Eating Amazon's Lunch: How Retailers Win

There's a false narrative that has persisted far too long among retailers large and small complaining about Amazon's growth across retail categories. The complaints range from predatory pricing to inventory and online experience and fulfillment. The blame game heaved upon Amazon for the failure of retailers from corner stores to mall anchors like Sears and JCPenney is an excuse for others' failure to execute. Many articles have been written over the past year detailing more reasons for the so-called retail apocalypse from The Atlantic to Bloomberg and The Wall Street Journal. While all of their reasoning regarding debt-loads, overbuilds, and technological innovation are valid at a macro level, what hasn't been addressed is the microeconomic decision-making at a transaction level. I'm talking about selling - not merchandising, advertising, inventory - just pure sales and customer service skills.

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n a recent visit to the King of Prussia Mall last week, my eldest daughter noted that visits to eight different apparel retailers, not a single salesperson or customer service associate at any of the stores offered to help her find her size or even inquire about her style, interests, goals - or anything else for that matter. Did we make some purchases? Yes, but not nearly as much as what would be possible selling to a teenage girl. This isn't limited to apparel. Just walk into any big-box retailer. If you can find an associate, chances are they're focused on stocking inventory not helping customers.  

It wasn't always this way, and it isn't this way at those specialty retailers who are thriving. Those places where you walk in, are warmly greeted by a salesperson asking, "What can I help you find today?" and "What projects are you working on?" and "What questions can I help answer for you?" Retailers that have associates who are helpful, knowledgeable and professional salespeople are the difference-makers in the customer experience. Because they show a genuine interest in the customer's goals, they are better able to upsell and cross-sell - and sell against an Amazon because they can do what Amazon cannot - have an intelligent, meaningful dialogue with the customer, uncovering hidden needs, building rapport and demonstrating value beyond the physical products all while making the customer feel good about the experience. This is the advantage that traditional brick-and-mortar retailers have over Amazon - with or without Whole Foods.

Executing this customer-first approach starts with employee training and ends with retaining top producers. Learn from Circuit City's decision in 2007 that doomed the former Good to Great company. Today average training per new retail employee is a mere seven hours in the United States. Poorly trained employees are less productive and make more errors. Is it really any wonder retailers are failing? Retailers that have stripped out sales training and customer-focus often cop-out excuses about Amazon's pricing, product selections, and fulfillment - but that's a sucker's game. Retailers today can't and won't beat Amazon playing on Amazon's turf - that's their game with their rules.

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The way to beat Amazon and eat their lunch is by training associates to become salespeople - true customer-service professionals - helping each and every customer to achieve their goals, asking questions and following through to complete the sale. It's not rocket science and you don't need deep analytics - it's just smart business. When backed up with a specific set of operating practices, investing in employees boosts customer experience and decreases costs. Companies can compete successfully on the basis of low prices and simultaneously keep their customers and employees happy according to Zeynep Ton, Professor of Operations Management at MIT Sloan School of Management, co-founder of the Good Jobs Institute, and a fellow at the Martin Prosperity Institute. She is the author of The Good Jobs Strategy: How the Smartest Companies Invest in Employees to Lower Costs and Boost Profits.

 If it is possible in retail - arguably the most difficult of environments - it is possible elsewhere from banking, healthcare, automotive, hospitality and so on. Many executives in businesses with slim margins believe that one can succeed is at the expense of their employees. Those businesses are often understaffed and lack proper knowledge and skills to serve customers well. Customers served by harried staff, in chaotic settings share negative buying experiences that are unpleasant with difficulty finding what they want and getting help, nearly impossible. The result is lower same-store sales and revenue per transaction.

Amazon will run its business with or without its present competitors. Retailers that run their business by focusing on developing employees and helping customers. It starts with a sincere interest to serve and a simple greeting. "Good morning. What brings you in today?" can open a world of new possibilities for customers and companies. Those that do make their employees the very best and their companies become the very best - with the sales results to prove it. 

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Why Companies Fail to Innovate

For many years now, America has been dealing with an innovation crisis among industries. These failures are well documented in the likes of Harvard Business ReviewForbes, and numerous investor presentations and filings. How big is the problem? Statistics indicate that greater than 90% failure rate and costing Fortune 500 firms well over $100 billion annually. Just imagine the cost across American business and across global economies. The numbers would be staggering.

There's much evidence for the failures and many purported solutions to the innovation dilemma. Though full of promises and potential to help, too often they fail to deliver. Let's face it, it's far easier to buy than build - and much less expensive. Consider Hollywood's appetite for sequels, big pharma's binge buying (Johnson & Johnson et al.), and how the companies once profiled in the former best-seller, Good to Great, have subsequently tanked. At the same time, mergers and acquisitions provide no guarantee of success. Again the annals of business are filled with many corporate flops. It's worth noting that some companies are multiple offenders - and they are far from alone in their failures.

 

In the face of challenges and known risks, organizations deploy armies of consultants, conduct executive strategy sessions, and often devote considerable resources to ensure success. Three related factors that prevent achievement can be summarized as poor communication, management, and employee engagement. One may as well have offices full of empty cubes to go along with the empty suits leading those organizations. Addressing these self-destructive behaviors is imperative, but you already knew that...

I'm talking about driving innovation: creativity, designing new realities and experiences for employees and customers alike, capitalizing on the white space and bringing new possibilities to the organizations and the market at-large. Can organizations do that with existing employees? Statistics demonstrate that they cannot. Otherwise, they would already be on that journey, right? So much for talent management...

How about the competition, are they innovating and creating a new reality in the marketplace? Surely a few are, but chances are they are presently invisible. HR and talent folks will never see them. Human capital and talent management processes and systems are designed to limit risk-exposure and subsequently limit upside-potential. Don't believe me? Consider the first business process in building any organization: Hiring. What percentage of people - especially those driving new innovation and revenues (e.g. sales, marketing, development) - are hired from outside of your industry? And somehow we've classified this job part of talent management?!?

 

No industry is safe from disruption - be it digital or otherwise - the call for innovation cuts across business and functions. Given budget constraints and the need to move quickly, this approach requires hiring employees and engaging partners who can bring innovation more rapidly. These are people who think differently. They understand context, people and technology combining them to innovate and achieve business impacts. The bottom-line is hiring and talent managers need to get outside of the industry bubble.

Focus on creativity and design thinking as knowledge, skills and abilities. Find and hire those individuals who evangelize and engage others in the process as leaders. Worry less about industry and titles and more about transformative business impact.

If you are unable to teach and develop industry knowledge & nuances, you have a bigger problem than you realize.

The talented people who will accelerate, innovate and grow your business are working in another industry right now. Go find them and hire them!

Are you serious about transforming your sales organization, improving effectiveness, innovating and elevating the customer experience? Hire me.

Character and Competence

Character and Competence

I often ask business professionals to define trust. Many describe how trust looks and feels, - it is an emotional bond after all. With trust comes confidence. Confidence in oneself and the other person. Confidence is developed from one's character and competence. Character includes ethics, integrity, and intentions. Competence includes capabilities, skills, execution and results.