Inspiring retail employees to think and act like owners

Client Results Story

Opportunity
RetailCo, one of the USA's premier department store retailers, renowned for its customer service practices, has been experiencing a decline in the revenues of its core business. 

Given a flat retail market outlook, customer defections and growing competitive pressure from smaller, product specific, mall-based and non-mall-based stores, RetailCo asked Bain to carry out a study of its customer and employee loyalty. 

Bain's objective was to identify the key drivers of customer and employee loyalty and design a strategy to 1) reverse the company's declining revenues by driving same store sales and 2) improve the retention of its best employees.

View Approach

Approach
To identify the key drivers of customer loyalty, the Bain team carried out a large number of interviews with current and former customers. 

The findings of this study were integrated with those of an equally large study of the client's front-line sales managers. Bain discovered that the tenure of the sales managers, customer satisfaction/retention and profitability were strongly correlated. 

Initiatives were designed to address key customer priorities, such as easy shopping experience and inventory availability. In addition, a radical new performance-based incentives system was introduced to drive retention of managers, and thereby profits.

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View Recommendations

Recommendations
The customer initiatives and pay scheme were introduced to the company in a pilot program with 5 stores. Supporting these efforts, Bain also worked to improve the company's training, sales, staffing, and inventory practices at the store level. 

Over the course of the pilot, a number of modifications were made to the customer initiatives and incentive program resulting in a easy-to-understand model that could be translated across the client's entire business.

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View Results

Results
On average, the pilot stores outperformed their non-pilot counterparts. As a result, the RetailCo decided to roll out the new classification and front-line compensation system to its entire company on a region-by-region basis. 

Over time RetailCo saw greater employee retention, superior customer service, higher same store sales and increased earning per share.
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