A bear market
(2003) The retail industry is lost in the woods.
Montgomery Ward, inventor of the mail-order catalog, retail visionary and inventor of the catchphrase "satisfaction guaranteed or your money back," filed for bankruptcy and closed for good. Born in 1872, it died in 2000.
Kmart, pioneer of discount retailing that began life as Kresge's, filed for bankruptcy in 2002 and announced it was closing 284 of its 2,114 stores. More than 22,000 employees would be fired. Born in 1899, Kmart was on life support in May 2002.
In this gloomy market, what's a retailer to do?
Maxine Clark has a pretty good idea. In 1997, she founded Build-A-Bear Workshop, a St. Louis-based retailer of stuffed animals. Thanks to a memorable store experience that fuels a nearly 50 percent word-of-mouth referral rate, Build-A-Bear Workshop is exceeding all traditional retail store growth benchmarks thanks to its legion of mostly young customer evangelists.
In four years, Build-A-Bear Workshop has grown to 75 stores and over $100 million in revenues. The company spends next to nothing on advertising to drive this revenue -- it relies primarily on its customers for growth.
Build-A-Bear Workshop creates customer evangelists because:
The company focuses on a memorable experience.
This is no Toys R Us. A Build-A-Bear Workshop store is an average of 3,000 square feet, about the size of the average Gap location. There are no chattering robots, toy guns or Barbies. Just dozens upon dozens of unstuffed animals ($10-$25) lining the brightly colored walls with a few hundred outfits ($3-$15) resembling teeny baby clothes, ready for outfitting.
Once a customer has decided on a favorite "skin," as the store associates call them, it's time to begin the 30-minute, life-giving process to their new creation. Working a store employee, customers stuff their own creations using a raucous stuffing machine, then give it an air "bath" with a good brushing, create a birth certificate and finally decide on some clothes.
Because customers are involved with creating their purchase, they remember it vividly and tell lots of other people about it.
"Every single one of our customers is engaged in the process of making Build-A-Bear Workshop more famous by telling someone about their experience," Clark says, adding that almost half of their new customers heard about the store from a friend or family member.
Part of the Build-A-Bear Workshop experience is the attention paid to product details, especially accessories. Sneakers have real treads. The "bear binoculars" really magnify distant objects. Pockets and purses are sewn to hold additional accessories. Instead of a traditional shopping bag, customers tote their purchases in a "cub condo," a house-shaped box whose inspiration was the bagel container from Einstein's bagels. Every thing and every process has a name, usually derived from "bear." The company is a universe of puns.
When asked what the big, nuts-and-bolts retailers can learn from her fast-growing success with Build-A-Bear Workshop, Clark says, "I don't care whether you make screws or sell screws, or you sell clothing, there's nothing a store can't do to improve its business. They can use more entertainment techniques, which are sitting right there in front of them. They just don't use them."
Customer feedback drives the business.
Since Build-A-Bear Workshop's primary audience is email-savvy, the company relies heavily on electronic communications. So, Clark's email inbox fills up with 4,000 notes per month, most of them from customers.
Those voices have created "99 percent" of the company's new products, Clark says. Some customer suggestions: add a black Labrador as a product. The company did. In its first six months, it sold 100,000 units. The company had already been offering shoes to go with each animal. Why not add socks, a customer suggested. Shortly thereafter, the company did. Another customer suggested party rooms for birthdays and get-togethers, which the company began to offer in selected stores in 2002.
Clark says every email writer receives a personal response from her or one of the company's executive team. Responding to customer email is not a bear, she says. In fact, she recommends that every executive team in the world do the same.
"I would absolutely recommend it 100 percent," she says. "I've had people tell me they think it's low-level, that they have a person who gets paid to do that. This is my monster. I go through life telling people this because I know I have not been listened to. I think companies have such bad habits from having secretaries read letters and handle customer problems."
Clark stays close to customers with a "Cub Advisory Board," a group of 20 boys and girls 8-17 years old who review new products and suggest additional ones. It meets with Clark and her team 3-4 times per year.
"They are fearless and honest," she says. "If they approve of something, we are pretty certain to have a winner."
(Excerpted from "Creating Customer Evangelists".)
