When you focus only on technology and ‘efficiencies’ to improve the bottom line, you take decisions based on urgency that alienate customers and lower your business into the realm of perpetual price wars. Focusing on what is urgent this quarter vs what is important exacerbates the problem and the downward spiral grows deeper.
Will Hutton wrote last week in The Guardian: “shareholders must stop sucking companies dry at the expense of innovation, investment and the wellbeing of the workforce.” Too many companies use productivity as a stick to beat employees into submission. This bottom line focus ignores the top line customer.
Companies blame persistent price wars for their current fate. When one interacts with employees of some of the nation’s most ‘efficient’ and largest companies, you encounter vacant, staring automatons labouring under performance metrics so crushing, they live in fear of losing their job.
- Handle this call in 76.3 seconds,
- Stock this aisle in 11.2 minutes,
- Deliver this order to the customer’s home 4.7 minutes…
…or your head is on the chopping block. So tightly timed is ‘service delivery’ in most large UK companies, you hear fear when you say, “just one more question…”
And throwing money at customers does not buy their loyalty. When you do, that makes it impossible to stop without consequence. After 16 months, Tesco will end its petrol discount programme. Launched by previous CEO Clarke as a game changer, Tesco say they will “focus on providing deeper discounts in-store because that is what their customers want.” Yes, those living in big cities without autos might feel that way, and when I advised the company, I said this was something you were stuck with, they obviously disagreed.
The problem? Shoppers like sales.
Two years ago, retailer JC Penney ousted their chairman for his ‘fair and square’ pricing strategy vs. continual ‘sales.’ Net in the 4th Quarter that year plunged by $428 million dollars. CEO Johnson was ousted with the share price at $14 per share. Today it languishes at $8.44 a share. And future prospects are dim with Bloomberg Business, CNN Money and others speculating that despite store closures and cutbacks, bankruptcy may be their only survival play.
So what will the impact be on Tesco? Well, it makes switching chains much easier. Customers already choose location convenience. But in an informal survey of shoppers, many asked the same question… ‘why on earth would they abandon such a popular programme?’
Because they are so desperate to cut short term costs wherever they can find them, they think great strategy will save them. Tesco blames low cost providers Lidl and Aldi for their woes. And yet both have fewer items, in store fresh bread baking operations, plus a selection of wines and quality chilled foods that brings customers there first, then they go to Tesco for whatever these two do not carry.
No matter what business you are in, it’s the customer’s experience vs pricing. If competing on price, removing a popular programme that keeps customers ‘price-shackled’ means rougher times ahead unless you also change your internal culture. McKinsey, Boston Consulting and Booz Allen are very well paid for producing excellent strategy. They do nothing around implementation or the people side of the business. Yet this is where strategy, no matter how well conceived, ultimately collapses under its own weight.
At the end of the day though, there is a fundamental lack of mutual trust between large retailers and their customers.
- Chains do not trust their customers to stay loyal without tricking or buying loyalty and
- The consumer group Which? slammed chains for their ‘confusing’ pricing.
Something’s gotta give. When you need an advanced maths degree to walk through a store and you need a calculator to figure out if you are really saving money because, like Pavlov’s dog, you are fixated on a specific coloured sticker thinking it must be a bargain, you are often set up for a cruel fall.
Re-reading Stew Leonards Book ‘My Story’ for the 5th time uncovered a number of great ‘Stew-isms’ that so many companies could use tomorrow.
- Take care of customers and they will pay the price for REAL quality.
- Cut the number of items and mark them clearly.
- “If you are not directly serving the customer, you’d better be working FOR someone who is.”
- Why do customers drive 100 miles to visit my store(s)? Because everyone here makes them feel welcome.
- EVERY morning EVERY manager reads and actions EVERY customer improvement suggestion or complaint and figures out not if it is legitimate, rather how do we action this to serve?
If the customer takes the time to write, that needs to be acknowledged and acted upon by you. Immediate, short and long term actions are communicated because Stew knows his customers are the most important thing in his business. His store once made the Guinness Book of World Records for the most sales per square foot with only about 2,000 items when competitors have 30-50K items.
So what do you need to do?
- Stop ‘mapping the customer experience’ like some mystical compass coordinate.
- Stop focusing on your net promoter score without understanding what the qualitative experience is for your customers.
- Stop taking their custom for granted or trying to buy their loyalty.
- Do start treating them like they are the most important thing in your business.
- Do talk with them and start asking them what they would like to see.
- Do take a real interest in their needs and concerns.
- Do listen attentively vs waiting for your turn to talk and defend yourself.
- Do apologise, profusely and come back to them.
Stew instructs his managers to let the customer take their order home when they forget their wallet. He trusts people to return and has not once lost. Most return within an hour to pay. How many UK retailers would trust their customers to do that?
Would you do that? Why not?