We ensure we have the processes and approaches in place to make us resilient and, importantly, we empower our employees to play a crucial role. That means ensuring they can own up to mistakes when they happen, that they are equipped and empowered to make rapid and informed decisions, and that we have a high-performance culture. This is the backbone of our success.
Founder and CEO, AO
AO, the Bolton-based online retailer that sells household electricals and appliances across the UK, has come a long way since its founder and CEO John Roberts created the business following a bet with a friend that electricals could be sold in a better way.
Twenty-four years on, the numbers behind the business show the scale of the journey that AO has been on since. Now listed on the London Stock Exchange and a constituent of the FTSE 250 Index, AO employs around 3,000 people and has seen its share price rise consistently in the recent times, boosted most recently by eight consecutive upgrades.
Moreover, the company’s ongoing strong performance – along with its successful negotiation of the pandemic period – is testament to a resilient business model that is underpinned by a focus on profitability, the ability to pivot quickly when needed, and an unwavering focus on the very best customer service, among other things.
At the heart of AO’s growth journey is a dedication to what John refers to as ‘profit performance’ – simplifying the business and making it more efficient wherever possible. “Our single biggest push has been to stop doing things that lose money, so we can focus on the things that make money,” explains John.
“Of course, we have a focus on continuous improvement – making sure our day-to-day processes and systems, such as warehousing and stock control, are efficient and cost-effective is crucial. When you have fewer distractions from the things that clearly aren’t working and aren’t making money, then you have more time to focus on the things that do– so the process must start there.”
In addition, John says the “pivot to profitability” boosts the resilience of the business because it provides staff with the time and flexibility needed to adapt to unexpected changes. “At the end of the day, we sell electrical goods – online and delivered by a two-person delivery team – which is a pretty difficult environment in which to make money. That’s why it’s so important for us to focus on profitability.”
There are times where you want to focus on innovation and tomorrow’s growth opportunities, for example, and there are other times where you want to batten down the hatches and stick to your core business. Stripping out the distractions means we can pivot between those far more quickly. This makes us more resilient to the unexpected.
Founder and CEO, AO
Another ingredient behind AO’s resilience to market shifts and its continued growth has been its ability to evolve its offering.
The business has relatively recently made what John refers to as “a natural move” into mobiles, for example. “That’s an area that is a very natural fit for us – mobiles are electricals, after all – and so that was an obvious move.”
Other evolutions have been more innovative, however, amid growing demand among customers to recycle old appliances, AO has identified the opportunity to produce a range of new appliances manufactured purely from recycled goods.
“As a result of that innovation, from next year we are aiming to sell washers made from recycled washers and fridges made from recycled fridges,” says John. “That will be the culmination of an eight-year journey – but is a brilliant example of innovating to diversify.”
Another core focus that has underpinned AO’s business strategy – throughout its 24-year existence – is its commitment to delivering unrivalled customer service and satisfaction. “I truly believe in the value of empowering all our staff to make every customer’s interaction with us as easy, stress-free and special as we possibly can,” John explains.
In practice, that means ensuring staff have the tools to create “magic in the moments that matter” – the freedom to make decisions and go beyond the expected.
As part of this, the business spends around £1m a year on AO teddy bears – so delivery drivers can add a ‘magic moment’ for customers with young children or pets. John cites an example of where a delivery driver proactively went back to a customer to drop off a teddy bear because they had run out when making the delivery at an earlier date. This particular interaction resulted with the customer providing some positive feedback to the business, praising the delivery drivers. This, in turn, earned the drivers a bonus through an incentivisation programme aimed at encouraging them to go the extra mile during customer interactions.
“That will cost the business in terms of the bonus for the crew, and the price of two teddy bears,” explains John. “But that is a very small price to pay to make the customer happy and likely gain some significant word-of-mouth referrals.
We really want to empower our employees to think differently, go the extra mile and make decisions for the good of the business – all of which helps build a resilient culture.
Founder and CEO, AO
Other customer-service focused initiatives include retaining control of the company’s call centre as an internal – rather than outsourced - function, which John says helps AO keep control of the quality of service delivered through the centre. “Nobody cares more about the business than those of us who work on it,” he adds.
The result of this commitment to customer service is that AO is the highest rated retailer in the UK on Trustpilot based on a combined rating of over half a million reviews and a Trust score of 4.8 out of 5.
Many of these strategic approaches have required the business to make “bold decisions”, according to John – who adds that the key to ensuring all employees are on board and pulling in the same direction is “open and honest” communication.
“I strongly believe in the power of candour,” he explains. “In turbulent times, you will have to make tough decisions – but the key is taking the time talk to your people and to explain why you are making these decisions, because only then can they understand why these things matter and what they will help us achieve. Too many businesses shy away from those conversations.
“That’s why I, as CEO, hold monthly internal “town halls”, monthly Q&As and I make sure my email address is available to all AOers if they want to raise something with me, and why I try meet every new starter at their introduction day. We have to be open and honest with our people.”
John says an important factor for any business that has been on the kind of trajectory that AO has, is having a banking partner that can support it through every stage of the journey.
“Our relationship with Barclays spans our entire 24-year existence,” he explains. “I like relationships with people that can make decisions – so I like a bank that empowers its people to make those decisions themselves. Not all do.
“We want to go on a journey together – through the good times and the bad times. That means we need a candid relationship, to be open and honest on the information that we share, and to be grown up about the risks and the tolerances.
“And it’s important to us as a business that we have a financial relationship with our bank, rather than just a product-based relationship,” John adds. “Our partners across the business and across Barclays are fundamental to our success – and we've always found Barclays to be a very supportive partner.”
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