Modern Magic Formula

customerserviceI recently had dinner with a small group of leading figures in the UK retail industry.  The broad topic of discussion was the current state of play with particular reference to shoppers changing habits and the rise of mobile and internet shopping.

The findings will form part of a larger report later in the year, so I won’t steal Kantar’s thunder.  However we did keep coming back to the same point.  Whatever the channel, the only real point of difference any retailer has is the way their people interact with customers.  There is nothing that any of us offer that someone else does not, or could not offer.  And they may well be able to do it cheaper, faster, better etc.

I have had the pleasure of working with Martin Butler in the past.  He puts it far more elegantly than I can and in much more detail – for more on this check out his books here.  Martin argues that ‘People don’t buy what you sell‘ and as a consequence retail is ‘The art of being chosen‘.  For all of our focus on new technologies and channels retail still is about being chosen and for me that increasingly comes down to customer service.

So called ‘showrooming’ (where a shopper visits a store to try a product with the full intention to buy online) is often seen as a threat by many retailers.  I have certainly been into stores to look at an item ‘in the flesh’ then walked out and bought it online using my phone before I hit the street.  And yet it is a great opportunity, here they are presented with a potential customer who is ready and willing to buy.  Great customer service can easily trump price and I have definitely been into a store to try with no intention of buying there and found myself handing over my plastic having felt I had just made a new connection.

Arguably any retailer who sees showrooming as a threat and not an opportunity has big issues.  These may not be easy to fix but I’d argue that they are simple to understand.  It is ultimately all about the people, all about their training, all about their leadership and all about their freedom to act.

This all seems very obvious.  Yet retail is typically very controlled and hierarchical, it’s more about monitoring and checking.  Staff clock in and out, there are strict rules to prevent theft and fraud and processes to ensure everyone keeps working.  In this environment there is little room for trust, procedures and policies rather than common sense cover all aspects of the job.

This frequently translates into a disengaged ‘jobsworth’ attitude.  Staff will not be willing to move away from the laid down policy regardless of the circumstances for fear of their job.  I heard a story of a staff member who left to train as a nurse.  On his last day after his shift a few drinks were had and somehow his shoes ended up in a canal – I think we have all been there.  No worries, he went back to his store that was just closing up to buy a pair of cheap sneakers to walk home in.  As the tills were closed he was refused to be served, he offered to leave the cash.  But no, there was no policy to cover this.  It might get the sales assistant in trouble.  So he walked home barefoot.  I forgot to mention – it was snowing.  Does anyone think this was in any way right?

The solution isn’t easy but it is simple.

Trust.

Trust that you have hired the right people (if you haven’t whose fault is that?), trust that they all want to do a good job (I know no one who sets out to do a bad job), trust that they want to learn and grow (we all do if we allow ourselves to admit it).  Build an atmosphere of trust and trust staff to not only do things right but to do the right things. Human beings not human doings.

The rest follows.

You will feel very exposed and yes sometimes your trust will prove to be misplaced. And weighed against the freedom and benefits of not having to act like a secret policeman, the improvements in customer service with the consequent improvements in results it is a risk that might be worth taking.

Of course this does not just apply to retailers, or even to organisations.  As individuals we are all looking to be chosen and trusting in ourselves is a good step on the route to being chosen. After all if you don’t trust yourself why should others trust you?

All we need is a magic formula
A whole new backbone
Is what we’re looking for
So you wanted to change the world
But I didn’t believe you
That’s why we’ll say goodbye to the good old days son
I’m trying the best I can
But there’s a white flag burning in the middle of my hand
I’m tired of being exposed
And I don’t know how much more of this I can stand

Modern Magic Formula – Biffy Clyro

Shock Shock

The Co-operative retail movement was set up by 19th century Weavers in the industrial North West of England.  The foundations, which still hold today, were based on the business being member owned for the good of society.  Now running a range of businesses from Childcare, through Retail  to Funeral services the Co-op is a cherished and trusted organisation and it’s Banking business with it’s ethical principles seemed to offer an alternative to the ‘casino’ Banking that is now condemned.  But now, close to collapse the Co-op bank has had to be ‘rescued’ itself.

It was the acquisition of the failing Britannia Building Society that started the problems.  Like most of the other Mutual (ie member owned) savings societies the Britannia had incorporated allowing it to buy out it’s members for a few pounds and then act more like a ‘real bank’.   Sadly the Britannia was going bust (that did seem to be a definition of a ‘real bank’ in 2008) and the Co-op Bank bought the failing business.

The Co-op for it’s part underestimated the size of the bad debts in Britannia and overestimated it’s own management capabilities to turn things around.  It also failed to attract new accounts – given how little respect the public had for the main Banks and the apparent appetite for a different approach that seems incredible.

It is perhaps not unexpected but once again the words mismanaged and Bank seem to come together.

Now a deal has been struck with a number of aggressive Hedge funds ( the very antithesis of the ideals of the founders) to put £1.5bn into the business.  The Co-operative group will have to find around £500 million and will end up with only a 30% stake.   Of course everyone is now concerned that the Bank will lose it’s ethical stance.  That would be the same ethics that lead the Bank to have to put around £400m aside to compensate customers for mis-sold PPI claims etc.

In fact the Hedge funds know that without it’s ethical positioning the Co-op has little to differentiate itself and the new owners may well make a better fist of building on this unique selling point.  There are steps being taken to ensure that the basic principles of a mutual bank are retained and in truth a 30% stake should be enough for the Co-op to control matters.

Whilst the hard nosed business realities mean that the ethical principles are likely to be not only retained but strengthened, the ownership structure will lead many to challenge the authenticity of those principles. Throughout this saga it has been a lack of adherence to the basics of the Co-operative ethos that have been at play.  A lack of authenticity on behalf of management underlies many of the issues.  And yesterday the news broke that Chairman at the time is now facing charges of buying illegal drugs, the night after he testified to the Treasury select Committee, from a guy he met on Grindr.  It’s worth mentioning that he used to Chair the anti-drugs charity ‘lifeline’ and is a Methodist Minister.  The point isn’t that Flowers should be criticised for using Grindr and drugs  but the sheer bloody hypocrisy (if the allegations are true).

We should all learn from this, once we cease to be true to ourselves in even small ways we lose our way and lose the trust of those around us.  Finding and sticking to our own core values and purpose is a certain way to gain trust and improve our own fulfillment.

So whilst I wish the Co-op well as we need a better banking model (I should also declare that I am a Co-op member, an investor in the Bank and have many friends employed in the various businesses), I fear that faith has been lost in the very principles on which the business is built and the USP is badly damaged.  Time will tell how well they are able to repair the damage.

“You’re wondering why you’re exhausted, exhausted
From using theses lies, I’m sure you’ll regress again
Maintain your silence”
Biffy Clyro  – Shock Shock