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.
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.