What Traditional Retailers Can Learn About Customer Service From Today’s DTC Brands

Today’s top direct-to-consumer (DTC) startups have built their businesses by creating differentiated, frictionless customer experiences that focus as much on how they serve customers post-sale as they do on the shopping experience. As a result, these new brands are building lasting customer relationships that are fueling e-commerce’s rapidly growing share of retail sales and the decline of traditional brands.

While traditional brands have had e-commerce sites for years, they've spent most of that time continuing to optimize the brick-and-mortar store experience and now find themselves unprepared to deliver the overall experience and level of customer service of their DTC competitors. For these legacy brands to catch up and survive, they need to understand and adopt the insights, culture, processes, and technology that are inherent to the success of these digitally native upstarts.

Poor customer service can wreak havoc on a brand and negatively impact the bottom line. According to the American Express 2017 Customer Service Barometer, more than half of Americans have scrapped a planned purchase or transaction because of bad service, and 33 percent of Americans say they’ll consider switching companies after just a single instance of poor service. The numbers don’t lie; U.S. companies lose more than $75 billion annually due to poor customer service.

Although the traditional supply chain and wholesale retail model of the past has historically limited a brand's engagement with customers as well as their control over the experience and purchase data, the good news is that customers now crave that one-to-one interaction with brands. All brands now have an opportunity to close the gap between their ideal customer experience and reality. However, meeting — and hopefully exceeding — expectations of a superior experience likely means reimagining how brands think about customer service. And the new crop of DTC brands can provide the learnings traditional retailers and legacy brands need to hear.

Customer Service Needs to Be Built Into the Company Fabric, Not an Add-On

Today’s DTC brands have figured out how to make customer service a central part of their ethos, not an afterthought. Many companies have gone so far as to build their brands around it, making it a focal point of their culture, rather than thinking about it as a necessary evil of doing business. Bonobos is a great example of this, and one of the reasons traditional retailer Walmart purchased the brand in 2017. Early on, management set high customer satisfaction and response time goals as part of the entire company’s metrics, which was critical to establishing a customer-first culture, as was naming its customer service agents‘’ninjas” and celebrating Ninjapalooza across the business every Cyber Monday. While a fun celebration of its customer service team, Ninjapalooza is also a reminder for the entire organization at the start of its most critical time of year that while Bonobos sells some nice clothes, it's the company's customer service that differentiates it from competitors and makes the brand stand out to customers.

Customer Service Needs to Always Be Personalized

Customers have more power and choice than ever before. They expect the brands they favor to personalize their interactions at all times, and understand and even anticipate their needs. Providing a highly personalized experience that puts the customer relationship first is key to modernizing the customer experience. Many brands have been able to leverage support from their customers to further grow and engage their customer communities. Take unicorn beauty brand Glossier, for example. Born out of a popular blog, a key part of Glossier’s success has been a direct result of community building through its customer experience team (aka the gTeam). The gTeam has incorporated community feedback into product design and development of hit products, such as Milky Jelly Cleanser. Glossier has used the relationships it has built with customers to not only build brand loyalty, but also better anticipate questions or concerns customers may have about its products.

Customer Service Isn’t a Cost; It’s a Sales Opportunity

When it comes to making a purchase, Gartner reports that 64 percent of people find customer experience more important than price. The research company even predicts that more than 50 percent of organizations will redirect their investments to customer experience innovations in 2019. Furthermore, The Temkin Group found that a moderate increase in customer experience will generate an average revenue increase of $823 million over three years for a company with $1 billion in annual revenues. Thinking about customer service as an avenue for sales growth rather than a business cost is a way that traditional retailers and legacy brands can change their perspective on return on investment.

Customer Service Should Provide a Holistic View of Customer Interaction

With more customer data than ever before, it’s critical to have a holistic view of the customer journey. This includes optimizing workflows, being as responsive as possible to customer requests, and uncovering insights and data that help customer service teams create higher levels of engagement. Travel brand Away has done a great job leveraging technology to stay nimble and keep its customer-first focus intact at all times. Away’s customer service team can see customers’ order histories and other prior interactions they’ve had with the brand, which gives the agent more context about what customers need and how they can help them. In turn, Away's team can be more informed and personalized in their approach and streamline the entire conversation they have with customers.

Customer Service is Emotional, Not Transactional

Customer service experiences can leave lasting emotional outcomes. With more purchases occurring without any human interaction, customer service teams are often the only people a customer may communicate with from a brand. This puts even more importance on how customer service agents engage customers. Companies are helping their agents with this by adopting real-time sentiment analysis, so they can better gauge the emotional state of the customer prior to initiating a conversation and properly mirror it through voice tone and word choice. Sentiment changes can also be monitored during the conversation, so agents can tell if they're helping to produce a happier customer or for a manager to step in if the interaction is going sideways. Companies can also use sentiment analysis to proactively segment and message customers — e.g., sending those with low sentiment scores a note with a high-value offer the next time they shop with the brand. Managing the emotions of customers through the customer service experience is critical to building loyal customers.

As the DTC revolution continues and digital advancements proliferate, more and more customers will demand the same kind of experiences from traditional brands as they get from DTC brands. If traditional brands can truly embrace customer service and make it priority No. 1, they'll have a much better chance of standing out from the pack, driving brand loyalty and, ultimately, being victorious on the new marketing battlefield.

Brad Birnbaum is chief executive officer of Kustomer, an omnichannel customer service platform.