October 23, 2014

Often, Existing Customers Hate Change

I'm frequently disappointed that some vendors believe that my clients are complete idiots who are unwilling to change, as if vendors are flexible organizations that change at the drop of a hat.

There are times when change is possible. There are times when the customer refuses to let you change.

I think back to my time at Nordstrom. We killed off a $36,000,000 catalog business. This business had a merchandise assortment that evolved toward a 55+, rural customer ... a customer in stark contrast to the suburban/urban retail shopper that thrived in our stores.

When we killed the catalog business, half of the customer based that would have kept shopping via catalogs simply quit shopping with us. My team measured the results. A 65 year old customer in Fargo got really, really upset when we asked her to change. She refused to change. She wrote us letters, telling us how stupid we were, telling us how our customer service ethic went down the drain because we stopped selling what she wanted to buy. She didn't come back, period. If she were our only customer, then we would have changed, and we would have died (contrary to the message above).

It is so very, very hard to change when your existing customers do not want to change. My Nordstrom experience was positive, because we had seven million customers who liked what we were doing, and we had five hundred thousand customers who hated what we were doing. We found a way to get the seven million to spend more (online), to offset the five hundred thousand who quit buying our merchandise.

Your business is probably not so lucky. Maybe you have 200,000 twelve-month buyers, and when you make a change, 20,000 like it and 180,000 do not. Ooops!

It's easier to change when you have a broad merchandise assortment and a diverse customer base that buys across many categories.

It's very hard to change when you have a comparatively narrow merchandise assortment and a homogeneous customer base buying from a small number of categories.