Conversocial white-paper-us-retail-nov2011

WHO’SIGNORINGTHEIRCUSTOMERS?A Survey of the Largest Retailers and Their Use of Social Media

Following our white paper “Who’s ignoring their customers: Lessons from the Best and Worst UK Retailers on Facebook”, we were keen to investigate the performance of US retailers.

This report unearths the customer service offerings of the 10 most loved and hated retailers in the United States. We analyse how these retailers are meeting the challenge of delivering great social customer experiences.

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We reviewed these retailers’ Facebook pages over a period of 5 working days in September to assess how quickly, and how often, they responded to complaints and questions. We awarded scores of 0 to 5 for each response and took an average for each retailer. The average response time was taken for all complaints and queries left on the Facebook pages during the week of investigation, including both responses and non-responses (an unimpressive ‘0’).

Customer experience is about thinking holistically about all the interactions a customer has with your brand and creating an enjoyable transaction. In social terms this means making sure the online community is maintained and the needs of social customers are addressed quickly and consistently for everyone to see.

Why does social customer experience matter? 1. Customer demand A recent survey by Fast Company showed that 2 out of 3 customers want to speak to retailers through social media. Part of good customer experience is about responding to customers’ needs.

2. Good customer experience = brand loyalty Customers are no longer content with low prices and cheap offers to earn their loyalty to a brand. They expect to be valued – this rings true on social networks as well as in store.

3. Good social customer experience is showcased If you take care of your customers on social networks, it’s visible for the entire social world to see.

This white paper aims to explore the ways in which different companies address the needs of their customers on Facebook and Twitter, and how well they manage to stay on top of responses to complaints and queries.

We looked at Amplicate’s list of Loved and Hated brands, measured according to positive and negative mentions on social media.

LOVED

1 Costco Wholesale2 Nordstrom3 Macys4 Bloomingdales5 Dillard’s

HATED

1 Walmart2 Kmart3 Kroger4 Sears5 Safeway

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No one likes the big cheeseThe continued poor online sentiment rating of the largest retailer in our sample, Walmart, has caught journalists’ attention, having been listed as the most hated US retailer since at least April 2011. Walmart has nearly 4 times as many stores as Kroger, the second biggest chain in the sample.

The challenge: matching the customer experience of the little guyThere is a decisive link between increase in size and public image: larger chains are struggling to scale management of their online reputation. 1. The nature of retail at scale

A large household brand such as Walmart has a very different brand image and customer-brand relationship to that of a small prestigious brand such as Bloomingdales. Not all stores have the same emphasis on brand affection, but this means that companies like Walmart have to take extra careoveronlinecustomerinteractions.Sacrificingvaluedexperiencesfor low prices is a business decision, but one which you pay for in social media.

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We all love the little guyBigger retail chains do not have proportionally bigger online communities. The issues facing big companies in social media aren’t as straightforward as one might expect; customer communities don’t scale proportionately.

Although some larger retailers have larger social communities - Walmart is highly visible on social media with over 9 million Facebook fans and almost 96,000 twitter followers - smaller retailers can outstrip their larger rivals in community size. Sears has over 2,000 stores and nearly 900,000 fans; Macy’s has 850 stores and over 2.5 million fans.

One of the clearest connections we uncovered was that between company scale and volume of complaints. Size attracts disaffection. Sears, the 3rd largest retailer had 162 complaints in the week of investigation, compared with Macy’s 31 complaints – a chain only 40% of the size of Sears, but with nearly 3 times the fan numbers.

Many retail giants are struggling to keep their communities as happy as smaller companies; given the greater customer loyalty issues they face as bigger, faceless entities. Not only will fewer customers ‘like’ them – but these fans are questionable, and much more prone to grumble.

2. Social values of the customer

Whilst consumers clearly appreciate price, this is rarely praised in outlets such as social networks. Customers are much more vocal about their experiences. Walmart customers frequently describe the ‘love-hate’ nature of their relationship with the store, but this value-based ‘love’ is rarely mentioned on the page. Complaints about the level of service received, however, are much more frequent.

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Of those retailers using their wall for customer service, most responded within 1 to 4 hours, with Sears coming top of the sample. Those retailers with a larger volume of complaints - Sears, Walmart and Safeway - were fastest in the list. Although other brands with more positive sentiment ratings, such as Macys were responding to positive comments, they were less speedy at getting around to dealing with the more pressing customer service issues. Non-responders Costco, Kroger and Kmart also suffered large numbers of complaints and questions – but have chosen to let these problems multiply and fester.Despite some good efforts, as a group US retailers are relatively slow at responding to their customers, with none of the ten averaging under an hour - unlike 2 retailers in our UK sample, who achieved the quickest response score.

How quick is quick?The leading brand for responding to customer queries online is Xbox, with the World Record for fastest responding brand on Twitter, with an average response time of 2 minutes and 42 seconds. The faster an issue is resolved on the Facebook wall, the fewer customers will see the unresolved problem.

No US retailers managed to achieve an average response time within an hour, and not even half managed to get their average response time down to under 4 hours.

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Getting serious about social customer service: why does consistency matter?Response times are one indication of customer service capability but what is perhaps more interesting, is how social media is evolving as a service channel, alongside email and phone. Reliability is at least as important as speed, and applying processes to social customer service represents a higher level of maturity. While it may appear initially that those retailers with the heaviest burden of customer service issues are performing best, with quicker average response times, they fail to roll out this standard across the board. They’ve clearly recognised there’s an issue, attempting to reach some queries swiftly, but haven’t quite overcome the logistical challenge of standardised customer service. While some customers will be soothed by the odd quick reply, there’s still further to go to create healthy communication channels.

Consistency is very important if retailers are going to be serious about using social media. Two thirds of customers want to use social to get in touch with retailers, and for that to work responses need to be as consistent as they would be in traditional modes of communication such as telephone and email.

How often are retailers ignoring their customers?

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We found that missing complaints and questions entirely was a real pitfall for retailers in our sample with Walmart, the largest retailer, missing 41% of all customer service enquiries. Safeway are doing relatively well, missing only 5%. US retailers are a real mixed bag. At the tail ends, some show commitment to good service, whilst others ignore the issue entirely. But a large group sitting in the middle suggests that despite growing interest, social customer service still has limited structure. These retailers reach their customers quickly, or they don’t manage to reach them at all.

The customer service challenges facing each company are different: Walmart received more complaints and questions (362) than Safeway (129), but this volume was smaller relative to the fan size. This raises two different problems. Although a complaints-dominated page is a PR disaster, complaints buried amongst more frequent neutral and positivecommentsarehardertofind.Keepingupthesameratiosofrespondedcommentsisn’t a straightforward story.

Neglecting social complaints and questions is bad business senseUnanswered queries are costing retailers money, by pushing customers towards more costly communication channels, such as the phone.

Recent research by Customer Experience Analytics company, Click Fox estimates how much it costs to respond to customers through different communication channels.

Walmart received 362 complaints, 41% of which were missed. If each of those missed complaints were redirected to phone, costing $15 per call, this neglect would have cost Walmart $5415 in just 5 working days. That’s $280,000 to $300,000 in a year.

Failing to consider Service Level Agreements in social media pushes up the cost of dealing with customer service, as well as creating a wealth of PR problems on the page.

Inconsistency is an especially major problem for large retailers with poor sentiment ratings. The volume of complaints their bad social PR brings to their pages puts strain on the customer service machine. However, this inconsistency is something retailers are guilty of across the popularity spectrum. The problem for hated brands is that their downfalls serve to reinforce poor sentiment ratings.

A haphazard approach to responding to complaints creates a ‘snowball effect’. Customers are encouraged to post their query several times to avoid being ignored, and to add further comments to other customers’ complaints. High volumes of issues are self-reinforcing, meaningcompaniescanfindthemselvessuckedintoaviciouscycleandacomplaints-plagued wall, the longer they leave them ignored. Social customer service issues are like a virus that spreads if not dealt with immediately.

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When problems are left unresolved on a page, they attract empathy from other fans, creating an even bigger expression of dissatisfaction.

Customers will rally against a company. Social networks encourage communities, and the last

thing you want to do is to foster these against your poor service. Your page becomes a terrible

advertisement for your company, encouraging others to join the hate club.

Although retailers have made some progress in addressing social customer service - good response times from companies like Walmart appear promising - these channels still aren’t being treated with the same importance of procedure as traditional channels such as email or phone. The risks of this lax approach, however, are especially dangerous in the public arena of social networks

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Face up to Customer Service on Social MediaAs we’ve shown, managing the customer service burden is in a disorganised state for many retailers on Facebook and Twitter. Sometimes it’s managed well, but the picture left for visiting fans and on looking followers is one of disorder. It’s clear that many companies aren’t fully embracing social customer service, and are struggling to reach complete incidentresolution.Betterresourcingandefficientmanagementcouldreducethescaleoftheirproblemssignificantly.

Marketing and Customer Service: work togetherLarger companies with diverse geographical stores can’t treat their fan bases as homogenous units.

For brands with a larger number of stores and a lower sentiment rating, marketing posts oftengenerateaflowofcustomerserviceissuesonthepage,fromgeneralcomplaintstospecificqueriesallofwhichneedattention.

AnexamplefromSafeway’spageshowshowcomplaintscanflowinresponsetomarketingupdates.Hadcustomerserviceintervenedsooner,thisfloodmayhavebeenstemmed.

Flood of negative comments minutes after posting. Customer Service doesn’t

intervene for 15 hours.

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The most damaging breakdown of communication between marketing and customer service we discovered was a failure to understand the diversity of a fan base, creating not only public customer service issues, but real dissatisfaction.

This message shows a lack of knowledge about the target audience. A retail chain with as many stores as Walmart has significantvariationsofstockindifferentlocations. This advertisement for fabric shows a lack of central awareness that the products were not available in all stores. Posting a blanket market message to all customers has created PR problems: in this case they are encouraging customers to buy stock which has been removed from several stores. You wouldn’t run a local TV advert in the wrong state, so why not target as rigorously with social marketing?Not only does this harm the online community, but creates dissatisfaction with Walmart’s in-store offering.

How to avoid social customer service explosions Don’t create customer service issues from a failure to know your market.

- Keep track of what your stores are doing in different areas and geo-target marketing messages. –

- Learn from reactions to your marketing, by tracking the sentiment on your posts. This will help you to create better messaging in the future.

-Make sure the customer service team are monitoring for responses to deal with issues created by your posts. Even seemingly uncontroversial messages can trigger negative reactions.

- Be aware that customer service backlashes on updates are spread around the news feeds of your fans, and react fast.

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Embrace the wall!The most common response to customer service issues from retailers was to redirect customers to email. Some gave more personal and human replies than others, such as Nordstrom, who use one customer service personality – Lily - with a dedicated email address to manage complaints off the wall. Although this embraces some concepts of social interaction, it’s still not social enough.

Why redirecting to email is bad social customer service- The problem and complaints remain visible to your existing and prospective customers

- Any resolutions and resultant gratitude are pushed off the wall – a missed opportunity to generate good PR and turn around poor impressions of your customer care.

- All you achieve is to frustrate your customers further. In our sample, angry fans had often already told companies that they’d tried other routes.

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You can use Facebook to speak to us, but do it as we tell you.Retailers such as Walmart are using apps to create a space within their fan page for customers to voice their complaints off the wall.

This area is dedicated to complaints, queries (and praise). In theory, a feedback tab stops visitors from coming across complaints when looking for news and general discussion on the wall. However, we counted over 360 customer service queries on wall – one of the largest volumes in the sample.

As a means to keep complaints off the wall altogether, an app is ineffective. Walmart have made it one step closer to offering social customer service, in handling issues within Facebook rather than shifting them away, but it’s still not enough. Some are satisfied by the Feedback tab, but manydon’t appreciate the efforts to segment customer service issues. Customers know they’re taking their complaints public when they come to Facebook; it’s intentional, and they can’t be fooled out of this decision.

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Incident resolution: keep up the conversationThis study raises the issue of incident resolution. What should be considered a response? What you say, and whether you follow through, is as important in social media as other channels,ifnotmoreso.Asignificantnumberofretailers,particularlythosewithmorefans, failed to keep up the conversation with their customers, ignoring replies to their initial response;i.e.furthercomplaintsorclarificationaroundanissueafteracustomerservicerepresentative had responded.

Even if a problem is being resolved through another channel, the impression given to on-looking fans is that retailers are leaving customers hanging, and failing to follow up on promises to sort out problems

A ‘responded to’ issue doesn’t mean issue resolution. Some of our sample’s quick response times don’t necessarily mean they’re solving problems. An update to email customer service often mean the question hasn’t been addressed at all, and exacerbates frustration when the customer hears no more. An incomplete reply is as ineffective as no reply.

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Good PR: Customer service on the wallOnly one retailer in our sample of ten was really using Facebook to show off their positive customer experiences. This is truly social-savvy: dealing with the customer where they reach out, and showing the rest that the company cares makes the example below a double win for Safeway.

Having a full conversation about customer service on the wall poses potential issues of privacy. However, this can usually be overcome using order numbers, which do not reveal any personal information and allow the retailer to identify their customer. Consumers come to social media because that’s where they want to be dealt with. Many of them will already have exhausted other options, and become so frustrated they’ve moved to public social networks. Trying to channel issues away from Facebook misunderstands the relationship between a page and its fans.

Safeway was the best retailer in our sample at dealing with the full complaint on the wall. Whilst they still redirect some complaints to a Facebook dedicated email and a Freephonenumber,asignificantnumberofcustomerserviceissuesweretakenthroughto a conclusion entirely on social channels.

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ConclusionThePRchallenges facedby largecorporationsareonly intensified insocialmedia.Anegative public image can escalate when consumers have a more powerful voice. Retailers must deal sensitively with their online communities if they can ever hope to recreate the positive customer experiences delivered by small companies.

This means:

1. Fast and consistent responses to all complaints on the wall 2. Careful co-ordination between Marketing and Customer service to avoid negative feedback being spread across fans’ news feeds. 3. Geo-targeted messages to deliver better tailored updates to each sub- section of a broad fan base.

It’s clear that US retailers are largely aware of the challenges posed by social media, given their efforts to deliver fast responses. However, incident resolution is still an issue in social customer service. Although making headway, US retailers are failing to help themselves andreducethecustomerserviceburden.Atfirstitappearsthathatedbrandswillnaturallygenerate more complaints, but where do the cause and effect really lie? The ways in which many retailers are managing customer service shows that they often contribute to their own volumes of complaints, creating a cycle of dissatisfaction.

Most retailers haven’t fully socialised customer service – relying on solutions away from the wall to manage customers’ issues in a less public way. Redirection to traditional service channels such as email and phone is the worst example of this. But even those redirecting customers within Facebook, such as Walmart, are somewhat hiding from the truly social, public wall. In considering this an appropriate way to deal with issues, retailers allow more inflammatory complaints tomultiply from frustrated fans. Those that are dealingwith complaints openly, such as Safeway, are able to manage responses more effectively, scoring highly for consistency and in the top band of response scores.

US retailers are a mixed bag. The service you may receive varies – not only from company to company – but from each individual company. Social customer service is clearly a huge logistical challenge, but there’s more that can be done to establish Service Level Agreements for social networks. This is the most effective way to deliver customer satisfaction and positive customer experience.

The consistency issues raised in this report point to organisational and resourcing issues, rather than a lack of interest in customer service. Those ignoring the concept of social customer service entirely are in the minority. It’s time for companies to start taking social channels seriously, which means addressing customer service in a structured and organised way. It means applying resources – a presence on Facebook isn’t free, but it’s certainly a lot cheaper than dealing with complaints through other channels.

Facebook, and Twitter, are continuing to grow at a very fast pace. As more and more consumers turn to these channels to speak with companies, those who get it right will have the competitive edge. Brands in control will succeed in delivering the experience their customers expect.

Conversocial is software that enables customer service in Facebook and Twitter. An intuitiveuserinterface,fastteamworkflow,automationandprioritisationmakescalable

conversation management possible. Teams can identify and respond to messages which need to be dealt with quickly; no issues need be missed again.

Companies can start taking social media seriously with Conversocial – Facebook and Twitter become fully accountable channels with complete tracking of a team and the conversations they’re having. One tool gives all you need to keep the conversation flowing;withteammanagementandcollaboration,youcankeepyourbrandvoice

consistent and under control.

Contact:+44 (0)2076085208

[email protected]@conversocial