by Todd Pearson, Senior Vice President, Customer Success at Zuora

I know you saw it. The viral video of Kohl’s customer Candace Payne giddily trying on her newest purchase: an awesome Chewbacca mask. Sitting in the parking lot of Kohl’s, Candace Payne is the epitome of joy as she models her prized mask.

At 135 million views (and counting), this has become the most watched Facebook video ever. It’s also a call to find delight in simple pleasures and an unexpected marketing boon for Kohl’s. But above all else, this has become a story about a business nurturing customer relationships: a story about customer success.

The Kohl’s Playbook

With 1,160 current locations, Kohl’s has come a long way since it first opened Kohl’s Department Store in Wisconsin in 1962. For many years, Kohl’s was wildly successfully. In particular, they saw great growth between 1994 and 2009 (jumping from 90 stores to 1000 stores) by following a playbook of big openings, small stores in convenient neighborhood locations, lean staffing, and a generous return policy.

But in recent years, Kohl’s has been showing signs of age: slowed pace of expansion, lost market shares, and little sales growth. As Kohl’s long-time CEO Kevin Mansell noted, “We sort of lost the ability to engage new customers.”

In 2014, Kohl’s launched their comeback plan, the “Greatness Agenda.” Kohl’s planned comeback was rooted in strategies that allow them to build, maintain, and get closer to their core customer base. They rolled out an omnichannel integration of in-store with online shopping, listened to and responded to customer brand preferences, launched personal marketing to serve up customized offers to customers, and created their Yes2You loyalty program for shoppers, even those who don’t have a Kohl’s credit card.

And this reinvention has been working, as evidenced by increased sales growth and total revenues in 2014 of $19,023,000 leading it to grab the #157 spot on the Fortune 500 list for 2015 and the #23 spot in the National Retail Federation’s Top 100 Retailers for 2015.

This is a great start. Kohl’s is showing signs that even as a 50+ year old retail behemoth, they get that business is changing.

From Selling Products to Managing Relationships

Across the board, there is a marked difference in the way that businesses are operating: it’s not just about selling products anymore – it’s about managing relationships. This isn’t to say that products don’t still get sold, but smart businesses aren’t simply pursuing one-off transactions. They’re less concerned with units sold, and more concerned with creating consistently positive customer interactions.

Today’s businesses can’t just be product pushers. As CEO Mansell admits, “The core business we’re in, selling apparel and accessories, is a very low-growth to no-growth business.” So it’s not enough to just sell these products. They need to nurture and monetize ongoing relationships to build recurring revenue.

The most successful businesses of the future are all about this recurring revenue which, in its most general sense boils down to the idea of repeat customers that a business can count on.

In Business 101 from days gone by, students were taught that in order for a business to succeed, it needed to consistently acquire new customers. But with this new recurring revenue model, success depends largely on the recurring revenue potential of your existing customer base. In this new world, businesses need to work to earn their customer’s loyalty every single day.

Making a Statement About Customer Success

Kohl’s obviously made a smart marketing move by sending employees to Payne’s home to surprise her with goodies and Kohl’s gift cards (of course, filming the whole exchange to create another video which has racked up a not-too-shabby 30M views). They took the opportunity to capitalize on this viral success to make a statement that their customers matter, and that they are in the business of delighting, and building meaningful relationships with, their customers.

So this Chewbacca mask story is not really about the mask (although that mask is, admittedly, pretty awesome!). It’s a story about a company actively cultivating its relationship with their customers.
Kohl’s is taking great steps towards reinventing themselves as a modern, customer-focused business. If they continue to proactively manage customer success and build on the foundation of these strong customer relationships, customers will keep coming back – even if that Chewbacca mask has sold out.

To learn more about customer success, download our free guide, How to Build Customer Success: The Most Critical Element to Your Growth Strategy.