What experiences and results are your customers looking for?
The answers to those two questions provide insight into how and how badly J.C. Penney confronted its challenges: declining Brand strength, falling market share and lackluster earnings.
The bottom line is this: J.C. Penney decided to attempt to institute a massive change in their customer culture BEFORE they understood their existing customers needs, wants and appetite for change. They never put a “You Are Here” dot on the map of current reality. And if you don’t know where you are, how can you intelligently decide where to go, much less how to get there?
At Apple, Ron Johnson’s success in creating a brand new kind of interactive retail encounter labeled him the guru of customer experience.
J.C. Penney had a different set of needs: put sizzle into a boring Brand; increase sales and earnings, RIGHT NOW. Did that call for a creating an immediate, massive cultural shift in merchandising strategy and the customer buying experience? Possibly. But NOT before they understood who their current customers were and what kind of experience and results they wanted; and what changes they could make to attract new customers without alienating existing ones.
Ron Johnson sought to change the J.C. Penney experience and cultivate a new breed of customer overnight. Special sales and discounts would disappear. A new policy of “Everyday Low Prices” was designed to deliver maximum value all the time while simplifying the shopping experience by making time consuming comparison shopping and coupon clipping obsolete. It made a lot of sense – logically.
But it is a well- documented fact that people do not make decisions based on logic. Emotions influence every decision we make, even when we believe we’re acting only on logic. In a real world where logic and emotions are constantly crashing against each other, Everyday Low Prices becomes the new full retail price. It takes time and a lot of money to overcome that. J.C. Penney had neither the time and money nor the required appetite for risk.
So “Everyday Low Prices,” intended to bring clarity, instead introduced confusion. And confusion is the mother of mistrust. When J.C. Penney attempted to backtrack and bring back some additional price reductions, confusion only increased. Sales continued to plummet (in excess of 25%).
Coupon clipping and comparison shopping is, for many people, a meaningful, fun experience. It gives them a sense of purpose, of doing something that matters. Take that away and you’ve turned them off, before they even know what the hell you’re selling. The same is true for buying goods “ON SALE.” People love getting a DEAL.
The Ron Johnson experiment ended. Now the scramble goes on with a new cast of characters. No comment – yet.
And here are some Brand Lessons:
- Understand your customer: their wants and needs; the emotional factors that influence their buying and loyalty decisions; and what turns them off; from their point of view.
- Understand yourself: what are you capable of delivering; is it aligned with your customers expectations; and what must you do to keep the two aligned.
- Understand the pace at which you can introduce change, both from your customers’ ability and willingness to adapt, and from what your own organization can execute with competence and clarity.
How well do you know, I mean REALLY know your customers?