Old is New Again: Ten Lessons from the Retail Trenches

Michael J. Coles is a business executive, serial entrepreneur, education advocate, well-known public speaker, and the namesake of the Coles College of Business at Kennesaw State University. After almost two decades in the clothing business, he cofounded Great American Cookies in Atlanta in 1977 and built it into a multi-million dollar company and later served as CEO of Caribou Coffee. His new book, Time to Get Tough: How Cookies, Coffee and A Crash Led to Success in Business and Life, published by University of Georgia Press, offers practical tips for retail, whether you are selling books, clothing, or coffee.

1. A customer-centric equation will transform and sustain your business. While at Caribou Coffee, I created an equation that made me a success:  P + E + S = Ef (Product + Environment + Service = the Experience factor). This stood for Product + Environment + Service = the Experience factor. I had not taken algebra since high school, but I knew that if you changed any variable in an equation, the result will not be the same. I explained it to my team in this way: If you serve a great product, offer warm and friendly customer service, and have dirty counters or restrooms, you are not offering a superior customer experience. If you have a clean store, a great product, and terrible service, again your equation will yield an inferior result. If this happens with new customers, they will not come back. Existing customers might be more forgiving, but if the problems persist, they will stop coming as well. All three elements are critical—skimping on any one of them undermines the experience factor. Make sure the equation is working in every store, with every transaction.
2. In the digital age, customers respond to, respect, and remember the personal touch. Technology is one of the most effective ways to reach customers, and if used wisely, it can replicate the warmth of face-to-face contact that has defined exemplary customer service over the past century. The companies that have used technology in thoughtful and creative ways to serve their customers will continue to thrive in the digital marketplace.
3.  Hire and train well. The employee who cares only about getting paid tends not to pay attention to all the other things that help build customer satisfaction and loyalty. Once hired, train them well. For years we had trained our associates at Great American Cookies from behind the counter—showing them all the mechanics of how to make the cookies, handle the food safely, clean the store, ring up purchases. We realized that if you are only showing your employees the experience from one vantage point, you have a missed opportunity to serve your customer. So we put them on the other side of the counter as well, to let them understand the shopper's viewpoint. We wanted them to see what a good cookie looked like and what it was like to encounter a welcoming employee. We had each employee and trainee bake a batch of cookies, and we lined them up on the counter. Then we asked them all to pick the best batch—so they could see what was overbaked, underbaked, or, like in "Goldilocks and the Three Bears," just right. This, the training emphasized, was the cardinal rule: If you burn a batch of cookies, you throw them away. You do not worry more about food cost than about quality. No customer has a contract to come back—you have to make sure you sell the very best product you can.
4.  Trust your employees and give them the opportunity to do their best work for you. Few businesses invest in human capital in the way that they should, with professional development, opportunities for growth, and a meaningful reward system. Even fewer companies use the most important and cheapest tool in their arsenal—communication. The more you communicate to your associates and colleagues, the clearer the road map, and the more effective your company will be.
5.  Never take your customers for granted. One Saturday when I was working at Dorwins, a clothing shop in Miami Beach, the owner, Irving Settler, and I were closing after a particularly successful day. I turned to him and said, "These customers love us. We own them.” He shot back, "Kid, the minute you think you own any customer is the day you lose your business. Remember, there are fifty companies standing in the wings waiting to take your business from you. Never get cocky and think that you have a contract with a customer. They can always shop somewhere else if you don't give them the product and the price and the customer service they deserve."
6.  The biggest mistake most businesses make is keeping incompetent people far too long. If they are not working out, you have to either let them go or retrain and reassign them. I am fiercely loyal to my colleagues, but it is not good for the employee, the coworkers, or the company to keep an underperformer on the payroll without corrective action. I also learned from this experience that hiring and firing decisions in business really affect people's lives and should not be made casually.
7.  Have a clear mission and vision statement, and make sure your team is fully committed to it. If your associates cannot explain the importance of your company's mission and why it resonates with customers, you have some work to do. If you are leading a company and discover that there is nobody behind you, you are just out for a stroll.
8.  Find a mentor and take their advice. One of my first companies, Pant-O-Mine failed because I did not heed my mentor’s advice. Irving Settler had taught me as a teenager in Miami Beach to learn everything you can about your business. I was good at marketing and merchandising, but I did not pay enough attention to the bottom line, and the company had to file for Chapter 11 reorganization. I also realized that you have to honestly face the role you played in a crisis. Admitting failure requires digging deep to find strength that you may be surprised you have. I left Pant-O-Mine certain of one thing. If I ever went back into business for myself, I would make mistakes—probably a lot more of them—but I would never make the same mistake twice.
9.  Failure and crises are great teachers. When we opened our second Great American Cookie store, we expected to surpass the monthly sales for $15,000 at our first store. But in our first week at Greenbriar Mall, we did only $2,000 worth of business. We gave away samples beyond our lease line just as we did at Perimeter Mall. We had cookie cakes in the glass showcase. There was three times the foot traffic, but we had far fewer customers. What was happening? I had to find out fast, because we were doing the one thing a new business cannot afford—bleed money. The crisis at Greenbriar forced me to turn all of my attention to that store, and efficiency and customer service became the key to the company’s success.  
10. The most powerful thing I learned during my time at Caribou was not to rest on your laurels. Even if you deliver a great product and experience, do not assume it will age gracefully. Be prepared to test it, find its weak spots, and use that knowledge to improve it on a continuous basis. The four keys to success are information, innovation, implementation, and improvement. The last one is the one that most businesses forget. You have to constantly make your product, service, and environment better so your experience factor never gets stale.