With customer empowerment at an all-time high, which emphasizes the need for astute competitive pricing strategy, a company providing customer feedback insights studied how satisfied real customers are today. The study performed by the CFI Group -- Based on American Customer Satisfaction Index (ACSI) -- measured six elements of the customer experience: Physical store, Associates, Merchandise, Price, Checkout, and Online Presence, to find out what drives customers back to the store with intent to make repeat purchases, develop an affinity toward a brand, and recommend retailers to peers.
The study found that, while physical store and online presence met consumer expectations, store associates, merchandising, price, and checkout were identified as areas needing improvement.
Being most interested in the pricing aspects of the study, I wanted to know what it was about pricing that made customers unsatisfied? First, here were the pricing categories given to the customers to rate:
-- Everyday prices
-- Price, given quality
-- Prices compared to other stores
-- Sales and promotions
I'm not completely clear on what these categories meant to the respondents, or how they were scored, but we got the point that there's something about how the degree of satisfaction might be affected by the demographics of the respondents, as well as by their mobile technology use.
-- First, millennials voted high dissatisfaction with pricing. The study explains that many millennials are particularly price-conscious because they are the ones who launched—or failed to launch—their careers and adult lives under the weight of a long-term recession. They also bear the added burden of significant debt, which has crimped their spending power. They gave particularly low values (scores) to "Everyday Pricing" and "Prices Compared to Other Stores."
-- Those 65 and older are largely satisfied with retail price strategy.
-- Consumers are more likely to use their smartphones to check prices and comparison shop than perform any other commerce-related function or activity.
-- Millennials show a proclivity toward leveraging their smartphones for price comparison purposes while shopping.
-- Boomers, while smaller in number, have greater purchasing power and therefore exercise less price discretion.
Retailers, overall, are concerned about consumers’ ability to shop the competition from their own aisles… looking for a better deal… called showrooming.
What else the study revealed about shopper demographics vis a vis their behavior and satisfaction:
-- Older consumers are more satisfied with merchandise selection across the board than younger consumers—having refined both what they want and having gained the experience to know what best satisfies their desires.
-- Boomers have better aligned expectations as to where they shop, and are therefore more satisfied with their decisions and experiences.
-- Those 65 and older score retailers highly on their overall merchandising strategies, with particularly high marks for Quality, Variety, In-Stock Position, and Organization.
-- Millennials are slightly more discriminatory, scoring retailers’ merchandising efforts in the low 80s (81-82) across the board.
Online Experience: The survey results indicate little variation in online experience satisfaction across age demographics, though 45-55 year-olds indicate less satisfaction than other age categories, with particular disdain for the congruency (or lack thereof) of merchandise across channels.
Shipping: Shipping is a concern across all consumer age demographics, although men are slightly less influenced than women by shipping costs
According to the study, here is what retailers have to do to drive positive customer experience and engagement:
-- Retailers have to enable merchandise availability and price consistency across channels.
-- Retailers would do well to apply low-cost, free, or flat rate shipping where possible. (77% of respondents indicated that they’d shop online more often if shipping costs weren’t seen as prohibitive).
-- As the economy comes out of its recession, customers are still price and value conscious. Focusing on the store’s strength as it relates to price – value, quality, sales, etc. can set a retailer apart from the competition and attract and retain consumers.
-- Keep channels of communication "omnified" (my word). Millennials prefer passive communication, while baby boomers are more inclined to engage with associates via face-to-face.
-- Customers who can select the manner they choose to connect with a retailer (e.g. email, social media, phone, etc.) are far more likely to engage with associates in a meaningful way.
Bottom Line For A Retailer's Bottom Line:
The point of the study was to examine the relationship between increased satisfaction and increased future behaviors -- i.e. whether customer will shop with retailer again, develop an affinity toward a brand and recommend retailers to peers.
With more access to broader choices via mobile technology, it’s particularly difficult to win the affection and loyalty of the “new consumer.”
Retailers should consistently monitor, measure and benchmark customer satisfaction to compare themselves against competition as well as uncover actionable insights to improve performance across every customer touch point.
View CFI Group’s infographic illustrating the RSB findings below: