Wilson & Ellis Consulting Multichannel Magic
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Wilson & Ellis Consulting Multichannel Magic
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How to Achieve Double Digit Growth in a Down Economy
Getting it Right the Cabela Way According to the analysts and media, this is a bad time to be in the sporting goods business. The January Forbes article, “Sports Retailers Running on Empty”, says that retailers are in a slump and recommends a “new hot trend to catapult them out.” The numbers seem to support it, so it must be true. Declining sales, earnings, and stock prices indicated that 2008 was going to be a hard year for the industry. Stock prices rise and drop by the whims of the market and its analysts. Cabela’s, Inc. stock rose recently because of strong first quarter earnings. There isn’t a story there, only a reactionary market spike. The next time financial reports are released, it will be forgotten. Here’s the REAL Cabela Story While other multichannel companies are losing market share, filling bankruptcy, and whining about the economy, Cabela’s is profitably growing at a double-digit rate. (Fiscal year 2007 revenues grew 13.9%. First quarter 2008, they grew 16%) The company hasn’t started the next hot trend or reinvented themselves. They just simply remember who brought them to the dance. Years ago, I had the opportunity to visit Sydney, Nebraska and work with the fine folks at Cabela’s. When we toured the warehouse, I noticed a printer dispensing checks at the last station on the packing line. I stood there watching checks being written for pennies. Since I was the efficiency expert, hired to help them improve their operations, I felt compelled to tell Dick Cabela (Co-founder and Chairman) that this was a very inefficient process. He was refunding pennies when most companies kept or forgave any differences of $1 or less. (Since then, that number has moved to $5 for some companies.) The costs associated with processing the checked exceeded the refund amount. Dick patiently explained to me that it wasn’t about being efficient, it was about doing what was right. He wanted each of his customers to know that every transaction with Cabela’s was fair and honorable, regardless of the cost. WOW! He saw beyond the financial cost picture to understand that fiscal sales numbers were the sum of one order at a time by individual customers. And his success depended on relationships established during the processing of those orders. There weren’t any catch phrases like “customer care” or letter language like “CRM”. It was a simple explanation of his personal and corporate policy to treat people right. This was the first lesson of many I learned from my Cabela experience. The “treat people right” policy was obvious throughout the company. There seemed to be two rules: 1. The customers came first. No matter what. 2. Employees were treated with respect and in turn, they were committed to the company’s success. Everywhere I visited, I found that relationships always trumped product and marketing. It is a policy that stands the test of time. Long before the Internet, multichannel marketing, and a global economy, Dick Cabela established a solid foundation for his company by doing what was right. His customers and employees have rewarded him by growing his company even when the economy is slow. Entrepreneurs and executives everywhere should learn from his example. What’s Your Story? Do you have the foundation in place to profitably grow your company good times or bad? If so, life is good! If not, it is time to get started. Marketing, branding, and product are all important parts of a successful business. While they must never be neglected, they are not the top priority. No business can exist without customers. Keeping them happy and coming back is the only way to insure success. How do your customers describe their experience with your company? Do they look forward to visiting your store or receiving your catalog? If they have a problem, do they trust you to resolve it? It seems odd to me that so much time and effort is spent on personalizing marketing and so little is spent on service. I suspect that it is because you get instant gratification from marketing and easily measured results. A targeted sales promotion generates higher response rates and return on investment than a general one. You send it and then tally the sales. But, how does that build relationships? The service side of your business is where customers become advocates. Dick Cabela is quoted as saying, “When customers shop at Cabela’s and are one hundred percent satisfied, we cannot only expect them to return, but we can expect them to tell their friends. When you treat people well, you would be amazed at how quickly word gets out. There really is no better advertising than that of a satisfied customer.” It used to be said that a satisfied customer tells two people. A dissatisfied one tells ten. This is not true today. Satisfied and dissatisfied customers tell the world through blogs and social networks. It creates an environment where you have lots to gain and everything to lose with each customer interaction. Now is time to start a 1to1 service program providing personalized service to each customer. It’s guaranteed to help your business in good times or bad. If you haven't done so already...
It is free and guaranteed to help you grow your business.
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