The Gilt Groupe is a flash sale company. On their website, they host extremely short-term sales events (most last less than two hours!) featuring limited quantities of merchandise from top brands. The combination of short duration and limited quantities makes an appealing mix for competitive shoppers, who are legion. In six years, the brand has accumulated 7 million customers.
Why, then, did the Gilt Group recently take a 90-day break from sourcing new merchandise, adding any new services, or even trying to attract new business?
Know What Time It Is
According to the story Alexis Maybanks, Gilt Groupe’s co-founder, shared at the Women Entrepreneurs Rock the World Conference, the company was experiencing tremendous growth, and with that growth came some growing pains. The sales volume was overwhelming; the customer service department was swamped.
The Gilt Groupe leadership team faced a choice: continue pursuing growth at any cost, or put the brakes on long enough to focus the organization’s energy and resources on better serving the existing customer base?
This is not a unique challenge in the retail world. Every brand wants to grow; many brand managers have been duped into thinking that growth generation is the raison d’etre for their profession. And they’re not completely wrong: a brand that is not growing is a brand that is dying.
The Gilt Groupe demonstrated an understanding that not all growth is equally desirable. There’s a difference between sustainable growth (an increase in market share that allows a company to both attract and please new customers) and problematic growth, where the sheer volume of customer traffic rapidly outpaces the brand’s ability to provide an emotionally satisfying experience on an individual basis.
Problematic growth is the retail equivalent of a Bangladeshi garment factory: the building gets taller and taller, with more and more people inside of it, working harder and harder — all until the critical moment where the building’s infrastructure fails and everything comes down in a horrible crash.
A Time To Build, A Time To Grow
As a Brand Manager, you don’t want to build the Bangladeshi garment factory. You want to build a strong company with a robust retail infrastructure to support brand growth. That means you have to know what time it is. Consider your brand’s current circumstances, and examine how well you’re pleasing your customers. Be objective and analytical. Ask lots of questions, including:
- How long does it take your customers to place an order or make a purchase?
- Is it easy to reach your customer service department?
- How long does it take for the typical complaint to be resolved?
- How many complaints do you have, and what are those complaints about? (Be aware that customers can leave without ever once voicing their displeasure with how you’re doing things.)
- What percentage of your business comes from repeat customers?
- How much of your new business converts into an ongoing relationship?
It’s only after you have the answers to these questions, and you can compare the actual results to the benchmarks of performance that you’d like to see, that you can determine what time it is. Is it time to concentrate on building your company by improving and enhancing the customer experience, or do you have the justifiable confidence to focus your efforts on growth?
Sustainable growth is a balancing act, predicated on the understanding that it is always ultimately better for brand longevity to build a good company than a bad one. Customers are drawn in when they know they’ll be treated well; they’ll stay when you prove it to them.
The effort and energy Gilt Groupe put into building up their website and customer service capabilities is time well spent. So much of the brand’s appeal is dependent on a specific emotional experience: the thrill of competitive shopping, coupled with the triumph of getting in on the deal. Ensuring that there are no technical difficulties or overwhelmed staffers to short-circuit that emotional experience will result in brand growth.
Be A Better Brand Manager: The Essentials
Know what time it is. Assess your company’s performance regularly and objectively.
Improving the customer experience always pays off.
Don’t be afraid to put on the brakes. Going full speed is no good if it takes your company right into the wall of disappointing your customers.
