Interview: Martin Newman on the art of successful retail
Martin Newman, respectfully known as the “Consumer Champion,” is a seasoned professional with a career spanning more than four decades in the world of consumer-facing businesses.
He is not your typical corporate guru; he’s a down-to-earth expert with a passion for Customer Centricity and Customer Experience.
In this exclusive Q&A session, we’re stepping into Martin’s world to learn about his latest adventures. We talk in detail about his latest e-book which is all about shifting the focus from data reporting to actionable insights and delving into the art of measuring ROI in an ever-evolving retail landscape.
Martin, can you share your background and work?
I have a diverse portfolio of roles and interests, which I like to think of as three main buckets:
Retail, advisory and education: I have a significant background in the retail industry. Five years ago, I sold a successful advisory business called Practicology, which I had nurtured over about 10 years. During my tenure there, we grew to have a team of around one hundred people with offices in London, Hong Kong, Guangzhou (China), Sydney and Melbourne (Australia). I had the opportunity to travel extensively, visiting these offices over 2,000 times.I’m also an author with two books under my belt. One of them is in Vietnamese, and the other in Mandarin, which I find quite exciting. Additionally, I run a mini MBA with the Oxford College of marketing and also run a MBA in a day. I’m also privileged to be a visiting lecturer at Strathclyde University’s Business School.
I do take on consulting projects occasionally. I’ve worked with notable brands like Specsavers and Toyota, where I’ve undertaken different projects, including a significant omnichannel initiative.
Speaking Engagements: Another bucket of mine involves media and speaking engagements. This includes participating in dinners, roundtable discussions, keynote speeches, and sometimes contributing to white papers. I love doing these.
Board advisory roles and charity work: I serve as a board advisor with about five or six different organisations that I’m passionate about including Clearpay and Marketplacer and Chairing the retail arm of the Scouts. I also sit on the board of a charity called In Kind Direct. It’s an organisation where we act as a distributor for brands like Unilever and Procter & Gamble. They donate products like personal hygiene items, which we then enable other charities to buy at a fraction of the normal retail price. We’re able to help these charities in turn to support millions of people. Never more important than during the challenging times like we’ve seen recently.I’m also excited to share that I’ve just become an ambassador for The Retail Trust. It’s an organisation I’ve always admired, and I’m eager to contribute to their mission and the support they’re providing to many different retailers.
Let’s dive into your new e-book on measuring ROI in retail. Could you talk about the challenges associated with traditional KPIs (key performance indicators)?
The fundamental issue with KPIs, is that they primarily focus on reporting what happened rather than why it happened. I’ve experienced this firsthand during my time in retail, where meetings would often be inundated with an overwhelming number of KPIs. You’d hear about conversion rates, average order values, units per transaction, and so on. However, these metrics, while valuable, only provide insights into what occurred, not why.
For instance, let’s say your conversion rate is 4%, which aligns with the average retail conversion rate. That might sound good, but what if it dropped significantly last week? What you really need to know is why it dropped. What was the barrier preventing the other 96% of visitors from making a purchase? Maybe there’s an issue with payment methods or delivery options. The key point here is that KPIs often fall short in explaining the “why” behind the numbers.
So, what would be a more effective approach to understanding retail performance?
To truly understand retail performance, we need to shift our focus towards customer behaviour and feedback. It’s crucial to understand why customers do what they do and how they perceive your brand. This involves actively seeking the “voice of the customer” and gathering their feedback regularly.
Customers’ thoughts and feelings about your business extend beyond what they might write on your website or in a survey. They discuss their experiences with friends and family, on social media, and elsewhere. Retailers should tap into these sources to gain a more comprehensive understanding of customer sentiment. Similarly, retailers should encourage their employees to provide feedback and insights from the front lines. These employees often have a more immediate connection with customers and can offer valuable perspectives on what’s working and what isn’t.
Can you share an example of a company that has effectively used customer feedback to improve its performance?
One standout example is Mike Logue, who took over as CEO of Dreams, a struggling business losing about £60 million annually. In his initial weeks, he visited every single store and interacted with both customers and employees on the front lines. This hands-on approach allowed him to understand firsthand why the business was struggling.
He then introduced a customer survey called “Pillow Talk,” where an astonishing 40% of customers willingly spent half an hour providing feedback. This wealth of information became the cornerstone of decision-making within the company. Rather than starting meetings with subjective opinions, they began with concrete data from customers, informing their actions. This approach enabled Mike to turn the business from loss making to profit making, selling it for nearly £600m in 2021!
What lessons can other retailers learn from this approach?
The key lesson here is the importance of actively listening to customers and your own employees. Many traditional KPIs and decision-making processes don’t fully capture what’s happening on the front lines or the true needs of customers in local markets.
As retailers grow and become more centralised, they often strip away the autonomy and decision-making power of those at the front lines. This is a missed opportunity. These guys are closest to the customers and can provide invaluable insights into what products to sell, how to merchandise, and what promotions to run.
Retailers really should create structured platforms for customers and employees to provide feedback regularly. By doing so, they can make more informed decisions, stay agile in response to market changes, and ultimately enhance their ROI.
Your e-book talks about measuring the return on inclusion. Can you share what you mean by this?
When we talk about ROI, it’s not just about financial returns; it extends to various aspects, including the return on inclusion. In the past, when I served on retail boards and based on my own experiences, there was a time when concepts like sustainability or diversity and inclusion were seen merely as checkboxes on a to-do list.
Frankly, many boards didn’t fully grasp the benefits, let alone the moral imperatives behind these initiatives. But today, I’d argue that most businesses understand the moral obligation to be diverse, inclusive, and sustainable. However, the majority still struggle to realise the commercial value of these efforts. This is where the challenge lies; they often perceive these initiatives as a cost rather than a benefit and don’t see the immediate opportunity.
They might make sustainability commitments like saying they’ll be sustainable by a specific year, but the reality is often different. Many CEOs are incentivised for short-term results, and that shapes their decisions. If you’re a CEO with a short-term incentive plan, and someone comes along asking for funds for a sustainability initiative that won’t pay off for a couple of years, it can be a tough sell.
Measuring diversity and inclusion goes beyond traditional financial metrics. Internally, you can look at various KPIs to gauge the impact. Studies consistently show that diverse and inclusive businesses tend to be more innovative, creative, and efficient. Their product development improves, and they often cultivate better cultures because they have a variety of voices and perspectives at the table.
For instance, by fostering diversity in your workforce, you can measure improvements in innovation and creativity, efficiency gains, and even better product development. All these factors contribute to a healthier bottom line. Diverse teams bring different strengths and capabilities, leading to better decision-making. So, there are several internal KPIs that can demonstrate the value of diversity and inclusion.
Can you provide an example of how autonomy can drive innovation and creativity?
Let’s take the example of Timpson, a retailer known for its inclusive culture. They empower their employees, including those on the shop floor, to make decisions. These employees are trusted to use their judgment and creativity to provide discounts or resolve customer issues on the spot.
In contrast, many other retailers don’t empower their employees to make such decisions. Timpson’s approach leads to better customer experiences, increased customer loyalty, and ultimately, improved financial results. This demonstrates how a diverse and inclusive culture can drive innovation and creativity in a retail setting.
“To drive success, we must inspire our people and foster an environment where they can thrive.”
How can retailers change their approach to embrace these values and promote diversity?
It starts at the top. Retailers need leadership that understands the long-term benefits of diversity, inclusion, and sustainability. CEOs should be incentivised not just for short-term financial gains but also for progress in these areas over the medium to long term.
Changing the culture and instilling these values across the organisation requires transparent communication with customers. Brands should openly acknowledge their journey toward sustainability and diversity and involve customers in that journey. Authenticity and transparency can help retain and attract customers who appreciate these efforts, even if they take time to fully implement.
It’s all about making a positive change and creating an environment where diversity, inclusion, and sustainability become ingrained in the DNA of retail businesses.
How do you drive customer loyalty in today’s constantly changing retail landscape?
Building customer loyalty is a multifaceted endeavour that involves several key elements. Firstly, it’s about guiding your customers toward conscious consumption, helping them make informed decisions, and offering options like rentals, pre-loved products, or buy-back programs. Loyalty is also nurtured by prioritising the well-being of your employees and treating them exceptionally well, fostering a great company culture. These aspects collectively contribute to what makes someone loyal to a brand. There’s no single magic formula for achieving loyalty.
What challenges do businesses face when it comes to achieving customer loyalty, and how do these challenges relate to their focus on cost reduction?
The challenge lies in the fact that many businesses primarily focus on cost reduction and the cost to serve as major KPIs. In some cases, when it comes to business process outsourcing (BPO), the emphasis is solely on minimising costs. This approach, however, can lead to detrimental consequences, particularly in customer service. For instance, outsourcing to the lowest-cost contact centre might initially appear financially beneficial, but it often results in poor customer service quality down the line.
On the other hand, I work with companies like Nutun CX that prioritise their people. They take proactive steps like offering apprenticeships and education in townships, creating opportunities for those who’ve never had jobs before. These organisations invest in training, development, and support for their employees. The positive impact of these initiatives resonates with customers.
For instance, the big energy provider EDF’s customers recently voted Nutun CX, an outsourced contact centre as delivering the best customer service. Putting them ahead of their own in-house team.
Customers often reach out to contact centres when they’re extremely frustrated and have exhausted other communication channels. Neglecting to recognise and nurture these teams can be a mistake – employees play a crucial role in shaping the customer experience.
In many businesses, the focus remains on cost reduction because CEOs, CFOs, and others in leadership positions are incentivised to maximise bottom-line profit over the short-term. This often leads to shortsighted decisions that ultimately harm customer satisfaction and drive customers away. A prime example is reducing headcount in physical stores, causing customers to leave empty-handed because there aren’t enough staff to assist them.
In contrast, successful businesses understand the importance of creating customer lifetime value. They aim to give customers more reasons to choose their products or services repeatedly. They consider factors like inclusivity, sustainability, and customer service excellence as critical to achieving this goal. Instead of solely focusing on cost reduction, they prioritise growth by building a loyal customer base.
The key to this transformation is a shift in measurement and culture, which requires strong leadership from the top. A business needs a North Star—a clear objective that everyone aligns with. In the case of John Lewis, they might aspire to regain their reputation for exceptional customer service. This North Star guides decisions across all departments, ensuring everyone works toward the same goal.
Each department can contribute to achieving this objective in various ways. For example, logistics, customer service, store personnel, digital teams, diversity officers, and finance teams all have roles to play in delivering exceptional customer experiences. Traditional ROI models often fail to capture the long-term benefits of these efforts, which is why a new framework that considers customer-centricity, diversity, and sustainability is essential.
How can businesses encourage innovation and fresh perspectives internally?
Encouraging reverse mentoring and creating opportunities for younger employees to have a voice in decision-making can provide fresh perspectives and help break free from traditional thinking. Younger generations often bring confidence and a different outlook that can challenge established norms and drive innovation.
Fostering customer loyalty and transforming a business’s culture and measurement methods require strong leadership, a shared North Star, and a holistic approach that recognises the value of diverse perspectives and sustainable practices. This shift from a cost-centric mindset to a customer-centric one is essential for long-term success in today’s competitive landscape.
What are your future plans?
These days, I concentrate on what I enjoy and where I can make a positive impact. My focus has always been to deliver outcomes and value to clients. This approach has worked well for me, allowing me to stay flexible and keep various aspects of my career moving forward.
As for the future, I’m still figuring out the last part of my career. I’m not planning to retire anytime soon, but I’m open to evolving my roles. I want to continue doing things I enjoy, striking a balance between making a living and making a difference.
Download: ebook: Measuring ROI in retail.
