Hug Your Customers

Chapter 2

The New Business Landscape

Why is a hugging culture so important? It's because we believe retailing, and business in general, has undergone a fundamental shift in thinking and behavior in the last few decades, a shift that cries out for hugging. In particular, I've noticed three critical changes in the business landscape that are embraced by successful companies.

REACTIVE → PROACTIVE

The first big change was moving from a reactive to a proactive approach. Years ago, our sales associates often stood around and waited for people to come into the store. You waited and you reacted: "May I help you?" And we did. But that doesn't work any longer. Now you need to be proactive. You can't stand idly twiddling your thumbs until someone walks in the door. You have to take actions that will bring customers through that door. In other words, you need to initiate the sale, not simply complete it.

TRANSACTIONS → RELATIONSHIPS

Years ago, everything was transaction-based. The interaction with the customer began and ended with the transaction. Say the customer bought three suits, six white shirts, and a couple of ties, one striped and one solid. You had no complaints. That was a nice sale, and you earned a nice commission. End of discussion. You had no idea what the person was going to do with those suits and shirts, and it wasn't that you didn't care; you just didn't have the mind-set to ask the customer.

Today it's not enough to just make a sale. We have to ask the customer what he is using those three new suits for, and then we can decode that into what suit, fabric, color, and model are right for him. Often we know a lot more than he does about what he should wear in the business or social setting to look and feel great. If he travels a lot, you set him up with a harder fabric. In the old days, you might have sold him a thousand-dollar suit and he packed it in a carry-on bag, and the first time he put it on, it was all wrinkled. Today you have to listen in order to understand the customer's needs, and that means developing a personal relationship with him.

Anyone can sell a dark blue suit. Anyone can sell a wheelbarrow. But that's not a relationship.

So selling has shifted from transactions to relationships. It's moved from a "May I help you?" transaction to "Is the new outfit for business or a special occasion?" You're researching need. The critical difference in making this shift is how you think about customers. I believe in staying as close as possible to the customer.

"MAGIC" LIST → CUSTOMER-LED SERVICES

There's a third change that has taken place. It used to be that businesses had what I call a "magic" list, an assortment of little extra services they provided all customers as an incentive to shop with them: free parking, free alterations, free coffee, and a liberal return policy. The magic list defined service. Any business could draw up its own list. We had this list, and we still have it. These things do matter. But magic lists are no longer enough. Through the relationships you develop, you must listen to your customers on an individual basis so that you know her or him, and give them additional services that are important to them.

I call these customer-led services. Some customers, for instance, because of schedule or a phobia about crowds, might want to shop during off-hours. So you open the store at night for them. Or you fit them in a private dressing room. Let me give you another example that may sound silly, but it works. Every Saturday in the summer outside Mitchells we give away hot dogs. After a while, we added kosher dogs for our Jewish clientele. A loyal customer whose first name is Carole had high cholesterol, so we got some turkey dogs for her. She showed up every Saturday to get one, and so we started calling it the Carole Dog. The Carole Dog is a customer-led service. It's a matter of being willing to deviate from the magic list and doing "One for Good Measure."

In the hotel industry, a standard list of services gets you three or four or five stars. But have you ever stayed at a four-star hotel that you liked more than some five stars? Sure, and the reason you liked it more was because you were hugged. Perhaps the waitress remembered your favorite type of tea or coffee at breakfast without your asking. The magic list doesn't matter. What matters is passionate service and hugs.

FROM SATISFIED TO EXTREMELY SATISFIED CUSTOMERS

Add these changes together, and what you get are satisfied customers who are transformed into extremely satisfied customers. You move from meeting expectations to exceeding expectations. Carole might have expected to get a hot dog, but she never expected a Carole Dog. And the day I gave her that first Carole Dog, she gave me a hug back—actually, it was a big passionate kiss on the cheek. It felt great.

The reality is that satisfied customers simply aren't enough to make a prosperous business. They aren't really loyal and will readily defect at the slightest prompt. Only extremely satisfied customers are genuinely loyal.

Chapter 3

The Customer-Centric Organization

The way we've adapted to these powerful changes in the business world at Mitchells is by creating a customer-centric organization rather than a product- or price-centric organization. We feel customer-centric organizations are the best huggers. By customer-centric, I mean the customer is the center of the universe. Everything revolves around the customer. Everyone says the customer is important, but in most businesses, actions speak otherwise. The power of a customer-centric philosophy comes from dedicating the entire organization and its focus to the customer. You cannot become customer-centric until all parts of the organization passionately embrace the customer.

It's obvious to me that many leading businesses, whether they sell clothes or cornbread, are all about product. If they're in the clothing business like us, they're interested in whether it's a so-called Super 100 wool fabric or a Super 180. Is it handmade or machine-made? Is it light gray or olive? Two- or three-button? Short or long shirt?

At Mitchells, clothes are not our priority. It's not the first thing we think of, nor the last. Don't get me wrong. We like fabulous product, and we search the world to get it, but we're all about customers.

Now that may sound amazing. A clothing store that isn't about clothes? But it's true. And if we were a restaurant, we wouldn't be about food. If we were an electronics store, we wouldn't be about Blu-ray players. Businesses have lost sight of the idea that customers, not product, are the most important priority. Most companies think that all you have to do is have plenty of great product and the right value and customers will descend like locusts on their stores. Many stores have those things, and of course, we do, too. You can buy a great blue blazer or black skirt anywhere. You can buy a great flat-screen TV at any electronics store. You can get a great sofa at a lot of furniture stores. It's how you treat customers that determines your long-term success. To prosper today, you have to think customer before concepts like return on investment and margins. Far too many business managers have no idea who their customers are, or what their customers want, or what their perceptions are, and haven't a clue as to how to find out.

If you become customer-centric, it means you personalize the relationship between the seller and the buyer. It means your entire company listens and learns from your customers. It means you give customers what they want rather than what you want to sell them. It means you know customers' preferences better than they do, and can predict what they want.

I'm always saying to our associates, know more about your customers than your merchandise. In my business, we have what's called an SKU, a stock-keeping unit. It uniquely defines an item. It could designate the style, size, and color of a suit or dress. At Mitchells/Richards, we like to say we SKU our customers (when I tell people this, I make sure I spell it out, "S-K-U," so they don't think I mean "screw our customers"). We're trying to measure and understand our customers in every possible way. We have over 400,000 customers in our database, and by listening and learning over the years, we get to know a great deal about every one of them.

To create hugging relationships, it's essential to have people with long tenure, and we pride ourselves on that. Sometimes it takes more time than you would like for an associate to really get it, but when they do, it becomes natural, and that's why tenured associates are so productive. We've been told our tenure is much better than most of the other great stores. Our store managers, Tom Maleri and Jeff Kozak, average over thirty years. In our Connecticut stores, the head tailors average fifty years of service. You build great relationships if you work at it for many years. When I have conversations with peers, they constantly mention how high their turnover is. From time to time, they do cite very long term associates, but it's usually in the context of people who are old and tired whom they would like to take early retirement.

Once you've built a customer-centric organization, you'll find that customer loyalty builds over time, and with it, profitability. The true key to long-term profitability is strong and enduring relationships between the customers and the seller. When you have strong relationships, customers will do more of their buying from you. They'll refer other customers. They'll communicate with you better and tell you what they like and what they don't like, in turn making your business more efficient and effective. Your best customers are the ones who most want you to do well, so it makes sense to learn from them. And loyal customers will be more forgiving if you do something wrong, and return fewer items because you know their sizes, and their likes and dislikes.

In a customer-centric organization, everyone automatically thinks of the customer before anything else. Let me offer a story that illustrates this.

Ray Rizzo is a great customer, and his father was a real character, and not the easiest man in the world to fit. He had a tendency to undergo wide weight fluctuations, and he often was on the short and portly side, not your standard size. Some years ago, Ray's dad was living in New Orleans and he had driven up to Connecticut to visit Ray for Christmas. The Rizzo clan was going out on Christmas Eve to a friend's home, and Ray's dad had forgotten to bring along anything suitable to wear. He didn't have a sport coat or a good pair of pants—nothing. So Ray told him, "Let's go to Mitchells."

When they got to the store, it was already four o'clock. They were going out at six. Needless to say, things were a little tight. Ray spotted me and bounded over and said, "Jack, we've got a problem." He explained the situation and I told him, "Fine, let's measure your dad." We did a measurement and it was looking grim. He was a 53 short jacket and a 48 regular waist. No store anywhere in the world would have had something on the rack that would fit those dimensions, or even come close to fitting them, and here it was, Christmas Eve. Where was Santa Claus when you really needed him?

So I went to Ray and I said, "Oh, man, he is a real portly short size, and we don't stock those sizes. Your dad has a challenging body." We both chuckled. Then I said, "But let's talk to Domenic, our head tailor, and see what we can do." So I sat Ray and his dad down, gave them something to drink, and Dom got cracking. Now Dom already knew Ray and his dad, because everyone in our organization interacts with the customer. Because Dom knew them, he cared about them. Because he cared about them, what mattered wasn't that it was almost closing time and it was Christmas Eve. What mattered was that Ray's dad needed some clothes—and fast.

And so Dom rounded up the biggest jacket and biggest pair of pants he could find. In about an hour's time, he and his team in the tailor's shop had transformed them into an outfit that fit Ray's dad perfectly. He looked like a million bucks and felt the same. Hug, hug, as he thanked Dom and me more than a hundred times.

I remember driving home that Christmas Eve feeling so proud of Domenic that he went the extra yard. Just as important, I was proud that our family had been successful in establishing an environment where Domenic created the miracle without the owner telling him he had to do so.

Chapter 4

The Golden Principle

You can't truly become customer-centric unless the entire organization is integrated so that everyone touches the customers, and so you have to ensure and enable that that happens. We have very few rules in our organization, because I hate rules. I hated them as a kid, I hated them in college, and I still hate them. A rules-based company has a tough time hugging. So we have principles, not rules, and our Golden Principle, essential to a hugging culture, is that everyone, at some point, works on the floor. Of course, that includes Bill and me. It starts at the top. And when Dad used to show up, even at ninety-eight, the odds were he would get out on the floor and meet and greet customers and friends and schmooze with them as he circled the store, and sometimes they actually followed him like he was the grand pied piper.

The reason I'm on the floor every day for at least a period of time and all day on Saturdays and busy days, with a tape measure around my neck, is to send the message that no one is so high up in the organization that they are above waiting on customers. To customers and associates, it shows that you're ready for business. You have to deliver the message from the top. I consider it an honor, a privilege, and a pleasure to wait on customers. Relationship selling is based on owners or senior management on the floor. Some businesses don't have an actual selling floor like we do (the computer is the floor in the brokerage business, and I suppose the customer's living room is the floor in the life insurance business), but what I mean is that everyone must be able to interact with the customer.