Ok, but I know what you are thinking: “Retention, I get it… but what about employee satisfaction? What kind of impact could a more satisfied employee have on the service to my customers?” Remember that squishy feeling we talked about above? Those are emotions. This may be painfully obvious, but that squishy feeling defines the warm and welcoming environment. Imagine being a guest at dinner with a family who is arguing or constantly complaining. You would likely describe that experience as hostile and uninviting.
Ok, fine, but how do you measure employee satisfaction? Simple: you ask them, frequently. How satisfied are you working here? Are you planning to stay with the company for 3 months, 6 months, 12 months, more than 12 months? How satisfied are you with your manager? And why?
This, like your sales vs LY, is a relative metric. It is significant because you are asking every 4-6 months and that means every year you have 2-3 measurements to then compare against the rest of these lovely metrics.
Now with all these metrics we are getting a big picture on the performance of our customer service. Metrics are sexy… aren’t they?
Finally, the metrics you probably are measuring but you might not be considering as measurements of customer service:
· Inventory shrink
· Maintained margin
· Inventory turn
Let’s face it: inventory shrinkage is a part of the game of retail. A common misconception is that shoplifting is the number one cause for shrinkage. Studies prove that the majority of shrinkage comes primarily from internal theft. That makes most owners and managers extremely uncomfortable to admit, but you need to face it. Either they are stealing directly from your store or they are enabling others to steal, in which case you have a larger problem than customer service. Even if it is shoplifting, why do you have people wandering around your store who your staff aren’t aware of?
That is a problem that can be better managed. Without a connection to the customers, there is no opportunity for trust. And thieves don’t steal from people they trust.
Maintained marginand inventory turn go hand in hand. Everyone wants to sell their inventory at full margin. When your customers are being engaged by your sales people and they build credibility and rapport by asking questions and listening,then your inventory will move, increasing your turn and thus creating a higher maintained margin. This is an absolute for sophisticated retail stores. It tells you how much profit you are making from each product.
All of these numbers are indicators you want to consider when piloting your retail store. Once you understand their part in the story of your customer service performance you can develop training that helps you make adjustments that will improve results. Now we can talk about what good customer service actually is.