StyleScape responds to customer feedback (McKinsey final round)

1. Customer experience
   1. In-store experience. Is the store layout clear? Are the staff approachable and helpful? Is it easy to pay? Does the store get crowded? Is our inventory accurate?
   2. Online experience. Is our website responsive and user-friendly? Is it easy to place an order and pay? Is online customer service helpful and friendly?
   3. General experience. Can our employees handle customer complaints effectively? What types of resolutions do we offer, and do customers find them reasonable?
2. Product quality and availability
   1. Quality control.  Did we change suppliers or manufacturing? Have our quality assurance processes changed? Has there been a rise in product returns?
   2. Inventory management. Are our products uniformly available across stores? Does our online store accurately reflect in-store inventories?
3. Pricing and advertising
   1. Pricing strategy. How have our prices and promotions changed in the past year?  How do our prices and promotions compare to our competitors? Have customers been able to claim all advertised promotions?
   2. Advertising. How successful have recent marketing campaigns been? Has our brand image changed as a result? How effective is our social media strategy?
4. Employee engagement
   1. Employee satisfaction. What is the average length of service of our customer service staff? What is their satisfaction level? Is our compensation similar to other retailers?
   2. Employee training. How effective is our training program? Do they understand our products and systems? Are they trained to collaborate with the online staff?

Alternatively, the candidate could break down the structure as a customer journey / process:

Step 1: Customer arriving at the channel store / platform  

Step 2: Customer ordering & reviewing the product range

Step 3: Customer paying

Step 4: Product being delivered

Step 5: Product return

Then, under each step, the candidate could identify the main pain points that could lead to a decrease in customer satisfaction. 

The candidate should give a high-level overview of the data, interpret it, and suggest next steps for the client. A possible answer could look like this:

First, the customer survey reveals that online shoppers are more concerned with price and convenience, whereas offline shoppers are overwhelmingly concerned with staff friendliness and product availability.

Secondly, based on the complaints data, it appears that the problem lies with physical stores. While we do not have the absolute number of purchases and corresponding complaint rates to determine which channel is more problematic, we can see that the physical channel accounts for the vast majority of unresolved complaints.

Finally, by combining the charts, we can conclude that customer satisfaction is declining due to issues with staff friendliness, which is exacerbated by the fact that many complaints go unresolved. The client should therefore look into what specifically makes customers unhappy with their interactions with our staff and what kind of resolution they would expect to satisfy their complaint.

Step 3: Interpret the result

For the investment to be repaid, average customer satisfaction must increase by 0.7 percentage points. While we don't know the current average customer satisfaction or the potential increase as a result of the program, the required percentage increase appears very attainable. As a result, the client should proceed with the investment while carefully considering any associated risks.

Alternatively, the client should also consider how else they could upskill their staff aside from this training. For instance, they could try to rate the ‘customer friendliness’ of their staff, remove the low performers and turn the top performers into customer friendliness champions that can then retrain the rest of the staff. Also, the client could consider replacing some of their customer service staff completely with AI-based ChatBots that could serve customers on the online channel. 

A distinctive candidate would also notice that in order to assess whether the investment makes sense, they would need to compare it with the upside in profit and not revenues. 

Operational risks

Disruptions. Having less employees on the shop floor due to training might result in lower sales and decreased customer satisfaction. Coordinating training across the two channels might be difficult. Employee absences during training could create coverage gaps in store. 

Ineffective training. Inadequate resources can hinder people’s ability to learn. People might learn at different paces or through different means. Uniform training programmes might not account for individual inexperience. 

Financial risks

Cost of training. Cost of programs might be higher than anticipated. Training may take longer than anticipated, resulting in higher costs.  

ROI. Poor training outcomes could lead to lower ROI. Other improvements may generate higher ROI. Lack of compliance could lead to higher staff turnover. 

Legal risks

Compliance. Inappropriate training content or language could lead to legal issues.

Confidentiality. Training materials may contain sensitive information.

Reputation risks

Staff opinion. Inadequacy of training programmes might deter future applicants. Changing staff behaviour might be difficult and result in apathy. 

Customer perception. Inadequacy of training programme might affect our perception and further decrease customer satisfaction. 

Based on the current analysis, I advise Style Scape to implement a training programme to improve the customer service skills of their staff. I have two reasons for my suggestion: 

• First, it is clear that a lack of customer service skills is the culprit of lower customer satisfaction rates. This is evidenced by the customer survey that showcased customer’s desire for friendly advisors and the fact that many in-store complaints remain unsolved.
• Secondly, the training programme would cost $175k to implement, which would be offset by just a 0.7% growth in customer satisfaction. Given that small fluctuations in customer service can significantly impact our business, it is clear that the training programme should be of utmost priority to the client.

Some of the risks associated with this endeavour include our ability to ensure training compliance and any legal or operational risks, such as worker disruption or confidentiality.

In terms of next steps, I'd like to conduct a more in-depth review of potential solutions to increase customer satisfaction in order to identify one with the highest ROI and the least likelihood of failure.