Current Customer Service Strategies-Miguel Gomez, Ph.D.
1. Current Customer Service
Strategies for Strong Retail
Profits in a Recovering Economy
Miguel I. Gómez, Assistant Professor
Charles H. Dyson School Applied Economics and
Management
Prepared for presentation at New York State Nursery and Landscape
Association’s Leadership Forum, West Point, New York, November 4, 2010
2. Today’s Agenda
Macroeconomic situation and outlook
Contributions of the Nursery & Landscape
Industry
Marketing emphasis in the recovering economy
Group Discussion
8. Anemic growth in the 1-2% range
Consumers still working off mountain of debt
Government likely to retreat from the stimulative posture of
2010
• Housing a drag on the economy
commercial real estate dropping a year or a year and a half after
residential real estate
Backlog of foreclosures and delinquencies that will keep high inventory
Macroeconomic Outlook 2011
9. The NYS Nurseries and
Landscapers
It is the only sector in NYS Agriculture
that is experiencing sustained growth
in recent years!
10.
11. New York, Nursery Stock
US Census of Agriculture 2007 vs. 2002
Acres in the Open
2002 2007 % Change
15,924 14,638 -8%
Sq. Feet Under Protection
2002 2007 % Change
535,199 906,523 69%
Increased consolidation
Growth driven by areas under glass or other protection
THIS IS ONLY THE WHOLESALE VALUE OF
PRODUCTS …
WHAT ABOUT RETAIL AND SERVICES PROVIDED?
12. Retail Outlet Number of Employees
Census Nonemployers Total
NY STATE:
Home Centers 22,066 262 22,328
Lawn and Garden Equipment/Supplies
Stores 6,816 674 7,490
Nursery, Garden Center and Farm Supply
Stores 5,342 N/A 5,342
Florists 6,414 2896 9,310
Landscaping Services 15,594 16,156 31,750
Total 56,232 19,988 76,220
New York, Retailing of Nursery Products/Services
US Census of Manufacture (2002) and Bureau of Labor Statistics Non-
employer Data (2006) - EMPLOYMENT
14. Perspectives on Recessions
• How many of you have cut marketing budgets?
• Fact or Fiction?
- “We are living in the worst economic conditions
since the great depression”
- “We have nothing to fear, but fear itself”
- “Marketing does not work during a recession”
15. Economic Indicators
STATS 29-33 73-75 80-82 08-10
Real GDP -13.0 -0.5 -6.4 -5.7
Consumer
Sentiment Index
-- 57.6 51.7 68.7
Unemployment 24.9 9.0 10.8 9.4
Inflation -9.9 11.0 13.5 3.8
“We are living in the worst economic conditions
since the great depression” FICTION
Times are difficult, but 2/3 of us have lived through tougher times
16. “We have nothing to fear, but fear itself”
FACT
• Media today encourages spreading of fear faster than ever
before
• Consumers are spending less and saving more due to lack of
confidence …
… well planned promotions can increase sales by helping
overcome this propensity to save
• When consumers are reluctant to spend, they are unlikely to
settle for products that do not meet precisely their needs…
… firms must be careful measuring these needs and offering
products/services that meet these needs
17. “Marketing does not work during a recession”
FACT and FICTION
Dumb marketing does not work; smart marketing works
We usually tend to get sloppy during booming economic times
This is an opportunity to re-assess marketing strategies
Facts:
- In 73-75, firms that cut in marketing saw a 21% decline in sales
- In 80-82, firms that cut in marketing saw a 45% decline in sales
THE KEY IS TO WORK ON MARKETING STRATEGIES
THAT STIMULATE CONSUMER DEMAND
19. 1. Shape the message, don’t slash the price
Only 3% of American Marketing Association marketers say it is important for
marketing functions to adjust pricing strategy
Implications - understand your target audiences’ perception of the
economic environment; hone and refine your messages; highlight the value
of your product or service, rather than slashing the price
2. Focus on whom not to target
67% of AMA marketers say it is important to mitigate the impact of an
economic downturn by refining target audiences
Implications - assess which segments of potential customers you do not
want to target (some customers are more costly to serve than to lose); focus
marketing
Four strategies to enhance marketing plans
in a downturn
20. Four strategies to enhance marketing plans
in a downturn
3. Stand apart from the crowd and invest in innovation
66% report that they would take the same amount or less risk with a new
product and/or service innovation during a time of economic uncertainty
Implications - Differentiate through innovation with a product or service that
performs in a faltering economy; invest in R&D now to ensure that your
company is in a position to compete when the economy rebounds
4. Sustain the brand
63% say they can lessen the impact of a downturn by investing in brand
building as part of their marketing plan
Implications - realign marketing strategies to match business objectives
quickly to demonstrate a commitment to the bottom line; quantify results
21. Why focus on Customer
Satisfaction to Improve
Performance?
Moving towards selling an “experience” by strengthening
retail execution
Adopting a marketing orientation focused on customer
satisfaction
22. – …
Managing the
shift upwards
Challenge:
Experience
Commodity/Transaction
Value Add /
Information
Shopper Expectations
Importance of Price
High
Low
Source: R. Blattberg,
Kellogg School of
Management
And The Retail Experience
25. More relevant in current economic conditions
Challenge - adopt the mindset of a food retailer….
Prioritizing customer satisfaction to build customer
loyalty and increase profits
Should Customer Satisfaction Be Part of The
Industry’s Marketing Strategy?
YES!
26. The Customer Satisfaction – Profitability
Links
• Businesses that are able to
reduce customer defections by
just 5% have experienced a
jump in profits of about 25%.
• Cost of attracting a new
customer is five times higher
than the cost of retaining an
existing customer.
• Customer profitability tends to
increase over time because
loyal customers tend to be less
sensitive to price increases.
28. Group Discussion (10 Minutes)
What drives Customer Satisfaction in
your retail operations?
What Customer Satisfaction strategies
are more effective in your business?
29. Group Discussion (10 Minutes)
Low High
IMPACT ON
SALES
PERFORMANCE
Your Performance on
Satisfaction Drivers
High
Low
High, High
High, Low
Low, High
Low, Low
