A New Dawn at Home Depot

March 29, 2007

The promise of regime change seemed to glimmer a little brighter this week at The Home Depot.

Following the stormy weather of faltering stock price and its ìretirement for lifeî CEO severance package, more steady hands seem to be at the helm of this massive home hardware juggernaut. Thank you stockholders and thank you new CEO, Frank Blake.

Under deposed chief executive Bob Nardelli, The Home Depot suffered not just from flat to falling market value, but from an erosion of its customer base. Affected customers, including me, experienced a distinct tinny sound and lack of coordination in HDís tagline ìYou can build it. We can help.î No kinks revealed themselves more systemically or consistently than HDís externally managed rebates and warranty programs. Please visit the countless blogs and online communities if you want to verify this.

Looking back at the customer experience challenge, Nardelliís focus seemed to be on the ìitî ñ cutting costs, getting paid and passing blame. So far, Blakeís seems to be on the promise: ìWe can help.î Viewed against Lowesí steady call to disaffected consumers ìLetís build something together.î this is a critical shift.

A new way forward
For those who do not know him, Frank Blake is HDís new CEO. He comes to HD after executive roles at the Department of Energy and GE respectively. People who know him have described him as a keen-minded, collaborative leader. Importantly, Mr. Blake is proving his chops since taking the helm in January 2007, most notably here by embracing HDís steep customer experience challenge. He has engaged with his public to help right the listing ship.

I speak from personal experience in saying this. A little under a year ago, I replaced my homeís windows with The Home Depot. While the expense was justified in my 37-year old home, it was made more affordable and attractive by the ìno payments, no interest for 12 monthsî promotion and free stainless steel grill offer ($350 value). We are very happy with the windows, incidentally. 

Like countless others, our problems started after installation. Suffice it to say, HD did not make it clear to us that its back-office operations were not exactly humming or worse, given the triplicates and small print, being farmed out. We experienced this firsthand when our initial credit card statement arrived showing a 6-month no payments, no interest schedule. To its credit, HD cleared this up quickly. But it did signal to my wife and I that we should probably follow up on the rebate offer. Out of respect for Frank Blake, I am going to forego the specifics on this secondary and unfortunate lapse in customer experience management.

Home Depot

Actions, not words
The real news is this: After decoding Mr. Blakeís email address and sending him a note detailing my dissatisfaction, he took care of my issue, personally. Not because I told him what I do for a living (I did not), but because he is genuine in his desire to win back customers.

Frank Blake cares about customers. And he is putting his money where his mouth is. He has created a team empowered to rectify the causes of past wrongs before they happen again. People like Brandi Hyde, a project manager in Blakeís new Customers First for the Chief Customer Office, convey a true mission to change course and to embrace and own the customersí concerns and expectations. This signals to me that Home Depot is cleaning up its house. Keep it going!

Menawhile, if you need more evidence of the authenticity of this business shift, please read the article: Home Depot CEO: Sorry we let you down. After readers flood MSN Money's message boards with tales of lousy service, Home Depot's new top executive says change is on the way. Read Story.

In the article, Blake acknowledges past problems and asks customers to give him and the Home Depot brand a second chance. Says Blake: ìCustomers are our company's lifeblood ñ and the sole reason we have been able to build such a successful company is because of your support. The only way we're going to continue to be successful is by regaining your trust and confidence . . . and we will do that.î

An open invitation
With scandal close behind and Lowes around the corner, HD is now acknowledging an eternal truth: that its huge capital investments require constant customer feeding and development across all levels of the organization. Customers are the lifeblood of any business.  By paying attention not just to cutting costs through outsourcing and managing inventory better, but to the experiences of its customers, Frank Blake is building a new culture that actively reaches out to you and me, telling us ñ and showing us ñ that Home Depot is putting every effort behind winning back your trust.

Believe what you will there is a new dawn at Home Depot. 

-- Patrick Ohlin

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