Archive for December, 2008|Monthly archive page
“The only important thing is that we make the children happy”. It’s one of the most memorable lines from the 1947 classic, “Miracle on 34th Street”. Replace “children” with “customers”, it is also an idea that has unfortunately faded from the fabric of American retail. In the film, the Macy’s Store Santa makes that important point to an incredulous mom after telling her that she could get the fire engine her son wanted at a competitor. Mom couldn’t believe that Macy’s would send customers to another store.
Fast forward to today and imagine Macy’s or just about any other retailer helping a customer find the thing they are looking for by pointing to a competitor. It might occasionally happen, but it’s certainly not Standard Operating Procedure. To do so would reflect badly on the store’s merchants and send business to the enemy, right? The retail would much rather send a customer away unhappy than send them to a competitor. But perhaps the retailer’s perspective is different from the customer’s? Perhaps in the customer’s eyes, helping them find what they were looking for, at a competitor no less, was an unexpected “surprise and delight“. Might that not earn a few loyalty points?
A few years ago, a major consumer electronics retailer was testing various innovation ideas in the Boston area. One of those ideas was to place a “concierge” near the store entrance with the objective of improving close rate. The job had two roles:
- Greet people coming in and direct them to destinations in the store. This wasn’t just directing customer to “go to Aisle 5”. The concierge was trained to engage the customer to learn why they had come to the store. If “assisted selling” was involved (e.g. HDTVs, digital services), they would escort the customer to that part of the store and introduce them to a salesperson.
- Engage people on the way out. If they had made a purchase, thank them. If not, ask to assist in locating the item. The concierge desk had a couple of internet terminals and the concierge would help the customer find the product they wanted on the retailer’s website. They were also instructed to help the customer search for other retailers who might carry the product if they didn’t carry it!
The concierge idea was only tested for couple of months and in that time, the close rate improved, but not enough to offset the cost of the position. With that being the company’s determining success metric, the idea wass killed. The test also included a survey of customers to get their feedback on the experience and the results were impressive. Roughly 85% of the 1200 customers surveyed felt that the concierge improved their shopping experience and, more importantly, The same percentage said they were likely to recommend the retailer to friends based on their interaction with the concierge.
While the test did not generate the targeted close rate numbers during the 60 days it was operational, customers really liked it. If the company had run the test for 6 months or a year, would the close rate improved? Who knows, but I’d argue that the improved customer experience in those stores would have resulted in higher traffic over time and that’s every bit as important as close rate.
So why are retailers so focused on the transaction and not the experience? Because it’s the fastest thing they can measure. Unfortunately, a change in the experience may not lead to improved business in a 60 day time frame and most retailers don’t have the patience or the confidence to invest in an improved experience for the long haul. Paradoxically, failure to make customer experience improvements may prove to be the downfall of a many retailers in the next few years.
Now that the turkey and pies are gone, I guess it’s time to jump back into the blog. Recapping from my last post:
- Companies who differentiate on customer experience are more likely to succeed in the face of shrinking margins and discretionary spending.
- A highly engaged customer-facing workforce will deliver a consistently better experience.
- An “Open Organizational Culture” is necessary to drive employee engagement.
So what exactly is an Open Organizational Culture? Fundamentally, it’s one that fosters transparency and accountability to its employees, customers and the public. This is in contrast to traditional organizations that operate in a hierarchical model with an authoritarian culture that seems to foster privacy or secrecy.
An Open Organizational Culture has several unique characteristics:
Transparency and Open Communications
Leaders of high performance organizations nurture a culture that allows for people to question openly and have honest dialogue. They create a climate of candor throughout the organization. They remove the organizational barriers — and the fear — that cause people to keep bad news from the boss. They understand that those closest to customers usually have the solutions but can do little unless the organization encourages open discussions about problems. When people can raise objections when when necessary (and without reprisal), it paves the way to higher engagement.
In an Open Organization, the leader’s beliefs and values create the direction and the boundaries that people need to perform well. The values are clearly defined & communicated, and reviewed periodically for relevance. More importantly, the organizations practices, systems & processes are clearly aligned with the values and management ensures that employees’ day to day experiences are consistent with the values. You can quickly identify an organization that does not adhere to its stated values by gauging the level of cynicism amongst the staff. Open Organizations really walk the talk and it is reflected in their employees’ attitudes.
Empowerment in Organizational Culture
In “Good to Great” (2001) Jim Collins asserts, “good-to-great companies built a consistent system with clear constraints , but they also gave people freedom and responsibility within the framework of that system.” Open Organizations not only actively engage members of the workforce, they rely upon their contributions to on-going improvement. Driving Empowerment and responsibility down to the lowest appropriate levels within the organization, especially to the customer-facing members, has many benefits:
- It provides employees the opportunities and incentives to shape the company experience. Encouraging involvement in this way fosters a feeling of ownership on the part of employees.
- It promotes organizational creativity which leads to innovation. As I stated above, customer facing associates are typically the ones with the best insights regarding the customer.
- It allows decisions to be made without unnecessary or authoritarian approval process which can lead to a more responsive organization.
- Encourage continuous learning which in turn improves decision making.
So in summary, an organization’s culture is shaped by and reflects the values, beliefs, and norms held by its founders, leaders, and organizational members. In Open Organizations, values are aligned and honored, transparency and open communication are the norm and decision-making is informed by a process of continual learning. Cultures that embody these characteristics demonstrate them in the organization’s structures, standards, policies, and systems. They shape the work environment, staffing practices, and organizational performance, all of which influence the employee experience and by extension, the customers they serve.
If this sounds like your organization, great. I’d love to hear about it. If not, I’m curious about that things you see are barriers to getting to an Open Organization.
[image: Open 24 Hours on Houston Street]