Sacrificing Customer Service - Lessons from Home of Depot

What a wild few weeks we've had. It seems like the economic bad news just keeps coming. Bank failures, talk of a global recession, the economic bailout (or rescue depending on who you listen to). The whole mess makes you hesitate to pick up the newspaper or turn on CNN.

With all of the doom and gloom, it's only natural for employees to worry about their jobs and for business owners to worry about staying in business. But I have another fear that may seem trivial in comparison, but is very legitimate when considering the long-term prospects of any organization. My fear is that companies will panic and cut elements of their operations that made them successful in the first place. While cuts may be necessary, it's my hope that organizations will cut with a scalpel, not a chainsaw. And the one element that an organization should not allow to suffer is the customer experience.

Fortune Magazine recently had an article every business leader should read during these challenging times titled, Home Depot's Total Rehab. While the story doesn't focus on today's economy, it does provide a valuable lesson that is extremely relevant today. It tells the story of Home Depot, an organization that went from Wall Street darling to a shareholder and customer revolt resulting in the ugly ouster of CEO Bob Nardelli as the company lost its way. The main thrust of the article is that Home Depot's fall from grace was caused by cutting back on the quality of the customer experience by reducing the number and quality of employees on the store floor.

I well remember in past years going to Home Depot whenever I had a home project. The employees were amazing! They were easily accessible and unbelievably knowledgeable, which was important since I wasn't knowledgeable at all when it came to fixing things. I could ask any Home Depot employee for the most obscure repair part that I had little hope of ever finding, and not only would the employee take me to the part immediately, he or she would walk me through the installation of the part and invite me to call if I had any problems installing it. A trip to Home Depot was a pleasure.

But under Nardelli's leadership it all began to change. It was subtle at first, but the changes soon became glaring. It became harder to find anyone to help with a question, and once I did find someone, it was often apparent that I knew more than he did - which is scary to even think about. The stores started looking unkempt and employees became curt, sometimes rude. I made the switch to the new Lowes that opened closer to my house. After all, once a company's products become commoditized (a bag of nails is a bag of nails) price and convenience drive customer behavior. And besides, I found the Lowes employees to be friendlier and more knowledgeable.

Now, under the leadership of new CEO Frank Blake, Home Depot is putting its energy back into improving customer service. As you read the Fortune article, you'll see that they're betting on their customer service strategy to turn the operation around. And I hope it works. But they shouldn't be in this situation in the first place. They compromised the very thing that made them a star in the beginning; knowledgeable, helpful employees. And, as stated in the article, "once you destroy a strong service culture, it's difficult to get it back."

So, my hope is that during these challenging times companies will learn from the mistakes made by the Home Depots of the world. Now is the time to solidify customer relationships and differentiate your organization from those that are going into panic mode and sacrificing customer service. When the economy turns around, which it will, those organizations that sacrificed customer service will have to spend a lot of time, money, and effort to play catch up, and they may never succeed. Those organizations that sustained or increased the good will of their customers will be uniquely positioned to rule the market.