Chapter 10

A little better every time

What’s the point in doing things the same way time after time? Variety is not only the spice of life but trying different ways to solve the same problem eventually leads you to better solutions.

In this chapter we explore

  • the value of small-increment change
  • gathering ideas for improvement
  • inherent risks of measurement
  • improvement opportunity lists
  • A/B testing.

Do we have any idea?

Ideas are the fuel for organisations. What you do with those ideas, and how you convert them into action and improvements, is what then makes the organisation grow and prosper. Space for improvement can be readily found in all areas, especially in technique, systems, presentation, recruitment and performance. All retailers can benefit from a culture of everyday performance improvement but few try to. Don Taylor and Jeanne Smalling Archer, authors of the very helpful Up Against the Wal-Marts call this “kaizen”, as does Julian Richer in his awesome book The Richer Way. Others use different names for the same thing. Kaizen is Japanese for “continuous improvement involving everyone” and is a pretty good summation of the challenge.

Improvement in this sense isn’t necessarily about massive earth-shattering changes. What we are looking for are those everyday improvements: improvements in the ways in which we look after each other, our relationships with customers and the quality and relevance of our processes. A typical example might be the discovery that one piece of paperwork can be integrated with some other process rather than dealt with separately. Combining the two will save money and time – so that’s an improvement. It could be the realisation that the rules of a promotion we’ve created can be simplified to the benefit of the customer, and that is an improvement too.

Gathering improvement ideas

You will need to have two things in place:

  • a way to gather ideas
  • an improvements slot on the agenda for discussion at team meetings.

If you were to look at just 1 task or process in each daily team meeting, you will have 7 improvements each week, 30 for the month and 365 over a year. That’s awesome. Okay, so maybe you won’t get into this every day but you will still generate a significant store of improvement ideas every month. Working in this way is easy. You are not attempting to change the world in a day, you are just looking to change one little thing at a time.

Do you currently change anything each month? Does change only ever happen dramatically once a year? Doing it a little better every time puts you in the driving seat of change. Your team becomes a valuable engine of change.

Statistics can make you go blind – the measurement trap

Plenty of otherwise sensible people believe that you cannot improve that which you cannot measure. That’s dangerous, wrong even, and here’s why: some of the most effective customer satisfaction-improving tools are unmeasurable in a conventional sense. Smiling at a customer turns out to be one of the most effective ways to make them feel better about you and your company. How do you measure the number of smiles your team gives out?

Here’s something to think about. A number of aspects of sexual performance can be measured. Factors such as duration, the dimensions of various body parts, room temperature, heart beats per minute can all be easily recorded and measured (you might need somebody with a clipboard to come in and write this stuff down for you, though). But do any of these factors automatically add up to guaranteed great sex? Of course not, as there is a deeper set of emotional, compatibility elements, a sprinkle of chemistry and magic even.

Measuring the wrong things is a real trap. This is a grim example but it’s worth telling. A US Army general noticed that the daily success of the Vietnam War was being measured by relative casualty rates. A measure as crude and unpleasant as “if we kill more of them than they do of us, then we must be winning”. Convinced this measure did not convey a useful picture, this general, instead, created a set of metrics that, also took into account territory, specific objectives, political and economic cost.

It is what the general said about his reasons for doing this that is absolutely relevant to retailing. He said: “We are only making important that which we can easily measure when instead we should be measuring only that which is important.” Just because you can measure unit sales easily, for example, does not make that the most important part of your business to concentrate your improvement efforts in. Customer satisfaction is harder to measure but far more important because it relates to unit sales made today, tomorrow and next year.

Coca-Cola
Missing the wider story

In the early 1980s, the Coca-Cola Company had become incredibly twitchy about the strengthening performance of Pepsi, its nearest rival. Pepsi had made big strides into Coke’s market and one stat, in particular, had the execs at Coke sweating. In 1972, 18% of drinkers said they drank Coke exclusively against just 4% choosing Pepsi. By the start of the 1980s, this ratio had moved to 12% favouring Coke exclusively and 11% Pepsi.

And that’s when Pepsi pulled its genius move and unleashed “The Pepsi Challenge”. Pepsi targeted committed Coke drinkers and presented them with two small cups of cola, one marked “Q” and one marked “M”. Almost without fail, drinkers would take a sip and choose “M”, which would, of course, then be revealed as Pepsi.

Initially, the team at Coke attempted to claim that Pepsi’s campaign was fixed. But when they then ran similar experiments themselves, they discovered a 53% to 47% split in favour of Pepsi. For the market leader, this was a bombshell – the impact of a six percentage point spread could be measured in millions of dollars in potential lost revenue.

The team were horrified and commissioned a slew of additional market research projects. Each came back with similar results and attempts to qualify the choice for Pepsi began to suggest that Americans had fallen out of love with Coke’s distinct “bite”. What was once described as “refreshing” became “harsh”. The same tasters began to associate words like “smooth” and “rounded” with Pepsi and went on to suggest they preferred these attributes.

Roy Stout was the head of Coke’s consumer marketing research team and is the man who made the connection between losing market share and product taste. He reasoned: “If we have twice as many vending machines, have more shelf space, spend more on advertising, and are competitively priced, why are we losing [market share]? You look at the Pepsi Challenge and you have to begin asking about taste.”

This bombshell drove the board at Coke to make an extraordinary decision. It would change the hitherto sacred and world-famous secret Coke recipe to take account of the perceived change in America’s cola preferences. And thus was born “New Coke”, which had a lighter and sweeter taste, a taste more like Pepsi, in fact.

Early test results were good. New Coke pulled level with Pepsi on blind tasting preferences. A little more tinkering followed and New Coke began to pull out a persistent 6 to 8% lead. The board then took the decision to take it to market and launched a massive campaign behind the new formula.

All the research said New Coke would be a winner.

It failed and failed dramatically. Tens of thousands of Coke drinkers rose up in protest, sales of the new drink faltered and, cutting a long story short, the company was forced into a humiliating climbdown and reintroduced the original formula as Classic Coke. Very shortly afterwards, sales of New Coke all but evaporated.

Why? The flaw was, in hindsight, a very simple one. Coke has a predominantly citrusy-burst flavour whereas Pepsi has a more raisiny-vanilla taste. Take one or two sips of Coke and the experience is quite sharp, the bite is very strong. Do the same with a can of Pepsi and the first gulps are much smoother, sweeter and gentler on the palate.

But drink a whole can of either cola and the experience changes completely. And this is the flaw – Coke drinkers like the way a can of coke tastes but they don’t entirely like the first few sips. Coke drinkers who prefer the first sips of Pepsi when tested blind often complain of a cloying sweetness when they then go on to drink the whole can.

New Coke is a fantastic example of an entire company both putting too much emphasis on the research and ignoring instinct and emotion. So what were the real reasons for Coke’s slipping market share?

Consensus of opinion is that Coke had allowed its marketing spend to mature along with the product. It had failed to sell to the younger, hipper cola drinkers Pepsi had become so adept at communicating with. Coke’s customers were leaching away to a preference for coffee and later bottled waters whereas Pepsi’s were still enjoying rotting their teeth on “The Choice of a New Generation”.

I’m not entirely discrediting management by numbers but stories like this one go a long way to proving that without the emotional context you don’t have the full story.

Some specific statistics and background information here are sourced from the version of this case study related in Blink by Malcolm Gladwell.

Go with your gut feel

Use your gut feel and allow yourself to apply improvements, even to those processes, tasks and interactions to which you are unable to attach numbers. I’d like to ask you to consider valuing the power of your gut feel more highly. Gut feel isn’t random. It’s a guide, an instinct that tells you a certain path may be the right one to take. It is also that good sense that tells you not to do something. But it needs tuning. Books like this one exist to help you separate out correct gut feel judgements from other emotional factors such as fear or laziness.

Behavioural science is now beginning to come round to seeing gut feel as something real and valuable. There is a lot of credible recent research that suggests decisions made on gut feel are more often than not the carefully calculated result of our experience and knowledge and that instinctive gut feel decisions get better as we add new experiences and knowledge to our memories. Think of your gut feel as a potent business weapon, a weapon that is unique to you.

Again, it’s worth reading Daniel Kahneman’s Thinking Fast and Slow for more insight into this process.

Making improvement work for you

Let’s do it a little better every time. As well as running through ways to apply this idea at team meetings, you will need to create an environment in which the team feels comfortable to try things and suggest things. If you are the kind of person who greets every new idea with “I’d love to change that but…” or “I can’t see that working”, then soon people will stop trying and suggesting. Equally, if members of the team feel that you are likely to discipline them for making mistakes, then no one is going to want to try anything new for fear of punishment.

Get the culture of improvement established. Allow your people to question how they do things and you will benefit enormously. Make that an everyday occurrence: little steps but lots of them, and you and your customers will feel those improvements take hold.

Room for improvement

The best retailers do not stand still when successful. They strive to keep the momentum, keep growing and keep moving forward. That growth and movement is inspired by tiny little everyday improvements just as much as it is by sweeping change.

Here are some of the categories in which you will always be able to find lots of opportunities to improve things. The thoughts listed here are a deliberate mix of actual ideas and of pointers to get you looking in the right places for ideas of your own.

You might like to pick out a single line during daily team meetings and have the team come up with some thoughts and ideas on that theme.

Improvement and customers
  • Consider everything from the customer’s perspective.
  • Encourage customers to tell you their complaints (the most cost-effective research you’ll ever do).
  • And listen to them sincerely when they do.
  • Think about the type of people who use your app, visit your store or shop your site – who are you missing?
  • What do customers prefer about your competitors (ask them)?
  • Talk to customers all the time (ask staff to tell you one thing at each meeting that they’ve heard from a customer).
  • Aim to improve average transaction values.
  • Use eye contact more and look for opportunities to do the equivalent in virtual spaces.
  • Regularly walk your site and store like a customer would.
  • Get hold of former customers and ask them why they don’t love you any more.
  • Use social media to communicate with customers as it’s cheap, powerful and very direct.
  • Whenever you are resolving a customer complaint, ask customers how they would improve your service.
  • Remember names.
  • Think carefully about the integrity of your pricing.
  • Send customers stuff they might actually like to see.
  • Where can you add value to the customer experience?
  • What can you promise today that is better than yesterday?
  • Run surveys.
  • List for yourselves the benefits of doing business with you and then tell customers about these benefits.
  • What do other people do well that you really ought to be ripping off for yourselves?
  • List all the things in your business that regularly delight customers, then think about how to double the list.
  • Are you leading by example?
  • Write down a list of all the processes that touch customers directly – all of them.
  • Then do a list of all those that don’t – can you strip any of these out?
  • Make it easy for customers to give you feedback – use the internet, suggestion boxes, till receipt surveys, telephone aftercare calls, open evenings, and everything else you can think of.
  • Get customer opinion on new products before you put those products into your range.
  • Ask customers to tell you what’s missing.
  • Ask customers to tell you what they like about your store.
Improvement and you
  • Read stuff.
  • Get involved in the business community – if you are an owner or manager, join your street or shopping centre advisory committee or the Chamber of Commerce.
  • Talk to your business neighbours.
  • Ask people about your management style (and listen openly when they tell you).
  • Learn from those below you as well as above you.
  • Seek out examples of great retailers and learn from them.
  • Sign up to every internet resource you can find. There are loads of great retail Twitter feeds; for example, mine is @TheseRetailDays. Have a look at who I follow and you might find some of those useful to follow too.
  • Get a subscription to Retail Week and learn to read between the lines (why did so and so make that choice? Why is X thriving? Why is Y on its uppers?).
  • What things do you do outside of work that might be useful inside?
  • Make an honest list of your strengths.
  • Then one of your weaknesses.
  • Go on courses.
  • Sign up to every training and seminar resource you can, initially, as the more you go on the better you will become at recognising which ones are going to be truly useful in future.
  • Naff as it might seem, set life goals and then yearly goals for yourself. What do these goals tell you about the areas in which you will need to concentrate personal improvements?
  • Listen to people more than talk to people.
  • Open your eyes!
  • Go shopping more often – do things your customers do.
  • Read the trade press.
  • Learn from competitors.
  • Learn from people outside your sector.
  • Maintain your standards.
  • Get rid of the “yes” people and surround yourself with people who challenge and inspire you.
  • If you are in-store, appoint an honest and strong assistant manager as they will soon let you know where you have room for improvement.
  • Improve the balance of your life: you look after shops, shopping is fun, try to see it more that way.
Improvement and colleagues
  • Reward people for improving things.
  • Consider issues from your team’s perspective.
  • Don’t get mad with people for trying.
  • Let grown-ups think for themselves – empower people to make their own improvements.
  • Encourage talk, talk and more talk – leave every feedback channel open all the time.
  • Give people a look at these lists.
  • Buy employees a copy of Smart Retail for Christmas – remember to wrap it up nicely, in fact, get your dad a copy too, and all your friends.
  • Recognise people’s contributions.
  • Don’t rip off your staff, especially in the UK as the National Living Wage takes effect.
  • Never criticise employees in front of anyone else.
  • Build a great culture founded on trust and respect.
  • Tell people you are chuffed with them whenever they make you feel that way.
  • Are your job descriptions jargon-filled nonsense? Rewrite them all in human language.
  • Build friendships but never forget that you are the boss – keep a perspective.
  • Encourage the team to be open about their mistakes.
  • Have a laugh together.
  • Always, always celebrate success.
  • Be human in your relationships – if someone is going through a life crisis, help them cope with it.
  • Share the numbers – let the team own them as much as you do.
  • Pay a profit-related bonus.
  • Pay a customer service-related bonus.
  • Smile when you walk through the door every morning, even if you don’t feel like it.
  • Make sure everyone knows about all available courses and seminars.
  • Put aside cash for training.
  • Let good people go on courses you’ve been on – use training as a reward.
  • Be specific with instructions.
  • Sales assistants, social media monitors and call centre staff get closest to your customers – listen to what they tell you about those customers.
  • Challenge people and encourage them to challenge themselves.
  • Teach by example.
  • Show people that the best way to do things is to consider solutions rather than dwell on problems.
  • Get the team involved in all the big decisions.
  • Help employees to see that it is customers, not you, who pay their wages.
  • Hold regular one-to-one appraisals but be prepared to allow employees to tell you what they think of you, of your business and of the team too.
  • Have a team meeting every single day – just 15 minutes’ worth, but make those minutes count.

A/B testing

We are still in the early Wild West days of selling online. Nobody really knows all of the rules. Not even Amazon would make that claim. More than that, Amazon is never satisfied that it has all the answers, that it is the only one doing everything right – quite the opposite, in fact. Amazon makes extensive use of a technique called A/B testing and you should too.

At its simplest, A/B testing is a method for testing a variation on a current webpage, so customer X might see the usual A version but customer Y might see the B version. More dynamic versions of the tool may constantly offer even the same customer subtly different versions of the page as well as doing so across customers, types, territories and whatever other grouping metrics are useful. In both cases, you can quickly see if changing elements of the page change customer behaviours.

Things to test can be as small as the size of a specific button, to as big as a full redesign and all points in between. If yours is a large business, then your IT team will, almost certainly, be on top of this tool but, even if you are smaller, or even a one-off, then A/B testing is still available cost-effectively for you too. There are loads of third-party consultants and some platforms even build it in. Explore your options and get testing.

Online taken off

Even in physical stores, you can operate a version of A/B testing and this isn’t done often enough. Take an area such as the entranceway and play with versions of it across small numbers of stores. Test variation A across three stores versus three similar B control stores. Then swap back to the original in the test stores and put variation A into the three control stores. Measure footfall, conversion and ATV. You should be testing small variations such as these pretty much all the time and then rolling the learning into the wider estate. To make this easier, make sure your shopfitters and retail designers have considered modular fixtures in their format development. Modular means you can play with combinations at low cost and low risk.

A/B testing golden rule

There is one golden rule, and it should be obvious: A/B testing only works if you test just one change at a time. If your variation includes more than one difference, how will you know which one of those worked? Or worse, one might have worked but the others failed but you would only see the failure. So one change in colour on a page, one variation of a click box, one change of message. Online you can simultaneously test lots of those separately of course: 10,000 visitors, 2,000 see the original, 2,000 see variation one, 2,000 see variation two, etc.

Interpreting what constitutes one change in a physical environment can be trickier. Is one bit of POS enough of a change to test? Does it mean a whole display? I tend to believe in physical spaces; one family change counts as one thing: swapping all of one type of POS to a different colour or changing one display unit.

Now
Things you can do now

  • Put improvement on the team meeting agenda.
  • Review the lists for improvement. Select five items to tackle this month. Identify all the other items you feel could or should be tackled this year.

Next
Strategic considerations for the longer term

  • Review your major KPIs within your performance management environment and check that they line up with improving outcomes for customers.
  • Find five candidates for A/B testing.
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