Shop Our Store! Or Better Yet, Why Not Work Here

By Alison Wellner

Sep. 22, 2004

One morning this past August, 30 of Jenny Craig’s newest manager trainees gathered around the conference table at a hotel in Livonia, Michigan. These new managers at the privately held weight-loss company, based in Carlsbad, California, came from across the country to learn from four company trainers, watch PowerPoint presentations, and otherwise prepare for managing one of the company’s 449 centers in North America.

    As the four trainers kicked off the morning and introductions went around the room, a curious pattern emerged. After the obligatory “Hi, I’m so-and-so,” more often than not there was supplementary biographical information: “and I lost 80 pounds!” Or 35 pounds, or 20 pounds, or whatever excess girth the new employees had managed to whittle off their waists.

    These weren’t disillusioned defectors from Jenny Craig’s competitors. In fact, more than half of the new managers–16 out of the 30–plus three of the four trainers had started out as successful Jenny Craig clients, says Corrine D. Perritano, vice president of field operations, who was also in the room that morning.

    At Jenny Craig, seeing such a high percentage of former customers among its employee base doesn’t raise eyebrows. “We’ve had great success hiring from our client base,” Perritano says. She estimates that over half of the company’s 2,350 field employees started their association with Jenny Craig as one of the company’s approximately 53,880 clients it sees each week. “Typically, we don’t even have to do a whole lot of recruiting.” People who are successful on the program, she says, often get the urge to make a career of it and ask for an application.

    That’s a good piece of financial news for the company. “It’s a great savings, hiring a client,” Perritano says. “I don’t have to place the local newspaper ads, and I don’t have all the man-hours of going through all those résumés if I place an ad on CareerBuilder or Monster, setting up the pre-screening interviews, etc. If you look at all of that, we’re saving about $1,500 per hire.”

Good financial sense
    Indeed, for many companies, hiring customers makes good financial sense, says David Scarborough, chief scientist at Unicru Inc., a workforce-technology company based in Beaverton, Oregon. “You should be sensitive to your customer base because your customer base also has the potential to be your employee base,” he says. The company has computerized and studied more than 25 million employee applications since 1995, and tracked their progress as employees. Unicru found that customers indeed make superior employees. Customers-turned-employees have slightly longer tenures, and they’re also less likely to get fired, says Scarborough. What’s more, Unicru’s research also revealed that employees who frequently shop the stores that they work in–at least four times a year–outsell employees who were never store customers.

    Why such great outcomes? Customers-turned-employees have a built-in advantage over non-customers because they already understand the store, and can easily identify with other customers, Scarborough says. Plus, he adds, “they’ve already expressed a preference for the inventory, the style and the image of that employer.”

“You should work here”
    The hiring process starts in a department that usually has nothing to do with recruiting strategy: marketing. To hire effectively from the customer base, a company must have acompelling brand that can bring the right people through the door, says Micah Moore, group manager of talent acquisition at Sports Authority. The chain does about $2.4 billion in sales and has about 17,000 employees. “Our brand tends to attract a large applicant pool,” he says. (Customers are simply directed to in-store kiosks when they inquire about openings, says Moore.) Indeed, many retailers simply rely on the strength of their marketing to drive people to the store, and then recruit with the venerable “Help Wanted” sign in the window, point-of-purchase signage or a table stocked with brochures and applications near the front register.

    But other companies that recruit heavily from their customer base will often go beyond such tried-and-true measures, by training their store managers to keep an eye out for customers who could become “team members.”

    At Jo-Ann Stores Inc., the nation’s largest specialty-fabrics retailer, which logs $1.73 billion in annual sales, a recent study revealed that 87 percent of its 22,000 employees shopped in one of Jo-Ann’s 860 stores at least four times a year. Another 35 percent did so once a month, and 20 percent once a week, according to Rosalind Thompson, executive vice president of human resources. These high percentages mean that managers are trained to be on the lookout for customers who seem to have what it takes–good communication skills and a friendly attitude. “It’s really up to the management team in the store to get to know their customers,” says Thompson. When such customers are identified, they’re quickly buttonholed by a manager, she says. “They say, ‘Hey, you’re in here every week; you should work here.’ ”

    Jo-Ann Stores doesn’t just rely on chance to find the right customers. The retailer also uses in-store classes as a way to build relationships with customers. While a customer is learning how to make a Halloween costume for her kid or getting tips on scrapbooking, store employees use the opportunity to get to know customers who have high potential to become employees.

    Although Thompson says she hasn’t calculated return-on-investment stats, she’s convinced that recruiting from the customer base is “absolutely cost-effective. Our store managers don’t have the time to cold call, or to sweep the mall [for recruits] and that sort of thing. This is an efficient and effective way to do in-store recruiting–when employees are talking to customers, they can also be assessing the customers,” she says.

    Indeed, other than an occasional “we’re hiring” box on the regular direct-mail pieces that the marketing department sends out to customers or in the company’s weekly newspaper inserts, having managers looking out for high-potential customers is the major recruitment strategy that the company depends on to staff its stores. “The only time we ever do any type of mass hiring”–placing ads in the paper, going through employment agencies and so forth–“is when we’re opening a new store. We don’t have any recruiters in the field who recruit at a team-member level. So we’re saving a lot,” Thompson says.

Vacations for referrals
    At Jenny Craig, the very nature of the relationship between customer and employee aids in recruiting, as the service that the company provides depends on intimate discussions with customers about weight and health and diet. This means it’s natural for employees to get to know clients–and at the same time to scout them as potential employees. To make sure that employees know how important recruiting from the customer base is to the company, Jenny Craig has created an incentive program, says Perritano.

    The company uses a “points” system toreward employees; employees save up points to purchase items from a catalog. For each customer that is successfully hired as an employee, the employee who “scouted” the customer gets 100 points to use in a catalog, where everything from vacations to children’s toys can be purchased. (By way of comparison, an employee who is rated highly by mystery shoppers gets 50 points.) “Our people are anxious to get the points,” says Perritano.

Risky business
    Hiring from your customer base isn’t without its perils, however. “Since you’re not going to hire everyone who walks into the store, you have to be careful not to alienate,” warns Scarborough. Companies that plan to recruit heavily from their customer base must devise a system that gets feedback to would-be employees quickly–and sensitively, he says.

    It’s something that weighs heavily on Mike Stine’s mind. Stine is vice president of field human resources for Kmart, the nation’s third-largest discount retailer. The company emerged from bankruptcy protection last year, and now logs $23 billion in sales. Kmart has an average of 2 million customer visits a day, and from that pool, the company draws the majority of its new hires–some 75 percent to 80 percent of its 147,000 employees. “It’s very effective for us to recruit from our customer base, as opposed to blanketing a geographic area with ads in the paper and so on,” he says. But he’s mindful of the risk of turning a would-be employee into an ex-customer. “The experience [of applying for a job at Kmart] has to be a very pleasant experience because if there is a bad experience, it might turn them off from shopping with us,” he says.

    To that end, three years ago Kmart partnered with Kenexa, a Wayne, Pennsylvania-based company, to pilot a Web-enabled in-store application kiosk. The goal: to move the screening process along quickly so that managers could get back to would-be employees quickly. Four hundred of Kmart’s 1,500 stores participated in the pilot. At the kiosk, a candidate’s information is immediately run up against a “dirty number bounce,” which checks for invalid social security numbers, as well as another negative database that checks for theft-related convictions. “On average, 2 percent of applicants hit that negative,” says Stine, meaning that the process goes no further, and the customer can be politely–and rapidly–informed of the negative decision.

    Kmart’s kiosks include a behavioral assessment that scores a candidate on various retail-related skills and attitudes. Stine says that after the behavioral-assessment portion of the screening was completed during the pilot, the applicant pool was cut down by 40 percent. “We found people who were truly interested in working for us, and who also enjoyed retail.” Among the people that Kmart hired during the pilot, voluntary turnover was much reduced in comparison to that of stores that weren’t part of the pilot. Stine declined to provide exact ROI figures but says that “we have proved the return on investment to warrant the rollout to all of our stores.”

How sausages are made
    Another important part of hiring from your customer base is making sure that your customers know what they’re getting into, says Rosalind Thompson of Jo-Ann Stores. If a store is doing it right, a customer doesn’t see all the tiny little tasks that employees must perform. “It’s important to disclose to our customers what is involved in the job and not lead them to believe that they can just stand there and handle fabric all day. As customers, they don’t see the 2,000 boxes of freight that come into the back room.” Without being aware of that, she says, “they can’t make a learned decision to come to work for us.” And by the same token, she says, it’s important to train frontline managers to tell the difference between an eager customer and an eager customer who has what it takes to become a great employee. “It’s tempting to think, oh they’re enthusiastic, they’ll be fine,” she says. “Even if they’re our customers, we have to make sure they’re a good fit for our business.”

    Still, says Perritano of Jenny Craig, it’s hard to overestimate the value of hiring employees who have a history of excitement about the company long before they start to draw a paycheck. Such employees may require additional training, she says, “but you can’t train passion and you can’t train belief. Nor can you find someone who is such a good role model for our clients. Those things are priceless.”

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