Trader Joe’s – Loyalty is as Loyalty Does

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Jul 18, 2005
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By John Hennessy

In excerpts from his book, Trader Joe’s Adventure, run in Workforce Management, Len Lewis spells out the philosophy and tactics behind how Trader Joe’s achieves high levels of employee loyalty and low levels of employee turnover.

“Trader Joe’s has long adhered to the philosophy that happy employees make for happy customers. Happy customers spend more and visit the store more frequent. This attitude is rare in the retail industry at large, where employees are often seen as expendable.”

According to human resources expert Mel Kleman of Humetrics, an internationally recognized authority on recruiting, selecting and retaining hourly workers, “They’ve taken the approach that the employee is number one. They feel that if they treat employees the way they want employees to treat customers, odds are stores will have a better shot at providing a unique shopping experience for people as soon as they walk through the door.”

According to Mr. Lewis, some of what Trader Joe’s does to foster employee loyalty includes:


  • Leadership Development program – designed to allow people to make their own decisions about store operations because employee autonomy is so highly valued
  • Trader Joe’s University – focuses on management, leadership and communication skills
  • Average hourly pay of $21 per hour compared to $17.90 at union operations
  • Health insurance and retirement benefits
  • Hires highly motivated people with a talent for customer service and a passion for food.
  • Demonstrate that there is a career path, or at least an opportunity for advancement.

Blake Frank of the University of Dallas says, “Research shows that what an organization does for its employees once they get there has a huge impact on retention and performance.”

Mr. Lewis writes, “… employers usually get the employees they deserve. That being the case, Trader Joe’s gets some of the best.”

Moderator’s Comment: Can a loyalty program, or any other customer-facing program, succeed if your employees aren’t happy to be there?

Too often a shopping trip is a like a game of tag. The store employees are “it” and you do your best to avoid them so you’re not tagged. Self-checkout tips
the scales toward you getting out without the need to interact with anyone wearing a nametag.

The power Mr. Lewis’ book is in the bright light it shines on how different it is to shop at Trader Joe’s. Trader Joe’s employees make it practically a
pleasure to spend money. If anything, you want to spend more. You want to learn more.

The employees are masters at reinforcing your purchase decisions, with cashiers commenting on how they’ve enjoyed some of the products in your basket, not
to mention suggesting related products you would also enjoy. And their suggestions are usually right on.

They also make it look so easy to be helpful, pleasant and profitable.
John Hennessy – Moderator

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15 Comments on "Trader Joe’s – Loyalty is as Loyalty Does"


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Tom Zatina
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Tom Zatina
15 years 7 months ago

Nothing can destroy satisfaction or loyalty more quickly than a bad experience with a store employee. Conversely, customers tend to still remember what an employee did to help them, long after they have forgotten the special price on eggs. Happy and well-trained employees do make a difference, particularly when a customer is experiencing a problem.

Mark H. Goldstein
Guest
Mark H. Goldstein
15 years 7 months ago

Before a retailer dips into offering a points or incentive-based loyalty program, I see two requirements.

Requirement #1 – have great product or value proposition

Requirement #2 – have passionate employees willing to be front-line communicators of your loyalty scheme

To John’s question, absolutely not! Employees are your ‘last mile’ and, without their support, rolling out a loyalty program is very difficult.

Karen Kingsley
Guest
Karen Kingsley
15 years 7 months ago

There are three different TJ’s in my shopping area (I’ve also recently moved, making one more familiar than it once was). I’ve been shocked by TJ’s employee retention rates, and it certainly affects my shopping behavior as well as my willingness to go to the store. (Most importantly, I know which are the fastest checkers.)

The attitude of the employees is consistent and palpable. I recently wrote an article, interviewing consumers about their shopping habits and two of them commented that they’d like to work at TJ’s. The attitudes are felt by everyone who walks in there. They’ve achieved what Disney had once, but seems to be fading.

Ian Percy
Guest
15 years 7 months ago
There is one irrefutable principle here: “How we are managed is how we serve.” It’s not the best metaphor for modern times but even ancient scripture tells us ‘not to muzzle the ox that treds the corn.’ One of these days, we’ll actually get the point. Trader Joe’s is just more insightful and in the flow than most retailers. They hire purpose driven people and they treat them well. The fact that this commitment pays off at the bottom line is almost a matter of physics. For most other companies, the tired line about “Our people are our greatest resource” is a crock of you know what. And the challenge to get in and out of the store without touching any employee is actually funny when you think about it and would make a great SNL skit. Finally, we have the wise advice to invest in leadership. The higher you go in most organizations, the less development opportunity. Is the assumption that leaders have ‘arrived’ in some way? Invest in your leaders; your leaders will… Read more »
W. Frank Dell II
Guest
15 years 7 months ago

Too many retailers simply look at store employees as a necessary cost of doing business, yet they represent the company in the primary customer interface. Nothing hurts a store more or helps it more than the employees. Higher prices and weaker selection can be overcome with great employees. In other than a Hispanic market, employees that don’t speak English at checkout send customers elsewhere with the feeling I am not wanted here.

Mark Lilien
Guest
15 years 7 months ago

Many organizations, including retailers, airlines, credit card companies, hotels, etc., have “loyalty programs” that reward repeat transactions. I have a feeling that the majority of employees in most of these organizations are either unhappy or indifferent, certainly not “inspired.”

What is the measure of success for a “loyalty program”? In many cases, it appears to be a small bribe to retain a customer that probably doesn’t feel a loyalty connection that arises from the core of the experience.

The best organizations’ customers feel loyal without a “program.” And it is hard to enhance the customer experience if the staff is demoralized or has high turnover.

Tom McGoldrick
Guest
Tom McGoldrick
15 years 7 months ago

The linkages between customer satisfaction, employee satisfaction and revenue has been established and well documented since the mid 90’s. We have done numerous linkage studies and always find a strong relationship. However, the relationship is circular. Employee satisfaction affects customer satisfaction but customer satisfaction also impacts employee satisfaction. It is no fun to deal with unhappy customers!!!

Both customer and employee satisfaction are necessary but neither is sufficient. It is sad how few organizations actively link the two together.

Michael L. Howatt
Guest
Michael L. Howatt
15 years 7 months ago

With the rate of new employees coming into the retail industry being so low, either out of High School or, particularly, college, TJ’s has at least found a way to keep them once they are employed. In the end, it all filters down: treat the employee right – they are happier – they make the customers happier – customers buy more goods – come back to the store more frequently – everybody wins! Is this approach better than carry everything at a really low price? I guess time will tell.

David Livingston
Guest
15 years 7 months ago

All of this is common sense, however, it is easier said than done. One of my favorite supermarket retailers in New Orleans has beaten his competition that has bigger stores, cleaner stores, lower prices, and easier access and parking. How? It’s just a fun place to shop and work where everyone treats you nice. For some people, this could be the best interpersonal experience they will get all week. The same goes for the employees.

Len Lewis
Guest
Len Lewis
15 years 7 months ago

As I also point out in my book, the question is whether Trader Joe’s can continue to attract the type of people it needs as the company expands.

I don’t see any big jumps in store numbers. However, even the best employers are finding it difficult to attract and retain good people. It’s not easy to staff 200 or so stores with good people, who actually interact with customers. How difficult will it be if TJ’s gets to 1,000 or 2,000 units?

Doug Fleener
Guest
15 years 7 months ago

I believe you can have a successful loyalty program with unhappy employees IF you buy that loyalty with the lowest price. I can tolerate poor service and miserable people if I’m getting the lowest possible price. But I rarely shop on price but rather on convenience and the quality of the shopping experience. Personally, I’m not loyal to a company but rather the people I engage with in that store. I shop where the employees make me feel good and the only way that happens is when the company makes the employee feel good.

Companies need to invest in more employee loyalty programs to compliment their customer programs.

Bernice Hurst
Guest
15 years 7 months ago

Not a chance. Why on earth should customers be loyal if the company’s own staff are indifferent? Sadly, it has become something of a cliche, but for the past several years the mantra of UK business is that your people are your most important asset. Cliche or not, it is true and execs need to realise it, not just pay lip service.

Harry Schreiber
Guest
Harry Schreiber
15 years 7 months ago

Growing the Trader Joe’s culture was a long and dedicated process. The money is important, but the insight was to make the crew member feel a part of the company.

I feel that the first step was making the crew member comfortable with the merchandise. Everyone is encouraged to try all the foods. There are tastings for the crew. Those of legal age are allowed to taste the wines. If a customer asks a crew member about a food, the member can describe it, say how he likes it and why the customer may like it even if he did not.

The biggest thing I found missing was credit to the retired (and long term) Chairman, John Shields, who aggressively fostered the culture.

Jeff Weitzman
Guest
Jeff Weitzman
15 years 7 months ago

I have to agree with Doug–you can create loyalty with less-than-thrilled-to-be-here employees. It’s just a lot harder. You can also create loyalty with employees who do more than good when it comes to product knowledge, as many electronics stores have proven.

But Trader Joe’s is an excellent example of a store that competes on price and still provides quality service–a surefire recipe for loyalty. It didn’t surprise me recently when a Whole Foods employee accompanied me around the store searching for a specialty item; with those prices I expect it. But it’s a pleasure finding the same type of service at TJ’s and paying less than I would in a supermarket.

Robert Chan
Guest
Robert Chan
15 years 7 months ago
In the past two decades, first started with airlines, then hotels, followed by grocery stores and credit cards, loyalty has become a means by which a business improved its numbers. The numbers then became an integral part of how successful the company was being gauged by Wall Street. This in turn, became a driving force for stock prices and the CEO’s bonuses or stock option plans. A lot of businesses still have no clue that customer satisfaction or loyalty is very much service dependent. Of course, good prices are also a very critical part of the whole equation. We all have to know that Wall Street is full of pencil pushers or number crunchers. In reality, a lot of these number crunchers really don’t have the experience of running a business–the daily grinds which go with it. How can one consistently out-perform one’s forecast every quarter (which is a very short time by itself)? I am convinced that if a business does not have happy customers, that business is not going to be around too… Read more »
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