Consumers love to buy local. You can't walk into a supermarket or restaurant without seeing homemade goods, ecologically friendly items, and locally farmed food on the menu or shelves. It's not just good for the regional economy and environment; locally produced products offer customers a way to relate to what they buy in ways they can't with branded, imported products. Customers can drive out to the farm and walk through the fields, or chat with the vintner while at a tasting.
But these experiences will become less unusual and in time will be considered just another commodity. A more effective way to tap the local movement is through local service—the emotional connections that companies and their employees make with their customers by demonstrating empathy and building a sense of community.
Restaurateur Danny Meyer, a believer and trendsetter in serving locally grown food, believes local service was the critical ingredient in his recipe for customer loyalty. Mr. Meyer's Union Square Café was one of the first restaurants to embrace a very local customer segment—the solo business traveler. He not only accommodated but welcomed solo diners by offering a full menu at the bar. On the premise of local hospitality, as Meyer calls it, he has built the business exponentially and taken significant share away from more traditional high-end restaurants.
Transcending the Transaction
How do big businesses that operate on a huge scale and across vast geographies provide local service? It's impossible to import service the way supermarkets import local produce, but all of those characteristics that make consumers uneasy about mass-consumption produce—inorganic production, bland homogeneity, and at the core, a lack of authenticity—exist in the service industry as well.
For example, a customer seeking service too often faces a predictable progression from a robotic greeting to an over-rehearsed recitation of a script to the final, forced, "Have a nice day." To create meaningful local service, companies must nurture the empathetic connections between their employees and customers that transcend transactions and form the foundation of authentic relationships.
The challenge for big business is creating an authentic local experience, given the inevitable demands for scale. We know companies like Starbucks (SBUX) have done it. Starbucks turned the coffee commodity into a luxury good through its local service. Although the brand risks losing luster as it becomes more and more ubiquitous, customers experience "my Starbucks" (the affectionate name often used by customers for their local store) very differently.
Reinventing the Library
Starbucks trains all partners (that's what they call employees) in how to connect with customers in a genuine way. It is this experience that in part provides Howard Schultz and his team confidence that they can continue to make Starbucks both a beloved brand and a scalable business.
Other companies such as Barnes & Noble (BKS) are capitalizing on local service as well. In a move to keep local bookstores from re-entering the market to quench the 'local' thirst, Barnes & Noble staff-choices are back, and in a bold move, they are trading books-per-square-foot for creating a sense of community in their stores. Just like back in the days when your local library was a destination, Barnes & Noble has created story-time areas to encourage community gatherings. They have made an active investment in creating a community inside their stores vs. simply sponsoring unrelated community events.
Delivering local service is even within reach for the mega-businesses such as cell phone service providers, cable companies, and banks. To do so, it is critical for these companies to understand what is important to local communities. In other words, they need to be creative about ways to get in their customers' shoes. Companies like Verizon (VZ) and Citigroup (C) can leverage their scale to collect local information about the customer experience through their retail outlets.
The Community Call Center?
To act on this information, these companies need to make connections between internal functions—for example, between retail stores and call centers. Information collected locally must be shared throughout this network. If call center agents are armed with these data, they will be more successful in making empathetic connections with the customer. Rarely do these large companies make use of the powerful internal networks they have at their disposal—a missed opportunity to make scale a benefit in terms of delivering local service.
In the case of companies that do not have the advantage of many retail outlets—for example, cable companies—agents on the phone must simulate face-to-face interactions. Employees empowered to engage in dialogue with customers—as they would in person instead of simply following a script or adhering to strict call-time metrics—can make connections that influence customer satisfaction and loyalty. These agents can create a sense of community by engaging customers about their overall needs and ideas beyond the stated reason they called. Furthermore, employees who are engaged in problem-solving with customers are an important source of often untapped knowledge regarding how customers will respond to future innovations.
Driving Loyalty and Profitability
In some cases structural barriers may have to be removed to facilitate local service. For example, Macy's (M) is changing its field structure to become more local by removing management layers built up over time due to growth and acquisition. By placing decision-makers closer to the stores instead of in headquarters they are better positioned to compete on a local level, while reducing management cost.
Locally sourced and manufactured products are not sustainable for big business, but the emotional connection customers and employees get from them is achievable in other ways. Delivering local service creates an emotional connection with customers that transcends even the first taste of apple cider each fall, and drives long-term loyalty and profitability.
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