Experience & Excellence: The Rise and Fall (and Rise Again) of Customer-First Companies

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From the global headquarters of
Johns Taylor in beautiful New Jersey,

it's marginally better.
Here's your host, Joe Taylor,

Jr.
On the show this week.

I believe that customer experience
and business performance go hand in

hand.

You can and will improve your
company's margins by investing in

experience.

So I've got three textbook examples of
companies that burst onto consumer's

radar with transcendent
service experiences and they

later paid the price when they
drifted away from those core values.

We'll deep dive into the recent fortunes
of Walgreens who placed a bad bet on

locking your most urgently needed
items behind walls of plexiglass

and will examine what your business
can do to protect itself in case your

favorite social network
suddenly disappears.

That's all coming up after the
break on marginally better.

Welcome to Marginally Better,

a show about business innovation and the
American economy. I'm Joe Taylor, Jr.

My training. I'm a master certified
user experience consultant,

and when working with our
team at Johnson Taylor,

I'm helping our clients build websites
or apps at the sweet spot where their

business goals and
customer's desires intersect.

But I've also reached this point in my
career via some unusual roots As a radio

producer and journalist,

I've spent years telling stories and
figuring out what entertains audiences.

And I also spent six years working in
Apple during the transition between the

Steve Jobs and the Tim Cook eras.

So I know what it takes to
ship outstanding products
backed up by transcendent

customer experiences.

So I was inspired to launch the series
because there's a lot of chatter and

pessimism, especially about
online user experiences.

And I won't debate that.

I've walked away from plenty of project
proposals where a business wanted

us to goose their revenue numbers
by making their experience a little

worse. And I'm proud that our
teams never taken that kind of job.

So as I've experienced them the past
few decades have been about businesses

figuring out how to disrupt their
competition through technology.

We're now at the point where everyone's
using the same old growth hacks.

Some tactics that our industry
declared unethical 20 years ago are

now getting taught as basic
procedures in coding bootcamps.

And if you've listened to or read any
of the work from folks like Ed Tron,

Corey Dro or Molly White,

you know that consumers are getting fed
up and they're calling companies out

on bad behavior.

People are waking up to the idea that
they're not boxed into a single choice

for a particular good or service.
And under those conditions,

the next few decades will reveal
a new cohort of successful

companies that can jumpstart their
fortunes by distinguishing their online

and offline experiences. And sure,

there's still an overarching school
of thought in business that austerity

maximizes profits,

but you don't have to run
your business that way.

I believe that customer experience and
business performance go hand in hand.

You can and will improve
your margins when you invest

in experience, and you don't
just have to take my word for it.

Let's talk about three textbook cases
of brands that exploded revenues

by investing heavily in
the customer experience.

You know that feeling when you walk into
a store or call customer service and

you're already bracing
yourself for the worst,

you're preparing for battle with
some mythical bureaucracy that seems

explicitly designed to
frustrate you. Well,

today we're going to tell you
about something different,

something that actually works. In 2008,

Starbucks did something that
sounds almost ridiculous. Now,

they closed every single one
of their US stores for three

hours, not for renovations
or deep cleaning,

but to retrain their baristas to
make the perfect cup of coffee.

Now, their CEO at the time who had just
returned to the company called it their

transformational moment. And
here's the thing, it worked.

Their customer satisfaction scores
went up 20% that year. More than that,

their stock price, it tripled
over the next five years. Now,

as the New York Times
reported at the time,

Starbucks once a magic name on Wall
Street is increasingly seen there

as just another big food chain.
So they use the training reboot

to kick off a wave of growth built
on their reputation for quality

products and services, and
most importantly experiences.

Should they do it again? Starbucks
has received some criticism lately.

Detractors worry that catering too
specifically to a fickle younger

demographic has increased wait
times when their cues are full of

complex customized TikTok drinks. Now,

there are few months into the tenure of
a new CEO who's promising to once again

bring the company back to its roots this
time by ensuring that they can deliver

a high quality handcrafted
beverage in four minutes or less.

We'll be seeing what happens.

Now,

imagine you're running an online shoe
store and you decide to do something that

goes against every principle of
efficient business operations.

You tell your customer service reps to
spend as much time as they want on the

phone with customers, no time
limits, no scripts, just talk.

And that's precisely what Zappos did.

They even amplified what is now a pretty
famous story. Maybe you've heard it,

where one of the reps spent over 10
hours on a single call with a customer,

not because there was a problem, but
because the conversation just kept going.

When Amazon bought Zappos in 2009,

they paid $1.2 billion
for a company that started

selling shoes out of a small apartment.

The New York Times
detailed this at the time,

calling it a testament to the power of
customer service in the digital age.

And Zappos continues to
exist inside of Amazon

as a standalone brand,

even though Amazon itself often
beats Zappo's pricing and delivery

speed,

all because of the loyalty built
from those powerful early customer

experiences.

You know what's interesting about Netflix?

They could have stuck with their
DVD by mail service. It was working.

People liked it,

but they saw something coming a shift
in how we consume entertainment.

And instead of fighting it,
they did something remarkable.

They disrupted themselves.

They created an impossibly
complex algorithm that could
predict what you want to

watch. But here's what's fascinating.

They didn't just use
it to recommend movies.

They used it to decide what shows to make.

And their first major original series
wasn't just a shot in the dark.

It was based on data showing
their subscribers liked
certain actors genres and

similar shows the results.

Netflix went from a company
worth about $2 billion in 2008

to, well,

let's just say its market cap today
has made those early investors very,

very happy.

Financial Times captured this
transformation in a 2013 piece,

which revealed how the company's
deep dive into customer preferences.

Reshaped not just its business, but
the entire entertainment industry.

A decade later,

they're facing criticism
that the algorithm has gotten
too heavy handed and that

it's focusing too much on second screen
delivery instead of letting creative

professionals make great work.

But it was that willingness to commit
so fully to the customer experience that

vaulted them from a niche blockbuster
competitor to the kind of company that

can hire Beyonce to mount a football
halftime show that's not even at the Super

Bowl. It's funny,

we often think about business as
this cold calculating thing, numbers,

profits, bottom lines. But what these
stories show us is something different.

They show us that sometimes the
most calculating thing you can do is

care about your customers.
In each of these three cases,

there are two possible outcomes.

Those companies can choose to disrupt
themselves and regain the reputations for

powerful customer experiences.

Or they can sit back and watch while
someone new to the market pushes the

boundaries of that
experience even further.

We'll be here watching and tracking
together right here on marginally Better.

After the break,

the button Walgreens can press to
unlock a revitalization in their stores.

Stay with us.

Welcome back to Marginally
Better. I'm Joe Taylor Jr.

It's a story we've all seen
play out in our neighborhoods.

The local pharmacy wants a cornerstone
of the community now with bare

shelves behind plexiglass items
locked away in cases and store

closing signs in some of the windows.

This is what's happening at Walgreens
where an effort to stop shoplifting may

have ended up driving away the very
customers they were trying to retain.

This story goes back to
1901. Charles Walgreens Sr.

Worked in the succession
of drugstore in Illinois,

eventually purchasing the store he was
working in embedded in the corner of a

Chicago hotel. According
to company historians,

Charles hated the status quo
in the drugstore business.

He thought drugstore were
dark unwelcoming places.

He had some big ideas that changed
the shape of his entire industry.

Everyone who entered that first Walgreens
was greeted by the store manager and

sometimes by Walgreen himself.
He widened aisles.

He added a bigger variety of products.

He figured customers would swing through
for more day-to-day needs along with

their prescriptions, and he
pioneered private label products,

often making better versions
of the things he was copying.

A few years ago, Walgreens had a problem,

like other retailers in the
United States after the pandemic,

they were losing inventory.

Retailers tracked this with
a metric they call shrink,

and it was an alarming rate.

So they did what seemed
logical to them at the time.

They started locking everything
up, deodorant, shampoo, toothpaste.

Items that used to sit innocently
on open shelves were suddenly behind

plastic barriers requiring an
employee with a key to access them.

The company's CEO Tim Wentworth recently
admitted what many customers had

already figured out.

I just met with our head of asset
protection to look at some of the creative

things that we are looking at,

both as a company and as an industry as
it relates to the customer experience on

Shrink. I don't have anything
magnificent to share with you today.

It is a hand-to-hand combat
battle still, unfortunately,

but it does impact how sales work through
the store because when you lock things

up, for example, you
don't sell as many of 'em.

We've kind of proven
that pretty conclusively.

It's a perfect example of how solving
one problem can create many more.

Walgreens announced it would close
hundreds of locations this year,

part of a larger plan to shutter about
more than a thousand locations over the

course of a few years.

That'll bring the company's US
footprint from well over 8,000 locations

to slightly more than 6,000.

Wentworth has told investors that the
issues facing Walgreens are common among

the entire industry, and
he's been floating plans to
take the company private.

However,

the core of this debate extends beyond
locked up merchandise and stretch staffs.

It highlights a fundamental disconnect
between security and service,

as well as between
protection and accessibility.

So what could Walgreens do differently?

We've got three pieces of advice that
could help them get back on track.

First, customer service as security.

It's not enough to just throw
more people on the sales floor.

Walgreens must consider re-imagining
what security looks like in a retail

environment instead of a security
guard standing by the door looking

intimidating.

You can have well-trained employees
actively walking the aisles,

engaging with customers. They're
not just there to prevent theft.

They're there to help you find the right
sunscreen or explain the difference

between cold medicines or
suggest a good multivitamin.

This goes back to the practice that
Charles Walgreens started himself all

the way back in 1901.

This approach has worked remarkably well
for companies like Costco where engaged

employees and excellent customer service
have helped keep their shrink rates low

without having to resort to fortress
like security measures. It's very

common at high-end retailers to
cross-train floor staff in both

customer service and loss
prevention techniques.

But it's more likely that you could hire
someone from the community who's paid

well enough that they can authentically
engage with their neighbors who are

regular customers while maintaining
a watchful presence over the store.

Now,

that may not be a popular move at a
public company that desperately wants to

report a lower payroll line item.

That may be another reason why they're
thinking of taking the company private,

but this is probably way less
expensive than enduring that shrink

and surviving an exodus of customers who
don't prefer to wait for attendance to

unlock a bottle of detergent. Second,

let's talk about the Walgreens
app. It's a great first step.

It solves lots of problems by moving
some of the interaction from the pharmacy

counter to your phone and short,

not everyone wants to interact with
Walgreens through an app all the time,

but if your competition increasingly
looks like Amazon and maybe Uber,

the app might be the way to go.

Walgreens already has functionality in
their app that lets you pre-order items

from throughout the store and
shell them for pickup. However,

if you read employee reviews
on Reddit or Glassdoor,

you'll hear a common refrain that the
company has underinvested in the number of

people it needs to deliver
on the app's promise.

Overtaxed workers have to run around
the store collecting items like it's a

scavenger hunt even as they're trying
to maintain order at the photo desk.

The app only rewards you for planning
ahead. It doesn't account for impulse

purchases. The kind that Charles
Walgreen rightly predicted,

would become the
foundation of his business.

So here's where Walgreens might
take a cue from the hotel industry.

If I can check into a Hilton property,

I can usually request a digital key
that unlocks my room even if I have

bypassed the front desk. So if I'm
a trusted customer at Walgreens,

why not let me unlock those cabinets
myself with my smartphone app?

If you absolutely must keep
some items under plexiglass,

why not just give me the key? And third,

this idea of being a community
touchpoint deserves much more attention.

Walgreens has over 6,000 locations
left even after their planned

closures.

That's 6,000 opportunities to be more
than just a place to pick up aspirin.

They can partner with local health
organizations to offer wellness workshops.

They can create community health hubs
where people can get basic health

screenings, nutrition advice,

or even mental health resources.
They can offer telehealth services,

vaccination clinics, or
diabetes management programs.

The pharmacy counter can become
a health education center and a

focus on super foods and wellness
products can expand into learning

opportunities.

You could go so far as to doing cooking
demonstrations for healthy meals

sessions with nutritionists or wellness
challenges that bring the community

together.

These changes would require a
significant investment, yes,

but they are investing anyway
in locks, security systems,

inventory control.

Why not invest in something that could
actually grow their business instead

of just protecting it?

Something that can transform their
stores from places people have to go

to places people want to go better
customer service creates stronger

community connections.

Digital innovations make health
services more accessible.

When people see your store as a
valuable part of their community,

they're more likely to protect it,

especially in the absence of
independent local competitors.

It's a vision of retail that's less
about transactions and more about

transformation.

It's less about protecting inventory
and more about serving people.

And in the end, isn't that what a
neighborhood pharmacy should be about

after the break? What happens when your
favorite internet service disappears?

That's up next on marginally better.

It's marginally better. I'm Joe Taylor Jr.

Do you know that feeling when
something you use every day disappears?

That's what happened to 170 million
Americans when TikTok went dark in

response to a law and a whole
bunch of political mess.

And we won't get into
that. But here's the thing,

the response wasn't exactly
what you might have expected.

Zach, a 24-year-old
regular user of TikTok,

I put it in New Yorker saying I would
probably forget about it in a short time,

and he's not alone.

While TikTok influencers were
performatively crying themselves to sleep,

most users displayed a kind
of shrugging acceptance,

and it's a pattern we've seen before.
Remember when a OL was everything.

You've.

Got mail? That sound was the
heartbeat of the internet.

Do you remember when Dig was
the front page of the web?

Their declines sparked
genuine mourning among fans.

But we all found ways to
move on. And as for TikTok,

the response has been more like watching
a favorite restaurant close. Sad,

sure, but you'll find
somewhere else to eat.

Even though TikTok
reappeared after about a day,

the disruption made many users question
whether they needed the service.

The real story here isn't about
loyalty, it's about adaptation.

The influencers and small businesses
who built their livelihoods on tiktoks

algorithm are still scrambling,

but many had already hedged their bets
across platforms, Instagram reels,

YouTube shorts, they're all
part of the same ecosystem. Now,

here's what's fascinating.

The businesses that thrived most on TikTok
weren't necessarily the ones with the

most significant budgets
or slickest production.

They were the ones who understood
its language, quick, authentic,

often imperfect. A restaurant showing
the sizzle of a dish, being made,

a bookstore employee's genuine
reaction to a new release.

That's the kind of stuff that
caught fire. So what now,

smart business owners are
realizing something important.

It's not about the platform.
It's about the connection,

whether TikTok returns permanently
or not. The lesson is clear.

Don't build your house on rented
land. Use social media as a tool,

not as a foundation. Create
content that can live anywhere.

Build your email list, strengthen direct
relationships with your customers.

Platforms come and go, but good
stories, those stick around.

And maybe that's the real story here,

not about what we lost
when TikTok went dark,

but about what we might find
when we look up from our phones.

Thanks for listening to Marginally
Better. If you like what you heard,

please help us out. Leave a
quick review on Apple Podcasts.

It will help us spread the word about
the show to people like you who care

deeply about great customer experiences.

If you want to get behind the scenes
notes from me and the rest of the team,

go to marginally better show.com or
follow the link in our show notes.

Marginally Better is a
FRAX radio production.

Our producer is Nicole Hubbard with
Research by Connie Evans. I'm Joe Taylor,

Jr.

Frax Mean Little Planet. I.