For Insight Into Why a Company Might Be Failing, Look Beyond the Numbers

Staples Year-over-year losses

It never ceases to amaze me that when a business begins to fail, its leaders inevitably turn to the numbers. Don’t get me wrong: Numbers are certainly important. But focus too much on them, and you’ll be doomed to follow in the footsteps of the likes of Sears and other giants of yesteryear. It’s no secret that the recent pandemic and its lingering economic impacts have left their collective imprints on people and businesses far and wide. Unfortunately, the repercussions for some businesses have been incredibly detrimental, and many are grappling with a suddenly uncertain future.

Now that the pandemic’s upheaval has stabilized, one would think these businesses should see a financial turnaround, and yet they continue to struggle. If it’s not the global pandemic, then what is to blame? According to the headlines, it’s all down to supply chain issues and a lack of employees—but as I recently discussed, this explanation misses the mark. A more accurate assessment would be that these organizations’ leadership teams are focusing too much on spreadsheets, analytics, and calculators, and they’re missing the fundamental levers that could truly make or break their businesses.

Take, for example, a recent experience I had at Staples. Although the search for a single office chair may not seem at first glance like fertile ground for an evaluation of a massive global business, it does reveal the missteps and missed opportunities that can and will sink companies of any size.

When a Retail Giant Can’t—or Won’t—Help

My current office chair had begun to show its age over the past few months, and as the resulting back pain neared constant, I began the search for a replacement. Knowing that chairs come in various shapes and sizes, I thought it would be more effective to shop in-person than online. I headed to my local office supply store, Staples, to see what they had available. Unfortunately, the options were not only limited but also missing some of the most advertised models touted as the “new” ergonomic solutions for comfort and back pain relief. This was disappointing, as I would have preferred to experience these apparently great new options before making a purchase. However, all was not lost: After trying all available floor models, I did find a particularly comfortable option that also happened to be on sale, a nice bonus. Unfortunately, it developed that that model was completely sold out at that location. No problem, I thought; I’ll just buy it online.

When I went to make my purchase online, I discovered that the sale price I’d seen in store was not reflected there. I surfaced this discrepancy to a Staples associate via online chat and was informed that the Staples website does not honor in-store discounts. In order to receive the discount, I would have to make my way back to the store and order the out-of-stock chair from a kiosk on the premises. Evidently there was no alternative other than driving back to the store I knew did not in fact have the item I wanted.

Ultimately, I decided the discount was not worth the extra trip, especially since my purchase total qualified for free shipping online and proceeded to make my purchase via the Staples website. However, did my order really qualify for free shipping? Nope. they played the hat that informercials delt us all for decades… “Handling Fees”. After the chair was in the cart and I was ready to check out, they clearly showcased that my order qualified for “free shipping” and then quietly snuck in a handling fee of $12.75…Yet, the poor experience hasn’t stopped with the online purchase. Shortly after, Staples began to send a barrage of daily emails, sometimes up to two a day, with offers to buy more things and “rewards” which expire in mere days of being received; not one email providing any real value.

This experience with Staples led me to wonder how the company has been performing recently. I can’t say I was surprised to find a year-over-year decline in revenue, which showed 2021 ending at just half the numbers the company had posted four years prior.  Here’s the thing: The customer experience is everything for a business. Forget the accounting, forget the spreadsheets, forget the analytics, and forget the excuses—it is customer experience that wins the battle at the end of the day. Amazon is out there eating everyone else’s lunch, as businesses like Staples will readily complain, but the reality is that Amazon wouldn’t have such dominance if other companies simply spent more time focused on their own customer experience.

Let’s break down the lessons we can learn from the Staples customer experience:

  • Selection – I started with Staples over Amazon primarily because I wanted to see the product in person, a clear advantage of a brick-and-mortar store. Yet even in this area in which Staples should have had a leg up, they fell short by stocking the same floor models they’ve been selling for years and overlooking the newer, more ergonomic models advertised other places. Had I been set on one of those newer models, Staples would have lost the sale simply by failing to showcase the latest and greatest options.
  • Inventory – Another clear advantage of a retail store is the ability to hold stock in a location and provide instant access. This was another opportunity that Staples missed to capitalize on elements of the customer experience that set it apart from Amazon. Many shoppers will never even make it to a retail store’s online presence; they’ll skip directly to Amazon. Companies like Staples need to invest in the differentiators, because once the battle for the sale moves online, it’s most likely lost.
  • Inconsistent Pricing – In this day and age, there is no excuse for in-store and online pricing to differ. With Amazon and other outlets just a few clicks away, the failure to offer a sale price online gives customers every reason to go somewhere else for the same item at a lower cost.
  • Failing to Meet the Customer Where They Are – If a customer has already made their way to your website, you should be prepared to make the sale there. Likewise, if a customer has already made their way to your store, you should be prepared to close the deal on site. Instructing an online customer to go in to a store just to receive a discount, particularly when you know they had just come from the store, just screams “Amazon, Best Buy, anyone, please take our customer, because we certainly don’t care.”
  • Bait and Switch – Sneaking in a “handling fee” that takes the place of the “free shipping” smacks of infomercial trickery. Amazon, Best Buy, and other major retailers that are seeing success don’t attempt to sneak in fees like this. Appearing to take advantage of your customers encourages them to stop and look elsewhere.
  • Marketing Spam – The deluge of marketing emails from Staples added insult to the injury of the subpar customer experience. Emails like this should provide true value to the customers—and value that does not expire before it can reasonably be used.
  • Precluding Future Sales – This may not have been apparent to the representatives I connected with at Staples, but the fact is that I am an owner of a growing small business, one that has plenty of need for office supplies and equipment. This purchase alone is just the tip of the iceberg when it comes to the profit that I as a customer might represent for the company, and the same could be true of anyone else who walks through the doors. Amazon makes it extremely easy to make both personal and business purchases, and my recent Staples experience did not even come close to compelling me to change suppliers. There’s no incentive to shop online with Staples if I know that I won’t receive the company’s best price there (and will be subject to hidden fees), and there’s no incentive to drive to the store if I know many items won’t be in stock anyway and I can shop Amazon’s vast selection from home. Perception is everything in business today, and you never know who you might be interacting with. Representatives should be trained to treat each customer as a potential goldmine, because each might be.

A single mishandled chair purchase may not seem groundbreaking, but you have to wonder, how many millions of potential Staples shoppers are out there, and how many of them have had similar experiences? Or worse, how many were met with disappointment in a Staples retail location and used their phones to make a purchase on Amazon instead, right then and there, from the Staples store? In almost every step of the buying process, Staples introduced needless friction that prompts a consumer to jump to a competitive platform. Following this experience, it was not hard to see why the company has shown year after year of declining sales.

As an analyst, this leads me to question when a Staples executive last attempted to purchase something from the company, either in-store or online. Have they tested their own customer experience? Have they visited the competition to do the same? I’m willing to bet they haven’t. Instead, they are focusing on cost reduction and calculator-driven tasks in a short-sighted attempt to impact the bottom line, falling into the same trap that led Sears to where they are today.

Although I am picking on Staples here, it’s far from the only company deserving of this criticism. As businesses of all shapes and sizes continue to struggle through these economic times, the ones that always prioritize an excellent customer experience, even while keeping an eye on the numbers, will be the ones that weather the storm and come out the other end.

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