A major part of M&S’s return to the FTSE 100 last week (along with a share price rise of over 70%) can be credited to the retailer’s significant investments in customer service.
Stuart Machin, who took over as CEO in 2022, himself put the focus on customer experience as a key driver of M&S’s strategy, saying: “We’re only as good as our customers shopping with us today tell us we are. That’s what matters, and if we do right by our customers, we’ll do right by our shareholders.”
Since the beginning of M&S’s
shake-up in 2022, the retail giant has been vocal about its focus on the
customer and rebooting the service experience, investing significantly in its
staff and customer offer. The retailer put its money where its mouth is with a
£15m package to support frontline staff in the cost of living crisis, as one
example. It also invested £46.5m in store pay during the 22/23 financial year,
with a full-time M&S customer assistant earning nearly £150 a month more,
as well as pay going up 20% in the past two years.
Customer satisfaction vital to
supermarkets’ success
Despite the ongoing cost of living
crisis, customers have shown they will pay for a higher-quality product and
experience, if the offer is right - something M&S has run with, shortening supply
chains and focusing on quality as well as price. Additionally, good service
builds customer trust and loyalty. Satisfied customers will spend more and are
open to buying different products, a necessity for retailers and brands when
consumers’ disposable income is tight.
But it’s not easy. Set against the
backdrop of high food price inflation, satisfaction with food retailers has
declined sharply - with overall customer satisfaction seeing its sharpest fall
since the 2008 financial crisis. M&S’s ability to buck this trend is
remarkable; it is now the third fastest-growing food retailer, after Aldi and
Lidl. This data shows why, for a business’s bottom line, customer satisfaction
is vital.
M&S, like other retailers, is not
immune to customer problems, but the most recent UK Customer Satisfaction Index
shows its complaint handling has been strong.
Letting customers down is a risk to
business
M&S’s food division has climbed
eight places year-on-year in the UK Customer Satisfaction Index all sector
rankings, to third, making it the top ranked food retailer for customer
satisfaction. Ocado is just behind in fourth place, with Aldi and Lidl the only
other food retailers in the top 50.
Why is this important? In competitive
and lower-margin markets, there is a risk customers will go elsewhere if they
feel they are being let down by a business. Underinvesting over a longer period
can lead to a spiral of worsening service, staff morale and sales. It costs
five times more to attract new customers with marketing initiatives than to
retain existing ones, and in the long term, firms with higher-than-average
customer service ratings earn 114% more revenue per employee.
With consumer sentiment falling for supermarkets among rising prices, M&S are showing investment in the customer experience can boost their shoppers and bottom line.
Jo Causon, CEO, Institute of
Customer Service
This article first appeared in The
Grocer magazine, and we acknowledge their ownership of the copyright in the
article. For more details visit: https://www.thegrocer.co.uk
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