The living brand

Excerpts from Creating the Living Brand 
Neeli Bendapudi and Venkat Bendapudi, in Harvard Business Review

Any company can deliver outstanding customer service - even convenience stores, where low pay and high turnover supposedly make service a problem.

• Even companies that position themselves for the mass market can provide outstanding customer–employee interactions and profit from them. Their secret? They consider employees their living brand and devote a great deal of time and energy to hiring and developing them so that they reflect the brand’s core values
• We studied the convenience store industry in depth for two years, in conjunction with the National Association of Convenience Stores, and conducted detailed case studies of two companies: QuikTrip (QT), a $4 billion privately held firm based in Tulsa, Oklahoma, that operates 462 stores in nine central, western, and southern states, and the $2.8 billion Wawa, a privately held company based in Wawa, Pennsylvania, that operates more than 500 stores in five eastern states. QT has been listed as one of Fortune’s 100 best places to work three years in a row; in 2005 it was ranked number 19. Turnover rates at QT and Wawa are 14% and 22% respectively, a small fraction of the triple-digit average turnover in the retail sector.
• Both companies routinely outperform the market. From 1977 through 2003, Wawa stock has grown at an average annual compounded rate of 17%, nearly twice that of the S&P 500. QT’s stock value has risen 19.2% in the past three-year period, more than four times the S&P’s rate.
• We uncovered six principles that both companies embrace to instill the brand and its meaning in their employees - and to create a strong culture of customer service. Both Wawa and QT demonstrate the power, even in minimum-wage businesses, of investment in employees to create a positive customer experience.

Six Lessons of the Living Brand

1. Know what you’re looking for

• Every organization must have a clear vision of the skills and characteristics it wants in its workforce, and have a plan for getting them. But few companies that hire in the mass market have the discipline to go about doing that rationally and systematically.
• A company must decide which skills and qualities can be taught and which must be hired. QT insists on hiring “nice” people who like people, because that’s a tough quality to teach; it’s either present or not. At Wawa, the must-have is passion, for work and life.
• QT puts applicants through a rigorous, structured process that includes a personality assessment based on the qualities of QT’s most successful performers. Interviewers probe for stories to complete the picture.
• Hiring decisions at QT aren’t left to store managers. Instead, managers in each of the company’s eight geographic divisions do all the recruiting and hiring for their regions.

2. Make the most of talent

• In mass-market retail environments, talent is generally viewed as a commodity, and employees are basically interchangeable. But that outlook becomes a self-fulfilling prophesy. Studies have repeatedly shown that people rise or stoop to the expectations set for them.
• Wawa and QT get more from their people because they expect more. One way they communicate expectations is through training. At QT, each new full-time employee is partnered with a personal trainer who has previously held the same position.
  
• Such investment in people continues well beyond the initial hire. Wawa encourages its people to pursue degrees in any field of study, and reimburses tuition at three colleges with which it has relationships. The emphasis on learning helps Wawa to be an employer of choice, even though its pay is on a par with other companies in its labor market.
• People perform at their best if they see a future for themselves at a company. Employees know they can have a career at QT, due to its strong culture of promoting from within.
  
• These companies ensure that employees have the support they need, both externally and internally, to do their jobs well. Wawa involves store managers, who have the best information on store operations, in improving the performance of vendors. The company takes the same hard-nosed approach to analyzing the quality of internal support processes such as marketing and human resources.

3. Create pride in the brand

• In retail, service is the manifestation of the brand, and service quality depends directly on employees’ attachment to the brand. QT and Wawa constantly and consciously invest in maintaining brands that employees can take pride in.
• Such is the attachment to Wawa brands that the company’s 1994 move to put Taco Bell and Pizza Hut outlets in more than 100 stores was met with opposition from customers and employees alike. In 1996, Wawa began to phase out the brands to make more room for Wawa products. The company openly discussed with associates the error of the earlier decision and acknowledged the value of employee input.

4. Build community

• While many convenience store chains have focused on speed of transactions and sales volume per store, Wawa and QT have made concerted efforts to build customer loyalty through a sense of community. Almost all the customers we interviewed mentioned employee friendliness as one of the reasons they come back to the stores.
  
• At both stores, customers remarked upon two things they believed were unique: The people who worked at the stores seemed to be glad to be there, and they seemed to like one another. The perceived sense of community among store associates appears to spill over into a sense of community with customers.
• At QT, the community feeling extends to the customer-service appraisal system and the reward structure. The emphasis is on the team’s performance in satisfying and delighting customers. If a mystery shopper is especially impressed with a particular employee, everyone on staff at the store during that shift receives a bonus.

5. Share the business context

• Employees need a clear understanding of how their company operates - particularly, how it defines success. Because they understand the company’s values, employees don’t have to follow a rigid set of rules - they just have to behave in ways that meet customer needs.
• Employees also need to know how their work affects companywide financial performance and how the company arrives at its targets. Armed with this information, workers can better understand the decisions of upper management and improve job performance. At QT, every full-time associate is trained to read the store’s monthly financial statements and earns a bonus that is based on the store’s operating profit.
• QT executives are quick to dissect their mistakes. One of the purposes of this policy of openness is to encourage innovation by conveying the company’s tolerance for well-meant mistakes. Chet Cadieux, the CEO, tells employees that as long as the company hires smart and caring people, no employee can make an error that the company cannot recover from.
• Wawa coffee, which has a devoted following, was introduced because a lone employee decided to offer brewed coffee in a store.

6. Satisfy the soul

• Researchers suggest that to truly harness an individual’s creativity, to get her full passion and engagement, a company must meet her needs for security, esteem, and justice.
• Security. QT’s employees know that their safety and well-being are of paramount importance to top management, which deploys technology and staffing models to create a sense of security.
  
• Esteem. The emotional and physical demands of a service job can be wearing, so Wawa provides rejuvenation by celebrating successes and milestones. Every month, mystery shoppers evaluate Wawa stores along the company’s brand standards, which detail expectations for every element of the store experience, from waiting time to the freshness of the food to the cleanliness of the restrooms. Highscoring teams are visited by the “prize patrol,” which brings rewards and a party.
• Justice. So that workers will feel they are being treated fairly, Wawa gives eligible employees a share in about 10% of the company’s base profits. It has expanded its employee stock-ownership plan and is offering associates an opportunity to purchase additional shares. A mark of employee confidence in the company: Some 29% of company shares are held by associates.

At first glance, the investments that Wawa and QT make in their living brands may seem excessive. Executives are quick to agree that both organizations spend more than their competitors, though as private companies they keep the numbers close to the vest. “How can they afford to do that?” is a question we have heard as we have shared these stories of uncommon service quality in a commonplace industry. The leaders of Wawa and QT reply: “How can you afford not to?”