Service with a Smile—and for a Profit

Tom Peters

The electricity failed while a woman was at a grocery checkout. The clerk wouldn’t let her take her groceries home. She was a regular customer and was rushing to prepare her husband’s fiftieth birthday-party dinner. Irate, she called the store. The manager asked her what she had wanted to purchase. A half hour later he was at her home with the groceries—gratis of course—along with an inscribed birthday cake.

After several visits to a store’s men’s clothing department, a customer’s suit still did not fit. He wrote the company president, who sent a tailor to the customer’s office with a new suit for fitting. When the alterations were completed, the suit was delivered to the customer—free of charge.

The first incident took place at Stew Leonard’s—the Connecticut grocer who does about ten times the industry average in sales per square foot. The deliverer of the groceries was 32-year-old Stew Leonard, Jr., now the company president. His dad, Stew, Sr., applauds such behavior: “In a ten-year period, she’ll do $50,000 of business with us. That’s some investment! We’d better live up to it.”

The second incident involved the $1.3 billion, Seattle-based Nordstrom, a specialty clothing retailer. Its sales per square foot are about five times that of a typical department store. Who received the customer’s letter and urged the extreme (by others’ standards) response? Co-chairman John Nordstrom.

At a Cadillac dealership, almost all customers request their service person by name. A computer has each customer’s history, and also tracks the car moment-to-moment as it is serviced. Once a car is fixed, the computer records its location (in one of 350 parking slots); a lot-attendant-designed walkie-talkie system ensures that the car is retrieved in less than two minutes. The dealer? Sewell Village Cadillac, of Dallas, which sold 3,500 cars last year and sports 116 service bays.

The providers of this good service are well paid. The mechanic at Sewell’s can make upwards of $100,000 a year. Nordstrom salespersons earn a couple of bucks an hour more than competitors’, plus a 6.75 percent commission. Its top salesperson moves over $1 million a year in merchandise. Nordstrom lives for its customers and salespeople. Its only official organization chart puts the customer at the top, followed by sales and sales support people. Next come department managers, then store managers, and the Board of Directors at the very bottom.

Salespersons are urged to work ceaselessly on their “personal book,” where they record voluminous information about each of their customers. The most successful salespeople often have three or four bulging books, to which they seem religiously attached according to Betsy Sanders, the vice president who orchestrated the firm’s wildly successful penetration of the tough Southern California market. “My objective is to get one new personal customer a day,” says a budding Nordstrom star. The system helps him do just that. He has a virtually unlimited budget to send cards, flowers, and thank-you notes to customers. He also is encouraged to shepherd his customer to any department in the store to assist in a successful shopping trip.

He also is assisted by what may be the most liberal returns policy in this or any other business: Return anything, no questions asked. Sanders says that “trusting customers,” or “our bosses” as she repeatedly calls them, is vital to the Nordstrom philosophy. Jim Nordstrom told the Los Angeles Times: “I don’t care if they roll a Goodyear tire into the store. If they say they paid $200, give them $200 [in cash] for it.” Sanders acknowledges that a few customers rip the store off—”rent hose from us,” to use an insider’s line. But this is offset many times over by good will—and business—from the 99 percent-plus honest customers who thrive in the matchless “No Problems at Nordstrom” environment that the companylogo proclaims.

No bureaucracy gets in the way of serving the customer. Policy? Sanders explains to a dumbfounded group of Silicon Valley executives: “This drives the lawyers nuts, but our whole ‘policy manual’ is just one sentence: ‘Use your own best judgement at all times.'” One store manager offers a translation: “Don’t chew gum. Don’t steal from us.”

But it’s not all peaches and cream. The pressure to sell is high, with regular contests and a high-energy atmosphere (plus desire to hold onto what most consider the plum job in retailing). Moreover, management is highly visible, coaching and “helping people develop that good judgement” which the policy manual says is essential. As with Leonard of Leonard’s and Sewell of Sewell Village, the Nordstrom brothers are constantly in the stores as

These stellar operations share another trait: lack of complacency. Leonard says reading the (rare) negative customer feedback gives him ulcers. And Sanders is unsparing in her criticism: “We fall miserably short [of what’s possible],” she says, adding, “If we did our jobs right, there would be no need for malls, just Nordstrom.”

Major studies consistently show that top service—fromcomputers to retailing—pays handsomely. So why are the Nordstroms anomalies? I just don’t know. When will we learn that common sense—that is, slavish devotion to the customers and those who serve them—pays?

(c) TPG Communications (1986)

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