Last week I attended
ShopTalk Fall in Chicago, new data has come out around the staggering cost of poor customer service, and Kustomer launched a new pricing study. Here’s the latest:

CX Spotlight

A new report came out that found that poor in-store customer experiences costs UK retailers £41 billion in lost revenue.
The study also found that:

• 76% of negative online reviews are due to unsatisfactory in-store encounters.
  

• Ineffective queue management made up over 19% of the negative feedback, while unsatisfactory staff interactions made up 13.61%.
  

• 80% of the survey respondents will leave a store without making a purchase if they have a bad customer experience.

The cost equates to around £594 or $768 per person. That’s a lot of money on the line if extrapolated globally.

How can CX leaders turn it around? It comes down to staffing, training, and technology:

Staffing

Every company needs to attract talent that cares about doing a great job. In this case, that’s delivering a great customer experience. You may need to partner with HR on this one, but your company can attract people with a clear mission or if it offers great comp/benefits. Aim to hire people with a passion for the product or service your company sells.

But for something CX leaders can do on their own, managing lines is a (relatively) quick win. This goes for online and offline
- once your team members are on board, make sure you have enough people at the registers, on the sales floor, and responding to online questions and tickets.

Training

Many say that Gen Z is the problem behind bad customer service. Admittedly, Gen Z is the most digitally native generation, with more experience shopping online as a default than any generation before it. However in the US, the median age of a retail salesperson is 35 and 36 for customer service agents - showing it extends well beyond Gen Z.

CX leaders should dedicate resources to onboarding all employees to ensure they know how to deliver the quality of service that your target market expects. It’s important to deliver consistent brand experiences so people have the same quality no matter which location they step into and which employee they speak to.

Here’s a framework:

• Dedicate time to training and use engaging materials.
  

• Leverage one-to-many resources to like training videos that model the type of experience the company is trying to create for its customers.
  

• Move away from outdated practices of leaving new employees to learn independently on the job.
  
  

Tech

Tech can expand your staff’s and your broader company’s efficiency in different ways. Bring tech in-store to improve the customer experience, whether it’s with kiosks so customers can self-serve for price lookups, or providing AI-powered devices to empower team members to address a customer’s needs. Some retailers are filling the CX gap by offering free ship-to-store or ship-from-store if a customer’s desired product is out of stock.

It may be too tight of a turnaround to get all of these ideas in place for the 2024 holiday shopping season, but do what you can now. Then, gather data about this year and start laying the groundwork for 2025 staffing-based and tech-based CX initiatives.

ShopTalk Insights

I attended ShopTalk in Chicago last week and had some great conversations and learned from some of the best brands in the business. It was awesome to hear from the VP of Target talk about using AI internally - you’d think at these larger companies it would take years to implement something this big.

Here’s the recap:

Target: Boost Employee Productivity by Integrating AI

I attended a session with the VP from Target (Christina Hennington, EVP, Chief Strategy & Growth Officer, Target), where they shared some interesting examples of how they’re using AI internally. They’ve developed a ChatGPT-like tool for their employees, giving Target employees the opportunity to use AI technology to get answers to questions like how to sign up a customer for Target Circle or how to reboot a POS system.

It’s faster than calling over a manager, and a much better experience than having to tell a customer “I don’t know.”

This aligns with our own discussions at Kustomer about using AI to make employees and leaders more productive. It was great to see this in practice at a major brand.

They also talked about balancing the possibilities of AI with its practicality. They focus on solving immediate problems rather than just aiming for futuristic AI possibilities.

Another standout was their call center data. Target handles 250 million conversations annually, using this data to solve up-funnel challenges and reduce inquiries—very similar to what we aim to do with Kustomer’s AI solutions.

Fabletics: Use an Omni-Channel Strategy for Deep Customer Engagement

Adam Goldenberg, The CEO and Founder of Fabletics shared their focus on becoming an omni-channel brand, stating that customers who engage both online and offline are 5.7 times more likely to make repeat purchases. This really underscores the importance of creating a consistent brand experience across all channels.

They’re also dedicated to understanding their customers. They host “meet members” events where employees talk directly with customers to gather feedback. Additionally, corporate employees are required to work in stores to engage with customers directly.

Fabletics also emphasized a technology-first mindset, using hyper-personalization to tailor their offerings and customer experiences.

Fabletics: Making Employee Education Engaging

They take onboarding seriously, using TikTok-style videos to make the training process engaging and accessible. As a membership-based business, Fabletics understands the importance of every employee delivering a great customer experience, and this is reflected in how they educate their team from the start.

McDonald’s: Go Beyond Transactional to Personal Relationships

Michelle Gansle, Global Chief Data and Analytics Officer, and Allegra Krishnan, Global Chief Loyalty & Engagement Officer of McDonald’s spoke about moving away from purely transactional relationships to more personal customer connections. This feels like a broader shift in the market that many companies should be paying attention to. It’s all about building long-term relationships, rather than just processing individual transactions.

Golden Nuggets

Best Customer Service 2025: The Winning Strategies
What the FTC’s ‘click-to-cancel’ rule means for customers
Entrepreneurs Should Invest in Service, Not Just Sales — Here's How to Build a Customer-First Business

Interview Insights

I chatted with
Gabe Larsen, CMO at Kustomer, about the new pricing research that just came out. We dug deeper into some of the findings and responses.

What was one of the most impactful responses he heard? One survey respondent noted that he’s using seat-based pricing, which Salesforce introduced around the year 2000 - but nothing else he uses to operate his company is so old. Over 90% of respondents are on seat based pricing, but most told us they’re ready for a new pricing structure that better fits how they operate.

So why is Kustomer considering the seats-based model now? Gabe says there’s a clear connection with the rise of AI.

CFOs may appreciate the cost predictability of a seat-based model, but Kustomer found that many companies have different types of seats - full-time, part-time, administrative, supervisor, seasonal - so to meet the other need of flexibility, it becomes complicated managing all of these varying user roles.

Usage-based pricing is the clear frontrunner for what will provide the flexibility that respondents told Kustomer they wanted, and what will make sense as AI takes on more and more customer conversation deflections.

Check out the full interview here.