When you start cutting corners, customers can’t always tell. But employees usually can. And that can be just as bad.
In this Mixergy interview, Jim McCarthy, the co-founder of Goldstar, talks about his days working at Noah’s Bagels and recalls a corner cutting moment that revealed a deeper change in the culture there:
The culture of Noah’s began to change…There was a point where the management of Noah’s said, “Only 7% of our customers keep kosher.” But having kosher in the store means we can’t have a ham sandwich or even a turkey and cheese sandwich. So the logic went, “OK. If we lose the 7%, because we’re not kosher, we’ll replace it by selling these other things.”
I remember at the time thinking, “That’s not how it is going to work,” and saying, “That’s now how it is going to work,” and it did not, in fact work. Because you’ve taken the 7% of people who love you, think of you in a way that brings goose bumps to them, and told them to, “Go to hell.” You’ve told them to leave your store.
And more importantly, you’ve said to the employees, “Remember how we used to stand for something other than just selling bagels and cream cheese? We don’t stand for that any more.”
That type of “employees will notice even if customers don’t” thinking came in part from a story McCarthy had heard about Starbucks’ Howard Shultz:
There was a point, I think in the 80′s, where somebody came to Starbucks’ Howard Shultz, and coffee bean prices were going through the roof, and it was a threat to the survival of the company because the cost of coffee is a big part of their business. So of course somebody comes to Howard and says: “You know, if we just kind of kick down from the top grade of beans to this one, everything’s cool, and we’ve done a survey right here, that says only, let’s just say, 7% of customers can tell the difference between the best coffee and the second best coffee.”
And his response was, “No, we’re not going to do that, we’re going to find some other way to get through the price crisis. Because even if nobody noticed, the employees will notice.”
It’s a good lesson: You’re not just sending out a message externally, you’re sending one out internally too. If your employees don’t believe it, the whole plan falls apart.
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