Thursday, March 13, 2008

Dear Frank

Here we go again. Every once in a while I have to stop ranting about bland myopic strategies, insipid change efforts, and dully conventional leadership styles in order to get right to the core: How your company treats your customers is a superb predictor of how successful your company will be. Ron Havner, CEO of Public Storage, the largest self-storage company and REIT in the U.S., tells me succinctly: “The next frontier in our business is the customer’s experience.” That is why I was delighted to get a copy of a letter (not an e-mail, but a real letter!) that Phil Green sent to Frank Blake, the CEO of Home Depot. Phil is a regional sales manager for Pioneer Mobile Electronics. Phil had heard me deliver a speech to Pioneer distributors a couple months prior, and he knew I’d be interested in the experience he had with Home Depot. His experience (remember Ron Havner’s comment) no doubt helps explain why a healthy Lowe’s has taken so much business from a wounded Home Depot, despite the latter’s high-profile initiatives in mega-technologies, massive re-organizations, capital infusions, Six Sigma trainings, rock star CEO’s (remember Bob Nardelli?) and so on. Phil’s problem was utterly mundane. He had purchased a Ruby-red Eljer toilet at a Home Depot a few years prior. Now the toilet’s base was leaking, and he wanted to replace it. He wanted a Ruby color in order to match the toilet color itself, as well as matching the Ruby colors of the refrigerator and sink that he had also purchased from the same location. So Phil cheerfully and naively went back to the Home Depot where he had bought all these appliances, and from then on, his “experience” basically sucked. First of all, the response he received from store personnel was that it was no longer possible to get the color desired for the base, even though that store had sold him the original unit. Phil said he would be willing to buy the entire unit (list price $481.90) just to get the base color. Again, no luck. He was persistent because he had seen the toilet color on websites, but the supervisor at Home Depot was, to quote Phil, “…not very involved, and not too helpful. His attitude bordered on condescending.” The supervisor eventually, grudgingly, agreed to pursue the matter and get back to his customer. Of course, Phil didn’t get a call. He left messages on the supervisor’s voice mail, and when he called the main switchboard of the store, and was put on “hold” (a.k.a. phone hell) indefinitely. Now let me quote directly from Phil’s “Dear Frank” letter to CEO Blake: “I went back to the Eljer website, and found out that Lowes also sells Eljer. Guess what? I was able to call Lowe's, and speak to a real person in the plumbing dept. He checked on the Eljer Toilet in Ruby, and called me back in 5 minutes, and said ‘we can get it.’ By then, I had discovered the Eljer part number for just the base and asked Lowe's if they could get only the base. 5 minutes later, my new Lowe's buddy called back, and said they could. The cost? $162.37. ‘By the way’, said the Lowes salesman when I visited the store to order up, ‘would you like the base delivered to your home at no additional cost?’ I thought I had died and gone to heaven.” There it is: an utterly mundane story that is completely un-sexy to typical CEO’s and MBA graduates. Too bad, because Phil Green tells me that he and his wife plan both a complete kitchen remodel and an addition of a front porch. “Lowe's will figure prominently in our plans”, he assures me. “Home Depot will not.” There are no villains in this little story. The Home Depot people were not mean or evil. It’s just that customer care is a strategic priority at Lowe's, and the appropriate steps, decisions and responses that impact customers positively have been institutionalized at Lowe's. As many reports have noted, this is not currently the case at Home Depot—which is why Phil Green’s experience was tarnished. If I were Frank Blake—or for that matter, any CEO in any company—and I received a letter like that, I’d go nuts. I’d realize that there must be oodles of unhappy Phil Greens, and their unhappiness is like a fire alarm—indicating that a big problem in the organization needs to be addressed right away. I’d drop everything and work urgently with my people to figure out what needs to be done to authentically prioritize customer care throughout the company and effectively institutionalize the kinds of systems, processes, cultures


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