Understanding Halfords’ customer journey

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Nicolay had been with the company for one week when CEO Jill McDonald joined and put her first question to the business: “What do we know about our customers?”

“The answer she got was: ‘Not a huge amount’,” says Nicolay, who is the first person to hold the customer-focused role at the company. 

The paucity of customer insight was a result of previous CEO Matt Davies’ focus on transforming the company’s operations. 

“At that time [during Davies’ tenure], Halfords’ challenges were more around staff morale, knowledge and training. 

“He [Davies] completely transformed that. His focus was on getting the staff in the right place. There wasn’t a huge requirement then for thinking about customers, because they needed to set up the foundation with the staff beforehand. 

“So I think it was just at the point that they were recruiting the next CEO that there was this recognition that, actually, now’s the time. Now that we’ve got this great proposition, we can understand our customers better and think about how we can bring them into our shops.” 

Customer data

Prior to Nicolay’s arrival in the role, a piece of research had revealed that just 3% of Halfords’ customer sales could be matched to an identified customer. To address this, in her two years since joining, Nicolay has focused on bringing data together into a single customer view. 

“This view looks at in-store data, online data and data across the group,” says Nicolay. “That means across retail, Autocentres – Halfords’ car service and repairs business – and Cycle Republic, its specialist bike retail business. 

“Given that about 12% of our sales are online, we should always have had a 12% match rate. So there was obviously some work to be done to match things up properly.”

One measure to address this has been to introduce e-receipts – sales receipts sent to customers over email in lieu of, or as well as, a paper receipt. This was something that Nicolay had seen work well at her previous job at Argos – where she was customer strategy controller – as a “fair value exchange for customers”.

“There’s a reason for them to give us their details, because in return they’ll get that digital receipt,” Nicolay says. “It’s much less likely to be lost and, because we sell some things on lifetime guarantee, they’ll always have that email and we can always find it as well – so that’s reassuring for them. 

“It’s also a really effective way to capture customer data from the 88% of sales going through physical stores.” 

Halfords can now match 46% of retail sales to customers ( 59% across the group). Now that it has information on what these customers have bought, if they opt into marketing, they can be sent recommendations for further purchases – whether that’s bike accessories or, if they purchased a children’s bike, recommendations for bigger bikes a few years down the line. 

“I can never say this without sounding quite cheesy, but customers are on a bit of a journey with us,” Nicolay says. “What I’m really hoping to do with our data now is that we should be able to see people coming in for the child seat, but then move on to the balance bike, and then to the first bike with stabilisers, and then the junior bike and the adult bike. 

“Somewhere in there they might have a roof box, so there is quite a nice little journey through Halfords, of things that we can do, through their life, where we’re feeding in products that will be really useful to them at all those different times.“

Nicolay says that the joined-up customer view she has championed has also enabled Halfords to encourage more cross-category purchasing. She used her work on customer segmentation at Argos – another retailer that encompasses a broad range of categories – as a frame of reference. 

“When we set up the segmentation (at Argos), one of the key things that came out was this, kind of, cross-category idea. If you imagine it as having your least frequent customers at the bottom, and then going up to your really frequent customers, who are probably the most valuable to you, you can see that they would be much more likely to be shopping across lots of different categories. 

“What I was working on there – and equally working on at Halfords – was trying to see if a customer starts off in one category, what’s the next best category that we could flip them into? You can see from the data of people who are buying two things, what categories are likely to overlap.”

Customer insight

With a steady stream of joined-up customer data to work with, Nicolay’s other focus is on using customer insight to understand it better. 

“I was really keen when I started to establish a baseline of the team knowing their research,” she says. “I set up some work around brand tracking to help introduce the understanding of what customers think about Halfords compared with our competitors.” 

Nicolay had a conversation with McDonald – who is now moving on to a role at Marks & Spencer – around what she wanted to get out of the research, and she laid out two key objectives. “She wanted to reinvigorate and improve the store programme of customer experience measures, because she was conscious that it was very skewed; a huge part of it was based on staff giving out cards and asking for customer feedback,” says Nicolay. 

“That’s an issue because it’s a very natural reaction to give them to the people who you know are going to give you good feedback.” 

At the same time, McDonald also said that she wanted an overall business measure to understand customer satisfaction, against which she could measure herself and the rest of the board. 

“I remember saying to her: ‘That doesn’t need to be two separate things. You can bring that together’,” Nicolay says.

McDonald was sceptical that the programme for measuring shops and the programme for measuring customer satisfaction could be combined, but Nicolay assured her that if they created an overall end-to-end customer experience programme, they’d get both. 

Halfords appointed ABA Research to look after this programme, and launched it in shops last June. 

“The bit where it links up to the data is one of the key differentiators, because we now use the email addresses that we’re capturing to send an email the day after asking: ‘How was your experience?’ Nicolay says. “The e-receipts data has massively increased the volumes of people that we’re communicating with, and it’s also made the feedback less biased.”

The e-receipts use a dynamic survey link that automatically connects back to what the individual has bought, populating the questions around what they purchased, where and when. This means that the survey can concentrate on the customers’ experience.  

Nicolay has also led the charge to move away from using NPS (Net Promoter Score) on an individual store level. While overall NPS is still gathered and can be broken down by category and by individual shops, the shops are never given their score. 

“I was keen to keep NPS, because it’s a benchmark score, so there’s been a lot of work done on linking it to sales,” she says. “I was keen that we used it internally, at a broad level and senior stakeholder level. But I felt it wasn’t something that shops could necessarily get engaged with.” 

Instead, stores are given a shop service rating (SSR). This, says Nicolay, is to ensure that staff are not disheartened by being rated poorly on elements such as value, quality, range and product availability, which are out of their control. 

Instead, the SSR is based on elements determined from a drivers analysis that was run for the company by ABA. The drivers that emerged were: ‘friendly and helpful’, ‘knowledge’, ‘speed and efficiency’ and ‘colleague availability’. Nicolay says that a similar programme has been launched in the past few months to measure online experience – it was in the drivers analysis phase at the time of the interview. 

The drivers are weighted, says Nicolay. ‘Friendly and helpful’ and ‘knowledgeable’ had been identified as being slightly more important than the other two, in that they have a greater influence on the overall score. More specifically, a staff member being friendly and helpful will encourage a good experience, while a knowledgeable staff member will be more likely to lead to a purchase.

“Measuring things that are within the staff’s control keeps them engaged with the process,” says Nicolay. “We know that if they move their SSR up, it will increase their overall NPS, and increase our company NPS. So it’s all linked.”

All stores receive reports with their scores and in-the-moment alerts are used to ensure that they feel part of a collective move towards increased customer focus. Internal stakeholders have insight packs that include NPS and SSR scores, as well as insight from brand trackers to look at what’s been driving them. A cross-functional customer board has been created to take a top-down view of opportunities and allow actions to be taken.

“For example, we’ve seen that the returns process has been a driver of more negative sentiment, so we’ve done a whole programme of trying to simplify it,” says Nicolay. “That’s come from the insight – some really actionable things that we can go away and do something about, whereas before, it was more of a carrot and stick approach to stores. Just: ‘You’re doing well’, or ‘you’re not doing well’.“ 

Nicolay’s next step, she says, is to link the transactional data in the single customer view with the research. “For some customers – where they have given us permission – we can identify them, then link it with their transactional behaviour. 

“What I’m hoping is that when I look at my most valuable customers, ones that are spending the most, they’re likely to have high NPS. That really starts showing the value of giving that great customer experience.”