How DFS Step-Changed Its Level Of Customer Focus

Fast, agile companies are relentless in using customer feedback to drive improvements and to make the necessary changes to accelerate growth and performance. In my latest book, First & Fast, I met with Andrew Stephenson, who created a market-leading approach to customer-centered management at DFS, the UK’s leading sofa retailer. Here is a short extract from Chapter 7 of the book, Allowing Your Customers to Navigate:

On the back of some effective marketing, and despite some academic criticism about its superiority to other customer satisfaction measures, the Net Promoter Score (or NPS – see details here) has become a common metric in many corporate boardrooms. Few companies, however, have embedded NPS into an organization’s ways of working as far as DFS has achieved.

Stephenson admits that the metric isn’t perfect, but he believes that its simplicity and the ability of everyone across the business to focus around a single metric significantly outweigh any downsides. As a result, NPS has become as important as the sales and profit figures throughout DFS, from front line sales teams, to head office support teams, to senior executives and non-executive directors. By 2014, DFS’s use of NPS looked something like this:

  • The company now collects over 200,000 separate customer reviews each year, covering various stages of its customer experience – pre-sale, point of sale, point of delivery, 6-months post-delivery and following any customer service issue. This represents a response rate of over 10%;
  • Each sales consultant, store team and manager, area, region, delivery team and individual members, the in-house factory teams and the on-line team and call-center service team receive weekly NPS reviews, and their performance bonuses are directly based on their average NPS scores;
  • The executive team review overall NPS performance each week alongside sales, with actions identified for immediate resolution. Similarly, the monthly board meeting contains a review of the company’s NPS performance;
  • Any individual customer score of 6 or below results in a notification to the relevant store manager, who is expected to follow up with the customer, with central management follow-up of how the issue has been dealt with taking place shortly after;
  • Stephenson ensures that customers’ answers are as honest as possible. Here are three steps they’ve taken to ensure the integrity of the data:
    • DFS provides a charitable donation for every response received. Stephenson found that the previous method of encouraging responses, which was to enter respondents into a prize draw, had slightly skewed responses upwards, whereas a charitable donation had no such impact;
    • The entire system is administered by an independent third-party marketing agency, which is highlighted on all emails. Again, this has been found to improve the quality and integrity of customer responses; and
    • The system is email based, but for those customers where no email is collected, the marketing agency takes their mobile phone numbers to gain a sample of results from these customers to ensure that their views are in line with the majority of email customers and also ensures that individual sales consultants are not ‘gaming’ the system.

In other words, the NPS system that DFS has developed has become the oxygen that is breathed across the business. Rather than pursuing the development of large but intermittent initiatives that tend to follow annual customer surveys, the DFS system allows managers and colleagues from across the organization to make thousands of individual decisions every day that, together, have transformed the company and enabled it to be truly customer-centered.

How well does your organization match up to the customer-focus standards set by DFS?

© Stuart Cross 2017. All rights reserved.

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Business Rocks – How To Build Strategic Commitment

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This week’s riff: How do you build wider commitment to a new growth strategy? After all, it’s highly likely that some people are going to be negative about whatever you come up with and will be resistant to the changes you propose.

In essence, you have only three options. Option 1 is simply to tell people to support the new strategy and give them a JDI ultimatum. The problem with this ‘enforcement’ approach, even when delivered sensitively, is that, at best, you will end up with reluctant, rather than enthusiastic supporters.

Option 2 is to point at others who already support the new plans and suggest that if that group supports the new way forward, others should too. Again, however, you will have done nothing to remove any underlying doubts and resistance.

The third option, and the one I pursue with clients, is to actively involve and engage the organization. Executive teams should never outsource their strategy work, but do the hard yards themselves. Your wider management teams should also have the opportunity to challenge, refine and influence the emerging direction and priorities, and your wider teams should be able to determine how they can best deliver the aims of the strategy within their own areas of responsibility.

Involvement breeds commitment. How are you ensuring that as many people in your organization as possible are able to become genuinely and actively involved in your strategy and change initiatives?

Off The Record: The Sound Of Silence by Simon & Garfunkel

People talking without speaking,
People hearing without listening,
People writing songs that voices never share
And no one dared
Disturb the sound of silence

© Stuart Cross 2017. All rights reserved.

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How Richard Baker Put “The Chemists” Back Into Boots

As part of my research for my latest book, First & Fast, I interviewed Richard Baker, the Chairman of Whitbread plc. I had worked with Richard when he was the CEO of Boots and during our conversation Richard emphasized the importance of establishing strategic focus as a route to growth.

Below is a short extract from First & Fast, that describes how Richard used the heritage of the Boots business to help accelerate its growth:

“My first impression was that Boots no longer stood for anything,” explains Baker. “The company was a jack-of-all-trades and was going nowhere. It sold health and beauty products, but it still also stocked pots, pans and even homebrew! Unbelievably, Boots was no longer the market leader in pharmacy prescriptions, and it didn’t even have the green pharmacy cross on the outside of the stores. My priority was to refocus the retailer on health and beauty; I wanted to put “The Chemists” back into Boots.”

As Baker sorted out his office in the weekend before his first day, he came across a 100-year old advertisement for the retailer, which read:  Boots The Chemists – Biggest, Best, Cheapest, Stores Everywhere.

“I realized that the answer was in front of me,” said Baker. “It may have been created a century ago, but it summed up perfectly what we needed to do. I shared the advertisement at my very first public briefing the following day, and the five strategic priorities we created for the business a few months later – Healthcare First, Boots For Value, Only At Boots, Right Stores Right Place, and Expert Customer Care – were really only restatements of that sign.”

The focus on retail health and beauty led to some immediate growth initiatives. Store opening hours were extended, many pharmacies were kept open until midnight, prices were dropped on everyday toiletries in line with the rest of the market, and greater investment was put into Boots’s own brands, particularly No7. Top-line performance responded to this renewed health and beauty focus, reversing the declines of the previous leadership team.

Profit performance lagged revenues, as a result of the impact of lower prices on margins, but the sale of non-core assets, including the disposal of the healthcare products business, Boots Healthcare International, to Reckitt Benckiser for $3 billion, created a far leaner pharmacy and retail chain that enabled the subsequent merger with Alliance Unichem, a European pharmacy wholesaler, in 2006.

Strategic focus created both speed and growth, or, as Baker put it when we met, “You can’t spray and sprint!”

How could you create greater levels of strategic focus for your business and accelerate your growth and profitability?

© Stuart Cross 2016. All rights reserved.

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Fixed On The Vision, Flexible On The Journey

Compass On Woods Path

I’ve always thought that the term ‘strategic planning’ was an oxymoron, but, as a ritual, three-year plans are about as effective to twenty-first century business success as wassailing has been to English apple production. Each may make the people involved feel that they have more control over the end results, but the reality is that their performance will actually depend on how they react to the stream of unexpected and unplanned events that will inevitably take place, rather than the effort and energy they put into these up-front activities. The saying “fail to plan and you plan to fail” should be changed to “fail to learn and you learn to fail”.

You cannot therefore set out a long-term plan as if you’re planning a car journey on the national freeways. There is no satellite navigation that will tell you which exits to take, there are no lanes you should stay within and there is not even a road ahead that shows you the way – and if there is, then you’re probably just copying one of your rivals and, more than likely, in a difficult competitive position. Instead, it is better to think of strategy implementation as a sailing adventure across the sea. You may know your destination, you will probably have made sure that you have sufficient skills and resources for the journey ahead and you will have an idea of the route you need to take, but your actual speed, journey and success will be driven by how well you react to the constantly shifting winds, the ever-changing currents and the rise and fall of the tides.

It’s the strength and suitability of the boat and its crew, rather than the quality of the initial plan that will determine the speed at which the boat travels. As with sailing, the quickest route to strategic success is rarely a straight line, but is, instead, a zig-zag of constant adjustments to environmental conditions, combined with more dramatic turns and detours to avoid major storms and to take advantage of changes in the prevailing winds and currents. It’s not a “road map” that you need to deliver your strategy, but a “nautical chart”.

In August 2013, for example, Amazon acquired The Washington Post. Following the acquisition, Jeff Bezos, the founder and chief executive of Amazon, wrote to the staff of The Post about the purchase and what they could expect. In that letter Bezos wrote: “There is no map, and charting a path ahead will not be easy. We will need to invent, which means we will need to experiment. Our touchstone will be readers, understanding what they care about – government, local leaders, restaurant openings, scout troops, businesses, charities, governors, sports – and working backwards from there. I’m excited and optimistic about the opportunity for invention.” Bezos’s words echo his approach to long-term planning at Amazon where he once said that the company was “fixed on the vision, flexible on the journey.”

How are you keeping fixed on your big strategic goals and priorities, while remaining agile enough to cope with changes in performance and rapidly changing markets?

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Cross Shots: Are We There Yet?

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Better or Different

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This week’s riff: There are three ways that you can lead your market. The first is to be better than everyone else. That’s fine, up to a point, but in many markets most customers have already made their choice about what the ‘best’ is and are unwilling to spend significant time and effort on finding a new ‘best’. You would have to offer something absolutely amazing, for instance, if you wanted to become a new leader in the deodorant market. Consumers have already made their choice.

The second approach is to identify and focus on a new or under-served set of customers. Lynx, for instance, isn’t trying to be the ‘best’ deodorant brand, but it has grown and succeeded by becoming the first non-sports, lifestyle deodorant brand for teenage boys. And I can smell the evidence of their success every day in my sons’ bedrooms!

The third route to growth is to offer something very different to the existing players in the market. What if, for example, you developed a chewing gum that acted as a deodorant, or created clothing that would never smell? Well, a quick search on Google showed me that you can buy Deo Perfume Candy in the USA and that the clothing retailer, Uniqlo, offers sports shirts with deodorizing qualities. These solutions may not yet have hit the big time, but they probably have a better chance of success than another me-too deodorant.

All business need to invest in the ongoing improvement of their products and services, but to what extent are you also looking to identify potential new market segments or developing a totally different solution for your target customers?

Off The Record: Gonna Change My Way Of Thinking by Bob Dylan

Gonna change my way of thinking

Make myself a different set of rules

Gonna put my good foot forward

And stop being influenced by fools

© Stuart Cross 2014. All rights reserved.

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Business Rocks: D Is For…

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This week’s focus: My wife and I are currently redeveloping a new house. The work seems never-ending, as are the decisions. My wife has also been very busy at work, so I offered to help her sort out the tiles for the bathroom by going to the tile store – my client, Topps Tiles, naturally – and choosing some. “Er, thanks,” she replied nervously, “I suppose that you can have a point of view!?!

In other words, I could say whatever I wanted, but there was no way that I was making the decision! Strong, effective managers and leaders are good at making decisions and enjoy making decisions. But if you want to make every decision it’s likely that you’ll end up simply working too hard and also slowing down your organisation. In the ABC of leadership, D is for Delegation.

Delegation can be dangerous – my wife knows that she would have been foolish to let me, a colour-blind accountant, choose the tiles! – but effective delegation, where you are clear on the decision or action you’re delegating and where the person you’re delegating to is willing and able to accept the responsibility, delivers three major benefits: (1) It frees up your time and energy to focus on more important matters; (2) It helps develop the skills and capabilities of the person accepting the delegation; and (3) It improves the speed and productivity of your organisation.

When I told my wife about better delegation, she identified some immediate opportunities – which is why I’m now off to do the washing-up – but where could you work with your team to delegate more effectively and accelerate the speed of change in your business?

Off the record: The Bones of You by Elbow

So, I’m there charging around with a juggernaut brow

Overdraft, speeches and deadlines to make

Cramming commitments like cats in a sack

Telephone burn and a purposeful gait

© Stuart Cross 2016. All rights reserved.

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The Simplicity Test

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Complexity is the enemy of pace. As a result, it is a critical leadership task to simplify the organization wherever and whenever possible. Simplicity drives speed, which, in turn, drives results, and removing unnecessary complexity can be the catalyst for new growth.

As a starting point, take the test, below. Simply score your own organization (and your role within it) from zero to 5 for each of the statements below.

  1. We have a clear strategic intent that, in simple, everyday terms, articulates how we will succeed
  2. As a management team, we have identified a handful of objectives (3-6) that drive our focus and activity
  3. We have an overarching #1 goal that is the ultimate driver of our decisions and actions
  4. We have crystal-clear accountabilities across the business and managers are never concerned that they’re stepping on someone else’s toes
  5. We have minimized the number of management layers – there is no further room for improvement
  6. Managers know exactly how to seek approval for a major decision or improvement
  7. Our planning process is short, sharp and effective, taking only a few weeks to complete
  8. When an initiative or business activity isn’t working, it is quickly improved or killed – we do not allow problems to fester
  9. We minimize the number of formal meetings and senior managers’ time is focused on delivering a great customer experience
  10. This is not a political organization. Everyone feels free to have their say, and we all feel that we’re on the same side.

So, how do you measure up? Compare your score to the ratings below:

Over 40: Complexity under control, for now. You’re highly effective and productive, but make sure that you stay alert to the creep of complexity

25-40: Creeping Complexity. If productivity isn’t suffering now, it soon will be. Identify your key priorities and target improvements in simplicity over the next 3 months.

Less than 25: Complexity Paralysis. Your organization has low productivity and is spinning its wheels. You need to work hard and fast to focus your efforts on driving greater simplicity immediately.

© Stuart Cross 2016. All rights reserved.

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Business Rocks – Breaking Point

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This week’s focus: When I go to the gym and lift weights – which, believe it or not, I do from time to time! – there comes a point where I simply can no longer lift the bar. The decline in my performance doesn’t come on gradually; instead, it’s almost like an off switch has been clicked. One minute I can lift, the next my body has given up completely. My ability to lift collapses at this breaking point.

Dramatic breaking points affect organisational performance, too. I once worked with the valet team at a Ritz-Carlton hotel in the USA. The team performed brilliantly most of the time, but when demand reached a certain level, such as Sunday lunchtime, their performance collapsed as dramatically as my lifting technique and, as a result, cars were backed up along the hotel’s driveway. You can often see this effect in busy shops, too, when a queue can rapidly form at peak times, even though all the tills seem to be staffed, or at restaurants when, at busy periods, you wait seemingly forever for your meal.

There are three solutions to improving the breaking point of your key customer services: increase capacity (e.g. the number of people in the team), enhance the capability of the team or system, or improve its organisation and management. If you ask the team, the chances are they’ll ask for more resource, while most managers look to improve the capability of the system (either training or systems development) as the way forward.

In my experience, however, it is the third option, improving the organisation and management of the team, that has the biggest and quickest impact on performance. At the Ritz-Carlton, for instance, we established clear roles for all the team members, and appointed a ‘captain’ to marshall the team at peak times. These two actions had an immediate and dramatic impact on performance and the peak-time queues were no longer an issue for the hotel’s guests.

How about you? What’s the breaking point of your key services, and how could you better organise and manage the points of peak demand to deliver a better customer experience?

Off the record: 19th Nervous Breakdown by The Rolling Stones

You better stop

Look around

Here it comes, here it comes

Here it comes, here it comes

Here comes your 19th nervous breakdown

© Stuart Cross 2016. All rights reserved.

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The Weekly Big Idea Review

Children brainstorming.

Effective innovation is both a strategic imperative and a messy process of development, testing and refinement. If this process is to work, you need to have regular updates and reviews.

One way of doing this that cuts the chain of command between the ideas and the leadership team is to have weekly ‘big idea’ reviews. In these sessions, new, big ideas are presented worked on, reviewed and updated.

During the turnaround of UK grocer, Asda, in the early 1990s, the executive team met each Monday morning at a local store that had been set up as a laboratory to run series of experiments and to test new ideas. The team walked the store, reviewed the week’s progress and agreed the priorities for the following seven days.

The pace of innovation at Asda rapidly accelerated, and its subsequent growth and profitability attracted Wal-Mart sufficiently to buy the business.

It can be tempting to review your big, strategic projects quarterly, or possibly monthly, but this can inhibit pace and progress. A weekly review of actions and the evolutionary development of new ideas can step-change the pace at which you can develop new ideas, implement new offerings and grow your business.

© Stuart Cross 2016. All rights reserved.

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