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DPHA2009 Presentation Final

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This is a presentation I gave at the 2009 DPHA (Decorative Plumbing & Hardware Association) conference. The focus was on how to improve business using better customer engagement, company culture and …

This is a presentation I gave at the 2009 DPHA (Decorative Plumbing & Hardware Association) conference. The focus was on how to improve business using better customer engagement, company culture and carpe defect - the idea of seizing on a bad customer experience as a marketing opportunity.

Contact me with any questions.

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  • I think I know what you want.
  • The GOOD news is, I’m going to show you how you can get MORE. In the next couple hours, we’re going to talk about ideas, strategies and tactics to better engage with your customers and grow your business. The BAD news is....
  • I don’t have a magic wand.
  • I don’t have any magic mushrooms.
  • I don’t even have a magic spreadsheet that will spit out the optimal product mix for each of your stores in each of your markets.
    What I DO have....
  • is a deep understanding of CUSTOMER ENGAGEMENT and some pretty compelling evidence that CUSTOMER ENGAGEMENT IS THE NEW MARKETING and it’s exactly what you need in order to achieve your goal of MORE.
  • The things that I’m going to talk about today are going to require some CHANGE on your part. CHANGE isn’t easy. SOME of you are going to leave this presentation and talk about these changes at the bar or maybe on the plane on the way home but when you get back to work, you’ll get super busy rearranging the sales floor in early November and ...THEN your son gets in a fender bender....so you’ll make the changes AS SOON as you’re done dealing with the insurance company...but then it’s Thanksgiving and you’re swamped with the holidays but you’ll DEFINITELY get to them after the holidays but before you know it it's... New Year's Eve.....so these changes become New Year’s Resolutions ....
  • and we all know what usually happens with those. But SOME OF YOU are going to leave here and take the necessary step to make these changes. You’ll LISTEN TO and ENGAGE your customers in a whole new way, and you will see the positive impact it has in growing your business.
  • Pam Danzinger is one of the top experts in the world on luxury. She frequently publishes detailed research reports on trends in luxury spending...
    I know Pam and I like Pam. Her research is thorough and her data is accurate but as far as your business is concerned, it’s sort of like listening to the weather report in the morning. If it’s .....
  • raining, there’s not a lot you can do about it, except use an umbrella.
    If luxury spending is down 35% in your industry, YOU HAVE
  • NO CONTROL over that. Just like the stock market, you have NO CONTROL over luxury spending trends.

    What DO you have control over?
  • You have control over your company culture. You have control over how you choose to motivate or inspire your employees. You have total control over how you engage with EACH AND EVERY CUSTOMER that walks through the door - how you treat them BEFORE, DURING and AFTER a sale. You have control over....
  • how you make them FEEL. You can’t change the weather but you can make it a lot more fun to stomp in the puddles. There are three components of customer engagement that I want to talk about today but first, I want to do a little exercise. Everyone’s brain has a feature that helps us and hinders us.
  • Your brain is a PATTERN MAKER. From when we’re young, our brain develops patterns to keep us alive. Hot stove. Patterns give us language, order an logic. But patterns also have a negative side. Since we gravitate toward the familiar, patterned service can be ordinary, regular and normal. Ordinary service isn’t a sin but it’s not extremely memorable. So we’re going to do a little pattern-breaking, reinvention exercise to open up our minds.
  • Do you all have your handouts and a pen or pencil? This is question #1. I’m going to give you 60 seconds to look at the next slide and I want you to write your answer down, but don’t share it with anyone. OK? Are we ready?
  • Go. Sixty seconds. Write down your answer.
  • OK. By a show of hands, how many said 17?
  • 26?
  • 30? Did anyone come up with a different answer?

    None of those are the correct answer. And here is where the pattern breaker part comes in. I’m going to show the puzzle again with a hint.
  • The correct answer is 31. Does everyone see 31? So thinking of this exercise....let’s try to keep a very open mind today and try to think of some patterns that we can break.
  • I was lucky enough to spend the last two days with a company who is WIDELY RECOGNIZED as having some of the best customer engagement of any company in America. Their leader is brilliant. Their employees couldn’t imagine working anywhere else. They have won lots of awards and other companies try to copy so much of what they do. I learned so much during the last two days in.....
  • Scranton, Pensylvania. Dwight was nice enough to show me around Scranton. Pam and Jim actually weren’t there but they were off on their honeymoon…..
    No - I spent the last two days at....
  • Zappos in Henderson, outside of Las Vegas. Who here is familiar with Zappos? Show of hands?
    Zappos is a really amazing story with fairly simple beginnings.....
  • The year was 1999, and the founder Nick Swinmurn was walking around the Stonestown Galleria mall in San Francisco, looking for a pair of shoes. One store had the right style, but not the right color. Another store had the right color, but not the right size. Nick spent the next hour in the mall, walking from store to store, and finally went home empty-handed and frustrated. At home, Nick tried looking for his shoes online and was again unsuccessful.
  • This is Zappos revenue growth chart. From nothing in 1999 to over a BILLION dollars last year and they continue to grow. Almost three months ago, they were purchased by Amazon.com for about $950 million dollars total.

    The interesting part of the story? They built this business SELLING SHOES!........ONLINE! People have been selling shoes before
  • KOHLER was around. And people have been selling things online for about 15 years? So what’s the
  • MAGIC of Zappos? How do they do it?
  • You guessed it. CUSTOMER ENGAGEMENT. So you guys are probably saying, OK, Clay, we get it. Customer Engagement will help our business. Enough already. What is it? How do we do it? Where can we buy some?
    Before we look at the three components that make up what Customer Engagement IS, I want to look at some examples of ...
  • Bathroom Trends magazine. Gourmet magazine.
  • #1 - Company Culture
  • #2 - The Customer Experience (before, during and after the purchase.)
  • #3 - Something I call Carpe Defect or “Seize the Defect”

    So here is what we’re going to do. We’re going to look at a few examples of each of these and after the examples, we’re going to work through an exercise to help you think of ways to improve each component.
  • We’ll start with Company Culture. Zappos culture book. It’s like Willie Wonka designed the cubicles.
    I went for a two day session but if you’re EVER in Vegas, you can get a free tour of the Zappos office. You can email tours@zappos.com or catch me later on and I can help you. I highly recommend it.
  • Transparency and trust. The Container Store has a philosophy that one GREAT employee equals three GOOD employees. The Chairman and CEO Kip Tindell says that “The way to retain employees, to make them care, is to communicate everything to them.” Knowing the company-wide impact of everyone’s efforts on business performance makes people feel like a partner, not an employee and they act more accountable. The RESULTS? Double digit growth every year since 1978.
  • Wegmans = 37,000 employees. What fuels Wegman’s growth is passion, training and trust. Let employees make thier own decisions no matter what customer situation they encounter. There is no rule book and there is only one rule: NO CUSTOMER IS ALLOWED TO LEAVE UNHAPPY. They invest heavily in training and CEO Danny Wegman believes that a trained, trusted employee will do the right thing. Stable workforce (7% turnover) - Operating margins = 7.5%- double their competitors - Sales per sq. ft. = 50% higher than industry average
  • #1 - Company Culture
  • #2 - The Customer Experience (before, during and after the purchase.)
  • I had to throw this in there. I think this kid’s probably got a MUCH better company culture than customer experience.

    But it is possible to have both.
  • Did you guys know this? They don’t sell coffee.
  • They sell a customer experience. Initially it was their stores and the feeling you got when you went there. It was the fact that a grande carmel machhiato extra hot no whip was the exact same at any Starbucks you went to and if you want to the same one more than three times, the barista started to know “your drink”. But they didn’t stop there.
  • I was there. I personally watched hundreds of orders being placed for shoes. But that’s not their business.
  • They’re in the happiness business. They’re in the business of making quality personal connections with each customer they can.
    i.They sell the feeling you get when you order your shoes Monday night, expecting them on Thursday or Friday and the Zappos box arrives at noon the next day.
    ii.They sell the feeling you get when you can order eight pairs, try them all on and send the seven you don’t want back, free of charge.
    iii.They sell the feeling that one woman had when she emailed Zappos explaining that the reason he was late sending his other shoes back was because his mother had died unexpectedly.
  • Well by now you’ve figured it out. Pattern breaking or not. You’re not really in the hardware business. You deliver customer feelings.
  • You sell the serenity of a relaxing hot bath to an exasperated mom.
    You sell the ability for a customer to listen to their favorite radio show or music every morning before going to work.
    You sell the warm feeling people get when their houseguests remark on their beautiful bathroom.
  • #2 - The Customer Experience (before, during and after the purchase.)
  • Setup temporary locker rooms.
  • I did promise DPHA that I would help you definitively determine whether or not you should be selling luxury soap and high end bathrobes, so we will get to that a bit later.
  • #3 - Something I call Carpe Defect or “Seize the Defect” Does anyone want to take a stab at what this one means?

    “MISTAKES ARE AN OPPORTUNITY TO MAKE A CUSTOMER FOR LIFE”
  • So we’ve been talking about how to inspire and empower your employees and how to deliver amazing, take their breath away customer experiences. But we’re all human. We make mistakes. This isn’t about Six Sigma or zero defects. In fact, defects are possibly the best opportunity to show a customer how much you really care about them. Let’s look at some examples.
  • This is Zane’s cycles. In a single retail location in $13M......A very special
  • bike was to be placed in the window of Zane’s Cycles on Valentine’s Day so the woman could show her husband. It was on layaway and they were going to pass by the store on the way to V-Day dinner. Greg, the employee at Zane’s forgot to put the bike in the window before he left for the night. The woman had arranged for friends to be standing there. Zane’s had lost the trust of the customer. The next day, the bike was delivered to the home of the customer and Zane’s forgave the amount not paid. But they didn’t stop there. They bought a GC to recreate the Valentine’s Day evening and bought the friends catered lunch. But what about Greg. Poor kid got canned, right? Nope. He sent Chris Zane a check for half the amount of the bike. He was willing to be out a week’s pay to right the wrong. Chris Zane never cashed the check and Greg is still a valued member of Zane’s.
  • Netflix decided that honesty is the best policy. In August 2008, they had a HUGE technical glitch that interrupted and halted shipping of DVDs to customers. They didn’t know which customers would be impacted but instead of waiting or hiding it under the rug, they were proactive. They posted on their website
  • They were swift and honest in telling people. They emailed customers who may not have known. They proactively extended the free trial for new Netflix subscribers who had their first shipment delayed.
  • They were swift and honest in telling people. They emailed customers who may not have known. They proactively extended the free trial for new Netflix subscribers who had their first shipment delayed.
  • They were swift and honest in telling people. They emailed customers who may not have known. They proactively extended the free trial for new Netflix subscribers who had their first shipment delayed. The Container Store has a philosophy that one GREAT employee equals three GOOD employees. The Chairman and CEO Kip Tindell says that “The way to retain employees, to make them care, is to communicate everything to them.” Knowing the company-wide impact of everyone’s efforts on business performance makes people feel like a partner, not an employee and they act more accountable.
  • Intuit - 2007 - glitch. Secured a concession from the IRS and refunded all the people whose return was processed during the server problem. $15M. Results?
  • #3 - Something I call Carpe Defect or “Seize the Defect”

    Does anyone want to take a stab at what this one means?

    “MISTAKES ARE AN OPPORTUNITY TO MAKE A CUSTOMER FOR LIFE”
  • I started this workshop by explaining that driving customer engagement will require CHANGE on your part. A CHANGE in how you think about your customers. A CHANGE in how you think about dealing with mistakes. A CHANGE in how you think about delivering an experience.

    And I’m sure some of your are sitting there thinking, “sure, those were some interesting examples, but how is it relevant to the hardware industry?” I’ll tell you....
  • It’s relevant because you’re not just competing with the other people in this room. This isn’t about Best vs. Kleff’s in Scarsdale. You’re competing with every experience that your customers have everyday. I GUARANTEE some of your customers order from Zappos. I GUARANTEE some of your customers get movies from Netflix. I GUARANTEE some of your customers shop at Trader Joe’s. They are constantly raising the bar. THAT’s your competition.
  • It’s relevant because not only have these companies cracked the code on managing the emotional connection with customers, that connection has become even more critical in the digital and social media age.
  • Social media has dramatically increased customers’ ability to share stories about the experiences with the people who serve them.

    Word of mouth has always existed but social media is like word of mouth on .......
  • steroids....dramatically escalating your customers’ power and capacity to influence other customers. And if you think social media is just for kids, listen to a couple statistics.
  • And if you think that social media and the Internet is important but it’s not in your industry, I suggest you check out sites like....
  • DesignerPages.com. This is not something that’s coming in 3 years. It’s here now.

    And you have to think about how to CHANGE your business. Staying the same will not result in any significant improvement. And if you don’t believe me....
  • Believe this guy...
  • Transcript

    • 1. MORE
    • 2. Customer Engagement
    • 3. CHANGE
    • 4. • Floor covering stores, down 19.3 percent from Jan-Sept 2008 to comparable period 2009 • Home furnishings stores down 15.3 percent
    • 5. NO CONTROL
    • 6. KNOW CONTROL
    • 7. Customer Engagement
    • 8. Customer Engagement
    • 9. Customer Engagement
    • 10. Count every square you see Customer Engagement
    • 11. 17
    • 12. 26
    • 13. 30
    • 14. Count every square you see Customer Engagement
    • 15. Customer Engagement
    • 16. Customer Engagement
    • 17. Customer Engagement
    • 18. Customer Engagement
    • 19. 10 Years Customer Engagement Zero to $1Billion in Revenue 1,000,000,000 750,000,000 500,000,000 250,000,000 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
    • 20. Customer Engagement Do I get the KOHLER now or wait 2008 years for the Mac hands free?
    • 21. Customer Engagement
    • 22. What Customer Engagement ISN’T?
    • 23. #1 - Company Culture
    • 24. #2 - Customer Experience
    • 25. #3 - Carpe Defect Customer Engagement
    • 26. #1 - Company Culture
    • 27. The Container Store
    • 28. The Container Store
    • 29. #1 - Company Culture WORKSHOP
    • 30. #2 - Customer Experience
    • 31. STARBUCKS DOESN’T SELL COFFEE
    • 32. ZAPPOS DOESN’T SELL SHOES
    • 33. YOU DON’T SELL HARDWARE
    • 34. #2 - Customer Experience WORKSHOP
    • 35. “Come Shower With Us”
    • 36. Halloween “Light Night”
    • 37. #3 - Carpe Defect Customer Engagement
    • 38. IMPORTANT: Your DVD Shipments Have Likely Been Delayed
    • 39. “Our apologies to all once again and thanks for hanging in there with us.”
    • 40. “Forget all those whiney haters. You guys did your best. You deserve praise for getting through it, not hatred for some hiccups.” - Netflix Customer
    • 41. The Container Store
    • 42. #3 - Carpe Defect Customer Engagement WORKSHOP
    • 43. CHANGE
    • 44. MORE GRANDPARENTS ON FACEBOOK THAN HIGH SCHOOL KIDS
    • 45. HALF OF YOUTUBE’S AUDIENCE IS OVER AGE 34.
    • 46. !"#$%&$'()(*(+)%+'% (),-)(*.%(,%&+()/%*#$% ,-0$%*#()/%+1$2%-)&% +1$2%-/-()%-)&% $34$5*()/%&(''$2$)*% 2$,67*,89% % :%;7<$2*%=(),*$()%