Change management must include all stakeholders, and customers are stakeholders, too.

J.C. Penney Is the New Sears: Ron Johnson Has Done “Incalculable Damage,” Davidowitz Says is a fantastic article (and video) about JC Penney’s massive misstep in going to an everyday-low-prices model in this economy.

Anyone with a clue could have forecast this, and many did (my wife and I chortled at the original announcement, predicting failure on the spot). Apparently, Ron Johnson, JC Penney’s CEO, needs to get out more, or did the entire JC Penney board miss all the popular extreme-couponing TV shows?

Howard Davidowitz correctly asserts that limited in-store testing would have been advisable over betting the whole company on a hunch.

Better yet, leveraging JC Penney’s customer insights team should have been the first step before performing any in-store testing. These brand protectors and profit maximizers know how to perform a conjoint analysis survey and interpret its results.

A conjoint analysis is often misinterpreted or pigeon-holed as helping a company figure out its pricing, which is why it might not seem the right tool for JC Penney (since the company was very clear about how it wants to price). Instead, a conjoint analysis survey helps a company figure out what trade-offs a customer is willing to make–meaning, without being asked directly, the customer will inform the company of what is truly important to him/her. Typically clusters of choices will emerge, and a company can then build its go-to-market strategy from there.

In JC Penney’s case the conjoint analysis survey could have been leveraged to learn what’s important to customers today. Yes, customers always want the most for the least. Luckily, a well-designed conjoint analysis survey lets you actually sidestep that issue, and instead learn about customer price elasticity, shopping preferences, and motivators.

JC Penney could have leveraged many channels, including focus groups, but more importantly social media and public communities to get real meaningful feedback on its proposed pricing change.

Thus, even prior to any real-world testing, meaningful insights could have been collected. Then a limited roll-out should have been used to complete the testing phase.

A conjoint analysis is not a change management tool, but it can be used to measure the impact of a proposed change. As Ron Johnson said, “…the customer ignored us 99% of the time.” With proper foresight he could have made sure not to have pushed that to 100%.

Luckily, as CEO he can blame others:

Our marketing isn’t doing the work . . . We’ve got to get our pricing across. Coupons were a drug, they really drove traffic. [Customers] need to understand the value we’re offering.

Sheesh!

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