What Can Retailers Learn From John Lewis' Winning Approach to Customer Experience?
This case study delves into the challenges, key strategies, and winning initiatives that have made John Lewis a leader in the customer experience industry.
John Lewis began as a traditional Victorian retailer that sold well and made great profit; they focused on the customer but did not focus on the people who worked in the organisation.
Steven Lewis, the son of John Lewis, saw an opportunity to create a new culture that focused on two sets of people: the real customer shopping in store and the people working in the organisation. In the last 60 to 70 years, John Lewis has been part of an evolutionary process and has become an organisation owned and run by the people who work for it.
Through providing an excellent customer experience, John Lewis has been operating as a partnership for over 100 years. The company has a tremendous reputation for focusing on its customers and it has gone through the last century continuously improving its performance.
If we strip John Lewis’ customer-centric business strategy down to the key strategies that were implemented to achieve it, what you have is a man with a very clear vision for what he thought an excellent retailer that cared about its customers should look like.
Therefore, in this case achieving customer-centricity is having a clear vision of where you want your business to go, unrelentingly focusing on the customer and always doing the right thing for them.
Furthermore, involving the people who work in the business, promoting that jump from employee to partner and effectively saying ‘if we offer the best customer experience we can, it will positively impact our trading and business results which will then go on to benefit you’.
To this day, John Lewis Partners everywhere share a percentage of the annual profits, and have a direct influence on what they earn through actively providing a better service for customers.
How Did the Shift Happen?
John Lewis was one of the first retailers to set up a Business Intelligent Unit (BIU). One of the first BIUs dealt with customers who held account cards – at the time there were roughly 2 million account card holders and the aim of the unit was to look at their relationship with the organisation, how they traded with it, what they bought from it and what their lifetime value looked like.
From the data gathered, John Lewis was able to provide more accurate and detailed information about what customers actually wanted. The BUIs were able to work out the average life cycle that a customer took before they were shopping across a department store. They recognised a pattern of customers coming in and either making a large purchase or restricting their shopping to one particular department.
By providing customers with a better understanding of the proposition and the partnership John Lewis had to offer, over the course of 7 years that pattern began to change as shoppers began to ‘shop the shop’ and purchase items across the whole of the department store.
John Lewis has obviously had enormous success from making their customer experience their competitive differentiator, however that is not to say that the process was without any obstacles. Retail has gone through a massive revolution: e-commerce was coming along in its infancy and there was the use of new technology to understand the customer better. John Lewis was a very traditional retailer, up to that point the company mostly focused on the way it traded on a daily basis and the practical mind set around that.
Initially there was quite a lot of resistance to using e-commerce and customer information. Convincing people that for John Lewis this was the right way to go was a long process, but success came from highlighting what those changes meant, presenting information from the viewpoint of the customer, and engaging with senior executives to show them that while trading had been great in the past they really were going to have to embrace a new way of trading in the future.
14 years later, John Lewis online is a massive part of their revenue coming in, customers embrace it for browsing online, buying online, clicking and reserving and picking up in store. More recently, the introduction of being able to order an item from John Lewis and pick it up in selected Waitrose locations shows just how much commitment to innovation can change the scope of a business.
What Can You Learn from John Lewis’ CX Approach?
It is important for retailers to start focusing on the customer experience instead of the price war because prices are being matched across different retailers at an increasing rate. Nowadays customers do a lot of research online so they know where the best price is.
While John Lewis’ ‘Never Knowingly Undersold Policy’ was fairly unique a few years ago, now it has been copied by a lot of other retailers. Therefore it is the other smaller, softer things that allow customers to decide where they want to go and shop. John Lewis’ approach of always making sure the customer is happy is a major factor in persuading people to go back time and time again. It is really important for other retailers to become critically aware of those things and focus on making a difference to the customer.
In order to follow suit, the biggest thing your company can do is really understand the things that John Lewis understands: in retail the trend is to focus on new, exciting elements and whilst that is important (because you need to engage and entertain customers if they come into your retail environment), your company also needs to be very clear about the basics – the things that customers will only tell you about once you do not do them properly and then you need to continually improve those areas.
No matter how exciting and innovative your initiatives may be for customers, if you fail to achieve the basics you will only engage and excite them for a limited time before they drain away.
Overall, the impact of having a better customer experience for John Lewis has been enormous. There are two other factors to this that are really important:
- Firstly, John Lewis has a ‘Never Knowingly Undersold Policy’ in department stores so it has always been very price-competitive.
- Secondly, the thing which sets John Lewis apart has always been the extra things it does – the way it looks after customers, the way it responds to complaints, the way it goes out of its way, the way it goes the extra mile to make sure that it deals with any issues a customer has – and that is what makes it a major differentiator from other retailers.
As well as being competitive on price, more than any other retailer John Lewis trades an enormous amount on its reputation of being an organisation that will always make sure the outcome for the customer is the best possible one.
This case study was first produced for the Customer Experience Transformation: Retail conference in 2015.