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The Economics of Customer Engagement

Business in Bloom

Jim McCann opened a flower shop in New York City in 1976 because he loved being a florist and wanted to connect with his neighbors. But it was his innovative spirit and openness to new ideas that catapulted his single shop into a multichannel, worldwide phenomenon. His was the first company to sell flowers nationally over the telephone, and it was also one of the first online retailers on AOL and Compuserv during the Internet’s beginnings.

These days McCann oversees 13 brands and 4,000 employees, along with a dealer network of thousands of global florists. In an exclusive interview with Customer Strategist, he shares his perspective on customer centricity, innovation, employee engagement, and more.

Customer Strategist: What do you think is the CEO’s role in creating and facilitating customer centricity?

Jim McCann: It depends on the CEO and the situation…. In our situation I am a florist that became a CEO. As a florist I have always been involved in helping our customers express themselves and connecting to people’s lives. [As a CEO, I’ve] been expanding the range of products we have to help our customers make connections and express themselves.

My job is to set a tone and create an atmosphere where people can understand what the priorities are and what their responsibilities are. So, for example, in our customer service training we don’t have a lot of rules, but we do have letters from our customers about how someone did something extraordinary to handle a situation. Our charge to employees is to treat the next customer in such a way that they will want to write a letter to me about how [an employee] handled things.

So for me as a CEO, and my other fellow CEOs, I believe that it is our job to help develop a mission for the company and help every single person who works with us. And for us to say, “This is what is important to us and these are the things we reward and celebrate.” It is setting a goal and mission as to how we want to behave.

CS: What is 1-800-Flowers.com’s approach to customer strategy and how has it evolved over time?

JM: One of the things that we have done early on is embrace new technologies because we are a company based on convenience. If we are as convenient as we can possibly be, we will be in a position to help our customers act on their thoughtfulness.

You may go though your day and have two or three occasions where you say, “I have to drop someone a note to say thank-you in a special way,” or recognize a birthday or new baby, etc. If we are available and as nearby as your telephone, your laptop, your local shop, or your mobile device, then you will be more likely to act. The more convenient we are and quick about what we do, the more people in our universe will express themselves and, I hope, have a richer, more beneficial life. That is why we have been making those investments in technology.

The other side of that coin is that I am trying to re-create my first shop on First Avenue in New York City 30 years ago. Back then I had a very personable relationship with about 30 of my best customers. They would stop by the shop, and maybe they would make a cup of coffee, pull up a chair, and chat with us while we worked. Maybe they would comment on the arrangements or make suggestions for new ones.

We are trying to do the exact same thing, only this time it is 30 million customers and we are trying to create those same intimate types of dialogues. The irony is that the only way you can be that personable with your customers today is by using technology.

So our job now frankly gets more interesting by using these new technologies. We have online catalogs for merchandising, customer advisory panels that talk to my brother [President Chris McCann], and other avenues for customers to suggest new products and processes. The same things we did informally 30 years ago we are now doing in a much more deliberate and practical way by using new technologies that are available to us all.

CS: Talking about customer centricity is one thing, but how does it impact your company’s bottom line?

JM: It is my job to push us to be one of the most customer-engaged companies. We have blurred the line of where a customer begins and ends and where a staff person begins and ends. Our staff are customers and often our customers are staff. In the environment we exist in today there is no more curtain; it is ripped off the wall and our customers are interacting with us.

Two of the best products we debuted in the past two years were both introduced by customers. One is the Happy Hour collection of margarita glasses filled with flowers. A customer in Ohio wrote to me and sent me pictures of the idea, explaining she was trying an arrangement for an upcoming event. We ran with the idea and it is the single most successful product that has ever been introduced in the floral category. When the Happy Hour product debuted, some customers said they wanted a lower-price option, so we introduced a “mini” version of the Happy Hour arrangement, and that is also hugely successful. Both ideas come from very direct interactions with our customers. Technology allows us to have those ongoing personal dialogues, and it’s nice because you can extend your merchandising staff by another 30 million folks.

CS: You have said that 1-800-Flowers.com is built on the philosophy that long-term success comes from cultivating loyalty. How is that philosophy baked into your company’s everyday operations?

JM: One of the things that my brother Chris has championed in the past year has been pressing everyone to ask “Who are your customers?” It is all about taking it back to the intimate relationship we had 30 years ago when we had our one flower shop. Knowing customers by name is one of the rallying cries to our employees, so over the past 18 months my brother has focused on doing research and focus groups with customers to develop customer personas. Who are the five customer groups that are most likely to be your customers? Then we name them and picture them. We make sure that everyone in each of our brands understands who our customers are, and what his and her names are.

It has been a very interesting exercise because it allows us to put a name and a face on the people we serve. Each brand may have a different type of name and a different type of customer profile but everyone, regardless of if they work in the warehouse, on the telephone, or in IT, understands who our key customers are and what our customers are looking for. Our services have brought it back to being as personal as it was 30 years ago.

In terms of loyalty there are the obvious programs: points, etc. But the best thing to do is to invest in a dialogue with customers and let them see that you are really interested in understanding their needs and that you are changing and molding to fit their needs.

Chris just wrote to about 100 of our best customers offering to have a dialogue with them on a regular basis. I think 58 wrote back within two days saying that they would like to be involved. Fifty-eight people out of 100 is extraordinary.