We all have heard this statement before, and I believe there is no time that it is more relevant than now.
This week was a big earnings week on Wall Street and I have listened to several earnings calls to gauge how businesses are being impacted and adapting to the changes the Coronavirus pandemic has forced us to confront.
It has been an enlightening week.
For years now, some of you have heard me talk about one of the indicators that I use for evaluating companies I want to invest in for both you and me – customer service.
If a company takes care of its employees, they are likelier to have greater job satisfaction, and that spills over to the customer experience. If that customer experience is consistent in Baltimore, Omaha, Phoneix…then we are on to something.
Starbucks is a perfect example. Personally, I don’t frequent Starbucks, but their conduct during this pandemic has grabbed my attention and here’s why:
If you go to the local Starbucks, chances are you have developed some sort of relationship with the local barista. How does it make you feel if you go in and they say: ‘Hey Mike…having the medium coffee today…?’ I know it would make me feel pretty good, and it’s that personal interaction that has me hooked. And by the way, did I mention it is cheaper to keep an existing customer than it is to acquire a new one? You get where I am going with this…
So in their genius, Starbucks has told all of their employees that they will be paid until May 31. No questions asked. Now let’s revisit that interaction at the local Starbucks. If that employee knows they are going to be paid and not have to worry about things, how much stress is relieved from them? They can now focus on providing an awesome experience. As the consumer, how much more likely are you going to be to visit that same Starbucks, knowing your favorite barista is still there and that sense of community hasn’t changed?
And this is where opportunity lies.
Those companies that are putting people before profits, who are investing in creating the seamless digital customer experience, are poised in my opinion to not only weather this pandemic, but come out of it with more loyal employees, customers, and just as important, the brand.
Here is a fantastic interview that was on CNBC earlier this week with former Starbucks founder Howard Schultz. It is 15 minutes long and if you have the time I encourage you to watch the whole thing, but this clips sums up everything (approx.. 2 min):
This strategy is not new, but only a few have embraced it. Costco is one such company that has embraced this strategy for years, and the numbers speak for themselves. In their 2019 annual report, C.E.O. Craig Jelinek reported membership renewal rates of 91%, with worldwide renewal rates around 88%. The executive team has resisted overtures from Wall Street to make more money, instead focusing in on their customer experience and digital presence, with the end result being happy employees, happy customers, and happy shareholders.
Hopefully more companies will realize that investing in their employees is a step towards survival.
Similarly, companies’ digital presence is becoming more and more important, especially ease of use in their apps. In light of the ‘new normal’, we have had to adjust our ways, which has led me to using some company’s apps.
Two in particular of which I have never really used before: Chipotle & Target. Here as well the results don’t lie:
– From Chipotle’s First Quarter Earnings Release: DIGITAL SALES GREW 80.8% AND ACCOUNTED FOR 26.3% OF SALES
– From Target’s First Quarter Earnings Release: Digital Sales up more than 100%
Listen to Target’s CEO Brian Cornell describe the recent quarter, specifically around digital sales (approx. 2 min):
Simply put, those who have chosen to embrace their employees as an investment, not an expense, are on the right track and excite me as to their prospects.