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Case Study

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A west-coast electronics and home-audio chain has experienced a five-year slide in market share and same-store sales.

Context

A west-coast chain of consumer electronics stores was steadily losing their share of what had been a duopolistic market. They experienced declining sales of 8 percent over a period when the overall consumer electronics market was expanding at a rate of approximately 10 percent and suffered declining same-store-sales in each of the five years prior to our work with them. Same-store-sales had fallen 8 percent in each of two prior years.
 

Study Approach and Key Findings

We conducted 100 interviews with Customers at each of the 200 locations in the chain. To qualify for the survey the Customer had to have spent a minimum of $50. (We wanted to avoid excessive interviewing of low ticket Customers, e.g. those that had purchased only batteries for a radio.)

Our research indicated that there were three drivers that created Highly Satisfied Customers:

1. Greet the Customer when they enter the store
2. Speak to the Customer in terms they understand
3. Speak knowledgeably about the products and services you sell

We linked the execution of these behaviors to key financial outcomes such as ticket average, same-store-sales growth and profit growth. We also demonstrated that store managers needed to stay in place for at least two years in order to have their associates execute these behaviors effectively on a consistent basis.
 

Key Success Factors

From the start of this assignment all the way through its conclusion management created a series of opportunities for us to get in front of store managers to explain to them the importance of customer satisfaction and the need to focus on converting Satisfied customers to Highly Satisfied. Even before our initial results were disseminated, managers had come to believe that Highly Satisfied customers were all that count and had taken subtle steps to do their best to ensure that their customers were Highly Satisfied. In addition, once our findings on the importance of maintaining manager stability (and reducing associate turnover) became available the Human Resources department put into place a series of initiatives designed to accomplish these objectives.
 

Results

Our results were disseminated across the organization and we held two meetings with all 200 store managers to explain our findings and answer any questions they had. We also worked with store managers to design a store report format that would display each store’s survey results in an easy-to-understand report. That year the company reported an increase in same-store-sales of 3 percent. This represented an 11-point reversal in sales trends after 5 straight years of decline.

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