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Leading Listener: Trader Joe's

Customer feedback doesn't have to come from sophisticated research. At Trader Joe's, it's all about listening to people.

At first glance, Trader Joe's might not seem like a company that listens well. The specialty grocery chain, known for its private-label foods, doesn't have a way for customers to email it from its Web site. The 800-number on the site offers only a recording about store locations. And the company says it doesn't do focus groups.

But talk to almost any Trader Joe's customer, and you'll hear a story of how the company has listened and responded. Marynne Aaronson was surprised at how quickly her Reno, Nevada, store started carrying a soy ice-cream cookie she'd requested after trying it at a Southern California location. Susan F. Heywood was driving past her Phoenix Trader Joe's early one morning when she found it bustling, even though the store's official opening wasn't until 9 a.m. "A lot of people wanted us to be open early, so we try to be as often as we can," the manager told her.

And Mike Losey was tugging a cart full of flowers and wine in his Ann Arbor, Michigan, Trader Joe's when an employee stopped him and asked if he was throwing a dinner party. When Losey said yes, the staffer recommended a three-minute creme brulee after the two spent a few minutes discussing Losey's menu.

At Trader Joe's, listening to customers — and their valued feedback — is not about a carefully calibrated contact center or extensive customer research. Rather, it's about something much more simple, and simply human: a conversation among the customer and the "captains" and "crew members," as its Hawaiian-shirt-clad managers and employees are called. "We feel really close to our customers," says Audrey Dumper, vice president of marketing for Trader Joe's East. "When we want to know what's on their minds, we don't need to put them in a sterile room with a swinging bulb."

It's also about responding to what gets said. Captains spend most of their day on the retail floor and have a lot of autonomy to set up their stores to meet local needs. Employees can open any product a customer wants to taste and are encouraged both to recommend products they like and to be honest about items they don't. All store employees can email buyers directly with ideas or feedback from customers.

When customers do have questions or problems, Trader Joe's prefers that they contact their local store captain — hence, the info-only 800-number on the Web site. But the company does have a customer-service department and will hand over the number when requested. One question the department often gets is about ingredient labeling. In response, Trader Joe's began introducing allergy labels a few months before Congress passed related legislation in July.

In the end, Trader Joe's business model allows it to respond to customer feedback in ways that other supermarkets cannot. Suppliers do not pay stocking fees, or "rent," to place products on Trader Joe's shelves, a widespread industry practice that's anything but customer-focused. With drastically smaller square footage and inventories than typical grocery stores, the company removes items that don't sell well to make room for new products. In a sense, Trader Joe's entire inventory is a result of listening to customers — both their feedback and their dollars. "We like to think of Trader Joe's as an economic food democracy," says Dumper.

Runner-Up: Wachovia

There's more to listening than gathering data. What you do with it also matters. When Wachovia surveys customers — an impressive 25,000 every month — for feedback on its service experience, it doesn't just collect the results branch by branch. Rather, the bank asks customers about individual employees and uses those answers in one-on-one staff coaching. A recent 20-minute coaching session at a Manhattan branch made clear how this feedback — each customer surveyed rates 33 employee behaviors — can improve service. The branch manager urged an employee to focus on sincerity rather than on mere friendliness, to "sharpen her antenna" so she'd listen to customers more intuitively, and to slow down rather than hurry up. That focus on careful, sincere, intuitive service has paid off: Wachovia has held the top score among banks in the American Customer Satisfaction Index since 2001.

A version of this article appeared in the October 2004 issue of Fast Company magazine.