J.C. Penny, the American retailer, is getting a new boss. Ron Johnson will become their new CEO in November after having led Apple’s retail store operations for the last decade. Mr. Johnson is credited with the success of Apple’s retail store operations – and the results speak for themselves.
According to a recent article in the Wall Street Journal:
- More people now visit Apple’s 326 stores in a single quarter than the 60 million who visited Walt Disney Co.’s four biggest theme parks last year.
- Apple’s annual retail sales per square foot have soared to $4,406. Add in online sales, which include iTunes, and the number jumps to $5,914. That’s far higher than the sales per square foot and online sales of jeweler Tiffany & Co. ($3,070), luxury retailer Coach Inc. ($1,776), and electronics retailer Best Buy Co. ($880), according to estimates.
- Needham & Co. puts Apple stores’ profit margin at 26.9% in an industry that typically has profit margins hovering around 1%.
These results are impressive, but not surprising. Why?
Because Apple, through their training and support, enable their retail staff to sell the way customers want to buy.
CCC note: Interestingly, these findings have very similar undertones to CCC’s research how B2B service and support can influence loyalty. In essence, when we “teach” customers something they value, rather than try to sell them something we think they need or simply treat them as a transaction, the experience becomes more positive.
And the Wall Street Journal article described several features of Apple’s training and sales process that align to this very finding:
- According to several employees and training manuals, sales associates are taught an unusual sales philosophy: not to sell, but rather to help customers solve problems.
- “Your job is to understand all of your customers’ needs—some of which they may not even realize they have,” one training manual says.
Apple’s retail sales approach is best summarized by a quote from a former employee, who said, “You were never trying to close a sale. It was about finding solutions for a customer and finding their pain points.”
To me, the most fascinating implication here is that these impressive results can be had in what is arguably the most transactional of all sales environments – the retail sales floor.
Apple’s sales representatives might only have 20 or 30 seconds to engage a potential customer in a conversation, and what Apple’s results show is that when a sales person focuses on the customer’s outcomes or problems rather than a product’s features and benefits, customers will respond with higher sales, even at premium prices.
So for organizations who feel that they are trapped by a highly-transactional sales environment, the lesson here is clear – even if we have only a few minutes with our customers, we must enable our sales people to teach customers about their challenges rather than relying on a sales approach that focuses on the products we want to sell.
Do you think this is as relevant for a service environment as it is for sales? Let us know.
Related CCC Resources: