Customer Service & Relationship Management at Nordstorm
1.0 Learning Issues
1. What is “inverted pyramid?”
Inverting the organization pyramid chart, the bottom level of the chart which is normally the front-liner become the top of the chart whereas the board of director which is initially at the top shift to the bottom. It means that the company is empowering the employees, moving the responsibility and decision making down to the people that have direct contact to the customers. It increased the importance of the front-liner. Besides, it also gains the employees satisfaction through this inverted pyramid.
2. Why Nordstrom provide freedom, resources and support to employees to make decision?
Nordstrom implementing customer-focused services strategy, front-line employees are those who interact face-to-face with the customers. By empowering the employees; any problem occurs can be solved on the spot by the employees without going through the process to inform the superior. Besides, it can fulfill the employees’ intrinsic need and let them that their personal contribution is as important as their work.
3. What is “up-channel policies”?
From the reading, this “up-channel policies” is a set of agreement between Nordstrom and its suppliers. This agreement is positioned on maximizing customer satisfaction as well as building a close relationship between the company and the suppliers. Actually, this “up-channel policies” is associated with the “unconditional return policy”. Former CEO Bruce Nordstrom said: “If somebody has worn a shoe and it doesn’t wear satisfactorily for them, and we think that person is honest about it, then we will send it back.” Nordstrom is built around a customer-oriented philosophy. This explains if suppliers are going to do business with them, they have to accept the commitment of the return policy. In other words, they should liberally accept the returned goods. Of course, if Nordstrom found out there is someone who abuse this “unconditional return policy”, Nordstrom will not impose that abuse onto their vendors. This is how Nordstrom show their concerns and appreciations on top of the vendors’ efforts.
4. What is the meaning “customer comes second”?
According to Berry, Parasuraman and Zeithmal, the quality of service that internal customers receive strongly influences the quality of service that external customer receive. This further clarifies internal service quality drives employees’ satisfactions, which in turn enables the delivery of high-value service, resulting in customer satisfaction and leading to customer loyalty (Refer to figure 1)
Nordstrom is a customer oriented philosophy that put up it focuses on people; its policies and selections designed to satisfy its customers. However, without good and well functioning internal relationship, external customer relationships will not develop successfully. Thus, Nordstrom understands that customers will be treated well, only if the employees are treated well by the company.
5. What is Nordstrom’s merchandising and purchasing policies?
In Nordstrom, few products are centrally purchased for all stores. Regional buyers are the one who in-charge throughout the purchasing process as they are closer to the customer and understand about the customer preferences. Besides, Nordstrom also provides a full selection of merchandise in a wide variety of sizes to ensure the products always available when customer want or need it. In Nordstrom merchandising and purchasing policies, Nordstrom only stock high-quality merchandise. If Nordstrom found there is a defect in merchandise, all the merchandise in the entire delivery will return back to the suppliers. This shows Nordstrom is extremely customer-focused.
6. What is 60 minutes segment?
60 minutes segment is the most successful broadcast in television history in United States. 60 Minutes was created in 1968 by Don Hewitt and premiered on CBS on September 24 of that year. Jeff Fager is the program’s current executive producer. It is a production of CBS News providing a blend of hard-hitting investigative reports, interviews, feature segments and profiles of people in the news.
7. What is personal shopper?
Personal shopper is one of Nordstrom’s customer services where customers are treated individually. Personal shopper exists in Nordstrom physical store as well as in Nordstrom’s website. In physical store, the salespeople become the personal shoppers where the salespeople assist individual customer in making purchase decision by giving advice. The Nordstrom personal shopper staff, referred to as “Personal Touch,” ensures that patrons find what they are looking for with the customized assistance they deserve. Unlike other stores, Nordstrom requires no minimum purchase to have a personal shopper’s help. The Atlanta location in decidedly upscale Phipps Plaza hosts events like new perfume launches that your personal shopper can also help you with. A customer can even get advice from a personal shopper by phone if he or she is shopping online. Consumers can e-mail questions and purchase requests to their own Nordstrom personal shoppers. Personal shoppers do everything from answer questions about a specific item to help customers selecting complete wardrobes.
8. What is unconditional return policy?
Unconditional return policy is Nordstrom’s policy where customers can return their merchandise, whether new or heavily used, to Nordstrom at anytime for a full refund. Under this policy, items that could have been bought at Nordstrom are accepted without question.
9. Why “never say no”?
“Never Say No” is the slogan of Nordstrom’s employees. The employees try not to say no to each customer’s request. The purpose is to satisfy each customer. For example, Nordstrom’s salesperson went to get a slack for his customer from Nordstrom’s competitor as the size desired by the customer was not available in Nordstrom. When employees try their best to satisfy the customers, this will create a happy experience for the customers. Consequently, the Nordstrom can retain this group of happy customers.
10. Why does Nordstrom focus on customer lifetime value?
Customer lifetime value represents exactly how much each customer is worth in monetary terms. Nordstrom sees customer lifetime value of a customer as the sum of all sales generated from that customer, directly or indirectly. Although little money may be made from the first sale, but when the lifetime value of a customer is calculated, the positive dollar amount of a loyal customer is huge. Thus, to keep customer for a “lifetime”, Nordstrom employees do their best to satisfy the customers.
2.0 Current Scenario
Nordstrom, Inc. is an upscale department store chain in the United States. Initially a shoe retailer, the company today also sells clothing, accessories, handbags, jewelry, cosmetics, fragrances, and in some locations, home furnishings. It competes at a lower price level than that of Neiman Marcus or Saks Fifth Avenue, and at a slightly higher price level than Lord and Taylor. The corporate headquarters and the flagship store are located in Downtown Seattle, Washington. (Nordstrom Inc., 2008)
Nordstrom is very famous in customer service. It maintains the customer-focused philosophy which is flow from the founder, Johan Nordstrom’s values. Nordstrom focuses on people, the policies, emphasize on customers’ and employees’ satisfaction. Nordstrom’s organization chart is an inverted pyramid. Customers are at the top of the chart follow by the salespeople, department managers, and general managers. Nordstrom believe that customer delight drives the value of the company. To fulfill customer satisfaction, employees must be satisfied first. Salespeople play a very important role in Nordstrom. They can act as a “personal shopper” of the customers. Employees are treated as the most important asset in Nordstrom. Thus, employees have a lot of chances to be promoted and they are empowered to make independent decisions.
Nordstrom’s policies focus on the concept of the “Life-time Value of the Customer.” To keep the customers for a “Lifetime”, Nordstrom’s employees try to “Never Say No” to the customers. There is an advice of “Use good judgment in all situation” and an unwritten rule of “doing what is right” for the employees during the process of dealing with the customers.
Nordstrom maximize customer satisfaction by providing unconditional return policy, up-channel policies and merchandising and purchasing policies. All these policies are customer-focused which is coping with company value.
3.0 Answers to Question
Q1. Evaluate Nordstrom customer service approaches.
(a) Employees as “personal shopper”
From the case, Nordstrom are offering its customers a very personalized service. Employees act like “personal shopper” of the customers where they treat their customer individually. They show their customer merchandise and provide them product expertise. For example, a Nordstrom salesperson assists a woman shopping for business apparel by helping her shop for suits, blouses, shoes, hosiery, and accessories. The salesperson can travel from one department to another within the store in order to help the customer. In Nordstrom, the salespeople are not tied to one department, but to the customer. The salespeople in Nordstrom act like friends of the customer where they follow the customer to different departments and advise them on choosing the products.
This type of personalized service is very useful in creating positive experience among the customers, which would lead to customer satisfaction. As the salesperson serves the customer individually, there are direct and face-to-face interaction between the customer and the salesperson. Direct contact between the salesperson and the customer is essential as it offers the opportunity for them to start building relationships with one another through the service encounter. Human interaction in the service experience offers a chance to deepen customers’ emotional connection to the service provider. When a salesperson meets a new customer, direct communication offers an opportunity for the salesperson to learn about the customer’s wishes, preferences, and capabilities. This may sharpen the knowledge of the expectations about the customer. For example, when the salesperson knows that the customer likes dark colours, he may show the customer more clothes in dark colours. Direct interaction enables the salesperson to quickly responses to the customer’s needs and wants and solves his or her problems.
Once they build a relationship, the relationship may function as a means to retain customers. A relationship is built when the salesperson and customer understand each other well. The service provider’s knowledge, skills and capacity is a way of understanding services. A customer would prefer to go to a service provider who understands them rather than a new one. Besides, he or she may recommend to others about the quality service that he or she has received. Since the salesperson has specific knowledge, skills and understandings of the customers’ needs and preference, it can attract his existing customer to come back to him. “Personal shopper” can enhance the customer perception of Nordstrom service quality. “Customer perception of employee effort in delivering a service has a strong impact on service satisfaction and loyalty.” (Keaveney, Mohr&Bitner, 1995). Thus, having “personal shopper” as a personalized service, Nordstrom can create customer loyalty as well as positive word of mouth.
(b) Unconditional Return Policy
Nordstrom has an unconditional return policy and this return policy is one of the most important customer services. Customer can return any merchandise, whether new or used, at anytime for a full refund if he or she is not satisfied with the merchandise. This service is important as it gives customers confidence of Nordstrom’s merchandise. Since Nordstrom offers good quality product, Nordstrom may add value to its service by offering this unconditional return policy. By having unconditional return policy, customers would reduce their worries and financial risk because they can return the merchandise to Nordstrom for refund if they are not satisfied. Nordstrom’s unconditional return policy ensures each customer from Nordstrom is satisfied. Customer satisfaction is very important as it can create customer retention. According to Anderson and Sullivan (1993), the more satisfied the customers are, the greater is their retention.
Nordstrom’s unconditional return policy could affect the customer’s purchase process especially the post-purchase stage. During the post-purchase stage, the customer evaluates the service quality and their satisfaction or dissatisfaction with the service experience. Customers evaluate service quality by comparing what they expected with what they received. At Nordstrom, every customer has the right to return merchandise until they are satisfied. Hence, Nordstrom’s unconditional return policy can ensure every customer to be satisfied. Thus, this group of satisfied customers will be likely to make repeat purchase and pass on positive recommendation to family members and friends. When customers continually have positive experience each time they make purchase in Nordstrom, they will satisfy with the service and may become loyal customer.
For customers who do not have prior experience with Nordstrom, they may base their pre-purchase expectations. Factors like word-of-mouth comments or the news stories may affect a customer’s expectation. When customer is new to Nordstrom, they tend to face greater uncertainty and feel uncomfortable with risks. Thus, Nordstrom’s unconditional return policy could reduce the perceived risk of the customers. Positive word of mouth generated from satisfied customer may make first-time customer to visit Nordstrom. Hence, Nordstrom’s unconditional return policy can attract new customer as well as retain existing customer.
(c) “Never Say No”
“Never Say No” is one of the customer services in Nordstrom where customer can get almost everything they want in Nordstrom. In order to enhance customer experience, Nordstrom’s employees would try their best to satisfy the customer needs no matter what is requested. From the case, it is stated that in a Nordstrom store in Seatle, a customer wanted to buy a pair of brand-name slacks that has gone on sale. The store was out of her size and the salesperson was unable to locate a pair at other Nordstrom stores. The sales clerk quickly went to the rival and purchased the slacks at full price using cash from her department. The slacks were sold to the customer at Nordstrom’s sales price. Although this sale caused an immediate loss for the store, it helps to promote the loyalty of the happy customer.
The salespeople in Nordstrom show their courtesy to the customer with politeness, respect, consideration and friendliness. When the customers are treated politely and with respect, this can enhance the customer experience in Nordstrom. Besides, this can also improve the customer perceptions of Nordstrom service quality. When the salespeople in Nordstrom perform their roles by trying to meet customer expectation, it can enhance the service encounter and create satisfied customer.
Empathy is also one of the attributes of Nordstrom’s customer service when they employee try to “never say no”. Nordstrom provides care and individualized attention to its customers. Nordstrom pays great attention to communication where the Nordstrom’s employees listen to its customers and acknowledges their comments. When a customer does not prefer a certain design of a shirt, they salesperson would never say no and argue but listens to the customer’s comment. Besides, the employees keep their customers informed in a language that they can understand. For example, when the customers has a problem with the rules of washing a blouse, the salesperson would listen to the customer’s problem and demonstrate concern by telling her the right way of washing it. Nordstrom’s salespeople avoid using technical jargon when speaking with the customers so that the customers can understand. This would make the customers feel comfortable with the customer service. When the customers feel comfortable with the service, they would come again in the future.
(d) Free shipping
Free shipping is an additional customer service available in Nordstrom. This has added value for Nordstrom’s customer service. It creates convenience for the customers as customers do not have to travel all the way to Nordstrom stores to make purchase. Besides, it helps customers to save heir traveling cost and time. This can create customer satisfaction of its service. When Nordstrom offers free shipping, customers can save time and cost. According to Berry (2002), consumers’ perceived expenditure of time and effort would influence their perceptions of service convenience. Convenience will have a positive influence on their satisfaction with the service. Nordstrom promises that the order would arrive within 4 business days. This is another added value in Nordstrom’s service as Nordstrom has the value of reliability where Nordstrom has the ability to perform Promised service accurately.
However, Nordstrom’s free shipping has some terms and conditions. The free shipping service does not include international orders. This may affect the perception of customer service quality among customers in other countries. Foreign customer may feel unhappy of Nordstrom’s service standard. Some customers may want to make purchase at Nordstrom but due to different location, they may not be able to visit Nordstrom store. Nordstrom may lose this group of customers as they are not entitled for free shipping service. Some local customers may want to make purchase at Nordstrom online when they are traveling abroad. For example, a loyal local customer may want to purchase a business suit in his business trip to foreign country to meet an important customer. However, Nordstrom does not provide free shipping service which is within the customer expectation. The customer may feel upset with Nordstrom service and become disloyal to Nordstrom. According to the servuction model, the organization rules, regulation and processes may have a very profound effect on the customer experience. Thus, the free shipping service that does not include international orders may affect a customer’s service experience with Nordstrom.
(e) Buy Online, Pick up in Store
As consumers are becoming busier than ever before, many consumers cannot afford the time to do shopping. Thus, Nordstrom has been offering online buying service for the convenience of customers. However, after making an order in Nordstrom’s website, a customer had to wait for the ordered products to be delivered. Some customers may have the feelings of insecure and still find this inconvenient because the delivery normally takes some days. Now, customers are able to make order through the internet and pick up the order at one of Nordstrom’s stores. This is a new customer service from Nordstrom. Nordstrom is making an effort to know the customers and their needs. Hence, Nordstrom is said to have understanding of the customer as Nordstrom is creating the most convenient and secure way for the customers to do shopping.
After making an order in Nordstrom’s website, customers can choose a store in a designated area which is most convenient for the customers to pick up the order. Once a store is chosen, a customer will go through a same online checkout process. The order can contain items to be picked up, items that are shipping to you, items that are being shipped to someone else as a gift, or a combination of all of these. Once the order has been processed, Nordstrom will send you an order confirmation e-mail that summarizes the customer’s purchases. Besides, the customer can expect to receive a phone call by Nordstrom within one hour after placing an order online. Besides the quality of Nordstrom’s merchandise, Nordstrom has designed a very convenient way for online shopping. The online buying process may create a satisfying experience for the customers. The positive customer experience can retain satisfied customers (Khalifa, M & Liu, V 2005).