While customers’ patience and expectations have changed with the pandemic, in many instances, they’ve reverted back to pre-COVID levels. Now with cities reopening, vaccination rates reaching 60% or higher in adult populations, and post-pandemic inflation hitting us, customers are out shopping, paying more and expecting more for their money. For retailers trying to meet their customer service needs, “experiencing high call volumes” and “COVID-related disruptions” will no longer cut it as excuses. And for those customer support teams that themselves need support, a well-executed AI rollout can make a difference. But we emphasize at the outset, AI is not a panacea.
Of course, COVID drove massive disruption from both retail and consumer perspectives. We had been a nation of “consumer first” and “the customer is always right,” with Amazon pushing us to expect one-day receipt of goods. In short, as consumers, we were very used to getting what we wanted, when we wanted it. Then came the pandemic … and where we might have purchased Charmin toilet paper from Walmart.com, suddenly we found ourselves happy to get Quilted Northern at Target.com, that’s if it were available. Brand substitution was the norm during COVID.
On the positive, consumers also dug deep and found a surprising amount of empathy with retailers’ customer service efforts — technologies that may not have been embraced before, such as chat windows, chatbots, mobile messaging or being called back from a phone queue, suddenly became tolerable. Now as we embrace reopening, customers are reverting back to their highly expectant, sometimes even entitled ways. Where AI might play a role in the above Charmin stock-out situation would be to apply what was learned from the customer’s prior purchasing history and preferences, proactively communicate alternatives and make preemptive suggestions that would have given the customer a better sense of control. And from the back and forth, AI would continue to learn and come up with ways to leave the customer with a more satisfying resolution.
With inflation kicking in for the first time in 30 years, customers paying more also means that they are expecting better service as a result and, indeed, their acceptance of COVID-related explanations for delay is waning. While consumers shifted to interacting more efficiently online and digitally, their expectation of enhanced service also moved online. In the meantime, however, customers’ desire to interact with customer service isn’t going to slow down anytime soon.
This is good news for retail pharmacies and chain drug retailers, even if it means more thought and investment around the customer service experience. We say this because customer service may now be a retail drug chain’s best opportunity to interact directly with a current or prospective customer. As the hard work of connecting was initiated by the customer, retailers now need to show up for them in these customer service interactions. Ironically, the customer’s effort to connect already points to a potentially negative experience if the interaction is less than stellar. Retailers must now do everything in their power to not make customers work harder — to make it seamless and think of the customer service journey as free traffic and an engagement opportunity.
Customer service moving toward more personalization
We’re fully expecting that the days of the massive customer service bank — with dozens of phone reps sitting together in a room fielding call after call — will come back. But it will be under a new operating model, one that leverages technology and proximity to product. Digitally native and omnichannel companies keep their customer service centers close, either in the distribution center or in some other way that allows customers to interact with product. This points to a need for customer service agents who know not only the customer and their historical purchases, but also the product, backward and forward. AI-driven predictive personalization can also play an important role here, helping supercharge even the most intuitive and knowledgeable of customer service agents.
Looking forward, it’s been estimated that by 2025, 95% of all interactions with the customer service desk will begin with artificial intelligence (AI). But while AI is a tool that can be a possible solution, it drives a leaky funnel — as about 80% of consumers still say they wish they had spoken with a human instead. There’s a glitch in that AI-driven hierarchy: A customer is told to “Press 1,” and falls into a loop of having to rationalize their presence on the call … this leads to a very bad customer experience and threatens customer lifetime value and loyalty. A bad AI experience at the top of the funnel can lead to customer disappointment at best, and at worst, abandonment. Unfortunately, bad customer service also lends itself well to being shared among friends and on social media.
How can retailers avoid this damaging outcome? One way is by bringing together data from merchandising, marketing, promotions, historical purchases and customer service interactions to fully understand the customer and that person’s lifetime interaction with the retailer. Some chains are experimenting with virtual shopping that’s meant to emulate a superior in-store experience — from merchandising to clientele interaction. These technologies will likely be embraced, especially the type of AI interaction that determines “if you like A, you’ll probably like B.” But again, a word of caution: How often do customers receive an offer that has nothing to do with them — perhaps it’s for a different gender or is a completely different product than they’ve ever ordered for themselves. It may have been a search for a one-time gift for someone else, and now they’re locked into a stream of offerings that has nothing to do with them. This is not helpful to the customer.
For retailers to use AI more effectively, there will need to be a service-level prioritization. There are already some forms of this — for example: “Is this a new purchase?” “Are you a new customer?” “Are you an existing customer or is this a recent purchase?” These questions are beginning to establish a hierarchy in terms of how quickly the call might be answered and whether it can be directed to a human any faster. We’ll see these and other aspects of customer service getting smarter — for example, the personalization in marketing, merchandising and on website landing pages.
To make all of this happen, some companies may need to install a new type of customer experience manager — an individual who becomes customers’ advocate. We’ve seen chief revenue officers, but this model needs to be flipped and focused on how to drive the customer journey.
Where we’ve been, and where we’re going
During COVID, as is well documented, we saw mass disruption in physical retail — stores closed or operated on reduced hours, you couldn’t try on in-store, etc. — hence the customer service desk that dealt with the digital side during the pandemic will now have to embrace the physical economy as well. We saw breaks in the customer journey time line, as some systems didn’t understand what was purchased in-store versus online. Some companies that became very smart at target marketing lost out when those insights stopped popping up through a customer’s account or the retailer’s website. There was communication disruption … and customer experience failures.
Now, we’re looking at a definition of good customer service as hitting the close chat button or putting down the phone and knowing I don’t need to pick it up again. My problem solved, in one go. Many companies have implemented a touchback system, which is generally a positive approach. But now, for many reasons, customer service has become the chain drug retailer’s sole customer interface. CEOs as well as CMOs need to pay attention to this — and see that this is now the voice of the customer.
Matt Katz is managing partner and Chris Ventry is vice president in the Consumer and Retail practice at SSA & Co., a global firm advising companies and their C-suites on strategic execution. They can be reached respectively at [email protected] and [email protected].