“If all your friends jumped off a bridge, would you, too?” How many times did you hear this growing up? And how many times have you repeated it in adulthood? The message is sage and simple: Don’t follow the crowd – especially when the crowd is leading you right off a bridge, literally or metaphorically.
For as simple as this wisdom is, we sure do a bad job of following it in the business world. We are surrounded by books and articles telling us how to copy the other guys, and too often, as business leaders, we try to do exactly that. The truth is, following industry norms, or just taking the lead from a competitor, can take you down the wrong path for your value proposition. An example we can all relate to as consumers comes from the retail industry. For years retailers have driven up the metric of revenue per sales associate. They’ve done this in great measure by cutting staff. Yes, cutting jobs and all the related costs, such as basic training programs, have an immediate effect on the bottom line. But relentless cost-cutting, especially in human capital, comes at the high price of potentially alienating customers, destroying long-term core value, and limiting growth and eventually profitability.
As a consumer you have experienced this. You are an expert in the essence of being underserved. Stores are understaffed, and when you do find a sales associate, chances are they can’t answer your question. This understaffing and under-training of staff is a reflection of retailers trying to get by on as little as possible. Just last week I walked into a store that has been atrophying in a key downtown location for years. Floor after floor there was almost no one to be found. Merchandise was piled up. A sad sign at the elevator announced new hours: fewer weekday hours and some departments closed on certain days. It is only a matter of time before this store closes completely. My hunch is that they are open only because they earn something against a lease they are funding until it expires. This was once a vibrant place; busy, noisy with customers. No one around to serve and sell means eventually no one will be around to buy.
This paradox is the focus of a recent New Yorker piece by James Surowiecki. Surowiecki uses study results to argue that retailers who hire more people and invest in their training make more profit than understaffed businesses.
A positive customer experience and an increase in profit go hand in hand. A store performance chain cannot operate without talented, service-oriented staff to answer customer questions, guide sales, make suggestions, and stock and care for the merchandise. Surowiecki’s article makes the case that a well-staffed operation with knowledgeable associates increases the likelihood that customers will want to shop there. Sales and profits grow. This seems so obvious, and yet when I read the article, it’s so rare today. Too many stores and other businesses are trapped in industry cost-cutting norms.
It’s hard to break the habit of cost-cutting when it comes to staffing, especially when focused on the short-term results. But here are a few ways to think about a strong performance chain guided by a customer experience-driven value proposition and designed for long term success:
- Less cost is not always better. On paper, any reduction in costs seems like a good one, right? However, once those cost-cutting changes make it out into the real world the chain reactions to those decisions kick in. What seemed like a clear-cut business decision doesn’t always make sense. Instead of making choices based on what will cost less, think of it this way: How can you get better results for the investments you make? How can you turn an expense (staffing) into an investment that increases the potential in your customer experience? Take it one step further and evaluate your business’s staffing costs to see if you’re actually under-spending in that area. What outcomes (growth, expansion, profit) do you want, and where across your performance chain are resources most critical to deliver those outcomes?
- Match staffing and customer experience strategies. Like peanut butter and chocolate, a business’s staffing and customer experience strategies can be a match made in heaven. The two affect each other from the start, so it only makes sense to consider both during planning. Defining your customer experience requirements before you create your performance chain model, or before you adjust the one you already have, will allow you to align the two from the beginning. If someone else calls the shots for staffing strategy, make the case for complementary objectives that drive better overall business outcomes. The right partner will find this music to their ears to hear that someone else recognizes the value of a well-trained workforce.
- Remember that business is personal. Retail is a human, personal business, maybe more so if the relationship is online. Scrimping on staff numbers means scrimping on the human touch of the shopping experience. Sure, these experiences can’t be as easily measured as wages, but that’s why they’re invaluable. An associate solving a customer’s problem the first time around, as simple as it sounds, is a rare occurrence these days. And, experiences where customers have had their problems solved in a genuine, empathetic way are almost non-existent. If your value proposition calls for growing customer relationships, you have to be the exception. There is more than one right way to recognize and train staff. There is more than one way to grow customers, revenues and profits. Don’t ignore the human side of your business – and don’t, please don’t, just copy the other guys.
The big picture lesson? Do your own research. Make your own assessments. Ignore the noise, focus on the experience your customers value and fill in your performance chain from there.
About the author
Chris LaVictoire Mahai, a partner with global strategy and operational change firm Aveus, has more than 20 years of experience leading, developing and implementing business and marketplace strategies. Chris is also the author of ROAR, a business book focused on helping executives use the lenses of speed, predictability, leverage and flexibility to control their performance chains. You can also find Chris blogging regularly at ROARing Performance.