Opinion: Where BI And CRM Need Major Home ImprovementOpinion: Where BI And CRM Need Major Home Improvement
Home Depot and Lowe's use IT and pricing power to gain strategic advantage over small local competitors. But recent experiences at these chains show that both retailers have room for improvement in the use of customer relationship management and business intelligence.
May 9, 2007
I've long held the view that The Home Depot and Lowe's -- like many of the largest retailers -- use IT and their pricing power to strategic advantage over smaller, locally owned businesses.
Recent experiences at both home improvement stores, however, show how far these two companies have to go in the use of customer relationship management and business intelligence to make their stores run better.
They are the perfect argument against limiting the availability of BI tools to a subset of employees, as InformationWeek Research findings indicate one in four companies are doing by providing such tools to more than a quarter of employees.
As a company, Lowe's takes pains to gather lots of information from customers placing special orders. One would think the point is to serve you better next time around, but in practice just the opposite holds true.
I've been gradually replacing windows with new ones from Lowe's. My most recent purchase came more than six months after the last one. When it came time to reorder some of the same size windows, the Lowe's system had no record of what I ordered, only that I'd placed orders previously. It was up to me to find my records, match all the window specs and get the new order completed. At one point, it was suggested that I come back when the employee who helped me on my last order was on duty, as he might be able to complete the new transaction more easily.
During a separate Lowe's visit that should make the CFO cringe, I tried to place a special order for a window treatment. I visited the store early on a Saturday to ensure someone could help me, then proceeded to watch as progressively more employees and managers gathered around the computer screen trying to determine how to enter the necessary data. Once it became clear none of a half-dozen employees could crack the code, I gave up and left.
My experiences demonstrate major weaknesses in data management, data access, CRM, BI, system usability, and employee training at Lowe's. In addition to the toll on customer service, the company loses revenue.
I've shopped at Home Depot stores far longer than Lowe's and have probably gone through the same kind of love-hate relationship with that company over the years that many others have. At one point, I vowed I wouldn't shop there again, but more recently found special-order purchases of cabinets, carpeting, and more to go smoothly. I also was pleased with their product quality. Yet the company still has a long way to go in using technology to optimize its business.
One egregious example: I needed to buy a new garage door and found that Home Depot sells a reputable brand at a reasonable price. When I went to buy the door panels, there was an optional installation kit that an employee recommended I buy, possibly saving a return trip. Great suggestion. Pricing labels clearly indicated the extra box is sold separately. Try telling that to Home Depot's IT systems.
Upon checkout, the door unit itself was scanned without a problem. Not so with the additional kit. Repeated scans produced repeated errors. I got down on the floor to read the SKU number to the salesperson. No luck. A call to the department confirmed the item should be priced separately but the intervention of multiple employees and managers still failed to associate a price with an SKU. The cashier kept calling the department over the intercom and kept getting ignored, so I walked back to take down the SKU myself, only to find the sticker on the shelf was torn and the SKU wasn't readable.
I asked if the store has a product database to look up the item; the salesperson said the product mix changes too often to do that. More calls yielded the answer (borne apparently of pure frustration) that the separate kit is actually included in the price of the door. After 20 minutes, I wasn't about to argue with an obvious mistake that was saving me money.
Where did things break down at Home Depot? Incomplete product information on the warehouse floor and at the point of sale; inadequate training of employees, who have no idea what to do when the point-of-sale system can't generate a price; and a lack of CRM capabilities to prevent such problems. Home Depot's IT failings wasted my time and cost the company revenue.
The common perception is that the little guy can't survive in the land of Home Depot and Lowe's. Yet in my locally owned hardware stores and home improvement chains (which are thriving, by the way), they've got functioning IT systems that never, ever put me through hell just to make a purchase.
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