Apropos of pretty much nothing: my two daughters — for whom I live — drove down from Seattle last weekend and threw me a surprise birthday party. The appropriate aphorism: “A good time was had by all.” I just found two party hats in the freezer.
Which provides a seriously imperfect segue into: Nordstrom. Since the time I spent there informs nearly everything I’ve done in business the last thirty years; because what we do as full service agents has been rightfully compared to the Nordstrom model; and because I’ll reference them often, it might be worthwhile to give some background:
I was there when they were just breaking into the California market, before the Department of Labor made them shut down any employee off clock hours — which means a concerned Nordy personally delivering a prom dress to a hormonally anxious deb is considered illegal — and before any organized gangs began using their return policy as a profit center. The employee manual read in its entirety “Use your own best judgment at all times”, twenty five year old buyers were given multi-million dollar budgets with the single instruction “Buy what the customer wants…”, and every employee was given the imprimatur to say only one thing: “Yes.”
In the early seventies one billboard on I-5 leading out of Seattle read “Will the last person leaving please turn out the lights?”, but leading in to the city was another billboard that read simply “We understand there’s a recession. We’ve elected not to participate.” and signed Bruce Nordstrom. When the same Bruce Nordstrom — “Mr. Bruce” in the vernacular — was asked in a meeting why it was necessary to give money back to people who didn’t seem to deserve it, after an eternal icy silence he said: “That’s my money. You’ll give it back until I tell you differently.”
Everyone has probably heard the (true) anecdote of the radial tires returned for a full refund at the first San Francisco store. What everyone doesn’t know is that, while most department stores at the time funded their advertising at 4% of sales, we budgeted 2%. The rest went to funding tire returns.
But Nordstrom isn’t about anecdotes, or even something nebulously labeled customer service. Their success is built on one thing:
No decision Nordstrom makes is made without first considering what’s best for their customer.
Thus while all our competition was scrambling for higher markup to make up for lagging sales, Nordstrom capped its markup at 52% to deliver value. We shopped daily to avoid being under priced. When we’d build a product line we’d put as much into it as possible to boost quality; others took as much out as possible to boost margins. Back then there were buyers in every store, because what customers wanted in one part of the city could be vastly different from a store a few miles away. Employees were recognized and rewarded for going out of their way to serve.
Competitors were never in danger of actually getting it. They’d send executives from all parts of the country to tour, question and watch, then go back to their stores and write memos saying “Smile when people walk in.” Oddly enough that didn’t work, so they resorted to the old standby in order to draw business: another sale.
In relating all this to real estate, here’s what I think: the Nordstrom model is followed every day — passionately — by good agents.
The industry — the NARs, the MLSs — is still stuck in the Department of Labor model: protect the insiders at the expense of the customer.
Don’t we need to change that?
Cari McGee says:
Yay, Jeff! I worked at Nordstrom in So. Cal in the late 80’s. My very first day I was told to follow my instincts…to do what I thought was best for the customer. Nordstrom trusted me to make the right decision. That has governed the way I’ve done business ever since. I KNOW the right answer. I KNOW the right thing to do. I can be trusted. When you believe in your own ability to provide excellent cusotmer service, you just do. When mistrust enters in, service goes out the window. That’s what NAR and various MLS’s need to realize.
May 25, 2007 — 10:09 pm
Jeff Kempe says:
Thanks, Cari. I suspect Nordstrom has trained more than a few good agents: one of the best in the Northwest comes from the same background. I only need another twenty years to catch up!
May 27, 2007 — 8:36 am