When it happens it often leads to panic. When it happens you are instantly thrown into the unknown. When you go to board the plane and they say, "Ladies and gentleman, the pilot just informed me that this plane is not suitable to fly. We will need to find another plane to get you home tonight," you wonder if you will get home. I've had that experience a few times and it is rarely pleasant. The last time this happened, in an airline's hub, I was late for more than 4.5 hours going to my destination while they looked for another plane. But this was Southwest Airlines. The communication was clear, another plane was found, and although we took off an hour late, we ended up only 45 minutes late. I was thrilled.
Maybe I'm easy to please, but so few retailers these days do anything to save the sale when they screw up. Everyone screws up, it's what you do when you realize you have made the mistake that makes the difference in the mind of the consumer. Can you recover? Do your associates even care if you do?
One of the key functions that retailers have been requesting in their new POS application is the ability to add cross-channel ability or inventory visibility. Why? To save the sale. If it is not in stock at the store, can it be ordered online or at another store and delivered to the customer? Or can they go and pick it up at another location?
In a world where out of stocks are so costly, the functions that allow for saving the sale are absolutely critical to the retailer. In Specialty Soft Goods, RIS News/IHL Group research shows that up to 7.1% of same store sales are lost each year due to out of stocks. That was before the recession caused lower inventories and the financial troubles of CIT Group made the situation even more critical for many retailers.
In 2008, we estimated that retailers were losing upwards of $93 Billion annually due to out-of-stocks. In 2009 we estimate this increased to a rate of $125 Billion for the calendar year due to reduced inventory levels. Quite simply, retailer's fears of having too much inventory has only exasperated the out-of-stock issue at the most critical time.
Yet while saving the sale technologies are critical to help with the problem, technology without process change means nothing. And let's face it, most store associates simply don't care to save the sale. They seem satisfied with an answer akin to, "Sorry, it's not my fault, not my problem."
Retailers must train associates to care for the customers through using this new functionality. Without the process change, the new functionality simply will not be of much help.
It is estimated that over 75% of all IT projects fail to achieve the Return on Investment (ROI) that was promised by the vendor. Seventy-five percent! But the lack of return may only be partially the fault of the vendor. In most cases, the retailer's own internal processes were never changed to take advantage of the new technology. New technology with old process always leads to failure. And for many retailers, failure in the customer experience is all too common.
So before you make that technology investment, be sure to plan out the process change that is required to take advantage of that new system and role that out with the technology change. Clearly communicate and explain the process change even more than the technology change.
This cannot be overstated, so I'll repeat it again. New technology without a change in process ALWAYS leads to failure. And that leads to failure in the customer experience - which leads me back to the airline mechanical failure story with which I started.
Because of horrible experiences with other airlines, I was prepared for another nightmare. But Southwest fixed the problem, did it in a fun and friendly way, and we arrived reasonably late for such a problem. Southwest saved the sale. Not just with this one passenger, but the other 136 on the flight. The processes were in place, the friendliness was there, and they cared to fix the problem as efficiently as possible. Do your stores do the same?
