Office Plan

Volume 11 Letter 12

As we enter 2012 many of you will be thinking about your business strategies. As you do please be careful – once a course for a business is set it can become the path of least resistance. The question to ask as you head into 2012…. “is this path leading you to where you want to be?”

That’s the situation that was facing Kevin Peters CEO at Office Depot. Customer satisfaction scores at store locations across the country were phenomenal yet store sales were declining. The recession could explain sales being off but more troubling was that sales were declining faster than the competition! And how could customers seem so satisfied yet be buying less in the store?

To answer this question the CEO decided to do some market research. He donned a baseball cap, jeans and a T-shirt and went shopping…. at Office Depot. From his “shopping trips” across the country the CEO learned several things.

  • It’s not just about getting people through the door. People don’t browse office supply stores – they shop with a purpose. Leaving empty handed means something has gone wrong!
  • Measure the wrong things and your people will do the wrong things.Customer satisfaction questionnaires included measures on bathroom, window and floor cleanliness, stock levels and shelf neatness. Unfortunately good satisfaction scores in these areas didn’t translate into sales.
  • If you run a service business you’d better hire service people: Office Depot did a Myers-Briggs type survey on all their employees and found a large percentage were very comfortable stocking shelves but not very comfortable interacting with customers!
  • People don’t like shopping for Office Supplies: Office supplies are a necessary evil. People want to get what they need and get out.
  • Size Matters: The average Office Depot Store was 24,000 Sq Ft (2230 Sq meters) but 93% of sales came from 5000 sq ft (465 sq M).

Armed with these insights the CEO redesigned the strategy for Office Depot. He:

  • Incentivized employees to focus on customers as opposed to cleaning bathrooms and stocking shelves.
  • Redesigned the stocking system freeing up 80 hours per week of sales associates’ time to service customers.
  • Trained all staff on a simple selling system – Ask / Recommend / Close
  • Trimmed the size of its stores making them easier to shop in.
  • Added shipping and copying services to make Office Depot an office supply and service store

Office Depot is still very much a work in progress. They have reduced the size of many of their stores and are adding smaller stores into downtown areas of major cities. In locations where the above outlined changes have been implemented sales are up significantly!

Strategic planning is so easy to talk about but very difficult to do well. If you have customers – (and no matter how deeply you’re buried in a company you have customers) remember you need them more than they need you! Take a lesson from Kevin Peters at Office Depot1 and follow these steps:

  1. Do your market research,
  2. Make a plan that’s simple and that everyone can buy into (simple takes a lot of work to do well)
  3. Design all your systems and processes around reaching your goals
  4. Train your people so they can succeed
  5. Monitor and measure the right things

Happy New Year!

1. For the full story see How I did It “Office Depot’s President on How “Mystery Shopping” Helped Spark a Turnaround”, Kevin Peters HBR Nov 2011 P 46 – 50

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