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Service Tiers – a retail optimisation tactic

In retail, selling to someone unusual or with an unusual need is a hassle because often they want unusual products, something your ‘regular’ customers don’t normally want, which would sit around taking up limited space, and resources. Of course the web is changing this paradigm with its ability to overcome the costs/pragmatics of limited retail space, but that’s not much help here-and-now to today’s retailer (unless they’re up for a move to online, more on that another time).
What about regular customers, who from time to time want something a little bit over and above the call of duty? Those times where they have unusual needs – not for your products – but for how they access them, and for how they are treated. These aren’t people who want you to stock highly unusual products, they just need a level or style of service which isn’t normal for you. What do you do with them?
Most of the time retailers treat people who want unusual products, and people with unusual service requests, the same. It’s all too hard to meet the various expectations, so they don’t try to. They focus on doing well the other 70% of the time, and provide ‘normal’ services only. That approach works for them, first and foremost, not for their customers.
What many retailers overlook is that one of these two needs can be addressed quite easily. People who want to buy your normal products, but have unusual service needs, are remarkably easy to cater for.
Retail service-tiers are fertile ground for customer experience improvement. There is no downside to adding new service options, if you’re paid well for them, and can manage them in a controlled way. The great thing is that if your customers are prepared to pay for them, then clearly you’re creating a win-win situation.
Here are some ideas:
For a fee, open the doors for customers any time of the day or night. If they spend enough – even waive the fees (why would you not?). How much would it really cost for one of your staffers to be on call and pop in every now and then? Have you ever been frustrated that the sports, motorcycle, music or the clothing store weren’t open when you were ready to buy and happy to pay some kind of premium?
Offer to send your product via urgent courier during business hours, literally within minutes, for when they’ve got an emergency or just want to buy their way out of the waiting time. Pass on the real costs, but that’s it. This applies to anything from business shirts to baby clothes to gelato. Ever wished some gorgeous gelato could materialise before your eyes on a hot-summers afternoon when you were stuck in the office? Or that classic: stained your shirt on the day of the big meeting, or forgot to pack a new shirt on your business trip, and only realised when it was almost too late.
Offer an ‘anytime’ delivery option. Ever tried sending flowers last minute to someone in hospital only to find you’d missed the ‘normal’ delivery times and were completely out of options (even the local florists are closed at these times right)?
There are lots of examples of companies doing this well, but not enough retailers:
Cinemas – Premium seating/service for a fee, same old movie
Platinum/Gold credit cards – Convenience and complimentary services – for a fee, same basic product
Apple retail – Personalised special attention – for a fee, no change in product
Koru club – Convenience, status, complementary services – for a fee, but you still get on the same plane
Photo printing – Faster turnaround/delivery – for a fee, no change in product
Drycleaning – Faster turnaround – for a fee, still the same core service
Passports – Urgent processing – for a fee, no change in product
Freight/Postage – Faster delivery/more security – for a fee, and it still ends up in at the same destination
Service tiers are different to product tiers. Service tiers are about finding ways to sell the same basic product, wrapped in more useful services, to meet a broader range of reasonable customer wants/needs, and improving revenue and retention along the way.
It’s possible that by thinking creatively you can create whole new revenue streams, and that’s worth considering, but the killer benefit is in the impact of these services on your customer relationships. You’ll have found a way to go above and beyond for your customers, when your peers aren’t, at a time when they really need you to, or want you to. You’ll create strong ‘word of mouth’ because you’ll be providing something remarkable.
There’s a catch: if you don’t really know who your customers are, or what they value, you’ll have a hard time identifying a mutually beneficial value added service. Worse still, you might end up doubting there is anything you can do to improve.

In retail, selling to someone with an unusual product need can be a hassle. They want products that your ‘regular’ customers don’t, which is therefore a stock hassle and ties up your operating capital.

What about ‘regular’ customers, who occasionally  want you to give them a whole new level of service, say when they’re in crisis, or desperate? In these times they don’t have complex product needs they just need a level or style of service which isn’t normal for you. What do you do with them? Read the rest of this entry »

In a nutshell…

This is a place for us to share and discuss our thoughts and experiences about the role of the customer relationship in business. We're particularly focussed on how that's possible - on exploring the pragmatic aspects of incorporating customers into businesses.

This blog is written by the CTO team at DNA. We help improve businesses by looking through the eyes of their customers.

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