Chapter 12 Customer Services and Retail Selling. Learning Objectives Explain why customer service is so important in retailing Describe the various customer

Chapter 12

Customer Services and Retail Selling

Learning Objectives

• Explain why customer service is so important in retailing

• Describe the various customer services that a retailer can offer

• Explain how a retailer should determine which services to offer

Learning Objectives

• Describe the various management problems involved in retail selling, salesperson selection, and training and evaluation

• Describe the retail selling process• Understand the importance of a customer

service audit

Customer Service

• High-quality service: A service that meets or exceeds customers’ expectations

• Relationship retailing• Activities designed to attract, retain, and enhance

long-term relationships with customers

LO 1

Exhibit 12.1- A Shopper’s Wish

LO 1

Customer Service

• Customer relationship management• Information technology infrastructure that

supports relationship retailing• Fundamental unit of data collection is the

customer• Constitutes information on: • Customer• Purchasing behavior• Demographics • Consumer complaints

LO 1

Customer Service

• Should be adopted and evaluated according to the firms mission

• Retailers can develop relationships with their customers by offering:• Financial benefits• Social benefits

LO 1

Exhibit 12.3 - Three Basic Tasks of Retailing

LO 1

Customer Service

• Consists of all those activities performed by the retailer that influence:• The ease with which a potential customer can

shop or learn about the store’s offering• The ease with which a transaction can be

completed once the customer attempts to make a purchase

• The customer’s satisfaction with the transaction

LO 1

Customer Service

• Transient customer: An individual who is: • Dissatisfied with the level of customer service

offered • Seeking an alternative store with the level of

customer service that is perceived appropriate

LO 1

Customer Service

• Must be integrated with:• Merchandise management - Allocating inventory

in proportion to customer demand patterns• Building and fixture management - Building and

fixture dimensions influence customer service• Promotion management• Price management - Prices should be:• Clearly marked and visible• Fair, honest, and straightforward

• Credit managementLO 1

Common Customer Services

• Pretransaction services: Provided to the customer prior to entering the store• Convenient hours• Parking• Information aids

LO 2


• Transaction services: Provided to customers when they are in the store

CreditLayawayGift wrapping and

packagingCheck cashingGift cards

Personal shopping Merchandise availability Personal selling Sales transaction

LO 2


• Personal shopping• An individual who is a professional shopper

performs the shopping role for another• Provided by very upscale department and

specialty stores offer

• Sales transactions • Issues often overlooked by retailers• Clean rest-rooms • Dwell time: Amount of time a consumer must spend

waiting to complete a purchaseLO 2


• Posttransaction services: Provided after purchase of merchandise or services

Complaint handlingMerchandise returns

Renting, not buyingFraudulent employee

actionsShoplift returnsPrice switching

Servicing, repair, and warranties

DeliveryPostsale follow-up

LO 2

Six Rules to Follow When Handling a Customer’s Complaint

• Acknowledge the importance of the customer• Understand the customer’s problem• Repeat the problem (as you understand it) to

the customer• Think of all possible solutions• Determine the solution that is fair to both• Make sure the customer leaves feeling

satisfied with the solution

LO 2

Yours is a Very Bad Hotel

A graphic complaint prepared for:

Joseph CrosbyGeneral Manager

Lisa RinkerFront Desk Manager

DoubleTree Club Hotel2828 Southwest Freeway

Houston, Texas

In the Early Morning Hours ofNovember 15, 2001, at the DoubleTree Club Houston,

We Were Treated Very Badly Indeed.

• We are Tom Farmer and Shane Atchison of Seattle, Washington.

• We held guaranteed, confirmed reservations at the DoubleTree Club for the night of November 14-15.

• These rooms were held for late arrival with a major credit card.

• Tom is a card-carrying Hilton HHonors Gold VIP…• Yet when we arrived at 2:00am… we were refused rooms!

Refused Rooms… Even When We’re“Confirmed” and “Guaranteed”?

• Mike, your Night Clerk, said the only rooms left were off-limits because their plumbing and air-conditioning had broken!

• He’d given away the last good rooms three hours ago!

• He’d done nothing about finding us accommodation elsewhere!

• And he was deeply unapologetic!

Quotations from Night Clerk Mike

“Most of our guests don’t arriveat two o’clock in the morning.”

-- 2:08 am, November 15, 2001Explaining why it was

OUR fault that the DoubleTree Club could not honor our guaranteed reservation

We Discussed With Mike the Meaning of the Term “Guarantee.”

guar·an·tee (g r n-t ), n. 1. Something that assures a particular outcome or

condition: Lack of interest is a guarantee of failure. a. A promise or an assurance, especially one given in writing,

that attests to the quality or durability of a product or service. b. A pledge that something will be performed in a specified

manner.

(Save this for your future reference.)

Mike Didn’t Much Care.

• He seemed to have been betting that we wouldn’t show up.

• When we suggested that the least he should have done was line up other rooms for us in advance… Mike bristled!


“I have nothing to apologize to you for.”

-- 2:10 am, November 15, 2001Explaining why we were wrong

to be upset that our “guaranteed” rooms weren’t saved for us

The Career Path of Night Clerk Mike

(He peaked last week.)

November 15, 2001:Rude Hotel Clerk

1985:Paper Boy

1995:Subway Sandwich Maker 2004:

McDonald’sSandwich Maker

2014:Septic TankCleaner

Mike Wasn’t Too Optimistic AboutFinding Us a Place to Sleep.

• 2:15 in the morning is a heck of a time to start looking for two spare hotel rooms!

• Mike slowly started dialing around town.


“I don’t know if there ARE anyhotel rooms around here… all these

hotels are full.”

-- 2:12 am, November 15, 2001Just starting to look for alternate

accommodation for us, even though he’d filledhis own house up by 11:00pm

Mapped Against Other Hospitality Providers, YourDoubleTree Club Fared Badly on November 15, 2001.

GROWTH-ORIENTED

HEADING FOR COLLAPSE

DESPISES &MISTREATS

CUSTOMERS

TREATSCUSTOMERS

WELL

Mike Finally Found Us Rooms Here.

• Shoney’s Inn & Suites is a dump.• It is six miles further away from downtown

Houston, which makes a difference in morning rush-hour traffic.

• Had we wanted to stay at Shoney’s, we would have called them in the first place.

• We could only get smoking rooms.

The Experience Mike Provided Deviated from Usual Treatment of an HHonors Gold Member.

Expected HHonors Gold Member Benefits

Actual Benefits Provided by DoubleTree Club 11/15

Confirmed reservation Ignored reservation

Upgraded room when available

No room available

Free continental breakfast Free confusing directions to shabby alternate hotel

HHonors points plus frequent-flyer miles

Insolence plus insults

Jon, a colleague, was arriving in Houston on an overnight flight and coming to join us at the DoubleTree Club first thing in the

morning. As we had to go stay elsewhere, we wrote Jon a note and left it in care of Mike the Night Clerk.

Even After We Left the DoubleTree Club, OurTroubles Weren’t Over, as This Timeline Shows.

We Are Very Unlikely to Return to theDoubleTree Club Houston.

Lifetime chances of dying in a bathtub: 1 in 10,455(National Safety Council)

Chance of Earth being ejected from the solar system by the gravitational pull of a passing star: 1 in 2,200,000

(University of Michigan)

Chance of winning the UK Lottery: 1 in 13,983,816(UK Lottery)

Chance of us returning to the DoubleTree Club Houston: worse than any of those

(And what are the chances you’d save rooms for us anyway?)

Revenue Lost to the DoubleTree ClubHouston as a Result of our November 15 Incident

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

Our firm's totalexpenditures onHouston-area lodging

Dollars we'll bespending at theDoubleTree ClubHouston

Calendar2001

Calendar2002

Shown in U.S. dollars

We’ll Be Sending This Presentationto Promus Properties.

• And to some friends.• We hope they’ll share it with their friends!• If you’d like a hard copy, email us at:

[email protected].• Good luck!• And give our best to Mike!

Exhibit 12.6 - Factors to Consider When Determining Customer

Services to Offer

LO 3

Exhibit 12.7 - How the Retailer’s Sales Force Meets the Expectations of Both Vendors and Customers

LO 3

Retail Sales Management

• Types of retail selling• Salesperson selection• Salesperson training• Evaluation of salespeople

LO 4

Retail Sales Management• Types of retail selling• Retail trades that:• Sell shopping goods want their salespeople to both get

and take orders• Sell Convenience goods want the salesperson to take

orders• Retailers with: • High margins and high levels of customer service place

more emphasis on order getting• Low margins and a low customer service policy

emphasize on order taking

LO 4


• Salesperson selection• Hiring criteria - Retail-selling jobs should be

designed to have high levels of:• Variety, autonomy, task identity, feedback from

supervisors and customers

• Predictors• Demographics• Personality• Knowledge and intelligence• Experience

LO 4


• Salesperson training- Should familiarize sales force with:• Retailer’s policies• Merchandise• Customer types• Customer choice criteria• No active product choice criteria• Inadequate or vague choice criteria• Choice criteria in conflict• Explicit choice criteria

LO 4

Various Customer TypesBasic Types Characteristics Recommendations

Defensive Don’t trust any salespersonResists communicationGenerally uncooperative and will explode at slightest provocation

Avoid mistaking theirsilence for openness toyour ideas Stick to basicsTactfully inject product’s advantages and disadvantages

LO 4

Various Customer Types

Interrupter Impatient personalityInterrupts sales personHave perpetually strained expressionDriven and successful people who want result fast

Don’t waste time Move quickly and firmly from one sales point to anotherAvoid overkill

Basic Types Characteristics Recommendations

LO 4


Decisive Confident in their ability to make decisionsOpen to new ideas but want brevityHighly motivated by self-pride

No canned presentationsAssistDon’t argue or point out errors in their judgement

LO 4

Various Customer Types

LO 4

Indecisive Worry about making wrong decisionWant salesperson to make decision for them

Avoid becoming frustratedDetermine need as early as possibleDon’t present too many alternativesStart with making decisions on minor points

Basic Types Characteristics Recommendations


Sociable Friendly talkative typesHave excess time Resist closing the deal

Listen for points in conversation where product merits can be interjectedClose the deal subtly and friendly

Impulsive Quick to make decisionImpatient

Close as rapidly as possibleAvoid any useless interaction and oversellHighlight products merit

LO 4


• Sales force competition• Major variable in attracting, retaining, and

motivating retail salespeople

LO 4

Retail Sales Management• Compensation• Direct-dollar payments (wages, commissions, and

bonuses)• Indirect payments (insurance, vacation time, retirement

plans)• Basic components

• Fixed• Variable• Fringe-benefit package

LO 4

Retail Sales Management• Retail sales programs can be broken into:• Straight salary• Salary plus commission• Straight commission • Supplemental benefits

LO 4


• Evaluation of salespeople• Performance standards• Conversion rate• Sales per hour• Use of time

• Selling time• Nonselling time• Idle time• Absent time

• Data requirements

LO 4


• Conversion rate• Percentage of shoppers that enter the store that

are converted into purchasers• Measure of sales force performance• Sales per hour is computed by dividing:• Total dollar sales over a particular time frame by total

salesperson or sales-force hours

LO 4

Exhibit 12.9 - Selling Process in the Retail Environment

LO 5


LO 5


LO 5

The Retail Sales Process

• Prospecting: Identifying potential customers with ability and willingness to purchase your product

• Closing the sale: Bringing a potential sale to its natural conclusion• Ways to close the sale effectively• Make the decision for the customer• Assume that the decision has been made and ask if the

sale will be cash or charge• Ask the customer to select the product or service• Turn an objection around by stressing a positive aspect

LO 5

Exhibit 12.10 - Some Closing Signals the Salespeople Should Watch For

LO 5

The Customer-Service and Sales-Enhancement Audit

• Audit objectives• Identify the service, salesmanship, and sales-

enhancement methods that will increase sales• Target the methods by store and selling area that

will produce the most significant improvements• Determine the added sales that can be generated

by: • Improving the accepted service level • Salesmanship• Sales-enhancement programs

LO 6


• Advantages of the audit:• Provides management with a detailed analysis of

current sales activity by location and by selling area.

• Identifies how and where additional sales volume is available.

• Measures, analyzes, and reports on the specific factors.

LO 6


• Basic service• Customer contact• Salesperson-initiated contact• Customer acknowledgment

• Salesmanship• Merchandise knowledge• Needs clarification• Active selling• Suggestion selling

LO 6


• Sales enhancement• Impulse purchasing• Walkouts

LO 6

Documents

Chapter 12 Customer Services and Retail Selling. Learning Objectives Explain why customer service is so important in retailing Describe the various customer