Great Experience Race: Do Apple, Starbucks Engage Customers Better Than Local Stores?

This research was compiled by Customer Service Analyst Ashley Verrill of Software Advice, a customer service software resource.

Its role in facilitating purchases is certainly important, but when it comes to the retail customer experience, the value goes far beyond the cash register.

By fostering face-to-face interactions between brands and their customers, brick-and-mortar locations represent a pivotal opportunity for businesses to actually engage the customers who come through the door. Through upselling, cross-selling and the offering of specials at the service level, retailers with effective in-store experiences can deliver a maximum return on marketing investment.

Given the preconception that local retailers focus more on the personal experience (while larger, national chains are more about price and repetition), one would not be wrong to hypothesize that Mom-and-Pops are most effectively seizing the opportunity of the in-person interaction.

One would be wrong.

On July 26, I concluded a six-month project called "The Great Retail Experience Race: Local vs. National." The research was designed to compare the customer experience of five small, Austin, Texas-based retailers with five comparable national chain stores. In conjunction with customer service thinker Shep Hyken, I determined three quality metrics against which to evaluate the retailers' performance; these are detailed in the graphic below.

To gather this data, a team of 20 secret shoppers conducted 200 site visits of at least 15 minutes. Questions t. In every industry category but one, the national store outperformed the local shop:

Ironically, the local stores actually had more opportunities during the race to upsell customers because their employees talked to our site visitors more often (the second column in the graphic shows the percent of times where a personal, emotional connection was made with the customer). The small businesses simply didn’t take advantage of these opportunities to upsell at the same rate as the national stores.

After the race was over, I asked Hyken in a video interview why he thought the percentage of upselling was so much lower for local stores. He offered this hypothesis: "The national brands spend a lot more money on marketing, advertising and creating different kinds of promotions and specials. And when they create these, they expect their employees to push them and sell them. That’s a big part of what they do."

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In other words, the national stores have a much larger scale at which they are investing in these programs and therefore have a lot more to lose if employees don’t make the most of them. But this doesn’t mean local shops can''t stand to benefit from implementing these types of programs in the same way.

How Can Local Stores Do Better?

So, what can the smaller stores learn from the interactions we had with their national counterparts? Here are three tactics our site visitors experienced during the race that small business owners could easily replicate:

Ask really specific questions. When our site visitors went to Nordstroms, upselling and conversations about deals usually occurred after someone asked, "Are you looking for anything specific today?" Site visitors were asked to have an answer prepared for this question.

One person responded, for example, that they were searching for a gift for their brother for less than $100. Another person said they needed a dress for a wedding that weekend. In many cases, the customer service person would follow up these responses with additional questions, such as "What does your brother do in his free time?" or, "Is it a formal wedding, or more casual?"

In 35 percent of cases (compared with 10 percent for the local boutique, Maya Star), this led to the customer service person showing the site visitor a specific product. This tactic of proving they have a high degree of product knowledge, according to a recent Deloitte study, can increase conversion rates by as much as 9 percent. It also led more naturally into conversations about a sale they were hosting for cardholders in one instance, or a special they had on women’s boots.

Be consistent with deals at the register. In the field notes from Panera Bread, most of our site visitors recorded a very similar experience at the register. After ordering their meal, in 70 percent of instances the customer service person would ask, "Would you like to add a bakery item for 99 cents?" In comparison, employees at the local sub shop, ThunderCloud Subs, attempted to upsell just 35 percent of the time.

Not every visitor took Panera up on their 99 cents offer—in fact most didn’t. But the ones who did chose to accept the deal more than once. In one instance, the visitor declined the deal initially, but when he changed his mind and went back later, the employee still give him the special price. The visitor chose the deal in every subsequent visit (he conducted a total of four).

These tactics have clearly proven successful for Panera. Their stock was actually upgraded last year, in part from increased sales that came from upselling.

Give a little to get a little. Both Jo’s Coffee and Starbucks sell bags of coffee beans, and both can cost up to $17. This is a huge upsell opportunity when you consider that the average revenue per sale is likely closer to $4 or $5. In fact, Starbucks once offered an iPod to the team member that pushed the most bean bags.

In about half of the instances where a Starbucks barista attempted to upsell, they asked the site visitor if they wanted to buy a bag of coffee beans. One tactic they use to "sell" customers on the idea is offering a free drip coffee when they return the empty bag to the store. Clearly this strategy works for driving sales; according to one recent survey, 42 percent of customers said they made a purchase for additional products and services after being offered a "freebie."

These are just a few tactics we picked up from "The Great Retail Experience Race" for pushing deals and specials. What strategies have you found most successful? Join the conversation and add a comment below.

An earlier version of this article appeared here: "IndustryView 2013 | Small Businesses Lose Big to the Big Guys When It Comes to Presenting Offers."