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May 30, 2006
Stores and dumb terminals
I belong to a gym that's headquartered in New York. This gym is pretty well-known, and it has a few locations, including one that opened late last year near me here in Chicago.
I like the gym and its layout, but its employees must endure what countless other people in similar positions at stand-alone stores do: Function like a dumb terminal. The headquarters brainfarm 787 miles away makes all marketing decisions, handles all accounting and billing, hires all subcontractors, etc.
Even a refund due to a billing error took several days because it had to penetrate several layers of bureacracy in New York. And this is a small company. The local general manager basically functions as an operational janitor.
I got to know the local gym's first GM. Great guy. Believed in customer evangelism and tried to put its tenets into practice, especially since the gym is considerably more expensive than most local ones. But he faced monumental struggles every day because he was set up as a dumb terminal.
The company founder has a cool concept and creates unique branding, but he's obviously terrified to let his GMs have an impact. That's probably why the Chicago location didn't meet its early numbers and sits largely empty most afternoons: The founder's filter is New York City, not Chicago. He can't let his local GMs make mistakes. Mistakes only count on his watch.
One day a few months later the friendly GM was gone, supposedly for not meeting his sales numbers. It's hard to imagine how he could have in such a short time.
Which is why it was refreshing to hear the amazing Larry Selden talk last week at Brandworks University. He's been working with Best Buy to help the big electronics retailer take employee ownership to new levels.
Every day, a group of Best Buy GMs receives a P&L statement for their store's previous day of sales, divided by product category and customer segments. Based on previous work Selden did with the retailer on establishing "angel customer and demon customer" segments, a Best Buy GM can devise a daily plan to cater to angel customers and work toward firing demon customers. Right now, it's a group of GMs participating in the daily P&L program as the company plans for a wider rollout.
Daily P&Ls allow each GM to make quick adjustments and create predictive sales models based on product, day of the week, even weather patterns!
Results so far: Wall Street likes the effort and has bid up the stock significantly the past year because comps at the -- let's call them the smart stores -- are up 30% or more.
All because the stores don't have to function like dumb terminals.
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What a great story! I just got back from being an "angel" customer at a Marriott Courtyard. http://www.consumertells.blogspot.com
Fascinated as I've been with social marketing this year, I'm witnessing the dark side of WOM at my gym. As the gym's management continues to grossly neglect the condition of the club, members have started commenting on the "broken" notices taped to equipment. Once you've ignored the conversation so long it drops a dumbell on your toe, it's too late.
