Why the Customer Experience Matters in Retail Banking, Pharmacies and Other ‘Captive Customer’ Situations

How can the retail customer experience matter when your customers are locked into buying from you? To get the answer, we need to back up a step or two: When you're a retailer, there are two possible commercial relationships you can have with your customers:

Scenario 1: Your customer has no actual need to buy what you're selling (although she may buy it anyway). Scenario one is your retail reality when you're selling:

• An item that, although perhaps lovely or delicious, is intrinsically unnecessary — a trinket or chocolate bar, for example.
• An item that your customer could buy any time. There's no urgent reason to buy it from you right now — e.g., a new pair of shoes when the last pair are still perfectly fine.
• An item that your customer can get just as easily online (and perhaps with a wider selection to choose from, a hassle-free returns process and possibly an unfair tax advantage).

Scenario 2: Your customer more or less has to buy what you're selling. Scenario two is your situation when you're selling:

• An item that's become an emergency due to timing: supplies from Staples for something the customer needs to complete tonight (e.g., homework or a bound report, supplies from Michaels Arts & Crafts for a project the customer's community group is expecting to work on that afternoon).
• An item the customer truly needs and can only, realistically speaking, get from you. For example, you're the pharmacy the customer's doctor called the prescription in to.

In retail scenario one, the customer experience is the entire point of, and the entire hope for, your enterprise. If your customer doesn't have a fabulous, pleasing-to-the-senses-and-psyche experience, she's not coming back to your store. (Or even more likely these days, when socially generated content predisposes customers to act or not act, she won't even show up the first time.) The value of the retail customer experience here is obvious: This is the classic scenario of "a man without a smile shouldn't become a merchant."

In retail scenario two, since the customer has to buy from you, the experience isn't, commercially speaking, everything. For this reason, it's often neglected. Your customer has to pick up her prescription; whether you're nice to her or not is irrelevant.

So, be happy for whatever successful moves have landed you in a situation where the customer is required to buy your product (picking the right corner to locate your pharmacy, for example). But don't stop there. A captive customer can quickly become a rebellious customer. Instead of resting on your commercial laurels, consider your customer's need, her captive-customer status, as your retail jumping-off place.

The opportunity here comes in your ability to transform the situation from a must-have to a want-to-have. For example, to continue with the pharmacy example: What if my nearest chain drugstore weren't an evil-smelling dump with couldn't-care-less employees everywhere from the front counter to the window dressers? If it had caring, motivated employees, a clean parking lot and intuitively stocked shelves, it could turn this necessary shopping evil into a shopping opportunity for the customer and therefore an increased share of basket opportunity for the merchant.

Umpqua Bank, one of the great customer-focused banks, uses this theory of turning branch banking from necessary evil to desired experience. By doing so, it outshines its competition.

In an interview I did recently with Umpqua Regional Vice President Michele Livingston, she explained how the bank strives to turn a typically blah errand into something their customers want to do. Umpqua does this by making their branches hip: uniquely designed, with WiFi, free coffee and, of course, extraordinarily customer-focused employees.

Note that the hassle of changing a bank account is significant. Most banks’ customers aren't going to jump ship on any given day, no matter how shabbily they might be treated. But with superior service and a superior customer experience, Umpqua has earned not just happier customers, but better financial results as well. Its customers are taking advantage of the useful additional services the bank offers. The more Umpqua's customers enjoy the experience, the more natural it is for them to converse with bank employees about consolidating their IRAs, doing estate planning, etc.

Even with more or less locked in customers, a little retail love goes a long way.

Micah Solomon is a customer service consultant, speaker, and the author of "High-Tech, High-Touch Customer Service."