Walgreen's Strategy Paying Off

In my last post, I noted that Walgreen's has embarked on the people-based strategy of training pharmacists to spend more time helping patients with chronic illnesses.

Building relationships with customers, to proactively drive customer engagement vs. delivering reactive customer service, leads to strong and sustainable growth, at least in my book (literally).

A strategy like this sounds good in the boardroom and looks good on paper, but means nothing if it doesn't drive results, right?

Early results are in, and they couldn't be better. Here's what The Wall Street Journal just reported this week:

"Walgreen Co. said June same-store sales rose 2 percent, a reversal from two straight months of decline, as discretionary sales in the front end of the store improved. Overall, sales jumped 8.4 percent, to $5.67 billion" for the company."

This is a sound example of how employees who are aligned with your brand can create real relationships with customers, based on shared values. By improving each "moment of impression" a customer has with a pharmacist--or any employee in the Walgreen's organization--the ripple effect spurs growth in the different products and services a brand offers.

I will keep you updated on AmEx and Comcast, two other companies I applauded in my last post for installing people-centric strategies for growth.

Moving From Customer Service to Customer Relationships: The Way to Grow.

Walgreen's is training pharmacists to spend more time helping patients with chronic illnesses.

American Express is expanding a program aimed at getting agents to build better relationships with customers.

Comcast is putting call-center reps through new training and instructing supervisors to coach their agents more.

These are Brandtenders in action: moving from "customer service" to "customer engagement."



Over 25% of the 1,400-plus companies surveyed by Accenture said that customer service is the first area to get increased funding as the economy recovers, according to The Wall Street Journal. More importantly, these companies are changing how they perceive and approach customer service.

Customer service is reactive and transactional: taking customer orders and dealing with customer frustrations. The Brandtender approach is proactive, linking employees who are interested in the brand they work for—because of their company's unique culture (the DNA of a brand)—with customers who value their relationships with those employees.

I've found that the most customer-satisfying brands in the world do three things:

1. Help employees understand and become interested in the brand. (Don't over-engineer the brand message, make it simple and allow employees to relay it to customers in their own style.)



2. Give employees the tools to communicate the brand message at every turn, making every moment of impression with customers a strong one. (They should know what to say and when, consistently and effectively.)



3. Trust employees to represent the brand in the marketplace. ("Empowerment" is an overused word. It's about trust. If you don't trust employees, they know it and won't trust your brand. And if your employees can't represent your brand, then who can?) 



Best Buy Employees Deliver a Strong Brand Message. So Can Yours.

You’ve seen Best Buy’s television commercials featuring real, live “blue shirts”—employees of the electronics retailer—describing their real experiences with customers. The employees volunteered their stories, which have been captured intensely by director Errol Morris for BBDO.

One spot shows an employee helping a blind man learn to use his home-theater system. Another recreates a husband and wife’s spat over what kind of computer to buy. Over the holidays, some blue shirts even caroled their way onto the small screen.

No sales pitches, no prices, not even any exclamation points! The campaign’s theme is simply, “You, Happier.”

A great example of a company that understands what a brand is and isn’t.

Is: The relationships built between employees and customers.

Isn’t: The latest iThing, a sale, cool logo or fancy packaging.

As companies try to find ways to build relationships with customers to grow—or even maintain—business in a wobbly economy, Best Buy CMO Barry Judge found the inspiration for his branding strategy literally surrounding him, in the form of employees.

In the commercials, “we try to demonstrate how it’s our people (not the stuff) that make the difference,” Judge said.

He’s on to something.

The Gallup Organization found that 80% of the market value of the average S&P 500 company is made up of intangible assets like brand, customer base, innovation and talent of its employees.

It’s what separates one brand from competitors, regardless of industry. No two businesses have the same blend of individual styles, generations and cultures spread amongst their employee population. This unique mix becomes a differentiation that can’t be duplicated, the DNA of a given brand. That differentiation can be used to strengthen the connection to customers.

Traditional consumer marketing methods—special promotions, points-based loyalty programs—are tired, and consumers are skeptical of them. But, grow a brand through stronger bonds between employees and customers, and the overall business grows as well. Consumers turn to value and brands they can trust, making relationships critical to every business situation.

And it’s cheaper. This kind of marketing strategy leverages existing investments—employees.

Best Buy is, in essence, declaring: “Here are our employees, and we’re proud of them. We don’t need models or actors to help us connect with you, our customers. That’s not genuine. These are real people who can really help you. We care about them and we care about you.”

The company is personifying its brand, in the form of people who need people to succeed, who want to build relationships.

The Wells Fargo Brand: 168,000 Employees

Wells Fargo’s “surprise announcement” of record first-quarter earnings wasn’t much of a revelation to those who’ve watched the bank imbed its brand into the market.

First-quarter net income reached a record $3 billion. And just think--some Wall Streeters suggested Chairman Dick Kovacevich step down after he hit mandatory retirement age (65) last October. They’re not complaining now. After all, he fashioned a brand that's thriving during this historic economic downtown. 

How?

Diligence in lending practices, surely. But, it took something that's been completely missed in evaluations of the bank’s success: 167,500 employees trained to act on a brand message that creates committed customers.

These employee-to-customer relationships built a customer base that buys multiple products from the bank, not just a mortgage or checking account. 

The bank makes it a priority that employees encourage customers to buy all their financial products through Wells Fargo. Kovacevich's goal: sell at least eight products to every customer.

"We want to earn 100 percent of our customers' business,” he said. “The more products customers have with Wells Fargo the better deal they get, the more loyal they are, and the longer they stay with the company. Eighty percent of our revenue growth comes from selling more products to existing customers."

This concept, “cross-selling," is tough because individual products are often sold through their own distribution channels in larger institutions. Kovacevich was a marketing pioneer, moving all products through all channels.

It’s paying off. 

The average American owns 16 financial products from eight institutions, putting the "cross-sell ratio" at two. Wells averages nearly six products per household, thanks to front-line associates and managers creating relationships during routine employee-customer encounters.

That respect is shared with customers during interactions. When you visit a branch, you may see employees wearing t-shirts emblazoned with “I work for the customer.” This thinking has provided big returns--in the form of deposits. 

Tellers and other employees on the front lines try to make personal connections with customers. They say customers’ names when speaking to them, for example. 

Wells Fargo is more connected to its customers than any major American financial institution, and its board of directors was wise to grant Kovacevich exemption from the mandatory retirement age.