Sephora’s website is the largest revenue making store in North America, even with an expanding base of 430 stores across the Americas. However, their warehouse and DC were not scaled to meet the needs of a fast-moving operation or the needs of their 2300 global stores and their eCommerce customers. For example, the manufacturer’s tech did not enable the warehouse to prioritize replenishment, which led to delayed orders, waves and carrier moves. They weren’t engaging in planned distribution where the warehouse knows how products will ship to stores even before it arrives at the warehouse. And, while they implemented automation for expected volumes, the company lacked fulfillment automation for surge demands caused by new, hot lipstick colors or holiday demand.

Driving this, most tech implementation consultants functioned like the manufacturers’ line workers: reacting, not proactively strategizing. Our client, a JDA implementation firm, kept receiving a shortlist of 30 pain points needing coverage within six weeks to go-to-market causing our client to build for “wants”. Because our client, was not having the right customer discussions, Sephora would treat our client as technicians and pay for man hours vs. strategic value that has higher profit margins and revenue growth. And Sephora would try to penny pinch and negotiate on the number of hours and resources that would be needed for different projects.

There was no conversation on involving our client in the go-to-market planning of new products or lines. They didn’t have the content, stories and messaging to show how building for 30 software points only seeing 5-8% of the entire picture is leading to missed details and requirements as there’s no visibility into pipelines, growth plans, customer-driven needs, and current/future operational bottlenecks. They weren’t able to show the impact and how it delayed retail/e-commerce presence, wasted marketing dollars, increased days in inventory, slowed cash conversion cycles, missed customer shipments and created out of stock conditions. They weren’t able to show Sephora how the current reactive IT approach was allowing Ulta to beat them in customer loyalty and for Amazon to make inroads with the high-end beauty market as GTM time for new products and shades were increased by 6 months. Ultimately, they didn’t have messaging, content and support for the “why evolve” conversation that needs to happen to change “buying behaviors” and expand profit margin and revenue growth.

Image Source: Corporate Visions

Once the client was able to shift the customer conversation with profiles, content and messaging that was designed specifically for the why change or why evolve conversation, they were able to change the client’s perception of the firm from “technicians” to “strategic partner”. Our client joined leadership in the planning stages. They added value with processes that will show how changes would impact the warehouse, distribution and transportation under different scenarios and allow the beauty retailer to adapt and scalably align with new system changes without disruption to stores or customers. With this added value came more profitable revenue growth that was stronger than trading dollars for hours.

Read this article for more examples of technology and 3PL firms protecting and expanding key accounts. 

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