Having a customer conversation with Tesco

July 13th 2012

The influence of the modern supermarket on our daily lives is remarkably powerful. We take the big five for granted, rarely questioning  their hold  on how we shop, eat and behave.  Occasionally, we get very worked up about their part in the ruination of the local High St, or the damage they do as they squeeze the life blood out of local suppliers.  It’s trickier to justify this anger though, when they calmly tell us that what they do is designed to improve the customer experience and keep prices low.
So it’s no wonder they hold sway, when the deal is they rule the roost and we in turn acquiesce, only so we can walk into a clean store 24 hours a day and buy a range of food, healthy or otherwise. Personally, I have to own up to describing the whole food shopping experience as Sainsbores.  (No offence Sainsburys!)

While I am not a regular visitor to Tesco, I have always been interested in how Sir Terry Leahy pushed the posh boys out of the way (Sainbury’s and Marks and Sparks) and headed to the top.  I was therefore interested to read his new book Management in 10 Words. How would he describe the business methodology of growing a retail business to number one in the world?

For starters, I was surprised by his use of warm words – such as loyalty, culture and values. You would think Tesco was set up to save the world, not sell crisps. However, he is clearly a Tesco man, through and through. Passionate and obsessive leaders all have that in common. I met someone who works in Compliance at Barclays last year, and I asked her what was Bob Diamond really like?  She said he really seemed to be a Barclays man. He also talked about culture and values, as you will have read in my last two blogs.  In his own words:

Strong values underpin successful businesses.  They give managers a sheet anchor, something that holds their position and keeps them from being smashed on the rock when caught in a storm. Values govern how a business behaves, what it sees as important, what it does when faced with a problem.” (P 109)

Leahy was clearly a man with a big vision and a habit of doing things quickly. He says that intention is never enough and plans mean nothing if they are not effectively enacted.   He commented on his time at the Co-Op, at being frustrated by the length of time the democratic management processes took to make decisions. I am sure many others recognise the danger and destruction that slow and complex, unclear decision making can wreak on a business – especially one with growth ambitions.

Interestingly, we have introduced a decision-making model at LEYF known as ‘RAPIDs’ (courtesy of the excellent work from our SBT partners Bain & Company) to ensure speedier decisions.  It is something that also affects a culture; we want a culture of speed and intelligent response, not processes that actually work against the success of the business.

For me, the main thrust of Terry Leahy’s book was that it was all about the customer. You need to understand your customers and give them what they want.  It’s the only way to get loyalty, which in turn means a steady stream of income. For him, the Clubcard was key to his success, because it gave Tesco more direct access to customer’s data and better ways to talk to them.  The customer conversation became critical to the culture of the new Tesco, and meant they could provide the right products in the right places at the right price. It’s certainly the key lesson I have learnt from his book.

Whether you have read the book or not, what are your thoughts on the importance of  the customer experience? Is the customer always right? And what’s the best way to learn from them. Let me know below.