When Marvin Ellison was promoted to executive vice-president for U.S. stores at Home Depot in late 2008, the do-it-yourself retailer was suffering from poor customer service, which likely played a part in slumping sales. From 2005 to the first two quarters of 2010, the company had not had positive year-to-year comparables. Under Ellison's leadership, the chain's internal customer-satisfaction scores have risen some 30 percent.
Ellison was tasked with winning back customers at a time when many had stopped spending on homes and gardens because of the recession and foreclosures were rising across the nation. Two years later, he has rolled out training programs designed to make Home Depot (HD) the leader in customer service among home-improvement retailers. The size of the task is daunting. Home Depot has 1,976 U.S. stores and more than 300,000 employees, most of whom are serving customers daily in stores.
BusinessWeek profiled Ellison in May 2009, just as his campaign was starting to make a difference. BusinessWeek.com Management Editor Patricia O'Connell recently checked in with Ellison to learn of his progress in pushing his passion for customer service down to the aisles.
What were the customer service scores when you took over, and what are they now?
We conduct 100,000 customer surveys a week across our stores. On a scale of 10, we look at the percentage of customers who rate their shopping experience as a 9 or a 10 and subtract from that the percent of customers who rate their experience as a 6 or worse.
We believe the best way to grow is to get more customers who are promoters and fewer who are detractors. Our promoter scores have risen from about 48 percent in mid-2007 to about 52 percent two years ago, to 68 percent now. We are encouraged by this significant gain but realize we need to continue to work hard to keep improving our promoter scores.
What was lacking in customer service before?
We were focusing on too many other things—reporting and other nonessential metrics—as opposed to making the customer the priority. That's not to say we didn't think the customer was important, but customer service was one of many things on an associate's plate. Now it is clear what is most important, and we have defined the associate's role in taking care of the customer first.
Did it take the recession to make customer service a priority?
It didn't take the recession to make customer service a priority, but it afforded us the time to focus on it. When we made the decision in 2007 to focus on our core business—our orange-box retail stores—we knew customer service had to be a priority. The economy has been tough, but we have used this time wisely. We revamped our supply chain, we're improving our merchandising systems, and we're focused on serving our customers better.
What has the effect been on sales?
We are looking at ways to measure the exact impact our efforts have had on sales. The first and second quarters of this year were our first positive comp quarters in the U.S. since 2005. The economy has been a little better, but our associates' efforts have played a role, too. We have a very simple belief: If you combine a compelling merchandising offer with outstanding customer service, you will get improved transactions. And in our business, improved transactions lead to positive sales growth.
What were the key steps in turning customer service around?
First, we simplified things for the stores, giving them three primary things to focus on: remaining in stock, store appearance, and customer service. That strategy and focus haven't changed in two years, and we certainly haven't dished out new "strategic flavors of the quarter," either. Next, we removed tasks. For example, we replaced more than 200 weekly reports and e-mails with one, single-page weekly scorecard. Reports don't buy hardware; customers do, so I wanted our associates focused on customers. Finally, we put more people in the aisles by freeing them from tasks, trained them to be more helpful, and then we evaluate them on their effectiveness. We backed that up with training and rewards, working hand in hand with HR.
Who gets the training? Was any of it being done before?
One curriculum all associates cover is called Customer FIRST, an acronym for five steps we ask associates to take with all customers to ensure they leave satisfied. Like many companies, we've said "Put customers first" for years. It's a great slogan, but customers want more than mottos. So we defined it for our associates, set clear expectations for specific roles and behaviors while they're on the sales floor, then we backed it up with the HR review and rewards processes.
How is the training administered? Do even part-timers get this?
All salaried, full-time, and part-time associates go through this same training. When we launched it, store managers administered the training, and assistant managers and department supervisors can administer it as new associates join our team. It includes some presentation and written materials, but it also includes role playing and in-the-aisles assessments.
Has the role of the store manager changed because of Customer FIRST?
Store managers are responsible for implementing Customer FIRST and are evaluated on their success as measured by the customer satisfaction surveys. More importantly, store managers conducted the training in the stores themselves. All associates heard it straight from the top: No task gets in the way of serving the customer, and if anyone questions that, even your own supervisor, "Send them my way, and I'll explain it again."
How does Home Depot evaluate customer service at the employee level?
The behaviors and roles we've set forth are clear and relatively simple. You can watch an associate working with customers, and it's immediately clear whether they're following our customer service plan or not. Then our operations and HR teams integrate the FIRST expectations into performance reviews.
How does Home Depot reward associates for superior customer service?
We have a number of rewards systems that include twice-a-year bonuses for stores that make a plan; but one of the most immediate at the store level is called the Homer Award. These are apron badges with a monetary reward that are often awarded when customers praise an associate by name in our customer service surveys—and customers do that every week.
You've seen significant improvement in customer service satisfaction. Where do you go from here?
Our goal will always be to improve, not maintain. To do that, we have to continue to simplify life for our store associates so they can focus on the customer, provide them the tools to be effective, empower them through learning programs, and reward them when they succeed.