How Even Great Companies - Like Whole Foods Market - Can Self Destruct (And What Would You Do Instead)
| posted by Denise CorcoranI have been a very loyal customer of Whole Foods Market since they open one of their first stores in Palo Alto, CA -- probably about 15 years ago. So much so, in the beginning, I would commute an hour just to do my weekly shopping a this store.
Because my business focuses on world-class companies and cultures, I have also followed and observed first-hand Whole Foods from a business perspective. From day 1, it was clear to me that Whole Foods was a rare company with their strong culture and values, their radical management and organizational practices, their environment and their unusual business model. Their ability to generate a healthy profit and fast growth in an industry with typically razor thin margins and no growth is a testament to their excellence.
In past years, however, I have witnessed parts of their culture and pratices degrade and slip into mediocrity, maybe even self-destructive -- strictly from a customer point of view. Their management practices, their product selection and quality and, most importantly, their customer service practices just to name a few. So much so, that I have gone from being a raving fan and advocate of WF to being dissatisfied, alienated and disturbed. In fact, it has become my personal mission to use them as a prime example of what not to do.
Because evey business runs across similar issues and challenges, especially companies on the fast track, I thought that I would make it an educational experience to use them as a case study and 2 of the issues I encountered recently as a customer.
Issue 1: Chronic Overcharging on Bills
For the last 2 years (maybe more), I have been consistently overcharged at least for one item ... sometimes more then one ... and it seems to be getting worse. Because I tend to give people the benefit of the doubt and just rationalized it was just a few $$'s here and there, for the first few months, I ignored it.
Then, it became a real pet peeve of mine because I expect more from WF and the $$'s actually were mounting up. So I started to ask for refunds for the overcharged items and WF employees usually apologized and gave me my refund. If the issue triggered me that day, I asked for the store manager and complained how frequent the overcharging was happening.
The typical response was a rationalization as to why such errors happened - such as, clerk errors, sales prices not yet in register, etc. - and an assurance they were working on correcting such errors. Yet the problem worsens to the point of almost on every receipt, I have one or more overcharged items. As a customer, preaching customer service platitudes and telling me the same "story" each time is unacceptable in my book. As a customer, I don't care "why" you (the company) have a problem. I just care about it being fixed or, at least, improved.
It's a bigger issue than just me though. Probably because my dad was an accountant who scrutinized bills, I am probably in a small minority of customers who look at their receipts. i think of the thousands customers, possibly millions of transactions, where the company is overcharging and it goes unnoticed. While I expect an error or two at large retail stores every now and then, I have never experienced this frequency of overcharging anywhere I've ever shopped.
Of course, I am just shopping in one WF store and can't generalize to the whole company. Nonetheless, I know many of their practices and systems are standardized, so can't help to think that they may be earning millions of $$'s in profits due to overcharging. When the store knows they have such errors and are either not making it a priority or holding themselves accountable to correct them (yet are profiting from them), I start to deem it as an integrity issue as a customer.
And when a customer loses trust with a company they do business, that can be deadly for the company. Not to mention the possible PR or legal ramifications that overcharging on bills can pose.
QUESTIONS: If you were running Whole Foods and growing at a rapid rate, what would you do to:
1.) Make sure that overcharged billing errors went away once and for all?
2.) Respond to customer complaints about such overcharging to maintain their loyalty and prevent alienation?
3.) Ensure accountability from the store manager to each employee for such errors?
Issue 2: Developing Customer Service Policies That Are Company-Centric, Not Customer-Centric (AKA: Walking Your Customer Service Talk)
It's bad enough that I am being chronically overcharged by WF (see above). On top of that, their company's policies actually penalize me for their errors! Before I share what happened, keep in mind that one of WF values statements (in their words) is:
<<Extraordinary Customer Service
We go to extraordinary lengths to satisfy and delight our customers. We want to meet or exceed their expectations on every shopping trip. We know that by doing so we turn customers into advocates for our business. Advocates do more than shop with us, they talk about Whole Foods to their friends and others. We want to serve our customers competently, efficiently, knowledgeably and with flair.>>
Hmmmm... you could not have convinced me of this statement, based on my WF experience last night, if you gave me a million $$'s. In the past when I was overcharged, I would just bring in my receipt, identify the overcharged items and, without any questions, they gave me my refund.
Last night I brought in my receipt from the week before for overcharged artichokes. I was charged for organic when I got conventional. I was told by the supervisor that it was "store policy" that I needed to bring in the artichokes to get the refund ... and that I needed to call in about the issue first.
First of all, I have never had anyone tell me about these "store policies" before, for all the times I have been overcharged. Second I am not about to hang on to perishable items till I make my next visit to the store to "prove" I was overcharged. And I certainly am not going to make a special trip to the store about the overcharged item. Not worth my time and gas $$ to do that. Finally, I got the couple of $$'s I was owed in a store credit. I admit it. I was irritated that the store policy made it difficult for me to get a couple of $$'s refund (even a store credit) when it was their error! And the supervisor persisted to tell me he would make an exception now, but in the future I had to go out of my way to get a refund for their overcharge. Am I missing something here? Does this sound like a smart policy to you?
The plot thickens even more. I did my grocery shopping, checked out and ready to leave the store when I noticed on my receipt I had been overcharged again for the same exact item!! Now I am losing my patience that I have to go to Customer Service again - tying up 20 min. of my time because of store errors.
To add to the aggravation, when I asked for a cash refund, I was told by the same supervisor that it is "store policy" to give me a store credit, rather than cash, because I used a check. That to me is absurd!! Why should I have to get a store credit for the extra $$'s I never should have been charged to begin with? Why am I being penalized because once again WF made an overcharge error?
Last night, WF management did anything but "delight" me. They hardly went to "extraordinary lengths" for me, as they promised in their values statement. They did serve me with a "flair" but not one that will have me talking to my friends in a positive way.
They eventually gave me the artichokes for free, only after their customer apathy, rigidity and company-centric policies raised my blood pressure a few notches. Even after they gave me the artichokes, they warned me if it happens again that they make an error, that I will only only get a store credit if I pay by check.
I understand that companies make policies for a reason and often for very legitimate business reasons. I do the same in my business. However, policies first of all should align with a company's values. Policies should also be crafted with long term benefits and consequences kept in mind, especially how it impacts customer relations.
WF missed a golden opportunity with both. A company that proclaims extraordinary CS values utilizes policies that are company, not customer-centric. Policies, from my perspective, should provide latitude and take into account the context of a situation. In this case, WF management was fixated on putting their policy about a couple of $$'s refund over and above their relationship with a long time customer. That is not business smart in my book. Then again I am a fanatic about walking one's talk and touting great customer service as seen from the eyes of customers, not the company's.
Because many of my client companies are those on the fast track, I have witnessed such companies often get off track from what made them special and unique. One of the biggest challenges of fast growth companies is to ensure that as they get bigger as an organization that their values and culture are driven deep to the lowest levels. And then have systems, processes and standards in place to track and manage it. Otherwise even great companies -- including WF -- can self-destruct.
Questions: If you were running Whole Foods,
1. What kind of refund policies would you put in place and why? How would you let the customer know about your policies or any changes made to them?
2. Would you ever waive or modify your refund policy under any circumstances? If so, when?
3. How would you make it "right" if you overcharged a customer? What would you do to deliver extraordinary customer service in such circumstances?