In partnership with leading payment provider, Klarna, Professional Jeweller gathered jewellery industry leaders to discuss engaging staff and driving consumer loyalty in today’s ever-evolving retail climate.
On the panel:
Craig Bolton, executive director, Mappin & Webb and Goldsmiths (CB)
Hayley Quinn, managing director, Swarovski UK & Ireland (HQ)
Jeremy Hinds, sales development director, F. Hinds (JH)
Jo Stroud, owner and managing director, Fabulous (JS)
Mark Whybrow, national sales manager, Klarna (MW)
Pam Aujla, managing director, Trollbeads UK (PA)
In your opinion, what drives consumer loyalty on today’s more challenging high street?
JS: First and foremost I would say it is always about product. I genuinely think a customer won’t be loyal to you as a retailer or a brand unless they love the product.
CB: We’ve noticed that one-to-one relationships between the client and the team member have become much more important than the name above the door. People appreciate you getting to know them, and I think they become loyal to individuals rather than businesses.
MW: I agree with that. We’ve done a lot of research on what makes customers loyal and we’ve come up with this idea that ‘experience is the new loyalty’. Customers value the experience of going into store. Obviously the brand and the product is essential as well, but if consumers associate with the company – whether through emotional attachment or staff expertise – that’s what really keeps people coming back.
CB: I wonder whether the definition of value has changed too, particularly in our marketplace. Value historically has been about price but I don’t think it is anymore. Value, certainly for the younger consumer, is about experience.
HQ: I am not sure I agree. I think the challenge these days is there is no ‘one’ solution. The biggest growth in retail at the moment is with the likes of Amazon. Now they offer no experience whatsoever, other than the experience of being able to get what you want at the cheapest possible price, preferably yesterday. There is no personal relationship, yet Amazon has still experienced exceptional growth. The difficulty for a retailer is that even the same customer, in different purchasing mindsets, can require different things. Sometimes they known what they want, but they want it at the right price; other times they want to explore and be inspired; and sometimes they will have an idea in mind but will need you to go the extra mile. As retailers, how do you meet an infinite number of customer expectations for an infinite number of customers? That’s the challenge with loyalty. It isn’t one solution, and it isn’t the same solution for each customer on every occasion.
JS: Which is why I think it always comes back to product, and service is secondary. Younger people, for example, aren’t interested in the personal service in many ways, they much prefer to use automated tills and not have to speak to anybody.
CB: It still has to be about experience though, otherwise why would Net-a-Porter be investing so much into it. There is a place for the likes of Amazon, but in our industry there has not been much consolidation – yes we have lost some independents, but no as many as other sectors – and I think the reason for that is people still want to come to our stores and experience a team member telling them about jewellery and having that ultimate experience. Yes, there is always going to be a customer who is going to buy online, but the businesses that have fallen away from the high street, such as Debenhams, have done so because they have no point of differentiation. They disappeared because there was no reason to go to that store, whereas we do have something in our industry that is different, which yes, Amazon could replicate because it sells jewellery, and they will get that consumer, but there will ultimately be people who want to go in and experience buying a piece of jewellery from somebody who knows about that product — and I do believe that exists in our industry more than any other.
MW: Don’t forget the experience is not just about the physical offer — it is actually about the online experience as well. 65% of Gen Z or millennials disappear off a mobile site if it takes longer than three seconds to load, so don’t think experience is simply just face-to-face. Apps are a huge market because they are personalised and people want personalisation. So when I go on my app it tells me exactly what I have purchased, it gives me suggestions, so it is personalising the experience even if it is just on the phone. So the online experience is also extremely important.
JS: We also do a lot of events. We easily do at least five a year and I say to my customers at those events, ‘Listen, I know shopping behaviours have changed and you are not going to come in as often, but we love it when you come to our events and we have the chance to chat to you, so please keep coming’. Those customers still come into the store but many of them only come to our five events because it is a different buying environment and it is then all about an experience. They are still very valuable customers, they are still some of our best customers, but they buy in a very different way to two or three years ago when they were regularly popping in to see what we had new in the store. That just doesn’t happen anymore at all. So you have to evolve with the customer’s behaviour.
HQ: With that in mind, the solution isn’t what does the customer want? The solution is, what does your customer want? And then do it better than anyone else. You just have to be very clear about where your niche in the market is, and you have to do that better than anybody else because if you don’t somebody else will steal that business.
In the current retail climate, are you finding consumers more loyal or more fickle?
JH: I think they are equally as loyal, but they are just not spending as much, or they not visiting as often. So it is just trying to get as much out of them when they do come and encouraging them to spend with you.
JS: I completely agree. We genuinely see our customers now three times a year, when it used to be every month or so. They are just not on the high street as much anymore. It is not that they are less loyal, they are just genuinely spending less.
CB: I think there may be two types of customers as well. There is your customer who is after pure value and will always shop in the store offering the highest discount. But there’s also a loyal customer that you can capture. And they are loyal, they are just shopping a little bit less. Again, it is just looking at how you get them in more often through interest. Either interesting products, or events, or other means. I do also believe people have become more loyal to brands, and young people more so. I also think the younger people are going to dictate what goes on and because of that trends will change much quicker than we’ve ever been used to.
JH: Interestingly, since GDPR we have made more money from email channels than we ever did before because it forced people to re-decide what they were signed up to, and therefore we are now targeting people who chose to stay and shop with us.
HQ: I would support that. The old fashioned way of just pinging out an email, that’s just dead to the water, and GDPR really did put a stop to it. Now, unless you can give the consumer a reason to open the email – something that resonates with them personally – it doesn’t work. We’ve got treble digit growth from loyalty at the moment, but it is truly about personalising every single communication that you send the consumer. For example, ‘You bought this last month, we’ve got this that goes with it’, rather than a general ‘this is what we have on offer’ email.
JH: It’s also about where people sign up to emails. Previously a lot of companies picked people up by getting them to sign up to a discount code for example, which is pointless because they don’t want email marketing, they just want a discount. We collect most of our email data in store now, and if they are in-store they are already loyal to you.
CB: There is a huge part of this machine learning that the youth of today are so aware of. My 17-year-old son rejects a lot of things that comes through the mass-marketing channels, yet most the time companies now send him very specific stuff because they understand what he wants to look at. It’s either what he has been searching for or what he has physically bought and he knows that it is of interest for him. I think fast forward ten years, people will really reject stuff that they’ve never looked at or searched for, and people will disengage with retailers sending them stuff that isn’t relevant to them.
MW: It can be counterproductive to send stuff that isn’t relevant.
HQ: It’s all about digitalisation, and there are some very good examples. If you pick companies like ASOS as an example, if you have been onto the website looking at a product, they know what you have looked at, and will send a ‘I saw you were looking at this, did you know we’ve got that’ email, or ‘here’s an offer for it’ — and that’s the future.
JS: And New Look is fantastic. The girls in my team will buy something from New Look and then get an email that says ‘this goes with that outfit’, even if they bought it in a store, so it is making the marketing as relevant as possible for them.
MW: That’s exactly how Klarna works. We offer payment facilities, but we also have data on the customers. If you use Klarna we have a lot of info on the customer so that when they go on our app it is personalised and it is a one click check out. What we are actually finding is people are shopping through Klarna’s online shop because of the experience and the emotional attachment.
JS: What you are doing is kind of offering an individual recommendation. When you know a customer, you know their lifestyle, and your team can make personalised recommendations. That’s why I love audible on Amazon, I subscribe to audible books and then it suggests to me half a dozen things that I am thrilled about and I often download. The recommendations generally excite me and it doesn’t feel like its pushing stock on me.
CB: That goes back to what we said at the beginning, they can do that because they know you. The more they know about you the more they can target these things.
JS: The challenge is for businesses like myself with Mantra where we don’t have that machine learning, but equally we don’t have the face-to-faceness of a physical store, how do you benefit from that? We need to improve our IT really so we are learning from what our customers are buying and can make recommendations.
CB: We encourage our teams to not always sell. So sometimes it is just about saying ‘happy birthday’ or ‘happy anniversary’, and keeping those touchpoints with the customers where we can. And if they genuinely feel like you are not selling to them all the time I think that is a real positive. I have been staying in a new hotel in London and just after one day the guy on the door knows my name, and when I checked in yesterday I thought, ‘I am never going to stay anywhere else other than this hotel — this guy is amazing, how does he know me already?’ He’s not trying to sell to me, yet I will probably become loyal to that hotel because of him.
If people are coming into store less, what can you do to encourage higher spending?
PA: We opened our first store in London nearly a year ago and have learnt so much about what to do and what not to do, and the fact that price doesn’t really come into it. Previously we thought we had to do discounts and promotions, and that’s how we were really operating online, but actually what we have found is we have created a really interesting environment that people want to shop in and learn more about the brand. Now we are working out how can we get that message and that selling approach to our independent jewellers so they can also sell in the same way, because I think they have all fallen into this trap of thinking they have to give the consumer something, but we haven’t had to do that. We’ve found we have weaned ourselves off now – not entirely – of doing promotion after promotion. Instead it is about the environment and the product, but above all it is just about being genuine, and you’ve got to have the right staff to do that.
CB: We’ve found with mono-brand watch stores that the average selling price is naturally higher. We generally find people are happy to spend more and convert quicker within a mono-brand environment, but as soon as you put them into a multi-brand environment it becomes totally different. So I guess that is the challenge for us jewellers. The environment you have created sounds great, but can the independents do it when they are trying to cram everything in?
PA: What we are finding is a lot of them have a rear view mirror approach of, ‘this is what has worked for me for 20 odd years’, so they keep repeating that, and when you try to suggest they do something different, they don’t want to invest. They are not looking at things long-term. We do, for example, birthday parties in the store, and things like that, and it doesn’t always pay back there and then but it is about investing in the future. They harp on about the good old days and expect brands to drag people into their stores.
JS: Long gone are the days where you have a store on the high street and can sit there and expect customers to come to you. I’ve had stores for 14 years and even in that period it has changed completely. You have to create reasons for people to come and look at your product and for me that’s taking stuff out of the store and doing things like the garden parties and events in different venues.
CB: Your conversion rates will be higher now than ten years ago because consumers are researched. They are not browsing or wandering around the shops for hours likes they used to. Dwell times are like 60 mins now for shopping malls now. I remember when the Metro Centre first opened people would come for weekend shopping trips on coaches from Scotland. People would come and shop for the whole weekend, I mean, who does that now?
JS: I love shopping but even I can’t remember the last time I spent the day shopping. I used to do that as a birthday treat every year, but it has probably been four or five years since I have done that.
How are you finding staff loyalty at the moment?
PA: What I’ve found is that when I was younger I would do anything my boss asked me to do, within reason, and I wouldn’t question things. What I see now though, especially with the younger generation coming through, is that they don’t have that same desire to do whatever it takes. They actually call the shots to the extent where they want to have a good environment and good prospects, and they value other things. It is not just about the money. And we are a relatively small company in comparison to a lot of you guys, but we’ve had to be quite inventive. So on your birthday you can have a lie-in and on the anniversary of the day you started you get an extra day off. So we are having to put more experiences into their working lives. A bit like the customers really.
JH: You have to split it out between head office and stores. If I look at it from a head office point of view I completely agree. People, particularly millennials, are definitely looking for a work/life balance. They’ve already had their first job, they are then looking at whether they want to go and work 60 hour weeks and earn that extra bit of money, or whether they want to go to a 37.5hr week and earn slightly less but have a better work/life balance. From a stores point of view, it is completely different because it is much lower paid and I find it is hugely geographical based. Anywhere within the M25 or within commutable distance to London, it is very difficult to retain staff because they are very happy to move jobs. Everywhere else in the country is absolutely fine.
HQ: Our experience is identical only on top of that, 40% of our workforce both in the office and stores within the M25 is European, and at the moment they are leaving in their droves. We’ve come to the conclusion that there is no ‘one size fits all’ solution. So if you are working in London you are usually commuting into London and if you can’t work an eight hour day you are not coming in. So in London we only recruit people on eight hour day contracts. In Oxford and Cambridge most our recruits are students. So we have very flexible four hour contracts. We almost have bespoke solutions for every single store because you cannot have a standard approach.
JH: We do the same.
JS: I am with Pam on this point with how values have changed. I have been very lucky that my two senior managers have been with me for over ten years. They will do anything and everything and we couldn’t have kept the business going without the good will of those kinds of people. But we’ve just had an experience of our first millennial challenge where we had somebody in the office on the web team who was just not prepared to do anything that was not in the job description. They arrived at one minute to nine and left at 5.31pm, and they were not prepared to help out on weekends near Christmas when the website gets really busy. In the end we parted ways. That has been my first experience of somebody who genuinely wasn’t prepared to do something I think is quite normal in retail. We are going to have to be more vigilant now.
JH: We are very open and honest at the interview stage. Even when employing sales assistants, we say to them — you are going to have to work weekends, and you may have to work six day weeks during Christmas trading. Is that ok? If it is not ok then sorry we are not the right company for you.
CB: We’ve also seen a shift in mobility status too. When I was first starting out in management, if someone asked me while I was working in Dundee to go to Stevenage next week, it was no problem. But mobility now is within the same city for people. You can’t really rely on moving people as easy as you could have before. I agree with you, within our industry there is a huge reliance on good will still. So we’ve got this balancing act going on between what our industry has always had – which is a high level of goodwill and hardworking people going the extra mile – and then that new generation coming through that will have a slightly different view on life. And actually I think the mix of it is quite good if you can get it right.
HQ: The other thing is, no millennial stays more than two years. You just have to learn now that if you can get someone for two years and they do a really great job, that’s fantastic. But, that idea of they will be with you for ten years and so on and so forth is so far from the truth now.
CB: We find it geographical. The working ethic varies in locations.
JH: In our head office it is different as well. I think it depends how corporate you are. So if you’ve got a multi-faceted job that slowly adds things on over time you are more likely to stay. If you are doing a marketing assistant role for instance, understandably after two years you might get bored if there isn’t a clear pathway. We’ve got a girl in her early 20s who looks after all our social media and over time she’s started doing in-store events and working with me on some employer engagement stuff, and she has been with us for four years and hopefully won’t get bored.
HQ: You are absolutely right. If I think about my career, that’s exactly the career path I had, but the corporate world these days is so much more delineated and that has pros and cons. If you are going to work in a very structured way you are going to have to recognise that people do their time and move on to something else.
JH: It swings in roundabouts. We do an engagement survey every year and on the last one we scored 84% on freedom. The guys running the survey highlighted it as too high and warned us it might be an issue if people feel they can do whatever they want. But actually sometimes it is a good thing and sometimes it is a bad thing. It is finding that balance.
JS: I think that’s why we have retained people for so long, because I completely give them freedom to grow with the business. I said years ago that if the team came up with an initiative and it was on brand and it worked then I would be thrilled I hadn’t been involved in it.
JH: It’s a challenge at sales assistant level as well because if you haven’t got the ability to give them something that’s outside of their normal store role, that’s challenging.
JS: We do that through training though. For me it is about finding things that make them better at their job and will reward them. I may not be able to change their store role, but they can work through something to improve their skill set.
JH: Normally that first year is good, it is the year to three years.
CB: I find the first year toughest actually. I don’t think people always know what our industry is and I think as employers we often over promise the role too. I know managers do it because they are desperate to get that person on board so they say things like, ‘You will earn commission every month’, and six months in they haven’t earned any and we disappoint them. I was actually reviewing why people leave and I would say 50% of people leave our business because we disappoint them in some way and I think that’s why you’ve got to do surveys. We do surveys and breakfast meetings which will focus on specific groups of people, whether it be women or millennials, to try and understand a little bit more why we don’t get it right for them. What we have discovered recently is we do a really bad job of looking after single mums who come back to work for us part time. I don’t know why, but we’ve worked out from our stats that we lose more of those people than anybody else, so we are trying to figure out how we look after them better. So there’s lots of things we learn all the time and we are having to move and shape regularly to meet different needs. It is difficult when there’s hundreds of stores.
JH: Each store is different as well. Some staff, when you ask about the company, will only think about the store they work in. That’s why the managers in each store are so important in creating loyalty within the workforce.
MW: Would it not be beneficial to also know how the business is doing as a whole and how important that specific store is within that?
JH: They do understand how their store fits in, but when you’ve got individual satellites scattered around the country they are focused on the part that’s to do with them.
JS: I agree. A store has its own ecosystem. We used to have four stores and all those stores were completely different from each other. It was entirely about the manager of that store and loyalty to the manager.
HQ: To pick up on that point, as a global business it’s exactly the same challenge. In January this year we completely changed on a global level the whole incentive programme for everyone from family all the way down to part time sales advisors. So now, only 60% of an individual’s sales target is based on the performance of their own store. They will get a proportion of their monthly bonus depending on how the UK company performs. So if they have an absolutely stinking month because they are digging up the road outside the front of the shop, it doesn’t matter, because if the company has done well and the website has done well they will still get a benefit. Even at my level now, I am incentivised by the performance of the company because actually sometimes I have to do things that aren’t good for my business in the UK, but are good for the business as a whole, so why should I be penalised? It’s about making you understand you are all part of one global business. Conversions are up 15%, staff retention has improved by 50% in six months already, and we have just done a survey that comes back loud and clear that they love this sense of ‘we are all in it together’ and it has made a fundamental difference.
MW: That’s what I mean — exactly that. It’s a feeling of being part of the whole organisation.
Could everyone share something they have done that they feel has really engaged staff?
CB: I would like to mention two things. The first is breakfast meetings. Every quarter we choose a subject and host breakfast meetings with around 12 people, who are not managers, and they have been completely invaluable. We look at the stats, and we think, why are we losing people? Why is this group not so happy? And we get those people together to try and solve the problems. I think what has been really great for those people is that they have seen that so much of what they have said has been introduced. So when they say they hate this element of the company, or we would love to change this, we will try and change it. So there are things we have changed for the customer and there are things we have changed for the team, which I think has been extremely useful.
JH: If you are talking about single mums for example, would you bring them in from say a store in Manchester to head office? Or would you go up to Manchester?
CB: We do road shows. We get stores not far from each other and do a focus group in a hotel or something. It’s just amazing. It is lovely hearing from them because we don’t hear enough from them enough, and it is rewarding as well. So that works really well for us. The second thing in terms of reward, we do have commissions and similar things to what Hayley was saying, but the best thing we ever did was introduce an online portal that we call our ‘Brilliance Scheme’, which everybody is in on. We don’t allow brands to come in and pay people cash to sell products because it is so wrong that they should divert our people into selling the customer the wrong product just to earn cash benefit. Instead, we allow staff to take part in our scheme where they can earn points to get a prize of their choosing. They can have almost anything they want in the world;they can have a holiday or a new car if they make enough points, or they can buy a new toaster for the kitchen. Throughout the year there are opportunities to earn points through promotion schemes, or even by being nominated as team member of the month for doing well by our values. Points then go into the online portal and they can log on and see how many more they need to get the prize they want, and they can keep saving throughout the year and beyond, or cash the points in every month or so if they prefer. We’ve found it is much better doing that because people choose the gift they want. It’s a good way of engaging people.
HQ: For me, you need to just treat staff as individuals. You need to listen to them to give them an opportunity to give feedback and feel they can influence what’s happening in the business. You need to then action some of that feedback. But just giving them an opportunity to feel they have a voice within the organisation, particularly when you’re a big organisation, that’s the bit that makes the difference.
PA: One thing we’ve initiated is an internal communication system called Slack, and that’s made a world of difference. Just having that communication has energised the team. We have an ideas group, which makes everyone feel like they’ve got a voice, and it has really helped us celebrate success. Now when the store staff have a customer come in and spend over a grand on gold, a little Slack message comes out and no matter where you are you can be part of that achievement and celebrate. It has also enabled us to bridge head office and the store and bring everybody together.
JH: Our engagement surveys, we introduced them two years ago, and it has been really good. It gives people the opportunity to answer questions and feedback completely anonymously. We then sit down with the teams and discuss it and share that information and work together to solve any problems. Also, just trying to visit as many stores as we can. For us, family is a big part of our business. We have a twenty year dinner, so when someone has been with the company twenty years they come and have dinner with the family and we just try and keep the personal family element to the business, which the bigger we get, the harder it is to do.
MW: Again, engagement is really good, but actually having the transparency and doing something about it is really important. I have had engagement at every job I have been in, but at Klarna they are actually transparent and that’s massive for me.
JS: I am a bit different to these guys. I have never ever paid commission, I completely and utterly disagree with individual award schemes. I reward everything at team level, so every time a brand comes along and wants to incentivise our staff, I have always said that’s fine, but we need to reward them as a team. We don’t measure individual performance, it is completely against team spirit. At Fabulous the staff get rewarded as teams, so if they beat their store target they get money to go out together. For me it is absolutely about that team getting on together, because that is their life, the people in the store with them.