Is Dick Smith turning around?

Back in June I thought Dick Smith was a Dead Brand Walking, given the cruel suffering and ineptitude that is a visit to one of their stores, but since then I’ve had a number of opportunities to eat my words. The Business press is crammed with Hero worship for the genius of Anchorage Capital, the Private Equity firm and majority owner of the once iconic retail brand, also for Nick Abboud, the no-doubt brilliant retail CEO.

But I’m not convinced that the PE miracle is anything more than a slick PR mirage engineered to rake in a massive return for Anchorage Capital on the back of their very own ABM (this Alan Bond Moment came at the expense of Woolworths’ Shareholders).

Cut through the awesome David Jones deal, and the fashion tech store concept Move, and you’re left with the same old same old at the vast majority of Dick Smith stores, maligned staff all too few in number servicing a similarly slight customer base. Even if Dick Smith managed to look just like JB HiFi, which it won’t, it still won’t BE JB HiFi and it will lose all the same.

It’s said that growing a business means doing what you do so well that the Market DEMANDS that you get bigger, you get bigger only by being better. Doing deals and launching concept stores helps to create a perception of doing better, but the P&L is geared around the 300+ unprofitable stores that look just like they did when Woollies owned them, setting out a blueprint for a rocky ride on the ASX if they can get it there.

No, I suspect the miracle turnaround begins and ends when Anchorage offloads its investment in Dick Smith in record time to Retail Investors through a listing, or to the management team beforehand, and for as much as 20x the $20m they paid Woollies!

Maybe Anchorage’s ABM is more of a GGM for the Dick Smith team?

It isn’t all about surprise and delight, keeping customers is about getting the basics right

Today’s customers are more sophisticated than ever, sampling the wares of more brands in more locations than ever before, happy to journey to a café in the suburb next to the next suburb for a cold drip, encouraged to buy from overseas by far flung Friends’ waxings on Facebook and keenly eyeing the swings in their local currency for macroeconomic bargains. This Neo Consumer is older and richer than before too, more thoughtful, more discerning and always ready to Switch.

The Neo Consumer is empowered, in control and they know it.

Informed and empowered Neo Consumers are hard to impress too. Battling for their business is harder than ever, and the dangling of ever-oranger carrots has become an increasingly important part of the game. 3 Hour delivery, 100 day free returns, free international shipping, and super slick omnichannel blah blah have apparently become the battleground. But too much emphasis is lumped on the need to differentiate from the competition with whistles and bells at the expense of profit, and worse still, at the expense of consistent, good service that’s required to keep the hard-to-win Neo Consumer coming back.

With that empowerment also comes a willingness to walk away at the slightest hint their expectation won’t be met. And for the Neo Consumer, switching to a new provedore is easy come easy go. No warnings and no second chances, one slip, and they’re gone.

The pursuit of great service begins and ends with love.

Service begins with love

Some businesses will never get it, never.

I couldn’t be more passionate about great service, my adult life has been peppered by the pursuit of the perfect service experience, delivering it or it being delivered. So far I’ve found that it’s massively hard to give, and sadly rare to get.

A key milestone in that pursuit happened two weeks ago when Yabbit.com launched, Yabbit is the new feedback platform in partnership with American Express [Amex have made it available free and exclusive for American Express merchants in Australia]. Each day the Yabbit team are talking with businesses about the chance to hear from their customers, directly and one to one-ly about their service experience, the good and the bad, the great and the sad. Awesome, sounds good, they say. But they don’t always mean it. Like, really mean it.

And it struck me.

It’s not about service, it’s about love.

What’s love got to do with it?

Love is – Doing things you don’t have to do, but want to do, just because. Smiling because you can’t help it. A spring in your step. Caring about everything you do. Keeping things fresh and new. Doing what you say you will do. Surprising and delighting. Being spontaneous, early, eager, attentive, gracious, careful, thoughtful, even thankful. Just like great service.

Service isn’t about being fast or efficient, it’s about love. Giving your customers a little slice of you, showing how much they mean to you, and finding a team that will behave the same way, not because they are following a blueprint but because they also love to love. Did you show your customers any love today?

Some businesses will just never get it. Never.

What’s a great product without great service?

It’s rare that a great product would win without the support of great service, so why then are the two so quick to grow apart?

The problem, I think, is success.

Scale and its associated economies support the development of a product  but rarely do they support the development of the accompanying services. There are exceptions, of course, but not many; McDonalds is one, Apple another, Sadly I’m at a loss to think of a third.

It’s worth noting of course that Apple and McDonalds are are notable exceptions to the rule, albeit for vastly different reasons. McDonalds is a very, very large franchisor, and the “product” being sold does not come in a bun, the product is the Franchise. The Franchisee buys a proven recipe for fast food and efficient service. If McDonalds didn’t have control of the entire McD’s ecosystem through a tightly wound Franchise Agreement it would be impossible to maintain its brand of high-margin consistency that allows it to continue selling to franchisees at a premium.

Apple, on the other hand, is all about brand, and that brand extends through the product supply chain to the lifestyle, which includes the process of purchasing and ownership. Prior to Apple seizing control of its supply chain the service part was delivered by 3rd parties, now it is a powerful pillar in the house of Apple.

When a typical business grows, investment is poured into improvements in the production process, reducing the cost of goods and improving margins. The same can’t be said for service, great service at scale is costly, and returns to scale are minimal. In addition, training great service to new staff takes time, so the gap between product uptake and service delivery can grow rapidly if the growth was sudden and unforseen.

Improved margins are seductive, investments in service are not, and so the conflict begins.

As a business owner, you can get ahead. At a minimum there should be a record kept of a consistent service KPI such as Net Promoter that can serve as an early indicator of customer sentiment taking a turn for the worst. Where growth is happening at the expense of service the growth should be arrested until the issue is identified and resolved, hard as it may be to do so.

Positioning your entire business as a product is smart, have a McDonalds-like operating manual with detailed descriptions of service procedures and quality standards, or emulate Apple by asserting service as a key part of your brand, then live it with every touch-point!

To favour growth at the expense of service is a short term win, the positive sentiment that propelled growth in the first place is already evaporating, allow that to continue and chances are your brand will never recover.

yabbit.com–a feedback platform for business owners who care about great service…

Print

Things don’t always go well, no matter how passionate you are as a business owner. What’s important, is what you do next.

yabbit will help you to connect with your customers, on premise and off. Providing a platform to gather feedback about your business, and giving you a critical opportunity to respond when things have not gone well – before your highly connected and passionate customers turn to social media and their favourite ratings and reviews site to share their disappointment.

At no cost to you or your business, yabbit will provide an easy to use feedback platform that will encourage your customers to “tell it like it is” – simple, discreet feedback, straight to you, the one who cares the most, the business owner.

yabbit is looking for 100 passionate business-owners to get involved in a pre-launch Beta, to provide us with invaluable feedback that will help us shape this business into a game-changer for your business.

Go to www.yabbit.com to register.