Five observations to assess the store environment toward successfully installing Customer First.

Retail leaders must objectively understand how their business currently includes the Customer in the way it operates before trying to set a more Customer-centric direction and focus. There are some formal assessment methodologies, like dunnhumby’s Customer Loyalty Index (CLI) and Customer Centricity Assessment (CCA), which offer detailed evaluations of a business’ capabilities, strengths and weaknesses based on Customer perceptions (CCI) or global best practices (CCA).

The approach outlined below is not intended to replace these formal tools; rather, these observations are intended as a kind of ‘toe in the water’ to help retail leaders form early hypotheses and point of views. These are rules of thumb, heuristics culled from global experience. Later, leaders might use these observations to informally check progress from time to time as a way of assessing whether the “program in the stores matches the program in our heads”.

Hence, the context and laboratory for these suggestions is the retail store, where the rubber meets the road, so to speak.

1. Who Really Runs the Store?

Walking around a store (or better, walking around several), can give many clues toward understanding a retailer’s attitude about its Customers, as well as revealing some of the challenges ahead for installing Customer First. As Customers ourselves, we are qualified to assess an organizations ‘readiness’ for Customer First, simply starting by walking around.

How a Customer experiences the store shapes their perception of the brand, and there are dozens (even hundreds) of ‘moments of truth’ for Customers in each shopping trip – opportunities for the retailer to win more loyalty, or indeed to lose it. And it only takes one ‘bad’ experience to erase all the good.

For a list of some of these ‘moments of truth’ for Customers, see the corollary publication: how to walk a store.xls. Using this list can help leaders see the shopping experience through a Customer lens.

Leaders can form an opinion on where consideration for the Customers’ shopping experience sits by observing ‘Who really runs the store?’ – a way to put on a Customer lens in order to assess if the Customer, the retailer, the supplier, or no one is driving shopping experience decisions, like range and presentation, for examples.

• Choose three sections across the store (Telling categories include Yogurt, Pasta Sauces, Milk, and Packaged Lunch Meats). Look to see how the product is organized and presented (remember to try to see through the eyes of a Customer)
• By brand (e.g. all Dannon yogurt is merchandised together in a recognizable Dannon brand block)?
• By Customer benefit or usage (e.g. all brands of pro-biotic yogurt are merchandised together, as are all Greek style, all kid’s yogurts, etc)?

Or, by some hybrid but logical planogram v. rather random, with little recognizable logic at all?
Would you conclude that the product display / layout logic is influenced more by supply chain, by brands, or by Customer uses or need states?
How broad is the range (e.g., number of varieties or sizes)? How deep (e.g., number of brands of the same flavor or variety)? Does the breadth and depth feel Customer friendly, or confusing?

Of course, analyzing any available loyalty data will later tell us how Customers actually shop the category and that might well be by brand (or flavor or size, etc., and will certainly vary by section). But this first assessment helps us begin to form our perspective on how tuned in the business is around its Customers, and about where within the business leaders might need to begin to install insights and the Customer language.

2. What Messages are Customers Receiving?

Store signing not only delivers a written message, but also a type of ‘body language’ that Customers tune in to, albeit not always consciously. Look around the store to see both the written and hidden messages, and hear the tone being communicated: ask, do messages speak respectfully to Customers?

For example:

• Signing at the entrance rudely telling Customers what the rules are, even though 99.999% of Customers will never even think of shopping without shirts or shoes, or wearing roller blades
• Narrow limits on the quantities of promoted products or services
• Rules and restrictions, terms and conditions
• Aggressive security barriers and gates at entrances – although sometimes operationally necessary, these also tell honest Customers that they are not to be trusted.
• Phony expiration dates for promoted prices – customers learn that the deal will be repeated again soon, if not immediately. Best example is the many carbonated soft drink promotions below shelf price that are repeated frequently, and the innumerable ‘roller’ prices practiced by many retailers.
• Stupid pricing signs (any stupid sign, really)

3. What Messages are Employees Receiving?

While walking the store, travel through stock rooms and the employee break room. Note the signing and messaging aimed at staff. What seems to be valued more – numbers or people? What policies and rules guide employee behaviour? How are they expected to interact with Customers? Are the messages respectful of staff? Of Customers? What do signs say about the culture around Customers?

4. Who Has the Power to Satisfy Customers?

Dunnhumby’s Loyalty Drivers analysis suggests that Customers exhibit four ‘mindsets’ in their shopping journey – Discover, Shop, Buy, and Reflect. One element of the ‘Reflect’ mindset includes the decision to return, exchange, or to request a refund when the product or service does not quite suit.

On your store walk, observe who has the power to satisfy Customers making a return or wanting a refund: is the front line employee empowered to satisfy the Customer, or must the Manager be called? Is there one ‘service’ desk where Customers must queue to get their money back, or can the helpful cashier make it good on the spot?

Examine the return policy to assess its sensibility and ease from a Customer viewpoint. For example, must a Customer act within 7 or 30 days, and is a receipt required and signature under penalty of perjury? Is the taking of an oath necessary, or perhaps a drop of blood?

The store’s practice says volumes about who deserves trust in the eyes of the business. Requiring levels of approvals and higher Management involvement (or some other form of hoop-jumping) is neither trusting of employees nor Customers.

The return / refund policies and practices are strong indicators of a company’s readiness for, or progress along the Customer-centric journey. Customer-centric organisations give front-line employees broader authority to resolve Customer needs, and extend the power to satisfy Customers to most members of staff, in some form. For best practices in this area, please see the policies from Nordstroms in the US and Ritz-Carlton globally.

5. Leaders’ Words Matter

Senior leaders set the tone for how Customers are regarded and treated in the business, both by their words and their actions, of course. And the C.E.O.S – Customers, Employees, Owners, and Suppliers – all take notice. It’s widely documented that leaders who walk the walk are more effective than those who only talk the talk.

One simple yet powerful way to assess readiness and progress is to match how leadership’s walk and talk align. A word cloud, like the one illustrated below, makes the point very clear. In this example, recent shareholder statements (same quarter) were compared for two companies on a Customer-centric journey. We can see different progress in a form of ‘walking the walk’ at Retailer X and Retailer Y. The C.E.O.S are hearing what really matters to the leaders, and are forming the Customer culture accordingly, all the way down to store level.

Implications for retail leaders
The store shapes Customers’ perception of the brand; there are hundreds of opportunities for the retailer to win or lose loyalty in each shopping trip. Customers take clues, consciously and unconsciously, throughout their entire shopping experience, and draw conclusions about retailer warmth and attitude toward shoppers. And it only takes one disappointing experience to erase all the good.

Retail leaders must take an objective assessment of the shopping experience using a Customer lens to understand their current state and readiness for customer centricity. Pay close attention to the body language and tone of your policies; store signing, employee empowerment and communications, and practices around assortment and presentation are clear indicators of the organization’s attitude about the Customer.

Who actually runs your store?