Those shelves won’t stock themselves

Another day, another Wal-Mart story. This one is from Businessweek and deals with troubles Wal-Mart is reportedly having getting goods on the shelves (Walmart Faces the Cost of Cost-Cutting: Empty Shelves, Mar 28).

Wal-Mart Stores (WMT) has been cutting staff since the recession—and pallets of merchandise are piling up in its stockrooms as shelves go unfilled. In the past five years the world’s largest retailer added 455 U.S. Walmart stores, a 13 percent increase, according to company filings in late January. In the same period its total U.S. workforce, which includes employees at its Sam’s Club warehouse stores, dropped by about 20,000, or 1.4 percent. …

At a Feb. 1 gathering of Walmart managers, U.S. Chief Executive Officer Bill Simon said Walmart was “getting worse” at stocking shelves, according to minutes of the meeting obtained by Bloomberg News. Simon said “self-inflicted wounds” were Walmart’s “biggest risk” and that an executive vice president had been appointed to fix the restocking problem, according to the minutes.

Note that this is not a supply chain issue. Rather it is a store operations problem. The goods are getting to the stores; they are just not getting out to the shelves.

At the Kenosha (Wis.) Walmart where Mary Pat Tifft has worked for nearly a quarter-century, merchandise ready for the sales floor remains on pallets and in steel bins lining the floor of the back room—an area so full that “no passable aisles” remain, she says. “There’s no manpower in the store to get the merchandise moving,” says Tifft, who oversees grocery deliveries and is a member of OUR Walmart, a union-backed group seeking to improve working conditions at the chain. “Customers come in, they can’t find what they’re looking for, and they’re leaving.”

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Add ons at Amazon: Forcing customers to bundle

It’s a big week for on-line shopping so I thought I would discuss an Amazon program I stumbled across this weekend. My goal was to order a simple kitchen brush. A quick search showed that Amazon carried the product and that it was in stock. But there was a catch. Check out that little tag in the picture below stating that this is an “Add-on Item.”

So just what does that mean? Here is how Amazon explains it:

The new Add-on program allows Amazon to offer thousands of items at a low price point that would be cost-prohibitive to ship on their own. We’ve kicked off the Add-on program with thousands of new Add-on Items, and we’re adding more each day. Add-on Items ship with orders that include $25 or more of items shipped by Amazon, and you can get them delivered to your doorstep with free shipping. …

If you have an Add-on Item in your cart but less than $25 of items shipped by Amazon you can still check out with the rest of your items. When you proceed to checkout we’ll give you the choice either to keep shopping or to check out with the rest of your items and save your Add-on Items for later. We’ll keep your Add-on Items in the “Saved for Later” section of your cart so that you can easily add them to a future order.

Or to put it in a straightforward fashion: Amazon won’t sell me a kitchen brush unless I buy something else.

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Customer service via tweets

Just how productive can tweeting be? As the Wall Street Journal tells it, Twitter has become an effective platform for customer service at Citibank (Citi Won’t Sleep on Customer Tweets, Oct 4).

Frustrated by the 40 minutes she spent on hold with Citibank customer service, Stacy Small tweeted her displeasure. To her surprise, a Citibank agent tweeted right back. “Send us your phone number and we’ll call you right now,” read the message.

Within minutes Ms. Small, who owns a luxury-travel company in Los Angeles, was on the phone with an agent, one of about 30 customer-service personnel based in Jacksonville, Fla., and San Antonio who have received special training in social media. The agent took such good care of her that, now, whenever Ms. Small has a problem she bypasses the call center and instead tweets her concerns to the Twitter address @askCiti. …

Ms. Small was the beneficiary of a two-year effort by the Citigroup Inc. unit to overhaul the way it interacts with customers using social-networking sites run by Twitter Inc., Facebook Inc. and others.

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American Airlines will pay you to check a bag

OK, so my headline is a little misleading. By “pay” I mean give you 500 bonus frequent flier miles and by “you” I mean elite members of their AAdvantage frequent flier program who happens to be traveling from Boston. Here is how they explain the offer:

Through November 22, 2011, American Airlines will offer AAdvantage® elite status members the opportunity to earn a minimum of 500 AAdvantage bonus miles for checking bags on flights departing Boston Logan International Airport (BOS).

Earning the bonus miles is easy – simply visit a BOS Self-Service Check-In machine on the day of your departure and follow the normal steps to check-in with bags. Check at least one bag under your own name to earn the bonus miles, which will automatically post to your AAdvantage account five business days after you have completed the travel associated with your itinerary. As a reminder, all AAdvantage elite status members are entitled to check two bags free of charge (within current size and weight limits) in addition to earning the bonus miles with this special offer.

There are, of course, a number of caveats (such as the bonus is only for your first bag) but they are, in effect, paying a select group of passengers an incentive to check bags. This strikes me as rather crazy; I can’t quite figure out what they hope to accomplish with this.

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The genius behind the Apple Store

Apple’s adventures in retailing have largely been successful. The Wall Street Journal had a recent story that provides some eye-popping numbers on just how well they Jobians have done at the mall (Secrets From Apple’s Genius Bar: Full Loyalty, No Negativity, Jun 15).

More people now visit Apple’s 326 stores in a single quarter than the 60 million who visited Walt Disney Co.’s four biggest theme parks last year, according to data from Apple and the Themed Entertainment Association. Apple’s annual retail sales per square foot have soared to $4,406—excluding online sales, according to investment bank Needham & Co. Add in online sales, which include iTunes, and the number jumps to $5,914. That’s far higher than the sales per square foot and online sales of jeweler Tiffany & Co. ($3,070), luxury retailer Coach Inc. ($1,776), and electronics retailer Best Buy Co. ($880), according to estimates.

So what is the secret sauce behind Apple’s success? According to the Journal, it’s largely about employing training.

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Customer service revenge

From Belgium, a creative approach to exacting some revenge on a telecom provider with a disappointing customer service record. Reading the subtitles is pretty amusing. Judging by how much the Belgian in the office next to me laughed, the Flemish is just hilarious.

 

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Learning customer personalities to better manage call centers

Fast Company had an interesting article on the technology being pushed by firm called eLoyalty to improve call center operations (How a Personality Test Designed to Pick Astronauts is Taking the Pain Out of Customer Support, Dec 1). The roots of this approach date to a methodology developed by a clinical psychologist to categorize personality types.

The methodology, called the Process Communication Model, was created in the 1970s by a clinical psychologist named Taibi Kahler. He divided people into six main personality types, each of which has a different communication style and each of which has different stress triggers. If you know the personality type of the person you’re speaking with, Kahler explained, you can modify your own communication style to work more effectively with them, prevent misunderstandings, and avoid inadvertently pushing the other person’s buttons.

Apparently, this approach has been used by NASA to determine who’s got the right stuff to for space missions. But how does this apply to call centers?

In call centers, eLoyalty’s system uses the PCM framework to compile a personality profile of each caller from the moment they first contact the center. The system, which is automated, analyzes the caller’s language patterns and other behavioral cues to identify their personality type. (A team of 250 linguists, behavioral scientists, and statisticians have compiled a massive set of linguistic libraries and behavioral algorithms to parse callers’ every word and mode of expression.)

Each time the customer calls back, the system uses the existing profile to steer them to a customer service representative who’s the best match for their personality type, and it continues to analyze their subsequent conversations to deepen and enrich their profile.

eLoyalty, which has clients in the banking, health care, and insurance industries, among others, is the only organization in the call center industry licensed to use PCM. Typical call center quality assurance programs train reps in specific issues and rely on supervisors listening in to a small percentage of calls, and providing coaching to individual reps. The automated eLoyalty system not only allows a larger proportion of calls to be analyzed, but it moves coaching out of the realm of intuition and grounds it in evidence about how to communicate effectively.

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Tweeting for better tweetment

I am teaching service ops this quarter and we are just about to the module on service recovery. As I have noted in the past, this is one of the things that has really changed in the years I have taught this course. Why delays happen in call centers or smart ways of organizing resources has largely been static. But how people complain and how firms deal with those complaints has changed over time. Just in time for next week’s class, we have two new articles on how social media is impacting the service recovery process. First, up is the Wall Street Journal on Delta Airlines (The Airlines’ Squeaky Wheels Turn to Twitter, Oct 26). Delta apparently pays people to read Twitter and Facebook all day.

A computer program searches for terms like “Delta sucks.” Beside the wall-mounted monitors showing Delta mentions on Twitter and other sites are screens showing how Delta’s flights are operating. When bad weather creates delays and missed connections, the tweets fly, and the Delta agents can respond with specific information about the causes of delays. Some customers tweet from 35,000 feet using on-board Wi-Fi, and the social-media customer service agents can make sure they have been rebooked before they land.

“You are there with their emotions, good or bad,” said Allison Ausband, vice president of reservation sales and customer care. The advantage to the airline: Better to “resolve problems at first contact rather than letting them fume,” she said.

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What’s the state of customer service?

I am getting geared up for teaching my service operations elective this fall. I was consequently intrigued when a colleague forwarded a New Yorker essay to me on the “crisis” in customer service (Are You Being Served?, Sept 6). The article unfortunately is fundamentally disappointing. It begins with discussing the response to Steven Slater, the irate Jet Blue flight attendant, and noting that customer service workers are “frustrated … with stagnant pay, stressful working conditions, and obnoxious customers.” It then moves to observing that “everyone knows that the contemporary customer is mad as hell, too—fed up with inept service, indifferent employees, and customer-service departments that are harder to negotiate than Kafka’s Castle” before asking “When it comes to customer service, it seems, people are unhappy no matter what side of the counter they’re on. Why can’t we get it right?”

The analysis that follows then isn’t much. Yes, customer service is generally managed as a cost center, and that is going to put a premium on efficiency over pampering. Yes, companies are usually eager for growth and that means they are going to be scouting for the next customer as much looking after the ones they have. But that all seems old hat. One of the most basic frameworks in service management is the service profit chain. It is built off the idea that customer loyalty is the driver of profitability. It’s a useful way of thinking about some issues but I have been sorely tempted to drop it from my course because by the time I have students in the elective they are so tired of hearing this point. I start by noting that loyalty matters and they roll their eyes and start to doze off.

So what then is the way out of this customer service crisis?

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The falling cost of a US-based call center

Last week, the Financial Times had an article claiming that call center costs have fallen enough in the US that they were getting close to matching the costs in India (US matches Indian outsourcing costs, Aug 17). This garnered enough attention that it was even parodied in the Onion. As the FT tells it, there are two sides to this cost comparison. On the one hand, the recession has suppressed wages here. On the other it is getting more expensive to operate in India.

Pramod Bhasin, the chief executive of Genpact, said his company expected to treble its workforce in the US over the next two years, from about 1,500 employees now.

“We need to be very aware [of what’s available] as people [in the US] are open to working at home and working at lower salaries than they were used to,” said Mr Bhasin. “We can hire some seasoned executives with experience in the US for less money.”

The narrowing of the traditional cost advantage is also spurring other Indian outsourcers to hire more staff outside India. Wipro, the Bangalore-based IT outsourcing company, started to recruit workers in Europe, the Middle East and Africa during the global economic downturn. Suresh Vaswani, joint chief executive of Wipro Technologies, forecasts that half of his company’s overseas workforce will be non-Indians in two years, from the current 39 per cent.

Now NPR adds a little more detail (Outsourced Call Centers Return, To U.S. Homes, Aug 25)

Phil Fersht, an outsourcing analyst, says even before the recession started, companies were starting to realize that offshoring wasn’t the best option for other services. In some cases, workers in India are making only about 15 percent less than workers in Nebraska, he says. That’s the threshold where companies start thinking about whether it’s worth it to hire an American worker instead of a foreign one.

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