Before learning their recent low rating in a national customer satisfaction survey, Army and Air Force Exchange Service officials had already launched an effort to improve customer satisfaction, AAFES' director said.
Addressing customer satisfaction is the second phase of a campaign that began in October to "turn around" AAFES, said Thomas Shull, the exchange service's CEO and director.
The first phase, he said, had to be shoring up the financial health of the stores for the sake of the benefit — without raising prices for customers.
Now, "2015 is the year of the customer," Shull said.
Shull, a 1973 West Point graduate, left the Army as a major in 1983 and spent 25 years in the civilian commercial retail industry. He was the first civilian director in AAFES' history.
Since he arrived in 2012, AAFES has cut $221 million in annual operating costs. And despite a decrease in the customer base and sales related to personnel cutbacks in the force, AAFES' profits for 2014 are expected to be more than $390 million, according to unaudited results, up from $272 million in 2011.
Part of the profits from the exchanges help fund the services' morale, welfare and recreation programs.
AAFES dropped by seven points from its score last year, to 68 out of a possible 100, according to the nationwide American Customer Satisfaction Index results released Feb. 18. The decline was the largest of any retailer in the department and discount store category. AAFES tied with Wal-Mart for the lowest customer satisfaction score among large retailers.
ACSI surveyed 250 authorized AAFES customers worldwide, a small sample size that Shull described as "on the ragged edge of being credible."
He said AAFES officials "were quite surprised" to learn of their low rating, especially since their own survey, conducted by CFI Group Inc. of 43,000 customers about six weeks before the ACSI survey, showed a score of 80, representing an increase of one point over 2013. CFI Group uses protocols similar to the ACSI survey.
While there are possible technical reasons for the decline in customer satisfaction, such as a change in ACSI survey methodology, "I'm not saying we don't have room for improvement," Shull said.
Among the improvements slated for customer service, according to Shull:
- A process for escalating customer complaints to Shull and his team to deal with if they can't be resolved at a lower level. "I'll personally respond or my team will respond," he said. AAFES is in the process of hiring an "executive response specialist."
- Online training to model great examples of customer service for employees, whether they are store associates, or work in call centers, food courts or movie theaters.
- A revision of return policies.
- An update of price-matching policies for customers who find the same item at a lower price at another store.
- An emphasis on helping customers order an item online or from another store if they can't find it in their store. Certain associates will use tablets to provide a concierge-type service. Items can either be brought to the customer's store or shipped to the customer's home.
cut for space: "We can't have customers leave our store without a good experience," Shull said. "Often a sales associate says 'you can buy it online.' That's not going above and beyond. We need to help them buy it online."
AAFES has also been working on other elements of customer satisfaction. It has installed 424 "brand" shops within various stores, with familiar names like Carter's, The North Face, Samsung, Adidas, Victoria's Secret and Michael Kors.
It has added 13 concessions in 39 store locations and has begun offering first-run movies from Disney, Sony and Paramount in its theaters in the continental U.S.
AAFES officials launched a new website in October with more offerings. After a rocky start related to software problems, the website is working well, Shull said.
Sales have increased by single digits — not dramatically, he admits — but he noted that a dedicated marketing campaign for the new site has not begun and will not begin for another couple of months.
Since Shull arrived, AAFES has been working to increase the number of items on shopmyexchange.com that are offered in the stores. When he arrived, there was a 6 percent overlap of items sold in stores and those offered online. Now, it's 28 percent, he said.
While customers of Navy exchanges and Marine Corps exchanges are also surveyed, those stores are not part of the ACSI release of data because of their size. But defense officials subscribe to the ACSI for all exchange systems and the Defense Commissary Agency, and pays for those surveys.
INFORMATION was unavailable at press time about the scores of the other retail systems.
His first priority when he arrived in 2012 had to be shoring up AAFES' financial health. The exchange system was losing part of its customer base because of drawdowns. "We needed to do what we could to avoid adversely affecting the benefit," Shull said.
It was a difficult situation for AAFES officials, Shull said, to improve profits without raising prices. At that time, profits were projected to drop to by $70 million annually. The profits are important to help fund the services' morale, welfare and recreation activities. AAFES stemmed losses in part by by reducing the number of employee positions since 2012 by 6,200 — about 17 percent — through a hiring freeze, attrition and early retirement programs.
Karen has covered military families, quality of life and consumer issues for Military Times for more than 30 years, and is co-author of a chapter on media coverage of military families in the book "A Battle Plan for Supporting Military Families." She previously worked for newspapers in Guam, Norfolk, Jacksonville, Fla., and Athens, Ga.
