RocheonRetail - Top Three Blogs for August

There is an Elephant in the room!

Have you checked the Culture of your company lately?

Is it the Carrot or the Stick for Customer Retention?

Awesome Customer Experience at Home Depot!

It is Sunday afternoon and as usual a run to a DIY was required. I decided to go to Home Depot because it was closer than Lowe's. I went to get a refill on our propane tank for an evening barbecue, but being the compulsive person I am I decided to first walk the store to see if I could find anything interesting. Do any of you do this? I ended up purchasing a number of items including light bulbs, cleaning solutions, a double package of this citrus air freshener made from real citrus oils and my propane refill. I also encountered a number of Home Depot employees who were very engaging and going out of their way to help me. Strange I thought, most of the time I cannot find anyone and when I do they are looking at their feet as to not make eye contact with me. I wondered if this was a new mandate from headquarters focusing on customer service. 

As I got close to the checkout all of the lanes had people in them so I started to calculate which one I should go to for the fastest exit. I still needed to exchange my propane tank which was in my car. Just then a smiling woman stuck her head out from the self-checkout area and waved for me to come to her. Great but can she transact the propane exchange I thought? I asked right up front if she could do a propane exchange at self-checkout. “Of course we can” and she started scanning my items. When she scanned the double pack of citrus air freshener she seemed dumb founded and went to the center sales desk to confer with two of her associates. It seems she got a message that stated “DO NOT SELL THIS ITEM”. Sir I am sorry but we cannot sell this to you. I am sorry. I then said to the three sales associates, “you mean to tell me Home Depot will not sell this product”? I was ready to get a little upset when, Linsey (that is how she spelled it) the front checkout manager said “sir we cannot sell you this as there might be an unsafe reason for us not selling and this product could be in the process of recall”. I hope you can understand.

Here comes the amazing thing Linsey did. She asked one of the other sales associates to go back to the place I got this and get two other similar citrus air fresheners. I thought this will be interesting and what will she charge me? To my surprise Linsey gave me the two bottles of citrus air fresheners which I knew were more than double what I would have originally paid. Please take these for your inconvenience and drive your car up front so we can exchange your propane tank. Needless to say I complimented Linsey and the other two sales associates for making my Home Depot excursion awesome.

I have always used Home Depot as an example of poor customer service these past few years. When something like this happens I feel compelled to SHOUT about it. Home Depot please keep doing what you’re doing and I will always go to Home Depot for my DIY needs!

It is ALL About the Customer!

My favorite subject is the customer. I have spent many years in the retail IT business, but most of what I talk about is my observations about retail from a consumer point of view. What makes me qualified to blog and consult isn't my 30 years in retail IT; it is my passion to look beyond the hype questioning fact from speculation.

My belief is you do not need tons of supporting statistics which I also question as much as you need a realistic and common sense approach to what is going on in retail and looking pragmatically at where things can be improved. For example, I state the ability to win and retain customers is actually a very simple concept based on human behavior. Customers all want to feel special and get a great deal. Think about what great customer service is after all? Making you feel good! Feeling like you got a great deal is icing on the cake and is generally derived from thinking you have some inside track.

Things like mobile payments are now being seriously questioned as valuable. It has always been something I thought was a solution looking for a problem. What problem are mobile payments solving? In many ways I like the fact that I have this plastic card with a mag stripe (now with my picture on it). I think that it works great, holding and controlling this piece of plastic works well for me especially since I am able to do debit and credit. What would I benefit from having a phone with NFC (near field communication) I could wave over a device instead of swiping a card? It seems to do the same thing except by using my phone you now take away my plastic card. I am sure this can be hotly debated but that is how I see it. Price checking in a store maybe a good idea with all the talk of show rooming, but I believe most people do their research online first if they are after a particular product solution. I know I rely on those reviews and ratings on the internet and that has worked very well for me. Is show rooming really the problem or is it the lack of service you get typically in a store that makes the perceived extra cost of buying not worth it? I do my price checking on the web at home! RFID for retail has been another great way retailers were going to solve the shrinkage (theft) problem and also improve the management of their inventory while at the same time removing out of stock situations. I am still waiting. Some retailers are using RFID for clothing, but I am not sure there is a mass run by the apparel industry to put RFID tags on all garments coming from manufacturing.

There are many more examples of these creative solutions trying to find a problem. This is not wrong or right and actually is a very good thing. In the final analysis the market will sort this out with their wallets. It has always been that way and always will. It is looking at this innovation and really thinking about how it solves or enhances how a customer feels special and thinks they just got in on a great deal is what is important. Will mobile payments on the phone do that? There are in fact many solutions out there that will help to significantly improve that customer feeling. Believe it or not, cloud based technology that provides solutions for hiring great people, training those people and even giving them tools to cooperatively schedule their time on a mobile phone are great examples of innovations that work. You see your people are still your greatest asset!

Is it the Carrot or the Stick for Customer Retention?

I love to hate airlines. I feel like an indentured servant always working off my rewards and benefits. Airlines are all the same to me and I have clawed my way to gold or platinum on every one of the major airlines over the last twenty five years. I know people that rather than taking a direct flight with a non-affiliated airline for one hour, will take four hours with a connection just to get the points from “their” airline. I believe airlines tend to stay away from the word loyalty and use ambiguous names like Medallion or Advantage. I don’t feel like I am being rewarded because I flew with their airline. I feel like I had to pay penance to get the service everyone should get, or should they? I guess everyone cannot get on the plane at the same time?

Retailers generally do not have the luxury of treating their customers badly and then making them earn the right for good service by the spending of more money. Do you think they would if they could? Fortunately retailers must earn your retention by doing the many things that make you feel special and have you believe you got a deal. Retailers pretty much have to use the carrot and not the stick as in the case of the airlines to grow their business. Even though Amazon or Wal-Mart are huge,they know they can be displaced tomorrow by some new comer or competitor. This is healthy and important. No matter how much we believe a retailer has a hold on us, there are always multiple choices. In the case of airlines you do not have that many choices and those choices are getting less. Think about the upcoming American and US Airways merger?
Will that make services better and prices go down?  Because of this carrot or stick approach which is created by the economic theory of scarcity, we can look forward to a future of ever increasing better experiences in our daily shopping.

There is a clear financial motivation for a retailer to provide you with great service! The great services come in many flavors and are the primary differentiators of their business. This is why the omni-channel, mobile, customer-centric initiatives are so critical to a retailers future. Besides having highly trained and passionate employees (all employees not just sales associates) technology can also be used to remove much of the friction in the sales process. Why is it important that I can find a product on your website and find out if my local store has it in stock? Because if you don’t your competitor will! There are numerous examples like this that a few years ago were rare, but now are expected. These new expectations will continue to grow and it will be great for the consumer.

Now comes the hard part. As a retailer how do you do all of this exciting stuff and still make a profit? No simple answer here and the answer is some retailers will fail. This is the cycle! As a retailer you must go back to your core and first make sure you have a solid foundation with your leadership, vision and culture along with your products and services. This is a continual re-examination which requires commitment. The foundational part of your retail business which is dependent on the carrot and not the stick is what you build all of this technological innovation on not the technology itself.

Lastly seek outside help with technology. You are not in the business of creating technology solutions and if you are you should look hard as to why.   Amazon and Wal-Mart might be able to pull it off, but certainly not a mid-market retailer. Your leadership team must have an objective perspective and proven advice when considering the purchase of technology to advance your retail business. You cannot do it alone!

RocheonRetail - Top Three Blogs for July

“Loyalty? If you want loyalty buy a dog!” Part ll

http://rocheonretail.blogspot.com/2013/07/loyalty-if-you-want-loyalty-buy-dog_9.html

Are you missing the Art of Customer Engagement?

http://rocheonretail.blogspot.com/2013/07/are-you-missing-art-of-customer.html

“Be careful what you ask for, because you just might get it!”

http://rocheonretail.blogspot.com/2013/07/be-careful-what-you-ask-for-because-you.html

There is an Elephant in the room!

We hear everyday about all the great innovations that are available today and the need for retailers to be “omni-channel” ready. The truth is most retailers would just like to get out of the twentieth century! What I see is that most retail businesses (especially mid-market) are still being run on legacy systems. What that means is the companies information is all over the place and getting a single view of your information especially in real-time is almost impossible. Over the past five years or so as I have talked about what is needed to be customer-centric with most retailers telling me they have bigger and basic issues to solve. What is this? I hardly hear much about these kinds of basic issues needing to be resolved in the press or blogs? All I hear and see is the need for omni-channel, mobile, smartphone payments, etc.  The past few years have been filled with a significant consolidation in retail where the successful retailers and VC’s have been buying up slumbering businesses that did not make it through our last economic downturn. This is great for those companies who are doing the acquiring, but the problem it also creates is how do you put all these disparate enterprise systems together to run one efficient business?  Not only are many retailers dealing with their own antiquated IT systems, but also in in light of these acquisitions, the management of multiple antiquated systems. These retailers are scrambling to bring all of their disparate information and processes together so they can respond to the needs of a complex and highly connected set of requirements for today’s market. I know there are many retail companies out there that have overcome these issues, but not as many as you may think.

A “house of cards” is one way to characterize this situation. It is also further injurious because quarterly results are driving decisions for revenue and profit, not a long term vision.  This is the “elephant in the room”. How do I upgrade and get my infrastructure and applications into the twenty first century and not kill the company? Is the answer to this problem the ambiguous solution called the “Cloud”? I think so if you believe and trust in the notion that someone else can be responsible to make sure your system never goes down, provides high speed performance, ensures your information is secure and gives you control over how you use it. When speaking to retailers many want to get out of the IT business, especially mid-market companies. By going to SaaS based systems you can move from a capital intensive and internally complex business model to one where your costs are now operational, predictable and much simpler, sort of.

So is this a good idea, outsourcing your systems and applications? The answer in my opinion is yes, but only if you do it in a thoughtful and cadenced march having a very precise map to where you are going. The challenge is you can never give away control. In the past you had to rip and replace to go from an old system to a new one (think ERP). Now with these “Cloud” based offerings you can off load applications by simply shutting the old ones down and turning on the new ones, discarding your old hardware investments. This journey is obviously not quite that simple and does take a lot of time. The good news is you prioritize and choose what you want to shut down and when.This may be the only reasonable and fiscally responsible way to go.

I believe this is the future and that over the next ten years you will see service based business solutions becoming mainstream for most everything a retail company does. That is precisely why the Microsoft’s, IBM’s, Oracles, SAP’s, etc. are investing billions in this infrastructure.

Have you checked the Culture of your company lately?

“Natural law, or the law of nature (Latin: lex naturalis), is a system of law that is purportedly determined by nature, and thus universal.Classically, natural law refers to the use of reason to analyze human nature—both social and personal—and deduce binding rules of moral behavior from it” – Wikipedia. It is a natural law that leadership controls culture. We can look at history to watch the rise and fall of companies driven by focused leadership or the lack there of. Either direction this natural law does not care which. We look to our leaders for vision, inspiration and direction. Who are we? What do we stand for? What makes us great? Why are we going to win?

So in retail right now those companies who have the leadership to understand how to create a unified company vision, to inspire passion and innovation and to show the way will survive and thrive. It does not matter if you just implemented an omni-channel solution and can now buy on the web and pick up at the store. It does not matter if you are on Facebook, Twitter and Pinterest.  And it certainly does not matter that you have a BIG data warehouse crunching numbers all night trying to figure out how to get a customer to buy something! People make up a company and no matter how you are organized you must make certain your culture is aligned with your vision? Do your employees even know or care about you companies vision? This is core. I have never seen or even spoken with an Amazon employee. The main reason is everything seems to work. But I know even by just using their web site there are people inspired to delight me and my experiences. How do I know this? Because I see it in my experiences and I know from Jeff Bezos down through his entire team everyone is about the customer and their lifetime relationship with Amazon. Will Jeff continue to drive and grow this culture or will it fade away as he works on his space ships? Leadership and culture will make sure Amazon thrives or not even if the government taxes the internet.   

People buy from people. Trust is key and your people in your store, call center or even in some back room cubicle doing accounts payable, must be authentic and sincere about their relationship with the customer. You cannot dictate culture. It is derived as an output of leadership and transparency of a shared vision. Now then, you must obviously ensure you have the relevant and valuable products, services, technologies, etc., but without a pervasive and authentic culture producing a memorable customer experience at that critical point of impact you will not get to the top.

What this means is that every company can focus and should focus on the mechanics of execution, but examination and continued reaffirmation of your culture must be your companies number one priority. Your people must be motivated to seek out and solve problems on their own as part of your culture. It all starts at the top. Look there to start!