Target's Business Model

Walmart leads the world as the largest and most powerful retailer.  Their big box stores offer low prices and a large selection to their customers who line up to take advantage of the savings.  As I explained in a recent post, Walmart has been able to offer such low prices due to their economies of scale. But it has come at an expense; their customer service is often nonexistent.  And this provides an opportunity for other businesses to gain a strong market share in Walmart's shadow.  One of these businesses is Target.

In this article, I am going to dissect Target's business model focus of customer service and how they have found a competitive advantage to compete with Walmart without (completely) slashing their prices.

Customer Assistance

 The first hack that Target implemented to compete with Walmart is that they provide customer assistance.  Unlike Walmart where I can never find an employee who can answer my questions, Target has implemented a process to handle customer questions throughout the store.

Target has set up customer assistance phones throughout the store where a customer can simply pick up a phone and a customer service employee will soon arrive at the location to answer any questions that are not needed.  While Target is not the only big box store to do this (e.g. Lowes), they seem to continuously do a great job in assisting customers through this customer service model.

Knowledge Base Sharing

Lowes is a retailer that also has implemented the customer help model where you can push a button in several locations in the store and an employee will soon arrive to assist you with your question.  The thing that sets Target apart from other retailers who also adopt this model, is that they have designed their process so that employees can easily share their knowledge base with each other.

When you request help the help of an individual at any retailer, that employee may or may not know the answer to your question.  At Target, each employee carries a radio that is used to communicate with all other employees within the store.  This way, an employee assisting you is easily able to find the answer to your question, even if she does not know the answer herself.

Over-Staffing Checkout Lines

As I have explained before, the biggest thing that has turned me away from Walmart is that I was never able to get through the check-out lines quicker than about ten minutes, no matter what time of day I went to the store.  At Target, this is rarely the case.  Most of the time, clerks are waiting up by the isle to welcome you into their lane.

I have also observed that if most check-out lanes are full, a supervisor will quickly call for more employees to come to the front of the store to open more lanes so that customers don't have to wait.  The checkout experience is the last part of the customer experience, so this is probably the part of the shopping experience that a customer will remember most.  At Target, they make sure that experience is as good as possible.

Checkout Empowerment

An additional hack that Target utilizes is that check-out employees are empowered to make decisions which require a supervisory override at competing stores.  This innovation ensures a speedy check-out process, eliminates unnecessary rework, and overall enhances the customer experience.

Application

The topics I discussed here really only begin to scratch the surface on customer service.  But since Target has mastered these four components of customer service, they have become a major component of their competitive advantage in the marketplace.

How have you seen customer service be integrated into the culture of a business?