What a Peach
Extensive coverage of the 2013 NACS Show in Atlanta.
Pyramid of Power
C-stores generate 80% of their overall sales from two commodities—gasoline and tobacco—that also happen to provide less than one-half of the channel’s profits. How do you create customer and employee loyalty to the other 20%? By transcending expectations.
Chip Conley, founder of independent hotel company Joie de Vivre, asked attendees at the opening general session to consider the similarities between his business and theirs. Both hotels and convenience retail are service industries. They both face grueling competition from traditional competition, as well as “disruptors” who appear to come from nowhere. And both have a workforce that is paid an hourly rate, typically has no higher-education experience and serves in what detractors consider “dead-end jobs.”
With hurdles such as these, how can convenience retailers even hope to come out ahead? It’s simple: Don’t limit yourself. “A great hotel is more than a bed,” Conley said. “A great c-store is more than convenience.” Rather, it is about strong company culture, providing a place for employees to live up to their potential, and winning strong customer loyalty.
For example, Southwest Airlines is widely admired for its strong company culture and enthusiastic employees. Several years ago, during the recession, Conley was on a Southwest flight and noticed that the airline’s CEO, Gary Kelly, just happened to be passing out peanuts to customers—most of whom had no idea who he was. After Kelly finished his task and retreated to the back of the plane, Conley introduced himself and began picking his brain. One of his questions: Why didn’t Southwest introduce baggage fees as the other airlines did during these economically troubled times?
Kelly’s response: After the other airlines began charging customers to check bags, these same customers started bringing more bags onto the planes as carry-ons as a way to avoid paying the baggage fees. Boarding a plane soon became a much more laborious affair for airline employees. In effect, the move turned flight attendants into baggage handlers and made their customer service responsibilities even more difficult to fulfill. It was a strategic error that crippled employee morale.
“The sign of a great leader in business,” Kelly told Conley, “is know how to get out of the way and let employees live their calling.”
To provide a path toward building Joie de Vivre into an employee-focused culture, Conley adopted psychologist Abe Maslow’s “Hierarchy of Needs,” a pyramid that shows the different steps toward reaching true work happiness, or self-actualization. As you move up Maslow’s pyramid, you move toward a more representative version of yourself. In essence, it was a map for employers to help employees attain the old Army slogan “Be all you can be.”
While Maslow’s pyramid was designed for people in mind, Conley saw its potential use for businesses. “If humans can be self-actualized, why not a company?” he said.
For Joie de Vivre, Conley created a hotel hierarchy of needs, with the basic physical needs of the customer—a comfortable, clean bed—at its base. At the top is identity refreshment. Around this, the hotel company built boutique concepts based on magazines that personified their potential clientele. For example, one hotel had Rolling Stone as its touchstone, and another had The New Yorker.
For c-stores, the hierarchy of needs has convenience at its base, ascending to friendliness and then serving customers’ unrecognized needs. Conley shared the example of a c-store he frequents. The store’s owner asked Conley what items he would like him to stock. After Conley suggested a few—vitamins, protein bars—the retailer stocked them. This same operator had in fact asked all of his 25 top customers this question and delivered where he could. The result: All of them, including Conley, shared their positive experience with friends.
“When you provide something unexpected,” said Conley, “you create more loyalty.”