July 13, 2012 3 Comments
In our Employee Engagement Benchmark Study, we found a high correlation between good customer experience and high levels of engaged employees. But many companies don’t understand this connection, which is why we’ve identified “Ignoring Employees” as one of the 10 CX mistakes to avoid.
Apple, however, seems to be avoiding this mistake. Customers tend to love their experiences with engaged employees in Apple stores. That’s why I thoroughly enjoyed this article in the New York Times a few weeks ago: Apple’s Retail Army, Long on Loyalty but Short on Pay. It provides great insight into Apple’s retail model.
So I decided to dissect the article and reconfigure parts of it into some key lessons…
Apple stores are sales machines. There’s no questioning the success of Apple’s retail efforts.
Last year, the company’s 327 global stores took in more money per square foot than any other United States retailer — wireless or otherwise — and almost double that of Tiffany, which was No. 2 on the list, according to the research firm RetailSails. Worldwide, its stores sold $16 billion in merchandise. Divide revenue by total number of employees and you find that last year, each Apple store employee — that includes non-sales staff like technicians and people stocking shelves — brought in $473,000. Electronics and appliance stores typically post $206,000 in revenue per employee, according to the latest figures from the National Retail Federation.
The brand is built on an army of hourly workers. Apple’s brand may be drawn-up and envisioned in Cupertino, but it comes to life through 10′s of thousands of relatively low-paid 20-year-olds. This phenomena is true for many companies. (see CX Law #4: Unengaged employees don’t create engaged customers.)
About 30,000 of the 43,000 Apple employees in this country work in Apple Stores, as members of the service economy, and many of them earn about $25,000 a year. By the standards of retailing, Apple offers above average pay — well above the minimum wage of $7.25 and better than the Gap, though slightly less than Lululemon, the yoga and athletic apparel chain, where sales staff earn about $12 an hour. The company also offers very good benefits for a retailer, including health care, 401(k)contributions and the chance to buy company stock, as well as Apple products, at a discount. But Cory Moll, a salesman in the San Francisco flagship store and a vocal labor activist, said that on Tuesday he was given a raise of $2.82 an hour, to $17.31, an increase of 19.5 percent and a big jump compared with the 49-cent raise he was given last year.
People seek out a higher purpose. Apple recruits people who love the Apple brand and provides them with a vision for their work that goes beyond selling products to “enriching people’s lives.” Companies need to identify this purpose and communicate it to employees.
But Apple’s success, it turns out, rests on a set of intangibles; foremost among them is a built-in fan base that ensures a steady supply of eager applicants and an employee culture that tries to turn every job into an exalted mission.“When you’re working for Apple you feel like you’re working for this greater good,” says a former salesman who asked for anonymity because he didn’t want to draw attention to himself. “That’s why they don’t have a revolution on their hands.”One manager said it was common for people offered jobs to burst into tears. But if the newly hired arrive as devotees, Apple’s training course, which can range from a few days to a few weeks, depending on the job and locale, turns them into disciples. The phrase that trainees hear time and again, which echoes once they arrive at the stores, is “enriching people’s lives.” The idea is to instill in employees the notion that they are doing something far grander than just selling or fixing products. If there is a secret to Apple’s sauce, this is it: the company ennobles employees.
Train for key customer moments. Apple examines the experience of customers and trains employees how to deal with these critical interactions. Companies need to understand interactions from the customer’s perspective. (see CX Law #1: Every interaction creates a personal reaction.)
Training commences with what is known as a “warm welcome.” As new employees enter the room, Apple managers and trainers give them a standing ovation. The clapping often bewilders the trainees, at least at first, but when the applause goes on for several lengthy minutes they eventually join in. There is more role-playing at Core training, as it’s known, this time with pointers on the elaborate etiquette of interacting with customers. One rule: ask for permission before touching anyone’s iPhone. “And we told trainees that the first thing they needed to do was acknowledge the problem, though don’t promise you can fix the problem,” said Shane Garcia, the one-time Chicago manager. “If you can, let them know that you have felt some of the emotions they are feeling. But you have to be careful because you don’t want to lie about that.”
Apple established an environment for good customer experience. You can’t just push people to deliver good customer experience, you need to create an environment that encourages them to do so; people typically conform to their environment. (see CX Law #5: Employees do what is measured, incented, and celebrated.)
At Apple, the decision not to offer commissions was made, Ms. Bruno said, before a store had opened. The idea was that such incentives would work against the company’s primary goals — finding customers the right products, rather than the most expensive ones, and establishing long-term rapport with the brand. Commissions, it was also thought, would foster employee competition, which would undermine camaraderie.
Sales and productivity goals are creeping in. Over time, every system tends to sway away from its initial design. While this may be appropriate, it often leads to competing metrics or to environments that encourage behavior that is inconsistent with the original brand goals.
He had already begun to sour on the job when in 2007, he said, his store began an attendance system whereby employees accumulated a point for every day they did not come to work; anyone with four points in a 90-day period was at risk of termination. “It was a perfectly good idea, but the thing that was terrible is that it didn’t matter why you couldn’t come to work,” Mr. Zarate said. “Even if you had a doctor document some medical condition, if you didn’t come to work, you got a point.”
To meet the growing demand for the technicians, several former employees said their stores imposed new rules limiting on-the-spot repairs to 15 minutes for a computer-related problem, and 10 minutes for Apple’s assortment of devices. If a solution took longer to find, which it frequently did, a pileup ensued and a scrum of customers would hover. It wasn’t unusual for a genius to help three customers at once. Because of the constant backlog, technicians often worked nonstop through their shift, instead of taking two allotted 15-minute breaks. In 2009, Matthew Bainer, a lawyer, filed a class action alleging that Apple was breaking California labor laws. Sales employees, Mr. Garcia and others noted, deal with stresses all their own. Though commissions are not offered, many managers keep close tabs on sales of warranties, known as Apple Care, and One to One, which is personal tutoring for a fee. Employees often had goals for “attachments” as these add-ons are called — 40 percent of certain products should include One to One, and 65 percent should include Apple Care.
Employee engagement requires an ongoing focus. Even companies that have string levels of employee engagement, like Apple, can’t rest on their laurels. It’s critical to track employee engagement and to respond immediately whenever it starts to deteriorate.
Like many who spoke for this article, Shane Garcia, the former Chicago manager, talked about Apple with a bittersweet mix of admiration and sadness. When he joined the company in 2007, he considered it a place, as he said, that “wanted you to be the best you could be in life, not just in sales.” Three years later, his work life seemed tense and thankless. He had little expectation that upper management would praise or even notice his efforts. In recent years, the level of unhappiness at some stores was captured by an employee satisfaction survey known in the company as NetPromoter for Our People. It’s a variation of a questionnaire that Apple has long given to customers, and the key question asks employees to rate, on a scale of one to 10, “How likely are you to recommend working at your Apple Retail Store to an interested friend or family member?” Anyone who offers a nine or 10 is considered a “promoter.” Anyone who offers a seven or below is considered a “detractor.” Kevin Timmer said the internal survey results last year at the Grand Rapids store were loaded with fives and sixes.
The bottom line: Don’t ignore employee engagement.