Today’s customers are keenly focused on value. We see this reflected in NCG’s Customer Experience Program, which provides an opportunity for real co-op shoppers to tell us how they perceive value at our co-ops. Industry benchmarking data from our vendor SMG tells us that only 35% of co-op shoppers are highly satisfied by the value they receive from their co-op, compared to 44% of shoppers in our “premium grocery” peer group — a stark nine percentage point difference.
V = (Q + S) / $
Wouldn’t it be nice if we had access to a simple equation to help us calculate how our shoppers make their value assessments? Well, we do! The value equation is driven by three primary factors: quality, service and price. The strategic placement of quality (q) + service (s) on the top half of the equation illustrates the fact that when we provide impeccable quality and outstanding service, the impact of price ($) will be far less on overall value perception.
The Impact of Service
Costs continue to rise steadily, and while none of us can see the future, it’s a safe bet that these increases won’t slow in the near term. We must leverage what we have at our disposal to help mitigate rising prices. What we have is our people, who are among the most talented and passionate in the entire industry. We can grow the top half of the value equation to lessen the undeniable impacts of the bottom half. Figure 2 illustrates the impact. If we consistently execute upon the key metrics of both “Helpfulness of Staff” and “Availability of Staff,” we can reach 50% in overall value, well ahead of the industry average, and a whopping 15 percentage points ahead of where we stand today.
The Impact of Quality
As co-ops, we often think of quality in terms of product attributes — organic, Fair Trade, local — areas in which our product mix will undoubtedly exceed customers’ expectations. We must not forget that when our customers think about quality in their value assessment, it’s often in terms of the basics: product freshness and appearance. To customers, it doesn’t matter that our avocados are Fair Trade Certified if they are also far past prime. Similarly, our best local cream-top grass-fed milk may fail to impress customers if it expires in five days. It may seem obvious, but we shouldn’t rely on product attributes alone to convey quality; the food needs to look and taste great too.
The Value Equation Is Empowering
Depending on your volume and competition, it can be easy to feel like there isn’t much we can do to make customers happy with prices. The good news is that customers are far less likely to cite price as an issue when we exceed their expectations with regard to our service and product quality. Making improvements to the top half of the value equation is well within our reach and can be as simple as committing to a renewed focus on retailing basics and ensuring stellar service. If your co-op participates in NCG’s Customer Experience Survey Program, it’s easy to see where you stand today and to monitor for improvements on an ongoing basis. For more information, visit the Customer Experience Program page on NCG’s website.
