Almost nine years ago I had reentered the retail business after a fourteen year hiatus. The company I joined was just beginning a zealous journey to focus on the customer. The entire organization was determined to be more “customer centric” in every decision they made.  They had gone so far as to identify six demographic target profiles that they were going to cater to. The goal was to get intimately familiar with each of these customer segments so that we could offer them the “best” and most appropriate goods and services. Some of those goods and services were already available but we were not aware of which customers needed them or why. In other circumstances we needed to be more innovative and seek out or create new products or service offerings. As we sought to delight the customer, we assumed that they would reciprocate by buying more or at least more profitable goods and services.

One of those target segments that I was brought in to assist with was identified as “Barry.” He was an affluent male, with children, who most often lived in the suburbs, liked technology but needed it to “just work” and didn’t have the time or patience to fiddle with something. His high income enabled him to outsource many household services to others and allow him to focus on his priorities. Often times Barry would refer to his list of “guys” that would help him accomplish his goals – his lawn guy, his home repair guy, his electronics guy, etc. We wanted him to consider us one of his “guys” so we created several pilot stores that would line up as closely as possible to what he wanted from a retail store and we would use these stores to try new things and test our hypothesis.

Early in my work on the Barry segment we had gotten a briefing from one of our leaders who was responsible for connecting our corporate team to the retail pilot store employees. He was ecstatic about how Barry loved us! He explained to us how our rising Average Selling Price (ASP) and Units per Transaction (UPT) were great indicators of how Barry was responding to our improved experience and offering.

• ASP is the average selling price for a unit in a given category or (Total $ for all paper towels / # of units of paper towels sold = ASP for paper towels)
• UPT is the number of units on the sales receipt or (Total # Units sold in a store/ # of transactions in a store = UPT for a store) – you can also roll this up by districts or regions to see broader trends.

Both of these units of measure are extremely important to retailers as a gauge of sales proficiency but neither of them actually measure customer satisfaction!

These numbers might show a positive correlation but then again they might not? Maybe you just sold the customer more stuff or more expensive stuff that they don’t really want? The challenge with the retail model is that “customer satisfaction” is really the measure that you want but it can be costly and slow to get questions answered directly from customers about their experience. So instead we use the numbers that we have readily available as surrogates for the numbers that we really want.  This fact ties back to an earlier post “If You Don’t Measure It, You Can’t Improve It.”

This is a clear example of how the pace of the retail business is out of control… each week is a new “sale” with new products and new prices. These new products and prices need inventory to be shuffled from distribution centers to store floors with new signs and new price tags printed. This is an enormous task by a sea of employees and it never stops. All of this same work will need to be done again next week with new products and new prices! Retailers try to be strategic with their quarterly plans but are caught in the spinning vortex of time – weekly, monthly, quarterly, over and over again. What did we learn from last week’s sales numbers? The truth is that we are still trying to figure that out! But don’t worry too much because we can’t affect next week’s plans anyway because print advertising takes several weeks of planning. We will instead go with what we have.
So… we will make due using the numbers that we have readily available to measure the satisfaction of the customers that we think like us.

Two notes:
• Are you involved in measuring what customers think for your organization?  If so, would highly recommend the book The Lean Startup by Eric Ries (@ericries). He offers some new thinking about how to measure customer feedback in the start up process.
• It looks like Amazon has jumped on the Customer Centric bandwagon. According to a recent letter to customers on the Amazon.com website… Amazon’s “mission is to be Earth’s most customer centric company.” (See Photo)

Food for thought:
• Do your customers love you? Have you really asked them?
• Are you using customer satisfaction or another metric that is easier to measure?
• Who are your customers? Do you have demographic profiles?
• What else do you want your “customers” to be? Advocates, donors, volunteers, or all of the above?