Ye$, Cu$tomer Experience Matter$ (h/t Bruce Temkin)

Last time, I told you all about an airline customer service tale gone horribly wrong.  There were multiple steps along the way that could have prevented how bad it was.  But I take this to be a fault of internal employee alignment.  We have to know and understand our brand before we can act as its cultural ambassador to others.  In a ridiculous kind of way, our employees have to be beauty pageant winners -- walking tall with the tiara, the scepter, the (faux) ermine cape -- and being gracious as possible to everyone.

Resting on our laurels never yields anything good especially these days as power has shifted more to the hands and the voices of the customer.  This means that everything matters.  Not to make you paranoid or anything but every thing does matter.  Every single mappable touchpoint between you and your customers can be moments of glory or doom.  If you lose focus or you don't think it's important enough to pay attention, then you're headed for certain doom.

As backup, I've gone to my favorite Customer Experience expert, Bruce Temkin.  In this post, he shares that customer experience leaders have more loyal customers than the laggards which is kind of a no brainer.  The eye popping item is that the gap is 15 - 17% in three areas: willingness to buy more products, reluctance to switch and likelihood to recommend.  That level of "stickiness" is enviable in any industry and particularly enviable these days as consumers are more and more driven by price than before.

So on to more practical airline examples and I do recall that I promised to share more numbers.  In this post, I mentioned JetBlue's Jetitude as a model for employee engagement leading to positive, or as positive as possible, customer experience.  Jetitude consists of:

• Be in Blue always
• Be personal
• Be the answer
• Be engaging
• Be thankful to every customer

As I said then, Jetitude is effective because it's action and goal oriented with customer experience as the underlying theme.  What's striking is the infinitive "to be" which means that these are to be active behaviors and attitudes at all times especially "Be in Blue" which means living JetBlue corporate values and the brand identity at all times.  It also means that these active behaviors drive a sense of ownership and accountability.  Every employee has the power and permission to "be the answer" within the context of the JetBlue brand for the customer without fear of reprisal.  Great stuff.

And this translates to real performance metrics.  In that 2009 Airline Quality Report which measures customer complaints, on time performance, lost baggage among other items, JetBlue ranked 3rd while the other carrier ranked 13th out of 18.  You could suggest a connection between employee engagement and these metrics.  

Earnings also could be correlated.  Last week, JetBlue announced a record 50% jump in profits for the second quarter ($30MM versus $20MM) with $939MM revenues was a record representing 16% growth.  The company attributed this to fuller planes and growing while other airlines were suffering in this economic climate.  They even had to add employees!  Lest you think this was a fluke, JetBlue also recorded profits for all of 2009.  Finally, the stock price has risen 23% in the past year.  They are doing something right.

How'd the other airline do?  Well, the good news is they were in the black.  The bad news is that it was its first quarterly profit since 2007 and largely attributed to baggage handling and seat upgrade fees.  In fairness to them, they were given credit for tightening cost controls and there is some pocketed rebound in business travel.  Also, their stock price has improved nicely in the past year (but only because they were in dire straits last year).  On a comparative basis, you can say that JetBlue is doing better.  

I could bring up Zappo's success here as well but some may say I'm beating a dead horse here.  The point is that customer experience, though intangible, has real meaty impact on how well you perform as a company overall.  The point also is that it bears the time, money, resources, attention, etc., to make sure you communicate your brand promise clearly to your employees so that they can be your standard bearers to the customers.  It's mission critical.

Let's face it: there will be some people that we can never satisfy because it's economically infeasible to satisfy some demands.  That being said, we have to try every single time to "win" the customer's attention and loyalty.  It's not a coin toss with the probability of being 50% heads (win) and 50% tails (loss).  You have to hit a theoretical 100%.  If you're a student of statistics, you know that this is hard to do but you've got to try for it every single time.

What'$ your view on the dollar$ and cent$ of cu$tomer experience?

Best,

Parissa Behnia
Idea Chef

678Partners@gmail.com
678Partners.com
LinkedIn

Jetbridge to Nowhere

I was to go away this past weekend for a long overdue sister trip.  All of the plans went pear shaped when our plane suffered a mechanical problem.

We were on the runway, the engines were revving for a nice delicious takeoff and about 10 seconds into said takeoff, the pilots aborted.  We learned that there was an issue with one of the engines and we'd have to go back to the gate for a plane change or a mechanic.  The pilot was regretful and apologetic but also optimistic about getting back on track for our trip.  I was fine with a return to the gate as opposed to barreling up into the air with a defective engine and appreciated the caution.  The tone was appropriate.

When we got to the gate, there was a few minutes of silence and then the optimistic pilot informed us that mechanics were on their way to have a look.  The next voice we heard was not the pilot's and this was the gist of his comments "This is customer service.  This flight is cancelled.  Exit the plane with your belongings, walk over to the next terminal and stand in line at customer service to rebook or go standby."

Admittedly, I've got a bum left ear but I didn't hear a "sorry" nor "we regret this inconvenience" or similar.  I also didn't hear anything in the tone that was sympathetic/empathetic to our plight.  So, in a state of silent confusion, we trudged off the plane with the lone flight attendant that remained averting her eyes and not acknowledging us as we got off the plane.  Warm fuzzies all around!

So, after the panicked walk/run with wheelie bags to the other terminal, 45 minutes in line and only halfway to speaking to a live agent, we get rebooked via phone on a 5:30pm flight.  But we still had to stand in this long line to get receipts, passes, etc.  No sympathy from the phone agents either, by the way, and we had to tell the same story a few times over.

During the next 50 minutes in line, we realize that our trip now would be all of 1.25 days which wasn't worth it and wanted to cancel.  When we got to a live agent, she said she could help us but we should have done that over the phone - something we didn't know.  She also said she couldn't refund my sister's money but that she could have done that over the phone - also something we didn't know.  The good news, according to her, was that she refunded the miles back to my account.  It turns out, I had to call back later in the evening because she actually hadn't refunded the miles.  It was a fitting cap to a confusing and frustrating day with Chicago's hometown airline.

There were so many things that could have gone better and they all boil down to my wondering if they have a brand identity and if so, how it relates to employee engagement or lack thereof.  It's clear that neither time nor money have been spent on building real relationships with employees that transfer to building real relationships with customers.  Information, the lack of it, misinformation and delivery is all part and parcel of employee engagement.  It's clear in my example that time nor money haven't been spent on engaging employees.  Perhaps better put, so little time or money has been spent that it has led to employee disengagement.  The result is confusion and dissatisfaction: employee and customer.

Last month, I talked about the importance of apologies - remember Umpire Jim Joyce's disastrous call and instantaneous acceptance of his error?  I also talked about employee empowerment and I used Southwest's rapping flight attendant as a prime example of how the airline has successfully encourages its employees to  "walk the talk" of its brand promise.  As I said then, the word "sorry" doesn't absolve you.  Rather, it's an acknowledgement of what went wrong and that one understands the impact on others.  It also means that you have the power to provide the solution or lay the groundwork for a solution.

Customers want guidance towards a solution especially amidst a sea of confusion.  To be clear, it shouldn't be that we hand hold all the time.  Rather we take a few extra steps to provide meaningful pieces of information as an aide to customer decision making.  Making that extra effort and/or ensuring that the customer has the needed tools to make a satisfactory decision really can make a difference.  As I pointed out here, Maritz data show that 43% of customers defect because of poor service with 77% of that 43% connecting poor service with employee attitude and 83% of the 43% telling others their horror stories (like I've done here).

To bring it home: I can't begin to tell you how many times I heard, "I forgot how much I hate this airline." or even "This is why I fly Southwest." while in line on Friday because of the confusion, misinformation and a seeming lack of empathy/sympathy.  So, in real terms and using those Maritz percentages, if there were 150 people on that cancelled flight, about 65 will defect.  Of that 65 that defect, about 28 will say it was due to poor attitude and about 54 of them will tell their sad story to others.

Ouch.  Those are some serious numbers.  Wouldn't you agree?  I'll talk a little more about serious numbers in my next post.

Until Then,

Parissa Behnia
Idea Chef

678Partners@gmail.com
678Partners.com
LinkedIn

Amazon.com and a Mea Culpa

Friends, I have to tell Amir, the Network Sommelier, that he was right.  Earlier this year, he purchased one of those nifty portable Flip Video Cameras so that we can make vlogs on the go as we're zipping about town.  Quite convenient - all you have to do is hold up the camera to yourself, press the red button, start talking and ignore the strange faces on the passersby.

Anyhow, a few days after he received the camera and fell in love, Amir received an email from Amazon telling him about the Flip Video Camera, how cool it is, what its uses are and that if he purchased it with a Flip accessory, he could get an attractive bundled price.  And yes, friends, the attractive bundled price was less than he actually paid.

Understandably, he was all sorts of confused, frustrated, angry -- he kind of went through the five stages of grief (here) and I went on that journey with him complete with him asking me to write about it.  And, objectively, I did think it rather odd that he'd received an email about a great product he'd already purchased let alone the fact that the great product would come bundled with another item at a cheaper price than what he actually paid.

I chalked it up to a weird processing mistake, "Maybe they meant to say that because you bought the Flip, you'd be interested in XYZ but instead something went awry with the programming."  I just didn't think it was blogworthy...  But he was frustrated enough to think it was vlogworthy.  See this little video:

So...  fast forward to earlier this month.  I had to buy a book for my next club meeting (hi S, S, S, T, C, K and M...  or Stick 'Em as I just noticed) so I purchased that as well as a milk frother for my daily cafe au lait from our good friends at Amazon.  I got the package shortly thereafter and all was well...  Until I got an email from Amazon touting the features and benefits of different (and fancier) milk frothers than what I had just purchased.  And, to Amir's point, it didn't even open with a salutation.  Instead, here's what it opened with:  

"Are you looking for something in our Small Appliances department?  If so, you might be interested in these items..." 

Mr. Bezos, I was interested in something in your Small Appliances department and that's why I purchased it.  Thanks for letting me know that it wasn't special enough for you to remember.  And, oh yeah, thanks also for letting me know what I purchased was probably a bad decision.  I'm going to sulk for a bit and think about what could have been amazingly frothy cafe au laits instead of what I'm having in real life.

Okay - that was melodrama.  This is not life altering in the slightest.  My cafe au laits are perfectly frothy.  But, what it does is give me the case of the bummers.  How can it be that Amazon of all companies makes this boo boo not once but twice?  And who else is getting this feeling of disconnect from them especially in this age of super turbo super socialized CRM?  If this were a much smaller outfit and/or an outfit just starting out, I'd understand and forgive it.  But, this is Amazon.  This is the company that asks us to rate past purchases and recommendations so that they can refine what's presented to us further...  because they want to personalize the experience!  

This is also the company that bought Zappo's last year.  Last month, as you recall I wrote two posts about Zappo's (here and here).  Zappo's tagline is "Powered by Service" and Tony Hsieh very much believes that your culture is your brand and vice versa.  As I mentioned then, their great success is borne of their personalized customer service and they very much "walk the talk" when it comes to their customer service philosophy.  It's that commitment that garnered the $1.2B price tag, that results in 75% of daily orders being repeat business and that 1Q results were 50% greater than 1Q results last year.

So if Amazon is structured for refined recommendations and customer specific content...  and Amazon bought Zappo's for that level of customer service commitment that has made Zappo's so successful...  How was it that the emails we received didn't reflect recent purchases?  It's so odd and, honestly, not aligned with previous experiences with them.

What about you all?  Have you had this happen to you?  I'd love to hear your stories.

Until Next Time,

Parissa Behnia

Idea Chef

678Partners@gmail.com

678Partners.com

LinkedIn

P.S.  Please visit with us on Facebook!

Duane Reade's New York State of Mind

Hello Everyone!

Earlier this week I had the utmost honor to be a guest blogger for Shopper Insights in Action.  I learned quite a bit and met many great people!

Today, I would like to tell you about the talk by Joe Jackman, Duane Reade's CMO, which covered how that drugstore went from convenience destination to desired destination.  It's truly a "if you can make it here, you can make it anywhere" kind of New York story.  Honestly, I was excited for the preso because, as a former New Yorker, I remember my Duane Reade shopping experiences well... and not always because they were like running through a meadow of beautiful flowers.

Shopping at Duane Reade is like breathing -- vital but not always conscious.  It's a part of NY cultural fabric and before it's transformation, it felt like as you went from store to store the only thing in common from store to store was its name.  There was no consistency in format, layout, etc.  As you traverse the streets of NY, that's charming because every neighborhood in every borough (what up, Brooklyn?) has its own vibe.  But it's not charming when you're trying to have a quick, easy drugstore experience.

It's easy to say that New York is a brand (watch this Jay Z video to understand why).  But it doesn't mean that Duane Read was a viable brand on par with that of New York (or Jay Z).  And that was at the core of the research work to wort out how to revitalize and reinforce Duane Reade as a #1, top of mind drugstore shopping destination.

What did they learn?  Quantitatively, they knew they had the highest sales per square foot but that they were at the risk of being overrun by CVS and Rite Aid because those two brands bested Duane Reade in every single research dimension - ouch!  Qualitatively, they found numerous sites/blogs devoted to how much New Yorkers loathe the store.  Double ouch!  Net net: if they didn't do anything, they'd be gone like a New York minute.

They essentially learned that while Duane Reade stores are ubiquitous, it didn't mean ubiquity meant ease. Consumers told that they were bored, needed information, craved engagement and wanted things that would pique their interest to pull them into the store and keep them once they got in.  Duane Reade took the time to learn who their shoppers were and, significantly, who their shoppers weren't and honed in on three segments that represented their sweet spot.  And their sweet spot is nicknamed Maria, a busy ethnic minority woman living and working in multicultural New York.

So, they learned who their shoppers were and what they wanted.  Many companies would make subtle changes and hope for the best.  Duane Reade underwent a top to bottom change which not only required engaging with their customers and earning their loyalty but engaging their employees and earning their loyalty as well.  Many companies focus on the former but forget that it's an internal and external rebranding initiative!

Duane Reade decided to "own" New York.  And their new tag line "New York Living Made Easy" does just that.  It acknowledges that living in New York is a unique experience and that it can sometimes be hard.  It also lets you know that shopping at one of their stores now matter where you are in any of the boroughs will make it easier to navigate the city's landscape.  It's peace of mind in a concrete jungle.

In their stores, it's top to bottom format redesign with bright colored, well lit and easy to navigate aisles.  Cosmetics sections appear more inviting and the pharmacy is redesigned to look more professional so you can feel confident in asking for recommendations while waiting for your prescription.  It also allows for an employee fingerprint: one of the stores lists all the employees' favorite things to do or see in New York.

Duane Reade wants to reflect its New York heritage, a New York sense of humor and the "soul" of the brand.  The store redesign speaks to some of the quantifiable things shoppers wanted in an ideal store but the advertising reflects some of the intangibles.  Here are some funny gems that were on some NY cabs:

• Germs are everywhere and so are we.
• One place even tourists can find.
• Where the toughest people get the softest toilet paper.

The beauty of all of these initiatives starting with the research shows a wonderful sense of alignment and understanding of the long term goal of business survival and business triumph.  It's not an easy task to have the discipline to understand the research, devise the segmentation, drive internal and external branding initiatives, redesign the store to service the modern demands of "Maria" and reintroduce the brand to millions of skeptical, jaded New Yorkers.

This discipline allowed Duane Reade to go from being at risk to being acquired by Walgreens for over $1B.  Not bad, eh?  Have you shopped at Duane Reade recently?  Please share your thoughts!  And, join us on Facebook!

Best,

Parissa Behnia

Idea Chef

678Partners@gmail.com

678Partners.com

LinkedIn

Baby Registries and Customer Experience

Hello!

Thanks to everyone for the live feedback, comments on Facebook and here on the last post.  I had fun writing it and researching it.  And by researching, I mean that I watched that Huggies commercial multiple times.  Hey, I'm easily entertained.

Last month, I told my Budget car rental escapade (here, here and here) and it turned into an excellent discussion of why (and how) Jet Blue (here) and Zappo's (here and here) get it "right" when it comes to customer experience.  I also pointed out data from the always reliable Bruce Temkin to demonstrate the causal link between customer experience and business results.

In other words, customer service and customer experience matter.  We know that there are top line and bottom line impacts when we don't pay attention to either.  And, by this point, the fact that they matter should be more a "preaching to the choir" as opposed to a "teaching moment" for business people.  *sigh*

A friend was recently invited to a shower and the shower hosts instructed those invited to visit myregistry.com to purchase from the list the guest of honor compiled.  Easy enough, right?  Nope.  She had to call in reinforcements and when she couldn't find them, she asked me to navigate it with her.  It was probably one of the most complex things I've seen in a while.

Have you been to myregistry.com?  It's a consolidator of store items into one master registry list.  After you sign up for an account on myregistry.com, you can add a "Add to My Registry" button much like you can add a "Share on Facebook" button to your browser toolbar.  You can visit any site you wish and if you happen upon a must have item, you simply click "Add to My Registry" and it's added to the master list.  You can also sync all of your store registries so, again, it becomes a neat one stop shop.  In theory, it's a gift registry tool for good especially for the discerning, discriminating, time strapped or nervous and for people looking to give gifts.

In practice, it's a gift registry tool for good only for the discerning, discriminating, time strapped or nervous bride or mommy to be.  It can be painful for everyone else because though one can sync lists from larger department store registries, it's also possible that the registrant can choose one item across multiple, obscure, small sites which, as luck would have it, was the case for my poor friend.

See, the guest of honor had visited multiple smaller retail sites and chose multiple products, many with price points in the $5 - $15 range and her master list reflected all of her great choices.  The problem becomes when you make a selection.  In my friend's case, if you want to choose multiple items, you're directed to multiple sites with multiple tabs open on your browser.  You have to actively select what you want to purchase and go through checkout multiple times (your billing address, the shipping address, credit card info, message, etc).  After you go through that, you're to go back to myregistry.com to update the master list.

In other words, there's no link between the master list and the site from which you're purchasing at any step of the purchase process.  And, there's no roadmap to explain why multiple windows open when you select an item, that you need to go through multiple checkouts and that you need to return to the master list to update it.  Figuring it all out takes a lot of time, a bit of confusion and a smidge of aggravation.  Completing the purchases takes a whole other chunk of time, a bit of confusion and a smidge of aggravation, too.

In the grand scheme of things, this might not be "important" at all.  It's not on the scale of the oil spill nor does it solve high unemployment.  But, it still matters because of how we perceive others' appreciation of our business.  As consumers, we have choices.  And, as I mentioned in my last post, this unstable economic environment has made us savvier and warier consumers.  Our antennae are now trained to pick up "value for money" as we purchase.

As we've said so many times before, the minute by minute customer experience matters.  Sure, the "Add to My Registry" button is functionally a great idea but one wonders how much research went into actual user experience?  Did they consider scenarios like the one my friend went through?  And if they had, why didn't they build an explanatory roadmap so people don't spend time spinning their wheels trying to figure it all out?  In other words, why didn't the customer experience matter?

It comes down to strategy, lack of strategy and/or the failure of strategy.  You might recall my posts about stress testing from last week (here and here) with this anecdote being a good practical example of why we need to test and retest strategic and tactical premises.  On paper, the linkages to multiple sites makes sense but its failure in practice showed a lack of care and precision in execution.  The end result: aggravation instead of joy in buying a gift as well as resolution to never use myregistry.com if one can help it.

What's your take?  I love those comments!

Best,

Parissa Behnia
Idea Chef

678Partners@gmail.com
678Partners.com
LinkedIn

Designer Baby Booty

Hello!

I hope everyone had a great holiday!  Mine was filled with parties, BBQs, friends from out of town, hot/humid weather and the requisite overeating...  Just as July 4 should be!

Right before the holiday, my friend A.M. (Bonjour!) sent me a short article to share on the 678 Partners Facebook page as she knows I have affection for the unusual.  And this article was about Cynthia Rowley designer Pampers.  No need to adjust your monitors, rub your eyes or check the lighting, my friends.  It's true that Cynthia Rowley, the American designer, was asked by P&G to design high end Pampers.  And design she did.  In all, there are 11 patterns that will be sold in Target stores starting this month.  There's no long term commitment but if P&G is happy with its performance, it's conceivable the line will expand.

And, I'm sure many of you have heard of or even seen the Huggie's denim style diapers.  Below is the commercial which has both amused some and turned off others.  Full disclosure: it gives me the giggles.

You know what I find interesting about the Cynthia Rowley Pampers?  Aside from the fact they had a serious conversation with her about this, that is?  The suggested price of these diapers is $15.99 which is $6 higher than the plain variety.  So, for 60% more, your baby can relieve him or herself in style.  I don't know how that's a good fit with the realities of today's consumer.  The Huggie's suggested price for a pack of 29 is $13.49 and is priced higher than the plan variety.  To be clear: I'm all for baby fashion and nothing is more hilarious or more fun than shopping for baby clothes, etc., so I don't judge dressing babies to maximize their natural cuteness. 

If you've picked up any sort of newspaper, you will have read stories about how private label (also called private brand or store brand) is taking the country by storm and how consumer mindsets are shifting towards value for money type of purchases.  Also, we've seen multiple articles and analyses about the seismic shift in purchase behavior of private label not only because of the unprecedented economic environment but that also, frankly, private label product quality has improved dramatically.  Focus Group of One: I used to be squeamish about buying private label but now, I give it nary a thought.  A peek at my grocery shopping cart will show a large percentage of private label canned goods, pasta, storage bags, etc.

Some data just published from Private Label Manufacturer's Association (PLMA) reinforces this.  Sales of private brand products increased by 1.8B units and national brand units decreased by 2.1B.  In grocery, private brands were 23.7% of unit share and 18.7% of dollar market share.  A recent BrandSpark study shows us that 59% of Americans think that private label products are good as brand name products, 66% of consumers (this is an international study) believe that private label brands are usually extremely good value for money and that 56% of Americans have purchased more private label products in the past 12 months.  

You could extrapolate these points to say that consumers will feel less risk in expanding their private label purchases into new categories.  After all, if you buy private label chickpeas and are consistently satisfied, you may start buying private label cereal, for example.  And many stores believe that.  Rite Aid just announced a whole new private brand line and Walgreen's attributes a portion of its latest positive results to its private label offerings.  It's safe to say that private label is here to stay and it's safe to say that the private label/value for money mindset is ingrained into the consumer.  

So let's talk about diapers again.  More specifically, let's talk about diapers that are 60% more expensive than its plainer branded cousin let alone way more expensive than its private label counterpart.  You could argue that these designer diapers are for the affluent whose wallets aren't squeezed like the rest of us.  True.  But then these would be in better packaging and sold at Bloomingdale's not Target.

So why does it seem like P&G is not in touch with what's going on in the consumer landscape?  After the novelty fades, how many newly savvy and savvier shoppers will want 60% more expensive diapers?  What's your angle?  Let me know!

Best,

Parissa Behnia

Idea Chef

678Partners@gmail.com

678Partners.com

LinkedIn

Pier 1's Cardiac Stress Test

Happy Thursday!

It's July 1.  Holy smokes where did the first half of this year go?

I saw a tweet earlier this morning asking if anyone was halfway to accomplishing goals for the year.  It's a question many ask but it assumes that goals only have a one year shelf life with the creation of wholly new unrelated goals the next January 1.  What about goals that span a few years to fruition, that force you to make some tough decisions which may seem weird or (gasp) that show you have looked at your business stressors in the eye?

In my last post, we talked about embracing failure and used cardiac stress tests as example of why seeking the causes of failure is actually a good thing.  I encouraged us to be marketing, really business, cardiologists to look for the stressors in branding, messaging, products, service, customer experience, etc., so that we can identify where we are failing and write our business prescriptions to save us from an untimely end.

It's not silly to stand up and admit the possibility of failure.  And, really, do you want to be known as the business version of the Emperor's New Clothes tale?  I certainly don't.

And, interestingly, neither did Pier 1.  The other day, I came across a brief (yet interesting) interview of Alex Smith, Pier 1's CEO.  What was striking to me was the decision to cease e-commerce sales in 2007 during a time in which everyone was selling online or starting to sell online.  Let's face it: selling online is like breathing.  Everyone does it.  And yet they still walked away from it.

This was because they understood the failure factors in their underlying business model namely store operations and profitability.  They were low on cash and the stores weren't operating at satisfactory levels.  And because they knew that when (not if) they fixed it, they'd be able to be open again for e-business.  Here's what he said:

"The pie is still there ... We had a very acute business situation that we had to fix.  [E-commerce sales were] de minimus, so we weren't giving up a whole lot by getting rid of it."

I wish I were smart enough to use a term like "de minimus" but setting that aside, I wish I were smart enough to understand broad, longer term vision as opposed to letting the desire to "keep up with the Joneses" to inform my business strategy.  In 2006, Pier 1's internet sales were only 8% of the total.  So, he was right to call it small in the grand scheme of things and to redirect funds to improving profitability and store operations which brought in the lion's share of their revenues.

In the meantime, Pier 1 has closed 200 stores and renegotiated rents on many others.  They've streamlined merchandising and improved inventory management.  Result?  In times where stores are struggling and desperate for positive same store sales numbers, they were able to report 14% same store sales increase in May with June numbers trending in the same direction.  Their shares have risen about 29% this year.  Juxtapose those numbers with some depressing consumer confidence numbers and market volatility we've seen recently and you'll understand that Pier 1 understands their mission to survive and are committed to it.

Pier 1 will be back into the e-commerce pool this year.  But, in another instance where they identify and understand failure, this won't be a cannonball jump -- more like a tentative toe dip into the pool to check the temperature like site to store shipping instead of shipping direct to the customer.  He further says:

"One of our greatest strengths is that we have got this great nationwide coverage of stores ... We believe that 70% to 80% of our target customer base lives within a very comfortable drive time of our stores.  We also know from our research that customers buying home product like to see and touch the product before they finally commit, even though they do a lot of research online."

What I like about this is that it's a realistic blend of the necessity of e-commerce presence while at the same time understanding the realities of their business model and also understanding their type of customer.  In other words, they understand the critical points where they might fail and are considering ways to mitigate or eliminate failure.

Would Pier 1 still be around if they didn't cease online selling in 2007?  Maybe.  But maybe not.  But it was also risky to cease sales in the broader "perception is reality" point of view.  They stopped selling while others ramped up.  They went on an e-commerce diet.  Think about when you've been on a diet -- you really want that piece of cake, that juicy steak or those fries.  But you know you have to stay away from it.  It's hard!

And so is acknowledging where you might be failing and doing something about it.  What's your view?  I'd love to hear from you!

Best,

Parissa Behnia

Idea Chef

678Partners@gmail.com

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