The Home Depot: 700% in-person growth using the DIGITAL platform
by Nathan Artt on May 20, 2021 12:00:00 AM
While it feels like we are figuring out digital engagement for the first time, other companies and industries have dealt with the issue of digital disruption for years, and we are fortunate to have the opportunity to learn from them. Our disruption, or rather the accelerant to our ongoing disruption, was and is Covid. For Home Depot, it was Amazon and e-commerce.
When Frank Blake took over as CEO and Chairman of The Home Depot in 2007, Home Depot was struggling. The stock price at that time was a measly $38 per share, with a total market cap (number of shares x value of shares) of $50B. There was no digital presence, as Home Depot relied completely on its brick and mortar model. Fewer than seven years later, the stock price was well over $200 per share and the market cap grew to $350B, representing a 700% increase in value. Mr. Blake’s strategy was completely counterintuitive to the model that made Home Depot successful for years: build fewer stores.
Within seven years, Home Depot, who previously had no digital presence, became the fourth largest online retailer in the US. However, what’s more interesting is that in the same year, only 5% of their total sales came online!
In the early 2010s, there were many companies in retail who realized that the digital platform was an excellent opportunity to connect with people who had never shopped in their physical stores. Those companies, such as Home Depot, Target, and WalMart, realized the potential of having a retail presence with no borders or territorial restrictions to help them reach new and larger markets. Others decided, “we better have an online store so we don’t lose more customers”. While the two mindsets sound incredibly similar, they could not be farther apart, and over the years we’ve seen the chasm become larger between those who innovated to reach new markets, and those simply reacting to the markets.
When Frank Blake took over Home Depot, HD had billions of dollars tied up in physical locations around the country, as well as hundreds of thousands of jobs attached to those locations. The strategy was not to siphon off existing customers from the store to teach them new shopping habits - in Mr. Blake’s own words, “that would be silly”. The digital strategy started with the idea that there were far more people NOT shopping at Home Depot than people who were. So that’s where the team focused the digital strategy. For them, the digital strategy started with one question:
“Why don’t people shop at Home Depot?”
What the team at Home Depot found was startling in its simplicity:
- Most people don’t identify as DIY’ers
- Most people find the store to be large and intimidating
- Most people did not know what the store had to offer outside of building materials and tools - which they felt ill-equipped to utilize
Here is what the perspective of unchurched people could be about church:
- Church is for church people. I am not a church person.
- The building is large and intimidating
- I don’t know what the church has to offer outside of sermons
The team at Home Depot crafted a simple, but powerful strategy:
The more we can equip people to be better DIY’ers, the more tools and materials they will buy from Home Depot.
Here is a contrast of what this means practically from the perspective of someone who self-identifies as an inadequate DIY’er:
The in-store experience:
I, the inadequate DIY’er, need to change out a light fixture, so I decide that I need to go to a Home Depot store. I am not a good DIY’er, so I don’t know how to change out a light fixture, but I also don’t want to pay someone to do it. How hard can it be? So, I will go to the store. I will see a bunch of fixtures I know nothing about, which means I have to talk to someone who works at the store, who will likely make me feel even more inadequate, especially when I have to ask questions. He will tell me how to install the fixture, 90% of which I will probably forget or never really understand. What tools and materials do I need to install a light fixture? Wait, how will I even find what I am looking for in that huge store? Which fixture do I choose? How do I know which fixture is the best one? Forget it, I’m obviously not a DIY’er and therefore I don’t belong at Home Depot, so I’m not going. This confirms that I’m a terrible DIY’er.
The digital experience:
I, the inadequate DIY’er, need to change out a light fixture. I don’t know how to change out a light fixture, so I go to the Home Depot website. On the website there is a video to walk me through how to install a light fixture, which looks very simple now that I’ve seen someone do it. Under the video there is a list of the tools and materials I need to complete the job. The aisle numbers and bays where I can find them are included so I don’t get lost in that huge store. From there I can look at all the different light fixtures Home Depot has to offer, all of which are in my local store. I don’t know which one is best, but that’s ok because there is a community of other Home Depot shoppers (aka other previously inadequate DIY’ers) who have left their reviews and experiences about the products - along with pictures of those products installed. I am now equipped to be a DIY’er! Man, I can’t wait for this project and the next one. Turns out I do belong at a Home Depot store and I’m excited to go this afternoon.
The Unchurched Experience
Let’s take the retail example from Home Depot and apply it to church:
The in-person experience for a non-believer:
I am not a Christian, but I thought I was a good person. The situation I have with [my marriage, alcohol, prescription meds, relationship with my kids, etc.] needs fixing, but I don’t have the tools to change it, which leaves me feeling inadequate. “Religion” might help, so maybe I’ll look up a church. After all, I’ve always secretly wanted a loving God to exist, I just don’t know about those Christians. Going to a church, however, seems intimidating. The people there are probably the same people from my childhood who are going to make me feel even worse about the struggle I’m in. Talking to them will probably make me feel even more inadequate than I already do. I’d rather try before I buy, so I think I’ll go to the website. Oh, they put their Sunday service online. But the sermon I watched online has nothing to do with my situation and it’s more than 30 minutes long. I’m not a huge fan of talking heads anyways. Do I like this pastor? I’m not even sure that they’ll have anything that can help me with what I’m dealing with. I don’t think I belong at this church, so I just won’t go.
What the digital experience for a non-believer could be:
I am not a Christian, but I thought I was a good person. However, the situation I have with [my marriage, alcohol, prescription meds, relationship with my kids, etc.] needs fixing, but I don’t have the tools to change it, which leaves me feeling inadequate. “Religion” might help, so maybe I’ll look up a church. My neighbor told me about her church, so I’ll look it up online. The website has some really great resources about marriage, parenting, and an entire section for people who have questions about faith. I can even watch a sermon if I want to. I like the resources, especially because they speak to the situation I’m in. There are books, a list of sermons and talks about what’s relevant to me, phone numbers for counseling centers, and even an opportunity to connect with someone at the church who seems really friendly and relatable, even a few who have been through what I’m currently going through now. Wait a minute, based on my zip code, I see there is a group of people from this church who are meeting in a house down the road from me. This means I can check it out without actually having to go to that huge building 30 minutes away on Sunday and risk an uncomfortable experience. This is really helpful, and the people in the videos seem like people I could relate to. I think I’ll check it out next Thursday.
We don’t have all the answers for your church, but I want to leave you with one challenging question:
How can you move your digital platform from a digitized version of the auditorium to a digitized version of the lobby?
The lobby is where we create connections, provide next steps, assimilate people into community, and create meaningful connections and conversations. It’s a place where new people can feel in control of their own experiences, self identify with what they are looking for, who they want to talk to, and what next steps they want to take. How do we provide that digitally, Monday through Saturday, making ourselves available to people whenever they need us?
Our belief is that the more we focus on equipping people within the context of their own reality, and provide them with a safe place to take a next step, the more likely these people will one day end up within the community of our local churches. Home Depot proved that once people build a trust with a company (or a church) through a digital platform, they inherently desire the tactile and in-person experience that we offer. Digital doesn’t replace an in-person experience. When done well, it actually drives people to an in-person experience.
At our recent Executive Leadership Solutions Regional Innovation Lab, Frank Blake was asked to share insights and lessons learned from his digital innovation experience at The Home Depot with church leaders. His answer:
We would love to hear what ideas you and your teams are thinking through. We would also love the opportunity to simply connect with you. If you and your teams are figuring out how to better engage people post-COVID, you can schedule a call with someone on our team today.
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