Ask Your Customers What's Wrong - Could it Really be that Easy?

The other night my colleague and I were convening a merchant roundtable and started by distributing a questionnaire that asked the merchants to describe their typical customer. Things like where they come from, whey they shop in the district, what problems they see with the district...etc. Knowing your customer and responding to their needs and concerns is the foundation of a successful business. Unfortunately, many of the merchants in the room couldn't answer some of these basic questions. This simple questionnaire pointed to a fundamental problem within the district - merchants cannot pinpoint the reasons why customers are choosing to spend their dollars elsewhere. Without this critical information, there is little that merchants can do to address the problems and improve the shopping experience for their customers.

What I found interesting about that meeting, but not too unusual, was the emphasis that merchants placed on the shortage of parking as the primary reason their businesses are suffering. The mood in the room was tense as merchants lashed out in frustration at the parking situation. Here's the rub - two follow up roundtables with residents and district employees found that parking was in fact a MINOR concern. Their real concerns were related to the trash, litter, unappealing storefronts and 'grimy' interiors of stores...these were the real reasons that many hesitated to shop in the district. The disconnect between what merchants thought was the problem and what the customers actually said was the problem was amazing - and hopefully eye-opening for many of the merchants.

A recent article in the New York Times on-line ("What do Customers Really Want? Here's How to Find Out") emphasized a similar challenge. Small business owners clearly need to be more aggressive in gathering information from customers. There is no short cut for this kind of research, however commercial district management entities are in an excellent position to conduct this research on behalf of multiple merchants and the district as a whole, thereby sharing the costs of the surveying and helping to address and implement solutions to the challenges identified during the process. Surveys are helpful, but they are also no substitute for merchants striking up conversations with their customers and asking some of these questions themselves. District management entities should encourage their merchants to strike up conversations with their customers, or suggest that they make it easy for customers to provide feedback on the business' website. After all, the flexibility of small business owners is their greatest strength - they can more quickly response to problems and challenges than large chains can...and build a loyal customer base in the process.

Here's What 1,200 Shoppers Say Needs to Improve along Urban Commercial Corridors

Unfortunately, there is scant professional research and literature in our field – but there are some recent studies lately that are beginning to change this. A firm called Market Knowledge recently published a fantastic analysis of urban neighborhood shopping patters. The study “Urban Neighborhood Shopper Satisfaction Analysis” is a summary of 1,200 shopper surveys distributed in five urban neighborhoods (4 in Philadelphia, 1 in New York). The entire report can be downloaded at: http://www.eightpoints.com/research/customersatisfactionreport.pdf

Here are some highlights from the study, sprinkled with my own observations and insight, that confirm what many practitioners already know…

1. What happens “inside the store” matters. 70% of the customer experience is defined by what happens inside the store. Customers care about the quality of merchandise and the service they receive – and if they don’t find what they want in your district, they may never come back. Unfortunately, this means that much of the revitalization effort happens in the private realm – in the attitude of business owners as they greet customers, in the quality of their merchandise and in the attractiveness of their merchandise displays. Addressing these ‘inside-the-store’ issues is a tremendous challenge for commercial district managers. This is why a successful revitalization effort cannot happen without the cooperation and engagement of local merchants. For those commercial district entities interested in tackling this issue – one creative approach is a ‘Retail Audit’ that can help individual merchants diagnose and address problems and issues that may be keeping customers away. See a recent blog post on ’Retail Audits’ for more information.

2. Regardless of gender, income or age, the quality of the shopping environment (read – clean and safe!) makes a big difference to shoppers. At least initially, these clean and safe improvements need not be capital intensive – but they must be visible and they must make a marked improvement in the retail environment. Regular street sweeping, garbage pick-up, graffiti-removal/murals, etc. can make a difference – not just in how clean the district is, but also how safe it feels. The perception of crime is often more palpable than the reality of crime in many urban districts – and taking care of housekeeping can make a big dent in how the area is perceived. It sometimes make me nervous to emphasize the physical environment – only because many commercial district entities focus almost exclusively on making improvements to the physical environment and the public realm and then avoid addressing issues like store quality, store mix, value and convenience in their revitalization efforts. It’s important to note that a successful revitalization effort, particularly in an urban area, needs make sure they are addressing issues of clean and safe at the

3. Use the early stages of your commercial district management effort to lay the foundation for successful businesses – both new and old. Often times, communities are so excited about commercial revitalization that one of the first things they want to do is attract new retail to the district. But they jump the gun by going after retail before they are “retail ready.” Setting the stage for new retail means making sure the district is ready to accept new businesses – again, read clean and safe, and that the environment is conducive to attracting and retaining customers over time.

4. Parking and traffic congestion are not necessarily the most important issues to customers – even though in our experience merchants typically think this issue trumps all others. I have come to the conclusion that often times, complaints about parking are merely a scapegoat for merchants to avoid some hard truths – that the businesses are not offering the right mix of goods and services to customers and that marketing and communication in partnership with other businesses is lacking.

Any district management entity making a decision about 'first steps' in their revitalization effort should give this report a good read....