Thursday, April 20, 2017

Gift with Purchase to Cut Item Returns

About 95% of items returned to retailers are in fine shape. The customers most commonly say that they’re bringing back the stuff because of second thoughts about the purchase when they got it home. Even though such items are usually suitable for resale, there are still the costs of checking each item for defects, damage, or usage and then restocking it and selling it again.
     Aware of the hit to profits that item returns can cause, researchers at Seoul National University, using samples of American and Korean consumers, identified a way to reduce item returns: Offer a free gift along with the item purchased.
     This is a method you probably wouldn’t use for every purchase. But it can work well with sales of items where processing returns is especially costly or bothersome. The researchers found it’s even more effective when you allow the purchaser to choose the free gift from a few alternatives you present. The method works for two main reasons. First, the shopper believes that if they return the item, they’ll need to return the free gift, and this makes the psychological cost of the return higher. Second, the acceptance of the gift, and especially of a gift the customer selected themselves, results in a more solid feeling of ownership, and so a hesitancy to surrender the merchandise-gift pair.
     Knowing that you accept returns eases shopper indecision at purchase time, so you want to make item returns as easy as possible while still protecting yourself from financial ruin. There’s research suggesting that a free gift helps at this point, too. Adding a gift to accompany one of the alternatives facilitates the purchase decision. Studies at University of Chicago and Columbia University found that with financial investment decisions, it even works to offer a small gift with both of two alternatives because this moves the decision toward the riskier choice, breaking the tie. Consumer behavior researchers call this the “mere token effect.”
     Use the “free gift” method to augment other ways to reduce item return rates. Consulting with the shopper prior to purchases helps. University of Texas-Arlington and University of Texas-Dallas researchers identified two more factors:
  • Policies that are offer exchanges rather than money or monetary credit reduce the rates of return. 
  • Return rates are greater for retailers who are lenient about the time by which a return must be made or about allowable reasons for the return. 

For your profitability: Sell Well: What Really Moves Your Shoppers

Click below for more: 
Empathize to Ease the Endowment Effect
Dissolve Decision Paralysis
Return to Reconsider Your Return Policy

Monday, April 17, 2017

Argue Strategically with Shoppers

In a 2011 Harvard Business Review essay, Kevin Peters wrote that one of his earliest experiences as head of Office Depot’s stores in North America involved an employee arguing with a shopper. The argument was about whether the store carried a calculator the shopper’s son needed for first grade. The shopper insisted that the store carried that model calculator, the employee insisted that the store did not carry the item. “An employee arguing with a customer—it was unbelievable,” Mr. Peters wrote.
     Not just unbelievable, but also wholly unnecessary. How should that employee have responded to the shopper’s insistence do you think, based on your experiences as a retailer? I’m thinking of something like, “Let me check with the store manager to be sure I’m correct,” and then, if necessary, “You know, we may have carried that item at one time, but my store manager tells me we do not carry that item now. May I help you find an item we do carry which will meet your son’s needs?”
     This fits the situation even if the store never ever carried the item and the shopper is completely wrong in saying the store did. Avoid direct contradiction when arguing against a shopper’s beliefs. Researchers at University of Melbourne verified the value of that advice for arguing against shopper’s negative views of an item or store. A pair of brands were identified that shoppers disliked mostly because they considered it to provide poor value for money or mostly because they considered it to provide inadequate customer service. Then some of the study participants were shown an ad that directly contradicted the reason for dislike. Those who said they got poor value were shown an ad claiming good value. Those who said there was poor service were shown an ad claiming good service. The rest of the participants were shown an ad that argued for the other issue. Those who said they got poor value were shown the ad claiming good service, and the “poor service” people were shown the “good value” ad.
     The second way of doing it was much more successful in changing negative opinions of the brand about both value and service. In fact, those exposed to the direct contradiction came to view the brand even more negatively. People don’t like to be proven wrong, but they don’t mind learning new facts when it’s to their advantage.

For your profitability: Sell Well: What Really Moves Your Shoppers

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Be Thankful for Consumer Suggestibility
Put Foot-in-the-Door to Build Trust
Insert Introjection into Interchanges

Thursday, April 13, 2017

Change Up with Entitled Customers

Store loyalty programs work best when the customer experiences joy at receiving a program reward. The emotion strengthens the basic relationship in the brain between shopping at the store and pleasure. Eliciting joy at reward redemption is less likely when the reward is the same each time. Researchers at Yale University and Carnegie Mellon University find that, in this situation, customers come to feel entitled to the reward. They experience joy only when the amount of the reward is increased, and only until they again become accustomed to the increased amount. This effect is so strong that when the amount of loyalty program reward granted was decreased, the disruption to store loyalty was greater than if the participant had been told the program was discontinued altogether.
     Customers’ favorite loyalty program reward is a discount on an item of the shopper’s choosing. Progressively increasing the amount of this discount could quickly jeopardize the retailer’s financial viability. A better alternative is to periodically change the nature of the reward. How about a gift of a confection?
     Northwestern University researchers rewarded some consumers with cash and others with a slice of cake. As you’d expect, those who received more cash expressed greater joy than did those who received less cash. However, the size of the cake slice didn’t matter. Because there’s no number easily attached to the slice size, the happiness was determined by the flavor of the treat. So let them eat cake.
     Well, okay, I admit a piece of cake might not work as a reward for every type of store, or maybe any type of store beyond a bakery. Still, the lesson is that you can neutralize the entitlements trap with the language of merchandise rather than money.
     Yet you’re still facing the fact that the favorite reward is a discount. The solution to this one is to add the merchandise to the discount and periodically alter which merchandise item you award as a surprise bonus. Studies of loyalty programs find that small rewards given unexpectedly build a desire to reciprocate by giving future business to the retailer. Change and surprise meet the well-documented desire of consumers for moderate variety.
     In a New Yorker cartoon, the devil himself stands behind the host station at the entrance to Hell, preparing to write on a clipboard as he asks the new arrival, “And lastly, for all eternity, French, blue cheese, or ranch?”

For your profitability: Sell Well: What Really Moves Your Shoppers

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Personalize Discount Offers
Title the Entitled “Risky to Please”
Give Your Sales Pitches Changeups
Vary Velocity for Loyalty Program Motivation
Change Up How You Do Business
See Through Consumers’ Boredom Fears

Monday, April 10, 2017

Check Back for Complementary Add-Ons

An ad in the California Milk Processor Board’s highly successful “Got Milk?” campaign featured the protagonist eating a chocolate chip cookie and then afterwards yearning for some milk to go with it. Studies at Hong Kong University of Science and Technology and Italy’s Bocconi University verify that the delay built into the sequence makes sense: Our yearning for a complementary item grows after consumption of the partner item. Our thirst for milk is greater after eating the chocolate chip cookie than if the milk has been sitting there from the start.
     Is this only because the cookie is dry and sticky? No, the study results indicate. It’s because we associate the two items in our minds. Cookies go with milk, pizza goes with cola, crackers go with cheese. The partnering is to specific items. That this is true was shown in the studies when participants were asked to imagine consuming one of the items rather than actually consuming it. The imagining was enough to whet targeted appetite for a partner item. Other evidence was that, in this multinational study, the effect was found only for items considered to be partners in that consumer’s culture.
     So let’s use our own imagination to see ways to make use of these study findings. Imagine that a restaurant patron has ordered an item, but not the partner item. It could work well for the server to check back after the patron has started to consume the ordered item and suggest adding the partner item. The whetting effect would have increased interest in the second item.
     This works for a restaurant, where checking back with the diners is common. What about in a food truck, where the customer disappears after the order is delivered? In this situation, mobilize the customer’s imagination by suggesting a partner item at the time of order, using the format, “As you think about chomping down that pizza you just ordered, do you imagine you’ll want some cola to go with it?”
     The general principle of checking back for a partner item after a delay also applies to nonfood retailing. When there are optional add-ons to an item intended for imminent use, begin with the basic model and then build by suggesting the options, asking the shopper to think about the outcomes of using the purchase. And check in with customers after purchases to propose ways to enhance usage pleasure.

For your profitability: Sell Well: What Really Moves Your Shoppers

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Thursday, April 6, 2017

Cut Out Trying Item Tryouts

Prune away for your shoppers any conditions which try their good will when they’re getting sample experiences with items they’re considering for purchase. Researchers at Iowa State University showed that doing this improves intentions for shopping with you during the present store visit and in anticipated future store visits.
     The particular issue those researchers explored was the frustrating experiences of older women while trying on clothes in dressing rooms. But the researchers’ suggestion applies more broadly to anyone with a physical challenge, such as the handicapped, to make it more likely they’ll persevere when shopping with you. Easing the sampling also improves satisfaction for every other visitor to your store.
     The methods assessed by the researchers constituted adherence to the Universal Design principles developed in a collaboration among interior designers, architects, product designers, and engineers. Here’s my version of highlights from that manifesto, some of which are also found in ADA Update: A Primer for Small Business:
  • Ease access. Position tryout areas in convenient locations. 
  • Ensure that shoppers feel free of vulnerability, such as by adequately protecting their privacy. Have adequate lighting. Point out places for shoppers to safely put aside packages and belongings so they can turn their attention to the prospective purchases. Some retailers use an ottoman and mirror arrangement for easy visibility. 
  • Provide choices in how the shopper can accomplish tasks, such as by having illumination dimmers within easy reach for people with a limited range of motion. 
  • Present important information in pictorial, verbal, and tactile formats. 
  • Allow space for companion help, service animals, and assistive devices like walkers. Keep the dressing room uncluttered. Make it easy for the shopper to have staff do any re-shelving. Perhaps place a “Not for me” container by the dressing room exit. 
     Parallel guidelines apply when the items being tried out are not just being tried on. Researchers at University at Buffalo-SUNY and Indiana University verify our common sense notion that people master novel products best when given the opportunity to experiment with the product repeatedly. The measures of mastery included attraction to the product, a willingness to pay a premium price for it, and an ability to use the product’s capabilities in a variety of situations. By allowing the shopper to try out the product, you’re more likely to make the sale and have a happy purchaser. That’s best done for all shoppers in circumstances where they feel safe.

For your profitability: Sell Well: What Really Moves Your Shoppers

Click below for more: 
Dress Up Those Dressing Rooms
Ease Social Risk by Accommodating Shyness
Store Goodwill with Seniors
Accommodate Disabled Shoppers’ Psychology
Unpack Product Learning