The genius behind the Apple Store

Apple’s adventures in retailing have largely been successful. The Wall Street Journal had a recent story that provides some eye-popping numbers on just how well they Jobians have done at the mall (Secrets From Apple’s Genius Bar: Full Loyalty, No Negativity, Jun 15).

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, according to data from Apple and the Themed Entertainment Association. Apple’s annual retail sales per square foot have soared to $4,406—excluding online sales, according to investment bank Needham & Co. 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.

So what is the secret sauce behind Apple’s success? According to the Journal, it’s largely about employing training.

Still, Apple is considered a pioneer in many aspects of customer service and store design. 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. To that end, employees receive no sales commissions and have no sales quotas.

“You were never trying to close a sale. It was about finding solutions for a customer and finding their pain points,” said David Ambrose, 26 years old, who worked at an Apple store in Arlington, Va., until 2007.

Apple lays its “steps of service” out in the acronym APPLE, according to a 2007 employee training manual reviewed by The Wall Street Journal that is still in use.

“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,” and “End with a fond farewell and an invitation to return.”

Apple’s control of the customer experience extends down to the minutest details. The store’s confidential training manual tells in-store technicians exactly what to say to customers it describes as emotional: “Listen and limit your responses to simple reassurances that you are doing so. ‘Uh-huh’ ‘I understand,’ etc.”

So some parts of this are not that surprising. For example, who would have guessed that Apple under Steve Jobs would opt for a control freak approach while still giving the customer an enjoyable experience? Also, lots of firms have made a push into customer service complete with a training program built around a goofy acronym. (See, for example, this post on how Bank of America has tried to ramp up customer service in its branches.)

I see two things that set the Apple Store apart. First, it has gone for the high service approach from the start. Improved customer service at, say, Bank of America or Best Buy (to name another electronics retailer) represents a change in emphasis (if not a complete sea change) but it was how Apple set up its stores.

The second point is one that is made in the article: Apple benefits from selling just one product line. The article emphasizes that this simplifies training. But a different point is that it prevents free riding. If a retailer invests in high levels of customer service, customers are free to come in, benefit from the free service, and then buy from a cheaper retailer. That is certainly true with, say, Windows-based PCs. That doesn’t really happen with Apple. They have pretty tight control over their distribution and customers are generally unlikely to find Apple products much cheaper than they are at the store. (The exception may be ordering some products on line to avoid sales tax.) If you are looking for hot products — for which you might need more information — this is even more true since Apple appears to favor its own when it comes to allocating products.

Having said all this, I invariably find the Apple store frustrating. High touch service in some ways conflicts with big crowds. I find them difficult to navigate at times — even for simple things like paying. This is also reflected in how they manage reservations. Yes, reservations with a genius or a someone to walk you through training are convenient but it also means that virtually all capacity can be committed to reservation holders at the expense of walk ins. Put another way, the service can be great but it may be virtually impossible to access.