S4e7 The Learning from Nordstrom Edition with Robert Spector

James Nathan  00:53

Hello, and welcome to the Only One Business Show with me your host James Nathan and a really exciting guest for me today and hopefully exciting guest for you today as well. This gentleman is an international keynote speaker, a thought leader and author of the business classic The Nordstrom Way – An Inside Story of America’s Number One Customer Service Company. Business Week magazine said “for anyone looking to understand customer service at its best this book bubbles with insights”. It’s also an as an aside from this little introduction, one of my very very favourite customer service books. He’s revised his book a number of times 2005, 2012, 2017. The third edition The Nordstrom Way to Customer Experience Excellence, Creating a Values Driven Service Culture was selected by Forbes Magazine as a top business book in 2017. He’s currently working on another book, The Century Old Startup – the Nordstrom Way to Embrace Change Challenges and Culture of Customer Service. And I guess we’ll have a good chat about that. Other great books in his repertoire the Amazon.com – Getting Big Fast, The Mom and Pop Store: true stories from the heart of America and Anytime, Anywhere – How the best bricks and clicks businesses deliver seamless service to their customers. The 2002 groundbreaking book on omni channel customer service has contributed to many articles in many magazines and newspapers, including the New York Times and the Wall Street Journal and Sports Illustrated, and National Lampoon and has guested on many TV shows and radio shows and podcasts all over the world. Please welcome Robert Spector. Robert, how are you?

 

Robert Spector  02:36

James, it’s great to be with you this morning.

 

James Nathan  02:39

Well, it’s lovely to speak and say I’m really excited because the Nordstrom Way is a fabulous book and one of my very first you know, favourites I think I mentioned before we started I’m one of these people that buys you know, I’ll buy it in an audio book and then I’ll buy it in a hardcopy and just adding to the adding to the pension fund for you there I guess.

 

Robert Spector  02:59

Well, I appreciate it every every little bit helps.

 

James Nathan  03:04

So what got you so fascinated with Nordstrom? How did you get engaged and involved with them?

 

Robert Spector  03:09

Okay, I’m gonna give the abridged version of a painfully long story. So originally, I was a trade journalist for Women’s Wear Daily, which is probably the best known trade magazine newspaper rather for, for the fashion industry. And I initially covered I worked for them in New York, and then I came to Seattle. I initially covered Nordstrom, as part of my duties in the early 90s. I was contacted by literary agent about doing a book on Nordstrom. And in 1995, the book came out became a best seller. So I went from being a journalist to being an expert, and it’s good to be an expert, it pays more. And that’s a, that’s a five year journey that I wanted to condense into a very short story but but that’s the that’s the important part of it. And but I was I’ve always been fascinated by Nordstrom. It’s a unique culture, and dollar for dollar it’s one of the greatest business stories in the history of at least American business. And we can get into the reasons behind that.

 

James Nathan  04:19

Oh well I’d love to I mean for people not listening in the States and may know of Nordstrom but not really know exactly what we’re talking about who are Nordstrom and what’s so special.

 

Robert Spector  04:28

Okay. Well, Nordstrom was started back in 1901 by a Swedish immigrant and a business partner and John W. Nordstrom. He made his money in the Alaskan gold rush of 1900 and opened up a shoe store in 1901. And it was a shoe store for the first 65 years of its existence run by the family, they eventually got into apparel and cosmetics and jewellery etc. And now they do about $16 billion US. And it’s been a public company, publicly traded company since 1971. But there are still people named Nordstrom running the company. And that’s the single biggest competitive advantage that they have.

 

James Nathan  05:15

16 billion is that all, absolutely enormous. And what is it that makes Nordstrom the household name?

 

Robert Spector  05:26

But it is so simple that people think it can’t be that simple. Nordstrom focuses on the customer. Now every business says that every business has that right. You know, we’re focusing on but Nordstrom actually does it anything that Nordstrom does, whether it’s a policy or a software app, how does this positively impact the customer? And what are the many Nordstromisms is, if it’s not helping the customer? It’s not customer service.

 

James Nathan  06:01

Right. Okay. And impacting the customer is an interesting thing, because we think about well, people say the customer focus, because they want to get as much from the customer as they can. And clearly that’s not the case with these guys. How do they focus on that customer?

 

Robert Spector  06:15

Well, they they have, they take a very humble attitude toward the whole notion of customer service. As Bruce Nordstrom the patriarch of the company said, If selling shoes, he said we were raised literally on our hands and knees, taking care of the customer. And he said, you know, that’s a that’s a literal an metaphorical way of looking at things. So that shoe mentality, even though and shoes are still very much a part of the company, that shoe commitment mentality stays there. And they’re looking for people who share those values. Now, one of the important things when we’re talking about a brick and mortar retail store, is that all Nordstrom salespeople are in commission. Now their employees, they all get an hourly wage, but where they make their money, and sometimes a lot of money is on, is on commission. So that means being an entrepreneur being a franchise within a franchise. So you are creating your own clientele. There’s a woman in Vancouver, British Columbia, who sells handbags a couple of years ago, pre COVID, she sold $9 million worth of handbags. That is a lot of Chanel and et cetera. And her commission was almost a million dollars. This is a, this is a retail salesperson.

 

James Nathan  07:48

That’s amazing, isn’t it? Because when you say, you know looking after customers and having their best interests at heart, and then you say commission, to me, it kind of…. they rub up against each other. But clearly that’s not the case.

 

Robert Spector  08:01

Well, will the reason why that’s not the case….. Now, you know, let me preface by saying Nordstrom is not the perfect company, the perfect company is yet to be invented. Are there people at Nordstrom who don’t buy into this thing, of course, they have 65,000 employees. But the other part of the equation is that Nordstrom has a virtually unconditional return policy. So, so if I’m a suit salesman, and I’m selling us something or a sports wear or whatever, and I said, James, this is gonna look great on you, you know, the colour is right, in this…. but I don’t really believe and then and then you wear it and either your, your significant other or, or whoever says, Why did you buy that you look terrible. You know, and then you then you say, well, but if you’re a Nordstrom customer, well, I’m going to take it back. So sometimes people pick it back, take it back after a year. So if you and I have a relationship and also part of the whole Nordstrom thing is it’s not it’s not a transactional relationship. It’s it’s a relationship that builds upon itself. So I’m not going to sell you the most expensive thing I can today and not care what happens afterwards. No, I want you to be my customer for life. And to build that trust.

 

James Nathan  09:30

Well, that’s what I was going to get to when you mentioned that for life you think well they must. If you can sell that many handbag someone’s trusting you vet a lot of people are trusting you and you’re helping a lot of people at the same time. And that unlimited return things interesting because the business here called Marks and Spencer I’m sure you’re aware of the global phenomenon really, and they used to have a similar thing. And you know, I used to go back home to Australia and my stepmother used to give me a shirt that my dad had been wearing and say take this back to England with you and take it back because the colar is worn and I’d say don’t be ridiculous. And I take it and they, they would exchange it. They’d say, yeah, it shouldn’t have worn in that much time. And here’s the money. Now, that doesn’t happen anymore. They’ve changed that policy. And I think it’s probably because it was taken advantage of. But Nordstrom don’t worry about that do they?

 

Robert Spector  10:17

Well, you know, the dealership does not do very much in the way of traditional advertising. So the advertising comes from the their famous return policy. So I’ll give you a couple of examples. The most famous Nordstrom return story is that a customer came into Nordstrom with his with a with some automobile tyres, and wanted to get his money back and the Nordstrom manager gave him his money back. Now, what’s wrong with that story? Nordstrom doesn’t sell tires. So initially, I thought this must be an apocryphal story. Well, it turns out, it is a true story. Back in the early 1970s, Nordstrom bought three stores in Alaska, and it but it was a company that sold many different things, including tyres. So Nordstrom bought the stores eliminated lots of departments, including the tire department. And one day this this customer came in with a tire as the Nordstrom salesperson gave him his money back. And this has become the quintessential Nordstrom return story. In fact, I just did a podcast with Pete Nordstrom one of the brothers who did it now. And when I, when I speak, that is the number one question people ask me is the tyre story true? So there’s that but there are many stories of people, you know, bringing in frayed collars or whatever, or you know, it didn’t fit, because Nordstrom doesn’t want you to have something in your closet that reminds you that it would that it was a bad purchase. And it also part of the thing with the the salespeople on the floor is empowerment to do the right thing. So a couple of couple of years ago, I gave a talk for a financial services company. And at the break, a woman came up to me on crutches because unfortunately, her right leg had been amputated from the knee down. And she said I have I have a Nordstrom story for you. She said I would go to stores and ask to buy shoes and ask would you sell me one shoe? She only needed one shoe. And he said people would be a little embarrassed and didn’t know how to deal with it. He said I went to Nordstrom asked would you sell me one shoe? And they said sure. So they sold her one shoe. And they charged her half the price. And let’s say it was a $500 pair of shoes. So instead of a $500 sale, it was a $250 sale. Now, she can imagine how many people she’s told that story to. I’ve told that story around the world. I’ve told it in you know, in 27 countries, was that worth $250 in advertising?

 

James Nathan  13:06

My word was it was it? I mean, I’ve heard that story before. And I think…. I hear it, I think what a fabulous fact that they did that. And then I was looking at Vans, the you know the shoes that skateboarders wear. Now it’s not very long ago that they used to sell you one shoe. And they sold one shoe because they discovered that skateboarders would wear out the right shoe or the left shoe depending on which shoe they use to push the thing along with. And so to be sensible, they just started selling one shoe. And I heard this story and they stopped doing it now, unfortunately. And I thought Nordstrom, Nordstrom did that first. They sodl that one shoe. But that empowers the empowerment of the the ability for that person within the store to make a decision like that is quite unusual.

 

Robert Spector  13:58

Well, it is. And that’s why there are people who respond to the culture. And the important thing is the Nordstrom story is a culture story. And in the fact that it’s now in the fourth generation of Nordstroms. Now all of the Nordstroms from the second generation on started coming to the store when they were 12 years old, and they would break down shoe boxes or they would sweep up and then when they went to work for the company, they had the lowliest job. They were not Crown Princes saying okay, you you got your Masters in Business, you’re now a vice president. No, you had to prove yourself and as the generations have grown, there are a lot of Nordstroms and you know, some bought into it and some decided to do something else. But as one of the Nordstrom said to me, you know, everybody had the opportunity. And so now there are these two brothers, as I mentioned before, there was three and then that one of their cousins is also a top executive. And so that and then they pass this on. So they’re looking for people who are entrepreneurial, who are empathetic, and who are…. who want to take that, that empowerment and use it to feather their own nest. It’s not all that complicated. It’s just doing it is the hard part.

 

James Nathan  15:34

No, and but having a public company where there’s still family members running, I mean, I did some work with Mars a few years ago, you know, Victoria, Mars was there to give her a load of awards, but you know, she owns the thing, it’s Mars is a private business, but for them to work their way up. And also to still maintain those or get to those positions. Is there something special about them or it really just because they Nordstroms?

 

Robert Spector  15:57

Well, obviously, it helps that they’re that their name is Nordstrom, but they are as invested, literally and figuratively, in the company, as more than anybody could be. And as you know, as they’ve said to me, you know, that’s our name, you know, on the door, you know, when people walk into we have a special responsibility, and we don’t want to screw it up, because you know, there’s his family legacy there. But the other interesting thing is that they are, they’re totally open to new ideas. It isn’t been there, done that. So they’ve been bringing in people because there probably won’t be a fifth generation…. there is there is one daughter of the the current generation who’s working for them for the company now. But even they’ve told me this, this is probably it. But they brought in people who have that same attitude. So whatever happens, you know, the men running and now we’re in they’re in their late 50s, for however long they want to do, but they aren’t afraid of bringing in new ideas and trying new stuff. And that’s what keeps companies vibrant. You know, it isn’t well, that that’s how we’ve always done it. That’s how we’re going to be doing in the future. No, that’s, that’s a prescription for eventual demise. You have to keep changing, you have to be open to change.

 

James Nathan  17:32

Well, the world has changed a huge amount in the last five generations. You know, talk about it. Well, I’d like to talk to you about the central startup. But, you know, a century old business is a very different thing today to the shoe store, it was in the first place. How’s the internet affecting them? And how do they manage to continue the level of service that they can give, but do that online?

 

Robert Spector  17:54

Yeah, well, you know, it helped the fact that Amazon started in Seattle, and just less than a kilometre, from where, from where Nordstrom is now. And so they paid close attention to it. And so then, so they got into… so Amazon launched in 1995. Nordstrom launched in nordstrom.com, in 1998. They originally started as nordstromshoes.com, the world’s biggest supplier, you know, the world’s biggest shoe store. And so now fast forward today. Online sales are almost 50% of their sales. During COVID it was it was more than 50%. And, but but they have a lot of they have a lot of brick and mortar stores with with their with their full line stores and their discount stores. They have about 350 stores. They are using, they’re using those physical stores as part of an approach that they call “closer to you”. Now during COVID the whole notion of closer to you is kind of counterintuitive, because we’re trying to separate but so the whole idea of closer to you is you can you can order online, and you could pick it up in the store, at your office at your home, you can go there for alterations, returns, etc. So they are leveraging their brick and mortar operation to serve the customer because Nordstrom says that they’re their channel agnostic that there is no, there’s not an internet customer. There’s not a brick and mortar customer. There’s just a customer and most people I’m sure you and, you know, you buy online, sometimes you go into a store, you know, channel agnostic. So they’ve embraced the internet, they’ve embraced technology because they know if they didn’t, they’d be irrelevant. You know, it’s that simple.

 

James Nathan  20:19

And what about the returns policy online, because I know one of the problems that many businesses have when they move their business online is, you know, people will buy vast quantities more and return vast numbers more, you know, you’ll buy five shirts and send four of them back, you know, that must cause huge stock hassle. Has that is that affected them at all, or is the policy the same online as it is in the store?

 

Robert Spector  20:43

It isn’t the same online, you know, they they encourage…. Well, without asking people to come into their store, but more often than not, people will, would take an item and return it to the store. So, which is what Nordstrom absolutely wants. Now, if you just wanted to return it, without, you know, looking for something else. They have these areas in the store, where if you have the item number and everything and label, you just put it in a in a little box, almost like you’re almost like a postal box. And so and that’s part of it, so you thought, oh, I’m gonna have to return this, it’s going to take me 20 minutes, and then you come to the store. And it just, it only took you a minute. So now now I’ve given you back 19 minutes of your life that you thought were gone. Well, while I’m in the store, I guess I’ll take a look around. And apparently people buy stuff. And that’s right. That’s right. Yeah. So it’s using what what seems like a negative and making it a positive.

 

James Nathan  21:59

Oh, absolutely. And this, there’s two, there’s two, when I keep looking down and thinking these, these people are really heavily empowered. And I people talk about empowerment a lot. And then they tell stories about it. And there’s two, there’s two kind of parts to this that I really like one is the employee manual, which I think it’s quite an interesting thing. And the other is the story about the briefcase, can you tell us about both of those?

 

Robert Spector  22:24

Well, I know about the manual, I’m not sure that I know what you’re talking about the briefcase,

 

James Nathan  22:30

Okay. So tell us about the manual.

 

Robert Spector  22:32

Okay, well, when when people come to work at Nordstrom during employee orientation, in addition to all the other materials that you get, as a new employee, they have a small card, it looks like a postcard. And it’s a it’s entitled Nordstrom employee manual. And that’s very big, you know, welcome to Nordstrom, we’re glad to have you with us, etc. Our number one goal is to provide great customer service. So therefore we have only one rule, you flip the card over and it says “Use good judgement in all situations”. There’ll be no additional rules, use good judgement. So they’re looking for people who have good judgement. And now you we talked about empowerment. If there’s a bigger cliche, that customer service, it’s empowerment. What does What does empowerment look like that’s an abstract concept. And how do I know if I’ve gone over the line? So I give examples, whether it’s your return…. one of my favourite things, and there’s a, on YouTube people can find this video. If they look if they search for Nordstrom diamond story, as in  diamond ring. So just briefly, this woman customer had been at Nordstrom the one evening and trying on a few things and went home and as she was getting ready for bed discovered that her one of the diamonds from her wedding band had had what was missing. She felt were the last place I was was at Nordstrom. Next day she goes back to Nordstrom right when the store opens, she heads over to the department gets down on her hands and knees and starts looking for the diamond. And an employee in loss prevention sees her and asked her what the issue is. And he takes her information. Now he could have just taken her information and went on his way because that wasn’t his job. Now he went back to the fellows in housekeeping, the fellow who vacuum the floors and they go they start going through vacuum cleaner bags and opening them up. If you ever opened up a dirty vacuum bag. It’s pretty it’s…. okay, it’s pretty disgusting. So they went through about six of them and then finally they found this, this diamond, and then they contact the woman. And, you know, she’s, she’s in tears, she said, you know, yeah, it was insured, I could have got another but it was my diamond. And she talks about how she will be a customer for life. Now, that’s empowerment. You know, and it’s not just the people. And I tell this, when I when I speak to companies, where a lot of people in the room or when I’m speaking, might not be interacting or interfacing with a customer. But it doesn’t matter. Everybody is in the customer service department. And when you have a culture, where somebody in loss prevention, not a salesperson goes out of his way to take care of the customer. That’s a culture. So as I said, you know, you could find that that story on on YouTube. But what I when I first saw that, that video, it was at an annual shareholders meeting. And not only did they show the video to the shareholders, they also flew in from North Carolina to Seattle, that’s about 3000 miles. And they brought the Loss Prevention Guy and the housekeeping guys, they brought them to Seattle, and they got a standing ovation from the shareholders. And they also had, they had an opportunity to have dinner with the Nordstrom family. Now that’s the culture. That’s the, you know, we appreciate what you did. And we want it we want to show that appreciation.

 

James Nathan  26:40

Flying all that way over there as well. How wonderful for them. Yes, yeah, the story of the briefcase that I heard, and I can’t remember where I heard this from, so please forgive me if it’s not true. But it was a story…

 

Robert Spector  26:53

I thought I heard every story. But this, this is a new one. For me.

 

James Nathan  26:57

It was a story of somebody shopping in a Nordstrom store and leaving behind their briefcase or some documents or something like that, and then going off to a meeting. And that meeting was they had to go to the airport and then flew to wherever they were going. And the employee saw the briefcase realised what had happened, appreciated that this person would need it, and then took the briefcase to them. So they then went to the airport flew to the place where this customer was gave him the briefcase back

 

Robert Spector  27:28

well, yeah, you know, I’ve heard the version of the of that I heard that he was just that the customer had left their their ticket, back in the days when there were paper tickets, and then did that went out to the airport.

 

Robert Spector  27:45

And that sounds more reasonable.

 

James Nathan  27:46

That ability to spend money to look after people is something that they’re allowed to do. When I was a very new accountant in the firm I worked for everyone, all of us were given a Visa card with a £250 limit. And all the secretaries, the whole lot the entire workforce. And we were told under no circumstances are you to not use this card, we want to used. We want you to use it with you. If you meet a client in the street, you’re out for lunch, whatever you’re doing, if you get the ability to entertain somebody, the cards there for that. And I’m thinking that was quite a nice thing. And then I heard about Nordstrom and you know, a certain amount that they could spend to look after people which is much broader. But that’s still quite unusual in the world of retail, I think.

 

Robert Spector  28:33

Well, that’s when Nordstrom is one of the survivors, you know, and I write a lot about retail and in there are so many… the class that I teach at Western Washington University here. And this is an elective to marketing students. And I have them research a retailer that was once dominant in its field and either no longer exists or is severely diminished. And I say tell me why and how they succeeded, why and how they failed. And invariably, they failed because they didn’t adapt, you know, that they were still playing with the old rules. And you know, and if they didn’t have the culture, they didn’t have the the connective tissue that enables an organisation to last for a long time. By the way, parenthetically, you mentioned I did a book called The Mom and Pop Store and and I interviewed retailers from all over the US and I was I was in London and there’s a famous hat store called Locks Hats. And, so which has been around since 1683 on their present sites only since 1715. And guess I wanted a store that was not 100 years old I want to store there was, you know, more than 350 years old. And you know, and they’re still there, and they haven’t changed all that much. But they’re, you know, there’s a consistency and caring for the customer that is ageless.

 

James Nathan  30:25

And that mom and pop store thing. It’s a funny, it’s a very American expression, but it’s a family owned business, isn’t it?

 

Robert Spector  30:33

Right, right. Well, you know, it’s not it’s, it’s not technically a family owned business. It could be business partners. But it’s a small, independent business. And it could be a restaurant, a hardware store or a butcher shop. In fact, I also did a butcher shop in Clapham Common. I’ve got a friend who lives there. And I interviewed her butcher. You know, and, you know, it’s just classic, people who make a difference in the community.

 

James Nathan  31:10

Butchers are an incredible thing. I, I used to go and watch a butcher when I lived in Leeds in the north of England, and that guy was the best salesman I’ve ever seen in my life, you know, had a queue out the door. A lot of the good restaurants bought from that butcher shop. If you go there on Saturday morning, cue down the street, and you’d stand there and you’d wait. And the reason it took so long was because everybody was being served, chatting about the family and, and he do these wonderful things you’d say or what would you like today? He said, like, you know, I’d like a roast for Sunday. I think I’d like a leg of lamb great. He said last time it came in your ear like sausages. I’ve got the I’ve just made some more, shall I’ll put six of those in for you. And by the time the people who had left bags, full of stuff, to spend the money, they’re wonderful. Butchers are incredible people.

 

Robert Spector  31:58

Well, what my father was, was a butcher. And he did very similar things. In fact, I quickly I tell the story. I’m working in in the shop and my mother is there too. And then this, this longtime customer comes into the store, a female and my father says I had a dream about you last night. And she doesn’t she doesn’t quite know how to deal with this. She’s looking over at my mother. And and she turns back he said, I dreampt I sold you this leg of lamb.

 

James Nathan  32:30

That could have been a very tricky conversation couldn’t it?

 

Robert Spector  32:34

That’s right. That’s right. But and everybody laughed. But most importantly, she bought the Leg of lamb.

 

James Nathan  32:39

Wow, there you go. Fantastic. What is it about Seattle? Why is Seattle such a special place for these businesses? Because a lot of them have come from there.

 

Robert Spector  32:48

Yeah, well, you know, I’ve been contemplating that. And I’ve interviewed all of the executives who, like Howard Schultz from Starbucks. And Jeff Brockman is one of the cofounders of Costco and Amazon. I mean, you know, Jeff, Jeff Bezos certainly took notice of Nordstrom. Now…. It actually preceded the modern day version is all inspired by Nordstrom. You know, Jeff Rodman of Costco, he said, it all starts with Nordstrom, Howard Schultz said it all starts with Nordstrom. And so there’s a certain way of doing things. And in this in this book that I’m working on about Seattle companies, I include the band Pearl Jam. And because they are very fan focused, very fan focused, very much into the fan experience. And, you know, and all of these Seattle companies take that attitude.

 

James Nathan  33:56

No, it’s fascinating. It’s an amazing place and a lot of good stuff. When I read that list, I saw Pearl Jam. I thought, I wonder what that means. And I was going to ask you, but you’ve you’ve saved me the the problem. If anybody’s interested in anyone listening hasn’t read this book hasn’t read any of Roberts books. But if you haven’t read the Nordstrom Way, then I would absolutely adamantly recommend that you do so and, and enjoy it. Because not only is it full of, you know, fabulous ideas and things that we can take to our businesses, but also some wonderful stories and, and you know, and those sorts of things bring bring the world of Nordstrom to life. Before we finish up there, Robert, I’d love it if you just give us your one big thing, your golden nugget. The one thing that people listening to this podcast can take away and do in their business today that will make their businesses different for today and better for the years to come. What would that be?

 

Robert Spector  34:49

Okay, well, I’ll talk about briefly the the new book that I’m working on The Century Old Startup, it’s built around an acronym of facts FACTS, flexibility, adaptability, communication, transformation, social responsibility. And in the most important thing that I would I would tell people is that you must continually adapt. You must think like a startup at all times, because if you are just depending on legacy practices, that that it’s not going to help you be a factor in the future. So always question always adapt, always ask, what is a better way of doing it? And most importantly, how does this positively impact my customer?

 

James Nathan  35:40

Fabulous. Robert, thank you so much for your time. It’s been lovely chatting with you.

 

Robert Spector  35:45

Well, thank you, James. I really enjoyed there’s some great, great questions,

 

James Nathan  35:48

Complete pleasure.