A national big-box retailer is embroiled in a three-way competition for market supremacy
In 2000 there were three co-equal retailers serving the office supply and products space. The three were largely undifferentiated in terms of shopping experience and in fact their three corporate logos were nearly identical. Our client was seeking gain competitive advantage by differentiate themselves within this homogenous marketplace.
When we began working with this company their retail service delivery model was known as “Read the Need.” This meant that when a customer entered the store they were not to be contacted by any store employee. They were to be left alone to wander around the store at their leisure. If, during the course of this wandering, the customer were to evidence a need or appear to want to ask a question, a store associate was expected to “read that need” and respond.
Stated somewhat differently, their primary way of interacting with Customers at Staples was “reactive,” not “proactive.” The idea that an employee would engage a Customer on his or her own without any sign from the customer was considered completely unacceptable.
In addition, management viewed store associate turnover as a positive force. The prevailing point of view was that turnover did not affect retail operations and it had the virtue of keeping down labor costs because employees who turned over did not build up significant levels of seniority.
Study Approach and Key Findings
We began our study with a Key Driver analysis that surfaced four critical issues that built ongoing Loyalty among Customers:
1. Friendly Associates
2. Helpful Associates
3. Ease of Finding Merchandise
4. Speed of checkout
Around this time our approach to conducting Key Driver analyses changed, as we began to identify the specific behaviors that customers associated with these Drivers. For example, we learned from customers that “friendly” associates were people who welcomed them when they came into the store. As a result of this, these four Key Drivers morphed into three specific behaviors:
1. Welcome the customer when they enter the store
2. Walk them to the product they want to purchase
3. Make sure there are less than 3 people in line at each
A second key advance in our approach was the linking of these behaviors to actual financial outcomes. Customers were invited to take our surveys through a statement printed on their register receipt. To participate in the survey they had to key in a transaction number on their receipt that identified them as an actual purchaser. This identification number allowed us to link the customer’s survey response to their actual purchase behavior as taken from their register receipt. This showed us, for example, that customers who were walked to the product they wanted to purchase spent nearly 15% more than those that were not.
This was a major advance because it allowed us to “monetize” store labor—rather than regarding it as a mere line-item cost, this retailer was now able to measure the impact of store associate behaviors on actual customer spending. As a result, they became more aware of the importance of their labor staff, and expanded their Human Resources department enormously in an effort to keep this staff happy and in place.
By moving from broad Satisfaction statements to specific behaviors we were also able to use our results to dispel many negative beliefs that store associates shared about their customers. For example, “Read the Need” was based on the idea that customers wanted to be “left alone.” Our results clearly demonstrated that people who were greeted were more satisfied and spent more money than those who were not greeted. Once this became apparent and broadly accepted, “Read the Need” settled into the horizon.
During the course of our work the company moved well ahead of its competition in its retail category. It now dominates in a space where it was originally just one of three players.
By identifying a handful of simple, discrete behaviors that had the greatest impact on customer satisfaction we were able to create a sea-change in the organization’s approach toward both its customers and staff. Creating Highly Satisfied customers is not some complex activity that is well beyond the reach of mere mortals. It does not require superhuman intuition or heroic acts of selflessness. All you need to do is execute a few very simple behaviors that customers truly value. Management needs to keep the message to its associates simple and relatively easy to execute.
Interestingly, we found that appealing to the Satisfaction motive was a stronger motivator of employee behavior than when we spoke in financial terms. For example, we found that customers who received a suggestion to purchase a product that “complemented” what they had just purchased (e.g., Mr. Smith, would you like to purchase a case for that new laptop you just bought?) were both more satisfied than those that did not get such a suggestion and they spent 40% more as well. When we told store associates that making suggestions such as this increased ticket average we saw no increase in the percentage of customers who reported that they had received a suggestion. However, when we went back and told them that making these suggestions increased Customer Satisfaction by 20 percentage points we noticed that more survey respondents reported receiving a suggestion.
We also learned that the Human Resources department needs to work hand in glove with store operations. We were lucky to form a strong bond with the head of Human Resources for store operations, who believed in our work and argued strongly for reducing turnover and maintaining manager stability. As noted above, this represented a strong departure from the point of view that prevailed prior to our involvement at the company.