ander, Apple and Lululemon among others, however, it’s a very short list. Wikipedia defines customer service as a “series of activities designed to enhance the level of customer satisfaction, that is, the feeling that a product or service has met the customer’s expectation. A customer service experience can change the entire perception a customer has of the organisation”. How bad are we? Is Australia’s reputation for poor customer service deserved? The answer is a resounding yes if you base your answer on recent surveys and research. For example, in the 2012 American Express Global Customer Service Barometer of 11 comparable nations including the US, UK, Japan, France, Italy, Canada and Australia, Australia consistently ranked in the worst bottom. Only two per cent of Australians felt that businesses were meeting their customer service expectations (second worst nation), and 40 per cent felt that their expectations weren’t met (second worst nation). Choice Magazine’s recent Shadow Shop Survey revealed that in large retailers such as Dick Smith, JB Hi Fi, David Jones, Myer, and The Good Guys where sales and service plays a key role in generating revenue, they observed both excellent and poor customer service experiences. The key failure was an inability to provide a consistent and positive customer experience. Skytrack Awards for the Best Airports in the World are based on 12 million customer surveys. In the last four years Australian airports have not achieved a top 10 rating and often figure way down the list. Considering six of the top 10 airports globally are in Asia, it must be of concern to Australian retailers and the nation, as this is the first and last impression tourists have of our country. The Australian telecommunications industry Ombudsman received 193,702 complaints in the 2011-12 financial year, with 122,834 of these complaints relating to mobile phones. The Vodafone brand and bottom line has been severely damaged as a result of customer dissatisfaction relating to coverage and poor service levels. One of our directors recently spent two weeks in the US undertaking retail research for a client and had the opportunity to visit multiple retail stores, undertake mystery shopping, and do personal shopping during her rest days. In that two week period she only experienced one instance of poor service, with all other service interactions being consistently high. This can be contrasted to her experience in Australia in the run up to Christmas, which she describes at best as average and inconsistent. Are consumer expectations unreasonable in Australia? Australia’s consumers rightly have high expectations of retail staff according to Rod Orrock, GM of Domayne, who put it succinctly: “The Australian customers’ expectation is that retail staff will have a smile on their face, every customer will be acknowledged, they will have a positive attitude, great product knowledge, are not going to talk to other staff on the shop floor in sight of customers, and will be 100 per cent on their game 100 per cent of the time. “It is impossible for staff to be perfect 100 per cent of the time, however, it’s what you do and how you react when customers are dissatisfied that matters. This is critical to building a consistent customer experience and is the mark of a great retailer,” Orrock said. So why are expectations high? The three key reasons are: 1. More Australians are travelling overseas and experiencing superior service levels from hotels, restaurants, retailers, airlines etc. In 2002, 3.3 millin Australians travelled overseas, but in 2012 that number has grown to 8.03 million of which 819,000 visited the US, a country which excels at customer service. 2. The internet and websites such as Amazon, Strawberry.net, The Book Depository, Net-A-Porter, and Charles Tyrwhitt have created a near perfect one on one relationship with their customers. They recognise your name, are rarely out of stock, have more choice, often are 50 per cent or more cheaper than Australian equivalent stock, have a flexible returns policy, reward loyalty, make suggestions, and communicate regularly. This contrasts with Australian consumers bricks and mortar shopping experience. 3. Social media has given a voice to dissatisfied customers and as a consequence retailers have had to lift their game in how they communicate with customers and response times to customer complaints and queries. In summary, expectations are high but are not unreasonable – if you are not willing to meet customer expectations, they will tell you so, tell their friends and anyone else who will listen and then shop elsewhere. What are the gains? There are a host of benefits for retailers who lift their game and improve service levels. Improved service levels generate substantial revenue and profit uplift The Gallup Organisation conducts ongoing research on sales businesses, including retail and retail banking. That research established that fully engaged customers deliver a 23 per cent premium over the average customer in terms of share of wallet, profitability, revenue and relationship growth**. In addition, where customer and employee engagement was high, retail stores out performed by 3.4 times on financial metrics compared to stores that had a low level of employee and customer engagement. In November 2012 Best Buy in the US launched a turnaround strategy called Renew Blue. Two of the five key strategies were reinvigorate and rejuvenate the customer experience and attract and inspire leaders and employees. In the table below Best Buy quantifies the return to the business from developing their people, the customer experience and how it links to increased sales. Create a point of difference to compete against overseas retailers entering the market and local competitors. Overseas competitors such as Zara, Top Shop, Uniqlo and H&M create a competitive advantage through the size of the range, price points, design, and websites that Australian retailers will find difficult to match. To compete and grow against these formable competitors will require local retailers to develop a point of difference in one or two of the following areas: the customer experience, quality, Australian made, design and fit, and coverage. With so few Australian retailers producing a consistent high standard of customer engagement, it would seem an obvious place to focus to create that point of difference. E-commerce is changing the rules Over the next four years retail bricks and mortar sales in Australia will languish while online sales will experience double digit growth. Morgan Stanley Research from May 2012 forecasts that Australian online apparel sales will grow from $1.45 billion (4.8 per cent penetration) in 2011 to $2.935 billion (9.4 per cent penetration) by 2016. This growth will come at the expense of traditional bricks and mortar sales as the overall apparel market is predicted to flat line during this period at about one per cent annual growth. Australian retailers that don’t improve both their store and online experience will suffer. A practical example will illustrate my point. I love movies and music. On a weekend I enjoy nothing more than browsing at my local JB Hi-Fi Music and DVD section for an hour – it is my preferred bricks and mortar destination for this category. But when it comes to purchasing online, I shop at Amazon because of the superior customer experience, choice and the price advantage. I would never think to use the JB Hi-Fi website because of its lack of functionality and the inferior experience to Amazon. On December 15 I ordered five difficult to find CDs and a hardcover book on Amazon. Five of the six items arrived the following on December 20 – an amazing performance. By comparison my daughter ordered popular DVD, The Hunger Games, from the JB Hi-Fi online store in mid-November. After two weeks and two emails querying where her order was she tweeted her dissatisfaction. She was immediately provided with a refund – perhaps not the right response. I then purchased it for her instore as a Christmas present. The lack of investment by Australian retailers in their web strategy plays into the hands of overseas competitors, impacts the customer experience and isolates them from the main retail growth area in the next few years. * This article first appeared in Inside Retail Magazine’s February/March 2013 issue. Bill Rooney is a director of 6one5 Retail Consulting Group, specialists in retail strategy, consulting and retail training. He can be contacted at bill.rooney@6one5.com, (02) 9461 0478 or visit www.6one5.com. **HBR: Managing Your Human Sigma – By J Fleming, C Coffman & JK Harter