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Online Customer Service Delays Crippling Our Favorite Retailers: How They Should Respond

A CCW Digital Analysis



Matt Wujciak
06/16/2020

lululemon

Just this past weekend, I informed a colleague of a surging alcohol delivery service, known as Drizly, after he expressed that his local brick-and-mortar liquor store was closing indefinitely. Businesses like Drizly are receiving press from large media outlets like Business Insider and Yahoo Finance for a reason. 

Online alcohol sales are poised to surge by nearly five times to $13.4 billion by 2024, according to a new report from beverage industry researcher IWSR. “And Boston-based Drizly is one of a slate of startups moving to cash in on the trend,” Yahoo Finance reported. 

Read More: 4 Examples Of What Post-Covid Retail Will Look Like

But alcohol isn’t the only product consumers are guzzling. 

Online sales grew nearly 50% at the peak of the pandemic as consumers stayed home but continued to shop. E-commerce will continue to see a major boost, especially now that more consumer demographics have gotten used to online shopping processes for products they didn’t traditionally utilize digital services for, whether it be alcohol, groceries, athletic gear or virtually anything that can be delivered instantaneously. 

However, that doesn’t mean retailers in every market are prepared for the increased volume of online shoppers, that any business can deliver a customer a product “instantaneously,” or even respond to a request when it isn’t for that matter.

Which retailers are still struggling and why

Without question, customer service is more important than ever before. While June 15th marks the start of a new era for many non-essential businesses such as the retail and restaurant industry (as mandated policies and phases of the government’s COVID-19 response continues to evolve and non-essential businesses continue to reopen), many are not witnessing the success stories that optimistic analysts and writers have been preaching up until this point, and you’ll see why later in this article. 

Last month Nordstrom announced that it is to permanently close nearly 15% of its full line stores across the U.S (and in the U.K). John Lewis has reported that it is considering not reopening a number of its less profitable stores this week as part of a strategic review of the business.

“It’s the first time in history when incredibly large companies don’t have to ask which stores to close, but which to open, and that’s a silver lining to a horrible situation,” says BMO Capital Markets analyst Simeon Siegel. “Large companies are finding themselves as nimble as startups, as every single aspect of their business, all their baggage…is now allowed to be reconsidered.”

In other words, large corporations are reanalyzing their revenue streams. Parent companies are taking a closer look at what optimal dividends and income percentages to prioritize and from which subsidiaries, as well as which losses to accept. 

With harsh economic conditions, high unemployment rates, and cautious consumer spending habits, many large retailers (such as J. Crew) have experienced the reality first hand, filing for bankruptcy or closing indefinitely. The question for these parent companies is shifting from “which stores or subsidiary brands do we close” to “which ones do we fight to keep open.”

While many businesses scrambled to get their customer-service teams working from home and readjusted to digital business plans that consumers are inadvertently asking for (hence the surge in ecommerce), some shoppers are still running up against hours-long wait times to be able to talk with someone, online chats where no one answers, and unreturned calls and emails for important customer inquiries. 

When customers took their shopping lists online during quarantine, they brought their questions and concerns with them. But retail’s “customer service channels simply can’t keep up,” the WSJ reported last week. 

Best Buy Co., BBY +0.33%  admitted it’s behind on responding to a deluge of customer service requests. Most of its stores closed since mid-March because “we could not respond to customers as we would like and normally do.” 

Macy’s issued an apology for longer-than-usual wait times on its customer service hub. Last week, like many other retailers whose share price was dispirited, Macy's and Nordstrom closed down 15% and 12.2% respectively on the NYSE. Macy's was down despite efforts to realign expectations, demonstrating that investors remain incredibly nervous about the future for department stores.

Unable to keep up with online orders, IKEA too apologized to shoppers and said it was recalling furloughed workers to help improve its customer support. Its website tells customers it is only accepting emails to cancel orders.

Lululemon, as another example, says customer service calls are currently 2x–3x greater than usual, and the company has extended its return-processing time to 15 to 20 days, up from 10 to 15 days, the company said. This is partially why Lululemon, among other retailers, recently started allowing customers back into stores with appointments last month, and plans to fully open 800 locations today.

While some retailers continue to cut costs, often in the form of lower seasonal hiring, layoffs, and furloughs, customer service is not the department to cut short right now. In fact, Lululemon’s adding 500 former store employees to its call center. That’s on top of the 300 workers it moved to the helpline team earlier in the pandemic. (Hiring customer service agents isn’t the only investment they should be making). 

The backlog for Lululemon and Macy’s was unavoidable, many analysts say. I disagree. Online sales rose 77.8% in May, per Adobe Analytics. That spike outstripped the resources retailers had allocated to digital customer assistance, leading to a Help Center bottleneck and an abundance of brand-crippling customer tweets.   

Even the angry tweets, often a surefire way to get a company response, sometimes sit unaddressed. That is because the volume of returns and overloaded shipping services led to delayed refunds, and shoppers who returned products weeks or months ago are now calling because they want their money back.

You’d think a company like them, as high end as they are, they would have that customer service piece figured out a little bit more,” one Lululemon customer stated, as seen in the WSJ.

In order to have “that customer service piece figured out,” Lululemon and some of the other brands mentioned above need the right balance of automation vs. humans, digital vs. voice, so that they can better respond to changes in customer volume and inquiries, and deliver a better customer experience.

The future of the voice channel

No one’s safe from the behavioral economic consequences brought upon by the coronavirus. Customer service is the epitome of “doing more with less” right now, regardless of how many employees you have. Adapting to the right CX strategies and consumer behavior trends will give you the best chance at being on the favorable side of financial Darwinism, whether the answer is hiring more customer service employees or investing in better customer service technologies. My opinion? Both. 

Read More: The State Of The Voice Channel (Sponsored By Salesforce)

69% of consumers say that personalized care influences their loyalty to a company, helping organizations obtain quality incoming customers. Yes, that takes more employees to handle personal customer inquiries. It also takes better technology to create contextual overview for the humans that have to answer to those inquiries. 

Customers are calling, brands are struggling, and trends are emerging. It’s important for these brands to understand that while volume is increasing, fewer percentages of customers are calling with simple, transactional issues - meaning, the more important the inquiry is, the more likely a customer will turn to IVR or phone in hope of reaching a live agent to solve those complex (or personal) problems. 

This is where your live agents need to be, prepared to receive routed customer inquiries and predict problems based on their purchasing history, previous inquiries, and the channel of communication they’re advertently or inadvertently demanding. This is impossible without the right cloud-based contact center solution providers, CRM systems, and data aggregation tools, of course. 

The most important inquiries that customers cannot address via self-service or text-driven conversation channels provides even greater opportunity for the future of voice technology, the channel that many customer service departments think they’re struggling in. Emotional or more important customer inquiries should be routed to live human agents who are best equipped to handle more urgent or important questions, even if the inquiry starts out on an NLP technology like automated chatbots, SMS, or even IVR. 

If the complexity of the inquiry doesn’t demand the intelligence of a human agent, save it for artificial intelligence. 

Remember that it’s also not always 100% one or the other - human intelligence or artificial intelligence. For the ones that do desire both human and artificial intelligence, the most common pain points for agents include: swiveling across multiple systems: 56% of agents say they must toggle between multiple screens to do their jobs. Others include no access to AI during the phone call equating to no contextual assistance and a need to capture notes during and after call, increasing average handle time, in turn, decreasing CSAT scores and customer retention rates (the part that no one talks about in the above examples of failed customer service).

While a Best Buy, Nordstrom, Lululemon or Macy’s customer is calling with a personal problem, many are not routed to a live agent that the inquiry requires. When they are, many times an agent has insufficient or limited contextual overview to solve the problem in a timely manner as a result of siloed information, lack of AI, and archaic customer service technology (or more specifically, data aggregation tools). The problem isn’t the customer service agent, but the technology management has in place, setting a customer service agent up for failure. 

On the other hand, self-service is implemented to solve simple customer inquiries, while the phone continuously proves itself as the clear option for the complex, more emotional interactions (such as the 69% that will likely turn to the phone instead of a chatbot or SMS to solve problems that automation can’t). 

The future of conversational AI (and self-service)

For the problems that should be handled through 100% automation, whether it be internal (an employee) or external (a customer) these include things like eligibility, verification, authorization and referral information - without the need to speak with a live agent. 

Read More: How To Scale Conversational AI (Sponsored By IBM Watson)

For example, Humana's Voice Agent teamed up with IBM Watson to provide a faster, friendlier and more consistent way for administrative staff at healthcare providers to access pre-service, medical. The concept epitomizes successful customer service.

This particular solution that contact centers are implementing relies on AI to understand the intent of a provider's call, verify they are permitted to access the system and member information, and then determine how best to provide the information requested, whether you’re accessing medical information or the return policy of a pair of athletic shorts. 

The Voice Assistant uses significant speech customization with seven language models and two acoustic models, each targeted to a specific type of user input collected by Humana. Through speech customization training, the solution achieves an (increasingly more intelligent, ML-driven) average of 90-95% sentence error rate accuracy level on the significant data inputs. The implementation handles several sub-intents within the major groupings of eligibility, benefits, claims, authorization and referrals, and more. 

In the previous IVR system, a request for “benefits” could lead to a seven-page fax. Now, the Watson solution is able to respond with a specific “point” benefit, such as, “the co-pay for chiropractic visits is $100”. You can imagine a similarly complex backend process frustrating a Macy’s or Lululemon customer looking to see why the wrong t-shirt was delivered. 

As seen in the Harvard Business Review, only 3% of companies said they are able to act on all of the customer data they collect. The brands mentioned earlier are experiencing this first hand, and many stores are closing as a result of the abundance of data and the lack of aggregation. The abundance of data in siloed systems makes it impossible for managers to gain insights and streamline operations – resulting in increasing costs associated with legacy systems. 

Simply put: Customers struggle with current self-service options. Agents spend too much time researching problems, causing long wait times and customer frustration. Managers cannot identify actionable insights from this abundance of fragmented, unstructured data when 97% are unable to even access all of it (as a result of legacy systems). 

The future of the complete customer experience

Not every retailer is a Drizly, where a given market’s consumer trends (ordering alcohol online) fall in the business’ lap during a pandemic. But that doesn’t mean there aren’t resources to accommodate a changing Business Continuity Plan (BCP), especially when solution providers (such as IBM) are expediting CRM, NLP, and self-service and management technologies to manage and route inquiries more efficiently, whether it be phone or self-service.

Morning Brew recently stated: “Without physical stores, customers only experience a brand through its online order and returns processes. Delayed assistance, even if it’s beyond retailers’ control, can fray customer relationships,” which is true to some degree. 

Nonetheless, the pandemic has spotlighted the customer service world as one of the most important areas of business continuity, a department dependent upon agile flexibility in response to consumer behavior trends. 

“42% of the interviewed expect their shopping behavior to permanently change, a third are willing to pay more for local products, a quarter for trusted brands and a quarter for ethical products. Understanding how your customers will change and what new sub-segments are expected in the coming months is key to having an appropriate response to the new shopping dynamics”says Cristian Cârstoiu, Partner, Business Advisory Services, EY Romania.

Brick-and-mortar retail is undoubtedly shrinking with or without a pandemic. The pandemic has simply expedited outcomes. (For example, a third of American malls will close next year, according to NBC retail reporter, Lauren Thomas). 

Only now are retailers and ecommerce businesses like Lululemmon, Macy’s, Best Buy, Nordstrom, J. Crew, Wayfair, or even Drizzly learning that these trends involve the right balance between online and offline business plans to accommodate customers’ needs. This includes better managing consumer volume, AI-driven self-service from contact center solution providers, aggregating more actionable customer data (for 97%), and so much more that will continue to become evident to many in the coming weeks. 

When we fail to accommodate consumer demands in customer service areas like call volume, pending digital inquiries, Tweets, or average handle time (AHT), we risk brand reputation, customer-lifetime-value and retention rates, and the overall customer experience, regardless of the quality of our products. After missing out on different revenue streams from a poor customer experience enough times, many retailers are forced to close indefinitely, as we continue to see each week. 

Companies that lead in customer experience (again, dependent upon technologies like the ones mentioned above) outperform laggards by nearly 80% and 84% of companies that work to improve their customer experience report an increase in their revenue. 

In many ways, the COVID-19 pandemic is reminding analysts that consumer facing teams such as customer service in the contact center are becoming as important as the sales departments themselves. When we start to see the effects of competitive customer service technologies, resulting in better customer retention rates and potential customer-lifetime-value metrics, we start to realize that the objective of sales (as well as marketing), and customer service aren’t as different as we once thought they were. 

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For media coverage, lead gen, and digital marketing inquiries, contact me at matt.wujciak@customermanagementpractice.com.

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