Report: Apple Store Secret Sauce: Control + Attention to Detail

| News

Apple’s secret sauce in making the company’s fleet of retail stores is made of many things, according to an in-depth exposé of the company’s retailing operations by The Wall Street Journal. The key ingredients, however, mirror every other aspect of the way Apple does business, mainly massive control and intense attention to detail.

5th Ave. Apple Store

The Journal spoke to current and past employees, industry experts, and it got a look of some of Apple’s own training manuals in putting together its story. In addition to the control and focus on the details, Apple also spends a lot of time and resources on actually training its retail employees, something almost unheard of in the low-margin retail industry.

Of course, Apple’s own retail operations are anything but low-margin. Apple commands US$4,406 in annual retail sales per square foot, and that excludes online sales. Compare that to Tiffany’s$3,070, Coach’s $1,776, and Best Buy’s $880, and you can see that Apple’s retail performance exists in a league of its own. Apple’s profit margins are 26.9% for its retail operations, according to Needham & Co., compared to 1% for Best Buy.

Much of that may start with Apple’s philosophy for customer interaction. Retail employees are not given sales quotas or commissions, and are trained to look at the sales floor in terms of what is possible, as opposed to what is not.

Employees are also trained to listen to their customers and identify their “pain points” so that they can then find solutions for them. One of the company’s training manuals put this succinctly with, “Your job is to understand all of your customers’ needs—some of which they may not even realize they have.”

Such training offers customers at Apple’s retail stores a far different experience than any other retail chain on the planet.

Other tidbits from the article:

  • Employees are carefully instructed in how to deal with customers who are upset
  • Employees are forbidden from correcting a customer that mispronounces the name of an Apple product lest they feel patronized.
  • Micromanagement of employee interaction extends even to the verbiage used to communicate something. For instance, Geniuses are instructed to say “As it turns out,” rather than “Unfortunately.”
  • Genius Bar appointments are often triple booked.
  • Apple CEO Steve Jobs is still involved in even small details of his company’s stores. The Journal offered examples of him having input on the kind of security cables used to tether Apple products to their tables.
  • Retail staff earn between $9-$15 per hour; Geniuses’s earn up to $30 an hour.
  • Apple uses an acronym of the company’s name to lay out the “steps of service” for their employees:
    • Approach customers with a personalized warm welcome
    • Probe politely to understand all the customer’s needs
    • Present a solution for the customer to take home today
    • Listen for and resolve any issues or concerns
    • End with a fond farewell and an invitation to return.

There are more details in the Journal’s full article, including a store layout, photos of training manuals, and a lot of additional interview material. the story was published the day after Apple vice president of its retail operations, Ron Johnson, announced he was leaving the Cupertino company for a new gig with J.C. Penney.

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Comments

wab95

Customers the world over like to be treated, not simply well, but with respect and personalised service. They respond to it. We all do. And as common-knowledge, common-sense as that sounds, it is not commonly practised by the business community.

What Apple appear to have created with their retail store playbook (no reference to RIM hardware) is a common customer experience. In many ways, an extension really of their philosophy of an optimised end user experience with their products and services.

If true, this is a consistent corporate philosophy applied at multiple levels of business/client interface that few have attempted. I think it also provides insight into why the retail stores are consistently packed; not simply because of the products, but also the customer experience.

Lee Dronick

Customers the world over like to be treated, not simply well, but with respect and personalised service. They respond to it. We all do. And as common-knowledge, common-sense as that sounds, it is not commonly practised by the business community.

The last two times I went into an AT&T Store I was pleasantly surprised. They had a greeter who asked what I needed as soon as I entered and got a staff member to take care of me. They were very polite and helpful. In one case I was picking up the free MicroCell/Femtocell that offered me. The second time I was just poking around while me wife in a nearby store.

FlipFriddle

Maybe some Apple-esque vibe has rubbed off with the iPod association, Sir Harry. Or AT&T is just paying attention to what works. Our locally owned chain grocery store Wegmans (spreading to the mid-atlantic and northeast as we speak) is an example of how to run that business right; they train their people very well, and spend a lot of time and energy on their employees. That’s why they have been on Fortune magazine?s ?100 Best Companies to Work For? for 13 straight years, with the past 6 in the top 5, and one number 1. It makes a huge difference. Your staff is your first and primary connection to the customer in a retail environment. It seems like suicide to not make sure they are trained well.

Lee Dronick

Maybe some Apple-esque vibe has rubbed off with the iPod association, Sir Harry. Or AT&T is just paying attention to what works.

Also they may be concerned about customers, especially iPhone users, decamping for Verizon. The offered me, unsolicited, the MicroCell even though I have an AT&T tower less than a 1000’ feet away and rarely have dropped calls at home.

I also noticed better customer service at my local Home Depot. They too have greeters and if I ask where an item is located instead of giving me an aisle number they escort me to the location. I am thinking that retailers are very concerned about keeping customers happy, and shopping.

FlipFriddle

Sure. That customer service connection is a brick and mortar stores greatest advantage over online sellers. It’s too bad it took so many of them so long to figure that out.
Man, that profit margin difference between Apple and Best Buy is staggering.

Lee Dronick

Man, that profit margin difference between Apple and Best Buy is staggering.

Especially when you consider that Best Buy has 3 times the number of stores. Also more variety in products available in addition to Apple items.

wab95

The last two times I went into an AT&T Store I was pleasantly surprised


I have had a similar experience with AT&T. Back when they were Cingular (or however it was spelt), they had an abominable service record. I moved my wife’s mobile service - at her request - from them to T-Mobile. Now of course, she and the family are back to AT&T for their iPhones.

I would not be surprised if, as part of the partnership with Apple, employee training was made a stipulation. In my experience, the AT&T service has been good all around.

eolake

Thanks for the excellent article.

Bryan Chaffin

Thank you, Eolake. We’ve missed you around here. smile

eolake

Thanks, my man.
Too busy earning money and being neurotic.    grin

But I do read the site, it’s still one of the best.

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