Measure it, change it

Editor’s note: John Kiska is president of AdvisorOnTrack, an Ottawa, Ontario management consulting firm.

When the largest specialty electronics retailer in the U.S. goes shopping, you can bet it looks for a good buy. Indeed, that is exactly what the Best Buy Company did several years ago when it chose to acquire Future Shop (FS), a Canadian retailer with over 100 stores and a solid reputation for offering competitive prices and product selection.

However, prior to the acquisition, Future Shop realized it was sometimes falling short in delivering the desired level of customer service. This remained the case until a strategy was put into place that included the design and implementation of an innovative customer experience measurement system.

Developing the customer service strategy

Within the consumer electronics business, the traditional belief has been that product selection and price form the key to success. And while retailers have historically professed a commitment to service, they have often failed to meet this goal.

Prior to the acquisition, Best Buy was planning to enter into the Canadian market, which would have further increased the competitive pressures faced by Future Shop. As a countermeasure, Future Shop planned to initiate a customer service strategy that would truly set it apart from the rest.

“Future Shop wanted to improve the customer experience at the store level,” says Glenn Quarrington, Future Shop’s senior vice president of human resources and corporate services. “We wanted our associates working equally hard at sales as well as customer service. As consumer electronics continues to increase in complexity for the average buyer, we wanted to ensure our associates were fully trained to provide product information in a helpful and professional manner.”

To enhance customer service, Future Shop knew it needed to embark upon a series of system-wide changes, beginning with the development and endorsement of a customer service model by executive management. This model became the cornerstone for other changes, including a new employee recruiting system designed with greater emphasis upon testing and screening candidates for a positive attitude toward service, and a reward structure that compensated the entire store management team based on the results of customer feedback. Training programs were also revised to focus upon behaviors and skills needed to support an evolving service culture.

“For eligible management employees, a sizeable portion of their bonus is based on customer feedback in addition to sales and profitability performance. In developing the customer survey, we identified specific questions that are used to calculate a customer experience achievement score for bonus purposes. The better a store performs on a question, the greater the number of points that are awarded,” Quarrington says.

After developing a customer service strategy, Future Shop’s next step was to ensure that a system was in place to measure the in-store customer experience.

Accurate and timely

In keeping with its renewed commitment to service, Future Shop needed a measurement system that would provide it with accurate and timely information. Over the years, the retailer had tried a variety of measurement methodologies, ranging from outbound call centers to mystery shopping programs. However, these programs had limitations or proved to be unreliable. It was clear that a new system was required.

To this end, one important initial decision was the selection of a data collection technology that would help improve Future Shop’s data measurement approach. Like other retailers, it recognized the benefits of collecting customer feedback in the store while customers’ experiences were still top-of-mind. Also, given its reputation as a leader in consumer electronics, it was important to Future Shop that customers would perceive the data collection device as unique and innovative.

Using these criteria as a guide, Future Shop eventually selected a portable electronic clipboard from In-Touch Survey Systems that was designed specifically as a handheld device for recording and storing responses to survey questions. In fact, Future Shop was so committed to using the e-clipboard technology that it took the unusual step of purchasing the units themselves, rather than licensing them from In-Touch. Future Shop rotates approximately 30 e-clipboards across its 110 stores on a monthly basis, using internal staff members to facilitate the data collection process.

During each month, one week is randomly designated for surveys to be completed at every store. The target is to collect a minimum of 80 responses between purchasers and shoppers alike. On a quarterly basis, the target is to collect a minimum of 240 responses. As the data is collected, stores download responses daily. A final download occurs at the end of each collection period.

The e-clipboard survey was designed to minimize the time customers spend answering questions, while at the same time maximizing the value of the information collected. This initiative required collaboration across several different departments to ensure questions were not duplicated and that the information provided value to as many different user groups as possible. To increase customer participation rates, Future Shop also began to offer an incentive for completing the survey during each quarter.

Taking action on customer feedback

As the data is collected, operational decisions affecting service are made in a real-time fashion. With data downloaded daily, store managers have access to In-Touch’s Web-based, enterprise-wide analysis and reporting system. This helps Future Shop identify areas that require improvements early each quarter, particularly in those areas (or questions) that are more heavily weighted in the bonus plan.

On a formal basis, reports and statistics are generated every quarter by store, and summarized at a regional and corporate level. The scores are used to generate the Customer Experience Achievement Percentage (CEAP) that is used to determine bonus compensation.

In-Touch worked closely with Quarrington to get the weightings just right for the CEAP bonus plan. “It took some time before everyone was satisfied that the questions as weighted would produce the desired behaviors Glenn sought. But in the end the investment has paid tremendous dividends for Future Shop,” says John Scott, regional vice president of In-Touch.

In addition, customer feedback information has assisted with strategic and operational decision-making throughout Future Shop. For example, the company has been able to see to what extent pricing, product selection and store layout influence a customer’s shopping experience. Also, clipboard data that led to shopper and purchaser profiling has helped Future Shop to better understand why some people don’t buy. In this instance, the information led to the pilot of new operating and staffing models to improve proficiency on merchandising tasks.

Natural progression

These developments show the natural progression of how companies use measurement programs. When a firm introduces a feedback program it is probably using it as a scorekeeping tool. But initiatives such as the Future Shop service strategy take advantage of measurement as a way to support behavioral change, Quarrington says. “We wanted our associates providing a high level of customer service. To do this we needed to hire, train, promote and reward them for a commitment to service. To ensure these changes took place, we needed a measurement system to let us know how well we were doing in meeting our customer service goals, as well as how effective we were in changing behaviors.”

Now, with customer service attitudes forming part of the corporate culture, Quarrington is looking to the future. “We’ve collected data across 100 stores for almost two years. With this extensive data set, we want to develop models of cause and effect, to conduct what-if scenarios to determine possible outcomes on consumer behaviors. We want to develop a suite of models that we can use to make strategic decisions throughout the company. When this is accomplished, customer experience measurement systems begin to pay enormous returns.”

Continued relevance

As with most things, changes must be made to ensure continued relevance. Future Shop has recently introduced a new component to the customer experience measurement program. Its cash register system was programmed to generate a survey invitation for every nth customer using a preprogrammed algorithm. These purchasers are invited by instructions on their receipts to complete a Web-based survey before leaving the store. They then become eligible for the quarterly incentive.

The goal is to increase the number of responses collected and to provide additional flexibility in the types of questions asked. “A key consideration in implementing any measurement system must be how flexible it is to change,” Quarrington says.

Learning from experience

Following the Future Shop example, marketers should take note of certain fundamental lessons when designing a new measurement system.

  • Make sure the methodology produces accurate data. Any company implementing a customer experience measurement system for the first time must begin with the basics. How will the data be collected? How many responses are needed? What questions should be asked?

Only if these fundamental questions are answered adequately will the foundation be set to collect valid and accurate information. This is an absolute minimum to ensure managers make operational decisions that will effectively improve customer service.

  • Build internal consensus. Closely linked to the above is the need to build internal consensus for the program. Executive management must buy into the measurement system and be willing to make a long-term investment in it. The owner of the program must build relationships with key groups in functional areas, such as operations, sales and marketing, to ensure each group’s information needs are met. Although only one group should have ultimate responsibility for the measurement program, all groups must be involved for it to succeed.
  • Link information to a reward structure. Classic management theory states that what gets measured gets done. Customer feedback is no different. The results of feedback must be incorporated into a company’s reward structure. This means not only linking desired performance to positive rewards, but also penalizing poor performance. All parts of the reward structure, including pay, promotions and other forms of recognition need alignment with the measurement system.

Willing to invest

In the end, Future Shop succeeded with its customer service strategy because it was willing to invest the time, money and effort to make organization-wide changes. To help it monitor its initiatives accordingly, a measurement system was implemented that provided it with customer service operational and strategic decision-making capabilities.

As for the acquisition of Future Shop by Best Buy, Future Shop still operates under its own brand name. And in combination with its sister Best Buy Canada stores they form a formidable competitive force in the Canadian retail scene.