In an effort to innovate, J.C. Penney alienated. Customers left in droves, and the retailer taught other businesses valuable lessons in the customer experience.
To the company’s credit, it wanted to modernize and appeal to a larger audience — both fair and understandable business goals. But when the century-old retailer redesigned its stores, pricing schemes and promotions, the experience turned off many of its loyal customers — to the tune of a 25% sales loss in one year.
What you can do better
Here are three of J.C. Penney’s biggest mistakes – and how you can avoid them:
- Stopped promotions in exchange for 24/7 lower prices. Customers were used to J.C. Penney’s pricing model: The store would offer lots of sales around the holidays, as well as end-of-season discounts. Then the store’s leaders decided to do away with the promotion-heavy model for one that just offered the lowest possible price all the time — no advertised deals or discounts. But that struck customers the wrong way. The lack of promotions and discount offers made customers think they were paying more — when they were actually paying less. To avoid this: If you’re going to change your pricing, make sure customers understand how it works before you roll it out.
- Mixed it up (too much). J.C. Penney dropped some of its tried-and-true products to make way for a new selection. So customers who loved those products dropped J.C. Penney because they were confused — and their tastes weren’t going to change just because the store did. To avoid this: Roll in new products while customers still have the option to buy those they know best. Introduce them to new products and services and let them experience them as a trial first.
- Took on too much risk. Change is risky, so many business leaders take it on in phases. J.C. Penney didn’t just change a department or apparel line. It changed entire stores and every line. That overwhelmed customers. To avoid this: Notify customers of big changes ahead of time. Invite them to be part of the process by asking for their feedback before you roll out anything new and shiny. And roll out changes in small waves, not one tsunami.
