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.

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