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Truth be told: Busting myths around customer service & finance in retail

Truth be told: Busting myths around customer service & finance in retail

Retail

Shiv Joshi

Shiv Joshi

5 Jul 2019, 10:03 — 7 min read

Background: In the third of the ‘Truth be told’ series, Shiv Joshi uncovers the truth behind customer service and finance in the retail segment. In his previous article, he shared some common myths and the truth behind those perceptions in the payments, digital & e-commerce and supply chain sector.

 

CUSTOMER SERVICE / ENGAGEMENT

Myth: A consumer's engagement with a brand is only reflected in her transaction value

Fact: Siju Narayan, GM-APAC, Loyalty Juggernaut Inc. clarified that in the era of ‘always connected’ consumers, transaction value is just one of the dimensions of engagement. Consumers exhibit transactional and non-transactional behaviours that can effectively be extrapolated into brand affinity.

Similarly, consumers could exert influences in their social sphere that can impact a brand’s equity. “If an enterprise wants to truly leverage consumer engagement, they would do good to map their customers’ behaviours, influences and transactions in a holistic manner, build a three-dimensional customer-value model and then design and execute appropriate engagement strategies,” he suggested.

Also read: 4 unconventional ways to measure customer satisfaction

 

Myth: The fewer the customer complaints, the better it is

Fact: A low number of customer complaints may also suggest that people do not trust your brand enough to solve their problems. Amanda Nelson, former manager of content for Salesforce said that less than 25% of customers complain when they have an issue, and 70 – 90% don’t bother. Lesser complaints could indicate a serious issue with the redressal process or brand image.

If an enterprise wants to truly leverage consumer engagement, they would do good to map their customers’ behaviours, influences and transactions in a holistic manner.

 

Myth: All customers are equal and important

Fact: The ticket size of each customer differs so does his/her loyalty to a brand. There are opportunistic buyers and loyal buyers. There is also a set of customers who are unprofitable for a business. It makes business sense to identify them and focus on customers who are profitable. “Customer is your God, but it's you who decide which God you need to worship,” said Amit Sarda, MD, Soulflower.

Myth: Acquiring new customers is more profitable than retaining existing ones

Fact: It often costs more to acquire a customer than to retain one. Loyal customers also tend to be more liberal with their spending and prove to be extremely pivotal in getting more customers in the aisle.

Some businesses report getting as much as 60% revenues from loyal customers. Back in 2011, Shoppers Stop reported 72% repeat business from members on its First Citizen loyalty programme—a benchmark in the industry. It therefore makes more business sense to invest in further strengthening the relationship with existing customers who have shown their loyalty to a brand with repeat purchases.

 

Also read: Get inside the mind of your customers: 6 advantages of customer satisfaction survey

 

FINANCE

Myth: Finance in retail is limited to cash collection at the store and making statement of fund flow

Fact: “Finance in retail starts from arranging the required funding resources to planning. It involves recording product costing, overheads control, supply chain management, accounting of revenues, order to collection and reporting of financial statements for a company,” explained Dalpat Jain, Chief Financial Officer, at Vedant Fashions Private Limited – Manyavar.

Myth: Finance teams are mere cost-focussed bookkeepers

Fact: As per Naveen Duggal, CFO, Health & Glow, finance professionals are naturally good at numbers and due to the B2C nature of retail, have access to massive data at product and customer levels. ERP systems have helped finance professionals cut down time spent on accounting and focus more on business aspects. With the advent of analytics tools like PowerBi and Tableau, slicing and dicing of data has become very efficient.

Finance in retail starts from arranging the required funding resources to planning. It involves recording product costing, overheads control, supply chain management, accounting of revenues, order to collection and reporting of financial statements for a company.

 

Today, finance teams in retail are in a much better position to provide real-time insights into variations in footfall, average bill value and quantity at store, brand and SKU levels. “Apart from traditional business finance or MIS position, category finance has emerged as an important position, giving insights into how various categories are performing in terms of revenue and margin. Due to the ability to deal with data, category finance managers are helping in shaping planograms, inventory levels and assortment rationalisation,” explained Duggal.

Myth: Retail CFOs hate the marketing function

Fact: “What they actually hate is no metrics to revenue as a marketer,” clarified Duggal. Today, finance collaborates with the marketing function to analyse consumer basket and consumer behaviour. They are helping marketers to launch the right promotional schemes and understand the cause-effect relationship of marketing spends.

“Finance teams are more often seen on store visits, not for audits or mystery shopping, but to see data in the context of a store. Talking to the customers on the floor gives them far better insights. Indeed, finance in retail business is already becoming more revenue-focussed than ever before,” he added.

Myth: All retail businesses with a turnover of up to INR 20 lakh / 40 lakh are exempt from GST registration

Fact: “All retailers selling goods online through marketplaces would need to get registered under GST even if their turnover is less than the threshold limit for claiming the tax deducted by aggregators,” explained Gautam Jain, Director – Advocacy & Finance, RAI.

 

Also read: 6 tips to improve the financial health of your business

To explore business opportunities, link with me by clicking on the 'Connect' button on my eBiz Card.

 

Article source: STOrai Magazine

 

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views, official policy or position of GlobalLinker, Retailers Association of India or any other organisation.

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