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The Heartbreak of Customer Service, Part 2

This is part two of a two-part article.

What has happened to customer service, and where is it headed? For those who observe change, the future of customer service appears bleak. Is there a way for the multichannel direct marketer to win the War for the Customer’s Heart?

Last week I discussed three things that have sent customer service to new lows: expectations, the Internet and price. The convergence of these influences has produced a retail experience of customer self-service that has all but replaced customer service.

I predict that within 10 to 15 years the entire checkout/payment function will be automated in retail stores as it has been done so successfully through algorithms on the Internet. It may well be that retail stores will be staffed only with a few stocking personnel and guards to open and close the doors and to monitor theft. There might even be no employees or assistant managers, just a few part-time stockers, guards and an overall store manager supervising automated systems of self-service processes.

The barcode is responsible for huge advances in customer self-service. No one is required to price products; no one need know prices at checkout; and barcode readers are faster and cheaper than cashiers over time. People, and their inherent service humanity, have been removed from the equation.

The 2005 holiday season produced repetitive headlines extolling the double-digit gains in online shopping versus the flat bricks-and-mortar retail store sales. For the first time, we saw clear evidence of the future online dominance over malls and traditional stores. I have referred to the 50-year-old mall experiment as “Cities of the Dead” in other articles. The bleached bones of the Mall of America will be unearthed one day by paleo-consumptionologists who will try to uncover the meanings behind mystical gathering places called Food Courts and long-forgotten cults known as The Gap.

Direct Marketers Know What to Do

Direct marketing has had excellent customer service for decades. It is why DM has shifted huge amounts of market share from retail and is now making double-digit, online gains during the holidays, year-on-year. These customers come from somewhere, and that somewhere is malls. Run the computer simulation. The gains in online satisfaction relative to the defections from bricks and mortar indicate that malls will be in real trouble in about five years, maybe sooner.

Much of this shift comes from a growing consumer backlash against nonexistent customer service. Yet here is the interesting thing: There may not be any more customer service online, but the algorithms make it seem like there is more service, provided you don’t need anything out of the ordinary. A large part of my anecdotal collection of evidence is hundreds of conversations where people comment on how much easier and less frustrating it is to shop online compared with tolerating the rudeness and hassles of retail stores.

This shift is palpable. You see the evidence in less gift wrap and ribbons being bought as more packages are sent to recipients via UPS, FedEx and the U.S. Postal Service. If the algorithms don’t meet the consumer’s needs for customer service, there is usually a proficient inbound staff or live chat staff to handle the customer’s wishes. Unlike retailers, direct marketers have perfected the entire fulfillment process, going well beyond the cashier function. Lands’ End, in its pre-Sears, innovative, halcyon days, pioneered live chat and personal shoppers.

The result: dominant market share and incredible customer loyalty and retention. Compare that to the customer record of Sears or Kmart retail stores, which is bleak. DMers value customer service. We view it as being much more than just a cost center.

However, cracks are appearing. Many multichannel marketers today come without the 50 years or more of catalog and extraordinary customer service heritage. Many of these new online, multiple-channel merchants come from retail, and they have as little regard for the customer as they did for those irritating people who disturbed them by walking into their stores and asking to buy something.

Many “New Merchants” want to impose the customer non-service learned psychology of the Skinner box response on the online marketplace that they learned in retail. And they will destroy direct marketing. We are at a bifurcation in commercial history. One direction is near-total direct commerce. The other is overbuilt and risk-laden bricks and mortar retail. And I would state that there is little success in a third direction: peaceful co-existence. The market abhors compromise.

We multichannel direct marketers are poised to deliver the coup de grace to big-box retail. If ever there was a time for total, all-out commitment to arming ourselves with the most powerful of all weapons – extraordinary customer service – it’s right now while we are making incredible gains in online and catalog market share. Why?

• We know how to deliver world-class customer service, and we have the systems to obtain the information to deliver it.

• We have the cost structure to opt for world-class customer service over bricks and mortar.

• We have the fulfillment processes and systems to deliver world-class customer service.

• We have the overall margins allowing us to deliver world-class customer service.

• We have market share scalability because we recognize the inevitable intellectual consumer backlash demanding world-class customer service that is coming.

• We have a long heritage of caring for and about our customers.

Provocative? Yes. Divisive? Sure. Radical? You bet. We are engaged in a never-ending, global war of economic dominance. The battles fought on the foothills of the Internet and across the rivers of catalogs, will determine what form of marketing dominates and who owns the future. Were I asked to ride a powerful war horse into battle, I would choose as my mount Customer Service.

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