When Kevin Peters took the post as president of Office Depot‘s U.S. operations, he discovered a disturbing discrepancy: Same store sales were declining, but mystery shop scores were better than ever. His response was to go “undercover” to do his own market research, he explained during his keynote at the Forrester Customer Experience Forum 2012 East earlier this week.
Peters went on the road to experience Office Depot’s stores as a customer would. He donned casual clothes and visited 70 stores in 15 states over several weeks. His plan was twofold: Uncover the cause of the discrepancy, and get answers to the question, what brings you to Office Depot today?
“We live in a very competitive environment, no matter what industry you’re in,” Peters said. “Customers have more choice than ever before. You have to differentiate to win.” For Office Depot, customer experience could be that differentiator. Learning from customers and associates directly would provide the insight the company needed to make the right customer experience improvements — in other words, improvements that would impact customer satisfaction enough to increase sales and improve loyalty.
Peters started each visit by observing customers in parking lots. Some customers left without a bag or receipt in hand. “We’re not a ‘shopping destination’,” he said, adding that people shop there to purchase specific items, not to browse. Peters wanted to learn what customer experiences issues customers encountered that caused them to leave without making the purchase they intended to make.
After observing staff and customers in several stores, Peters determined that there were too many fair to poor experiences, and only few good ones. “Not enough to differentiate us,” he said. And certainly not a situation that traditional marketing alone could remedy.
A visit to one New Jersey store was the turning point. Peters observed too many customers leaving without a purchase — far more than at other stores. He then noticed an associate on a cigarette break in front of the store, also watching customers leave, but nonplussed. Although Peters didn’t want to break his cover, he felt compelled to talk to the manager.
Turns out that the disinterested associate was the store manager.
“It’s not his fault that customers were getting a [subpar] experience,” Peters said. “It’s our fault; my fault. We said to focus on tasks.” In other words, put away stock, clean, face shelves, etc., instead of focusing on customers. Mystery shops scored the quality of those tasks, that’s why scores were high. It turns out that Office Depot was measuring the wrong things.
“You need to earn [customers’] business every day or you won’t be relevant,” Peters said. “If you don’t deliver the message every time they visit that they’re important, you’re not going to gain their loyalty.”
As a result of Peters’ cross-country tour and extensive analysis of customer feedback, Office Depot set out to improve the customer experience in ways that matter most to customers. This includes introducing a new customer-focused selling model (supported by 80 hours of training for all associates), adding smaller stores, introducing copy and print services, adding shipping and tech-support services, and increasing the focus on its small business customers, which comprises two thirds of its base. It also included process changes like receiving daily deliveries and stocking in the early morning before the store is busy. As a result, the company was able to move two FTEs per store to the selling floor, which means more staff is available when customers need them.
Currently more than 700 stores are using the new selling model; all 1,100 stores will use it by Q3 2012. Conversions and store sales have increased among the stores using the new model.
Today, at the new stores, associates no longer use basic greetings; they ask the one question Peters started his journey with: What brings you to Office Depot today? That question has translated to a 40 percent increase in customers proactively serviced. As Peters noted, there’s no better marketing tool than a personalized customer experience based on what customers value most.
Office Depot’s next step is to optimize its website in ways similar to its in-store changes. In other words, the company needs to understand why customers visit its site but don’t convert, and then use that information to make sure it’s being relevant so they do.
Based on his experience, Peters’ shared this advice:
- Measure right. Make sure that what you’re measuring matters most to customers; those are the driver metrics. Others measures are results metrics.
- Act on customer insight. “There’s only one way to know what customers are thinking and that’s to ask them,” he said. Understand what’s most important to them and then take action.
- Stay focused. The competition wants your customers; and customers know they have more choice than ever. So, deliver what customers value every day.
“Remember,” Peters said, “we need our customers more than they need us.”