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Successful CEM strategy, study finds, calls for higher employee wages

A retailer's successful CEM strategy, study finds, requires above-average employee wages.

It seems almost too simple a formula: Well-paid retail employees are happy, and their happiness transfers to customers, whose positive customer experiences generate sales and help businesses grow.

Simple or not, some companies follow that customer experience management (CEM) strategy more closely than others, according to a recent survey the research firm Nunwood conducted. The London-based company's USA 2012 Customer Experience Excellence Survey found that retailers and other customer-centric businesses with well-paid staffs tend to fare better than outfits that don't pay as well.

"Success in retail was always [about] price range, but now that's done on the Web," said Craig Ryder, a consultant at Nunwood. "That's no longer a differentiating factor for stores. Stores now have to connect on an emotional level with their customers."

And when it comes to making connections with customers, a happy staff matters, Ryder said. This is especially true for employees who work on the sales floor.

"If you can reach out to customers, if you've got a high emotional intelligence, you're going to become very much in demand," Ryder said.

Just about any business can attract customers with online sales and promotions, Ryder said. But a bricks-and-mortar establishment needs to find a way to stand out -- and happy employees are one way to accomplish this goal.

Prior to websites and mobile applications, a store could pay its floor staff a minimum wage because customer experience was scripted, Ryder said. Nowadays, a good customer experience strategy requires smart employees who can have heartfelt conversations with patrons. Employing that type of worker means paying more than the minimum wage, he said.

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The supermarket chain Trader Joe's, for instance, pays its staff an average hourly wage of $11.76, which is $4.51 more than the federal minimum wage and $2.73 more than the average retail wage. It's no coincidence that Trader Joe's ranked seventh out of 100 retailers when Nunwood evaluated the results of the survey, Ryder said.

The Nunwood survey went out to 7,311 adults earlier this year and asked questions about their experiences as customers of 251 U.S. retail brands. It also asked them about what sort of emotional bonds they formed with those companies. Survey respondents were asked to rate, among other things, how personalized their retail experiences were, how much empathy an employee conveyed and how much time it took to meet expectations and demands.

Nunwood then went a step further. It examined those brands' growth figures -- a year's worth, until April of this year -- and separately estimated that the average retail salary is $9.03 per hour.

Combining its customer experience survey results with the growth and salary figures, Nunwood found that retailers ranking high in shopping experience grew, on average, by 9% more than companies that didn't place in the ranking. The brands that saw growth paid their shop floor staffs 28% more, on average, than those that didn't place in Nunwood's top 100.

Even though consumers search for personalization from retail websites and mobile apps, they nonetheless will also shop in a physical store, Ryder said. And that's why customer experience management should not be forgotten, he said.

"The [employee] will become a key element in a store," Ryder said. "What we're seeing from [younger consumers is that] they've grown up with the Net and cable TV. Buying on the Net is the norm. To get those guys out of the house and to a store will take more. Those people will value human interaction."

Retailers that pay good salaries to employees who can connect with patrons will be recognized for their customer experiences, Ryder said.

"People were earning the minimum wage in the past," he explained. "Now, we see a new breed of retail where employees are central to the shopping experience."

Nunwood found that the top provider of customer experience isn't just a retailer but a very customer-centric enterprise: Disney. With its theme parks and hotels, Disney "consistently delivers magical experiences," the survey report said. Nunwood couldn't track an average salary for the famed company.

Until the 1990s, customer service followed a script that didn't vary, Ryder said. "The script didn't come from the heart," he said. But now, the best companies hire for attitude and train for skill, allowing employees to personalize interactions with customers. "The best businesses are looking for the right people," he said.

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