-By Meg Major

From its origins circa 1929 as a local meat market to its current position as a quality-oriented regional grocer, suburban Cleveland, Ohio-based Heinen's Fine Foods' focus on customer service has never wavered. Indeed, while the 17-store grocer's commitment to excellent service has remained constant through three generations of family ownership, its methods of building connections with its customers have evolved dramatically with the passing decades.

"Our industry in general has been a very intuitive business," says Tom Heinen, grandson of company founder Joseph Heinen. Tom and his brother, Jeff, lead a team of roughly 2,500 full-time, part-time and student associates in perpetuating Joe's original philosophy of providing world-class customer service and the freshest, highest-quality foods. "It's ironic to me that the supermarket industry had one of the major breakthroughs in technology  —  the scanning of our products and ability to track every transaction and purchase  —  yet has been historically poor at using that information."

In seeking to get a definitive handle on how data could help it "make real improvements" for both its customers and associates, Heinen's management team endeavored to separate fact from opinions, so to speak, to form strategies and ultimately make decisions that would serve it best for the long haul. And by doing so, "We’ve learned something about ourselves in every category we have surveyed," says Heinen.

Chris Foltz, COO of the family-held grocer, concurs. "We recognized that we were full of opinions on what was important to our customers and associates, and how we were doing in fulfilling their needs and expectations, but we really didn't know," notes Foltz, discussing the impetus behind the retailer's interest in embracing a data-driven approach to evaluating its business and related opportunities for continued growth and success.

Through a strategic partnership with Service Management Group (SMG)  —  a Kansas City, Mo.-based research company that defines, aggregates and critically appraises customer and employee metrics that drive business results  —  Heinen's launched initiatives to better understand customer and, more recently, associate satisfaction levels.

"We have always focused on our key consumer segments from a service and quality perspective," explains Heinen. "But we made the decision to take service to an unprecedented level. While we excelled at, and were known for, the traditional 'friendly and courteous' approach, we knew we needed to be that much better to assure our future."

From the outset, the timely flow of SMG insights brought new realizations about Heinen's strengths and its opportunities for improvement, says Foltz. "We were very surprised by what we learned when the data and recommendations first came back," he recounts, noting the comparative difference that had been established with decisions backed by accurate data. "We had not previously understood which drivers actually were responsible for high levels of customer satisfaction."

Focus on Associates

With a strong commitment to associate satisfaction, Heinen's discovered a central tenet of successful retailing: satisfied associates deliver superior customer experiences. With this in mind, Heinen's applied the SMG methodology to learn more about its own associates' levels of satisfaction with the company  —  an area that Foltz says is a particular challenge in view of some of Heinen's least-experienced associates being among those who have the most direct interaction with customers.

To be sure, it's a scenario that has become even more complex in recent years as the concept of customer service has evolved from exhibiting friendliness to actually understanding customers' needs to help them make purchase decisions.

"Our first survey revealed that associates had a strong desire for feedback," says Foltz. "They wanted to feel valued and appreciated. The data helped us better understand how we needed to create an environment in which our associates feel they are doing something good today that makes them excited to return tomorrow."

In response, Heinen's designed and implemented its "Game of Work" program to ensure customers have consistent, reliable access to friendly, knowledgeable staff. At its foundation, the program follows Heinen's theory to approach work as one would a game, with a desire to perform coming from an understanding of whether one is winning or losing. The Game of Work program involves a daily posting of scorecards of various critical attributes of the business for associates to see, understand and work to impact.

"The Game of Work program is about engaging our people in a measured effort to make a difference," explains Heinen. "What I love about it is that it teaches associates that everyone has the ability to make a positive impact. It was a huge 'aha' moment for me to see how quickly we as a company could facilitate positive changes by simply scorecarding key measures and sharing the results with associates at all levels."

For example, many of Heinen's departments use sales-related scorecards, one of which illustrates the performance of innovative prepared foods  —  such as adding snow peas, julienned carrots and sesame seeds  —  and another for the deli department, where associates take turns as "captains" to select a particular product to focus on and promote. In the case of the latter, a particular deli department captain's plan generated a $1,000-per-week sales increase in one store. "When we demonstrate commitment to their satisfaction, our associates will step up and serve our customers in unbelievable ways," says Foltz. "In turn, this helps create an environment in which customers feel engaged and want to keep coming back."

At the manager level, ongoing surveys have shown that top drivers of associate satisfaction shift and change dramatically with the shifting of the economy. As a result, Heinen's leadership team is paying close attention to managers' interest in learning how the company is making changes to continue its success into the future. This measure, not previously a high-ranking interest, rose 22 points between survey periods to become a top focus of managers. "Satisfied associates lead to satisfied customers," Foltz says, which, in turn, "leads to customer loyalty and continued business success."


Understanding the Customer

With programs in place to help promote and evaluate associate satisfaction, Heinen's renewed its focus on better understanding the satisfaction levels of its customers. SMG analysis soon began to reveal unexpected discoveries upon which the grocer would quickly take action.

For example, with consumers seeking to enhance the at-home dining experience in the face of a challenging economy, Heinen's saw an opportunity to boost seafood sales beyond the historical 17 percent of its customers who shopped the company's stores' seafood departments. After developing weekly recipes and demonstrations to educate customers on how to purchase and prepare seafood, SMG's and Heinen's collective strategizing led the grocer to yield a 20-percent increase in seafood sales.

"In this example, we were really able to utilize SMG data to better understand how buying patterns are changing and implement changes that allow us to be relevant to our customers in this economy," notes Foltz.

Another compelling enhancement was realized with fresh produce sales, metrics of which indicated that customers perceived Heinen's produce selection to be low on Sundays. With this understanding, Heinen's added a Saturday produce delivery vs. relying on Friday deliveries to last through the weekend. While the modified delivery system obviously required some adjustment of procurement and store ordering, customer satisfaction with its enhanced Sunday produce selection found its customer service scorecard rising from 59 percent to 72 percent in less than five weeks.

Customer feedback also taught Heinen's that its customers' top driver of satisfaction centered on product availability, including sale items. To meet and exceed expectations in this area, Heinen's created a daily report to provide managers with information on the in-stock position of sale items.

In addition to studying its customers' satisfaction with store products, Heinen's is studying its opinions on service. The customer satisfaction study revealed that the helpfulness of staff in the produce department proved to be an important part of the overall shopping experience. With an enhanced focus and increased training on the helpfulness of the staff in this department, Heinen's raised its customer satisfaction rating from 65 percent to a consistent 85 percent to 90 percent.

As a result, Heinen's gained ground over its competitors in SMG's comparative database in several key areas, including:

Overall satisfaction Likelihood to return Likelihood to recommend Availability of products Cleanliness of store Associates' knowledge of products Courtesy/friendliness of staff Speed and ease of checkout
Despite the favorable measurable improvements in place, though, Heinen's continues to eye areas of continued future enhancement, among them developing process improvement teams for associates to involve them in a dialog on the types of changes that get work done most efficiently and effectively. Heinen's is also aiming to focus on better understanding and improving product availability scores.

"We have made our team believers," Foltz concludes. "[Company] sales are up 3 percent year-to-date, and were up last year as well. We are retaining our customers."