The ONE QUESTION Every Business Must Ask, Before Making a Decision
Customers shop at Wal-mart because Wal-mart has low prices, and product in stock. Wal-mart has earned this reputation by steadfastly managing logistics, and especially, costs.
But even doing what you're very good at can hurt you, if you don't measure your decisions against one simple question.
We'll get to that question in a minute...
First, let's turn to an April 3 New York Times article that describes how recent workforce reductions have prevented Wal-mart from getting fresh produce to its store shelves in a timely manner:
"Walmart, the nation’s largest retailer and grocer, has cut so many employees that it no longer has enough workers to stock its shelves properly, according to some employees and industry analysts. Internal notes from a March meeting of top Walmart managers show the company grappling with low customer confidence in its produce and poor quality. “Lose Trust,” reads one note, “Don’t have items they are looking for — can’t find it.”
The article further reports declining grocery sales at Wal-mart, and customers complaining about longer wait times at check-out, because fewer cashiers are available to staff all the registers.
Wal-mart has grown to become one of the greatest retail stories in the history of our planet by keeping costs low, and sharing those low costs with the customer through lower prices.
In other words, Wal-mart cost management has enabled them to created a better customer experience. That customer experience has driven customer loyalty, increased sales, company growth and profitability.
But according to Times report, when Wal-mart managed their costs by reducing the number of stocking clerks and cashiers, the customer experience was damaged in two ways:
Less-than-fresh, and absent produce inconvenienced and disappointed customers.
Longer-than-normal wait times at check out further disappointed customers.
The bottom line result to Wal-mart has been lost customers, lost revenue, and lost reputation.
Before a business makes any decision, it must first ask itself one important question:
"How will this decision impact the customer experience?"