Why do we use the term “Store Relationship Management” to describe the solution we’re building? Isn’t the real goal to increase the performance of retail stores? Wouldn’t “Store Performance Management” better capture the real essence of this new category of solution? In trying to describe the district manager solutions we were building for customers, we wrestled with these same questions. The reason we use the word “relationship” can be illustrated by an issue common to multi-unit management known as the “Tolerance Zone.”
The Brand Promise
There is one thing common to every multi-unit retail system: At the core of every one of these companies’ business models is a brand promise. No matter what retail banner you operate under, that banner means something to your customers. Your brand promise signals a set of products, a type of service, and an expectation for a specific consumer experience. Different brands focus on different value propositions, and “high-quality” for any particular brand means consistently delivering on your specific brand promise.
Of course, anyone leading retail operations inherently understands this concept of delivering their brand promise. Most of the time, the goal of multi-unit retail operations is to root-out variance, to ensure that all stores operate exactly the same. It is the consistent, high-quality delivery of the brand promise that is the engine that drives your growth. But…then there are the exceptions. What about markets where consumers have slightly different tastes? What about store managers who have a non-standard, but better way of doing something? What about that early-system franchisee who has a “different deal” in their franchise agreement? It is here that the district manager steps into…“THE TOLERANCE ZONE.”
Getting in the Zone
Though forms of this “zone” exist in all types of multi-unit retail, perhaps it’s best illustrated where ownership and responsibilities are most clearly defined, franchising. In their book, Franchising, Pathway to Wealth Creation, authors Spinelli, Rosenberg, and Birley describe the situation this way:
“Franchising is a negotiated relationship in which franchisors and franchisees must live with some degree of flexibility regarding each other’s performance. In essence, the franchisee and franchisor create a “Tolerance Zone” unique to their relationship, an informal performance standard on many dimensions. No party to any relationship behaves perfectly all the time, so strict interpretation of the license agreement is usually a prelude to legal action.”
It may not be the “fun” part of the role, but first and foremost, the work of the district manager is to protect the legal interests of the parent company. In models where a franchise agreement exists, the field person is there to make sure franchisees are working within the operation parameters set forth in that agreement (in other words, deliver on the brand promise). In the case where the relationship with a franchisee takes a bad turn, the district manager helps the company prove that it has lived up to its end of the franchise agreement. However, legal action is the last desired outcome on both sides of a franchisee-franchisor relationship, and where we find the Tolerance Zone.
This is where the primary work of the district manager can be found. In a particular store, what things that vary from the brand promise are okay? What issues need to be re-mediated? And in what order of priority? Does the store manager agree? Did he or she actually get them done? What about that franchisee that is balking at making that new equipment investment? All of this is where the “relationships” in Store Relationship Management comes from. Across an entire district with multiple stores, multiple managers and owners, maybe hundreds of employees, there can be hundreds of issues to track. For the district manager, getting others to get the right things done in the right order means keeping track of all of the actions, agreements, ongoing discussions, outstanding issues—across all of those relationships (and we haven’t even discussed all the desires of those guys back at corporate yet!).
Maximizing the Corporate-Store Relationship
The goal on both sides is to maximize the relationship between corporate and store to serve the goals of both sides. For the franchisee, the goal is to apply their own work efforts to a proven business model from which they can extract profits from each store unit they operate. On the parent company side, the goal is either to build a successful distribution channel for their products (e.g. car dealerships) or to expand the system of stores operated under their brand from which they grow revenue and generate royalties (e.g. most fast-food franchise systems). It is this set of goals on each side, combined with effective management of “the Tolerance Zone,” that constitutes the district manager’s work.
Read our Store Relationship Management white paper to learn more about Store Relationship Management and the corporate-store relationship.