Profitable Player: Kiehl's

Luxury makeup–counter employees are the used-car salesmen of the department-store world. Stop by for a simple tube of lipstick, and a plastic-looking clerk guilts you into buying ointments that promise to cure every wrinkle, spot, or dark circle you never had.

Contrast that with Kiehl's, where there are no mirrors to magnify your flaws. The spartan packaging of its products--dishwashing soap is sexier than this--seduces rather than screams. And when one of the 154-year-old brand's white-coat-clad sales reps approaches you, you're urged to take a free sample and see if it works before you buy.

The sample program, under which Kiehl's gives away more than 12 million packets and tubes a year, is the "cornerstone of Kiehl's customer-service philosophy," taking the pressure off both reps and customers, says Cammie Cannella, assistant VP of global education development. "It's very important that our customers believe in the quality," she says. "There is no other way to do that than have reps who educate customers about what's in our products and then let them try them out firsthand."

When L'Oreal acquired the brand in 2000 and expanded it to 16 stores and 150 department-store counters nationwide, it kept Kiehl's sample program--a winning, if investment-heavy, formula for building trusting customer relationships. Such gentle, generous tactics have proven a potent prescription: Kiehl's enjoyed double-digit earnings growth for each of the past three years and had more than $70 million in sales in 2004.

Complementing the free samples is a highly knowledgeable staff, which Kiehl's invests in heavily to train. The company uses nearly 10% of its compensation budget to send new hires to an up to four-week residency in New York, Miami, or San Francisco. Any sales techniques taught are more a lesson on what not to do: Don't promise too much. Don't send customers away without free samples. And don't use words like "fabulous."

That sort of high-touch, low-pressure service is the beauty of Kiehl's, says customer Sean Cambern. He'd never had any interest in skin care until he followed his wife into a Kiehl's store one afternoon. "Now I'm always stopping by," he says. "You'll never feel like you're being sold to." Now there's a formula for sales success.

See the full 2005 Customers First Awards.