EPISODE 081 : 09/29/2022
Howard Tiersky is a successful entrepreneur who has been named by IDG as one of the 10 Digital Transformation Influencers to Follow Today and by Enterprise Management as “One of the Top 10 Digital Transformation Influencers That Will Change Your World.” Today Howard is the CEO of FROM, the Digital Transformation agency, and the author of the new book Winning Digital Customers, a recent bestselling business book on the Wall Street Journal list.
Host: Ned Hayes and Ashley Coates
Guest: Howard Tiersky
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Topics discussed in this episode
- Detailed small business insights from Olympia, Washington
- Small business resiliency and adaptation during COVID
- Doubling community outreach during the pandemic
- Opportunities for small business loyalty programs
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Ned Hayes [00:00:01] Welcome to Spark Plug, where we talk to smart people working at the intersection of business and technology brought to you by Snowshoe, your smarter loyalty leader.
Ashley Coates [00:00:12] Spark Plug is happy to welcome Howard Tiersky to the podcast today. Howard is a successful entrepreneur who has been named by IDG as one of the ten digital transformation influencers to follow today and by Enterprise Management as one of the top ten digital transformation influencers that will change your world today. Howard is the CEO of From the Digital Transformation Agency and the author of the new book Winning Digital Customers, a recent best selling business book on the Wall Street Journal lists. Welcome to the podcast, Howard.
Howard Tiersky [00:00:49] Oh, thanks so much for having me. Happy to be here.
Ashley Coates [00:00:51] So looking forward to chatting with you today. Well, let’s start off by talking about your book. I would love to hear a thumbnail overview of the book, if you can. What’s it all about?
Howard Tiersky [00:01:01] Well, the world is changing very rapidly. Customers expectations of the brands that they interact with continue to move at an even faster pace. And expectations are set by brands like Facebook, Amazon, Netflix, Airbnb and so on. And so many great legacy brands are frankly struggling to keep up and to move fast enough to meet and ideally exceed the expectations of those consumers. And so that’s the work I’ve been doing for the last 25 years of my career, working with large brands, helping them figure out how to make the most of digital to improve their value proposition to their customers and improve their business. Over that time, I’ve worked with a lot of big brands, from General Electric to General Motors to Avis, Transamerica to Airbus to NBC and on and on, and had an opportunity to observe a lot of really successful transformations and frankly, a lot of not so successful attempts at transformation. And so the book was really just my attempt to codify what I’ve learned in all those years into a five step process, which really is what my company now uses in the transformation work that we do with large brands and really which any business, large or small, can use to think about how they thought the course to get from where they are to where they need to be to really compete in this hyper digital world.
Ned Hayes [00:02:10] Well, you mentioned where they are to where they need to be. And the full title of the book is Winning Digital Customers The Antidote to Irrelevance. So is that where a lot of companies are? They’re relevant today and they need to be winning? It’s one or the other.
Howard Tiersky [00:02:24] Yeah, there’s a great Jack Welch quote that I use all the time. Jack Welch, of course, the sort of legendary CEO who led General Electric for more than ten years. And I think ten acts, the stock price or something like that in a massive turnaround back in the eighties. And back then, he said of companies that when the speed of change on the outside exceeds the speed of change on the inside, the end is near. And there’s a lot of brands we could see littering the battlefield today, whether it’s Toys R US or Circuit City or Sears or RadioShack or and on and on. Companies that the end well is more than near the end is here because in most of those cases, they just failed to meet the expectations of digital consumers fast enough and other brands stepped in and were able to do it. And so, yeah, I think that companies today have the options to either follow the customer, to change, to transform, to meet the needs of today’s customer and tomorrow’s customer or yeah, you know, then, then you shrink, right? And you continue to shrink and you eventually become irrelevant. So that’s the scary risk that brands face today. And if they don’t transform, the good news is many are transforming. But that’s why it’s a burning platform.
Ashley Coates [00:03:32] Absolutely. Well, you started to say kind of how this book came about. You wanted to document everything you’ve learned over the past couple of decades into a five step process. But where did this idea first come from and how did you even begin to make nice, succinct five steps out of what you’ve learned over the past 20 years?
Howard Tiersky [00:03:52] You go into a situation and let’s say early in my career trying to get something accomplished, do good work, and you learn lessons. And over time you start to try to create a model and say, okay, what can I learn from this? How can I turn this into some sort of a system so that it can be reproducible? And then, of course, when you’re in a consulting field like I am, then you’re often called to explain to a client how how are you going to help us? So you have a particular pressure, so to speak, to be able to succinctly say, well, you know, here’s how we go about it. Step one, step two, step three support and five, etc.. So I think both to be able to be more effective ourselves and communicate with others. You know, it was very helpful to be able to recognize that there are these discrete steps that you move through and you know, and there’s a sequence of activities. It’s like, you know, if you bake cookies and, you know, first you grease the cookie sheet and put the cookie sheet in the oven and then you crack the eggs and start mixing in the flour. You know, you’ve kind of done it in the wrong order, know? So it’s helpful to think about all the things that need to be done, but also what’s the right sequence?
Ashley Coates [00:04:47] Absolutely. Well, speaking of sequence, as I understand the book, there are three key themes. So I’d love to unpack these one by one if we could. The first theme, there’s the general theme of Understand. Your customer. Can you talk about why this is so important to any business at any scale?
Howard Tiersky [00:05:06] Well, when we think about most businesses want to improve, right? They want to increase their revenue. They want to increase their profit. They want to increase their share price. So what are the things that actually cause that to happen? What causes you to have more revenue to be able to operate more profitably and be able to get people to be willing to pay more for your company? Well, all those things are human behavior. Successful businesses are successful because they’re able to drive human behavior. And there are several different categories of humans, employees, customers, shareholders and perhaps others, distributors, other members of your extended ecosystem. A lot of what we’re focusing on this book is the customers, because actually you could argue that that’s the most important because that’s where the money comes from. You could argue the others are actually quite important, too. But ultimately, if a business is successful at driving the desired behavior by their customers, getting them to buy, getting to buy more often, upselling them, getting them to not return products, post positive reviews, all their friends. If they can successfully do that, well, frankly, it’ll cover a multitude of sins in other areas of their business that might not be totally perfect. And if they can drive customer behavior successfully, then it kind of doesn’t matter if they have like a really awesome legal department or a fantastic ERP system. You know, there’s no money coming in and they’re not succeeding as a business. And so that really should be the number one priority. And so you want a more successful business. We have to more effectively drive customer behavior. So how do you drive customer behavior? Well, it starts by understanding. If I want to influence somebody, the first thing I have to understand is, well, what is it they want? You know, what is it that would cause them to, for example, do more business with me? What would cost and what’s holding them back? Why aren’t they doing more business right now? And so gaining the insight the insight really is how you aim, whatever you’re going to put at improving a business trajectory, whether that’s through digital or otherwise. A lot of businesses don’t do that nearly as much as I think they should, because sometimes people get a great idea and they believe in it and they want to pursue it. And it might be a great idea, but it’s only a great idea if it actually will drive customer behavior. And there are lots of ways of evaluating customers, understanding what they really want, coming up with ideas based on that, then testing those ideas with customers. These are key principles of design thinking, which is a topic I talk a lot about in my book. So that’s the core of why understanding the customer is so important, because it is what is going to enable us to figure out what to do, whether it’s new features on a website or an app, or redesigning the retail store or changing the pricing model or changing the business model. What to do to actually drive the behavior that we want?
Ashley Coates [00:07:35] Absolutely. And I think the second major theme of the book is customer journey mapping, design thinking. Many of our listeners are retail store owners. And so I’m wondering if you can talk a little bit more about how design thinking can apply in specifically a retail space.
Howard Tiersky [00:07:51] If you’re talking about a physical retail store, you know, there’s always the question of where should we invest to get more revenue per square foot? Right. And there’s an unlimited number of ideas you could come up with. We could carpet the store. We could have better lighting. We could give customers free coffee. We could lower our prices, you know, change our inventory. We could have a cloud stand outside and point to the store. I mean, you could brainstorm like an almost unlimited number of things that you could do. And almost all of them are going to cost money or at least use some kind of resources time, employees, time, etc.. So what should you do? What’s actually going to make a difference? Well, one of the key things that we talk about in the book is the search for what to do to improve is the most valuable thing to focus on, in my experience, is customer pain where our customer is experiencing you can call it friction, you can call it effort, hassle, inconvenience, frustration. Where are the parts of the current journey in your store where customers are experiencing points of pain? Because when those are the things that you know, and some of them may be small, but if you add them up together, they create an emotional journey. You know, if I go to the, let’s say, the supermarket, I have a journey, a series of things that happened. That’s all a journey is a story. And there are some probably some bright spots and some moments that are frustrating. For example, if I go to the store and I try to get the cart out and I have to struggle and fight with it to get it to release from the cart that it’s connected to. You know, that’s that’s a moment of frustration. Is that going to cause me to never go to that store again? Probably not. But now put negative two points in the experiential journey. And then maybe I go into the store and my favorite brand of cookies is on sale, and I’m delighted. And then that’s a wonderful, positive, emotional moment. And then I’m look, walking on the store and I can’t find where the cinnamon is. And I ask a salesperson and they tell me it’s an aisle six, but I go to all six and it’s not there. And now I’m angry and annoyed. Why don’t they have better trained salespeople that know where products are in the store and so on and so on and so on, right? I have this series of experiences and some of them are going to be hopefully positive and some of them may be negative. And so the process of really mapping that out and understanding what those journeys look like is the best way to start to identify and then clarifying and measuring. Well, what’s the severity? Of those different moments. And what’s the frequency? If only one person per day gets the wrong information about where something’s located in the store, you’re probably doing pretty well. But if 75% of the people that asked an associate for the location of a product on the shelf as given wrong information, then you have a very frequent point of pain. And some of these points of pain, again, are more problematic if I have to wait in line for an hour and a half to check out like I have occasionally had to do at Costco. That’s a very severe point of pain. Now, if I just have to wait 10 minutes, you know, maybe that’s a more amount point. So. So getting that all mapped out and understanding what is the emotional journey look like? Where are we creating points of pain? And for each of those points of pain, what percentage of our customers are actually experiencing them? Now you have the basis to say, instead of just brainstorming, Well, my customers might like it if we do this, our customers might like it. If we do that, we actually understand what are we doing that’s holding them back from loving us at the 100% maximum level, and we have the opportunity to then prioritize those things in terms of their impact. Based on everything I was just saying, frequency and severity together with what the level of effort is going to be. Of course you want to say, well, if it’s a massive undertaking, it’s obviously going to require more impact to be worth doing and based on that, create a portfolio of things to improve. And so I think that’s a key way that we can use and we talk about design thinking in the first step of design thinking is empathy, which is very similar to the idea of understanding your customer, to be able to understand what is their experience, what do they see, think, feel here, and how does that drive behavior? And then as we start to prioritize those points of pain and say, okay, these are the ones that we want to address, typically that requires the creation of a solution. It’s one thing to say, Well, the lines are too long. People are waiting 20 minutes in line and you say, okay, here’s a solution. I’m going to create self-checkout counters or I’m going to train my cashiers better, or I’m going to change my post system or whatever it may be that may or may not solve the problem. I’ve seen stores swap in a new upgraded POS system and the lines are even slower because the new system has problems that the old system didn’t have. So just because you have a problem and you come up with a solution doesn’t automatically mean that solution will make it better. But the risk is you could make it worse or you could keep it the same. So a key principle of design thinking is to prototype and test, to figure out how do we create this sort of minimal effort version of this idea to say if train one cashier and new methods of of checking people out and measure them and see if the training actually results in those kinds of benefits or test the point of sale system with a few lanes or what have you. And in that way, we’re both deciding what to do based on customer behavior and pain, not just creativity. And then we’re coming up with solutions and testing those so that by the time we invest and, you know, if you’re going to invest any of those retail dollars at that thin retail margin, you better be pretty confident that you’re going to get an impact. By the time you make those investments, you have at least a reasonably high degree of certainty that you’ve really carefully aimed that choice, that investment, and then it’s going to have a desired impact on customer behavior.
Ashley Coates [00:12:55] Thank you so much for illustrating that, Howard. That was fantastic and our listeners will really appreciate that. And then to address a third major theme of the book, you have leadership in alignment. You talk a lot about that. Can you tell us why leadership and alignment are important?
Howard Tiersky [00:13:10] Sure. Turns out people don’t like change and people like some types of change, but most people, they like the change that they choose. You know, you might decide to go out and get the new iPhone, but that’s something you decided when you work at a big company and all of a sudden they make an announcement, say, hey, let’s take our example of work, we’re moving to a new process, or we’re going to redesign the layout of the store, or we’re going to create self-checkout lanes or whatever it may be, despite the fact that it may be designed to improve the customer’s experience, despite the fact that it may be certain even to improve the company’s overall prospects, it doesn’t always mean that it feels good to the people, the employees, for example, who are having to actually deal with it and implement it on a day to day basis. There seems to be something in like human personality and genetics where the majority of people, definitely not all people, but the majority of people kind of have this feeling like just to leave things alone, you know, it’s a hassle to start changing things around. And so you can expect that if you’re driving transformation within an organization. Well, let me put it this way. If you are the innovator, if you’re the visionary driving transformation, you might be really excited about it. But it might be harder than you think to make that enthusiasm contagious. And when you tell everyone all the changes and they realize it’s going to be disruptive, you’re probably going to encounter some resistance. And some of that resistance is irrational, just fear of change, and some of it is perfectly rational. You know, anytime you do something new, it could fail. That creates risk. People don’t like to be part of something that fails. It could create hassle, inconvenience, as all kinds of change is painful. So it’s understandable that people are like, if we can avoid this change, let’s avoid it. And that is a reasonable point of view. It’s just that in such rapidly changing times, like I was saying earlier, it’s kind of hard to avoid change and still remain relevant. So you have to pick the right change. But then it really requires great leadership to help the people in the organization understand the change. Get on board with the change and not resist the change and all that. And so that is actually and it’s much harder to lead an organization through transformation than it is to lead an organization, whether that organization is just one store or whether it’s a giant retailer with 4000 stores. It’s much harder to do it through transformation than just in ordinary times when all you’re trying to do is just kind of keep people motivated and optimize things and such.
Ned Hayes [00:15:27] I did really like your focus in the book on customer experience as a preeminent goal, and I wondered if you could speak to customer experience and why that matters, especially in the digital age when so many people don’t feel like the in-person customer experience matters anymore.
Howard Tiersky [00:15:43] Today’s shopping experiences are, as they say, omnichannel journeys, and very often the number of channels can be four, five, six, seven. You know, there’s email, there’s texting, there’s apps, there’s websites. Obviously, there’s an in-store experience, there’s direct mail, and I’m sure I’ve missed a few. So there’s so many different ways that we touch customers out of a desire to call centers if people have questions or problems and customers are using them all. It’s not like customers never want to go to the store, but they want the convenience afforded them by digital experiences. And so the most successful retailers are figuring out both how to create great self-service digital shopping experiences so that, for example, someone doesn’t have to get in their car and drive to the store when that isn’t of value to them. Maybe I’m reordering another one of these PGA golf shirts that I wear. I don’t need to try it on. I know the size. I know what it is. I just need a few more. There’s no point in getting in the car and going to the store. On the other hand, you know, if I’m trying to try on a suit that I want to get and I want to make sure it fits well, then that’s the value to me. But even then, if I am going to the store because the in-store retail experience has to compete with the digital world, it’s very important that that store be worth the trip and be a really great experience. And there are a lot of ways that digital can help us do that. You know, I had an experience recently at Banana Republic. I tried on some pants, I think it was, and the pants were too big. And I went out of the dressing room with this pair of pants. And the woman who was sort of monitoring the dressing room area said to me, oh, you know, are you going to take those pants? And I said, Well, they’re they’re too big. And she goes, Oh, what do you want me to see if we have them the smaller size? And I said, Yeah, okay. But I was kind of in a hurry. She takes her tablet, she stands the barcode, and she immediately can say, Oh yeah, we have those in such and such size to having to go get them instead of the usual experience where the salesperson offers that and then disappears for 15 minutes while they search the store. And you really don’t know whether you’re waiting to actually get a pair of pants in a smaller size or, you know, they’re going to come back after 50 minutes and say, sorry, I couldn’t find them. And by the way, they probably had them. They just didn’t know where to look. In fact, Footlocker stores now are putting RFID tags in all of their shoeboxes so that not only do they know what is in inventory, but it’s easy for someone to go into an app like a salesperson and see where is that inventory? Is it in the store room or is it on the floor? And actually, might it be in the computer but no longer in the store because there’s a shrink problem and so get much, much more accurate ability to put hands on inventory and merchandise. So in the case of Banana Republic, it was very obvious and apparent to me that that associate was using a digital device, but sometimes the customer doesn’t even have to be aware of it. We can just use digital to improve the way that we can serve customers in a retail location as well. And that’s critical because digital has taught our customers to have less and less patience. And so when they’re in the store, we want to give them the good stuff that comes from being in a physical facility, like the ability to touch and feel the merchandise, to get advice from an in-person salesperson. But we need to make sure we’re scratching that itch for convenience. Otherwise, it’s going to feel more appealing to go digital. And well, frankly, if you’re Banana Republic, that customer could find you digitally as well and could order from you digitally. But if you have a banana republic in my vicinity, how many clothing retailers are there near my house? Several. But how many clothing retailers are there on the Internet? Hundreds of thousands. Right. So you’d much rather be competing with just those stores that have a physical proximity than with everybody on the Internet. You’re much better off, if you can, getting that customer into your physical store.
Ned Hayes [00:19:13] Right. And you describe the Banana Republic experience as a positive one because the technology accelerated your experience and made it smoother rather than getting in the way. So I think the moral of that story really is that if technology is helping you be faster and more responsive to your customers, great. If it’s slowing you down, if it’s getting in the way, it’s not adding anything to the customer experience.
Howard Tiersky [00:19:35] Indeed. Indeed. And also, it’s interesting, you know, that same day when I was at that experience, the Banana Republic, I happened to also be shopping at Nordstrom, Nordstrom’s, a great store and very often has great customer service. But on this particular day, I was trying to buy shoes and I had one of these experiences where I was a size 12 and I saw I pick out some shoes and say to the guy, You have these in a size 12. He goes off for 5 minutes, comes back. No, we don’t. But I brought you these other shoes, which are nothing. Like the shoes that I wanted. I’m like, okay, I don’t want those shoes. Okay. What about these shoes? Okay, hang on. He goes to the back. So I was his back and forth for a half hour of waiting to hear. Do you have this in a size? And it was curious to me that here I am in a, you know, banana republic is, you know, not a low end, but it’s a relatively modestly priced apparel store versus Nordstrom, which is not at the top end, but certainly much higher up and more known for great customer service. And it may be that they have some of these tools as well. And the guy in the shoe department at the Wanted Paramus Park in New Jersey just didn’t happen to using it. But, you know, I was actually receiving a much higher quality level of customer service at the Banana Republic than I was at Nordstrom because of the application of technology. So it’s not just for your high end stores.
Ashley Coates [00:20:43] Mm hmm. Absolutely. I think it’s something about shoe departments. I always have that experience. And also, Howard, I was very impressed to see that you have a forward in your book from Michelle McKenna, CIO of the NFL. And in fact, I’m going to put you on the spot. I’m going to read a bit from the forward. Howard Pierce, he has been one of my secret weapons. Reading this book and applying its principles will help you achieve real, sustainable change that can thrive long after the last consultant leaves the building. So that’s pretty high praise. Can you tell us a little bit how the foreword came to be?
Howard Tiersky [00:21:16] Well, Michele, I have worked with her for many years. Actually, when I started my company, she was our first client. At the time, she was the CEO of Universal Studios Theme Parks. And so we were brought in to work on the redesign of the website and the ticketing system for buying tickets for Universal Studios theme parks in Florida around the time they were launching the Wizarding World of Harry Potter theme park. And then subsequently, she became the CIO at a company called Constellation Energy, which is now part of Exelon, one largest energy companies, United States. And she asked us to come there and help her with the customer experience for a utility customers. And then subsequent to that, she became the CIO of the NFL and once again asked us to work with her there. So we’ve been working with her almost nonstop for 15 years. Great, great privilege. And she’s an amazing executive, a driver of innovation everywhere she goes. Obviously, she’s been fantastically successful. The board of directors of many really cool companies as well, like RingCentral and others. And so but you know, it’s just been a long standing relationship. You’ve been helping her with some of the companies where she’s been asked to drive digital innovation.
Ned Hayes [00:22:18] Right. Well, that’s a great story. Anything else about the book that you think we’ve left out that we should know?
Howard Tiersky [00:22:24] Oh, my goodness. Well, there’s 400 pages of it, so no doubt.
Ashley Coates [00:22:26] Let’s talk more about your business life. So I understand you worked with many business clients over the years, Verizon, NBC, Universal Studios, digital leaders like Facebook, Spotify, Amazon. What commonalities have you noticed as you move from one client to another? What common business problems does everyone seem to face?
Howard Tiersky [00:22:46] Well, you know, almost everywhere I go, there’s there’s smart people, creative people, excited people trying to apply digital. And almost everywhere we go, we have some of the type of challenges we talked about before, because these are all large organization, sorry, these are all large organizations. And so there’s some great things about large organizations. They have well-known brands. They have a lot of resources and assets. And there are some challenges, which is they have a lot of arms and legs and complexity and sometimes bureaucracy. And that can be difficult in a time when moving rapidly is so important. You know, there’s like that old cliche of, you know, an aircraft carrier takes I forget exactly how long they say, you know, five miles to turn around or to make a turn. You know, if you want that giant aircraft carrier to be able to change direction because there’s just so much mass and so much momentum going in a certain direction. And I think that’s a challenge that very, very large companies have to figure out, even if there’s somebody who sees what needs to be done and recognizes this is the change we need to make, getting the entire organization shifted is a time consuming process and the world is moving so quickly that that is probably one of the most consistent challenges I see across companies.
Ned Hayes [00:23:50] You know, I started reading your book last week and I really enjoyed the way you brought your own personal anecdotes and your family into the stories you were telling about business. And I think a lot of people are beginning to really kind of meld together their work life and their life outside of work. Was that your experience during the last few years kind of finding a different balance?
Howard Tiersky [00:24:09] Yeah, well, you know, it’s interesting. We have had a very flexible work arrangement that my company since we started pretty nearly and more so over time, so long before COVID, the 100 or so people who work with my company have had very flexible work arrangements. We have offices. We have a great, amazing innovation center in New York City, for example, and have had offices in Orlando in a number of other countries. But, you know, we generally, with the exception of certain roles, have not asked people to show up to the office every day. That wasn’t really the mindset for meetings. Yes, you know, we need to have a collaboration session. We’re all going to work together on a given day. Absolutely. But otherwise, sometimes you need to be the client. Sometimes, you know, you can come to the office and work. That’s fine. Work from home if that’s best for what’s going to enable you to be productive. There’s a principle in Agile which is watch the work, not the worker. And I think that’s that’s really good advice. You need to hire people that you. Trust and you will perform. Then you’re better off letting them have the flexibility to mix life and work in the way that works best for them. And I think that’s been a real differentiator for us in the talent marketplace up until the last couple of years when that was somewhat unique about how we operated. It became very much less unique when the COVID hit and everybody started doing it. So we were like, Okay, well, that’s great. Unfortunately, we lost one of our talent differentiators. But I think that everybody else learned what we and obviously other companies had already learned, which is that people can work very, very effectively most of the time remotely. And the need for everyone to schlep into an office every day is really antiquated with this, with some exceptions. Of course, if you’re a dentist, probably need to go to the office every day. But the type of work that we do now.
Ned Hayes [00:25:44] I heartily agree with you. I mean, we’ve learned that productivity can happen anywhere.
Ashley Coates [00:25:48] Speaking of these businesses having to find new ways to survive and thrive, well, I’m curious which sectors of business you think have most successfully navigated the last few years, and why have they been successful?
Howard Tiersky [00:26:02] Well, different sectors have had different levels of challenge these last few years. For example, the travel industry has been most decimated by COVID. And so they’ve had a great challenge with massive, massive reductions in their demand. And now as they’ve come back, we do a lot of work in rental car, for example. Now the demand for rental car is back. The cars aren’t available because of the supply chain issue. So I think that the travel industry, we really need to tip our hats to so many companies that have managed to continue to survive, whether it’s hotel chains, cruise lines, airlines and are still there for us despite just unbelievably harrowing several years of economic disaster. Then I think you have other industries that have the opposite problem in health care, in the production of certain home products, you know, whether it’s home exercise equipment or the things that we were consuming even more than before because we were home so much. And some industries, it’s been very interesting to me. There are some industries like we do work in the fashion industry working on apps to help companies that do HVAC installation. And the HVAC industry saw a huge surge because people were home more and they were home in the middle of the day. And so people who had maybe an older air conditioning unit, that they sort of tolerated the fact that it couldn’t quite keep up. But the hottest part of the day, the middle of the day, they weren’t home anyway. And now all of a sudden they were home all day. And it was really a problem. And so, you know, these sort of unintended consequences of like I remember I mentioned Foot Locker before I was talking to president of Footlocker is a while ago, maybe a year, year and a half ago by COVID. And he was saying that they’re seeing the sale of sweatpants go through the roof, but not so much the sweat tops, you know, like bifurcated apparel, right? Where everyone’s wearing, like, sweat pants and like work shirts and they can see it and their inventory and their inventory planning. So it’s kind of like, you know, how many people are smart enough that when we first heard that, you know, there was this Wuhan wet market in Kobe that had escaped or however it happened, someone said, we need we need to make more sweat pants. Or someone else was telling me, orthodontics. There’s been a huge surge in adult orthodontics because people who had tooth problems, you know, maybe they didn’t wear their retainer from when they were a kid and their teeth had shifted, but they didn’t want to walk around, go to work and have their lawyer go to court with braces on. They all of a sudden said, oh, you know, here’s my chance. You know, I’m going to be home for the next year or whatever else. Now’s the time to get braces. And all of a sudden, you know, it was great for orthodontia. So there were all these sort of interesting, sort of difficult to predict correlations between COVID, both harming businesses and helping businesses. And I think with that, in terms of specific businesses that have done well, you see it all over the place. I think so many retailers who have figured out how to quickly implement buy online pickup in the store, buy online pick up curbside is very impressive. All the retailers that have figured out how to create more contactless interactions in the store are restaurants who, you know, so many didn’t offer any kind of delivery service who very quickly teamed with the Ubereats and the Instacart or, you know, Seamless and others so that they could get food to people, not just so that they could keep making money, but so that they could serve people and serve this need. And then, you know, the one I think we have to acknowledge most above all is Zoom, who obviously was a leader. We’re using Zoom right now. So if you’re listening, Zoom, good job because it’s amazing that that’s a technology platform that had to scale up like more than 100 acts over a period of just a number of weeks. And it’s a testament both to the scalability of Zoom to their teams and also to the cloud based world that we live in today. Because if it were ten years ago, I think that would have been impossible because Zoom could never have built 100 more data centers. But running on and I don’t actually know, I think they’re running on a website, but I’m not 100% sure. But running on today’s cloud infrastructures, whether it’s Azure or AWP or Google Cloud or any of these others, the ability for a business to be able to very, very rapidly five X, ten X or 100 x, the scale of their digital operations, if it’s architected correctly, is is tremendous. And of course, Zoom did that with. Just very, very little hiccuping. And that’s just a tremendous, huge public service, I’m sure. Very good for their business. But it was a huge public service for education, for health care, for business, for all of us.
Ned Hayes [00:30:08] Right. Totally agree. And one of the big surprises that I’ve seen during COVID is how resilient retailers were. Retailers really bounce back. And your book actually opens with an anecdote about the demise of Toys R US and the rise of Amazon. Could you tell us more about any surprises that you’ve seen in the retail sector during COVID?
Howard Tiersky [00:30:28] There’s a lot of ways that retailers bounced back and dealt with it. I mean, one of the things that I also saw retailers do really well is figure out how to leverage store inventory. There were a lot of retailers that had an online operation and then they had the retail operations, but they were fulfilling their online orders through warehouses, building centers, and then they would send inventory to the stores. Many stores hadn’t gotten to the point of being able to leverage their in-store inventory for online orders, and all of a sudden they find themselves in a situation where, first of all, supply chains were disrupted, so they couldn’t necessarily replenish the warehouses. And second of all, they had inventory in the stores and the stores were closed. Now, of course, we’re talking about the earlier period of COVID. And so a lot of retailers had to do a lot of quick work to figure out how to modify inventory systems, you know, spit and baling wire or whatever it took to be able to leverage that inventory. And a lot of retailers did a really good job of that.
Ashley Coates [00:31:19] We’re really intrigued by the idea that every store, even Starbucks and McDonald’s, all started as one small store in one neighborhood. It was one person’s dream to build this business. And some of these took off into many, many locations. So curious, what retail dreams do you see as interesting as we move forward? Other retail dreams?
Howard Tiersky [00:31:40] I think that the retail has to figure out how to create experiences that are worth the trip. You know, I love we’ve just had I’m always been a big fan of Mall of America and the ambition there of helping retailers create retail experiences, which really are fantastic experiences, not just kind of shelves of merchandise and cashiers. And we now have American Dream, which is opened here in the New Jersey area, which is owned by the same organization that has Mall of America and, you know, creating retail experiences, first of all, which are, you know, in these multipurpose environments where you have great dining, you have great entertainment options and things like that’s a beautiful environment, a place to walk around. They have concerts and other things, so you really want to go there. And secondly, where the individual retailers have created a more special experience because that’s the that’s what has to be done to compete with online. There’s many benefits to getting people to your store, but it has to be you know, in the old days, it was all, you know, location, location, location. You know, if I want a hammer, then I’ve got one or two hardware stores around me and I’ve got to drive to one of them. And you know, if all they have our shelves full of tools and a place to pay. Well, their main benefit was inventory local to where I was. But obviously that world has shifted so much, except in the case of the need for immediate gratification. I can order that from Amazon and even that and you know, get it so quickly. Amazon, of course, as you know, keeps shortening their delivery window from two days to one day to same day. And more and more of their SKUs are available with shorter and shorter delivery windows. And so you really have to be able to justify why should someone get in the car and come to your retail experience? And, you know, my retail dream is, you know, you asked about Toys R US when I grew up. I grew up in Chicago. And I remember when Toys R US came to Chicago and they had these commercials on television saying Toys R US is here. And in the commercial, the Toys R US store was shown as a castle. I don’t know if you guys ever saw these old commercials. Right. And the kids would go over the drawbridge into the castle. And then there were, you know, Geoffrey the giraffe and all these other figures, giant. It was like Disney World, you know, and everyone’s kids were riding around on roller coasters near you. And, you know, it was this unbelievably magical experience shown in the commercial. And of course, I nag my parents. You must take me to Toys R US. I must see this amazing place. You know they take me in. Of course. What do I find? It’s not a castle, right? And there’s not giant giraffes walking around. There’s signs with pictures of giraffes. Quite the same thing now, is it? You know, and there’s shelves full of toys. And of course, as a kid, I was happy to see shelves full of toys, but it wasn’t the vision. Now, Toys R US many, many years later created their flagship store in Times Square with a giant Ferris wheel and a huge candy store and a walk in dollhouse. There’s clearly been this vision and it’s this is I’m just using twice as an example. But but any retailer has somewhere within their organization the vision of the store that they really want to be, the experience that they really want to give customers, the challenges of thin retail margins. It’s tough to make money if you get too fancy. And so the pressure winds up being to cut these visions of wonderful experiences down to shelves, merchandise, checkout, you know, and that model, that math just doesn’t work that well in a world where there are just more convenient ways of getting merchandise to your home other than having to drive to the mall park. We can wait in line, etc.. And so I think that, you know, I would I would suggest every retailer needs to be doing is dreaming. What is the experience at doing research as well to understand what is the experience that would make that customer love going to that store? And of course, we see stores that are doing this Lululemon, the Apple Store, the Amazon Ghost Stores, which allow you to walk out without having to to check out and removing that point of pain. So I think retail innovation is more important than ever because retailers have to figure out if they want to continue to have a physical presence and not having one is a viable option as well. You can be successful, which obviously like Amazon, despite having limited number of physical stores, is obviously getting 99% of the revenue from from online. That’s a viable choice. But if you want to be a physical retailer, and I think there’s absolutely a place in the world for that, then you have to be more innovative than the old days where you could just put a store in a place where people needed what you were stocking and rely on simply convenience.
Ashley Coates [00:35:55] Yeah, I think we’ve seen that the in-store experience has really become more important than ever, as you said earlier, to make it worth coming into the store. Another couple of things we’ve seen be more important than ever in retail are engaging customers and building customer loyalty. Has that been your experience in the business world as well?
Howard Tiersky [00:36:14] Yeah, you know, I think customer loyalty is hugely important. I think one of the problems we have and the retail industry has this as much as any industry is, what do we mean by loyalty? What so many retailers have done is said, well, we need more loyalty, so I guess we need a loyalty program. And the problem is that loyalty programs don’t really create loyalty. If by loyalty you mean a feeling, if by loyalty, you mean a dedication, a commitment to that brand, to that store, an emotional connection. Loyalty programs, by and large, are essentially a kind of a discounting program, typically, right. You know, by five guests get the 6 to 1 free or earn points, cash back, those types of things. And, you know, there’s nothing wrong inherently with that, but it just gets confusing because if you think, well, that kind of loyalty program, that type of quote unquote loyalty program may generate more repeated transactions from that customer, just like a sale generates more transactions, but it doesn’t necessarily create emotion. And so we have a little bit of an overloaded term when we use the term loyalty in business. And I think that that’s why when I like to talk about customer love, only because that term loyalty is sort of been taken by this other goal of generating repeat transactions. But I think separate from that, businesses need to be thinking about how can they be a brand that people are really committed to? You know, one of my daughters was talking the other day about Walgreen. She loves Walgreens. I was trying to figure out what it is she loves about Walgreens. And I have to tell you, I’m still not sure I understand. But she said to me, you know, when she walks into a CVS, she’s like, oh, I want to be a Walgreens. You know, she’ll drive far there to go to Walgreens and CVS. Now, frankly, I to me, they’re like same. So I don’t I don’t have whatever whatever it is about her as a customer persona is different enough for me that whatever Walgreens is doing that’s lured her and I’ve been immune to it. But that kind of connection, that kind of sense of, no, this is my store, this is where I go and I drive a little farther to get to it if need be. This is my kind of place. That’s what brands should be striving for first and foremost. And I think many are. But it can be tricky to figure that out. And in the book I show a model. Actually, we’ve tried to reverse engineer. What is it that creates that feeling of, I’ll call it customer love, that the strong emotional connection. And we talk in the book about kind of three things that create that sort of inspire that feeling, if you will. So if companies are trying to figure out how can we get customers to be more emotionally connected to our brand? There’s some tips in the book about how to do that.
Ned Hayes [00:38:48] Well, most great business books like yours tap into a moment in business history and describe what’s there and describe how to continue to improve it. So if we could ask you to think ahead 5 to 10 years and you were writing another book, what do you think your next book is going to be about?
Howard Tiersky [00:39:03] I don’t think it’ll be 5 to 10 years. I actually am writing my next book right now. It’s called Digital Humanity. And what it’s about is human versus digital interactions and how to figure out as a business where you want to try to drive people to digital self-service versus not how to make your digital interactions more human. There’s a lot of research that shows that that customers want more humanity in their digital interactions and how to make your human interactions more human through the application of digital. Because there are plenty of human interactions that aren’t infused with a lot of humanity. Like, for example, when we go to the DMV and there’s a lot of ways that digital technology can help associates in stores or other employees at companies create more a more sense of humanity in their interactions with customers. So that whole topic is what I’m writing about now.
Ashley Coates [00:39:52] Very exciting. Well, please let us know when that book publishes. We’ll make sure to put a plug out there. Only have one final question for you, Howard, which is what is your legacy? What would you like to be remembered for?
Howard Tiersky [00:40:05] Well, all I can think is that my children are my legacy. I have five children. My oldest is graduating college next year. My youngest is going into fourth grade. And if something was going to be my legacy, if I had to pick, I would pick them over anything I do in business. But in business, you know, I mean, listen, I think I’m just another person out there talking about things that a lot of other people are also passionately advocating. But the thing that my mission is helping great brands understand their customers better so they can serve them better. And my hope is that if I look at the work that that we do every day at my company, we’re helping stranded motorists on the side of the road, get themselves rescued faster. Through our work with Triple A, we’re helping people who are trying to find Medicare supplement plans for their parents who may need Medicare plans or for themselves if they’re elderly. Do I work with CP one? We’re working with a Transamerica, trying to make the retirement planning experience better, you know? My goal is that the work that we do is touching people’s lives and and using digital as a force for good. And I think that we we hear a lot of stuff about all the bad things that digital does to us. Kids have too much screen time. Social media is destroying our society. And I’m sure there’s truth in all of those things. But my belief is that net net that the digital world that we’re in is much more of a force for good than something destructive. And, you know, my hope is that my legacy will of I’ve just played a role in helping leverage and utilize digital as a force for good.
Ned Hayes [00:41:27] Well, thank you so much for your time today. Great discussion. Really appreciate your insights.
Howard Tiersky [00:41:31] Oh, my pleasure. Great to be with you guys.
Ned Hayes [00:41:34] Spark Plug is a wholly owned property of Snowshoe. All content and copyright 2021 Sparkplug Media.