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Robert Spector co-wrote the book on Nordstrom (literally). Here, in an article previewing his new book, Lessons From Nordstrom, due for publication late Spring 2000, Robert identifies some of the key Nordstrom management principles that other organizations have successfully emulated.
Learning Points
LESSONS OF THE NORDSTROM WAY
The 8 Management Principles of America’s #1 Customer Service Company are:
- Provide Your Customer With Choices
- Create An Inviting Place for Your Customers
- Hire Nice, Motivated People
- Sell The Relationship:
Service Your Customers Through The Products And Services You Sell
Empower Employees To Take Ownership
Dump The Rules: Tear Down Barriers To Customer Service
Encourage Internal Competition
Commit 100% To Customer Service
© Robert Spector
About the author
Robert Spector is a business writer and acute observer of corporate cultures. He is the author of corporate histories including Chevron, Eddie Bauer and Kimberley-Clarke. He is co-author of The Nordstrom Way and author of two new books: Amazon.com! Get Big Fast and Lessons From The Nordstrom Way. You can find these books in our eBooks Store
A note on Language Conventions
Some of our articles, like this one, are written in US English. Others use UK English spelling. Throughout the site we have tried to achieve a balance between the two, to reflect the cultural balance of our site users.
You can find out more about Robert Spector in the
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Spector Speaks!
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The author’s book, Amazon.com Get Big Fast, is in our
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Robert Spector is author of The Nordstrom Way, available through our eBooks Store
Look out for The Nordstrom Employee Handbook - all 75 words of it - at the foot of this article
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The scene is downtown San Francisco. The time is the late 1980s. Nordstrom, Inc. has just opened up a four-story, 325,000 sq. ft. store on Market Street. But this story does not take place at Nordstrom; it takes place at the Emporium, another department store in downtown San Francisco.
A male customer has just purchased a dress shirt at the Emporium and begins to walk out of the men’s wear department. He takes a few steps and then hears his salesman call, "Wait! Stop!"
The shocked customer freezes in his tracks.
The Emporium salesman walks over to the customer, grabs the shopping bag, fishes the receipt out of the shopping bag, scribbles the words "Thank you," on the receipt, puts the receipt back in the bag, hands the bag back to the customer and says with a sigh, "Ever since Nordstrom came to San Francisco, we have to do this."
The scene switches to the other side of the U.S. It’s the early 1990s. Nordstrom has recently opened a new store in the Garden State Plaza in Paramus, New Jersey, which is just across the George Washington bridge from Manhattan. A woman customer begins getting frequent follow-up telephone calls and reminders of upcoming sales from a saleswoman at Macy’s, another anchor tenant in the mall. When the customer asked the Macy’s employee why she was so diligent, the employee answered that she was developing her customer-service habits because "I’m waiting to be hired by Nordstrom."
So, what is it about Nordstrom, the 98-store, 98-year-old Seattle, Washington-based retailer? How did it get to be the gold standard of customer service? What are the customer service principles by which Nordstrom runs its business? And what can you learn from these principles?
The Beginning
You can’t understand Nordstrom without knowing its origins.
Nordstrom, like many great retailers, was founded by an immigrant—a man named Johan W. Nordstrom. The middle child of five, Johan was born February 15, 1871, in the town of Alvik Neder Lulea, in the northernmost part of Sweden, 60 miles below the Arctic Circle. Because his family farm was too small to share with his older brother, Johan left Sweden in 1887, the winter he turned 16. With 450 crowns (about $112) of his modest inheritance, he bought a suit, "the first clothes I had ever had on my back that were not homespun and hand woven."
Landing at Ellis Island, New York, Nordstrom, who spoke no English, worked his way West. He was a day laborer in Michigan; a coal miner in Iowa; a gold and silver miner in Colorado; a logger of Redwood trees in California, and Douglas Fir trees in Washington State; and, finally a potato farmer near Seattle.
In 1897, he traveled to the Klondike region in Canada’s Yukon Territory, where gold had been discovered. Two years later, he struck gold and made $13,000.
Nordstrom, who anglicized his name to John, eventually returned to Seattle, got married and looked for a business to invest in. In 1901, he opened up a tiny shoe store in downtown Seattle with an old Klondike pal, Carl F. Wallin, who owned a shoe repair shop. They called their store Wallin & Nordstrom.
Selling shoes was a rather odd venture for both men, who spoke only broken English, and wore ill-fitting, rumpled wool suits that bunched up at the knees and elbows. In a privately published family history, John Nordstrom later recalled:
| I had never fitted a pair of shoes or sold anything in my life, but I was depending on Mr. Wallin’s meager knowledge of shoe salesmanship to help me out. Well, this opening day we had not had a customer by noon, so my partner went to lunch. He had not been gone but a few minutes when our first customer, a woman, came in for a pair of shoes she had seen in the window. I was nervous and could not find the style she had picked out in our stock. I was just about ready to give up when I decided to try on the pair from the window, the only pair we had of that style. I’ll never know if it was the right size, but the customer bought them anyway. |
What I love about that story is that John Nordstrom, without even realizing it, instinctively discovered the essence of customer service the Nordstrom way: do whatever it takes to satisfy the customer. Although he was a retail neophyte, he made sure that the customer was not going to leave without his making a sale. It’s been that way ever since at Nordstrom, where the greatest sin is to "walk" a customer—i.e., to lose a sale by not having what the customer wanted.
Opening day sales at Wallin & Nordstrom totaled $12.50. By way of comparison, this year Nordstrom will have sales in excess of $5 billion.
A Family Business
By the late 1920s, John’s three sons, Elmer, Everett and Lloyd, bought out their father and Carl Wallin. The three ran the business until the late 1960s, opening additional stores in Seattle and Portland, Oregon, and running the shoe concessions in many department stores across the western U.S. The downtown Seattle store became the largest independently owned shoe store in the United States, with annual sales of $12 million.
In the late 1960s, the three sons handed over the reins of the company to the next generation of Nordstroms: Everett’s son, Bruce A.; Elmer’s two sons, James F., and John N., and John "Jack" McMillan, who was married to Lloyd’s daughter, Loyal. All four were University of Washington graduates, with degrees in business. Like their fathers, the three younger Nordstroms began working in the store as children, and continued to sell shoes throughout high school and college; McMillan also started working for the store while an undergraduate. Trained from the sales floor, the third generation was literally and figuratively "raised kneeling in front of the customer," said Bruce.
The same can be said for the fourth generation of Nordstroms—six cousins all in their thirties—who began running the company in 1995. They include Bruce’s sons Blake, Peter and Erik; James F.’s sons Daniel and William; and John’s son, James A., who are all co-presidents of the company. The chairman of the company is John Whitacre, a long-time Nordstrom employee, who is the only non-family member to hold that position.
Nordstrom Customer Service Principles
In my forthcoming book, "LESSONS OF THE NORDSTROM WAY: The 8 Management Principles of America’s #1 Customer Service Company" (John Wiley & Sons. Editor’s Note: We’ll put it in our eBooks Store and alert you as soon as it is published), I have identified the elements that make Nordstrom Nordstrom—and how they can be emulated by virtually any company in virtually any business. Here are some explanations and examples of four of those principles
Provide Your Customers With Choices
Nordstrom has always provided its customers with wide and deep inventories. A typical Nordstrom store carries between 150,000 and 200,000 pairs of shoes, with the world’s widest selection of sizes and widths—from 2 1/2 to 14, AAAAAA to EEE, for women; 5 to 18, AAA to E, for men, in a broad range of colors.
The same philosophy extends to apparel and cosmetics because, at Nordstrom, customer service means stocking the right item, in the right size, in the right color, at the right price, at the right time. Anything less than that is not customer service. And if the Nordstrom store you’re shopping in is out of a particular size or style or color, Nordstrom sales people will call up every store in the chain to track down that item. Occasionally, they’ll even go over to a competing store and buy the item and resell it to the customer. Whatever it takes.
The greater the selection, the less chance that a customer will leave the store disappointed. "You can stock a pump in navy blue and black calf and red and green," said John Nordstrom, grandson of the founder, "but if the customer wants it in black patent leather, and you don’t have it in black patent leather, you don’t make the sale. And you have to have it in her size. The last thing a sales associate wants to do is to walk back out to the sales floor and tell the customer that you don’t have the shoe she wants."
Create an Inviting Place for Your Customers
Convenience and openness are trademarks of Nordstrom store design. "When customers first come into the store, we’ve got about 15 seconds to get them excited about it," said John Nordstrom of the third generation, who is a student of store design and customer reaction. "First, are they able to meander through the store without impediments, such as narrow aisles? When they’re walking down an aisle, and another customer is coming the other way, do they have enough room to pass? If the answer is no, all of a sudden they’re distracted. Instead of looking at the nice sweater, they’ve got a stroller banging them in the ankles. When they think about our store, they don’t think of jostling and banging, they think of it as a pleasant experience."
Consequently, Nordstrom wants to make it as easy as possible for customers to circulate and shop through the entire store, and for sales associates to help them do just that.
Store layouts typically resemble a wheel. The hub is the escalator well and the spokes are the marbled aisles that lead directly back to each of the 30 or so departments.
The subtleties and details make the shopping experience easy and convenient. The aisles provide ample room for customers to browse (and for people in wheelchairs or parents with strollers to get around) and give shoppers the freedom to circle the store and to plunge into the center of each individual department. By making the aisles around the escalator wide enough, "if someone wants to walk all the way around the store, they’re not fighting through traffic, even on the busiest day. That’s important because, sometimes, that’s the only time we get that customer in the store," said John Nordstrom.
The waiting areas around elevators are extra wide for strollers and wheelchairs, and the elevators themselves are larger than average, making it easier to load and unload those strollers and wheelchairs; escalators are 42 inches wide--compared to most other department store escalators that are 36 inches wide. This extra width allows spouses or children to ride next to each other. Unobstructed sight lines enable the customers riding on the escalators to quickly scrutinize the whole selling floor.
Nordstrom’s large, carpeted dressing rooms, fitting rooms and customer lounges are furnished with upholstered chairs and/or sofas. Fitting rooms in the more fashionable ready-to-wear departments include tables, table lamps and telephones for the customers’ use.
Nordstrom creates a homey parlor or lounge feeling with plushly upholstered sofas and as many as 35 custom-made upholstered chairs, which have legs and arms that are taller than average; the seating is firmer, which makes it easier for a person to stand up.
Nordstrom currently has four restaurant concepts, from an espresso cart to a full-line restaurant called The Pub, which is located near men’s suits. The Pub is so popular during lunchtime that reservations are often required. If there is a lengthy wait for a table, the hostess will give the customer a beeper so the customer can continue to shop; he will be beeped when his table is ready.
Hire Nice, Motivated People
Who doesn’t want to hire nice, motivated people? Nordstrom is looking for people who are already nice and already motivated because the company provides little in the way of a formalized training program.
The company is not necessarily looking for people with previous retail experience, because those people have already learned to say "No" to the customer. Nordstrom doesn’t want them to say "No"; Nordstrom wants them to say "Yes." The company’s preference is to hire a nice person and teach her how to sell, rather than hire a saleswoman and teach her how to be nice. The corollary to that rule is "hire the smile and train the skill." I once asked Bruce Nordstrom who really trains the sales people. His answer was: "Their parents."
Marti Wikstrom, a Nordstrom executive has said, "Someone once asked me, ’Do you think Nordstrom employees are exceptional or do you think they are in an atmosphere where they are expected to be exceptional so they are?’ I don’t know. I think we have some exceptional people and I think we have some average people who work at an exceptional level. And given another set of circumstances, perhaps they would not.
At Nordstrom, they work at an exceptional level because they are supported by the culture."
The best salespeople are entrepreneurial self-starters. Nordstrom gives people the freedom to do whatever it takes to make the customer happy (as long as it’s legal).
If you boil the Nordstrom system down to its essence, it’s that Nordstrom gives the peple on the sales floor the freedom to make decisions—and management supports them in those decisions.
Sales people, who are paid on commission, are judged on their performance, not their obedience to orders. Individual creativity is a by-product of freedom. Working at Nordstrom is not for everybody. Workers are sorted out by a natural selection process where only the fittest survive. The company has very high expectations. If you don’t meet them, you’re gone.
Commit 100% to Customer Service
Every company talks about customer service. What sets Nordstrom apart is that Nordstrom does not consider customer service a strategy, but rather a way of life. Nordstrom continually reinforces this attitude by spreading stories of customer service that are above and beyond the call of duty. In the Nordstrom culture, these stories are called "heroics."
Tom Peters once wrote about a man who sent a letter to Nordstrom that described his difficulty in getting a suit he bought there to fit -- despite several visits for alterations. When the letter reached John Nordstrom’s desk, he sent over a new suit to the customer’s office, along with a Nordstrom tailor to make sure the jacket and pants were perfect. When alterations were completed, the suit was delivered at no charge.
Then there is the story of a customer who fell in love with a pair of burgundy, pleated Donna Karan slacks that had just gone on sale at the Nordstrom store in downtown Seattle. But the store was out of her size, and the sales associate was unable to track down a pair at the five other Nordstrom stores in the Seattle area. Aware that the same slacks were available across the street at a competitor, the associate secured some petty cash from her department manager, marched across the street to a rival department store, where she bought the slacks (at full price), returned to Nordstrom and then sold them to the customer for the marked-down Nordstrom price. Obviously, Nordstrom didn’t make money on that sale, but it was an investment in promoting the loyalty of an appreciative customer, who, more than likely, thought of Nordstrom for her next purchase.
As these stories are spread throughout the organization, employees soon see that the people who run the company encourage, honor and reward oustanding acts of customer service. They discover that management is not just giving lip service to customer service, but actually doing something about it.
Some heroic stories have nothing to do with making a sale. Consider this letter I received after one of my presentations:
Dear Robert:
I liked your talk about Nordstrom customer service so much, that I later went shopping at Nordstrom and bought two pairs of shoes—which—by the way—I will be charging as a business expense!
Here is my Nordstrom story: In the Fall of 1992, I accompanied Linda, my 33-year-old sister, to Seattle, where she was to undergo a bone marrow transplant for leukemia. If you’ve ever seen anyone after they’ve gone through one of these things, you would think they were in a concentration camp. Skinny, pale and sickly looking; no hair - not even eyebrows.
Due to muscle weakness, Linda ended up in a wheelchair. After she was discharged from the hospital, we stayed in Seattle for a few months to keep a constant watch on her progress. At one point, the doctor cleared her to take a few "road trips" to get out of the apartment.
Linda’s favorite thing to do was go shopping, so we hauled the wheelchair and Linda to downtown Seattle, and ended up at Nordstrom. This was our first time in a Nordstrom store. Picture me wheeling around my sister, pale and sickly looking. (I forgot to mention that Linda was a model, and always took pride in her appearance.)
Well, most people avoided us because she looked awful! We were going through the cosmetics area of Nordstrom when a saleswoman stepped out in front of us. She asked if she could put some make-up on my sister! God love her. For one half hour, she made my sister feel like a million bucks.
Linda died shortly thereafter. But I will always remember the Nordstrom saleswoman who made her feel like a beautiful human being—knowing she wouldn’t make a sale, but she made a difference.
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The Future
Today, as it nears the end of its first century in business, Nordstrom is faced with all the challenges of customer service in the 21st Century. In the past few years, the company has found a successful sales alternative in "Nordstrom The Catalog," a direct mail marketing tool that enables customers to conveniently shop with Nordstrom from the comfort of their homes, 24 hours a day. (Nordstrom has long sent out catalogs, including a successful series featuring only private label merchandise, but the company considered them essentially an advertising vehicle for the goods in the stores.) Its web site, Nordstrom.com, has been generating positive response from customers, as Nordstrom figures out the best way to give customer service on the World Wide Web.
And the company is still building stores. By 2000, Nordstrom will have seventy-two full-line stores in twenty-five states, twenty-six of their Nordstrom Rack clearance stores and seven stores that carry only the Faconnable line of men’s wear and women’s wear.
The attitude of the fourth generations of Nordstroms, who are leading their company into its second century, is summed up by co-president Bill Nordstrom, who wrote this in an annual report:
"Our goals remain the same. We want to be the best. Our customers want to shop with the best. Our employees want to work for the best. Our communities need us to be at our best. And our shareowners want to own a part of the best. Being the best at what we do has always been Nordstrom’s goal and always will be. How we become the best is what we must all be willing to question, and moreover, be willing to change."
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FIGURES, CHARTS & GRAPHS
FIGURE 1 The Nordstrom Employee Handbook
Each new employee receives a copy of the Nordstrom Employee Handbook. It consists of one page, which contains 75 words.
WELCOME TO NORDSTROM
We’re glad to have you with
our Company
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.
Nordstrom Rules:
Rule #1: Use your good
judgment in all situations.
There will be no additional rules.
Please feel free to ask
your department manager,
store manager or division general
manager any question
at any time.
Because Nordstrom doesn’t have many rules, employees don’t have to worry whether they are breaking any.
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Source:
| Robert Spector is a business writer and acute observer of corporate cultures. He is the author of corporate histories including Chevron, Eddie Bauer and Kimberley-Clarke. He is co-author of The Nordstrom Way and author of two new books: Amazon.com! Get Big Fast and Lessons From The Nordstrom Way. You can find these books in our eBooks Store |
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