Don’t Forget Customers During Organizational Change

Most smaller businesses and nonprofits exist to serve their customers. But sometimes, they take their eyes off the ball during organizational change or growth. And, that’s not a good thing.

The customer experience is a key factor in building brand loyalty for any organization. Every brand touchpoint must offer a positive, exceptional experience. When that experience is lackluster or inconsistent, the risk for customer attrition rises.

Case in point:
Ross Stores. Even though I don’t often write about B2C retail marketing, this company’s situation is a perfect example of what not to do during change or growth.

According to Hoover’s, “Ross operates about 1,125 Ross Dress for Less and dd’s DISCOUNTS stores that sell mostly closeout merchandise, including men’s, women’s, and children’s clothing, at prices well below those of department and specialty stores. While apparel accounts for about 50% of sales, Ross also sells small furnishings, toys and games, luggage, and jewelry.”

Ross is an S&P 500, Fortune 500 and Nasdaq 100 company headquartered in Pleasanton, California, with fiscal 2012 revenues of $9.7 billion! The chain - located in strip malls in some 30 states, mostly in the western US, and Guam - targets 18- to 54-year-old white-collar shoppers from primarily middle-income households.

One thing about me… I love a bargain, and so, I had been a regular Ross shopper for years. (Notice that I used the past tense.) Why don’t I frequent Ross Stores much anymore? Because the customer experience declined so badly, it isn’t worth my time.

When I first shopped there, the shelves were filled with decent merchandise at rock-bottom prices. I always walked out with a few bargains every time I visited. But, that ended about 2-3 years ago.

Now, the shelves are sparsely filled. On some displays, products are separated by a foot of empty space. And, it’s not because items sell out quickly.

The company published a long list of risk factors in its recent “Forward-Looking Statements” that include, “higher than expected inventory shortage.” The company is also re-purchasing its common stock, “obtaining acceptable new store locations and improving new store sales and profitability, especially in newer regions and markets.”

In spite of its challenges, the company has managed to grow its 2013 first quarter by 12%!  All that’s well and good for shareholders , BUT my customer experience has been lackluster and disappointing for a long time.

Now, you can’t argue with success, right? But, isn’t there a risk that the stores’ poor customer experiences will catch up and cause customer attrition? Unless, there’s a major change in inventory management, I believe that’s a real possibility.

So, what’s the lesson here?

As organizations experience change and growth, it’s important to ensure that excellent customer experiences are maintained. It’s easy to get distracted managing change, but without loyal customers, the changes may lead to downfall.

The jury is still out on Ross Stores. We’ll have to see what transpires over time.

Have you experienced lackluster customer experiences at Ross Stores? Other businesses? When do you decide to walk away?