Michael’s Stores Links CX And Marketing

Last month I met Paula Puleo, CMO of Michael’s Stores, at a SAS event in Orlando. She gave a presentation that I really enjoyed, describing activities at the arts and crafts retailer that blends marketing with customer experience.

The importance of customer experience comes out loud and clear in what Puleo presented as the three elements of Michael’s corporate mission:

• Inspires and enables consumers to experience creativity
• Leads industry growth and innovation
• Creates a fun and rewarding place to work that fosters meaningful connections with our communities

I was really impressed with Puleo’s presentation, so I caught up with her after the event. In her presentation, Puleo listed her six marketing priorities. Here are some of the additional details that she provided for each of them:

• Live The Brand: Puleo talked about trying to foster connections with customers and associates. The company runs events like craft cruises and craft days at baseball stadiums (they’ve had them at Arizona Diamondbacks and Texas Rangers games and expect to expand to other sporting venues). Puleo also pointed to Michael’s participation in the Festival of the Masters at the Walt Disney World. The goal is to bring crafts to venues that are more family oriented. She said that these activities bring a level of inspiration to all of their messages.
• Real Time/Face Time = The New Prime Time. Puleo talked about having a dialogue with customers. Michael’s uses a dedicated Social media team to keep Twitter and Facebook alive. Each store has dedicated customer experience managers that aren’t focused on other store operations. Puleo says that these employees make the environment happy, friendly, and fresh and she called them “our people-people.”
• Make the private brand not so private. Michael’s has a large private brand business, which provides strong financial benefits. Rather than positioning these store brands as boring alternatives, Michael’s wants to celebrate them and make them a strong value proposition. So the company introduced its product designers to customers. Influential bloggers, for instance, are periodically invited to spend the day with product designers. Connecting customers and influential crafts bloggers with product designers make the private brands come to life and creates what Puleo called a “playground for customer co-creation.”
• Compete in the trenches. Puleo said that they need to compete at a local level. So corporate marketing helps the stores understand who their customers are and any local competitive threats.The company is investing in deeper data insights to better understand customers and provide the stores with even more insights. The corporate marketing team also creates experiential events and demos that can be used in the stores.
• Remove the angst. Puleo talked about finding what’s in the belly of your customers. if you remove that angst then you will eventually sell them something. She understands that shoppers are anxious about spending, so they lead with value. She also recognizes that Michaels customers have angst about having quality family time. That’s why Michael’s came up with the idea for The Knack, which is a site with simple ideas for family crafts projects.
• What works. Puleo discusses the importance of measurement and having good KPIs in place. She works closely with her finance partners to understand what’s working and what’s not, to measure the ROI of the marketing spend.

Puleo also discussed Michael’s loyalty program.They’ve just started offering experiential benefits for Gold customers (that spend $250+ per year). In about 275 of its stores, Michael’s invites its top customers to events with stores designers and celebrities in the crafts world. In St. Louis they had an event with The Crochet Dude and in Dallas they had a contest where customers pitched their projects to Puleo, Michael’s chief designer Joe Pearson, and “rock stars” like the Double Stitch Twins. Puleo says that “access” is the currency that they try to give to good clients; it’s all about surprise and delight.

I asked Puleo about what’s next. She recognizes that many of their customers come to a Michael’s store because they have to come – to get materials for a kids project or to buy a widget. She wants to inspire customers into coming into the stores because they want to. Her goal is to get everyone, even non-customers, to realize that they have some talent and creativity and have them think about coming to Michael’s to express it.

The bottom line: Michael’s sells products, but it markets the love of arts & crafts

Walgreens Rolls Out Customer-Centric Retailing

There was an interesting article in the Chicago Tribune about Walgreens’ effort to improve its in-store experience. The company’s new store format, which it calls “Customer-Centric Retailing,” will be rolled out to more than 2,500 of its 7,000+ locations this year. According to Walgreens CEO Gregory Wasson:

As we move into the next phase, we’ll continue to build sales, take work out of stores, lower inventory and, most importantly, improve our customers’ overall shopping experience

Here are some elements of the new store formats

• Eliminated about 3,500 products from stores to focus on fewer, better-selling items
• Adding more food and wine and expanding beauty aisles and preparing this summer to bolster electronics.
• Lowering the heights of shelves
• Installing bigger and more colorful signs to help shoppers navigate the aisles

My take: Companies should take notice of Walgreens’ store redesign and those of other retailers like Wal-Mart, Michael’s, and Macy’s that are rethinking their in-store experiences. The days of shoving as much inventory as possible onto shelves and hoping that customers find what they want are gone. Companies are realizing that its much more profitable to offer fewer SKUs and make it easier for customers to find what they are looking for.

Not only is it more economical to carry less inventory (Walgreens eliminated $500 million of inventory as part of this effort), but it can also be much better for customers. As I’ve discussed in a previous post, consumers are often more satisfied when they have fewer choices.

And redesigning store layouts to help customers shop is also critical. It’s worth referring back to one of my old posts (from 7/07) called Why Don’t Stores Support Shoppers? that discusses four separate elements of the in-store shopping experience:

• Wayfinding: From walking into the store until you find the right area
• Browsing: Comparing multiple products within a category 
• Studying: Evaluating an individual product or products
• Getting Help: Finding answers to questions along the way

Those components deal with selecting products, but you also want to make sure that customers go ahead and buy those items. So it’s also critical that retailers spend time revamping their checkout experiences as well.

The bottom line: Make it easier for customers to buy from you.

Customer Experience Lessons From Marks And Spencer

Last week, I was in London to lead a panel discussion for Tealeaf at the MarketingWeek Customer Retention Conference. The opening speaker was Jo Moran, Head Of Customer Service/Experience at Marks & Spencer. She presented a lot of great ideas that other companies can learn from.

Moran outlined a number of steps that the retailer uses to infuse service into its traditionally “product-centric” culture:

• Define the service proposition. Marks & Spencer defined what it calls “Our Service Style” which has four elements:
  • Be positive
  • Be determined
  • Take ownership and responsibility
  • Be respectful
• Embed in the structure. Moran described a new position, Coach, that acts as a role model and also as a trainer on the floor to teach employees how to deliver the service style.
• Support with training. The retailer has a full spectrum of training from one-off events to a fully developed career path. She said that there are three key words for all of their training:
  • Simple
  • Memorable
  • Do-able
• Keep up the momentum.They do audits of the customer experience, have champions across the organization, and a cross-organization steering committee. She said that you need to figure out if you are on a “journey or separate chapters in a  book that aren’t linked.” [editorial note: you need to be on a customer experience journey].
• Look at what’s getting in the way. The retailer looks at tasks and red tape that either keeps employees from spending more time with customers or wastes the customers’ time.
• Improve or remove. Moran talked of very coordinated recognition programs (daily, weekly, monthly, and annual customer service awards), but they also use the “stick” to get rid of employees that can’t deliver the service style.
• Measurement to drive continuous improvement. M & S uses mystery shoppers (which Moran said she “loves and hates”) as well as a voice of the customer program that explores new ways to get feedback through mechanisms like Twitter, Facebook, and Fizzback.

Moran also discussed the company’s “service circle” which had at its center: “SERVICE: Doing what’s right for customers” and was surrounded by five circles:

• Understand your business
• Understand what customers want
• Make a connection
• Be flexible
• Be commercial

One of the final things that Moran presented was this model (which I’ve recreated, so it’s not exactly the same as her slide):

The bottom line: There’s a lot of good stuff here.

Misleading Coupons Hurt Loyalty

My cousin went to Lord & Taylor expecting to use a 20% coupon. After finding a bathing suit that she wanted to buy, she went to checkout.

The sales rep, however, said that the coupon did not work for her order. They called over the supervisor who insisted that the coupon could not be used for bathing suits. Even after several minutes, the supervisor could not explain where it said that bathing suits were not included. The sale rep was nice about the situation, agreeing that it was misleading after the supervisor left. But my cousin had to pay full price for the bathing suit.

The experience was so problematic that my cousin told me about it (and she probably told other people as well).

My take: I’ve included a copy of the coupon below. Take a look at the wording. Even with the closest reading of the fine print, it does not seem to say that bathing suits aren’t included. 

There were two significant problems with this interaction: 

• Misleading wording. Despite the large font claiming “Storewide Savings,” it has so much fine print that it’s very hard to understand. And the implementation of the coupon in the store does not seem to match how it’s worded.
• Unempowered employees. Even after realizing that the policy was wrong, the salesperson did not have the ability to override the system. She should have been able to give my cousin the 20% discount.

Unfortunately, these problems aren’t unique to Lord & Taylor. Too many retailers still try to lure customers into their stores with less than clear promotions. This type of experience may drive short-term traffic, but it doesn’t create loyal customers.  

The bottom line: Incremental sales aren’t worth the cost of loyalty.

Employees Are Key To Electronics Retailing

Here’s how Best Buy CEO Brian Dunn ended a recent blog post on CNBC:

You should be happy with what you purchase. This means that the product works the way you expect it to before you walk out of the store, or when you get home. If not, you’ve overpaid at any price.

Dunn’s post discusses the importance of knowledgeable staff in the consumer electronics space. He points to a study by The American Consumer Institute that shows how often consumers selected different attributes as being important for their electronics purchase:

• Product quality (85%)
• Knowledgeable staff (77%)
• Finding someone to help (74%)
• Lower prices (70%)

My take: True! Dunn’s comments are consistent with my previous post about Wal-Mart’s new tech support as well as my research which shows that customer service trumps price across most industries. When consumers chose a retailer, the need for higher customer service increases with age. There are 2% more Gen Y that want good customer service than those that want low prices. For Seniors, the gap between customer service and low price is 14%.

That’s why retailers need to focus on the 4th law of my 6 laws of customer experience: Unengaged employees don’t create engaged customers.

The bottom line: Don’t sell electronics, help people chose and use them.

For More Sales, Design Better Checkout Experiences

I’m guessing that many people who read the title of this post think it’s about online experiences. That’s where “design” and “checkout” most often show up in the same sentence. But I’m actually discussing in-store experiences. According to recent research, about 1.6 percent of customers abandon in-store checkout lines. For a typical retailer, that’s over $100,000 per store per year, which is more than $50 million per year for a 500 store chain.

My take: I’ve recently discussed new in-store merchandising strategies for Wal-Mart, Michael’s, and Macy’s. Companies are recognizing that store design has a significant impact on customer purchases during a visit and on the likelihood of customers to return to the store. But the last place you want customers to have a bad experience is when they’ve got a product in one hand and payment in the other.

So companies need to take another look at the design of their checkout experiences. This means examining their queue structure (multi-line, single-line, etc), the queue environment, and in-queue merchandising. Technology offers new options for in-store experiences like self-service checkout kiosks and portable checkout systems.

Since I mentioned online experiences at the start of this post, I’ll end with a comment about online experiences. I’ve written in the past about flaws in the Store to Web experience. With the growth of mobile applications like ShopSavvy, retailers will increasingly need to design experiences that cross-over online-offline boundaries.

The bottom line: Stop losing customers that are ready to buy.

Walmart’s Experience Redesign Makes Sense

What do you get when you combine Walmart’s low prices with smart merchandising and good service? Trouble for competitors. And Walmart’s Project Impact is aimed at doing just that.

According to Walmart’s Northeast general manager:

We’ve listened to our customers, and they want an easier shopping experience. We’ve brightened up the stores and opened things up to make it more navigable.

Here’s an example of Walmart’s new store experience:

Source: BNET

My take: There’s no reason for companies to make trade-offs between low prices and good in-store experiences (or good experiences in other channels like the Web and the phone). That’s the core premise of the post My Manifesto: Great Customer Experience Is Free. 

When companies focus on their target customers, it becomes very clear that customer experience is not an optional ingredient. But that doesn’t mean that Walmart or any other retailer should replicate the experience model of Nordstrom’s or even Michael’s Crafts. The key is to understand what your customers’ need and want.

Employees are also a critical component of customer experience. As I’ve discuss in my eBook The 6 Laws Of Customer Experience: Unengaged employees don’t create engaged customers. That’s why every one-tenth-of-a-point increase in employee engagement at a Best Buy store increases it profits by $100,000 a year.

Is there a blueprint for getting this right? Yes. Experience-Based Differentiation.

The bottom line: Customers notice when you neglect their experience.

Michaels Crafts Distinct In-Store Experiences

Here’s a very interesting approach to in-store experiences: store-within-a-store for every category. I ran across work that retail brand consultancy Interbrand Design Forum did for Michaels, the arts and crafts specialty retailer. This is what the jewelry area looks like at Michaels:

The bottom line: Tune retail experiences to support user goals

My Macy’s Provides Recession Blueprint

Late last year, Macy’s consolidated its divisions and started tailoring in-store merchandising to the needs of different regions, an approach that it calls “My Macy’s.” It turns out that “My Macy’s” has been such a success that it is rolling out the effort across all of it’s stores. According to Karen Hoguet, Macy’s CFO:

For the spring season, the My Macy’s districts outperformed the remaining stores by 2.6 percentage points

My take: These results aren’t surprising. In a previous post, I gave “My Macy’s” a thumbs-up for following a recession strategy that I called: simplify, target, and align. During a recession, companies have less opportunity for sloppiness so they need to more effectively align their offerings and efforts to the specific need of target customers. Since the needs of customers vary across regions, it makes sense to merchandise in different ways in different regions.

The bottom line: What’s your “My <Your Company>” strategy?

The Experience Of A Bicycle Built By You

The Tour de France just ended and the Pan Mass Challenge, a huge event where people raise money for the Dana-Farber Cancer Institute by biking across Massachusetts, was held this past weekend. So biking is in the air.

That’s probably why an email from Peter Merholz, President of Adaptive Path,  caught my eye. He sent me a link to a blog post about work that his firm is doing with a bike store in San Francisco. It turns out that Mission Bicycle Company was selling fixed gear bikes online, but decided to open a retail store where customers could easily assemble their own custom bikes.

But “easily” is not something that’s easy to accomplish — especially when Adaptive Path had less than 2 weeks to design the in-store experience.

Despite a HEAVILY time-constrained project, Adaptive Path followed a user-centric approach:

• Interviewing cyclists to understand their needs and expectations of a custom bike retail experience
• Clearly articulating the Mission Bikes process in a way that aligned with cyclists’ needs and expectations
• Sketching and generating experience concepts quickly
• Prototyping the experience design concepts in their studio

The final store design (which is very cool) was based on 4 components: Instructions, Wall Mount Displays, Table Displays, and Build Kits. 

Here’s what Zack Rosen, CEO of Mission Bicycle Company, told me about his new bicycle shop:

The visceral experience of being in our store surrounded by beautiful bicycles and parts laid out like artwork was what made the sales system and process work. If our customers are excited by the prospects of designing a custom bicycle they will happily go through the process Adaptive Path careful designed.

It’s worth taking a look at the case study they pulled together on the effort. It shows the evolution from sketches, to designs, to implementations. For example, this is how the Table Display evolved:

The bottom line: There’s always time for good user-centric design

In-Person Satisfaction Snapshot- Costco, Barnes & Noble, and Marriott Top The List

We asked more than 4,500 US consumers about their satisfaction with experiences across 12 different industries: airlines, banks, cell phone service providers, credit card providers, hotels, insurance firms, Internet service providers, investment firms, medical insurance companies, PC manufacturers, retailers, and TV service providers. Our analysis looked at phone, store/branch, and Web interactions.

Here are some highlights of consumer feedback on in-person interactions. The analysis looked at satisfaction rates at an industry level and changes from last year’s results, examined satisfaction for individual companies, and compared responses across generations of consumers.

• Highest industry satisfaction: Retailers (88%)
• Lowest industry satisfaction: Heath plans (69%) and TV service providers (69%)
• Most improved industry: Credit card providers (improved 6%)
• Least improved industry: Internet service providers (declined 7%) and health plans (declined 7%)
• Highest company satisfaction: Costco (94%), Barnes & Noble (94%), Marriott (94%), Old Navy (93%), credit unions (93%), and Sam’s Club (93%) 
• Lowest company satisfaction: Time Warner Cable (61%), Road Runner (63%), Sprint (64%), and Comcast (66%)
• Most satisfied generation: Seniors and Gen Y were most satisfied for four of the industries
• Least satisfied generation: Gen Yers were least satisfied for six of the industries
• Largest generation gap: Banks (Gen Y at 86% versus Younger Boomers at 68%)

The bottom line: What’s it like when customers come to see you?

Experiences That Satisfy Consumers, 2009

I just published a report called The Experiences That Satisfy Consumers, 2009 that examines consumer satisfaction with Web, phone, and in-person experiences. My analysis looked at more than 100 companies across 12 industries. Here’s an overview of the results:

Only hotels and investment firms cross over the 80% satisfaction mark in every channel, while health insurance plans and TV service providers don’t even make it to 70% in any channel.

The report also analyzed changes from last year, differences across generations of consumers, and satisfaction levels for individual companies. As I did with last year’s report, I’ll create separate posts to examine satisfaction with Web interactions, phone interactions, and in-person interactions.

The bottom line: Consumers aren’t as satisfied as they should/could be.

Microsoft Takes A Giant Leap Into Retail

Microsoft has been contemplating a new frontier…

Retail.

Over the past couple of years, Microsoft has recognized that it needs to take a more active role in the retailing of it’s products. It can no longer leave in-person merchandising and selling to retailers. What’s driving the urgency in Redmond to get into stores?

Apple.

Apple has radically changed the paradigm for retailing in technology. Rather than relying on retailers to deliver in-person experiences, Apple stores have revolutionized both the sales model and the service model for technology retailing.

That’s why it’s no surprise that Microsoft just hired a former Walmart executive to open a chain of retail stores. This effort will report into Kevin Turner, Microsoft’s COO (and a former Walmart executive) who says the aim is to

Transform the PC and Microsoft buying experience at retail by improving the articulation and demonstration of the Microsoft innovation and value proposition so that it’s clear, simple and straightforward for consumers everywhere.

This follows Microsoft’s recent unveiling of its huge Retail Experience Center in Redmond. I actually visted the center last year while doing some work with Microsoft on its retail strategy; it’s quite impressive.

My take: The technology market is maturing. Mainstream consumers are now the largest market; not techies. There’s a broad base of customers who want to buy technology products (PCs, phones, MP3 players, TVs, etc) who don’t understand anything about the underlying technology. So the listing of speeds-and-feeds (along with other technical specs) is an outdated retail marketing approach.

Unfortunately, retailers have not kept up with this shift. If you look at the 25 retailers that we ranked in Forrester’s Customer Experience Index, three of the bottom four were electronics retailers (Best Buy, Circuit City, and Radio Shack). This might also explain why stores like Circuit City and Tweeter are going bankrupt. So manufacturers like Sony, Apple, and now Microsoft are taking a lead in finding the right approach.

Here’s some of the things that mainstream technology users need:

• Plain language about feature benefits to enable trade-offs (why should I care about 60 HZ or 120 HZ when buying an LCD TV?)
• Products that are easy to setup and provide very simple interfaces for making common configuration changes
• Easy-to-use decision making tools for narrowing potential products
• Human advice (through trained employees and social media forums) for making product decisions
• Access to help for setup, repair, and usage questions

The bottom line: The electronics retail experience is overdue for a makeover

Recession Insights From Zeller’s CEO

I just read an interesting article about Mark Foote, CEO of the Canadian retailer Zellers. Since Zellers is a discounter, the down economy is helping its business. But Foote isn’t just sitting back and pegging his company’s growth on the recession. Here are several things that he’s working on:

• Lowering the prices on 250 key items from paper towels to ironing boards
• Designing in-store displays and signage to more actively communicate price savings
• Putting more focus on its higher-margin apparel category with products that mimic upscale brands like Lululemon
• Pruning up to 25% of the inventory to concentrate on the products that are most important for its target shoppers: “mom and her kids.”
• Looking for ways to more radically change the Zeller store experience in the future

According to Foote:

A new Zellers store would stop them in the first few feet and give them a moment of pause. A great new store builds on but changes the character of the brand.

My take: Foote’s actions highlight the importance of four questions that every senior executive should be asking in the midst of this economic downturn:

1. What’s our core value proposition and how does it translate in this economic environment?
2. How can we more aggressively tailor products, services, and experiences to meet the needs of our most important customers?
3. How can we deliver more value and make sure customers recognize that value?
4. Despite the focus on tactics in an economic downturn, how can we maintain progress on our long-term strategies?

The bottom line: Navigating through a recession takes active leadership

Radio Shack Reformats Its Stores; At Last

Radio Shack announced that it plans to reformat two-thirds of its 6,000 stores. According to Peter Whitsett, Radio Shack’s head of merchandising:

The changes will result in more organized and easier-to-navigate stores that will help customers better compare products.

My take: It’s about time. In a previous post, I mentioned that Radio Shack customers aren’t very loyal to the retailer. The retailer’s experience has a lot to do with it. Radio Shack came in at the bottom of the 27 retailers in Forrester’s Customer Experience Index. During other research, we found flaws in Radio Shack’s in-store shopping experience as well as its Web-store cross-channel experience. When we looked at the process of shopping for a digital camera, we actually found that Radio Shack had some excellent content at the front of the store. But it was almost impossible to see the information, because it was buried in small font behind the cameras. The rest of the Radio Shack store seems like a random collection of stuff; not easy to navigate and not compelling to browse.

The bottom line: I’m looking forward to Radio Shack’s new look.