Home
>
Strategic Planning
>
Changing Strategy Without Losing Your Customers - Three Vital Steps to Refining Your Strategy

Changing Strategy Without Losing Your Customers - Three Vital Steps to Refining Your Strategy

American Eagle Outfitters and Wet Seal Stores have issued statements about company turnarounds needed to cut sales loses. This kind of story occurs far too often: a business disconnects from their customers because the company either wants to sell to a larger customer base or they want to upgrade to a more prestigious look.

The Strategy:

The strategy may seem initially correct. Here are some examples:

==> Three years ago American Eagle decided to shift from its targeted customer, the high school teen, to the college student body by offering more sophisticated styles. Their intent was to grow up with their customers.

==> Wet Seal felt they had to react when competitor Forever 21 started to offer more trendy items. Wet Seal decided to distinguish itself by upgrading the quality of the products.

==> In an attempt to end a downturn in market share, McDonald's decided to upgrade their menu selections. They introduced higher priced specialties, super sizes, and upped prices on their traditional favorites.

==> Remember when Farmer Jack closed their stores for several days to go to everyday low pricing? It was their attempt to recapture the value-minded customers they had lost to Wal-Mart and Meijer. At the same time, Kroger, which was always positioned on quality and variety, was upscaling to compete with Whole Foods Market and other specialty chains.

==> Unlike Wal-Mart where Sam Walton and his company leaders understood the low-price business, Kmart executives moved into the posh suburbs of Detroit. While Sam continued to relate to his customers, even driving his own ancient pick-up truck, Kmart's CEO had a driver behind the wheel of his luxury car. It is no wonder he became uncomfortable running a discount store chain and wanted to impress his upper-class friends by upscaling the stores.

The Mistakes:

Each of the these five organizations made a fundamental mistake in changing their strategy.

==> American Eagle overlooked the fact that as youth grow into adulthood, they want to leave behind the things of youth. Although a favorite among adolescents, the college customer wants to move from high school and show they have grown up. American Eagle is one of those things they want to leave behind. American Eagle needed to concentrate on building their high school business.

==> Wet Seal was disconnected from their customer. When they differentiated from Forever 21 with higher quality and prices, they forgot that their customer base was more disposable. They wanted new swimsuits through the season, not one suit that will last a couple of years, especially because the trend cycle is shorter.

==> McDonald's decision to upscale ignored their marketposition as a low-cost fast food retailer. They struggled until they developed the dollar menu, which has brought back their base customer. Keeping the upscale menu items, the chain is able to address the desires of a changing national diet while retaining the customers that made them strong.

==> Although Farmer Jack's move was probably the right thing to do, the corporate executives at parent A&P did not understand the margin structure for everyday low pricing, raising prices to the previous high-low strategy. By abandoning ELP, Farmer Jack returned to poor results, sealing the death of the chain. However the Kroger strategy worked because it did not change the customer base.

==> Kmart's move was a disaster at the check-out. To further kill the company, the executive was replaced by a new CEO. This CEO was from an exclusive suburb of New York City and owned upscale "The Museum Company". Although financially astute, there was no chance he would relate to the Kmart base customer that craved Big Red chewing gum instead of Altoids. The company entered a downward spiral that would end in bankruptcy.

Underlying Principle

Let's shift for a moment to corporate culture. The number one problem with changing a corporate culture is that the current corporate leaders see the culture as a comfort zone. The existing culture is what made them successful, therefore it works (at least in their minds). The idea of changing a corporate culture, even for improved productivity or bottom-line results, takes the executives out of their comfort zone - therefore they do not embrace a changed culture. In fact, most will undermine or be outright hostile to a change in corporate culture.

To prove the point, how many executives do you know that have taken their company to casual attire yet still wear a tie? If you know of even one you know too many. Although they may make great sounding excuses as to why they need to wear the tie, the reality is that they have not bought into the changed culture.

The Core Problem

Back to the idea of knowing your company roots, these same "culture-change-fearing" executives will quickly embrace an upscale strategy that ignores the existing customer base. Why? The new strategy is in some way close to their comfort zone. The customer perspective becomes unimportant as the comfort-zone factor kicks in.

This is what the unsuccessful companies above did. In one form or another, they tried to change their customer base. Executives will make this product or service change because these high-paid executives are attempting to take their customers to a place more in line with their own shopping desires or where their acquaintances will give them the most admiration.

Three Vital Steps to Refining Your Strategy

There are three vital steps to take if you want to successfully change your stategy to add more value to your customer. To receive these steps, request the FREE PDF file at www.getmaximpact.com/RequestArticle-Strategy.html.

Rick Weaver is President of Max Impact, a national leadership and organization development company based in Rochester Hills, Michigan. Rick is an accomplished business executive with experience in retail, market analysis, supply chain and project management, team building, and process improvement. He has worked with hundreds of companies to improve sales, processes, and bottom-line results. MaxImpact offers leadership and organizational development services along with employee assessments and background checks. Contact Rick at 248-802-6138 or via email, rick@getmaximpact.com. MaxImpact is on the web at rick@getmaximpact.com

Batchtown Chicago prom limo .. Lockport Chicago limo O’Hare

In The News:

There are common habits and oversights that could leave your financial information vulnerable to cybercriminals, according to Kurt the CyberGuy.

Counting calories just got easier with The Drop, the world's first automated nutrition tracker using advanced computer vision and artificial intelligence.

A virtual private network can help ensure your information remains security and your privacy remains intact. Kurt the CyberGuy explains.

Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.

Artificial intelligence-based cameras are giving air defense operators unprecedented capabilities in monitoring and protecting airspace.

Apple's iOS 18.1 Inactivity Reboot automatically reboots your iPhone if it hasn't been used or unlocked for more than three days, providing better data protection.

An inventor designed rooftop solar panels for a Tesla that draws solar energy while the car is parked, adding travel mileage without plugging in.

There are currently no laws governing what artificial intelligence can and cannot do with the information it gathers; here are 10 things to avoid telling AI chatbots to keep yourself safe.

A credit union with over 240,000 members recently revealed it was targeted by cybercriminals, resulting in a data breach that was part of a two-month attack by hackers.

Scammers have become skilled at creating convincing fake websites that can easily fool unsuspecting users. The CyberGuy offers tips to protect yourself.

Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.

CAPTCHAs, which are used by websites to confirm whether users are people or bots, are harmless, but hackers are using them to infect PCs with malware.

Hackers recently leaked personal information of about 500,000 Americans and stole patient medical records that included lab results and insurance details.

The holiday season sees a rise in mobile shopping scams. Tech expert Kurt “CyberGuy" Knutsson helps you learn how to stay safe.

Tech expert Kurt “CyberGuy" Knutsson says a VPN enhances online banking security by encrypting data and protecting privacy.

Beware of these six sneaky holiday scams. Tech expert Kurt “CyberGuy" Knutsson gives you tips to avoid falling victim.

Tech expert Kurt “CyberGuy" Knutsson reveals how to securely back up and factory reset your Android to protect your privacy and data.

Artificial intelligence is making life easier for cybercriminals, allowing them to create elaborate scams to trick people. Kurt the Cyberguy explains how to protect yourself.

Cut through all the digital clutter and delete multiple emails from your Android simultaneously. Kurt the CyberGuy explains how it's done.

Tips to prevent your holiday decorations from being stolen

Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.

Kurt "CyberGuy" Knutsson lays out the immediate steps you should take if your phone has been hacked and your personal information becomes vulnerable.

Fraudsters are sending people bogus invoices through PayPal as part of a sneaky scam that is going around; here's how to protect yourself from being fooled.

A former Colgate-Palmolive employee was shocked to discover $750,000 had been drained from her 401(k) account. "CyberGuy" offers tips on how to prevent identity theft.

Electric vehicle maker Harbinger recently showed its electric delivery truck can handle icy roads with agility and stability in winter.

Changing Strategy Without Losing Your Customers - Three Vital Steps to Refining Your Strategy

Strategic Planning