12 things retailers can learn from the United Airlines PR disaster

We’re not happy until you’re not happy!

I heard this line used by a business analyst when discussing a new possible new slogan for United Airlines. It baffles me how supposed smart people can make such dumb mistakes. The default explanation by the CEO of United was that had to “Re-accommodate” four passengers to reposition a blight crew, they were following company policy. This was a classic case of making a bad situation worse. We can disagree about who was a fault the passenger or airline, but there is no question that United Airline had the ability to take control of the message and mitigate the damage.

Business Schools and Public Relation Firms will be using this as a primer on how not to respond to a PR crisis. So what are the takeaways that would apply to any business especially a retail business?

  1. Admit your mistake and apologize – clearly and concisely with no buts
  2. Recognize that in this digitally enabled age everything goes viral
  3. Companies polices should be guidelines not hard and fast rules
  4. Empower your people to use common sense when confronted with problem customer
  5. Win the war not the battle- it’s OK to try to mollify a problem customer
  6. The customer is not always right but when their wrong handle with caution
  7. Learn a lesson from our current President- Be preemptive and post online how your people resolved a customer’s problem or at least tried to resolve it.
  8. You can’t control what people post online but you can respond
  9. Discuss the situation with your salespeople as a learning tool
  10. Every interaction with a customer either enhances or diminishes your relations with them
  11. The relationship you have with your customers is an at will relationship. The customer determines how long it will last and when it will end.
  12. Retaining existing customers is 3 to 5 times less expensive than acquiring new customers

The 3P approach to solving difficult problems

I just read an interesting article about Robbie Bach’s 3P framework for change. His book Xbox Revisited explains the 3P process which is a game plan for reducing complex problems or processes to simple steps. His quote, “I believe that solving difficult problems requires a tremendous ability to simplify” is the benchmark of his process. His 3P’s are Purpose, Principles and Priorities. Every organization would be well served by employing these principles as the framework for a project or initiative

Purpose: What is our goal – develop a short statement of purpose or the goals of the project

Principles: How are you going to execute the process? Is there an alignment within you organization that everybody understands the guiding principles on how the process will work?

Priorities: Define no more than the top five goals which will be the sole focus in solving the problem or executing change within your organization.

The 3P’s will be the blue print I will use for all my consulting projects going forward. It will be part of a collaborative process to ensure projects stay on track and meet the stated goals. Most project fail because for a few reasons, the main ones being project creep and forgetting the original purpose of the project. Reaffirming the 3P’s in weekly updates meetings will serve as a management tool to stay the course and fulfill the project original intent. Managing projects takes discipline and strict adherence to a well thought out plan.

To learn more about the Robbie Bach and the 3P approach to solving problems click on the link below:

https://www.robbiebach.com/3p/

 

Data, retail and political!

We may have learned an interesting lesson on the use and source of data based on the election results. I’ve been a 100% proponent that in retail of the adage that” if you can’t measure it you can’t manage it”. At one point this was very straight forward primarily because access to data was limited. Now we can dive deep into data and into the components of any group we are analyzing. I watched the election results with great interest and in particular how a specific demographic group voted. They were able to dive into a demographic using multiple factors such as white suburban, college educated, millennial women with a strong religious affiliation. Additionally they benched marked that data against the performance of that subset in prior elections.

The similarity from a data perspective between political polling and retail is strong. Retail has always been about analyzing numbers to fully understand the performance of your store. Relational databases allow retailers to dive deep into sales history and come up with and almost limitless number of calculations. The basic numbers that were there standards for monitoring performance were simple: Gross margin, gross profit, turns and value of inventory to name a few. Typically retailers are focused on inventory data to manage their businesses which is a critically important asset. An efficient inventory, specifically having the right product at the right time and at the right price is essential for sustained profitability. Customer analytics is not given the same attention by retailers as inventory analytics. There’s no question that retailers recognize customers as the life blood of their business but they don’t really track and benchmark their activity. Here are a five metrics a retailer can use as key indicators to measure customer behavior. In order to make these numbers relevant they need to be benchmarked against historical numbers by month to spot trends and react to them.

  1. Number of individual transactions
  2. Average sale per transaction
  3. Average number of items per sale
  4. Average gross margin per sale
  5. Retail value of inventory at the end of the month

Let me explain why this composition numbers provides a good basis for getting good insight into the performance of your retail business.

The value of the capturing the number of transactions per month is obvious, however you need to factor in the other data elements to get a complete picture. Consider that sales are up month over month but your average sale is down and the number of items per transactions is also down. If you only look at the top line number of total sales number you would be missing a trend that may be an indicator of a problem. I recommend that my clients post these numbers to a spreadsheet every month as an analytical tool. The manual process of entering these numbers into a spreadsheet is a great way to get a retailer to stay on top some subtle changes that may happening.

 

Move it or lose it!

In retail parlance moving inventory historically referred to sales or sell through, but now it taken on an additional meaning. The goals of a well run retail store is to have the right inventory at the right time and the right amount. Today we have a new dynamic called Omni channel. The consumer is now empowered to buy on-line and pick it up in store (BOPUS). I don’t agree with the naysayers who have predicted the demise of the retail store however the traditional way of doing business is imperiled.
BOPUS has other pieces to it than simply buying on-line and picking up in store. A true Omni channel strategy also allows the consumer to buy in store and have it shipped or buy in store and pick up at another store. The underpinning of all these inventory movement options is technology. We take the three basic historical rules of having the right inventory at the right time and the right quantity and add getting the inventory to the right location for customer pick up. The rules are changing quickly and survival dictates retailers change as quickly. This is another case where the savvy retailer will understand the value of technology to solve a problem. Plan accordingly before you leap into Omni-channel. Those who don’t adapt will be in serious danger of surviving.

Disrupt you!

At a recent conference I attend in Dallas the major theme was “Disruptors”. They defined disruptors as companies or processes that have a significant impact on a market by either changing the way business is done or reinventing the business, think Uber or Airbnb. Both of these companies have added a new dimension on how business is done in their respective markets and paradoxically Uber owns no cars and Airbnb owns no hotels. So now that the term “Disruptor” has become and “in” term for companies wanting to define themselves as innovative we should take a closer look the difference between disrupt, transitional or simple change.
In the retail point of sale world offering a hosted system is simply a change of where data is stored. A Saas model is transitional because you are offering a new pricing model that bills monthly for the software and all services for a long as a retailer use the software. The “Disruptor” in the point of sale market place is coming. That will be when companies not only offer their core solution as a Saas model but also a full complement of add on solutions such as Open to Buy, CRM, BI reporting and Warehouse management to name few. The disruptive aspect of this model will be when the add on software is also on a monthly subscription with cost determined by usage.
This is a quote from Jay Samit’s book Disrupt You! “Businesses whether they sell dog food or software- don’t sell products; they sell solutions”. Uber and Airbnb are both selling a service which disrupted the existing business model. Thinking ahead digital printing is looming as the next big disruptor to manufacturing but will it also be a disruptor to retail? I can envision Amazon in the near future selling certain categories of consumer products and delivery them to a digital printer. Can digital services be as disruptive to specific traditional retail segments as it was to book stores and music stores?
This may sound crazy but worth pondering!

Customer loyalty turned upside down!

Sometimes you step back and think, who thought this was a good idea. I received my monthly cable bill yesterday which includes my internet, phones and cable TV. The bill reflected a $50 increase or about 20 %. My cable provider has an office about a mile away so I stopped by while out on a few errands. The clerk referred by billing questions to the supervisor on duty who immediately determine the cause of the increase. My plan has a 20% bundle discount which expires June 1st. every year. Without hesitation he immediately renewed by bundle discount for another year and then cautioned me to avoid this happening again by marking my calendar with a reminder to stop by the store next year by the end of May to renew the discount. He then added that it would be shame for me to lose the discount since I’ve been a loyal customer for over twenty years. This is when the fun started since in my business as a retail consultant I’m always discussing ways for retailers to maintain their loyal customers.
This is basically the conversation that followed: “So you acknowledge that I am a loyal customer and my monthly bill is over $300 a month. Why is the burden on me to remind you that my bundle discount needs to be renewed every year? Cable companies are losing customers who have alternative services especially for movies and TV programming.” His response was “Why would we just automatically renew the discount without customer asking for it? That would be foolish on our part.”I received a call later in the day from customer service supervisor as a follow up. She was aware of my conversation at the local store and expressed her gratitude for my business and being a loyal customer. She also was happy they were able to maintain my discount but next year I should get to the store sooner to renew it, since there policy is to allow only a one week grace period from the expiration date. They turned the whole process upside down. In essence what they saying, “Even though you’re a loyal customer we require you to contact us annually and tell you want to remain a loyal customer”. Interesting concept! Here’s my takeaway, review any policies, procedures or processes you have than are barriers to customer’s maintaining a relationship with your store and remove then immediately. Every interaction with a customer either enhances or diminishes the relationship. Think about it!

Retail abrasion- Things that irate your customers the most!

1. Technology that lags behind their expectations
2. Restrictive return policies, especially “All sales are final”
3. Gift cards that expire
4. Inability to return on line purchases in the store
5. Excessive communication by email, text or social media that has no substance or value proposition
6. Constant out of stocks of key or promoted items
7. Slow or cumbersome checkouts
8. Inadequate store signage
9. Not being recognized as a good –valued customer
10. Not being responsive in resolving problems or issues

10 Obvious things every retailer should know!

1. Happy employees are the linchpin for creating loyal customers
2. It’s essential you know who your best customers are and treat them as your best customers
3. All customers are not created equal but they all count
4. Having the right inventory at the right time and at the right price is a key to a retailer’s success
5. If you’re ignoring millenials your putting your growth in jeopardy
6. The cost of retaining an existing customer is 3x-5x cheaper then acquiring a new customer
7. 75% of customers when surveyed said they spent more in stores that provide good service
8. Upgrade your technology to embrace the digital customer who shops 24/7 – if you’re not communication with them digitally your competition is.
9. Love the business you’re in but don’t fall in love with your processes and procedures. Evaluate, change and adapt.
10. Retailer ware too many hats to be good at everything. Focus on what you’re good at and delegate the rest

Where’s the retail bump with gases prices so low?

Despite the downward trend of gases prices why haven’t we seen a commiserate increase in retail sales? The most recent report on retail sales indicates a weakening of the retail sector. Analysts have offered a myriad of opinions on why retail sales are soft. These are a few of the most common reasons given:
– Under employment: People have taken lower paying jobs
– Obama care: The implementation of Obama care has caused a dramatic spike in insurance costs
– Savings: There has been a significant increase saving rate in this country.
– Student debt: Millenials are important factor in retail sales and they are burdened with substantial student loans.
It’s fair to say that all of these have some effect on retail sales but here a few other factors that should be considered.
– Gas prices: Gasoline sales are part of the retail sales numbers. Obviously when gas prices decline their contribution to the retail sales number declines
– Before the economic crisis retail sales experienced double digit increases as did the expansion of retail outlets. People were using the equity in their homes to finance the spending spree. The recession and ultimate collapse of the housing market brought this growth trend to an abrupt end.
– The hangover effect: After the “Great Depression” it took nearly a decade for consumer confidence to rebound and people to resume their old spending habits. We are seeing the same process happening now during the slow recovery from “The Great Recession”. Consumers are in fact saving more and being more cautious which is only natural after a financial crisis. Maybe one the lessons is that retailers should take a careful approach to opening new stores as can be attested to by the recent announcements of store closures.
There’s always a rush to judgment to provide quick analysis to economic numbers, which usually tend to be an over simplification. Consumer confidence is a main driver of retail sales and that’s always tricky to predict. Retailers should be less concerned about what pundits are saying and listen to their customers. That’s where you’ll get the “unvarnished truth”.