Cover Stories: Where the Customer Is Still King

By George Russell

Amid growing anger over the decline of American service, many U.S. companies defy the trend and flourish handsomely because of the care they lavish on customers. A sampling:

Nordstrom. In the low-margin, highly competitive world of department-store sales, Seattle-based Nordstrom has turned exacting standards of customer service into a billion-dollar annual business. The rapidly expanding chain, which has 45 stores in California, Washington, Oregon, Alaska, Montana and Utah, has drilled its staff incessantly with the venerable dogma that the customer is always right. Result: the chain's sales, 73% derived from women's retailing, passed the $1 billion mark for the first time in 1985 and reached an estimated $1.6 billion for 1986. Sales per square foot of space, a basic retail performance yardstick, is about double the average for the industry.

A major ingredient in Nordstrom's success is the quality of the salesclerks. They are paid about 20% better than those of competitors, and they are well trained and encouraged to do almost anything within reason to satisfy customers. In Seattle, a store salesclerk personally ironed a customer's newly bought shirt so that it would look fresher for an upcoming meeting. Thomas Skidmore, vice president of a Los Angeles-area real estate brokerage, tells of bringing back a squeaky pair of year-old shoes to a local Nordstrom outlet, hoping merely for repairs. Instead, he got a new pair of shoes free.

Throughout the chain, the sales help strictly follow a dictum laid down by the company's president, James Nordstrom, 46: replace anything on demand, no matter how expensive, no questions asked. Although the policy is sometimes abused by shoppers (who may, for example, order a $500 dress, wear it once to a party, and then return it), it works well for Nordstrom. Says Skidmore: "I < couldn't believe how nice they were being. I bought another pair of shoes on the spot."

Nordstrom was founded in Seattle in 1901 as a retail shoe store by a Swedish prospector, John Nordstrom, who had struck it rich in the Klondike. Now a publicly traded concern, the firm is still closely controlled by members of the founder's family and propelled by their hands-on style. Says Edward Weller, a senior analyst in the San Francisco office of the Montgomery Securities investment firm: "Nordstrom's movitates people, not just by paying them well but by congratulating them and encouraging them."

Byerly's. In the 19 years since Don Byerly, now 47, opened his first store in the Minneapolis suburb of Golden Valley, he has almost never publicly advertised a product or price. "We spend the advertising money on service," he explains. The payoff has been impressive. There are seven Byerly's outlets in the Minneapolis area, and an eighth is under construction. Sales for the chain reached $135 million last year, and are expected to climb to $150 million in 1987. Byerly analyzes his success this way: "The only reason people will come back to our store is because of what happened to them the last time they were here."

At his carpeted, chandelier-bedizened supermarkets, Byerly offers 24-hour, seven-days-a-week grocery shopping, complete with full-service meat and fish departments. The outlets are attractive, but the difference is, as he puts it, "the way they're run." Each store is managed semi-independently by a single boss, who tailors the contents to neighborhood needs with little overseeing from top management. Company-wide, Byerly's has 2,100 employees, but only five work in what the proprietor jokingly calls "world headquarters" in the Minneapolis suburb of Edina.

Byerly's places special emphasis on helpfulness. Each store employs a full- time home economist, who can work with customers on everything from menu planning to getting bubble gum out of household carpets to figuring how much food to buy for a party of 300. The home-ec experts maintain "special-foods programs" of particular dietary products at each outlet. Says Byerly: "Let's say your doctor prescribed a low-sodium diet. The home economist will give you a blue folder listing everything that you can buy in the store that's low sodium. And each of the products is marked with blue tags on the shelves." The same system is used for low-cholesterol and low-calorie diets. As at many supermarkets, Byerly's employees will place customers' groceries in their autos, but on those rare occasions when the wrong bags are put in the trunk, the right goods are delivered directly to a shopper's door, along with a free cake or other goody by way of apology.

Byerly insists his prices are competitive with regular supermarkets' despite the many services. Says he: "We take the advertising savings and try to be price competitive. We're aimed at the average shopper." Whoever shops at Byerly's, the appeal is obviously spreading. Lea Plotke, a resident of neighboring St. Paul, claims that she always takes out-of-town guests for a look-see at her Byerly's. Why? Because, she says, "it's like a tourist attraction."

Mini Maid Services. In 1973 Homemaker Leone Ackerly, mother of three, wanted to buy a new auto. To earn the money, she hired herself out as a cleaning lady. She has since, as they say, cleaned up. Now 41, Ackerly drives a Jaguar XJ6 and oversees a maid-service empire, based in Marietta, Ga., with 900 employees at 96 franchises in 24 states. Annual revenues: more than $9 million. Mini Maid is about to launch franchises in Germany, Italy and Australia. The secret of Ackerly's success? Says she: "We do one thing one way for one price."

Inspired by the meticulous regimen of fast-food outlets like McDonald's, Ackerly's Mini Maid operation offers a menu of 22 basic daily cleaning chores that its four-member crews will perform in an average time of 55 minutes for a fee of $39.50 to $49.50. The duties of the blue-and-white-clad cleaning squads -- primarily young mothers and homemakers -- range from washing kitchen floors to scouring porcelain to bed making. Says Ackerly: "We arrive with a smile, we have knowledge, we deliver what is asked of us, and we call back new clients the next day to see what could be done better."

Following the McDonald's formula, Ackerly eventually distilled her knowledge of "team cleaning" into a 300-page manual of dos and don'ts. The book serves as the basis for training new Mini Maid personnel. Among its teachings: pick up statuary in the middle, rather than at the top and bottom, and clean animal-skin rugs with a whisk broom rather than a vacuum cleaner. Sums up Ackerly: "The homeowner does not have to feed us, pick us up, give directions. We don't give a song and dance about our car breaking down as a reason for not showing up. We are successful because we have learned the hard way."

Amica Mutual Insurance. Among the behemoths of the insurance business, Amica Mutual figures far down the list. The Providence-based company, which specializes in property and casualty coverage on such items as homes, autos and boats, earned $13 million last year on revenues of only $400 million. Nonetheless, the 80-year-old Amica has earned a top grade from the monthly Consumer Reports and an A-plus billing from the A.M. Best insurance-company rating service. With a modest crop of 400,000 customers and only 39 branch offices across the country, Amica has consciously avoided increasing its size to match its reputation. Says Amica Vice President Charles E. Horne: "We address a very small segment of the market, and we try to do it well. We simply seek not to be the biggest but to be the best."

Amica has not strayed into commercial lines of insurance, choosing to remain focused on individual-customer care. The firm never advertises and relies on referrals for most of its customers. It employs no independent agents and hires its own adjusters and underwriters. The company's unusually high ratio of 1 employee for each 140 clients allows it to meet high performance standards, like routinely answering all customer mail within a day of receipt. Amica tries to respond to claims in the same speedy manner. The company's adjusters have been known to take extraordinary pains to assist clients in duress. After Hurricane Gloria hit the New England coast in 1985, one Amica homeowner policyholder was unable to get any government agency to remove a ten-ton tree that had fallen onto her house. When she called Amica for help, an adjuster came out and made arrangements the same day for a construction company to cart the tree away.

L.L. Bean. Freeport, Me. (pop. 6,700), is an unlikely Mecca. Yet every year 2.5 million American worshipers of sensible, frugal and unpretentious products for the outdoors descend on the Yankee seaside town. Their aim: to visit the one and only L.L. Bean company store, which is open around the clock and features 6,000 items, ranging from moccasins to sleeping bags to camel-hair cardigans. However, many more Americans know the company through the 75 million L.L. Bean catalogs that are mailed out annually. Celebrating its 75th anniversary this year, the company, founded to market a superior hunting boot, has become a $362 million business that sells its merchandise 24 hours a day by telephone and employs 1,850 workers full time, with an additional 1,800 on , duty during the peak fall-to-Christmas season.

Mail order forms the bulk of Bean's business: last year $308 million of the company's sales came from catalog orders. The firm's reputation for homey efficiency comes from its ability to deliver virtually any item almost anywhere in the U.S. and Canada within 72 hours. During peak season, more than 28,000 telephone orders a day flood the Bean switchboards. Computers help keep track of the models, colors and sizes that are in stock at any given moment, and orders are filled accurately 99.8% of the time. The company provides repairs as well as sales. Each year, for example, it resoles some 17,000 pairs of its famed Maine hunting boots for $24, about half the cost of a new pair.

Bean employees receive 40 hours of training before they deal with their first customer. Much of the instructional emphasis is on care and thoroughness in filling orders and on general courtesy and helpfulness. People around the U.S. call the company for advice on what accessories to provide for children on their way to camp, what to take on a first trip to Alaska and what to wear while cross-country skiing. If a Bean staffer cannot answer the question, the customer will be switched to someone who can.

With reporting by Meg Grant/Seattle and William Szonski/Boston