Nordstrom has only a few big sales a year, so it needs to be find other ways to keep customers coming into its stores. Part of the secret of this is its four-tier loyalty program which was tweaked earlier this year to allow more customers to join.
At the lowest level of the program (for customers spending $1 to $1,999 a year) customers are able to access $100 worth of tailoring and get access to early deals at annual sales. At level three ($5,000 to $9,999) customers can access special “style experiences” like a tour of Vera Wang’s New York workshop. Level four customers can host private shopping parties at their favourite store – providing they spend over $10,000 a year.
Like all loyalty programs, Fashion Rewards gives Nordstrom extraordinary levels of data about shopper buying habits. These are clearly put to good use – members tend to shop with Nordstrom twice as often and spend three times more than other customers. In total, members account for 30% of all sales.
These programs have a price, and the opening up of the program to more people has seen Nordstrom’s margins fall this year. But having an army of rusted-on, aspirational customers is crucial in retail.
Blake Nordstrom’s time in the shoe departments of the family business clearly made an impression on his view of customer service. “Selling shoes — retailing — is getting on your hands and knees and listening to the customer to try to fit them and to try [to make a sale],” he said in 2010.
There’s a lovely line in last year’s Businessweek profile of Nordstrom that tells the story of Blake addressing the shoe department at a new store and giving them the message that to “err on the side of tolerance”.
Blake then related the story of how he unknowingly refused a string of returns from the wife of a famous rock star. When the star came in to complain, Blake learned he only had half the story – she was spending tens of thousands of dollars at other stores and returning a fraction of that to Blake’s stores.
The message of tolerance spreads beyond the shop floor, however. Last month, Blake wrote to employees urging them to support a bill to legalise gay marriage in the state of Washington. The company already offers partnership benefits to employees in same-sex relationships.
“It is our belief that our gay and lesbian employees are entitled to the same rights and protections marriage provides as all our employees,” the memo said. “We feel the next step in this journey is to now support freedom to marry, also called marriage equality. We gave this thoughtful consideration and felt the time was right to come out in support of this civil rights issue.”
The referendum was approved. Another small victory for a retail family whose success is built on a pretty simple idea: The customer deserves everything.
James Thomson is a former editor of BRW’s Rich 200 and the publisher of SmartCompany and LeadingCompany.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
