The Theory
It is important to understand the context between sales and service. Often when we ask clients whether they consider themselves to be a sales or service environment, the response we get is:
“Our objective is to deliver the highest level of service whilst maximising all sales opportunities.”
Well of course that is the perfect aspiration! However, we ask you to delve deeper and consider ultimately where your organisation sits when it comes to choosing where your priorities lie. This is well articulated by choosing one of the following two outcomes:
Customer A: The customer has a disappointing service experience but nevertheless buys the product that they need.
Customer B: The customer has an exceptional service but doesn’t, on that occasion, make a purchase
When we put this scenario to professionals within a retail service environment, many initial responses are for outcome 2; “better to not achieve a sale but have the customer leaving with a good feeling about the service they have received”.
What if we then told you that the sale was worth £100,000?
For most that would change things; “of course, we want to deliver a great service, but we are all commercial organisations and after all, it is £100,000!”
What if we then told you that the customer had a further £10 million pounds to spend? Suddenly the service has become more important!
Math Time!
PiP has calculated a formula for assessing whether you are a sales or service environment. If your answer equates to more than 1%, then you are in a more sales-focused environment:
Your Calculation Explained…
In reality, if a customer’s average visit spend is more than 1% of their potential lifetime value, then you are in a sales environment where maximising sales conversion is critical.
Think about the kitchen industry where a customer may only buy 3 or 4 kitchens in their lifetime, with up to 10-year gaps between visiting a showroom… closing that sale is the ultimate priority!
On the other hand, a supermarket that is visited by a customer 2 or 3 times a week, would be crazy to focus on risking a future lifetime value of £100,000+ for the sake of a small additional purchase.
Of course, being in a sales environment does not stop you from delivering an exceptional customer experience (which will of course increase your chances of selling products). Equally, a service environment is not a badge that stops you from selling! We just think it is important to understand your retail environment and ultimately where the priority sits.
