TL;DR

What: To survive in retail, customer service is key

What Singapore Retailers Can Learn From One of America’s Top Retailer – Nordstrom

The deluge of e-commerce did not stop Nordstrom from growing its retail presence.

Nordstrom retail store
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The situation was tense. Time was of the essence.

The employee tried to call her several times as he drove to the airport with her bags.

A Nordstrom housekeeping staff at Connecticut found a customer bag together with her receipt and flight itinerary in the parking lot.

Guessing that the customer probably left the store directly to catch her flight at John F. Kennedy International Airport in New York, he looked up her phone number in the company’s system. The employee tried to call her several times as he drove to the airport with her bags.

When he got to the airport, the customer still hadn’t picked up the call. He had the airport page her to let her know that he had her bags.

Thankfully, the customer responded, retrieved her belongings and caught her flight with a spring in her step.

Nordstrom – a multi-billion dollar American retailer

What you’ve just read is merely one of the countless heroic customer service stories surfacing from Nordstrom – America’s most customer-oriented retailer.

While other brick-and-mortar retailers struggled against the onslaught of e-commerce, Nordstrom thrived, successfully expanding its physical presence and venturing into the online retail market.

First established in 1901 as a small shoe retailer by a Swedish born immigrant, Nordstrom has grown over the years to become one of the leading names in the fashion and apparel industry in America.

As of November 2018, Nordstrom operates a total of 380 stores,  including 122 full-line stores in the United States, Canada and Puerto Rico; 244 Nordstrom Rack stores; three Jeffrey boutiques; two clearance stores; six Trunk Club clubhouses; and three Nordstrom Local service concepts.

With a presence in 40 different states in the US, the Seattle-based retailer hires 72,500 employees around the world and generates annual sales of some $15.5 billion a year.

While other brick-and-mortar retailers struggled against the onslaught of e-commerce, Nordstrom thrived, successfully expanding its physical presence and venturing into the online retail market.

Nordstrom became a truly omnichannel retailer.

Only one rule for customer service

Famed for its legendary customer service, Nordstrom has only one rule for its employees:

Rule #1: Use your good judgement in all situations. There will be no additional rules…”

“…Our number one goal is to provide outstanding customer service. Set both your personal and professional goals high.

We have great confidence in your ability to achieve them…

Rule #1: Use your good judgement in all situations. There will be no additional rules…”

This seems to be working well for them. Up till 2017, Nordstrom has been making the Fortune 100 Best Companies to Work For list for 20 years in a row.

Wondering what else sets the family-run Nordstrom (it is now helmed by fourth-generation members of the Nordstrom family) apart from the rest, I decided to read the book “The Nordstrom Way” by Robert Spector and Patrick D. McCarthy (a former superstar salesperson in Nordstrom).

11 principles of great customer experiences

Written in an easily digestible narrative, it documents the company’s corporate values and obsessive focus on customer experience.

Here are some of the key learning points

#1 Customer interest over company interest

Be relentless in pleasing and delighting the customer, no matter what it takes.  Nordstrom’s approach is such that sales associates should place precedence on the customer’s interest over the company’s interest no matter what it takes.

#2 Only hire the best employees

Be stringent in hiring employees and ensure that they have the right attitude and values. Sales skills can be taught but not a smiling face. Nordstrom makes it a point only to recruit extremely service-oriented staff.

Motivate them to behave like entrepreneurs who are running their own mini-shops in specific departments.

#3 Empower employees like entrepreneurs

Once you hire the best, you should empower them as much as possible to do everything humanly possible to ensure that a shopper leaves satisfied and happy.

Motivate them to behave like entrepreneurs who are running their own mini-shops in specific departments. Offer awards, prizes, and certificates for top sales and service performers.

Creativity rather than following formulas are valued at Nordstrom.

#4 Peg pay to sales and customer experience

Peg employees’ pay, commission, and bonuses to achieving specific sales quotas, but emphasise that they should never hard-sell to a customer and sour the shopping experience.

Customer experience is number one and takes precedence over sales if both are in contention.

#5 Celebrate heroic examples of customer service

Celebrate “heroics”, i.e. tales of superlative service. One of the most famous examples happened in a store in Anchorage, Alaska.

A customer returned a set of tyres to a Nordstrom store even though they did not sell tyres. What the sales associate did was to find out where the original store was and returned it for the customer while refunding him on the spot!

#6 Build deep relationships with customers

Sales associates are account managers rather than clerks in Nordstrom. They each have a notebook to jot down key details like customer sizes, preferences, phone numbers, birthdays and other pertinent details to strengthen and build customer loyalty by developing deep relationships with them.

The greatest selling tool is the telephone, and Nordies use it regularly to call their clients.

… make it convenient and easy for them to return the goods by paying for postage both ways.

#7 Offer unconditional money-back guarantees

Offer unconditional money-back guarantees for your goods sold for the 98% of customers who are honest. Better yet, make it convenient and easy for them to return the goods by paying for postage both ways.

Back this up with the lowest-priced guarantee of refund if a customer can find the product being sold more cheaply anywhere else (a common practice in the States now).

#8 Decentralise management

Decentralise as much as possible – hiring of personnel to department managers, buying of merchandise, and so on.

#9 Stock inventory deep and wide

Nordstrom offers the most comprehensive selection in the business, and ensures that customers don’t walk because they fail to find “the right product at the right size at the right price at the right place”.

#10 Create environments that encourage extended stays

Design your shop layouts and furnishings to entice shoppers to stay as long as possible within the department store.

Make it easy for them to gain access to their respective areas of interest (men’s wear, women’s apparel, children’s etc.).  Make aisles wide enough for strollers and wheelchairs and take care of the comfort of your guests by providing comfortable sofas and chairs to sit on.

… embrace the tenets of a reverse pyramidal organisation structure

#11 Reverse pyramid organisation structure

Finally, embrace the tenets of a reverse pyramidal organisation structure, where customers are at the top rung, followed by sales associates, department managers, buyers, district managers, senior managers and finally the co-chairmen at the bottom.

High staff standards – boon or bane?

While the above principles are critical to the success of Nordstrom, they also set very high standards for its employees. Not everybody can survive in its high-pressured environment of sales, service and satisfaction where poor performers are regularly weeded out. This has led to numerous major run-ins with the retail union. This has been costly for the company in terms of reputation and legal fees.

Can our retailers follow suit?

Treating one’s staff well, empowering them with a strong sense of purpose, rewarding customer-oriented behaviour, and going the extra mile for customers can make all the difference.

It would be great if retailers in Singapore can embrace some of these ideals by treating their retail associates as empowered entrepreneurs (with the right compensation that is commission-based) so that they, in turn, can treat shoppers as guests rather than intruders.

Treating one’s staff well, empowering them with a strong sense of purpose, rewarding customer-oriented behaviour, and going the extra mile for customers can make all the difference. By doing so, you create strong staff and customer loyalty. The effort you have invested will easily pay for itself through improved employee retention and customer lifetime value.

This article first appeared on Cooler Insights.

Feature image by Pacific Architectural Concepts.


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