Bad Customer Service Equals Good Sales

Consumers might be happier with where they shop, but that still doesn’t mean they’re purchasing more. The American Customer Satisfaction Index numbers recently came in, and it increased 0.9% during the fourth quarter, brining it to 75.7 overall on a scale of 100.

The two chains on top, with scores of 80, were Kohl’s and Nordstrom. Too bad their sales don’t reflect the score. Kohl’s same-store sales fell 6.9% in January, while Nordstrom recorded an 11.4% plunge during the same period.

All of this actually seems like it’s good for the consumer and bad for retailers. “As the economy slumps, more pressure is on retailers to make a sale, [which] forces them to pay attention to customer experience,” University of Michigan professor Claes Fornell is quoted in one article.

Surprisingly (or maybe not), Dollar General, one chain that saw its favor with consumers fall by 3.8%, to 75, actually had a good quarter. That chain saw same-store sales rise 9.4% and is planning on opening 450 new units this year.

So does that mean a bad shopping experience is an indicator that a retailer is performing well?

9 Responses to “Bad Customer Service Equals Good Sales”

  1. 1 James February 18, 2009 at 8:37 am

    Maybe consumers hate to admit that they actually shopped at Dollar General!
    Kohl’s and Nordstrom do a good job of delivering on value, if they are persistant their sales figures will turn around too.
    Why buy a pair of beat to death stone washed pants at Old Navy when I can get a pair with 100% of the wear still in them for less at Kohls? Consumers are getting it, they will vote with their dollar as they always do.

  2. 2 Dana February 18, 2009 at 9:20 am

    Comparing apples and giraffes today, are we?

    Dollar General hawks price. Kohl’s and Nordstrom are selling service. All do a pretty good job of delivering on their promises. In a tough economy, who’s really surprised that folks are shopping price?

  3. 3 Broker February 18, 2009 at 9:35 am

    In a tough economy people try to stretch their available funds as far as possible. You can’t do without bread or milk or laundry detergent but you can do without a Facconable shirt.

  4. 4 Smiley1 February 18, 2009 at 10:04 am

    You neglected to mention the actual PRODUCT categories. How can you even mention Nordstrom and Dollar General in the same paragraph?

    With the flight to discounters I’m sure the Nordstrom folks had more time to help their customers and the DG folks had less time…and long lines at the checkout.

    Correlation doesn’t always = Causation 🙂

  5. 5 Derrich February 18, 2009 at 10:22 am

    Well, apples to oranges anyway. Ian talked about giraffes in the Starbucks blog. =)

    The increase in sales at Dollar General shouldn’t be a surprise by now…despite less than stellar customer service. There’s an obvious trend that has gravitated toward low-priced anything…i.e. the FY 2008 sales increase of 6.9% for FY 2008 at McDonald’s. And next time you’re at CostCo (or WalMart for that matter), count how many $50k+ cars you see in the parking lot.

    So much for social bifurcation.

  6. 6 Luca Brasi February 18, 2009 at 10:35 am

    Dude, c’mon. Slow news day? If you’re shopping for commodities, price will win over service. If you’re shopping for the experience, service becomes a much bigger component.

    But even with commodities, service can make a difference. If you’re in Best Buy and you get a salesperson who actually cares and knows his products, you’re much more likely to buy more or trade up than if Cousin Moze is helping you.

  7. 7 PAG February 18, 2009 at 12:57 pm

    I needed a new dress to wear for some weddings this summer and I went to Lord and Taylor because I knew I would find quality and choices. But…I have three weddings to go to this summer and I bought one dress to wear to all three. That’s why the department stores are losing money. What in the past might have been a $300 sale (two to three dresses) was only a $100 sale.

    Consumers like me, even those still lucky enough to have jobs, are being more practical.

  8. 8 moolahtime February 18, 2009 at 5:08 pm

    This is a meaningless and worthless article. Please write something of substance. Would you compare the sales figures of Bentley to that of Chrysler to determine customer trends? Of course not! So, don’t bother comparing Nordtroms to Dollar General.

  9. 9 Weed Removal February 18, 2009 at 7:39 pm

    Ian: C’mon now. Seriously. Wow. I bypassed looking at 47 e-mails to read this Paul Blart gee-wizdom? Dollar Schlockers are “buried” by long lines of 3 or more and the last-to-go Nordstroms CSRs are focusing more on customer service? How sophomoric…

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