Why is there a resurgence in customer service in the "invite only" retail sector when sales numbers for traditional stores are hitting rock bottom and even malls are renegotiating their leases.? In the last ten days, two online "invite only" sample sale houses are seeking to seduce customers not only with prices that are paltry compared to retail, but enticements of customer service. Online retailer, Gilt, proclaimed, "Tada! A Better Way To Shop Consolidated Sales." And, in an e-mail admission, the CEO says, "I am well aware that navigating our consolidated sales has been….let's say 'less than optimal'. You've weighed in on this issue often enough that I couldn't bear the idea of hosting another Final Sale until we had a more elegant solution."
When was the last time you heard that from a CEO of any type of company? According to today's
Wall Street Journal,
Gilt just landed an additional $40 million in funding from Matrix and General Atlantic. Valued at $400 million, Gilt is planning to expand its offerings. Their revenue is expected to hit $500 million in 2010.
Gilt is even soliciting additional feedback offering, "We'll keep tweaking the format and functions till you tell us it's 'just right.'" Where are the rest of the retailers? Why has it taken so long for the retail industry to notice its customers?
Another player in this invite-only space,
Rue La La, asks its customers if they are having an "ooh la la moment?" They launched several new initiatives creating an easier shopping experience by making a significant change in their shipping policies. They are offering free returns on shipping and now customers don't have to pay twice if they order more than once during the same day before a 10 pm EST deadline. This week's wares includes everything from name brand clothes to pots to watches. Although they were overcrowded this week and needed to shut down the site for the better part of the day. This reminds me of the good old days when
Zappos first started.
These two online invite only sample sale purveyors are taking the customer service piece seriously. According to the "Customer Experience Blog" by Bruce Temkin, Vice President & Principal Analyst at Forrester Research, this attitude adjustment will reap revenues. Temkin analyzed data on customer loyalty and how that can affect revenue. The bottom line is that investment is customers are a key revenue booster.
Some key findings:
o The difference in loyalty between companies in the top quartile of customer experience (when measured against industry averages) and the companies in the lowest quartile:
- 14.4% more customers willing to buy another product
- 15.8% more customers reluctant to switch
- 16.6% more customers likely to recommend
o Temkin also examined the revenue change from a 10 point increase in a firm's Customer Experience Index. It results in a $284 million change for every $10 billion in revenue (average across 12 industries):
- Additional purchases: $65 million
- Reduction in churn: $116 million
- Word of mouth: $103 million
Temkin's bottom line: Customer experience is a great investment. Apparently both online retailers agree and are investing in their customers.
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By Nancy "when I'm not shopping I'm writing about shopping" Brenner
Proenza Schouler 
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