Holding onto the customer is crucial in all of retail, but for the small business sector, it’s of the utmost importance.
The time and resources it takes a CE dealer to attract new business is enormous compared to what it takes to keep the loyal customers they’ve already built up. So, what does drive a shopper to simply go elsewhere and what can retailers do about it?
Software Advice, a free software review and suggestion service, spoke with our own Justin Guinn, a retail market researcher here, on his latest study that looks into this topic.
Software Advice: Your research points to some surprising stats in terms of independent retailers and customer retention.
Guinn: Our report uncovered some very unexpected findings regarding typical retail problems leading to customer attrition. First and foremost, 85 percent of customers are likely to stop shopping at a neighborhood merchant if they have a bad experience with it being understaffed.
Next, 83 percent are likely to stop shopping if the store is out of stock of the desired item. Lastly, 66 percent of shoppers are likely to take their business elsewhere if they aren’t recognized as a loyal customer by the shop owner or employees.
These are all huge percentages, and are ones that, at first, surprised us. But when you put yourself in the shoes of today’s consumer, a picture starts to form: with the pace that things move today, they likely expect things to go smoothly when shopping at a small business. Perhaps they feel like it’s easy for them to shop elsewhere after a bad experience, or simply go online to get what they need.
With that in mind, these are statistics that retailers should be cognizant of since they can’t afford to lose even half that many customers. These common problems can often be attributed to a misstep in a retailer’s manual processes and/or a lack of automation on the backend.
Software Advice: How can the small business retail sector address that churn?
Guinn: An easy remedy to these problems is implementing a robust point-of-sale [POS] system. Most systems these days come equipped with more than enough capabilities to help retailers manage every facet of their business: inventory, employees, customers and reporting. A properly used POS eliminates timely manual processes and assures things don’t fall through the cracks. Surprisingly though, 64 percent of single-store retailers still don’t have a POS system in place. This represents a big gap, but we see that most are currently looking to modernize, which is a step in the right direction.
Software Advice: Why do you think the POS adoption rate is so low with single-store retailers, and do you see that changing in the future?
Guinn: To put it in context, we talk to retailers every day; from what we’re hearing in these conversations, single-store retailers are slow to adopt POS systems because it goes against “the way we’ve always done it.” It’s easy for retailers to get set in their ways.
Or perhaps they opened their store thinking they’d eventually get a POS, but then decided they’re doing “good enough” without one. They might last for a while, but sooner or later the cracks will start showing, and they’ll get bigger and bigger as the store tries to grow.
Oversights and mistakes of manual methods are often culprits of these “cracks,” and they usually lead to larger organizational problems, much less potential loss of customers or revenue opportunities.
Not only are manual tasks like counting inventory opening the door for inaccuracies, they’re also tedious and draining too. POS systems automate processes like these, freeing up merchants to spend time focusing on the finer points of their business. That’s why POS systems have great positive impacts for retailers, and have the ability to really turn a business around by making sure those cracks get patched up.”
Justin Guinn is a retail market researcher at Software Advice, a Gartner company that provides detailed reviews and research on thousands of software applications, and free telephone consultations to help buyers build a shortlist of systems that will meet their needs.
