Listen to your Customers: The Story of how Great Clips Changed the Salon Industry

Interviewed by Donna Stone

Ray Barton is the Chairman and former CEO of Great Clips. I had the opportunity to talk to him about how he built Great Clips into the world’s largest salon brand. Here are some of the key takeaways from our conversation. You can hear more of Ray’s insights at the Compete Through Service Symposium on November 7^th.

You have been very successful building a huge national franchise business. How would you describe your personal work ethic, and how has it been instrumental to the growth of Great Clips?

I have five sisters and we all learned very early that we had to work for what we wanted. That carried over to the business. It was easy for me to make the commitment of time and energy it took to build a business. Building Great Clips was fun–it never felt like work . . . it was always exciting and challenging. The work ethic came naturally–it was part of who we were.

What else would you attribute to your success in the service industry?

Great Clips led the change in the salon industry. We changed the way customers were served. When we started the industry was organized around the stylist.

Salons were open five days a week with very limited hours. Customers had to make an appointment. We changed that: we were open seven days, and 9AM to 9PM weekdays. Customers could walk in anytime, when it was convenient for them, and get a great haircut. We have a system designed to find out what the customers want and to make sure they get it.

We also changed the industry for the stylist. We were among the first to offer paid health insurance, paid training, and paid vacations. We provide an amazing career path, which can lead to salon ownership.

Most importantly, we had a great team. Everyone pulled together. We listened to one another, treated each other with respect, and worked together to solve problems. This built trust. We were a team, we supported one another cheered for one another, and celebrated each other’s successes.

Can you tell me about some of the difficult times you had along the way? Maybe things that you tried that didn’t work or competition was executing better at some point?

We’ve had many challenges as we built Great Clips. One was keeping our system simple and consistent. Today we have over 3,600 salons and 35,000 stylists.

To deliver quality to such customer requires we keep our business model simple, so it can be executed over 900 million times a year. This ensures each customer gets exactly what he or she wants.

Because we were different than other salons, people kept trying to change us, add services or products. We had to stay focused on what we did, haircuts, and get better at delivering a great haircut experience rather than change who we were.

To build a brand, we also had to stay consistent. Each salon had to look the same and carry the same products, deliver a great haircut every time.

I can see how it would be very difficult to have that consistency across the salons to get to that point. But once you have it, it’s a lot easier to maintain right?

We have a simple system, a common language, and a few measures to determine how we are doing delivering a great customer experience. This has been very powerful and led to 40 straight quarters of same-salon sales increases.

We are very focused. What keeps me awake at night is how we maintain our focus and keep our system simple. How do we resist changing what is working because we are bored with it.

How do we avoid changing who we are and instead work to get better at what we do? This will always be a huge challenge.

When forming your strategic vision, how much did you have to adapt to the market, and how did you navigate the unknowns in a changing customer landscape?

Our strategy was to listen to the customer. We want to lead and be different because that was what the customer wanted, that is what the customer demanded. We adapted to what the customer wanted. We were always very customer-focused.

Lastly, what advice would you give entrepreneurs entering the service industry today?

Understand what your customer wants- that’s job #1. Our industry was organized around the stylist, and we flipped it.

We had to motivate our teams to deliver what the customer wanted and to show them that everyone wins when you give the customer what they want.

__________________________

Ray Barton joined Great Clips in 1983 as CEO. He led Great Clips from 4 salons to more than 3,500 salons and annual sales in excess of $1 Billion. Prior to joining Great Clips, Barton was a member of the professional staff of the international accounting firm Alexander Grant & Company (now Grant Thornton), Vice President and member of the board of directors for the North Central Region of Century 21 and Vice President of Quintex Energy Inc.

Barton serves on the boards of directors of TCF Financial Corp. and Scottsdale Lincoln Health Network., and is a Member of The Board of Trustees of the University of St. Thomas. He is a former chair of the board of Children’s Hospitals and Clinics of Minnesota and serves on several advisory boards of private corporations. Additionally, he has served on the boards of directors of the Minneapolis Heart Institute Foundation, the American Association of Cosmetology Schools, and the Junior Achievement Association of the Upper Midwest. He is a longtime member of the Young Presidents’ Organization, World’s Presidents’ Organization, and past President of the Minnesota Chapter of the World Presidents’ Organization.

Barton has received numerous awards including the Minnesota Business Hall of Fame Lifetime Achievement Award, the John F. Cade Award, and the Minnesota Business Ethics Award, which recognizes Minnesota businesses that exemplify and promote ethical business conduct for the benefit of the workplace, the marketplace, the environment and the community.

Note: All content within this website is the property of Center for Services Leadership. Any use of materials, except for social media sharing, without the prior written consent of Center for Services Leadership is strictly prohibited.

The forgotten asset – the crucial role of the employee in delivering great Customer Experience (CX)

By Phil Klaus

The employee, the forgotten asset? Forgotten is a day and age when the consumer calls the shots and consumer to consumer (C2C) interactions seemingly rule the business world (Klaus 2013a; 2013b)? Or, has the tide turned again, and managers do recognize that employee retention is crucial from both a primary (think cost of hiring, training, and possible loss of productivity by hiring a new employee), and secondary cost factor (e.g., disengagement, customer service and errors, and a negative cultural impact caused by high turnover)? Let’s start out investigating the ‘status quo’ of employees in today’s business environment, with a special focus on services.

A few months ago I had the pleasure of listening to Prof. David Bowen’s (Thunderbird School of Global Management) excellent presentation about the employees’ ‘disappearing act’ in service research. Reflecting upon his presentation I couldn’t help but think that managerial practices seem to have forgotten about the employee too. Consulting clients on a regular basis, I am still puzzled about the fact, which is backed up by my research, that more frequently than not crucial interactions in forming the CX are executed by the worst paid, least trained, and often the organization’s most under-appreciated employees. But why? Are managers still assuming that the level of service they provide is ‘pretty much the same as everywhere else,’ or even still see employees as costs rather than assets? The same managers, when asked about a recent bad customer experience, will identify with pinpoint accuracy an interaction with an employee as the main source of their frustration. Why can’t managers relate to their own experiences and translate these into actions? But, that’s a different story.

Throughout our investigation into managers’ possible rational behind their, often quite apparent, lack of attention towards the employee, we received two main explanations: first, employees deliver an equal level of service, compared to their competitors, and, second, employees are considered to be a cost, rather than an asset. All my research exploring the most profitable CX strategies and management programs (see Klaus 2014a) highlight that these arguments do not hold up. The three key factors differentiating the most successful CX strategies from others are: measuring CX in an insightful way, revolving your CX program around the customer, and effective CX delivery.

The latter exhibits interactions with service personnel as a crucial determinant of consumer behavior, e.g., purchasing, repurchasing, word-of-mouth behavior, and share-of-category. The more employees are recruited, selected, trained and remunerated based upon CX deliverables from the customers’ viewpoint, the more profitable the firms are. The most advanced and profitable firms extend this notion to their suppliers and fulfillers, to make certain that all customers-employee interactions deliver upon the CX promise (Klaus 2014b; 2013a).

Think about it, how good is the CX with your telecommunication provider if the call center employee from abroad is focused on a short turnaround time rather than finding a solution for you? I am certain that all of you can come up with a story, or two, where your CX was devalued or destroyed by such an interaction. There truly aren’t any valid excuses to ignore the importance of EVERY customer-facing employee. Employees hold the key to customers’ behavior, and you need to take good care of them if you want to succeed in a CX-driven economy (Klaus 2014). This can be achieved by:

1. Hiring the ‘right’ people based on the experiences your customers are looking for. Think ‘soft’ versus ‘hard’ skills and vice versa.
2. Investing in your employees – it will pay off.
3. Demonstrating trust by giving employees the autonomy and authority to act upon the customer needs in the situation at hand.
4. Going beyond the ‘service with a smile’ attitude.

Managers need to realize that an employee is, first, and foremost, an asset for their CX program, not a cost position. If latter is the case, you might be doing something wrong in the first place.

In this series we now discussed which CX strategies are most profitable, explored how these strategies are converted into a successful multichannel strategy, and outlined the crucial role customer-facing (direct and indirect) employees play in managing the CX. In my next post I’ll be discussing some of the key challenges for executives wanting to take advantage of the CX opportunity – how to gain support from the boardroom in order to compete successfully on the new competitive battleground – the customer experience. I look forward to your CX questions that I will answer during the Center for Services Leadership podcast.

________

Dr Phil Klaus is Professor of Customer Experience and Marketing Strategy and holds multiple visiting professorships around the globe. His multiple award-winning research has appeared in a wide range of academic and managerial journals. Phil is a frequent keynote speaker at public and in-company seminars and conferences around the world. He has an active, international portfolio of Blue-Chip clients, for whom he advises on customer experience strategy and profit enhancement.

References:

• Klaus, Ph. (2014a), Measuring Customer Experience – How to Develop and Execute the Most Profitable Customer Experience Strategies, Palgrave-Macmillan.
• Klaus, Ph. (2014b), “Preservers, Transformers, and Vanguards: Measuring the Profitability of Customer Experience (CX) Strategies.” DMI Review, Design Management Institute Publications, Vol. 24, No. 4, pp. 24-29.
• Klaus, Ph. (2013a), “The Case of Amazon.com: Towards a conceptual framework of online customer service experience (OCSE) using Emerging Consensus technique (ECT),” Journal of Services Marketing, Vol. 27, No. 6, pp. 443-57.
• Klaus, Ph. (2013b), “New insights from practice – exploring online channel management strategies and the use of social media as a market research tool,” International Journal of Market Research, Vol. 55, No. 6, pp. 829-50.

Differentiating on the Human Experience to Drive Customer Loyalty and Growth

By M. Bridget Duffy, MD

In an era that challenges healthcare organizations to do more with fewer resources, patient experience is often considered an add-on. However, in an increasingly competitive environment, organizations can no longer solely focus on stripping out waste and reducing costs. A growing body of evidence points to the human experience as a key driver for employee and customer satisfaction, loyalty and performance.

Therefore, it is important to integrate traditional approaches to efficiency and quality improvement with strategies that transform the culture. The imperatives of this infrastructure include:

1. Create an emotional connection

Customers choose service providers based on personal experiences, trusted relationships and valued recommendations. To understand customer needs and expectations, organizations must first map the gaps in efficiency plus empathy. Market leaders must provide services and use technologies that restore empathy to the customer experience. In addition, they must focus on building connection and relationships into all aspects of the organization – from executive leadership to frontline staff – so that from the first impression to the last, people feel a connection. Going beyond customer service to creating a real emotional connection to a product, service or company will drive market differentiation, customer loyalty and growth.

2. Build a culture of humanity

An organization that cares about optimizing the wellbeing of its staff will deliver better results. It takes only one employee to destroy an optimal customer experience. Every employee must be connected to purpose and the mission of the organization. That is why organizations must create a work environment that allows employees to bring their full selves to work and don’t have to check their souls at the door. A culture that enables employees to feel empowered by and connected to the company and the mission drives results. Successful organizations foster a culture in which staff members at every level are viewed as valued members of the team. Organizational culture and communication among team members influences the quality of working relationships, job satisfaction, and has a profound impact on performance. Inspired, engaged and happy employees are loyal and powerful. They generate positive experiences that create market differentiation, loyalty and growth.

3. Infuse the voice of employees and customers

To strengthen employee and customer connection, industry leaders must keep their finger on the pulse of what matters most to both of these stakeholders. Truly listening to these voices requires more than simply deploying random satisfaction surveys, which only scratch the surface. It is essential for organizations to build an infrastructure where staff and customers feel empowered to share their voice and know that they will be heard. Experience-focused organizations collect real-time staff and customer voice and tap into their wisdom in the design and innovation process for added insight into product and sales strategy.

4. Create a Checklist of Always Events®

In healthcare, Always Events® are practices or processes that should always occur when patients interact with healthcare system. Borrowing from this concept, other industries must create a checklist of Always Events to hardwire humanity and empathy into day-to-day operations and design optimal experiences for employees and customers.

• Map the gaps in efficiency plus empathy
• Reconnect employees to purpose
• Walk in the shoes of employees and customers
• Create emotional connections and trusted relationships
• Enable peak performance by empowering staff

To request the whitepaper Differentiating on Human Experience: How Healthcare Organizations Drive Lasting Loyalty and Growth, click here.

M. Bridget Duffy, M.D. will be speaking at the 25th Annual Compete Through Service Symposium on Thursday, November 6th, 2014.

___________________

Bridget Duffy, M.D., is Chief Medical Officer of Vocera Communications, Inc. and co-founder of ExperiaHealth and the Experience Innovation Network, where her mission is to assist organizations in rapidly transforming the patient experience. Dr. Duffy was the first Chief Experience Officer in the United States, establishing that role at the Cleveland Clinic. She was an early pioneer in the creation of hospitalist medicine and launched programs to accelerate clinical discovery in the field of integrative and heart-brain medicine, helping establish the Earl and Doris Bakken Heart Brain Institute. Dr. Duffy is a frequent speaker on the subject of why patient experience matters and how it impacts clinical outcomes. Her work has earned her the Quantum Leap Award for spurring change in her field, and she was featured in HealthLeaders magazine as one of “20 People Who Make Healthcare Better.” In 2014, she was named one of the “Top 50 in Digital Healthcare” by Rock Health, a full-service seed fund that supports startups building the next generation of technologies to transform healthcare. Dr. Duffy attended medical school at the University of Minnesota and completed her residency at Abbott Northwestern Hospital in Minneapolis.

Note: All content within this website is the property of Center for Services Leadership. Any use of materials, except for social media sharing, without the prior written consent of Center for Services Leadership is strictly prohibited.

Are all channels truly equal? How to design and manage a successful Multichannel Customer Experience (CX) Program

By Phil Klaus

Over the next few weeks, I’ll be sharing insights from my research and consulting work in a series of posts, which will discuss critical aspects to delivering successful CX experience. You can read the first post, Demystifying The Black Box – How To Design, Manage, And Measure The Most Profitable Customer Experience (CX) Strategies, here. The series will conclude with a podcast with the Center for Services Leadership, where I will be answering questions from the CX community. I invite you to share your questions and comments through the blog or via Twitter (#CXquestion) and I’ll be happy to address them in the podcast. This is the second post in the CX series.

Social Media—a manager’s curse or blessing. To use the words of some of my clients, “As if managing offline channels wasn’t hard enough already?”
Managers worldwide, while almost evangelistically embracing the new multi-channel environment, are often left with very little guidance on: (a) how to take advantage of online channels, (b) how to develop a corresponding multichannel strategy, and (c) how to manage the multi-channel strategy in the best possible fashion. This, in turn, leads to frustration in the boardroom about both the benefits of online channels and the influence on the overall customer experience (Klaus, 2014a).

CEOs worldwide are questioning the push towards adding new online channels, and whether they are destined to be an expensive cost-of-doing-business to meet customers’ ever-rising expectations of service quality, with no incremental return (Klaus et al., 2014). The alternative may be a different impact upon business performance that might better assess, and, therefore, improve how positive outcomes are generated from multi-channel strategies (Maklan, Peppard and Klaus, forthcoming).

In our global research, which consists of multiple longitudinal studies dissecting multi-channel strategies and their performance, we explore a dynamic, competitive environment. We developed a typology that can be used to benchmark existing practices to the described state of management, including how different multi-channel practices are linked to performance. We found clear evidence that social media has an important role in successfully managing the multi-channel customer experience (Klaus, 2013). The most successful firms use social media for stakeholder communication, resource allocation, competitive environment tracking, and segmentation practice enhancement. Thus, social media delivers key insights for the internal and external perceptions of the entire multi-channel strategy, elevating it from being solely a channel of, to a key component of, the overall strategy.

Based on our results, we suggest that to develop and take advantage of opportunities, firms must:

1. develop an online channel strategy focused on multiple channels,
2. manage transformations of this strategy internally,
3. upgrade their skill sets, and
4. integrate new technologies such as mobile devices and social media, in order to
5. improve the customer experience.

The development of a new multi-channel transformation plan requires a coherent buy-in from all functions inside the firm. Our findings submit that many firms are struggling to come to a consensus on how these changes will be formulated and implemented. The documented tensions between the different channels have to be overcome in order to succeed with a company-wide accepted vision, including the new marketing approach reflecting the new channel mix.

Once this is achieved, firms face the task of managing the transformation internally. We found support for the proposition that the introduction of an online channel program influences the constellation of the entire firm. Entire business models and constellations, such as financial services (see Klaus et al., 2013), hospitality, retail, need to be scrutinized and reconsidered to adapt to the new multi-channel environment (for more details see Klaus, 2014b; Klaus and Nguyen, 2013).

The main benefit and challenge of the new multi-channel environment is to create immediate access throughout all channels, to not only gain insight in the new customer-experience-driven behavior pattern, but to also deliver the corresponding experiences. We found clear evidence that once organizational barriers to use of digital tools fade, they form a foundation of entirely new business processes.

For example, a national real estate agency now uses a platform allowing them, while at location with a client to sign a binding contract, to initiate loan application/approval, fix an appointment with the notary, set-up telecommunication, electricity, gas, and water services ‘right on the spot.’ This unique, customer-experience-focused solution led to higher customer satisfaction, positive recommendations, an increase in return business. A management consultant firm used social media effectively as a platform to allow their employees to engage in, and freely exchange ‘best practice’ examples, leading to both, a more defined learning and experience exchange, and higher employee satisfaction. These processes, thus, in turn, improve performance significantly. Firms able to address and master the multi-channel challenges deliver better customer experiences, leading to superior financial performances. (Klaus, 2014b)

There is no doubt that the online channel is a crucial ingredient in firm strategies worldwide. Firms will use them to support a range of business processes to create stronger links to employees, suppliers, customers and vendors. A key challenge that remains is managing unavoidable multi-channel strategies in which all channels – face-to-face and online – must co-exist and deliver the best customer experience possible (Klaus and Maklan, 2013). Thus, all channels are truly equally important.

________

Dr Phil Klaus is Professor of Customer Experience and Marketing Strategy and holds multiple visiting professorships around the globe. His multiple award-winning research has appeared in a wide range of academic and managerial journals. Phil is a frequent keynote speaker at public and in-company seminars and conferences around the world. He has an active, international portfolio of Blue-Chip clients, for whom he advises on customer experience strategy and profit enhancement.

References:

• Klaus, Ph. (2014a), Measuring Customer Experience – How to Develop and Execute the Most Profitable Customer Experience Strategies, Palgrave-Macmillan.
• Klaus, Ph. (2014b), “Towards Practical Relevance – Delivering Superior Firm Performance Through Digital Customer Experience Strategies,” Journal of Direct, Data, and Digital Marketing Practice, Vol. 15, No. 4, pp. 306-16.
• Klaus, Ph., Keiningham, T., Edvardsson, B., and Gruber, T. (2014), “Getting in with the “In” crowd: how to put marketing back on the CEO’s agenda,” Journal of Service Management, Vol. 25, No. 2, pp. 195-212.
• Klaus, Ph., Gorgoglione, M., Pannelio, U., Buonamassa, D. and Nguyen, B. (2013), “Are you providing the ‘right’ experiences? The case of Banca Popolare di Bari,” International Journal of Bank Marketing, Vol. 31, No. 7, pp. 506-28.
• Klaus, Ph. (2013), “New insights from practice – exploring online channel management strategies and the use of social media as a market research tool,” International Journal of Market Research, Vol. 55, No. 6, pp. 829-50.
• Klaus, Ph. and Maklan, S. (2013), “Towards a better measure of customer experience,” International Journal of Market Research, Vol. 55, No. 2, pp. 227-46.
• Klaus, Ph. and Ngyuen, B. (2013), “Exploring the role of the online customer experience in the firms multi-channel strategy – An empirical analysis of the retail banking services sector,” Journal of Strategic Marketing, Vol. 21, No. 5, pp. 429-42.
• Maklan, S., Peppard, J. and Klaus, Ph. (forthcoming), “Show Me the Money: Improving our Understanding of How Organizations Generate Return from Technology-Led-Marketing Change.” European Journal of Marketing.