Customers First? Not So Fast.

October 9, 2007 | blog | By Mike Sullivan

There’s a long list of marketing pundits and authors who’ve made their fortunes selling the idea that putting customers first is the sure way to retail success. They might take issue with a piece of advice dispensed the other day at a conference on retailing. It was offered up by one of the founders of The Container Store, a company that has made Fortune Magazine’s list of “100 Best Companies to Work For” the past eight years. Co-founder and CEO Kip Tindell says putting customers second has been the key to his company’s success. The Container Store has grown at an astounding 20 percent each year since he and his partner opened the first store in 1978, so there must be something to it.

Instead of customers, Tindell says, employees should come first. He means it, too. While so many companies identify employees as a “key audience” in their marketing plans, The Container Store is one of the few I know of that actually has real strategies for appealing to that audience. In fact, the company doesn’t even have a human resources department. HR is a marketing function at The Container Store.

“We charge all of our employees with pulling in great talent,” Tindell said. “Grade A talent only wants to work with Grade A talent.” Attracting and retaining great talent is the company’s highest priority.

And Tindell puts his money where his mouth is. The Container Store pays 50 percent to 100 percent better than its retail competitors, and offers a 401K plan and medical, dental and vision plans for full- and part-time employees. They also invest 241 hours in training per employee against an industry average of just eight.

“We’re wild-eyed fanatics when it comes to training,” Tindell said.

He’s also a big believer in communication. Employees have a natural curiosity about where they work, and they want to be in the know. They don’t want a customer or a friend telling them something they read or heard about their employer. The only way to build a sense of inclusion is to keep everyone looped in. Tindell and his executive team work to do that constantly.

“We have a huge moral obligation to make sure employees look forward to coming to work each morning,” he said. The company has 11 percent annual employee turnover versus a retail industry average of 100 percent. Clearly, he is focused on what he considers to be an important personal responsibility.

And why the fanatical focus on employees? Employees who are positively engaged and challenged deliver excellent customer service. A disengaged, under-compensated, under-trained, unappreciated and unhappy employee doesn’t. It’s no more complicated than that.

And The Container Store’s goal is to deliver what they call “astonishing customer service.” Anyone who has ever visited one of the 38 stores knows they make good on that promise without exception. He’s created an achievement-oriented culture with a balance of challenge and reward, and it is simply more fun to work and perform in an environment like that. Customers spread the word on their good experiences, driving more traffic and positive experiences, and the sales and profits ring up.

Tindell says it’s a profit strategy that has driven his company to more than $500 million in sales in 2007, and he describes the result with two simple words: competitive insulation.

Employees are the ones charged with creating great customer experiences, and when they deliver, they create for their employer a competitive advantage that is extremely difficult to match.

Thirty years of positive results is enough to declare The Container Store’s strategy a winner.


Mike Sullivan

President at LOOMIS, the country’s leading challenger brand advertising agency


We challenge underdog brands to think differently. We help them find their voice, and urge them to blaze new trails to make sure they stand out from the pack. Whether you need an agency of record or support on a project, we are here to help you win.