People Do What You Inspect, Not What You Expect
By Lyle Walker / July 2016Insights
In my early career as a Co-Manager at Kroger, one of my first store managers had a favorite saying he used during daily store walks: “People do what you inspect, not what you expect”. In the world of retail store operations, where you are managing large staffs of over 100+ hourly employees, this saying was absolutely true. But… taking a different spin on this, in the world of retail merchandising, I’d rephrase it as, “People do what you measure, not what you monitor”.
For example, we have lots of discussions with retailers around how to move from a “product” focused organization, to a “customer” focused organization. The intent is to understand how to bring customer metrics into the promotional planning process, so that the customer has a voice on what items to promote and how to price them. The goal of being more “customer centric” is not a new one, but is still lacking in being consistently executed across most retailers. Which poses the question, how do you change what’s measured to include the customer, so that a customer centric approach becomes pervasive across the organization?
One of the growing trends within retail is to move data out of reporting systems and integrate it into operational, work-flow systems. For example, integrating customer metrics and modeling/forecasting into the promotional planning process of creating a weekly ad, can provide immediate results. A promotional planning solution manages the steps from start (vendor supplies an offer) to finish (an Ad circular is produced). It provides efficiencies from a workflow standpoint that in and of themselves, have great value. But, by integrating predictive modeling/forecasting with a heavy emphasis on customer metrics, this process becomes completely transformed. A retailer can now sit in an ad meeting and evaluate their promotional plans using traditional measures of $ Sales and Profit, but also customer metrics of penetration, basket reach, importance by customer segment, and others. These customer metrics then become pervasive and measurable, on a consistent basis. With this in place, the goal of moving from a product focused organization to a customer focused organization is achievable, and one that can be monitored, but more importantly, measured.
Contributed by Lyle Walker, Vice President of Business Development at dunnhumby
Lyle is Vice President of Business Development at dunnhumby, with 20+ years of Pricing and Promotions experience working with and for retailers including Kroger, Winn Dixie and Walmart.