Archive for December, 2010

‘Miracle’ customer philosophy still works today

Thursday, December 9th, 2010

‘Tis the holiday season, the season known to make or break more businesses than any other. The tradition of gift-giving is known to have cash registers ringing up as much as 40 percent of a retailer’s revenues and 80 percent of their profit.

With so much riding on these few weeks, it’s not surprising that the commercialism of Christmas drives some organizations to lose faith, supersede common sense and create policies that work against joyful experiences, and perhaps profits.

A Christmas aficionado, I can’t help but relate the Tryptophane Thursday and Black Friday retail practices to a movie classic based upon a customer experience on Christmas Eve in 1944. Writer Valentine Davies went to a busy department store to purchase a gift for his wife. Overwhelmed, he wondered what Santa would think of the hectic scene.

Davies went on to share what he imagined Santa’s reaction to be in the Oscar winning movie, “Miracle on 34th Street,” starring Maureen O’Hara, John Payne and Natalie Wood.

A miracle itself, the movie debuted in June of 1947, not only having received the necessary approval of the retail rivals, Macy’s and Gimbels, but portraying them as friendly competitors in the film. This summer Christmas film proved so popular it graced the big screen for six months, right through the holiday season.

The story starts off with Macy’s famous Thanksgiving Day Parade, where a man who calls himself Kris Kringle replaces a drunken Santa and rides atop the holiday float. To capture the true spirit of the parade on film, actor Edmund Gwenn took his place as Santa in the actual 1946 parade.

Well-received by the crowds, Santa is hired by Macy’s for the New York store on 34th Street. And Kris, a.k.a. Santa, brings the Christmas spirit to the store, its shoppers and its employees. Putting the happiness of children ahead of commercialism, Kris sends shoppers to other stores for bargains and products not found at Macy’s.

The grateful voices of the customers were heard loud and clear by the Macy’s management, which adopted Kris’s practice as a storewide policy. “Mr. Macy” said the store was going to be known as the helpful, friendly store with a heart, the store that puts public interest before profits.

Of course, as the story goes, great profits came with having a heart. It turned out to be quite the customer loyalty program. And even when Kris’ sanity was questioned in court, Macy’s cashed in on the spirit and belief of Christmas.

The latest version of this story, released in 1994, has a bit of a different twist that is perhaps more in tune with today’s retail competitive environment. The rival stores take on the fictional names of Cole’s and Shopper’s Express. Cole’s needs healthy holiday sales in order to overcome its recent financial woes and keep its doors open. Shopper’s Express is counting on its vulnerable competitor to fail, allowing the purchase of Cole’s for a bargain price and the end of its long-time competitor.

Friendly rivals they are not, as Shopper’s Express plots to damage the reputation of Cole’s charismatic Santa, and in turn kill store traffic and sales. Santa’s sanity is again put on trial, only to grow the support and belief of its employer, New Yorkers and the court.

The underlying business message still applies today. Putting the customer first pays dividends. True, many businesses just pay lip service to this belief, but there are some who are being just as bold as the movie’s department store.

Progressive, in fact, has adopted the exact same practice. The insurance company shares competitors’ rates with potential customers, even when they’re lower, and has done so for years. On the company’s web site you will find rates scrolling across the home page ongoing.

Sure Progressive loses a few customers to lower rates, but gains the trust and loyalty from many more through its transparency. It is the third largest insurer in the United States and has averaged a whopping 73 percent profit growth since 2001. And while that growth has slowed a bit as of recent, the company is not cutting back but rather instituting more customer-focused programs.

Another example, Publix supermarkets, reacted to increasing food prices by giving the customer a break. They cut prices on the essentials like milk and bread. They also staff their stores with knowledgeable employees who among other things make menu recommendations for customers planning special meals or events.

The popular Trader Joe’s honors the local customers and their shopping experience. The store foregoes stocking fees or rent from suppliers, allowing each outlet’s customers to decide with their purchases what stays or goes from shelves. Even individual requests are honored.

So having a heart is still paying off, as some businesses experience bottom-line miracles all year round.

Experience a bit of seasonal magic for yourself. Travel via video ( http://www.youtube.com/user/operaphila?feature=mhum ) to Macy’s in Philadelphia where customers, employees and local choir members fill the store’s many floors with music and Christmas spirit as they sing the Hallelujah Chorus.

Now what do you think, did sales increase that day?

Anita Ancel is President of Ancelary Group, a Vermont firm that helps CEOs and their teams develop attitudes and habits for ongoing success and happiness.