Upon learning that the J.C. Penney board of directors had ousted its CEO, Ron Johnson, I have to say, I was not surprised. In his 16-month attempt to reinvent the longstanding retail giant, things did not go well. For the fiscal year, the company lost $985 million.
Johnson’s playbook included the elimination of all coupons, transitioning to a steadier but supposedly lower pricing structure, and installing specialty brand stores. The strategy was rather bold and risky. I am not saying strategies should never be bold and risky. In most cases, by definition, they have to be. Nevertheless, not every bold and risky strategy guarantees success.
Beyond all the strategic analysis, I just wish Johnson had consulted with my wife first. As I recall, she came home one day after a shopping excursion and flatly declared, “I’m not happy with what’s happening at J.C. Penney.” That was when I knew for sure the company was in trouble.
You see, Kathy was one of J.C. Penney’s average loyal customers. Not anymore. When the customer experience for Kathy changed, that alone told me more than all the business and strategy analysis in the world could have told me. It well illustrates a fundamentally important point for all businesses. If you disappoint or alienate your regular customers, that will be your undoing.
Yes, I will admit, Kathy is pretty special to me. I realize J.C. Penney may not feel the same way I do. J.C. Penney may consider Kathy to be just another average customer—no one special. In a sense, I understand J.C. Penney’s perspective; Kathy is just another average customer. But therein lies J.C. Penney’s mistake. Kathy genuinely is someone special. She is someone special because she had a customer experience that portended an ominous message. J.C. Penney somehow missed that.
Every business will miss that unless they understand how special all the “Kathys” are.