A major part of M&S’s historic return to the FTSE 100 last week, along with its over 70% share price rise, can be credited in part 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.
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