Home Depot Still Has A Spark Of Customer Centricity

I’m in the process of publishing a report called “The Customer Experience Journey” which describes 5 levels of maturity as companies head towards Experience-Based Differentiation. As companies evolve past the first couple of stages, they need to develop “Customer-Centric DNA,” which I’ve defined as:

A strong, shared set of beliefs that guides how customers are treated  

So I’m always looking for tangible examples of this type of culture. Well, I found an example in a comment to one of my posts called Can Frank Blake Revive Home Depot? I know that people don’t always read the comments, so I decided to post an excerpt of it here:

I’ve been an Employee for 8years and yes the Nardelli era was hard, not only for the customers but also the employees who’s heart pumps orange blood. I stuck it out with the company because I know the creation of this company wasnt built on the values Bob Nardelli tried to push on all of us…. Now that we have Frank, I can feel the flame spark again… it may never be a strong flame like it once was but I still have faith that it will one day light again. For all of you frustrated customers I would like to tell you that I am personally sorry, even I lost the customer service focus that bernie and arthur built this company around… but I can honestly say I got it back, and I want to rub it off on every employee I come in contact with…. Frank understands that in order to do this we have to teach train and develop each other so that we can better serve you… it will take some time to build that back, but I can see the light at the end of the tunnel.

The bottom line: If most of Home Depot’s employees still feel this way, then I’m betting on the company!

Can Frank Blake Revive Home Depot?

Home Depot’s stock closed yesterday at $27.18; 29% lower than a year ago. That’s certainly troubling, but what’s even more concerning for the retailer is the poor feedback from its customers:

  • According to the American Customer Satisfaction Index, Home Depot’s satisfaction dropped 4.3% in 2007 — the largest drop of any specialty retailer that it tracks. By comparison, Lowe’s customer satisfaction increased by 1.4% over the same time-frame.
  • In Forrester’s Customer Experience Index, Home Depot received a score of 72%; 25th out of 27 retailers. Lowe’s, on the other hand, ended up with a 79%; 15th out of the retailers.

This is a terrible story. So is Home Depot doomed to failure? Not necessarily. While the firm has a lot of problems to fix, it’s got one key part of the solution in place: Frank Blake as CEO. I just read a Q&A with Blake in the Wall Street Journal which really impressed me. Blake seems to be doing a lot of the right things to make the company more customer-focused, in particular:

  • He went to the founders for advice. During store visits with Bernie Marcus, Blake learned the importance of the connection between associates and customers. As I’ve said many times in this blog, companies often lose site of what’s important; letting the hunt for profits obscure the company’s purpose. Founders can often help restore the original sense of purpose.
  • He thanks employees– personally. When it comes to great customer experience, it’s critical for executives to get actively involved. I’ve often discussed the thank you notes (called “Blue Notes”) that David Neeleman (JetBlue ex-CEO) sent out to employees who did something good for customers. It turns out that Blake asks for examples of associates doing extra-ordinary things and he sends out 40-50 handwritten thank you notes per week.
  • He understands the levers of leadership. To quote Napoleon: “The role of the leader is to define reality and give hope.” Blake understands that he needs to lead the entire organization through major change so he sticks to simple messages that everyone can understand and pushes his executive team to make decisions.

If Blake is looking for what to do next, he should take a look at following eight questions that gauge the customer-centricity of management teams:

  1. Do senior executive staff meetings have a recurring agenda item on customer experience? (this does not include dealing with customer emergencies)
  2. Do internal communications from the CEO/President regularly include discussions of customer experience?
  3. Do external communications from the CEO/President regularly include discussions of customer experience?
  4. Is customer experience explicitly discussed (in some form) within the company’s strategic plan(s)?
  5. Does the executive team have a clear set of customer experience objectives?
  6. Do most of the executive team members have goals based on customer experience objectives?
  7. Is the compensation of executive team members tied to customer experience objectives?
  8. Does the organization believe that the CEO/President would trade-off some short-term financial results for longer-term customer experience gains?

The bottom line: Home Depot appears to be in good hands.