Customer-Facing Talent

Retailers face a tough battle to generate growth in the face of unprecedented competition from global rivals and digital rivals, but many are overlooking what could be their best opportunity. Improving the way employees interact with customers – whether in stores, online or even via call centers – is a proven route to enhanced sales performance, but too few retailers are focused on doing so.



Customer-facing talent deserves more attention. Yet retailers are nervous: their investment in customer-facing capabilities has not always paid off in the past, particularly as they have sought to implement their tactics at scale.



The answer is to think more carefully about a holistic investment that is tailored to the needs of specific customer segments, rather than depending on traditional assumptions. Concentrate on three themes in particular: frontline performance, technology, and training and recruitment.



Focus on sales

Starting with frontline performance, research from Accenture suggests there is no correlation between the wages that retailers pay and their earnings: better pay may drive sales, but that may not always translate into higher profits.



One issue is the scale of larger retailers and the high proportion of their costs accounted for by employee wages. At a $15 billion retailer, for example, raising pay across the board by $1.50 an hour would cost around $140 million – simply to maintain its current operating profit, such a pay increase would need to generate at least 3.8 percent more sales.



Moreover, some retailers are in a better position to raise pay than others. Those with fewer employees – because of their business model or customer demographics, for example – find it easier to improve productivity and therefore to pay more. Companies that depend on low-skill, low-cost labor may find it more rewarding to introduce greater automation than to pay more.



Higher pay is not the only way to nudge employees towards increasing sales. For imaginative retailers, there are plenty of other possibilities. One UK grocery retailer is urging employees to encourage each customer to spend just 50 pence (78 cents) each week until the end of the year – if successful, the initiative would generate up to $400 million of additional sales.



Technology and training

As for technology, analysis published by RSR Research suggests that 59% of retailers are now using in-store tools to “make our employees smarter and better informed”, up from 47% last year. Examples include clothing retailers that use ‘magic mirrors’ that enable customers to try on clothes virtually, and home improvement retailers that can generate 3D views of how a customer’s room might look with a new piece of furniture.



However, while such customer-facing technologies can be effective, installing them across a retailer’s entire chain of stores may be prohibitively expensive – as with paying staff more, the additional revenues these tools deliver rarely justify the costs of implementation.



That said, failing to invest in technology is also potentially costly, running the risk of being eclipsed by competitors that have put money into the right solutions. Weighing up which investments to make depending on the nature of the business – both to keep up with rivals and to secure potentially game-changing competitive advantage – will be a crucial challenge for retailers.



Considered investment in talent is also crucial when it comes to training and recruitment of customer-facing staff. In the case of the former, sales staff need help in understanding how to move customers along the journey towards making a transaction, often jumping across channels as they consider their options. Yet, training at scale is expensive – it may require overtime payments for staff taking courses outside their normal working hours, for example, or a rise in cover costs if staff aren’t available during their usual working day. This may be a difficult balance to achieve.



Changing recruitment practices may be more effective. For instance, many retailers are investing in staff who show story-telling skills that will equip them to communicate with customers considering making a purchase. In the grocery market, retailers are rethinking the skills needed by customer-facing staff such as call center workers and home delivery drivers.



No easy answers

These are not easy demands and difficulties to reconcile. But that does not mean retailers should walk away from the imperative to ensure their customer-facing talent is of sufficient caliber to drive sales and increase profit: the key is to raise standards at scale so that all customers enjoy a much better experience.



The answer is to mobilize advanced technologies and training techniques to deliver affordable scalability – and to do so with a coherent strategy that spans pay, technology, recruitment and development, rather than focusing on individual elements in isolation. Retailers that get it right will generate sufficient additional revenue to boost profitability – and to fund a virtuous circle of additional investment, including in higher wages.



Chris Donnelly is retail industry strategy lead at Accenture Strategy.