Leadership

Listening to customers: Sandbox solutions

Written by Roger Hardy

How often do you hear the phrase, “If it ain’t broke, don’t fix it?” It’s a motto many businesses follow. Whether it’s the product they sell, how they sell it or even the customers they target, too often companies get stuck inside a box. The truth is, in business today you need to be “breaking it” every day. If you want to keep growing, you need to challenge yourself and your team to look for new opportunities and larger sandboxes to play in.

When we launched Coastal Contacts and our Canadian brand Clearly Contacts in 2000, we contemplated selling only contact lenses — hence the names. We had a very clear vision when we started: to be a $100-million-a-year online retailer of contact lenses. We were quoted in articles in early 2000 stating that exact number as our focus, which we pursued with passion and energy for seven years.

As we grew, our customers kept asking us for more products. So, taking small steps at first, we gradually added lens solutions and then cases to our offerings. When we crossed our $100-million milestone last year, we felt immense satisfaction. But at the same time, we also realized that we would need to reset the bar for future growth. The question internally became: “Where to next?”

That question naturally arises for entrepreneurs now and again, but this time the answer wasn’t staring me in the face. In fact, the answer was hiding behind a wall that I had spent seven years building.

To find the answer, we turned to our customers. We began asking them on a consistent basis what they wanted to see from us. Last year, we shipped more than one million orders, so we had a lot of customers to ask.

To disseminate the information, we devised a ritual whereby, in our weekly management meetings, senior staff would take turns relating the details of their conversations with customers. These are customers who we proactively called for feedback, not just customers who called us — because there is a difference. We wanted to talk to people inside their normal routines and find out how we could make their lives easier and better.

A funny thing happened when we began listening to customers — we kept hearing the same thing: buying contact lenses is usually expensive and cumbersome, but Coastal Contacts made it cheap and easy. Buying eyeglasses is also expensive and cumbersome. Can’t you do for eyeglasses what you did for contact lenses? Make it easy; make it cheap!

As a fast-growth public company, two primary expectations are placed on us: one is to maintain our compound annual growth rates; the other is to sustain our profitability. As you’d imagine, these are two things we are very passionate about. To meet these external expectations as well as my own drive for growth, I needed to listen to what customers were telling us and look beyond our box.

The idea of adding eyeglasses to our product line had come up in the past, but the timing wasn’t right. Besides, historically, eyeglasses have been the enemy of contact lenses. Now, we felt we had a strong grasp on the contact-lens business, and a look at the eyeglasses market revealed that the U.S. alone was worth some US$34 billion, 10 times the size of the contact-lens market. Getting into eyeglasses would allow us to access an entirely new market. And given that contact-lens wearers own eyeglasses, too, we’d be in the unique position of being able to bundle products for them, thus differentiating our company from competitors that offered only contact lenses.

There were also some fabulous synergies: the size and weight of our products make it easy to ship overnight, and we could offer thousands and thousands of frames, whereas an optical store can offer only a few hundred. Finally, there is the cost. The average optical retailer sells only two to three pairs of glasses per day, so they need to make ridiculous margins. Our high volumes dramatically reduce our base cost per order.

In January, we built a state-of-the-art lab and launched our eyeglasses business. We now ship 4,500 orders of contacts and eyeglasses per day, and open 1,400 new customer accounts per day. That volume allows us to offer more styles at less than half the price of a retail store.

Outcome: we have been blown away. Customers had told us they wanted this, but we hadn’t known just how badly. Already we’ve had days in which more than 10% of our total shipments are eyeglasses. Shipping 500 pairs of eyeglasses or more per day has opened our eyes to the size and possibility of this market. We never had 500 sales a day in our third month of selling contact lenses.

It’s a very exciting time for us. We now have a huge sandbox and phenomenal opportunities — and we are just getting started. Along the way, we have learned a valuable lesson: the crown jewel of our company is our 1.5 million existing customers. All of the excitement for the year ahead is the result of listening to them. And that’s something we plan to do more of — with a shovel and pail in hand.

Originally appeared on PROFITguide.com
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