This paper examines the customer relationship strategies that have made Nordstrom, Inc. one of America's most admired retailers. Beginning with the company's founding philosophy of "greed through love," the paper reviews Nordstrom's well-known return policies, employee empowerment culture, and electronic customer relationship management tools. It also outlines the eight management principles identified by retail analyst Robert Spector, describes the retailer's tiered loyalty rewards program, and offers recommendations for broadening the program's appeal by drawing on competing models from Saks Fifth Avenue and Neiman Marcus. The paper concludes by connecting these strategies to Nordstrom's sustained sales growth and store expansion even during recessionary periods.
The paper consistently pairs a general claim with a concrete, real-world example — for instance, linking the abstract concept of viral marketing to Nordstrom's practice of accepting returns on items not purchased in-store. This claim-then-evidence structure keeps the argument grounded and persuasive throughout.
The paper opens with a brief company profile before moving through a logical arc: philosophy → specific policies → operational CRM tools → codified management principles → loyalty program details → recommendations → performance outcomes. Each section builds on the last, moving from description toward analysis and prescription. The conclusion ties company expansion data back to the loyalty strategies introduced at the outset, giving the paper a satisfying circular structure.
Nordstrom, Inc. has long enjoyed a reputation for providing superior customer service. This paper examines the strategies that the retailer employs to build customer relationships and promote customer loyalty.
Nordstrom is one of the nation's leading fashion specialty retailers, with 204 stores located in 28 states. It was founded in 1901 as a shoe store in Seattle, and today operates 115 full-line stores, 86 Nordstrom Racks, two Jeffrey boutiques, and one clearance store. Nordstrom also serves its customers through its website and catalogs (Gonzales, 2).
Nordstrom's business strategy has been called "greed through love" (deFelice). The 110-year-old retailer owes its success to customer-friendly policies that are well-known, widely admired, and frequently imitated in the U.S. retail industry. Nordstrom employees work to form lasting customer relationships, and the company is known to have one of the most customer-friendly merchandise return policies in the global retail industry (Farfan, 1).
In addition to its generous return policies, Nordstrom's customer relationship strategy includes other notable tactics. According to deFelice, Nordstrom is willing to take risks and do unusual — and often expensive — favors for shoppers, even accepting returns on items not purchased there. Such risks, however, often yield significant gains. Word spreads that Nordstrom is doing extraordinary things for its customers, and shoppers tell their friends. This word-of-mouth, or viral, marketing lures new customers into the store and is statistically shown to produce better results than basic brand advertising (deFelice, 1).
One of Nordstrom's former top salespeople, now-retired Patrick McCarthy, described his efforts to build customer relationships. To keep track of his 12,000 customers, McCarthy maintained a personal customer book — some of it on paper, some of it in his head. Today, however, employees maintain records electronically. Salespeople can be alerted when unusual sizes and new shipments arrive, and reminded to call customers when alterations are ready. Nordstrom's customer relationship management system also tracks inventory electronically, allowing salespeople to quickly determine which nearby stores carry a particular item, without having to call through a list of numbers (deFelice, 1).
McCarthy also enthusiastically describes a Nordstrom culture of empowerment. According to Robert Spector, McCarthy's co-author of The Nordstrom Way, Nordstrom gives people on the front line the ability to make decisions and gives managers the ability to back them up. Spector claims that Nordstrom operates by a single rule: use your good judgment in all situations. Nordstrom management believes that the more rules you impose, the farther you get from the customer. As Spector reports, "Nordstrom has a consistency of purpose. That's key. It comes down to hiring the right people and then truly empowering them to take care of the customer" (deFelice, 1).
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