RIS News Custom Research. customer-centric wfm. Enabling the shift to customer-centric performance goals in the age of showrooming

Transcription

1 RIS News Custom Research customer-centric wfm Enabling the shift to customer-centric performance goals in the age of showrooming produced by

2 by joe skorupa Customer-centric WFM Enabling the shift to customer-centric performance goals in the age of showrooming You can perform workforce management functions with rudimentary software or you can build your own or you can use spread sheets, but if you do, it doesn t mean you are going to like it. Displeasure with using these tools will likely be heard from the top down (by executives at headquarters who monitor budgets) and bottom up (from store managers who are tasked to stay within budget). Ultimately, the sound of a squeaky wheel will be heard from those who need better tools to do their jobs and when the sound gets loud enough a strongly worded message will be sent requesting grease. When this message is heard it will be taken seriously because retailing is a labor-intensive industry and there is a great deal of corporate equity at stake in getting labor management metrics and costs right. To do this effectively, workforce management (WFM) solutions used at store level should be easy to use by managers. Software that isn t easy to use forces store managers to sit at their desks for extended periods of time to create and modify labor schedules, which is an unproductive use of their time that could be more profitably applied. In addition, good WFM solutions should also have fully automated time and attendance functions and, of course, built-in controls that help managers align costs with weekly budget and sales targets. Other important functions of WFM include reporting abilities for comparing projected labor costs to forecast, comparing actual costs to budget, and generating sales per labor-hour. And all of this reporting needs to be done in near real-time and broken out by month, week, cluster, store and employee. It is also an absolute necessity that the WFM is current with local, state and federal requirements, including the Affordable Your Workforce is your Brand Even in today s ever-changing omni-channel world, the vast majority of all purchases still happen in the store. This means your associates are vital to creating a consistent, dependable customer experience. They are the personal interaction that satisfies your customer s needs in an increasingly impersonal transaction environment, and ultimately influence whether your customers feel emotionally connected to you or not. Simply put, your workforce is your brand. There is little doubt that retail today is more complex than ever. Not only are you faced with the impact of omni-channel retailing, you re also contending with a new wave of regulations such as the Affordable Care Act, and ever-shifting wage-andhour and meal-and-rest rules. And, of course, you still need to contain payroll costs. That s the role workforce management has traditionally played, as a mechanism that can contain labor costs ensuring every labor dollar invested had a viable return and managing compliance. Now, retailers are turning to WFM to connect the associate to the customer experience and drive real, hard-dollar increases in revenue and profit. Delivering a consistent customer experience is both an art and a science, and the benefits of aligning your workforce strategy with your brand objectives are clear: an engaged, focused workforce delivering on the brand experience that customers expect. Fairly simple labor model changes and/ or labor model updates, and improvements to scheduling and forecasting can chart the course to a properly aligned workforce strategy. R I S N E W S. C O M A P R I L

3 FIGURE 1 The future of stores lies in providing more help and service to customers instead of forcing shoppers to stalk associates like big game hunters seeking prey in the jungle. Care Act (Obama Care), and let s not forget about the software platform being agile enough to accommodate new developments, including mobile, the cloud, touchscreen time clocks and advanced analytics. Putting all of those requirements aside, as if that were remotely possible, there is one final necessity of a good, modern WFM solution that is critical today the ability to help manage the strategic shift occurring in retail to reset store-level performance goals in the age of showrooming. This shift requires a new breed of smart, multi-tasking, customer-centric store associates, and the retailer s WFM solution is a key to making this shift happen. With big issues like these on the table RIS decided to devote this month s Custom Research report to WFM. Customer-Centric WFM To understand the high-level forces driving change in WFM solutions we asked retailers to tell us which customer experience priorities they will be looking at when they replace their current WFM software or do a major upgrade. A huge majority (81.8%) chose shifting from managing tasks to better serving customers as their top priority. (See Figure 1.) Managing tasks through task-management software has historically helped What are the top CUSTOMER EXPERIENCE priorities for your next workforce management solution or upgrade? FIGURE 2 What customer-centric PROBLEMS will you be trying to solve with your next WFM upgrade? FIGURE 3 Shift from managing tasks to better serving customers Shift more to sales related tasks and activities Help shoppers make purchase decisions Inconsistent in-store experiences with associates Reduce lines or increase speed at checkout Enable manager to spend more time on sales floor Help shoppers find products they want Help shoppers resolve problems while in the store Convert workforce into brand ambassadors Leverage customer satisfaction KPIs The current pain point is inability to help shoppers make buying decisions. 50% The goal is to shift away from managing tasks to better serving customers. What strategic steps has your organization taken to better achieve labor optimization? Align scheduling to customer-centric drivers Allocate labor budget to store needs and operational constraints Define labor productivity improvement goals for each store Align scheduling to back room activities 13% 60.9% Labor optimization goals now include alignment with customer-centric drivers. 43.5% 39.1% 59.1% 52.2% 81.8% 60.9% R I S N E W S. C O M A P R I L

4 FIGURE 4 managers get better control over such store fundamentals as stocking shelves, receiving goods, changing prices, replacing signage, visual merchandising and so forth. However, as the software has matured it has begun to shift toward more customer-centric tasks, which are critical to help improve sales and loyalty. There is a clear need for stores to go beyond traditional fundamentals today and change their focus to improving the customer experience once shoppers enter the store. WFM software has a role to play in this shift. According to recent financial reports from retailers, comp store sales are rising again for strong brands and category leaders despite headwinds in the marketplace caused by mobile, social and online disruptions. One way to ensure that customers who come into a store actually leave with a product they came to buy is to get associates more deeply focused on supporting sales efforts, as opposed to being busy doing non-sales activities. The sales support approach shows up in several places in the research, including the second highest priority chosen by retailers (59.1%) for their next WFM replacement or major upgrade. (Figure 1.) Another place it shows up is in the answer to a question about which customer-centric problems retailers will want to solve when they implement their next WFM. The top response was to help shoppers make purchase decisions. (See Figure 2.). The word help is significant here, because it clearly denotes a sales support function as opposed to a checkout function. The future of stores lies in providing more help and service to customers as opposed to the traditional self-service model, which forces customers to stalk associates like big game hunters seeking prey in the jungle. Two other customercentric problems retailers want their next WFM to solve are helping shop- What are the top three BUSINESS/PRODUCTIVITY priorities for your next workforce management solution or upgrade? Visibility into productivity KPIs to improve store performance Decrease labor costs by optimizing task assignment distribution Develop a comprehensive scorecard of KPIs aligned with goals FIGURE 5 What WFM modules are you currently using and which ones will be included in your next WFM upgrade? Weekly labor forecasting & scheduling Time keeping Annual labor budgeting & planning Time checks/punches Leave/vacation/time off Attendance management (track early, late and no shows) Task/execution management Tie KPIs to specific store attributes Improve or refresh accuracy of labor model Decrease labor costs by optimizing workload distribution Optimize payroll allocation to improve accuracy of forecasts Shift switching Mobile applications 21.7% Use Today 22.2% 31.6% 33.3% 47.1% 47.1% 46.7% 44.4% 57.1% 66.7% 76.2% 72.2% 85.7% Mobile apps and task management top the list for next-gen WFM. 95.7% 89.5% 82.4% 76.5% 30.4% Visibility into store KPIs can drive improvement in comp store sales. 83.3% Include in Next WFM Upgrade 69.6% R I S N E W S. C O M A P R I L

5 FIGURE 6 pers find products they want (43.5%) and helping shoppers resolve probems while in the store (39.1%). Evidence of the shift toward a more customer-centric approach can also be seen in the top strategic steps retailers say they will take to better achieve labor optimization. In response to this question retailers chose aligning labor scheduling to customer-centric drivers () as the top strategic step. (See Figure 3.) Once again we see that retailers are moving beyond a fundamental approach to WFM toward more customer-centric goals. Optimization strategies that are not directly customer-centric appear farther down the priority list, although they were still chosen by more than half of respondents. These strategies include allocating labor budget to store needs and operational constraints (60.9%) and defining labor productivty improvement goals for each store (). Aligning Store and WFM Goals Changing store strategies from a traditional approach to a more customercentric approach is a little like turning around a giant aircraft carrier in a busy city harbor. It can be done, but not quickly or without careful planning. It also can t be done in a way that risks negatively impacting business results (sales and customer satisfaction). The best way to plan for the shift toward customer-centric goals for store associates is to think of them as augmenting existing WFM functions as opposed to replacing them. Efficient execution of fundamentals will never go away. It just becomes a minimum requirement for being in business, as opposed to a strategic opportunity. When we think about retail fundamentals we think about optimizing business performance and productivity, or put another way getting the most bang for your labor buck. FIGURE 7 FIGURE 8 Which WFM metrics does your company provide to store-level manager workbenches? Customer satisfaction KPIs have not yet risen to the top of the manager s workbench. Which of the following factors are having a negative impact on achieving store goals and improving customer satisfaction? KPI for financial goals KPI for sales per employee KPI for labor expense KPI for store performance KPI for labor scheduling KPI for customer satisfaction KPI for employee incentives KPI for turnover Labor budget is not aligned with store labor demand Reducing labor costs has become imperative Skills are not aligned with responsibilities Staffing levels are not adequate Weak or low employee morale Infrequent adjustments to historical data models 17.4% 17.4% 18.2% 39.1% 45.5% 52.2% 69.6% Retailers are seeking help in better aligning the labor budget with labor demand. 63.6% Rating score for retailer s current workforce management solution on a scale of 1 (lowest rating) 6.5 to 10 (highest rating) R I S N E W S. C O M A P R I L

6 FIGURE 9 What is your timetable for a major upgrade to your WFM solution? FIGURE 10 13% Will start in months 8.7% Will start withihn 6 months How many employees are there in your organization? 4.5% 25,000-50,000 When asked to name the top three business/productivity priorities for their next WFM solution retailers singled out these three: visibility into productivity KPIs to improve store performance (69.6%), decrease labor costs by optimizing task management distribution (), and developing a comprehensive scorecard of KPIs aligned with goals, which was chosen by. (See Figure 4.) Keeping a lid on labor costs is never far from a retailer s mind so it is not surprising that it shows up in the top three business/productivity priorities. However, it is more interesting to note that the other two priorities at the top are focused on better visibility into key metrics. What you can t track you can t change. To add some insight into how WFM tools are adapting to retail needs we asked retailers what workforce modules they use today and which ones they will add in their next WFM upgrade. (See Figure 5.) The most common WFM modules in use today include: time keeping (95.7%), annual labor budgeting and planning (89.5%), time checks/ punches (85.7%), and tracking leave, vacations and time off (82.4%). The top WFM modules not used today but planned for the next WFM upgrade are: Mobile applications (83.3%), task/execution management (72.2%), and shift switching (66.7%). As previously noted, labor metrics tracked through the WFM are high on retail priority lists, so we wanted to dig a little deeper to find out which KPIs are considered critical to include on store manager dashboards. The top four KPIs are: KPI for financial goals (69.6%), KPI for sales per employee (), KPI for labor expense () and KPI for store performance (). Near the bottom of the list is the KPI for customer satisfaction at 39.1%, which probably recognizes the reality that this area of WFM metrics is still emerging and therefore assigning hard numbers on a store-by-store basis may take a few years to develop. (See Figure 6.) Shifting gears from specific metrics (KPIs) to using data to influence outcomes we asked retailers to tell us which strategic factors are having a negative impact on achieving store goals and improving customer satisfaction. By far the top negative factor is when the labor budget is not aligned with store labor demand, which was chosen by 63.6%. (See Figure 7.) The second highest negative factor on 17.4% Will start within 12 months 34.8% No plans Currently upgrading 9.1% More than 50, % 31.8% Less than 5,000 10,000-25, % 5,000-10,000 the list is when reducing labor costs become an imperative, which was chosen by 45.5%. Tied for third are skills are not aligned with responsibilities and staffing levels are not adequate, chosen by. WFM Upgrade Timeline Most retailers will tell you that fundamental WFM solutions have been around for many years and as a result are not subject to the hype and buzz that sometimes surrounds less mature retail technologies. They are proven technologies that incorporate best practices from the many retailers that have used them. R I S N E W S. C O M A P R I L

7 Advanced WFM solutions play a critical role in improving store-level performance in the age of showrooming. As a result, one would think that retailers should feel a fairly high degree of satisfaction with their current WFM solution, but that is not the case. We asked retailers to rate their current WFM solution on a scale of one to 10, where one stands for least satisfied and 10 stands for most satisfied. The average score was 6.5, which is a little above a neutral rating. Clearly, retailers believe there is more they can get out of their WFM solution than they are getting now. (See Figure 8.) Like all mature technologies, such as POS, WFM is a necessary part of the retail tech stack and one that gets refreshed on a cyclical basis, meaning there will be a certain percentage that have no foreseeable plans to upgrade, another bloc who are upgrading now, and a final segment who are planning to upgrade within the foreseeable future. In the current cycle, which is being driven by a strong customer-centricity imperative, we find that a large number of retailers are planning WFM upgrades. More than a quarter () are already in upgrade mode, which means they have already begun but not yet finished their WFM project. (See Figure 9.) Another quarter () will begin a new WFM project within one year, which breaks out into one group that will begin the upgrade within six months (8.7%) plus another group that will begin within 12 months (17.4%). When we account for the 13% who say they will begin a WFM upgrade within two years we find FIGURE 11 What is your organization s annual revenue? FIGURE 12 $1 billion to $5 billion 4.5% $5 billion or higher 13.6% Less than $100 million 22.7% $100 million to $500 million 18.2% $500 million to $1 billion What was your company s sales performance in the most recent 12 month period? 18.2% No change Increased more than 5% that only 34% say they have no upgrade plans at this time. Methodology This study was conducted during the month of July and only senior executives from national or large regional retailers were invited to participate. The results do not include any store-level, field-level or regional employees. Only headquarters-level staff responses were included. Conclusion Although WFM solutions have a long history in retail, are fully tested and proven, and are generally considered mature elements in the retail tech stack, they 13.6% Decreased Increased up to 5% are still very much evolving and adapting to disruptive changes taking place in today s retail marketplace. In fact, WFM solutions have a major role to play in enabling and enforcing the shift to a more customer-centric and service oriented approach in brick-and-mortar stores. Having an advanced WFM solution in place today is critical to improving store-level performance in the age of showrooming and aggressive onlineonly retailers. WFM solutions are key elements in a strategy that will help create a new breed of smart, multi-tasking, customer-centric store associates and omnichannel-empowered stores of the future. RIS R I S N E W S. C O M A P R I L