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Posted by Sucharita Mulpuru on February 2, 2012
I received a curious email from one of the founders of eBags the other day. In it, he said that by bringing customer service back to the US and away from an offshore vendor, the company actually reduced customer service costs by 34% (yes, reduced!) while still growing sales by double digits in Q4. It reminded me of another article not too long ago from the Wall Street Journal that cited Qantas as having one of the world’s best check-in experiences because the airline invested in RFID tags for passengers, a decision that the article pointed out no other airline has yet copied. These examples stood out to me because these companies managed to pull off a very difficult trick: to make contrarian investments that industry peers would consider hogwash that nonetheless pay off in spades. It’s more likely that such investments would backfire, but when they work, they succeed beautifully. Three cases in point:
I certainly don’t want to overstate the ease of making these contrarian investments; they’re darn hard to execute. The change needs to matter to customers. And it needs to be executed well. The announcement last week by Ron Johnson, the new CEO of JCPenney to revamp the stores, falls into a decision that is certainly bold and gutsy. The questions that remain are, will customers care, especially since most of the stores are not situated in great malls worth visiting, and will they execute well. Brands like Apple, Williams-Sonoma or even Abercrombie have an advantage in that they have products that attract passionate store associates.
Do you have an example of a company that executed an expensive change really well, or that executed the wrong change and bombed? Share with us your thoughts.