8/16/2021

Furniture
Customer-Based Strategy

Rajdeep Grewal, PhD

Townsend Family Distinguished Professor
Kenan-Flagler Business School

© 2020 Rajdeep Grewal, All Rights Reserved. Do not copy, store, distribute without express permission.

Managing Ongoing Customer Relationships

Customer focus with customer satisfaction as the lynchpin

• Validated
• Fast
• Focused
• Certain
• Accountable
• Customized
• Repeatable

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Customer-Based Execution and Strategy

1. Identify target customer
segments
Customer 2. Develop customer value
equation
model 3. Identify strategic areas and
their weights

1. Develop execution plan from 1. Develop strategic initiatives

customer value equation linked to strategic areas
2. Evaluate performance based
on customer and operational
Execution Financial 2. Eliminate initiatives that do not
support the customer value
performance indicators
model model equation
3. Develop financial performance
3. Link execution plan to
resource allocation indicators to measure progress

Satisfaction Ratings

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Furniture Retailers: Survey Items

Furniture Retailers: Survey Items (cont.)

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Statistical Analysis

Descriptive Statistics (Overall)

Standard
Variable Minimum Maximum Mean N
deviation
Overall satisfaction 1 7 5.66 1.26 300
Repurchase 1 7 5.41 1.32 300
Recommend 1 7 5.65 1.31 300
Check out 1 7 5.70 1.28 300
Availability for in-person contact 1 7 5.58 1.34 300
Merchandise 1 7 5.62 1.30 300
Pricing 1 7 5.40 1.38 300
Return policy/service recovery 1 7 5.39 1.36 300
Sales staff 1 7 5.65 1.32 300
Store 1 7 5.65 1.35 300

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Correlations
Variable 1 2 3 4 5 6 7 8 9 10
Overall
1.00
satisfaction
Repurchase 0.57 1.00
Recommend 0.71 0.65 1.00
Checkout 0.69 0.52 0.63 1.00
Contact 0.68 0.60 0.66 0.63 1.00
Merchandise 0.67 0.56 0.66 0.69 0.60 1.00
Pricing 0.61 0.49 0.56 0.65 0.60 0.69 1.00
Return 0.66 0.58 0.59 0.66 0.68 0.58 0.62 1.00
Staff 0.70 0.57 0.62 0.76 0.64 0.71 0.67 0.58 1.00
Store 0.70 0.55 0.59 0.69 0.65 0.75 0.69 0.55 0.74 1.00

Descriptive Statistics (By Retailer)

Retailer Ashley Furniture Gallery Furniture Star Furniture All
Overall satisfaction 5.93 5.50 5.56 5.66
Repurchase 5.59 5.36 5.29 5.41
Recommend 5.79 5.61 5.54 5.65
Checkout 5.93 5.61 5.57 5.70
Contact 5.72 5.49 5.53 5.58
Merchandise 5.88 5.61 5.37 5.62
Pricing 5.37 5.33 5.50 5.40
Return 5.43 5.45 5.28 5.39
Sales staff 5.88 5.57 5.50 5.65
Store 6.01 5.46 5.47 5.65

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Regression Results: Overall Satisfaction as the DV

Coefficient Standard error t-value p-value
Intercept 0.61 0.22 2.77 0.01
Check-out 0.13 0.06 2.15 0.03
Availability for in-person contact 0.15 0.05 3.03 0.00
Merchandise 0.11 0.06 1.94 0.05
Pricing –0.03 0.05 –0.66 0.51
Return policy/service recovery 0.19 0.05 3.85 0.00
Sales staff 0.16 0.06 2.71 0.01
Store 0.19 0.06 3.35 0.00
R2 0.65
N 300

Customer Value Equation

Implied coefficient Importance weight
Check out 0.13 14%
Availability for in-person
0.15 16%
contact
Merchandise 0.11 12%
Pricing 0 0
Return policy/service recovery 0.19 20%
Sales staff 0.16 17%
Store 0.19 21%
Total 0.93 100

Customer satisfaction = 0.14*checkout + 0.16*contact + 0.12*merchandise +

0*pricing + 0.20*return + 0.17*sales staff + 0.21*store

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Regression Results: “Repurchase” as the DV

Coefficient Standard error t p
Under
Intercept 2.04 0.28 7.05
0.01
Overall Under
0.60 0.04 11.93
satisfaction 0.01
R2 0.32
N 300

Regression Results: “Recommend” as the DV

Coefficient Standard error t p
Under
Intercept 1.46 0.24 5.92
0.01
Overall Under
0.74 0.04 17.44
satisfaction 0.01
R2 0.50
N 300

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Building a Customer-Based Strategy Map

Check-out

Availability for Repurchase

in-person contact

Merchandise
Overall
Pricing satisfaction

Return policy/
service recovery Recommend

Sales staff

Store

Customer-Based Strategy Map: Furniture Industry

0.14
Check-out

0.16 0.60
Availability for Repurchase
in-person contact
0.12
Merchandise
0.00 Overall
Pricing satisfaction

Return policy/ 0.20 0.74

service recovery Recommend
0.17
Sales staff
0.21
Store

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Customer Value Equation

Customer value equation
Customer satisfaction = + 0.14(checkout + 0.16(contact) + 0.12(merchandise)
+ 0.00(pricing) +0.20(return) + 0.17(sales staff)
+ 0.21(store)

Execution Model: Consider Top 2–3 Strategic Areas

0.14
Check-out

0.16 0.60
Availability for Repurchase
in-person contact
0.12
Merchandise
0.00 Overall
Pricing satisfaction

Return policy/ 0.74

0.20
service recovery Recommend
0.17
Sales staff

Store 0.21

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Regression Results: “Store” as the DV

Standard
Variable Coefficient t-value p-value
error
Intercept 0.33 0.24 1.34 0.18
Store is uncluttered 0.12 0.04 2.72 0.01
Store layout makes it easy to find everything 0.12 0.06 1.88 0.06
Store layout is intuitive 0.10 0.06 1.70 0.09
Pleasing ambience and décor 0.09 0.06 1.52 0.13
Neat and clean store 0.12 0.06 2.06 0.04
Merchandise displays are well-organized –0.01 0.06 –0.25 0.81
Store is well-lit and bright 0.13 0.06 2.02 0.04
Store is safe 0.22 0.07 3.41 0.00
Restrooms are easy to find –0.01 0.06 –0.11 0.91
Restrooms are clean 0.08 0.06 1.39 0.17
R2 0.65
N 300

Execution Value Equation: Store

Variable Implied coefficient Importance weight
Store is uncluttered 0.12 0.20
Store layout makes it easy to find everything 0 0
Store layout is intuitive 0 0
Pleasing ambience and décor 0 0
Neat and clean store 0.12 0.20
Merchandise displays are well-organized 0 0
Store is well-lit and bright 0.13 0.22
Store is safe 0.22 0.38
Restrooms are easy to find 0 0
Restrooms are clean 0 0
Total 0.59

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Regression Results: “Return Policy” as the DV

Standard
Variable Coefficient t-value p-value
error
Intercept 0.33 0.18 1.84 0.07
Making it convenient to return items 0.35 0.06 6.03 Under 0.0001
Product returns are easy to handle 0.12 0.06 2.00 0.05
Comfort with returning items that are not correct 0.01 0.05 0.27 0.79
Clear direction if transaction is not processed 0.11 0.05 2.22 0.03
Problems are promptly resolved 0.11 0.06 1.78 0.08
Problems are addressed right the first time –0.07 0.06 –1.22 0.22
Quick and easy return of goods –0.04 0.06 –0.60 0.55
Easy to get credit for returned items 0.24 0.06 4.14 Under 0.0001
Picks up items I want to return from my home or business 0.12 0.05 2.22 0.03
R2 0.75
N 300

Execution Value Equation: Return Policy

Implied Importance
Variable
coefficient weight
Making it convenient to return items 0.35 0.37
Product returns are easy to handle 0.12 0.13
Comfort with returning items that are not correct 0 0
Clear direction if transaction is not processed 0.11 0.12
Problems are promptly resolved 0 0
Problems are addressed right the first time 0 0
Quick and easy return of goods 0 0
Easy to get credit for returned items 0.24 0.26
Picks up items I want to return from my home or business 0.12 0.12
Total 0.94

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Execution Levers: Return Policy and Store

Store is uncluttered
0.20
Making it convenient to return 0.37
items
Store layout makes it easy to 0.00
Product returns are easy to 0.13 find everything
handle
Store layout is intuitive
0.00
Comfort with returning items 0.00
that are not correct
Pleasing ambience and decor
0.00
Clear direction if transaction is 0.12
not processed Return 0.20
Neat and clean store
Problems are promptly 0.00 policy/
resolved Store
service Merchandise displays are 0.00
Problems are addressed right 0.00 recovery well organized
the first time
Store is well-lit and bright
0.22
Quick and easy return of 0.00
goods 0.38
Store is safe
Easy to get credit for returned 0.26
items
Restrooms are easy to find
0.00
Picks up items I want to return 0.12
from home or business
Restrooms are clean
0.00

Complete Customer-Based Strategy Map

Store is safe 0.38
Store is well-lit and bright 0.22 0.21
Store
Neat and clean store 0.20
0.20 0.60
Store is uncluttered 0.20 Return policy/ Repurchase
service recovery

0.17
Sales staff
Making it convenient to return items 0.37 Overall
Availability for 0.16
Easy to get credit for returned items 0.26 satisfaction
in-person contact
Product returns are easy to handle 0.13 0.14
Check out 0.74
Picks up items I want to return from home 0.12 Recommend
or business 0.12
Merchandise
Clear direction if transaction is not 0.12
processed 0.00
Price

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