Thursday April 7, 2011
The results of a new study on customer experience, service, and satisfaction released this week revealed that Amazon (AMZN), Kohl's (KSS), Costco (COST), and Lowe's (LOW) are the retail companies that are delivering the best customer experiences, in the opinion of their customers. In fact, the U.S. retail industry as a whole knows how to create a good customer experience better than any other U.S. industry, according to the 2011 Temkin Customer Experience Rankings. Nine of the top ten companies in the U.S. that create the best customer experience are retail industry companies, the survey said.
One big surprise in this particular customer experience list is the ranking of Apple (AAPL). Considered to be a consumer favorite, Apple customer ratings in this particular survey led to Apple being ranked #79, behind retail companies that are not generally considered to be particularly customer-centric, like Kmart (SHLD), Gap (GPS), and OfficeMax (OMX), and also behind direct competitors like Best Buy (BBY) and AT&T Wireless (ATT).
What makes an outstanding customer experience? In my experience, most retail leaders aren't all that clear with their answer to that question. Customers are clear about it, but the employees that are responsible for creating the experience are not so clear. Behind every great customer-centric retail company is a customer-centric mission statement.
Customer Service Mistake #1 - Assuming that Unhappy Customers Will Complain
I was engaged in a discussion recently with a client about changing the way they deliver a certain product to their customers. What I love-love-love about this client is that they always-always-without-exception-always ask the question "How will this effect the customer experience?" whenever they contemplate a change. As customer focused as the entire team is, I was surprised that this statement made it into the conversation... "Nobody's complained about it yet, so it must not be annoying."
One of the biggest mistakes that retailers make is assuming that unhappy customers will express their unhappiness in the form of a complaint. Even the most customer-centric companies often make this false assumption. Relying on customer complaints too much can sabotage even exceptional customer service-oriented businesses.
For example, the other day I was sitting in a fast casual restaurant when a couple of employees came out from behind the service counter to tidy up the dining room and restock drink and condiment stations. Every time one of those employees would grab supplies from a certain cabinet, the cabinet door would slam shut very loudly. It was so loud that it caused a woman in the dining room to jump in her booth - not once, but several times. In fact, the cabinet door slammed 12 times in less than 15 minutes. (Yes, I counted. Yes, I know I'm a freak.)
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The two employees were completely oblivious to their own behavior because they were completely oblivious to the customers in their dining room. They were completing their tasks with efficiency, but their was no acknowledgment that there was anyone else in the room except the two of them. Since the customers in the dining room were not anywhere on their radar screen, they obviously thought their banging and loud personal conversation were invisible to the customers too.
That restaurant received no cabinet-banging complaint from me that day, but I assure you that it was quite annoying to me and to the other six people around me who shifted their focus away from their meals to give a disapproving glance to the disruptive stocking duo.
When I worked for Disney, they made an assumption about customer annoyance that was completely opposite from most companies. Disney employees in all positions were taught to assume that if there was even the slightest possibility that a guest would be annoyed by something, then assume that they would, in fact, be annoyed, which was completely unacceptable. It was the job of Disney employees to proactively identify potential annoyances and find a way to eliminate them before they created a diminished experience for even one guest.
Dealing with customer complaints was not supposed to be a part of the daily job at Disney because preventing customer complaints by eliminating the root cause of potential annoyances was. By the time a guest had a frown on their face, it was too late. By the time a guest was so dissatisfied that they would complain, several employees had failed in their proactive annoyance-elimination duties, and they would all be held accountable for it.
This is not about a banging cabinet. This is about the attitude and outlook that would allow a banging cabinet to be okay. If that's okay, then what other "small" annoyances are okay too? Dirty silverware, broken locks on the restroom doors, general lack of attention to the cleanliness of the dining room? This restaurant regularly has all of those annoyances. But as long as customers aren't complaining about it, it must not be all that annoying, right?
Wrong.
Later that same day, I was jogging through a park when someone started jogging beside me, goading me to run faster. To my surprise, it was one of the employees of this same restaurant. Vicky acknowledges and recognizes me every time I walk in the restaurant door, and she acknowledged and recognized me in the park that day and gave me a big sweaty hug. (I was the sweater, she was the hugger.)
Vicky is an employee who gets what a customer experience is, and she is constantly looking for ways to make the customer experience more pleasant. Vicky has never banged a cabinet and if she was working that day, I'm pretty positive that she would have told the stocker twins to stop doing it too.
Last week after another run, I pulled into a Hardee's drive-thru to get a drink for the ride home in rush hour traffic. After placing my order, I pulled up to the window. There were four people standing on the other side of the drive-thru window, all with their backs to me. I rolled down my window and stuck my hand out with cash in hand and nobody turned around. I started to wave my money in the air while they continued to talk amongst themselves and ignore me for slightly more than four minutes. (Yes, I timed it. Yes, I am a freak.)
If I had no interest in the art of customer service, I would have driven away without my order. As it was, I waited it out just to see what would happen.
When the mini-meeting finally started to disperse, one of the employees opened the drive-thru window the first thing I heard from one of the women who still had her back to me was "That's the biggest load of crap I've ever seen."
It was a perfectly timed expression of my sentiments in that moment!
I was SO annoyed with that Hardees quartet that I did want to complain that day. And I might have, if not for the fact that two of the four people who had thought it was okay to leave me sitting in the heat burning my $3.67 per gallon fuel while they finished their ultra important conversation were obviously supervisors.
So, I didn't express my annoyance in the form of a complaint. Instead I made the decision not to pull into a Hardees - any Hardees - again, unless I am dehydrated to the point of unconsciousness.
When you turn your back on your customer experience, you can except that your customers will return the favor and turn their back on your business.
By the time a retail chain notices that their customers traffic has slowed down, it's too late to find out what annoyances drove those customers away. And then all you can do is assume that the root cause of your revenue decline must be the economy, the job market, the competitive environment, the high gas prices, the weather, or some other convenient excuse-of-the-day.
So the morale of these stories - and millions of other customer service stories that occur every day - is that relying on unsolicited customer complaints as a measure of customer satisfaction or dissatisfaction is a set up for failure.
If you really want to know what your customers think and feel, you have to ask. But if you're not willing to do something about what you hear, don't even bother to ask because your lack of response will be even more annoying.
Your customers probably won't tell you it's annoying to be ignored, but stare at some bums through a drive-thru window for a few minutes and you'll have a more clear understanding of what your customers feel like when you go about your job without any regard for their experience. After that, the the answer to the question "What makes a good customer experience?" will be a bit more clear along with the benefits of some good annoyance prevention policies.
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Customer Service of Specific Retail Companies:
Thursday March 31, 2011
There were few surprises for the U.S. retail industry when the Fortune 2011 World's Most Admired companies was recently released. Fortune Magazine greatly "admired" Apple (AAPL), Google (GOOG), Amazon.com (AMZN), McDonald's (MCD), Wal-Mart (WMT), and Disney (DIS) last year, and those same six companies and their retail operations were admired again in 2010.
Of all the ways that U.S. businesses are measured and compared - and there are plenty of ways that U.S. businesses are measured and compared - this is one of the oddest. First of all, it is difficult to believe that the who are expressing their opinions for this particular ranking list (investors, financial analysts, and executives) sit around and "admire" much of anything. In light of what is actually being scored in this survey, a better name for the list would be "World's Most Seemingly Safe Long-Term Investments."
In other words, given how they innovate, interact with their customers, compete globally, and manage their people, assets and finances, Apple, Google, Amazon.com, McDonald's, Wal-Mart, and Disney are the some of the companies with significant retail operations that are "least likely to make any shockingly stupid business moves that will suddenly tank their business and your stock portfolio." That, of course, is much too long of a name for an annual ranking list. And I guess in a roundabout way there is an "admirable" aspect to the businesses that make the investment community feel safe.
For the 20 companies with global retail operations that were named on the "The 50 Most Admired Companies in the World" in 2011 the designation is significant. It's also equally significant to notice which retail companies don't rank very high on Fortune's 2011 Most Admired list.
Wal-Mart, being the largest retail chain, the largest company in the United States and the company with the largest global sales on the Forbes Global 2000 list in 2010, might also be expected to be found in the #1 position on an "admired" list which reflects the sentiments of the investment community. But Wal-Mart, apparently, is not that admirable, even to those who value the same thing Wal-Mart values more than anything else - money. Wal-Mart hovers around the top ten of Fortune's annual most admired list, but it doesn't dominate the top of the list.
It seems logical that one could assume that the retail chain that holds so many "largest" designations in global business would naturally also hold the top spot on every "best," "most," and "favorite" list. In fact, in all the ways that retail chains are measured, rated, and compared that isn't related to annual revenue, (and there are a LOT of ways that the U.S. retail industry is measured, rated, and compared besides annual revenue), Wal-Mart is the largest retail chain with the least amount of recognition. So, while you can tell a lot about the mission, vision, and values of a retail company by the accolades it is awarded, you can tell a lot about the mission, vision and values of the Wal-Mart chain by the recognition that it doesn't receive.
Here is a list of some of the "best," "most," and "favorite" industry recognition that Wal-Mart did not receive in 2010:
- NRF Retail Innovator of the Year, 2000 - 2010
- Best Emplouyers for Diversity 2010
- Fortune Best Company to Work For, 2006 - 2010
- World Congress Responsible Retailer of the Year
- EPA Climate Leaders Program
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While it is #1 on the Forbes 2000 list (financial), it is #115 on the Forbes Most Reputable Companies list. Only Wal-Mart's California and Texas stores are recognized for their Green Power consumption, and Wal-Mart ranked #51 on Newsweek's latest Green Rankings list. In environmental impact measurements, Wal-Mart lags far behind much smaller retail chains like Staples (SPLS), Starbucks (SBUX) , and Kohl's (KSS).
Wouldn't it be nice if one of the largest employers in the world was also one of the Best Companies to Work For? Wouldn't you expect that the company that takes in the most revenue in the U.S. would also be the most generous charitable donor in the U.S.? Wouldn't you hope that the company that was most able to have environmentally friendly buildings, and energy consumption actually would?
So basically what we learn about the Wal-Mart corporation from the most prestigious ranking lists is that Wal-Mart knows how to successfully manage a global supply chain, sustain a respectable profit margin, operate in global environments, and move low-priced cheaply manufactured merchandise around planet earth. These are not small accomplishments, and they deserve to be recognized. Isn't that plenty for a global giant like Wal-Mart to master?
Many - mostly those who profit from Wal-Mart's profitability - would argue that retail businesses exist to expand and grow and make as much profit as they can and if they can do that, it is enough. Why do you need to worry if you're among the "Most Admired Companies" when several of the "admired" companies have annual revenue that is lower than Wal-Mart's quarterly numbers?
The tangible value of things like exemplary environmental responsibility, employee relations, and reputation, is difficult to quantify, but the lack of these things shows up in some very tangible ways.
The bottom line about why Wal-Mart should care about being the "best," "most," or "favorite" at some aspect of retailing that doesn't involve revenue and profits is because it can. Sam Walton cared about the "how" of his business, and I'm not so sure he would feel like his legacy is conducting itself in the highest and best manner that it could. If you are the one retail company in the whole world that has more resources than any other retail company in the whole world, it would be great to know that you thoughtfully contribute a respectably proportionate amount of those resources to the well-being of more than your top executives and shareholders.
That's not just good business, that's good beingness.
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Tuesday March 15, 2011
The aftershocks of the Japanese earthquake reached the shores of the U.S. today as investors and financial analysts started assessing the damage that Japan's devastating earthquakes and tsunami would have on U.S. businesses. In the first day of trading after Japan was ravaged by earthquakes and tsunamis, shareholders of all sizes were selling off stocks of the American companies that were predicted to suffer the worst collateral damage from Japan's natural disaster.
Included in the post-earthquake stock sell off were U.S. luxury brands like Coach (COH) and Tiffany (TIF), both of which derive as much as 20% of their sales from their Japanese retail operations. Besides the Coach and Tiffany stores that were physically affected by the earthquakes and tsunami, investors were worried that consumer sentiment in Japan would plunge in a way that is similar to how American consumers responded after Hurricane Katrina and 9/11. It's easy to understand why high-priced purses and diamonds might not be high on anyone's priority list when they're distracted by constant news reports about death, destruction, and nuclear meltdown.
U.S. luxury retailers have been singled out so far, but Coach and Tiffany are definitely not the only members of the U.S. retail industry that will suffer from Japan's natural disaster.
The Gap (GPS) operates 131 namesake stores and 29 Banana Republic stores in Japan, and at least 6 of those stores were physically located in the hardest hit Japanese cities and prefectures. American Apparel (APP) has 6 stores in Japan, Apple (AAPL) has 7 stores in Japan, and Abercrombie & Fitch (ANF) has two stores in Japan. It won't be a surprise to hear references to the earthquake and its negative sales impact in future conference calls.
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Costco (COST) has nine warehouse stores in Japan, and Wal-Mart (WMT) operates 414 retail stores in Japan, including namesake hypermarkets and Seiyu supermarkets. In contrast to high-end and luxury retailers, it's easy to see how Wal-Mart and Costco might actually benefit as displaced victims have to relocate and rebuild.
Toys 'R Us (TOY) has 45 stores in Japan, and L.L. Bean has 20 Japanese stores, all of which could be negatively impacted by Japanese citizens who are not in the mood to hike and play.
The company with U.S. ties that will undoubtedly be the most devastated, however, is Seven & I Holdings, the parent company of 7-11 Inc. in the U.S. There are 13,232 7-11 stores in Japan , and about 25% of those are physically located in the cities and prefectures that suffered the most earthquake and tsunami damage. Surely Seven & I lost a significant number of locations, and for those stores that are left standing, their supply chain and customer base will surely be severely compromised.
While it is somewhat heartless to worry about the sales of luxury leather, and Japanese slurpees in the midst of tragic human suffering, life is business and business is life. And in case we all need any more gentle reminders, the Japanese disaster makes us all mindful that whatever happens anywhere on the globe affects everyone on the globe. There are many things we'd like to forget about the Japanese earthquake and tsunami of 2011, but the responsibilities and interdependence of global citizenship is not one of them.
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Tuesday March 1, 2011
If the Oscars are synonymous with fashion trends and style, and jcpenney (JCP) has been the only retail sponsor of the Oscars for ten years, is jcpenney also automatically associated with fashion trends and style? It's a mathematical formula that jcpenney has seemingly believed in as Oscar's only retail sponsor for a decade. But if you judge branding success by media coverage, jcpenney didn't win big enough at the Oscars this year to outweigh the bad media buzz that started after the NY Times published an article in early February exposing the retailer's alleged scandalous blackhat search engine optimization (SEO) practices.
Just like the Oscar movie stars themselves, jcpenney is finding out that the public may forgive, but they rarely forget bad buzz. Marketing campaigns are just not as much fun to talk about as someone - or some company - caught in a juicy scandal.
First, let me just say what an odd decision it was for the retailer to start officially referring to itself as jcpenney instead of JC Penney last week. How does the company expect to stand out in a crowded retail marketplace when the company name no longer even stands out in a sentence? I'm just saying.
But that is a different issue altogether for the freshly rebranded jcpenney. The bigger issue before the company is still the SEO accusations. Just how scandalous was the alleged SEO scandal, really?
At issue is the integrity of the Google search results. As an avid searcher and a search engine consultant, I am compelled to ask who is trying to fool who about the "integrity" of Google search results? There is little purity or integrity in Google search results when commercial e-tailing sites are part of the search engine mix.
In the olden days if you wanted information, you went to the library. You went to newspapers for news, and you went to the Yellow Pages for ads. Now you go to Google for everything and information, news, and commercial marketing are all jumbled together. There's no way in that search stew to get a "relevant" search result. Google search results are always polluted by the biggest companies that have allocated the biggest budgets for search engine marketing (SEM).
Every Google search result that returns a for-profit commercial result is more of a "paid" result than an organic result. No matter what combination of proactive SEO strategies a company uses, they paid for them somehow. And if Google expects any company to just sit around and hope that bloggers, tweeters and Facebookers will organically mention their company name and products without the company doing anything proactive to get the attention of bloggers, tweeters and Facebookers, then the Google search engineers are living in a virtual dream world.
In Google's view, the "illegal" and junky links that were hooked up to jcpenney.com skewed the "relevance" of the search engine algorithm, and inappropriately moved jcpenney to the top of Google page one results for search terms like "bedding," "skinny jeans," "furniture," and "samsonite carry on luggage." The fact of the matter is that jcpenney does sell bedding, skinny jeans, furniture, and samsonite carry on luggage. So, what's so "irrelevant" about jcpenney being associated with any of those products?
One of the search terms that the media focused on as being inappropriate for JC Penney was "little black dress." At the writing of this blog, here are the companies that show up on Google page one organic search results for "little black dress," along with the number of little black dresses that they have for sale on the landing page linked to those Google page one search results:
(Those are probably the only unsolicited, truly organic, non-affiliated incoming links those six e-tailers have received this year.)
These are the websites that the Google algorithm tells me are the most "relevant" to me when I'm searching for a little black dress. However, the jcpenney website has 29 little black dresses for sale, so doesn't that make jcpenney.com a more relevant website than Ann Taylor, Boston Proper, and Banana Republic?
Really, if I was standing in any average mall and I was looking for a little black dress, would Banana Republic be one of my top six destinations? Would I look there before I looked at jcpenney? Doubtful. So how come the Google algorithm thinks Banana Republic deserves a spot on page one and not jcpenney?
Reportedly jcpenney currently has no little black dress page one placement because jcpenney - or someone associated with it - allegedly crossed the fabricated Google out-of-bounds line and got manually removed from page one. Google is its own judge and jury with the unbridled authority to decide that the 108 year-old company on the Largest U.S. Retailers list with 29 different style of little black dresses in inventory can no longer have a place in the little black dress page one search results.
Jcpenney's willful or unwitting culpability aside, does it make anyone else uncomfortable that the sole manipulator of the search engine rules also gets to act as its own omnipotent judicial body and unrestrained executioner? I think that it should. The Google corporate autocracy not only impacts a company's revenue stream, it also manipulates the information that is and isn't easily accessible to the world. Isn't that something that Google fought against in China? In ways, Google itself is doing the same thing.
Here's an idea... Why doesn't Google just create a separate commercial search engine and let companies pay their way to the top just like they used to do in the Yellow Pages? It seems to me that has much more integrity than the current cat-and-mouse game where websites work to beat the Google algorithm, and then Google changes the algorithm in response.
The search engine game is just that - a big game. And it's the pursuit of winning that game with its constantly changing rules that created the space for unscrupulous SEO firms in the first place.
This is not to imply that using blackhat search engine strategies is an acceptable business practice. It's smarmy at the worst, ineffective at the best, and it smells of either dishonesty or desperation, none of which are good business practices.
But let's not fool ourselves into thinking that IKEA is a more relevant #1 result for "furniture" than jcpenney. Both sell furniture. And jcpenney has been selling furniture in the U.S. for a lot longer than IKEA, so it seems like jcpenney had dibs on relevancy before IKEA even crossed the ocean. But IKEA can beat out jcpenney for furniture search "relevance" not by having a bigger furniture selection, or better furniture, or by selling more furniture, but by allocating more resources to its "furniture" SEM efforts.
Whether or not Google's search engine game is as relevant as it could be is one issue. The other issue is whether jcpenney knowingly broke the rules of the Google game as they stand today.
It would have been so refreshing if CEO Mike Ullman would have taken the opportunity last week when reporting fourth quarter earnings to address this SEO scandal while he had the attention of the press. By ignoring the issue, he left the integrity of the retail brand that he has been working so hard to transform tarnished.
I believe that a direct denial from the top leader of the jcpenney organization, a simple apology for the bad perception the scandal created, and a plan of action to ensure that it doesn't happen in the future would have laid the whole matter to rest. Perhaps all of that is still to come, but it's unfortunate that a word from Ullman didn't clear the air before the retail chain's "modern, flowy, flirty" spring fashions were broadcast to an international fashion-loving Oscars-viewing audience.
Although it is standard PR practice to disassociate corporate leaders from scandals, Darcie Brossart's public statements as spokesperson for jcpenney are not really satisfying. She's been blaming the NY Times for characterizing the company wrong, blaming Google for not sending an official notification of the alleged SEO wrongdoing, and with the firing of the SEO firm that it has been using since 2004, jcpenney is obviously shifting blame to them.
Ultimately, though, it is jcpenney's responsibility to know what's going on, and exactly what their SEO dollars are paying for. It has been my experience in corporate America that when managers and executives don't know what's going on, it's because they don't want to know. You don't ask the questions that you don't really want to know the answers to because if you don't know, you can't be held responsible. Those are the unwritten rules of the corporate Blame Game.
Taking responsibility seems like a reasonable expectation to have with a company whose founding mission statement was the Golden Rule. It also seems like taking responsibility is an essential step for Ullman, since he has been the leader of the "Winning Together" corporate culture program since 2005.
The jcpenney Statement of Business Ethics refers to founder James Cash Penney's original guiding principles which asked the question, "Does it square with what is right and just?" Today's jcpenney employees are told "These words express the integrity that we all believe is fundamental to our business and are still what governs our decisions today."
That is what we want to believe about jcpenney and in order to continue to believe that, we need to hear from the top jcpenney leader that those aren't just words in a corporate document, but rather, actionable standards. It's always so unusual and refreshing to hear a corporate leader put principles before profits.
We want to know how Mr. Ullman feels about about all of this, and how much value 108 years of consumer trust has to the company today. The consuming public needs to hear it from the leader, not from the company mouthpiece.
And after you tend to that, Mike, can you please reconsider part of this corporate identity thing? A retail company that's survived for more than 100 years deserves at least one upper case letter in its name, don't you think?
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