Customer service during bad economic times.

Earlier this evening, I was watching the news and there was of course a story on Black Friday, the busiest shopping day of the year. In addition to aggressive promotional sales and reduced purchases, the story briefly mentioned how retailers were asking employees to be extra friendly. This comment made me wonder about how customer service was being affected by the economic trouble going on around the world.

I think there are two schools of thought on how a bad economy could affect customer service.

Customer service is pushed aside. During bad economic times, consumers are looking for good deals. They want their dollars to go further and to get more stuff for less money. Customer service is a “nice thing to have,” but not a necessity. As a result, consumers are willing to put up with bad service in exchange for cheap prices. If the service is good, great. If not, no harm done. Consumers are going out shopping to get the things they need at cheap prices, not necessarily to have an enjoyable shopping experience.

Customer service is more important than ever. During bad economic times, consumers are looking for good deals and retailers know this. Competition is stiff and good deals can be found everywhere. Every retailer has the same product for less money than it was selling a year ago and they are constantly slashing prices. Because the flat screen TV or collared shirt cost the same at two retailers, customer service can set them apart and create a competitive advantage. If both Nordstrom and Saks Fifth Avenue have sales on the same items and the prices are essentially the same, the customer would prefer to spend his or her dollars at the store where he or she is treated better.

The report talked about how Neiman Marcus was the darling of retail last year. This year’s darling of retail is on the opposite end of the retail spectrum: Walmart. It makes you think about how consumer priorities have changed with the economy.

I think the current situation is a mix of both situations I outlined above, depending on the purchase and the particular consumer’s financial situation. The people who are hurting the most are going to care the most about prices and the least about service. In turn, though, the people who are hurting less are likely going to care more service and that is where a lot of the service-based competition will arise.

What are your thoughts on how the economy is affecting customer service? What have your customers told you and what have you learned from your competition? Oh, and in case you’re looking for something more directly related to today’s shopping events, this was the post I wrote on Black Friday last year.

6 Responses to “Customer service during bad economic times.”

  1. Meikah Delid said:

    Nov 29, 08 at 2:38 am

    Hi, Doug, I just read on the news that stampede in one Walmart store. It was sad that people had to scramble for cheaper things. Hard times, I guess, do that to people.

    I wrote about Black Friday and customer service, too. Just go check out my site.

  2. Glenn said:

    Nov 29, 08 at 8:08 pm

    A customer’s experience extends well beyond employees being friendly. While that’s important, it’s not the whole meal deal. What happens when the store is out of the product the customer wants? Will the employee attempt to order it from another store or from the store’s Web site? Will the prices offered in store and on the Web be the same?

    Or is the culture of the retailer such that each store manager holds back merchandise so that each can sell it? Do they put their store over the health of their company? Is this due to the culture of the company and its rules, rewards, and recognition?

    BTW, you mentioned that Black Friday is the busiest day of the season. I don’t think so. It never was for me. The three days prior to Christmas were always much busier. Other stats from the retail world seem to bear me out. Although I did hear one JCPenney manager say that yesterday was his busiest. I hope he is mistaken.



  3. Larry Streeter said:

    Dec 01, 08 at 9:10 am

    Great point you bring up in this blog. As we market to small business owners, the downturn of the economy is something we’re watching very closely as many small businesses struggle to stay afloat. All the more reason why we continue to invest in our customer service efforts to create loyalty amongst our customer base! Helping our customers understand the value our service provides them in retaining their customers and driving repeat business has always been the key to our success and is even more important today!

  4. Joe Rawlinson said:

    Dec 01, 08 at 3:02 pm

    I think with commodity products, price will be the deciding factor. The more expensive an item, the more that great customer service will play in influencing the customer to purchase from any given business.

  5. Service Untitled said:

    Dec 03, 08 at 8:36 pm

    Glenn, you’re right. It is more about being friendly and it all falls under the general idea of providing great customer service. Black Friday has traditionally been one of the busiest shopping days (in terms of volume of shoppers), but you are right, not always the busiest and not always resulting in the most sales.

    Larry, you said it nicely. You have to let customers know how you can help them and they will typically appreciate your service more.

    Joe, commodities are almost always about price, so you definitely have a point there.

    Thanks all for the comments!

  6. Josh said:

    May 25, 09 at 8:33 pm

    Bad economic times are great times for businesses like Walmart and others like them to try and gain new customers through impressing them with low prices and good customer service. Where customers might tolerate bad customer service during bad economic times they are going to stop giving those companies their business when times get good. It is a mistake for any company in my opinion, to slack on their customer service.