Truth #3: It’s not your employees’ fault

Design a system that sets up everyone – even your average employees — to excel as a matter of routine.

man looking at jewelry in shop windowCase: Spence Diamonds

We tend to associate scripts with lower-wage employees, but Canadian retailer Spence Diamonds has revealed the power of writing dialogue for even $100,000-plus employees.

Spence has built a high-growth retail jewelry business with margins that are double the industry average. Counterintuitively, Spence gets there by delivering outstanding service through the highest-paid salespeople in the business. Even less intuitively, its success is driven by a highly scripted sales process that tells veteran salespeople exactly what to say, when to say it, where to stand—even where to put their pens throughout a conversation.

Spence pays its experienced “diamond consultants” more than twice the industry standard. CEO Sean Jones describes managing these salespeople as being “like managing an NBA team,” with all the sensitivity toward egos, team chemistry, and playing time. Everyone is an individual performer, and everyone is at the top of his or her game. And Jones’s job is to get his squad members to do something truly bizarre: don’t trust their instincts, even when those instincts allowed them to dominate every other sales environment. Learn the script. All seventy pages of it. And stick to it, even when they feel confident enough to start tweaking the process.

Why the rigid process? Jones discovered that his salespeople were six times more likely to be effective if they followed “the Spence way,” step by tiny step, from the moment a customer walked into the store to the moment he or she signed on the dotted line. The entire process is designed, with scientific precision, to find out exactly what customers want and to help them feel confident acting on it. Founder Doug Spence’s core insight, which Jones ran with, was that the typical engagement-ring buyer (young, male) is terrified when he walks in the door. Not just a little bit anxious or intimidated. Terrified. And not just of the product, but of the institution it represents. Marriage is heady stuff. Piled onto that base level of fear is often the sickening awareness that he will be judged by friends and family on whatever ring he selects. This is quickly followed by another unsettling thought, often the moment the customer crosses the threshold of a jewelry store: he knows nothing about diamonds. Cut, color, clarity, carats. It’s an obscure new language, and he doesn’t speak a word of it.

Many jewelers do little to reduce the engagement ring buyer’s anxiety. The client steps into a hushed, feminine domain. A small selection of merchandise is typically locked up under thick glass cabinets. A conspicuously armed guard is on patrol, reinforcing the buyer’s sneaking suspicion that he’s in the wrong place at the wrong time. With consequences. Contrast that experience with “the Spence way”: a friendly and accessible atmosphere, open cabinets filled with thousands of prototypes made of cubic zirconia that the client can touch and feel, a personalized education on the basics of diamond grading. And the Spence customer gets to interact with a friendly consultant, who knows exactly the right words to say, at exactly the right time, to help the buyer make the decision of a lifetime.

The scripts aren’t the only reason the model works. Like other successful service businesses, Spence Diamonds has decided where to excel (selection, service, price) and where to underperform (location, brand). It only invests in one location per market and finds retail space that is near a premium location, but outside the real estate sweet spots, where prices are significantly higher. The company has also figured out how to deliver excellence with fewer, better people, a model that’s underutilized in many service industries. Spence pays its people significantly more, but it doesn’t need as many of them.

And yet Jones maintains that the company’s real competitive advantage is its sales script. Spence is now the most profitable jeweler in Canada and is looking toward global expansion. Its biggest barrier to growth? Finding great players to move diamonds with empathy on the retail floor—and finding great coaches who can keep them on script.

Wednesday, February 15, 2012