Greetings and Bathrooms: One CEO's Metrics for Retail Stores

Yesterday, we had the CEO of a large retail chain as a visitor in the Stanford class we Huggy Rao and I are teaching on scaling-up excellence.  I will refrain from using his name as this a class, not a speech to the public.  But he said something  interesting in response to a question about the challenge of "descaling bad behavior."  When I asked what the "warning signs" he looked for during store visits, signs that management was slipping, he offered two metrics (which he said could be applied to many others retail settings too):

1.   Am I -- and other customers -- warmly greeted by employees when they enter the store?  He said this was a general sign that employees were focusing on customers.  He added that the small social connection and associated feeling of obligation makes it a bit harder for people to walk out of the store without buying anything. 

2. Are the bathrooms clean?  He joked that people in his company must think he has a small bladder because he is always asking to go the bathroom.  He argued that dirty bathroom are a sign that the managers and employees are failing to execute in other ways, and because customers react so negatively to dirty bathrooms, it was especially bad for motivating sales and return visits.

He said that, when he spots these signs, he immediately has a huddle with the store manager and employees to explain why they are of such concern to him and to persuade them to start changing their behavior right away.  He also emphasized that his firm uses all kinds of quantitative measures to run the stores, but as he pointed out, these simple measures add something that can't be seen just from looking at the numbers.

Ireally liked the elegance of his two measures and how he tied them to his immediate actions.

I wonder, what other simple measures do you use -- as a customer or manager -- to assess if a store is being ran well or badly?

P.S. I was sitting next to a marketing professor from another university during the talk. He argued that if you look at Wal-Mart's recent financial challenges (which the press seems to attribute to such deep cuts in the merchandise prices), part of the problem may be that they are failing along the lines suggested by this veteran CEO.  As he noted, Wal-Mart is eliminating some greeters and moving others away from the entrance; an article in RetailWire comments on reduced and altered use of greeters: "A lot of changes have taken place at Walmart over the years since Sam Walton's passing, but the latest may have him flipping over in his grave. "  That marketing professor also asserted the cleanliness of Wal-Mart bathrooms have slipped in recent years (This is hearsay as I am not a regular Wal-Mart customer; I did try to look online for evidence to support the claim, and while there were individual complaints, I didn't see any systematic evidence one way or another).

Comments

[Parag]

Excellent post. They say that truly well turned out people do not wear bad socks and underwear. So it is too with organisations.
http://eyeseework.blogspot.com

[ttchipster]

But watch your context. This past weekend my family visited an outlet mall. EVERY store greeted us warmly and enthusiastically when we entered. Clearly someone had been around and given some stern advice. It was nice the first time, by the third time it was annoying and after that it was creepy, like we'd entered The Stepford Outlet Mall.

[michelle]

I took an MIT quality management class from a Deming Prize winner. The program involved a number of visits to manufacturing plants and distribution centers. Before our first tour, the professor gave two pieces of advice:
1. pay attention to how the floor workers greet you. it is a good sign if they wave from across the room or want to show you their area.
2. pay attention to the bathrooms. if management respects employees, they will be clean and well stocked.

[davidburkus]

I like the idea that one or two metrics can be used to make some assumptions about the whole organization. One of my favorite examples is David Lee Roth's "No Brown M&Ms."

His shows had so much technical equipment that needed to be perfect. As a measurement, he embedded "No Brown M&Ms" in the pre-show checklist. That way, if he walked into the Green Room and there were brown M&Ms, he knew that the equipment crew had likely shorted the set-up elsewhere too.

[Bret Simmons]

Love the point about dirty bathrooms. When I was a lowly manager for McDonald's Corp. they taught us to pay attention to these and other details, like dirty baseboards and dirty HVAC intake vents. Business that don't pay attention to things their customers see probably also have "dirty kitchens"

[Ariegoldshlager]

Bob,

Thanks for a very insightful post.

See this Office Depot's case study for a similar [or the same] practice:

http://ariegoldshlager.posterous.com/can-your-market-share-decline-while-your-cust

Thanks,

Arie.

[dan markovitz]

The dirty bathrooms reminds me of the legendary contract rider for Van Halen, which demanded that the concert promoter remove all brown M&Ms. The band's thinking was that the presence of brown M&Ms indicated that the promoter hadn't read the contract carefully -- so it acted as a leading indicator that there might be trouble. The dirty bathrooms seem to operate in the same way. Read about the rider here: http://www.thesmokinggun.com/documents/crime/van-halens-legendary-mms-rider

[Michael Ciszewski]

Some really great, common sense measures.

And, I couldn't help but catch the irony in a conversation about "descaling bad behavior" which includes having clean bathrooms.

[twitter.com/jmcaddell]

Bob, I am assuming you're familiar with the research of Zeynep Ton, who studies retail at MIT and was formerly at HBS. She focuses on retail staffing and compensation, and has some pretty excellent examples that cutting staffing may cut costs, but harms profitability more (and investing in staff can increase profitability).

A store that is understaffed will not take time to greet people, or to clean the bathrooms.

regards, John

[Sam Whiteman]

Bob - I heard a similar story about the CEO of Greyhound re bathrooms and cleanliness. I think the old CEO used to hold his staff meetings (it might have even been his annual investor meeting) in a Greyhound Station bathroom to highlight how serious he was that if the bathrooms weren't up to scratch then neither was the whole station.

Sam

[Jay_dilley]

These are great metrics for any business. Management and staff that work at an organisation with dirty disgusting bathrooms are lazy management and disengaged. If you allow your company's facilities to fall into disrepair, the company will be soon to follow.