New Rules For Retailers In The New Economy

There's no denying that late 2008 and early 2009 ushered in a sea change in consumer purchasing behavior. As the rampant consumption of the preceding years has given way to high anxiety among consumers, retailers in the US and around the world are facing bleak prospects for the foreseeable future.

A retailing business model premised on consumers continuing their spending spree is now proving to be a losing proposition for all but the most high-end retailing categories. Even the discount chains, where traffic tends to hold up when the economy slumps, are feeling a shift in priorities.

So with business as usual no longer a viable option, what comes next? One place to look for hope and opportunity is in the delivery of high-quality customer service, a tried and true retail differentiator. Given current economic conditions, the service delivered with every customer interaction has become even more important. As a result, it's never been more important for retailers to be mindful of how much more it costs to win new customers than to keep the ones they have. While there are many views and estimates of the relative cost of winning and keeping customers, there is no debate about the basic assertion that it costs much more to win a new customer.

Even if it's clear that customer service is the new critical differentiator for retailers, how to achieve high service levels is less clear. Few would quibble with the assertion that employees hold the key to successful customer service. For many retailers, employees are the sole point of customer interaction, the ambassadors of the brand. But with budgets under extreme scrutiny, retailers don't have the option to blindly "throw human resources" at the problem.