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TOM LEONARD

The Customer Is Always Right

At Stew Leonards, we follow four simple secrets to success inguiding our business. Iwould like to sharethese principles with you,because I believe that you will find them useful in your own effortsand, besides, they are easy to remember.

The first of these four simple secrets to success is to SAllSFYTHE CUSTOMER. The driving force behind this idea is that onlyhappy customers come back Customers will not return to anybusiness where they feel unappreciated. We learned that hardlesson, at Stew Leonard's, when a customer came in during theearly days of the Norwalk store and walked up to my dad claimingthat a half gallon of eggnog she had bought had turned sour. Shedemanded her money back "Are you sure?" my dad asked, as hereached and smelled the eggnog. "It doesn't smell sour to me."The customer insisted that it was bad, and asked, "Why don't youtaste it?" He then tasted it and suggested, "You're mistaken, that'snot sour."

She got so made he could see veins popping out of her neck '"want my money back," she railed. My dad reached into his pocketand pulled out a dollar. "OK, OKI" he quickly replied. At the time,eggnog cost 99 cents and she didn't even give him the pennychange. When she reached the front door, she turned andscreamed, "The only mistake I made was shopping here,and I'mnever coming back to this store again." Dad thought, '" justpaid theprice for a happy customer by giving her money back. But byarguing with her, I lost a customer at the same time. Well, howstupid can you be to argue with a customer. Even if you win theargument, you're going to lose a customer."

Volume 24 Number 4 Fourth QuaIter 1990

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The CustomerIs AIwil)'S RIght

Dad felt so strongly about this lesson that he bought an 8,000pound granite rock and had our two customer policies chiseledliterallyright in stone. He put that rock at the entrance to the storefor all our customers and all our team members to see each daythey came in.Anytime you visiteither of the Stew Leonards stores,you will read etched in stone, "Our Policy: Rule 1 . The customer isalways right Rule 2 . Ifthe customer is ever wrong, re-read Rule 1.

We give tours through the Norwalk plant now. One recent tourincluded a contingent from Japan. The Japanese saw my dad andcame running over to ask, "How come this place is so busy?"Without hesitation he replied, "Well,you know you've got to takecare of the customer - SATISFY THE CUSTOMER. Only happycustomers come back." Looking a bit disappointed, the leader ofthe group probed, "No, really, how come?" Pausing a moment,Dad responded, "Well,you know, it's teamwork. You'vegotto workwith your people." Growing annoyed, the group leader quipped,"I've read all that stuff. Really, how come? We didn't come all theway from Japan to hear all that stuff." "Look," interrupted Dadquickly, seeing out the comer of his eye that my Mom had justentered the store pushing a shopping cart, "I'll tell you the realsecret, but you can'ttell anybody." Excitedly,the Japaneseagreed,"OK." Dad began slowly, "You gotta REALLY love the customer.Watchr' Mom didn't even see it coming. He walked over to her andkissed her right at the entrance of our store. Unfortunately, as Ilooked over at the tour, I saw the Japanese in a huddle takingstudious notes. So, ifyou're ever over inJapan, watch outforoverlyamorous merchants.

We've transplanted many of the same principles from theNorwalkstore to ourtent in Danbury - the suggestion box isone ofthem. Speaking of which, a customer dropped a note in thesuggestion box one day, and it read:

"Dear Stew, I've been shopping in your Danbury Farmer'sMarket now for over two years and I love it However, everytime Icome here Isee your son, Tom, working hard but I'venever seen you. Don'tyou think in Danbury his picture shouldbe on the suggestion box, not yours?"

We sent the note down to Norwalkand had it typed and passedaround. Aftera fewdays went by, I received a call from Dad and hesaid, "Youknow,Tom, I'vebeen thinking about thatnote.I think thecustomer's gota point Howaboutcoming down and letting us takeyour picture for the suggestion box in the new store?" I said,"Greatl" and went down to have my picture taken. On the waybackIthought to myself, "You know, he must have read that note ten

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times before he called, but he never noticed that the handwritingmight have looked just a little bit familiar." Too late now!!

In our Danburystore by the exit we keep a suggestion box. On it iswritten, "What do you like? What don't you like? I'd love to know-Tom?" We get over 100 notes a day in that box.

When you take a customer's suggestion, acknowledge them.Many customers will drop a note in the suggestion box the firsttime. To make that kind of feedbackwork, however, you must reactIf they come in the store the next time and you haven't reacted totheir suggestion, then they won't drop another note in...They justsay, oh, forget about it

At Stew Leonards we collect all the suggestions by 8 o'clock inthe morning. By 100'clock, they are typed up and distributed to allthe mangers' desks and the cafeteria tables. By 2 o'clock in theafternoon, we're no longer interested in whether someone has hada chance to read them, we want to know what has been done tosolve the customer's problem.

Remember, it's not the customerwho writes a note orcomplainswho's your enemy - they're really your best friend, because they'regiving you a chance to improve. It's that customer who doesn't,who says... "Oh, the heck with itf'...and walks out never to returnwho kills you, because then you're not receiving feedback on whatthe problem is. Ifyou don't know what the problem is,you can't do avery good job solving it

I promise you that the very first thing a customer will do the nexttime they visit a store is to check whether their time was well spentwriting the suggestion. If you don't listen, you soon stop getting asmany notes. Just as you and I believe that every idea we have isimportant, so do our customers - and as long as they hold themoney, I'm going to listen.

You can imagine when I opened the Danbury tent in 1985 howmany times I was opening the suggestion box each day. As theproud manager of our new tent, I was eager to hear the wonderfulthings our customers had to say.To myamazement, one afternoonaround 5:00 I found this note: "Boy, am I disappointed. My friendstold me to come to your tent for the bargains on Perdue Chicken.To mysurpriseyou're sold out Well, I guess it's 1Vdinners tonightBrian Losee, Turtle Drive, Danbury."

It was true! We sold all that we had projected. But that oneunhappy customer broke my heart Just then I looked up and sawtomorrow's fresh delivery of Perdue Chicken pulling into ourparking lot I looked at my watch - it had only been 20 minutessince Mr. Losee wrote the note. I had an idea.Offto Turtle Road withtwo packages ofchicken Iwent When he opened his door, you can

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The Customer Is Nnys RIght

imagine his surprised lookseeing me with his dinner in hand only30 minutes after having left his note in our suggestion box. Mydream store had another happy customer!

While waiting to buildthe newstore in Danbury, we met oftentotry and figure out a way to listen to what our new potential cus­tomers wouldwant At our main store in Norwalk we listened bysetting up a tent across the street as a garden center. During theChristmasseason wewouldsellChristmastrees. Usingthismodel,weset up a tent at the newsite and itworked, the store has grown.Just listento the customers, find out what theywant and giveit tothem.

Let me illustrate...

Itwasa cold,rainynightinDanbury. The onlythingthat made thenighthalfbearablewasthe Christmasmusic playing allaround meand the wonderful smellof the Christmastrees.Just afterdinneracouple pulled into the parking lot and stumbled out of their car. Icould telltheywere really in the holidayspirit Theywanted to buythe largest tree from the smallest group for the le~st amount ofmoney. I thought it was going to be a quick sale with the raincoming downso hard outside,but then Isawher pullout a ponchoand golfumbrellaand IknewIwasinbigtrouble.Forty·five minuteslater1wassoaking wet,but they had their perfect tree for $19.95.1carefully loaded iton theircar and offtheywent 1wentto the trailertochange and warmup.Thirtyminutes laterthe phone rang."StewLeonard's Christmas Shop, Tom speaking, can Ihelp you?" andout of the phone came the voiceof a highly anxious man. 1couldhear hiswife screaming at himthat he had ruinedtheirtree. Hesaidhe tried to carve the stump to fit in his tree stand and the stumpcracked. Couldhe bring the tree back for an even exchange. Thetree had been perfect "Carvethe stump?" Iwonderedto myself. Itwasstraightas an arrowwhen it left- unlike him.But Ithought ofmy dream to someday have a new store and how my Dad alwayssaidyoucan't winan argument with a customer; foreven ifyouwin,you'll lose that customer. Only happy customers come back tospend money. Soon, coming in the entrance to the tent, was thecarved up remains of a once beautifultree. Then minutes laterhewas on his wayhome with another beautifultree. For free. Ifyouthinkofit, the tree wassure a smallpriceto pay.Mydream storehada customer for life!

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A recent national survey found that it costsfivetimesas much toget a newcustomerintoyourstore thanitdoestokeep theoldonehappy. If that's the case, then what's the better price, a $20Christmas tree, or the $100 it'llcost you to get a new customer tostand in exactly the same spot again.

At Stew Leonard's we figure that if a customer spends $100 aweek in our store, in a year that equates to $5,000 and in ten yearsthat equals $50,000. We believe that our greatest assets aren't inour financial statements, rather that the real assets are ourcustomers walking around our store deciding whether to comeback again.

When a customer comes to Stew Leonard's, they don't ask,"Hey,what can Ido for Stew today." Instead, they ask"What's Stewgoing to do for me?"lfwe don't do it,then the customer is not goingto come back

Profitis a reward for doing a betterjob foryour customers. h's nota game where the customer wins and the business loses, or thebusiness wins and the customer loses. Either you're both going towintogether, or you're both going to lose together. It's as simple asthat

We conduct a focus group once a month at Stew Leonards. Wesit down for about an hour with 20 good customers and we askthem what they think we could do to better serve them. Let me tellyou it's a wonderful opportunity to talk to your customerand to findout what is going on from the customer's perspective.

We had a customer stand up at one of our focus groups. Shesaid, "Look, Idon't buy your strawberries, because they come in asupermarket package. Ilikebuying them where Ican pick my own.Sometimes Iwant big ones, sometimes small ones." "You mean,"we said, "ifwe put them out loose, you think we'd sell more." Shesaid, "Surer'

So wewent to Freddie, our produce manager, and asked him toput the strawberries out loose and let the customers pick them.Hornfled.heyelled, "Youcan'tdo that! Don'tyou knowthat as soonas you put the strawberries out loose and the customers can pickthem that they're going to eat them all?" Hewas right!As soon aswe put the strawberries out loose the customers started eatingthem, and they liked them! Our sales shot up. As a result, we wereable to go out to Driscoll, California and start bringing in a trailertruck of strawberries a week. And naturally, you get a better dealthat way. lt's a win-win situation. Everybody wins.

I was walking around the Danbury store this summer andFreddie came up to me and he said, "Tom, you gotta see this." hwas lunch time, and he brought me over to the strawberry display

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-which is20 feet long,bythe way. Ayoung fellow washidingintheright hand comer stuffing strawberries in his mouth as fast as hepossiblycould.Hewasn't buyinganyofthem - he didn'tevenhavea shopping cart. "He's eating his lunchl" Freddie announced in adismayed voice.

"You know, Freddie," I answered, "99 percent of all thecustomers are honest It's only 1 percent who are stinkers, andthat's the 1percent who's takingadvantageofyounow.I'll takecareof itforyou." Iwalkedoverto the guyand Ilethim swallow before Isuggested, "Youknow, Idon't thinkyou can just sit here and stuffstrawberries in your mouth like this. I think you've got to buy acouple of them." Helooked me rightin the eye and said, "Go readthe rock, buddyl" Iasked him ifhe wanted something to drink.

Now, Iwouldlike to talka little bitabout the second simplesecretto success: TEAMWORK TO GET IT DONE. The founder ofFamous Amos Cookies,Wally Amos, once said that TEAM standsfor TOGETHER EVERYONE ACCOMPUSHERS MORE. He hasalways insistedthat it takes teamwork to do anything.

Recently, we received this letter from a customer, it reads:"Dear Stew,

I woke up this morning feeling terribly depressed anddespondent Fortunately, Ihad my regularappointment withmy psychiatrist When Iphoned him to tellhim Iwas runningbehind schedule and wouldbe a little late,to myamazementhe gave me the following doctor's prescription: skip today'sappointment and instead drive down the street to StewLeonard's dairystore. Spend the rest of the morning walkingaround inside,talkingto as many ofthe smilingemployeesasIcould.Afterthe hour's finished, go out inthe parkinglotandvisit the barnyard animals.

To tellthe truth,Mr. Leonard,Ithought he wasthe one whoneeded the psychiatrist more. I've just returned from my firstvisitto your store and boy,do Ifeelgreat!As a special bonusI'm going to be savinga lot of money, too. It'sa lot cheapershopping in your store than going to the psychiatristr'

The reason I tell this story is that it takes happy employees tocreate happy customers. I always try to remind myselfwhat WaltDisney once said, "You can build, dream and create the mostwonderful place in the wholeworldbut ittakes people to make thedream come true." Much of that dream is tied to attitude.

AtStewLeonard'swehireone out ofevery20job applicants,andwebase thatdecisionstrictly on attitude.Webelievethat ifyouhavea great attitude,you'lI be able to go rightdown into the store andworkdirectly with the customers and that they'll be happy.

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We found it a successful strategy to build a bit of a waiting list atthe store. The success of this strategy lies not in recruiting, butrather in retaining. Asyou grow, you must concentrate on retainingthe successful people you have on staff. Therefore, you begin tohave fewer openings and then you can begin to pick and choosewhoever you want to bring on board.

As a follow on to this personal approach, we promote exclusivelyfrom within, and as soon as you geta promotion, you get your owncareer ladder. The story of Dan Arthur is a fine example.

Dan started as a cart boywhile in juniorhigh school. He's workedhis way up as my right hand man in Danbury, the Director ofDanbury Operations, and when the store's finished in July nextyear, he'll probably have over 500 people working for him.

At Stew Leonards, we're big advocates of Dale Carnegie. All ourpeople go through the Dale Carnegie Human Relations Course.Dale Carnegie reminds us that "the sweetest words to anybody inany language is their own name,"

To apply this wisdom we tried to figure outhowto thankby namethe customers who come into the store. We came up with theName Game. The way it works is this, if the cashier thanks thecustomer by name, then the customer can drop the cashier's namein the suggestion box. The first prize winner each weekWins$50 asthe cashier with the most names. Second and third place winnerseach win $25. You may ask yourselves how do Tom's cashiersknow all their customers' names? It's simple. Most people pay bycheck. Just look at the check and say "Thanks for coming in Mrs.Smith,"

At Stew Leonards we've always believed in the value of usingpositive motivators rather than negative motivators to influenceemployee behavior. The reason why is evident in a story that mywife tells.

Mywife went to getTom, Jr. a bicycle at a store in our town. Theyhad two bicycles, one for $69 and the other for $99.She picked the$99 bicycle and went to the cashier to pay. The cashier rang up thesale for $69. Surprised, Karen quipped, "Gee, I didn't knowthis is onspecial". The cashier replied, "Well, yes it is". "Why don't you put asign over it.J'llbet you can sell a lotmore," Karen suggested. "Well,I can't," answered the cashier, "because this is myspecial," PuzzIed,Karen asked, "Your special, how does that work?" "Well," thecashier replied, "the manager yelled at me this morning in front ofmy friends, because I was late. And now I'm going to get even withthe store before I quit"

If you missed the message in my wife's story, at least try toremember Bill Marriott, .Jr,'s observation, "If you take good care of

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The Customer Is Always RIght

your people, your peoplewill take care of you." In otherwords, if themanager supports the team members who are working in yourstore, they'll take good care of the customers and the customerswill come back and reward the business.

We like to say that at Stew Leonard's we manage by MBA, orManagement by Appreciation. Bennett Cerf once said that "A paton the back is onlya few vertebrae awayfrom a kick in the pants, butits miles apart in the results that it brings." Let me set the stage foran example ofourMBA philosophy by telling you the story ofBetsy,one our cashiers who was in the store one nightjust before closingwhen a customer came in and said, "Gee, I'm lucky I got herebefore you closed. We just got back from vacation and I wanted toget some food for the kids' breakfast and their lunch at schooltomorrow."

Betsy rang up her order, just as any cashier would do, only tohear the customersuddenlygasp, "I left the house in such a hurry Iforgot my checkbook. I don't have any money with me." lrnrnedi­ately, Betsy suggested, "Well, could you come in tomorrowand payfor it?" Surprised at Betsy's independence the customer responded,"Sure, but you don't have the authority to let me walk out of thisstore without paying for my groceries, do you?" Betsy assured thecustomer that she did, indeed, have the authority. Pleased,but still abit cautious the customer remarked, "Well, rn take the groceries,but I'm not walking out ofhere without the manger's okon that" SoBetsy called Jimmy the manager over and, he said, "Sure, noproblem."

Through our orientation program we try to convey to all ouremployees that when a customer has a problem in the store, thatthe first thing each employee should do is THINK YES.

Now, at Stew Leonards YES just doesn't mean, "Gee, yes, whatcan I do to help you?" We broke it down a little bit further. The "Y'asks you to look at the customer as if YOU were the customer ­and how do YOU like to be treated? The "E" asks you to dowhatever you have to do on the spot to EUMlNATE the customer'sproblem. The goal of YES is to have a happy customer leave thestore and then come back. Anally, the "S" affirms that no matterwhat you do, the managers are guaranteed to SUPPORT yourdecision. With YES you won't get your neck chopped off becauseyou're sticking it out for a customerand you're making an unusualdecision.

The third simple secret to success is EXCELlENCE TO MAKEIT BEITER. Vince Lombardi, a hero at Stew Leonard's, once said,"You know, the secret to doing something great is just doing thebasics brilliantly."

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The JoumaI Of CreatIve BetIlIVIor

We have a ONE·IDEA CLUB through which groups of teammembers can go any place they choose to visit a company theyhear is doing something super and from which they can bring anidea back to improve the store.

There are three rules to the club. The first rule states thateveryone who goes on the visit has to come back with their owngood idea. If three people go, three ideas have to come back. Thesecond rule states that the improvement has to be instiMed insome form in the store within.72 hours. If you don't do it in threedays, you probably won't do it at all. The third rule states that youcan't criticize the host company as you walk through it

As an example, we heard of this place up in Boston that washaving great success with their demos. Now, in the food businesswhen you go in your typical supermarket and they have a demo,that's not an accident-research shows that it triples your sales. Sowe try to run 50 demos a week in our store.

We brought the demo crew up to Boston to look at this greatdemo operation. On the way back, I turned to Dorothy, the head ofthe demos, and I said, "Hey, what is your good idea?" "rve got thegreatest Ideal" she fired back. "You know, when we do a demo, wehave to use toothpicks and no matterhow manygarbage cans I putaround the store, the customers will always eat the demo thenthrow the toothpicks on the floor. I end up constantlyhaving to callbuilding services to sweep the floor up." "Well, I know that,Dorothy," I replied, "doyou know that we have extra people on justfor your demos?" "No, Tom," she cut in, "you're missing mypointLook at my idea - use pretzel sticks instead of toothpicks for thedemos. Nowthe customers eat the demo, they eat the pretzel sticksand our floors are clean. Isn't that greatf'

Frank Perdue, of Perdue Chicken fame, a good friend of thefamily's called one day and said that his biggest customer, thechairman of the largest supermarket in America, wanted to comeby for a tour of our store. We were tickled pink.

As we were lunching with him afterwards, my dad turns to himand asks, "You know, I've always wanted to ask somebody in thesupermarket business this question. Why is it that whenever you gointo a supermarket, you alwayshave 10 or 15 registers,but only4 or5 of them are open and you end up waiting in a long line. Why don'tyou open up more of them?" "You know, Stew, I don't know." hereplied matter-offactly,' I don't have time to worry about whathappens in every one of my stores. I have 1,500 stores to worryabout That's easy for you with one store."

"Well, what is it you spend all your time worrying about?" dadfired back. The exec got all excited and said, "From here l'rn flying

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to Miami for a transportation meeting. We're working on standard­izing the sizeof the pallets that we ship our product in so thatwe canfit more in our tractor trailers. That won't make any difference toyou with one store. But with us, it's going to save us millions,"

On the wayhome dad hitme in the ribs and beamed, "You know,Tom, there's alwaysgoing to be room for little guys like you and mewhen the big guys worry about the size of their pallets and not thecustomers that are in their store."

Nowhere's the fourth simple secret to success, WOWTO MAKEIT FUN. This is myfavorite. You've gotto promote business. And ifyou come into our store you'll see our dairy plant in the store. Youcan seeyour milkcome in fresh from the farm everyday. We like tosay that you'd have to own a cow to get it any faster.

We keep an animal farm out in front with over 100 barnyardanimals in itWe believe thatwhere the kids want to go, the motherswill soon follow. We have Clover the Cow and Daphine the Duckrunning up and down our aisles. And we have jazz bands andcountry & western bands on the weekends. All these made ourcontroller sayWOW when he got the bil1! But they work. We recentlyadded a new one act, The Farm Fresh Ave, who are animated milkcartons that sing and dance to keep the kids in the store.

We have customers that make us say WOW. For example,there's Colleen Blanchard who 2 years ago went to Russia andaccidentally took a vacation picture holding one of our SteW:.. .Leonard's shopping bags. After getting the film developed, shedidn'twant the picture, gave it to mydad and said, "I thought you'dget a kick out of this - this bag's been to Russia." He, of course,didn't knowwhat to do with it, so he tacked it on the wall behind theregisters, with a little card underneath it that said "ColleenBlanchard visits Russia." He didn't think another thing of it Amonth went by, and while he was walking around the store hehappened to stop by the wall to notice that somebodyhad added apicture with this next to it: "The Gardellas go to Cairo." Shortlythereafter we received a photo from a Pygmy tribe in Africa.

"Wowr' dad said, "we could have some fun with this." Now,everyone who takes a picture holding a Stew Leonard's bag in frontof a famous landmark, anywhere in the world, receives a $3 giftcertificate to the store and gets to put their picture up on the wall.And this thing tookoff. Today, we have over 10,000pictures in fromall around the world.

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We believe our four simple secrets work. Since 1986, when weopened the TENT in Danbury, Connecticut, I have been followingin the footsteps of my Dad and brother "Stewie" providing qualityproducts at a reasonable cost with the customer's needs comingfirst Nowwe all are embarking on a new adventure...in the Spring of1991, we will open a brand new Stew Leonard's store in Danbury.

So take a trip and visit us in Danbury. I would love to see you allthere experiencing the Stew Leonard spirit I promise you it will bebigger, dedicated to you the customer, and a fun place to be.

"Remember you the customer are always right," and if weforget..Show us the Rock..!

Tom Leonard, President, Danbury Operations. StewLeonards, Danbury, cr.•••• •

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