How is customer service relevant to your lease ?
How important is customer service to your retail business? Most owners would say that good customer service and strong relationships are fundamentals of running a successful business. Seems obvious, right? Well in theory yes, but in practice there are plenty of shoppers who have encountered poor customer service at some point in their lives. As a retailer this should be abhorrent to you – of course retailers are human, we all have off days when things just don’t seem to be going our way. There are myriad of reasons for this, including personal issues such as financial stress, relationship problems, health challenges etc…however we must try to shield our own personal issues from customers.
The reality is your customers have their own personal issues to deal with, so the last thing they want to hear is you grizzle about how quiet trading has been during the past few days or how your landlord is unreasonable. Whilst some of your customers may sympathise with you on the surface, they really aren’t that interested and are probably just being polite.
With nearly 30 years in the retail industry having worked on the landlord side of the equation for most of that period, I encountered many retailers who would otherwise have had strong businesses, had their customer service skills been up to scratch. During my daily walks around my shopping centre as a Centre Manager, I would often chat to retailers about how business was – whilst most retailers were even handed with their feedback, some negative retailers blamed all their woes including falling sales and declining profits on everyone else (including their customers) – they did not think for one moment that the source of their problems may have lied with themselves!
Imagine blaming your financial performance of your business on your customers – I remember hearing all manner of crazy explanations such as “old people just don’t buy enough product” and “my customers are very price conscious and don’t like paying a lot” and “customers these days just don’t have any loyalty”. Instead of blaming the very people who they relied on to generate sales and by definition, their livelihood, these retailers should have taken a good hard look in the mirror and asked themselves – I am the problem, does my negative attitude and that of my staff stink ? Are we providing poor service?
In the shopping centre industry we would often gauge customer attitudes towards individual retailers, through research that included exit surveys and focus groups carried out by independent third parties – funnily enough the vast majority of those retailers with the lowest customer feedback scores were the same retailers who’s sales were declining and often corelated with their rent payments falling behind.
In each of these cases I believe the retailer had simply missed the mark in terms of meeting the wants and needs of their customer – they weren’t focused on looking after the very people that they needed to satisfy.
From a landlord perspective, especially within a shopping centre environment, it is fairly obvious which retailers have good customer service and those who do not. As mentioned there are plenty of indicators such as poor sales, climbing rental arrears and badly maintained stores. In many cases landlords also receive direct customer feedback from shoppers who simply walk into the Centre Management office and complain about how poorly they have been treated.
When it comes to renewing a lease, most landlords will not look favourably upon a retailer who exhibits poor customer service, as more often than not this same retailer is not likely be meeting their obligations under their lease. If the landlord has an opportunity to replace this retailer, they may not offer a new lease to the incumbent operator meaning their business would be impacted significantly.
So remember, good customer service is integral for so many reasons, including the security of your leased premises….