06/04/2013 06:43 pm ET Updated Dec 06, 2017

JC Penney: If You Don't Listen to Your Customer... You Lose

The Challenge: Few companies know as much as they should about their customers and their expectations for meaningful engagement.

Being arrogant in disregarding customer expectations is dangerous. This is a lesson JC Penney found out the hard way when sales dropped 25 percent in 2012.

This is reinforced by the Accenture Study on customer-centricity in which they noted, that for too many companies, providing a tailored experience is an elusive goal; "... failing to deliver a high-quality customer experience can result in a staggering erosion of a company's customer base -- a loss of as much as 50 percent over a five-year period."

Some of JC Penney's missteps included:

• Customers have come to expect promotions around holidays. But the company did away with these sale events. They are bringing back event promotions 26 times a year, often around holidays like Mother's Day.

Customers associate a company with the merchandise or services they traditionally provide. When the selection changes, it causes confusion. JC Penney will be returning to basic clothing and favorite brands.

Knowing your customers means knowing demographic aspects meaningful to sales. The company switched its focus to a trendier, younger and generally thinner audience, alienating longtime Penney customers who could not find items to suit their size or style.

Penney has been hurrying to welcome back customers. A few weeks ago, it apologized to customers in an ad that said: "Come back to J. C. Penney. We heard you. Now, we'd love to see you."It then ran a second ad thanking customers for returning. New marketing materials also specifically state, "you asked, we listened" as well as "you can have it all".

5 Takeaways:

» If you think "the customer doesn't really know," stop! You disregard the wisdom and preferences of your customers at great peril! Your business starts and ends with the customer.

» Build your value promise around the wants of your customers. Then, put measures in place at every level of the organization to deliver on that promise.
Customers should have a consistent experience with every employee and every situation. And every employee should know what you have promised.

» When is the last time you really asked your customers what you could do better? Before you add, change, or "improve" anything, make sure it is something that will be wanted and embraced by the people who count; your customers.

» If you have not recalibrated your strategies within the past 12 months, you are likely out of date with the needs of today's rapidly changing and greatly empowered consumers.

» Constantly monitor customer service complaints and sales statistics to identify and quickly resolve "hot button" issues.

Ernan Roman is recognized as a Customer Experience innovator and was inducted into the Marketing Hall of Fame for creating three transformational methodologies: Voice of Customer Relationship Research, Integrated Direct Marketing, and Opt-in Marketing.

He was also named by Crain's B to B Magazine as one of the "100 most influential people in Business Marketing".

His latest book on marketing best practices is titled, : Voice of the Customer Marketing: A Proven 5-Step Process to Create Customers Who Care, Spend, and Stay.

Ernan is also the author of the widely read blog, "Ernan's Insights on Marketing Best Practices", (, and author of "Opt-in Marketing" and "Integrated Direct Marketing".

ERDM's Customer Experience strategies achieve consistent double-digit increases in response and revenue for clients, which include IBM, MassMutual, QVC, NBC Universal, Microsoft, Hewlett-Packard, and Symantec.

As a leader in providing Voice of Customer research-based strategies, ERDM has conducted over 10,000 hours of interviews with customers and prospects of these clients to gain an in-depth understanding of their expectations for high value customer relationships.