You’ve Heard of the 80 – 20 Rule???

Posted by Deborah Chaddock Brown on January 26, 2010 under Attitude, Customer Moments, Resolving Conflict | 3 Comments to Read

I love conversations with Leslie Ungar.  You know her.  I talk about her often.  That’s because she always has some interesting little tidbit to share that speaks volumes.  Today it was the retelling of something Bruce Nordstrom (Grandson of Nordstrom’s founder) had to say when visiting Northeast Ohio a while back.

Someone asked him if people took advantage of Nordstrom’s famous return policy.  You’ll all heard the story about the customer who returned a tire to Nordstroms and they didn’t even sell tires.  But the associate smiled and happily gave the customer a refund.

Well, first off, my Dad - another person who always had great stories to tell, said that there was a Nordstroms location that did in fact sell tires, but the point of the story is that Nordstroms takes their customer at face value and does whatever it takes to make them happy. (p.s. the tire return took place in an acquired store that had sold tires before being owned by Nordstroms)

So how did the founder’s grandson reply?  “Yes.  There are some people that take advantage.”

He went on to say that only about ten percent of their customers took advantage of Nordstroms policy to make customers happy.  “You don’t make policy based on ten percent,” he was quoted as saying.  “You make policies based on the 90%.”

I’ve often heard of the 80/20 rule.   You know – the rule that says 20% of your customers bring in 80% of your revenue.  That 20% of your employees generate 80% of the work.  That 20% of the whiners take up 80% of your time.

But here, the rule is even stiffer.  Make policies based on 90% of your customer’s needs.  Nordstroms has been in business over 100 years and their customer philosophy has remained the same – regardless of the change in economics:

The company’s philosophy has remained unchanged for more than 100 years since its establishment by John W. Nordstrom in 1901: offer the customer the best possible service, selection, quality and value.

What else has remained the same for over 100 years? 

Okay – let’s get back to your company policies.  Do you make your policies based on the few that try to take advantage or the many that build your business?  I can remember in school there would be obscure rules and the teacher would say “It is because of the actions of a few that we’ve had to change the rules.”  Didn’t you want to punch “the few” in the nose for making it more difficult or less enjoyable for you?

Our customers feel the same way.  Imagine a world where companies created a culture around the many.   So look at your customer service policies.  Are they based on the few that try to ruin it for the rest of us?  Or have you positioned yourself like Nordstroms and created policies around the 90% of your customers who just want a good quality product/service at an affordable price?