Loyalty
Some companies demand loyalty from personnel, but we felt that loyalty should first come from us to them. Loyalty is something earned, not expected.
—Elmer Nordstrom
Loyalty is a feeling of strong support for someone or something. We all crave it and once we have established loyalty we nurture it, because loyalty, like truth and respect, can be lost in the blink of an eye.
Loyalty—to customers, colleagues, vendors, and community—is the by‐product of respect, recognition, and reward for a job well done. Loyalty helps to create a bond and allegiance that enables us to get through the inevitable challenging times. The only way people will be loyal to an organization is if they are shown appreciation, given respect, and rewarded with good pay and a piece of the action.
Because brothers Everett, Elmer, and Lloyd of the second generation of Nordstroms believed that the commitment to loyalty started with them, they dedicated themselves to providing opportunities for their employees to make more money than any other retail salespeople in Seattle.
“We did everything we could to get the best people, and once we had them, we did everything we could to keep them,” said Elmer. From as far back as the 1930s, Elmer and his brothers believed in promoting from within, which is a Nordstrom employment practice that endures to this day. (We will be discussing Nordstrom's promote‐from‐within policy in several other sections of this book.) “We wanted our people to know that they could work their way up, while also learning about the business on different levels,” Elmer said.
A Career or a Launching Pad
You can't buy loyalty and job satisfaction. You can rent them, but you can't buy them. Golden handcuffs (benefits and/or deferred payments that an employer provides in order to discourage an employee from leaving) might be an effective short‐term solution, but that approach is less effective over the long term. Many good people will sacrifice dollars for a place that values and trusts them.
That's not to say that money doesn't matter. Nordstrom instituted profit sharing back in 1952 because the brothers wanted to make sure that their employees who had done a great job would have money for retirement beyond Social Security.
“It was a natural development that reflected our basic philosophy: The better we treated our people, the better our people performed,” recalled Elmer.
Nordstrom believes that its employee profit‐sharing plan helps it attract better personnel who see themselves as part owners of the company. (We go into more detail on profit sharing in Chapter 7: Competition and Compensation.) Profit sharing sparks motivation and encourages allegiance to a company where individuals can see the potential of building a career. Over the course of our research, including countless interviews with Nordstrom employees, we heard many stories of individuals initially joining Nordstrom for a summer job or part‐time job while they were getting their higher education, but who then chose to stay because of the career opportunities and the potential to make a very nice living and to retire in comfort and security.
Nordstrom management understands that it's imperative to find career advancement opportunities and other ways to keep bright, talented, motivated people.
“I don't think we would have blossomed if we didn't grow,” said Erik. “People wouldn't have seen the opportunities and would not have stayed. There are lots of examples of people who have had great careers with this company. They started on the selling floor and grew with the company. They are the ones who are responsible for our reputation.”
Adrienne Hixon, a store manager who has worked for Nordstrom since 1992, told us that she “grew up on the sales floor.” Starting as a seasonal cashier because she needed a job, “I was going to stay here until I got my ‘real’ job,” she said. “I'm still here.”
The company nurtures the development of employees and offers a “My Career” website and ongoing coaching feedback.
“We view career development as a shared responsibility among managers, employees, and the company,” said Pete. “Our approach is to enable our leaders to be the teachers as well as the developers of their people's growth.”
Nordstrom feels that even people who don't make a career with the company can benefit from working there. Over the course of our research, we've met people who worked at Nordstrom for a period of time, learned valuable lessons, and went on to careers in law, real estate, sales, and virtually every kind of field you can imagine.
Pete recalled the time he was asked to discuss career choices with a young woman starting out in the business world.
Diversity
Nordstrom salespeople come from all walks of life.
“Our people don't have one look, one background, one culture,” says Erik. “The common thread is they are themselves. They are genuine.”
Nordstrom recruits through targeted media, job fairs, community organizations, and college placement centers. The company reaches out to communities in which it operates to recruit, employ, train, and promote ethnic and racial minorities in its general employee and management ranks. It has historically been ranked among the “50 Best Companies for Minorities” in the United States by Fortune magazine.
As of 2017, of the company's total employment of approximately 72,000 people, 51 percent were people of color and 70 percent were women. It is among the top 50 companies in the United States based on wages of women corporate officers, and women constitute more than 40 percent of its corporate officers.
“What makes this thing work is that it is such a diverse group of people, with all these different experiences,” said Blake. “I believe we are the sum of our experiences. How do you hire people with those elements and also get different points of view? That's the challenge. We have to be reflective of our communities and our customer base. We need to encourage different styles and points of view.”
Nordstrom is considered the first upscale retailer to advertise in Ebony, a magazine that caters to African Americans. It also advertises in other publications targeted to people of color, including Asian Enterprise Magazine, Minority Business News USA, Hispanic Business, Black Enterprise, and Ability.
Nordstrom regularly features models that reflect the population's various ages, races, and disabilities, which is “really about reflecting the customers and communities we serve,” said a company spokesperson. “We serve diverse customers, and it's an opportunity for them to see themselves when they're looking through our print catalog or online. We don't promote it or go out and talk about it. We just think they look great.”
Leadership Model
In addition to its concentration on service and people, Nordstrom focuses on leadership development, which is grounded in experiences. The best leaders at Nordstrom are the ones with the most diverse experiences, the most mentors, and the most ups and downs. Adversity is a great teacher.
“The biggest learning comes from the toughest experiences,” said Blake. “We used to be prideful of our silo approach: You start in the shoe stockroom, you sell shoes, you become a shoe department manager or a shoe buyer. You're a specialist in shoes. Today, our people move to different departments and different parts of the country and get to work with and learn from different people. That kind of experience creates a much better leader.”
Steve Wilkos, winner of the company's highest honor—the John W. Nordstrom Award—tells new employees: “Try to learn a little bit from a lot of different people. Sometimes we get too locked in working for a certain leader or particular division. You don't get well rounded that way. I believe the more people you can work for at Nordstrom, the better off you'll be. Your career at Nordstrom is yours to build. There are no rules.
“That's a tough concept for a lot of people to understand. Most people miss it because they're looking for this big magical system. It's not there. At Nordstrom, you come in, be yourself, take care of the customer, and have some fun. If you can do that, you can do anything you want in this company.” Wilkos's philosophy is summed up by the sign‐off he uses on his e‐mails: “Smile. Have Fun. Sell Stuff.”
The John W. Nordstrom Award is bestowed on the manager who best exemplifies the characteristics of the founder, which the company lists as, “hard work, persistence, servant leadership, loyalty, honesty, ethics competitive spirit, and an unwavering commitment to putting the customer first.”
John W.'s great‐grandsons Blake, Pete, Erik, and Jamie, solicit nominations from regional managers, who in turn request them from store managers. Generating good sales numbers is one major criterion, but the winner must also be a selfless team player and committed to doing business the Nordstrom Way.
The identity of the winner is known only to the handful of people who will keep it a surprise until it's announced at a regularly scheduled regional Recognition Meeting.
Nordstrom likes to add a little drama to the proceedings for maximum impact. While the regional manager is conducting the meeting, all of a sudden the Nordstrom family members make their surprise entrance. The employees erupt as if the Beatles had just shown up because everybody knows that something special is about to happen. The Nordstroms announce the winner—who is taken completely by surprise. The winner springs up to the front of the room, and suddenly here comes his or her spouse and children (who have been notified in advance) to share the moment. Tears and laughter abound.
Each year, the new and past winners of the John W. Nordstrom Award attend a dinner in Seattle, hosted by the Nordstrom family. The company pays for the travel and lodging for the winners and their guests—even if those past honorees are no longer working for the company. Now that's loyalty.
Best Places to Work
Nordstrom has been ranked among Fortune magazine's “100 Best Companies to Work For” every year since the list was first published in 1998. In the most recent survey, Nordstrom was the third‐oldest firm, trailing only Goldman Sachs and American Express. It is also one of the 25 most‐admired companies in the United States, according to Fortune. It is one of only five companies to make Fortune's “Best Companies to Work For” and “Most Admired” every year the survey has been taken.
The company is one of Fortune's “100 Best Workplaces for Millennials.” According to one millennial frontline salesperson: “This is the first retail establishment that I've worked for where supervisors above my managers have taken an interest in my well‐being and performance. Management tries their best to make sure new hires feel welcome by maintaining their open door policy and always being available for anyone, whenever they need to talk.”
Every year Nordstrom scores a perfect 100 percent on the Human Rights Campaign's annual Corporate Equality Index (CEI) survey, which rates large U.S. employers on their policies, practices, and benefits related to gay, lesbian, bisexual, and transgender communities and employees, recognizing the company for creating a workplace that is committed to equality for gay, lesbian, bisexual, and transgender employees.
Some salespeople who work at Nordstrom may find that they are in the wrong job. If selling is not their strong suit but they like working for the company, Nordstrom will find a place for them in a nonsales position. They don't want to lose people who have been with the company for several years, because such people understand the culture and can be valuable team players.
A (Bob) Love Story
You might not be aware of who Bob Love is, but old‐time fans of the Chicago Bulls of the National Basketball Association will tell you that before there was Michael Jordan, there was Bob Love. Love was a star forward for the team from the mid‐1960s to the mid‐1970s, and was the team's all‐time leading scorer, until Jordan. (Love is still third, behind Jordan's teammate Scottie Pippen.)
Love, who grew up in poverty in rural Louisiana, finished his NBA career in 1977 with the Seattle SuperSonics. After a debilitating back injury, financial problems, and the breakup of his marriage, he had almost hit rock bottom. Adding to his difficulties was a severe stutter, which made it difficult to find a job. In the 1980s, he got a job busing tables and washing dishes at the restaurant in the downtown Seattle Nordstrom store, at $4.45 an hour. It was hard to miss a 6‐foot 8‐inch African American busboy. When he was recognized, people would whisper, “Hey, that's Bob Love. What a shame.”
This is how Love described what happened next, in his book The Bob Love Story:
After trying to work with several speech therapists, Love finally found a woman who could reach him. Part of his therapy was speaking in front of groups, which he had never done before. It worked. After several promotions in Nordstrom's food services division, Love eventually left Nordstrom and was hired by the Chicago Bulls as the team's goodwill ambassador, representing the organization at various functions throughout the Chicago community. To this day, he makes more than 300 appearances a year at schools, charity events, basketball clinics, and nonprofit agencies, and is an honorary spokesperson for the National Stuttering Federation of America.
The depth of his loyalty and appreciation to Nordstrom cannot be measured.
Customer Loyalty/Sell a Relationship
Until he retired in 2000 after almost three decades, Patrick McCarthy was the quintessential Nordstrom employee. For the last 25 of those years, McCarthy sold men's tailored clothing in the downtown Seattle flagship store and was number one in sales throughout the chain for an astonishing 15 years in a row.
An entrepreneurial self‐starter, like all top Nordstrom salespeople, McCarthy, who considered himself “a franchise within a franchise,” was, in his day, one of the best‐known salesmen in Seattle. He drew from a personal client list of 7,000 people, ranging from recent college graduates to chief executive officers to United States senators.
McCarthy used to tell the story of playing golf one day with a couple of people who didn't know who he was. At the first tee, one stranger who was in his foursome asked the standard getting‐to‐know‐you question: “What do you do for a living?”
To which McCarthy replied: “I sell a relationship.”
The questioner flashed a quizzical look, and then returned to the golf game. But at the second hole, he had to ask the question again: “No, really, what do you do for a living?”
McCarthy replied: “I sell men's suits at Nordstrom.”
“Oh, so that's what you do,” said the stranger, fully satisfied with the answer.
“No,” McCarthy replied. “That's not what I do. What I do is sell a relationship.”
And that's exactly what all successful businesses and salespeople do—sell relationships.
“It's not easy to attract a new customer and it's not easy to keep them,” said regional manager Greg Holland. “You earn your business one customer at a time.”
It is axiomatic that people like to do business with people they like. If your product or service is similar to your competitor's, and the price for that product or service is similar to that of your competitor, what will be the reason why you get the business and not your competitor? The answer to that question is the relationship you have with your customer and the trust you have built up over time. Once you've established and nurtured that relationship and never take it for granted, why should your customer go anywhere else?
Nordstrom is constantly reinforcing the value of relationships to its sales force because a loyal customer invariably goes back to the same salesperson. That's how you build your business—by being trustworthy, reliable, keeping your promises, and making adjustments along the way as conditions change.
“A lot of times, salespeople are in a rush to make a quick sale,” said clothing salesman Van Mensah. “But a quick sale is not nearly as valuable as a long‐term relationship. If a customer is looking for a specific item, you do everything possible to find it for him. I don't think I'm providing the customer with good service unless I exhaust all the avenues within the company to satisfy the customer's needs. That extra effort is going to sustain your business in the long run.”
Customer Loyalty to a Salesperson
Customer loyalty is the coin of the realm in business. Nordstrom salespeople generate that loyalty by taking ownership of the customer and the customer experience. But what's even more remarkable about the Nordstrom culture is how customers feel about Nordstrom salespeople.
In our consulting practice, when we speak to clients, invariably someone in the audience will come up after our presentation and open the conversation by saying, “I have this Nordstrom salesman,” and proceed to tell a story about outstanding customer service—either one spectacular example or just a description of a good, solid, steady, loyal relationship that has grown over the course of several years.
In most sales cultures, salespeople are always claiming a customer as their own. But when a customer claims a salesperson as his or her own, that's powerful; that's a relationship. That's loyalty.
Pat McCarthy saw that loyalty firsthand when he was mentored by his role model, a Nordstrom salesman named Ray Black. Black was a professional men's clothing salesman, thoroughly knowledgeable about the merchandise. Before joining Nordstrom, Black had worked for many years in several of downtown Seattle's finest specialty menswear shops, and his loyal clients followed him from store to store. “They came into the department asking for Ray because he identified their needs and knew how to satisfy them,” said McCarthy. “If Ray wasn't working that day, those clients would turn around and leave. They only wanted Ray to work with them. Men saw him as an ally. They heeded his advice on where to get a good haircut or what style of glasses to wear. Their wives saw Ray as the mediator who could interpret their views to their husbands.”
Every transaction, every touch point, is an opportunity to create a meaningful moment, an emotional connection that will endure—a relationship. Therefore, in every customer interaction, you and your team must consider these three questions:
- Am I enhancing the customer experience in a meaningful way?
- Am I creating loyalty by satisfying the customer?
- Am I contributing to the financial health of our organization?
The answer to each one of these questions must always be a resounding “Yes!”
Stories of Loyalty
Do you know one small gesture that can make a huge difference in your business relationships? Remembering the customer's name. That small but meaningful touch gives customers the feeling that they are important and that their business is valued. According to Nordstrom, of all the questions the company asks its customers, the one that most highly correlates with how much money they spend is: “Does the salesperson remember me from my last visit?”
A top seller in a women's department in California remarked, “As simple as it sounds, it's very important to look the customer in the eye and call her by name. Then you need to learn her style and her size. When she comes back, you can pull her size right away and say, ‘These jeans should fit you perfectly.’”
That kind of service engenders loyalty.
“Loyalty is why I fly in [to Phoenix] from Santa Fe, New Mexico, twice a month to get products,” wrote a customer about a salesperson named Thomas. “Loyalty is never hesitating on where I'm going to shop for a new pair of shoes, or a Michele watch for my better half, or even those custom shirts that you all make for me that fit so perfectly. Loyalty, in a world of many options, does not come easy and is very hard to learn. I commend Thomas for solidifying my loyalty to Nordstrom.”
One saleswoman studies the travel schedule of a good customer who often travels to Europe, “so I could schedule her alterations appointments or find a dress for a special event or a new suit if she was meeting with a foreign dignitary,” said the saleswoman.
“We believe with every fiber of our being that our customers are smart,” said chief innovation officer Geevy Thomas. “You can't fool them on pricing. We have a sign in the employee area of The Rack: ‘Our customers are not loyal. They expect the best product at the best price every day.’ They want us to win, but if somebody else has the same dress for a dollar less, they are going to buy it there. We should have no delusions about that. We have to earn the business every day.”
Twenty percent of customers are members of Nordstrom's loyalty program, and that 20 percent accounts for about 40 percent of the sales. Loyalty program members “visit” (go to the store, log in, text, or call) Nordstrom twice as much as nonmembers and spend three times as much money.
Responding to customers' requests, Nordstrom continually works on offering a more personalized, flexible, and inclusive loyalty program that allows customers to earn points to get exclusive perks including private shopping parties and early access to sales, regardless of how they choose to pay for their purchases—whether through Nordstrom credit, store cards, or outside credit cards.
Robert Spector has his own story about valuing the loyalty of customers. As a young man, Robert, like his grandfather, father, mother, uncle, sisters, and cousins worked in their family butcher shop in a farmers' market in Perth Amboy, New Jersey. Robert went to college in Lancaster, Pennsylvania, which is about a three‐hour drive from Perth Amboy. One Saturday, toward the end of Robert's senior year, he was back in Jersey, working behind the counter at his dad's shop.
A long‐time customer said, “Robert, I hear you're about to graduate college.”
“Yes, I am,” said Robert.
“You should thank me,” said the customer.
Robert looked at the customer quizzically, wondering what he meant. The customer saw that Robert was puzzled, and proceeded to explain his statement: “I've been a loyal customer of your dad's for 25 years. I paid for your college education.”
To that, Robert had a simple, two‐word response: “Thank you!”
That brought home the message that every customer is valuable—not just for the business that they are giving you today, but for all the business they are giving you over the course of a lifetime, based on trust, respect, and loyalty.
Vendor Loyalty
At Nordstrom, the importance of relationships and loyalty extends to its vendors.
Many of Nordstrom's relationship “secrets” are actually old‐fashioned ways of doing business. The second generation of Everett, Elmer, and Lloyd weren't just working hard in their stores; they were also cultivating relationships with their vendors in the shoe industry.
“We built rapport with our suppliers and treated their representatives with common courtesy,” said Elmer. “For instance, we always believed that when a traveling salesman came to town, they should be entertained by us and not the other way around. We would pick up the tab in restaurants and quite often invited salesmen to our homes for dinner. Our families reported that they looked forward to these dinner guests.”
Bruce has fond childhood memories of his dad Everett bringing home traveling salesmen and manufacturer representatives for dinner and drinks.
“If we had had a larger house, we probably would have let them sleep there,” said Bruce. “We got to know these salesmen well. My sister Anne and I looked forward to one particular salesman coming to our house because he always brought us big all‐day sucker lollipops.”
The loyalty that the Nordstroms developed with their vendors helped them during the Word War II years, when the supply of leather was tightly controlled. Domestic footwear production was allocated primarily for military use, and retailers were rationed a quota of shoes that they could sell. Once they reached their daily quota, many other Seattle shoe stores closed for the day. The Nordstrom brothers did the contrary.
“I vividly remember the specific days during the course of the year when ration stamps came due and customers were allowed to use them to buy a pair of shoes,” recalled Bruce. “There were so many people lined up, waiting to get into our store that the fire department would allow in only a certain number of people at one time. The customers would literally buy everything we had.”
Because Nordstrom paid its suppliers in advance, the company was able to get its hands on many pairs of shoes when its competitors couldn't. Because it was usually offered the right of first refusal on available merchandise, Nordstrom earned a reputation for being a store that was well stocked. By the end of World War II, Nordstrom became the largest independent shoe store in the United States and one of the largest in the world in terms of square footage and volume.
Vendors continue to play an active role in the business, all the way to the selling floor. Nordstrom wants vendors to have relationships with salespeople and department managers to help with presentation and product knowledge. Nordstrom holds its vendors accountable. Product is everything. Loyalty is required; it's not optional.
“Nordstrom wanted to find a way to recognize the people who do it the best; people who not only make the best products but are honest and ethical and really a pleasure to be partners with; people who care about our success and people whose success we care about,” said Bruce.
Nordstrom reciprocates its loyalty and appreciation to vendors with a special recognition. Every year since 1992, Nordstrom selects several companies from more than 30,000 of its vendors to receive its Partners in Excellence Award to recognize the invaluable role vendors play in helping to create the best possible shopping experience. To be chosen, a vendor must be customer‐centric and consistently demonstrate a commitment to quality, value, service, partnership, and business ethics. Over the years, these honorees have included relatively new companies as well as long‐standing ones such as Estée Lauder, Nike, Ralph Lauren, Tommy Bahama, Hugo Boss, Josie Natori, and UGGs shoes.
Nordstrom is well known for taking a chance on a vendor, nurturing that relationship, and helping that vendor grow—not only within Nordstrom, but also within the retail industry.
One example is the shoe company named for its founder, Steve Madden, who told Women's Wear Daily, “There would not be a Steve Madden brand without Nordstrom. They allow entrepreneurs like myself to have a national base.”
When Nordstrom talks with vendors, the big question is, “How can we do more together?”
Brands covet an invitation to win shelf space at Nordstrom. When Madden was first asked to attend a Nordstrom buyer's meeting, “It was like an invite to the White House,” he said.