A Case Study - Customer Relationship Management

We’re heading into the home stretch now. I want to drive home the point on strategy by looking at a case of a successful Social CRMish strategy—even though it is still a work in progress and somewhat unconventional: David’s Bridal.

David's Bridal Case Study

David’s Bridal:The Unconventional Social CRM Strategy
David’s Bridal is a true American success story. In the late 1990’s they were revolutionary and they built a dominance in the wedding apparel market that no one is near touching—with nearly 40percent market share. But they are smart enough in some of their leadership quarters (including the CEO) to recognize that what an observer of the industry called a “disruptive force in the target sights of the rest of the bridal industry because their model created something that just creamed the rest of the industry” was no longer revolutionary. In fact, they understood that their extant model could be a brake on the progress toward their goals as the 21st century moved on.

Paul Greenberg Pretty Safe Harbor Nonfinancial Compliance and Full Disclosure Policy Statement
First, in the interests of full disclosure, David’s Bridal has been my client for the last seven years, and they are simultaneously my favorite and most exasperating client. They drive me nuts and they make me kvell like a proud daddy. I’ve made friends there who will be my friends for life regardless of whether they or I have a continued relationship with the company. So what you’re hearing here is their story, my story, and a story they know that I’m telling about them. In fact, the cochairman of their Customer Value Review Committee (CVRC) (more about this in a minute) actually presented at the 2006 AAA CEO Conference with me because what they do is so out of the box and so compelling that it is a genuinely good story with lots of stuff worth hearing about, including the obstacles they overcome—and the rather unconventional approach that the CVRC represents. What they have in progress is something unique and, hopefully, repeatable as an idea— though I know they don’t want it repeated in the wedding apparel industry. But it has a genuine practical value that goes far beyond just their $2.4 billion niche industry.

And Now, Back to Our Practitioner
So what’s the story with David’s Bridal? They are the world’s largest wedding apparel and related accessories retailer. They have more than 300 retail stores in 46 states and Puerto Rico. Their business model is a massive selection of wedding apparel styles with multiple sizes on the rack from the Versaces and Vera Wangs of the world at unbeatable prices. Their stores are high volume retail outlets, not boutique service or one-on-one service providers. They are deeply sales driven. They have 3 percent of all the wedding apparel stores in the United States, but are so predominant that over 70 percent of all the brides who shop for gowns pass through their retail portals, though they don’t necessarily buy. In the seven years I’ve been associated with them, I’ve seentheir market share go from 20 percent to roughly 35 percent. They are immensely successful. Let’s put it this way, while there have always been lots of issues to deal with (as there are with any company), I was by no means there to fix something broke. Their ROI is to take that nearly 40 percent market share and turn it into a 50 percent market share. They recognized that this was not going to be a short-term, one-shot effort, and wisely recognized that their business model and culture had to change for this to take place—from the CEO, Bob Huth, on down. But the statistics support the effort, thanks to research work done by senior director and CVRC co-chairman Scott Rogers. They found that if they just captured some of the business that walked in the door and then walked out and never purchased there, they could hit 50 percent market share without building a single additional store—just based on that 70 percent traffic volume and a greater conversion rate.

Identifying the Problem
Metaphorical Step One Thousand and One (MSOTO). To get to the point of real breakthroughs took us (me and the forward thinkers at David’s Bridal) two years with multiple missteps and let’s just call them “misaligned” political agendas. It was painful, painstaking, and the constant pressures of the day-to-day jobs affected those evangelists trying to build an “outside-in culture” that had been intensely focused on “inside-out” sales—not customers.

Make no mistake about it. This was and still is an intensely salesdriven culture that aims at driving high volume traffic through its stores quickly and effectively. Their concern was how to develop a more customer-centric focus at the company. But to do that they had to answer the fundamental first question, “Who is the customer, really?”

Who Is the Real Customer?
Their customer for as long as they existed was perceived to be the obvious one—the bride. Not even the bridesmaids. That meant the customer lifecycle, which was defined by the length of time to the wedding date, was about as long as a very old fruit fly—say, seven months. (Please don’t bother to look up the lifecycle of fruit flies. I’m sure that they’re way shorter than seven months. Just grant me a literary license for the day. I’ll pay whatever registration fees you want and fill out the paperwork.) That means from the time the bride was engaged to the time that the wedding was over and the bride was whisked off by the groom for all the after-hours stuff that grooms and brides do and probably had already been doing.

Yep, seven months and out. The running joke was that repeat customers at David’s Bridal undermined the moral fiber of the United States.

Because the wedding was the end of the relationship, referrals, especially word of mouth referrals from the brides and bridesmaids to those with upcoming nuptials, were of major importance at David’s Bridal (henceforth DB). They measured 46 percent of their business as word of mouth referrals.

Their business model was based on the assumption that their value pricing and incredibly wide selection of high quality gowns on the racks was their critical differentiator, and if they provided good service they would get the referrals they needed. Thus one huge driver was their $99 wedding gown sale.

It sounds about right, doesn’t it? It’s a solid business model that earned them 40 percent of the market. But, as we found out quickly, there was a lot of work to be done.

Identifying the Problems? Ruthless
The first problem they discovered was that servicemprovements at the store level were in order. Imagine service complaints from people who are shopping for what might be the most important and certainly the most emotional day in their entire lives. The results of bad service in that environment could change the term from “going postal” to “going bridal.”

Luckily, that didn’t happen, but as their sales rose and the intensity of high volume activity increased without massive increases in sales consultants, the service complaints increased. But the selection of, among others, Versace and Ralph Lauren was so compelling and the idea of getting a super-perfect gown off the rack that day or shortly thereafter was just so powerful, sales growth continued.

There was another concern. The only person who got any attention in the store—for some of the reasons mentioned above—was the bride. The bride was the goddess of the purchase. The bridesmaids were essentially a coterie of clothing mannequins who tried on the bridesmaid dresses that the bride picked for them. So why pay attention? After all, this is event-driven sales. The centerpiece of the wedding is the same as the centerpiece of the wedding cake—the bride.

Concentrating on the bride pretty much exclusively got them to where they are.

Prior to my arrival, there had been a number of steps taken and systems put into place that affected the CRM strategy. One of the most interesting was the creation of a point-of-sale system that you’d think was a CRM system, except that data collection only occurred after the sale had been made—individual transactional customer data. Ordinarily, you’d think that this would be valuable because of the future purchasing patterns of the customer, but remember, they didn’t expect to see the bride back after that fruit fly lifecycle ended. The relationship to the customer was event-driven (the wedding) and one-off (“happily ever after”). Thus the data was valuable only for historic reasons and market analysis, but nearly meaningless for the customer insights necessary to drive repeat business.

CVRC, Not CRM: The Right CRM Strategy
These were only a few of the specific issues that needed to be dealt with in conjunction with cultural mindsets that surfaced as the work continued. About two years into the process, I was sent about 300 pages of documents from different programs at David’s Bridal to review to see if they were on a customer-centric track. They asked for my edgy New York style brutal assessment. After spending two weeks reading and then writing an extensive commentary, my conclusion was “no” despite the obviously good intentions built into the program. This sparked a series of meetings with senior executives and CRM-related team members, which uncovered something in retrospect that was not at all surprising. Like zillions of sales-focused companies before them, DB was presuming for the customer, as opposed to listening to the customer. So, because of the good nature of the people involved and the business value that the company could realize from a change, we decided to do something about it.

I went to the CEO, empowered by the David’s Bridal evangelists, and laid out a plan to form a committee that I called the Customer Value Review Committee (CVRC). Here’s how it was set up and what its purpose was:

  1. Find the most customer-centric decision makers at the company and populate the committee with them. Keep in mind, this was not meant to equate to a classically cross-functional team that a CRM program typically demands. Fair departmental representation didn’t matter. What mattered was that the members were strongly focused on the customer even if they ran the supply chain or the art department (so to speak). They also had to be decision makers who were empowered to decide on something at the meetings being held by the committee.

  2. Recognition that this wasn’t a CRM implementation and it wasn’t a “project.” It was a programmatic approach to changing the culture at David’s Bridal from sales-driven to customerdriven, but not a full-blown CRM effort.

  3. It would be publicly endorsed by the CEO and that endorsement would be known throughout the entire company so that its authority as an empowered committee would be clear.

  4. It would do several things:
    • Find out what the customers were actually saying and thinking—not presume for them at all.
    • Find out what the store of the future would be like, as well as who the customer of the future would be.
    • Do a high level process and program review to see which DB processes were customer-value friendly and which weren’t. This was not a full look at each process, just an overview.
    • Do deep customer mapping of customers who were selected by store, geography, and other characteristics and interviewed by the members of the committee—this was an absolute requirement. Committee members, as customer-centric as they were, had in several instances little or no interaction with the customers in their recent senior management job incarnations.
  5. Once this process was completed—over about a year’s time— expand the results to a pilot.

  6. Keep the committee alive to act as the conscience of the customer inside of David’s Bridal and to be the fount from which all customer-centric wisdom and projects would spring.

We got complete buy-in from the DB CEO and we were off to the races. There were seven committee members and me. We fought, laughed, loved, cried, got confused, lost focus, refocused, but at the end of it all, were able to say amen and hallelujah. There were several significant epiphanies on the committee, particularly after the customer mapping was done and the results supported by both anecdotal and metric evidence. All of a sudden what had been presumed for the customer was seen to be, simply, wrong. For example, the registration process at the front door was seen to be an event of major impact. It turned out the bride didn’t even remember registering the vast majority of the time. Second, the assumption throughout DB history was that price and selection were their great differentiators. It turned out that price wasn’t as important as selection.

Keep in mind that the mapping has topical and timely utility so, for example, in an economic downturn, pricing might become as important as it was previously presumed or even more important.

Critical to the mapping process was the questionnaire for DB customers, which was primarily designed by Scott with the help of members of the committee. This questionnaire, a model for customer experience mapping, was perfectly done, with questions designed to trigger a memory but not to direct the respondent customer to any preconceived conclusion. The breakthroughs were worth the effort.

From Fruit Fly to Human Being
One of the most significant things that we found, thanks to the brainstorming among the CVRC and the mapping, was that the customer of the present was nothing like the customer of the future. The bride was the customer of the present, with somewhat more than faint recognition that the bridesmaids were going to be brides one day. But the customer of the future wasn’t the bridesmaid, though she certainly was a potential future DB customer. The future customer is, ta-da, the mother of the flower girl. Yes, the mother of the flower girl. Here’s how it goes.

David’s sells wedding gowns (and associated accessories, of course), bridesmaid dresses, flower girl dresses, junior bridesmaid dresses, quinceañera dresses for the 15-year-old Latina, prom dresses, sweetsixteen outfits, and so on. After marriage, one of the things a bride often becomes is a mother. The bride becomes the mother of the flower girl, junior bridesmaid, bridesmaid, and bride (and some of those others in between), and then that bride becomes the mother of the flower girl, ad infinitum. What was a seven-month one-off relationship becomes a lifetime relationship with, admittedly, years between events. But nonetheless the nature of the customer and the lifetime value equation changes dramatically, as does how the company works with that customer.

There’s still a long way to go at David’s Bridal. The CVRC has expanded to a second circle of senior store management so that a social network/community pilot sanctioned by the CEO using Neighborhood America’s technology can begin with some of the stores to see how the store of the future will work. This is very cool. I mean, think about it. I have no kids. This year marks our 28th anniversary, so a wedding isn’t in my future, but I’m excited over wedding apparel!

This is exciting CRM strategy—an unconventional CRM strategy, but it points out one of the core lessons of CRM strategies. They are never the same from company to company. In some companies, conventional strategies work really well and the application of best practices is entirely appropriate. In others, conventional strategies and best practices applications will literally take the company down—which means creative thinking is in order. Don’t worry about whether or not you are following the “right” steps when it comes to engaging customers. Just figure out, given the business model you have and aspire to, how your company is going to do it, even if it doesn’t use conventional means. The key to Social CRM strategy is doing what you have to for collaborating and partnering with your customers, not looking good to someone because you followed the textbook and used the right buzzwords.

I don’t mean t be harsh (well, maybe a bit), but strategic CRM methodologies are sometimes driven more by appearance and pleasing someone notable to a career than by substance and the customer. Delight your customer and your managers will be delighted. Take my word for it.

Okay, we’re heading toward drill-down, not meltdown. Now that you have a broad picture of the elements of a CRM strategy, we’re going to start digging into some aspects, somewhat more technical and functional, of what it takes to develop an organization that is engaged with customers. But before we do that, two things.

First, read the takeaways that Doug Leather, a highly respected consultant and business leader in the southern hemisphere, provides to you—free of charge—on developing a CRM strategy.

Second, take a deep breath, take a break, and get yourself a drink. Non-alcoholic? Orange juice might be a good choice. Alcoholic? Lagavulin 16-year-old single-malt scotch or a really good Manhattan. Either way, come back later and the trip through Social CRM land will continue.

Mini-Conversation with Doug Leather:On General Strategy
Doug Leather is the CEO of REAP Consulting, a group of global customer management experts specializing in the development and delivery of tools and programs that build business value. He’s also someone that I know from having served on the Customer Think Board of Advisors with him. I am glad that I did. He really knows his stuff with over 25 years in marketing and customer management. He is acknowledged as a leading expert and thought-leader in customer centricity. He is laser-focused, on providing a great CRM methodology and a detailed knowledge of best practices. He takes all that experience and knowledge and applies it to the practical application of customer management in different geographic territories, markets, and industries. The man is smart!

  1. Make sure that you’re not solving the wrong problem really well! The delivery of an “intentional customer experience” is reliant upon an organization being suitably aligned and joined up so that everyone is clear about what the experience is to be, and any bottlenecks to the delivery of the experience have been identified and resolved. As such, to build appropriate customer management (CM) capability requires a clear understanding of end-to-end organizational capability to deliver the experience. Make use of an appropriate CM assessment framework (ideally with benchmark capability) to measure organizational customer management capability, as the first step. If you don’t know how good (or bad) you are, how will you ever effectively bridge the gap (between your enterprise capability and global good practice) to become as good as you want to be? Heaven forbid you invest time and resource in an intervention, project, or program that doesn’t enable you to get to the very foundation of what is required to be truly customer-centric.

  2. If everybody has responsibility, then nobody has responsibility. Most businesses do not have somebody who is responsible for customer management. Appoint a customer management executive or a chief customer officer who is responsible for the integration of sales, service, marketing, and customer inputs, and account- able for maintaining and enhancing the value of the customer base, as a key company asset.

  3. Customer management is change management. Customer management is not a temporary endeavor undertaken to deliver a unique product, service, or result. It is a set of related projects managed in a coordinated way to achieve benefits or synergy that cannot be achieved by managing them individually. If CM is business strategy, then it is the CEO who must principally sell this direction to the board, financial analysts, staff, and customers. Be crystal clear about what you’re trying to accomplish and ensure that everyone understands the pressure for change, ensure that everyone understands the vision, ensure that organiza- tional capacity for change exists, and ensure that a set of actionable first steps is in place.

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