Tuesday, June 30, 2009

Match the Product to the Customer's Skill Level

Sometimes the best item for a customer depends on the person's skill level. Take power tools, cameras, and sports equipment. It could be wise for a low-skill customer to buy equipment requiring high skills if the customer is in the process of building those skills. It doesn't make good financial sense to buy the entry-grade equipment and then have to put out more money for the upgraded version a few months later. Get out of the customer's way, especially when the highest grade equipment carries the highest price.
     But a tradeoff with high grade equipment is that it might require considerable skill to use it properly. You don't want customers misusing what they purchase from you. If they wreck the equipment and then come to return it to you, you'll either accept the return and take a loss on the equipment or worse, one of your staff will refuse to take the return, thereby losing that shopper as a customer.
     To keep up your profitability, sell skill-based equipment based on the customer's true skill level. Unfortunately, customers often misjudge their true skill level following biased product demonstrations. Katherine Burson at University of Michigan had participants practice putting golf balls. Half the participants putted from a distance of ten feet, the others putted from a distance of three feet. After completing their putts, each participant was asked to choose from among golf balls marketed to different skill levels. The balls labeled as being for higher skill levels cost more.
     The people in the three-foot-putt group had sunk more shots than those in the ten-foot-putt group, and as a result, the three-foot group chose the more expensive balls. They'd misjudged their capabilities.
     How well are your staff matching the skill level of the customer to the skill level required from the product?

Monday, June 29, 2009

Emphasize Energy Saving

In your advertising, in your signage, and in your salesperson-to-customer conversations, emphasize your products' energy saving features. According to an Advertising Age/ARC survey, saving energy is a high priority for your shoppers. Today's consumer wants to be thrifty, and energy costs continue to climb. Moreover, consumers want to be socially responsible, and we're told repeatedly that we as a society are wasting too much energy. There's a third driver behind your customers looking for products which save energy. They like products which use the latest technology, and a sign of state-of-the-art is that the product consumes less energy than older models.
     The mix of motivations for energy saving is different for different age groups, so you'll want to customize your approach. For teens, the driving force is using the latest technology. Tell them how energy saving prolongs the time they can use a product between battery recharges. For shoppers over age 35, on the other hand, the motivation has more to do with social responsibility. Tell these folks how their purchase helps promote a healthy future.
     Emphasizing energy saving means going beyond talking to your customers about it. It also means considering revisions in your store's merchandise mix to pay attention to energy saving as a product feature. It means that when you negotiate with suppliers, let them know you aim to carry products which conserve energy.
     Yes, many shoppers place a high importance on product features other than energy saving. And decades of consumer psychology research has shown that there is a subgroup of shoppers who actually aim to earn social prestige by being wasteful, including wasting energy. For your shoppers who fall into this group, you'll want to adjust what you say. But for most of your shoppers, hearing about energy saving energizes the urge to purchase.

Sunday, June 28, 2009

Have a Retail Pricing Specialist

One employee in your store should have pricing of the merchandise as their primary responsibility. In Making Money Is Not Illegal, Immoral or Fattening, here's how we describe the role of Bob the Profit Builder, the Retail Pricing Specialist:
"Bob puts up the bin tags with the new prices on them. Bob is authorized to recruit help if he's got a very large price change, but by and large, it is Bob who puts up the bin tags, and it is always Bob who takes responsibility for the bin tags being perfect. Bob knows about product locations in the store. And to pull it all together, Bob overflows with high-quality common sense."
Pricing must make sense to the customer. For example, with something like drill bits, the customer doesn't expect the price to go down as the size of the drill bit goes up. This is another area in which the Retail Pricing Specialist is invaluable:
"A really big benefit in having somebody do retail pricing in our stores comes when there's a pile of bin tags out on the sales floor. Employees who prefer to be doing lots of other things than put up bin tags end up putting up those tags as fast as they can so they can get that sheet clear and just throw it away. In doing it that way, they are missing one very important element: Once those bin tags are up, they forget to stand back, look, and spot the places where you have to say, 'That would not make sense to the customer.' You'd be impressed by how many thousands and thousands and thousands of dollars we've made in our company just by having Bob stand back to look at the relationships among the item prices."

Saturday, June 27, 2009

Repeat Information When Selling to a Group

When people shop together in groups of friends or as a group of family members, the total of their purchases tends to be greater than when they shop as individuals. At the same time, their memory for what you tell them as a salesperson tends to be inferior. They forget what they are told more than do shoppers you address as individuals.
     Repeat the information more often when selling to a group. You don't want to offend your shoppers, though, and repeating the same information word-for-word could offend—or at least bore—any shoppers in the group who did understand you the first time and remember what you said. To lessen the chances of offending, look at the different members of the group as you repeat the information. Catch the eye of each of those who appear to you to have not understood.
     With some product information, you can repeat the message in different ways. Tell the group of shoppers verbally. Then show them written material that repeats the information. Next, demonstrate your points by showing the shoppers what you mean. And check for understanding by asking the shoppers their opinions about what you've said. Multi-channel teaching always helps improve learning. Because of the tendency of group shoppers to forget, it's especially valuable there.
     There are purchase situations where the forgetting can turn out to be useful. Researchers from Indiana University found that when members of the group are presented brand information, it disrupts memory for the brand's competitors in that product category. The effect is strongest when the group is collaborating in making the purchase decision. If you've decided that a particular brand would best serve both the needs of the shopper and the profit potential for the retailer, repeat information about that brand, but not about the competitors.

Friday, June 26, 2009

Stay in Touch for B2B Sales

In our overall economy, the dollar figure for business-to-business sales is larger than the dollar figure for sales to individual consumers. This means there can be opportunities for high profits in your B2B sales. Because B2B sales put special emphasis on the personal relationship between the customer and the salesperson, know who does what regarding each sale:
     Initiators: Who identifies the need for your product or service? Talk with these people to be sure you understand the need to be met. You don't want your business to be remembered for selling a solution to a problem that didn't exist.
     Gatekeepers: These are the people who are formally given responsibility for limiting the information available to the organization. Purchasing agents might maintain lists of approved vendors and required product specifications. Stay current on what the Gatekeepers expect of you.
     Influencers: Because Influencers work outside the formal network, it would seem hard for you, the retailer, to stay in touch with them. However, the most powerful Influencers are often those who have made similar purchases in the past, so keep Influencers informed about your latest and greatest products and services by keeping in touch with your past customers.
     Buyers: They sign off on the purchase from you. Purchasing agents could serve both Gatekeeper and Buyer roles. But if this is the first time you've dealt with this business, check to be sure. You don't want last-minute surprises about the terms of the sale.
     Users: These people might be the same as the Initiators. However, with purchases that take a long time to complete, there might be some different people who end up being the Users. Because you want to dazzle the users with the quality of your product or service, check in with the Users for a while after delivery.

Thursday, June 25, 2009

Answer Customer Questions with Enthusiasm

After you've heard the same customer question a dozen times, do you look the next customer who asks you that question straight in the eyes and say, "Good gosh. Don't you know ANYTHING"? Well, okay, maybe not, but I'll bet your staff who are asked the same question repeatedly can forget how important it is to enthusiastically welcome customer questions. After all, questions signal the customer's interest in making a purchase from you.
     Whenever you answer a customer's question with enthusiasm, expect the customer to become enthusiastic. If that doesn't happen, analyze why. Maybe you misunderstood the question. Maybe you've not noticed whether the customer wants your answer to consist of product specifications or general reassurance. According to researchers at Stanford University, University of Utah, and University of Iowa, customers usually want specifications pre-purchase, but after making the purchase, they're usually seeking reassurance.
     Essential to enthusiasm is a smile. Unfortunately, some people otherwise qualified to do retail sales have great difficulty putting a smile on their face or in their tone. They don't belong on the sales floor, at least until their clinical depression eases. For others, the depression is temporary and will disappear if you have the employee start working in a different department, where they'll be energized by getting a whole new set of questions.
     Enthusiasm works the world over. But the way that enthusiasm should be displayed does depend on culture. When Wal-Mart first opened stores in Germany, employees were expected to greet customer questions with a smiling, enthusiastic welcome. Shopper analyses showed that the customers thought this type of enthusiasm fit better with Oktoberfest than with a Wal-Mart shopping fest. The customers felt the sales help were flirting with them.
     It was time to keep up the enthusiasm, but tone down the smile.

Wednesday, June 24, 2009

Space Out “Bad News” Products on Shelves

Your order of toys arrived. The distributor gave you an excellent purchase price, great store displays, and even videos to train staff on selling the toys. You ordered these toys because you'd learned customers are buying them well in other market areas, and you're the first in your area to carry them. You expect to see high sales profits.
     Then today as your staff were stocking the first group of the toys onto the store shelves, you saw a front page newspaper story saying a dangerous defect has been found in some toys from this manufacturer. Now you notice that each time a child picks up a box to look it over, an adult with that child tells the child they can't get the toy because of the manufacturer.
     You do your own checking and find that none of the toy product lines you're selling has been found to contain defective items. There is every reason to believe these toys are perfectly safe. Knowing this, what can you do to improve sales of those toys?
     Plenty. And one method that might not occur to you is to space out the boxes containing the products. University of Utah research findings suggest that when a product is feared to have a defect, putting the boxes further apart leads shoppers to think the one they purchase is less likely to have the defect.
     Is this because the sparse stocking tells the customer that others are already buying the product? Or is it no more than superstition? Unless the defect is a communicable disease, the spacing of the boxes should have absolutely nothing to do with product quality. Still, there are times we'll find it better to work with the superstitions of our shoppers than to try to talk them out of the superstitions.

Tuesday, June 23, 2009

Train Staff About Dress Standards

Employee dress standards are part of the service we offer customers. But dress standards are tricky for retailers. How much creativity do we allow? Are the standards different for floor staff than for back office staff, even when back office staff come to the sales floor during a work day?
     Do we want sales staff to dress like the customers are dressing—maybe best for a hardware store? Or are our dress standards part of our selling, so we want sales staff to dress like we want the customers to dress—probably best for a fashion boutique?
     If customers and other employees complain that what one employee is wearing is overly revealing, how do we handle that? If we make employees wear uniforms, what share of the cost of the uniforms will the business owner pay?
     And when we're setting dress standards, what is the most important wardrobe item to include? Well, in Making Money Is Not Illegal, Immoral or Fattening, Art Freedman and I answer at least that last question:
     "What do you want your employees to look like to the customer? Have you ever thought about it? Do you have a standard, a very specific way you want them to look?... First of all a name badge is absolutely mandatory…. Do you let an employee out on your floor without a name badge?... The name badge is the most important single item."
     Still, the dress code standards need to go beyond the name badge. Think through what dress code standards are realistic for your situation. Then set the standards and enforce them. Give your people a reasonable time to make adjustments, but enforce the standards. This means training staff, coaching staff, starting from the top down. As we say, "If you don't train them, don't blame them."

Monday, June 22, 2009

Clearly Define Your Different Target Customers

Shoppers prefer to buy at stores they feel fit their personalities. Depending on how large your store is, different parts of it can have different personalities. You also can have different stores with different personalities. Still, there are limits. By clearly defining your specific types of target customers, you can design shopping experiences to fit them. Customers who don't fit into one of the types you've defined may avoid shopping with you, but that loss will be more than replaced with purchases from shoppers who feel a good fit.
     Best Buy did this a while back, clearly defining their five top types of target customers:
  • The professional man who wants a superior quality home theatre system, even if it carries a very high price.
  • The young man willing to spend money on state-of-the-art features to show off to other young adults.
  • The family man who wants good value and is willing to forgo state-of-the-art features.
  • The busy suburban mom looking for products the family will enjoy using together.
  • The owner/operator of a small business who wants to know about the commercial cost/benefit tradeoffs.

     It's not as if Best Buy decided to shoo off other kinds of customers. Unless somebody has dropped by to rob you, destroy merchandise, or insult your shoppers, it sure seems you'd like to have their business. But when Best Buy featured instrumental and children's music in areas designed for a busy suburban mom, the side effect was making the area less attractive to some other kinds of customers.
     What is the personality of each of your store areas and websites? Is the personality intentionally designed rather than happening by accident? Do those intentions place more importance on fitting the personality of your most promising customers than on fitting your own personality?

Sunday, June 21, 2009

Teach Newbies How the Store Team Works

How quickly do your new employees learn the ways in which staff in different parts of your store operation work together? Are your sales staff aware of how the store buyers decide which merchandise to purchase? Do the hourly employees know what the store operator expects of the managers?
     Have staff from the different store functions do presentations about the following:
  • The tasks they carry out. For instance, "I count the cash that the cashiers turn in and check that against the cashier's tally."
  • The ways in which these tasks help the business achieve its objectives. "What I do helps our store get money into the bank so we can buy the merchandise to always be in stock, and what I do helps keep anybody from cheating our business out of money."
  • What they like most about their job and what they find most challenging.
  • What they've done and are doing to improve the efficiency and effectiveness of their job.
  • Some specific ways the new employee—in carrying out their job tasks—could help the presenter carry out their job tasks efficiently and effectively. For instance, "There are some really simple things you could do that would help me out a lot. One of those is to write numbers very clearly. Sometimes, I can't tell a 1 from a 7, the way it's written."
     When experienced staff members give this sort of presentation from time to time, it reminds those experienced staff of the importance of assessing and improving their own performance. From the perspective of the new employees, these presentations welcome them into their roles as members of a profit-making team. It also opens up their eyes as to where on the team they might like to move in the future.

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

Saturday, June 20, 2009

Set Healthy Margins on Multi-Solution Products

Consumer surveys over the decades find that a product which solves multiple problems or satisfies multiple needs will carry an additional appeal with consumers. So as a retailer, increase your stock of products designed in the tradition of the multi-solution Swiss Army Knife.
     Because there will be toothpaste shoppers who specifically want cavity protection without the chemicals used for tooth whitening, the toothpaste shelf should carry a specialized cavity protection product. But overall, a toothpaste which promises cavity protection plus whitening is likely to sell better than a toothpaste which promises to do just one or the other.
     Yet there's a wrinkle: Although shoppers are attracted to multi-solution products, researchers at Northwestern University found that the shoppers tend to believe such products are inferior in each of the capabilities compared to single-solution products. The product which promises to be a jack of all trades risks being seen as a master of none.
     The Northwestern University research findings suggest that one remedy is for the retailer to charge more for multi-solution products than for single-solution products. The extra cost helps convince shoppers that the product can indeed do more.
     It never pays off in the long run to gouge shoppers with exorbitant prices. But do keep in mind that other trend among shoppers—the search for low prices. Are you trimming profit margins on many of the products you carry in order to keep customers coming? Boosting margins on multi-solution products may be the right solution for you.

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

Friday, June 19, 2009

Help Older Customers to Help Others

In my opinion, retailers have an ethical obligation to be charitable even if it doesn't build profitability. But done in the right ways, charitable activities WILL build profitability for the retailer, and doing well financially can make doing good feel even better. An example of this is with senior citizens. When you provide ways for seniors to help out other people, you'll get and keep more of them as ongoing customers. Here's why:
     Researchers find that altruism is especially important to elderly consumers. Seniors like to give their business to retailers who are compassionate, and they like to view themselves as generous. One dynamic behind this is a desire to leave behind a legacy of love. Maybe behind this, in turn, is a calculation of what will be required on the résumé submitted at the Pearly Gates. A related dynamic is a sense among senior citizens that they want to compensate for other, less positive, legacies their generation seems destined to leave behind—-stupendous government deficits and possible fallouts from global warming, for instance. A third dynamic is that senior citizens often want to fill unscheduled time to ease loneliness and boredom, and few people will turn away offers of charitable work.
     All this opens up opportunities for you to build relationships with older consumers. Whenever you organize a charitable activity, offer a variety of ways for your older customers to pitch in to help. Then after they've helped, recognize their contributions with a certificate of appreciation so fancy it could even be attached to the Pearly Gates résumé. Including your store's name and logo on the certificate of appreciation is part of making it fancy, of course. If you add in a gift certificate, keep the dollar amount small. Otherwise, it takes away from the senior's feeling of contributing.

Thursday, June 18, 2009

Say Yes and Apply a Price

Your staff might automatically say no whenever a customer makes a request that requires going beyond normal store procedures. Sure, we can't have our business disobeying the law. And it won't end up well if we violate business ethics. Plus we should help protect our customers from taking actions that are foolish.
     But regarding this third one, what is foolish to us can make good sense to the customer. Art Freedman and I discuss this in Making Money Is Not Illegal, Immoral or Fattening. Art's family owns and operates American River Ace Hardware in Folsom, California, so he talks from that perspective:
     "Why would a customer give us $250 extra for a Weber barbeque? Well, they'll want us to take it up to their home in Lake Tahoe, about 90 miles away, set it up in their backyard, see that it's hooked to a full tank of propane, and it is ready to go. Well, if they ask, we're going to do it. But we're not going to do it for free. It is far better and more profitable to say yes to a customer and apply a price to it than it is to say no.
     "Some of my employees might say, 'With what I earn, I wouldn't pay that much extra, so I'm not going to suggest it to the customer.' I look at those employees and say, 'There are people who come into this store who have a lot of money. They are willing to pay to hear the word yes and know that we will do what we say we'll do. They don't care if we charge them $250 to get the Weber barbeque up to Lake Tahoe. They just want us to say yes."
     Coach your staff on the value of saying yes to customers.

Wednesday, June 17, 2009

Know Your Potential Customers’ Intentions

Operators of retail businesses can get so caught up in managing pressing daily issues that they aren’t looking sufficiently at the potentials. They make decisions based on what they know about their regular customers without also considering what they can discover about their potential customers. They make decisions based on the shopping habits of customers today instead of on educated estimates of what customers will want a year from today. They make decisions about serving consumers based on what the business is now, not on what the business can become.
     Learn from the past and take account of the present. In gaining new customers, don’t lose the ones you’re already serving. In preparing for how your customers will be shopping a year from now, recognize that the best single predictor of the future is what’s happened in the past. In building your business to reach its full potential for profit, remember what has worked well in the past and what failed. Use the past and present. But don't get stuck there.
     Base your business decisions on accurate data about consumers’ attitudes. In my consumer attitude survey work over the years, I’ve seen problems with accuracy when the questionnaires, interviews, focus groups, and diaries fail to assess the shopping intentions of the consumers. Beliefs will be assessed with items like, “Sales staff here want to get me the right product for my needs.” Feelings will be assessed with items like, “When I buy a product here, I’m confident I made a good decision.” But many consumer attitude surveys lack the intentions items like, “Next time I need a product carried by this store, I’ll shop here.”
     For your business to reach its full potential, know all three. Know your potential customers’ beliefs, feelings, and intentions.

Tuesday, June 16, 2009

Be Ready to Explain Price Increases

These days, most customers are especially sensitive to increases in prices for items they regularly buy. Sometimes customers accept the price increases and move on. In other cases, the customers get upset. According to researchers at University of Arizona, Arizona State University, and University of Pennsylvania, the root of the upset is a desire—conscious or subconscious—to punish the retailer. How else to explain a shopper leaving behind a full cart and walking out the door?
     What leads to a customer wanting to punish the retailer instead of accepting a price increase?
  • Does the customer consider the item to be a necessity? If they believe they must have the item, then even if they can manage to afford the extra charge, they tend to feel trapped when they see a price increase. The answer? When raising prices on items that many customers will see as necessities, use signage to describe less expensive alternatives. Prepare your sales staff to point out the alternatives if a customer complains about a price.
  • Is the price increase a surprise? Consider warning customers of upcoming price increases. There's certainly the risk they'll then start looking for other sources for the products they've been purchasing from you. But there's also the opportunity for you to boost sales and book profits sooner if customers decide to stock up before the cost rises.
  • Does the price increase seem unjustified? Have your staff ready to answer questions about pricing. If a customer says, "Why is the price so high?," the salesperson might say something like, "When our suppliers increase their prices to us, we need to pass those increases on to the customer so that we can stay in business and continue to both serve shoppers like you and employee the people like me."

Monday, June 15, 2009

Use Closed-Ended Questions Selectively

When welcoming customers, almost always use open-ended questions. An open-ended question is one that asks for more than a yes or no, or more than making a choice from limited alternatives. "What may I help you find in the store today?" is an open-ended question. "May I help you?" is a closed-ended question.
     If you welcome a customer with "May I help you?," chances are they'll instantly say, "No," and that gets in the way of you servicing the customer. People coming into your store are there for a reason. When the reason is to consider making a purchase, the open-ended question opens the door to let sales staff discover how to best complete the sale.
     Still, there are times when you don't want the window open too wide. This is when to use closed-ended questions. For example, some customers enjoy socializing with staff so much that they forget it's a business transaction. Staff have other customers and other responsibilities to attend to. When it's clear that the customer has found all that they need on this shopping trip, switch from "What more items may I help you find?" to "Have you found everything that you wanted to find?," and from "What did your husband think of those earrings you bought last time you were in?" to "When will you next be back to shop with us?"
     Closed-ended questions also are useful when opening up an extremely quiet customer. The most common reason for extreme quiet in a customer is suspiciousness. If you ask them to volunteer too much information, they'll get startled and leave the store. It's best to begin with "Which department may I help you find?," then move to "What are you shopping for today?"
     Train your staff to smoothly navigate between open-ended and closed-ended questions.

Sunday, June 14, 2009

Protect Customers From Dangerous Decisions

After an usually windy storm blew by my home, left behind was a huge limb from a liquid amber tree blocking half the street. Even larger tree debris was down all over the area, so it would take a while for city crews to reach my place to slice up and haul away the limb. Since the limb was obstructing the view of an area where neighborhood children often cross the road, I decided to cut up the limb myself and pull the pieces out of the way.
     I figured that the bigger the chain saw, the quicker I'd get the job done. With that in mind, I asked the guy at the equipment rental shop for the biggest chain saw around. The guy asked me no questions in return, except for which credit card I wanted to use. What I dragged back to my car was a chain saw really much too powerful and cumbersome for me to use, given my limited experience both with chain saws and with playing defensive end on an NFL team.
     The danger became clear as soon as I started up the chain saw. I needed to stop the saw, drain it out, pack it up in my car, and drive back to make an exchange. As I say, I needed to do all that. But I didn't.
     Instead, I managed to hack up the tree limb while leaving my own limbs intact. How fortunate, since a customer without fingers has trouble pulling out credit cards. I wonder if the operator of the equipment rental shop knows about the customer disservice created at the front desk with me and many others each day.
     I didn't ask him, but I'll ask you: How well do your staff help protect their customers from making dangerous decisions?

Saturday, June 13, 2009

Maintain High Margins on Blind/Non-Comparables

In Making Money Is Not Illegal, Immoral, or Fattening, my coauthor Art Freedman talks about the profit opportunities when carrying and selling what he calls Blind items and Non-Comparable items:
"Blind items are those SKUs for which few of your customers know the competitors’ prices for the items. Non-Comparables are those for which, as far as your customer knows, you are the only one who carries the item, class, or department. Niches, an example of these, provide big opportunities to turn a profit."
Art goes on to say, "In many cases, the value to the customer of a Blind or Non-Comparable item is set by what the item can do for the customer, not by what the competition might be charging." Just to prove that Art and I aren't the only ones who believe this and to show that this business approach is time-tested, we quote British social thinker John Ruskin, who wrote in 1884, "A thing is worth precisely what it can do for you, not what you choose to pay for it."
But not all items you sell come from the Blind or Non-Comparable buckets. The other two categories are Sensitive and Competitive. With Sensitive items, you should either be the market leader on price or be within 10% of the market leader's price in your market area. With Competitive items, be within 15%, unless you've decided to be the market leader yourself.
Assigning each item to the right bucket takes time and experience. But when you do it, chances are you'll be surprised at how many items are Blind or Non-Comparable, and so give you the opportunity to tweak profit margins up to make more money. And remind yourself at least once each day that making money is not illegal, immoral, or fattening!

Friday, June 12, 2009

Have Fun Items Throughout the Store

Researchers from New York University and University of Pennsylvania found that when people put a healthy food item into their grocery shopping cart, they become much more likely to select a fun food item next. In choosing the fun food item, they're still interested in the nutritional value, but from the opposite point of view. They might very well be selecting the fun item because it's not nutritious.
     This sort of thing is true for all kinds of merchandise beyond food items and for ecommerce as well as store purchases. A shopper who makes a good, sound purchase decision is ready to buy an item that's mostly for fun. And when your customer is looking around for fun items, you'll want to be sure you make those items easy to find.
     The best way to do that is to have fun items displayed throughout the store and throughout the website. More than this, whenever a customer makes the decision to buy a highly sensible item, offer them a follow-on sale of a fun item in the same or a related product category.
     The reason to offer the fun item in a similar category is that shoppers like the items in stores to be arranged with some scheme. But shoppers also like variety within a product category, and the fun items certainly can add variety. Researchers from Columbia University and University of British Columbia found that the sort of variety provided by fun items even helps customers in crowded stores to feel better about their shopping experiences.
     For each of your product categories, what are some items you can include that are there mostly because they are fun to have, or even just fun to consider purchasing? How can you display those items to project the fun, the excitement, the humor?

Thursday, June 11, 2009

Personally Deliver Paychecks

If you don't personally deliver paychecks to the employees, you and your managers are missing out on a great chance to motivate your staff.
     Yes, I know that loads of employees don't literally get paychecks. They've arranged for direct deposit of their pay into a bank or credit union. But the employee still gets a statement as evidence of the deposit, and that's what should be personally delivered to those folks.
     Personal delivery provides the opportunity to recognize each employee as an individual contributor to the profitability of your business. Fully use that opportunity. You should be continually making mental and written notes of what your managers are doing well and how they can do even better. Your managers and supervisors should be doing the same with the employees they oversee. Then as the employee is handed the envelope with the paycheck inside, hook it to the performance with a comment or two individualized to that employee. I'm not suggesting this as a replacement for the daily coaching and the annual performance reviews you'll be doing. But getting paid is a time for celebration and rededication to boosting business profitability.
     It's also a time to recognize where that profit comes from. It comes from customers shopping with you. Without the customers, there is absolutely no reason to open up the doors in the morning or keep the website going. So now that I've made a case to you for personally delivering the paychecks, may I suggest how to gift wrap each one? Print up envelopes that say, in large letters, "Here's a thank you from our customers." Present each check in one of those envelopes. To keep top-of-mind awareness for the message from one time to the next, vary the color of the envelopes or the color of the printing.

Wednesday, June 10, 2009

Keep Your Promises

A common motto for customer service is "Exceed the customer's expectations." Although fine-sounding, this motto doesn't work in practice. Each time you exceed expectations, it nudges the expectations up for the next time the customer visits. At some point, it's no longer profitable—or maybe even possible—to keep raising the bar for yourselves.
     In fact, the customer might not even notice if you do manage to exceed their expectations, unless the excess is dramatic. Researchers at University of Georgia and University of Southern California looked at situations where shoppers ended up feeling either somewhat better or somewhat worse about their experience than they'd expected. When shoppers' expectations were exceeded, the shoppers often took it for granted and didn't give lots of credit to the product or service. It was when expectations were NOT met—when the store's promises were NOT kept—that there was more likely to be an impact on the evaluation of the product or service.
     So to ignite the mental fireworks inside your shoppers' heads, all it could require is to consistently keep your promises. Do you promise the lowest prices in the area? The broadest selection? The latest distinctive merchandise? The quickest checkouts? Whatever it is, be sure to deliver.
     If you're a manager, then delivering on promises to customers means knowing what the customers are being promised. A special danger with commissioned salespeople is that they'll overpromise in order to make the sale. Actually, though, overpromising can happen in any retail situation just because the salespeople want to help out the customer or don't know the limitations of the products.
     One more thing: It is much more likely that your employees will keep their promises to the customers when you keep the promises you make to your employees.
     Regularly check that promises are kept.

Tuesday, June 9, 2009

Have Suppliers Train Staff & Shoppers

If a supplier wants you to carry their products, they should be interested in your staff selling those products well and in your customers using the products to best advantage. To help you achieve these goals, deal with suppliers who are eager to provide your staff and customers with professional-quality training.
     The key qualifier is "professional-quality." You don't want the time of your staff or customers taken with instructions that are confusing or with trainers who know their subject thoroughly but bore people to tears or, worse yet, make people feel dumb when the trainer answers their questions.
     Checking out the training is a chance to team up with retailers who operate businesses like yours. Ask the supplier to put you in contact with other retailers where the supplier has done training.
     The best of the suppliers will collaborate with you in setting up customer how-to sessions as advertised special events, whether it's about how to configure that twenty-speaker sound system your store sells or about the intriguing ways to tie that scarf your store features as a fashion accessory. Look at customer training as one of the ways you draw in shoppers and give superb service.
     Professional training of your staff is essential when it comes to products you're introducing. New products with the highest potential for success are those that solve a customer's problems in an innovative way. But the greater the degree of innovativeness, the greater the degree of unfamiliarity to the customer and, therefore, the greater the need for the salesperson to learn how to tutor the customer. And it's not just about how to use the product. It's how to get the best from using the product and how to avoid the sorts of problems that lead purchasers to return products.

Monday, June 8, 2009

Use Bounce-Back Coupons

In Making Money Is Not Illegal, Immoral, or Fattening, Art Freedman talks about using bounce-back coupons:
"A bounce-back coupon that works very well for us is 50% off any single item that retails for under $30. Now think about what I’m suggesting here. How much would you pay a customer to walk every single aisle of your store? Think about the customer who comes into your store, goes right to a specific aisle, picks up exactly what they came in for, and leaves without any real idea of everything else you stock. The bounce-back coupon gets your customers walking up and down most aisles in your store looking at your product selection because they’re trying to figure out how they’re going to use their 50% discount. We find that about seven out of every ten of those customers with the coupon also buy something else, and at the margins we’re carrying, we’re really not losing any money on this. The fact is we’re getting more customers in, so we’re increasing sales right then and we’re building knowledge in the customers of all the different things we can sell them.
"We use the bounce-back coupons about four times a year because we think you can wear it out."
Historically, only about 2% of discount coupons distributed by retailers are ever redeemed. One reason: According to researchers at University of Alberta and University of Manitoba, shoppers have been concerned that if others see them using low-value coupons, they'll be considered as poor or as cheap. But a 50%-off bounce-back coupon is not low value! And in any case, things are changing. IRI finds that about 63% of American shoppers are taking their coupons with them.
Today's an excellent opportunity for you to lay out your plans to use bounce-back coupons.

Sunday, June 7, 2009

Stock Larger Package Sizes

Given a choice among littlest, medium, and biggest package sizes, some food shoppers—-usually what are called promotion-oriented shoppers—-pick the biggest one, while others—-prevention-oriented shoppers—-pick the medium size. If your shoppers have the money to spend and if it's to the benefit of your shoppers to purchase more, you can increase the package sizes they buy—-with the added profit this brings—-when you increase the package sizes of your littlest, medium, and biggest versions.
     An example of this came from Duke University researchers' look at purchases of soft drinks at fast-food restaurants. When the littlest-medium-biggest choices were 12-ounce, 21-ounce, and 32-ounce cups, promotion-oriented shoppers most often selected the 32 ounce version—-the biggest size. When the choices were supersized to 21, 32, and 44 ounces, those shoppers selected the 44-ounce cup—-the new biggest size. At the other end, prevention-oriented shoppers liked the 21-ounce cup—-the size choice in the middle—-when the choices were 12, 21, and 32 ounces. But when the choices were 21, 32, and 44 ounces, the prevention-oriented shoppers liked the 32-ounce size—the new medium size. The 32-ounce drinker moved up to being a 44-ounce drinker, and the 21-ounce drinker moved up to being a 32-ounce drinker.
     This power to switch shoppers to larger package sizes works better with soft drink cup purchases than with, let's say, furniture purchases, but it works for more than just food retailers.
     Will dieters be angry that all you offer are the larger food package sizes? Well, you actually might be helping out the dieters. A group of researchers in Portugal and the Netherlands say that dieters find it more comfortable to exercise self-control in their eating after purchasing large package sizes than small package sizes of the same foods.

Saturday, June 6, 2009

Stay Convenient to Your Customers

You can't be the convenient shopping place if your store is closed or if you have inadequate staffing at the times many of your customers find it convenient to shop with you. To stay convenient to your customers, think both inside and outside the store.
     As to inside the store, have you avoidably set appointments that will call you away during your normal times of availability? Or are there busy seasons when it will be more difficult to get in touch with you, ask for your advice, order special items, or have service work completed? If so, use social media to warn your customers in advance.
     As to outside your store, one thing that determines convenient times for customers is traffic patterns. You might find that during commute hours, there are many more cars driving past your parking areas than at other hours, so you'll want to be open then. But the heavy traffic also could mean some shoppers, such as senior citizens, want to avoid being on the road. What's convenient for them would be off-commute hours. Barriers to convenience might include your customers needing to make a left turn instead of a right turn to get into your parking lot, so they're more comfortable shopping on the way to work instead of on the way back.
     In what ways can you keep it convenient for your customers to get to you and back during heavy vehicle traffic times? What can you do to make the shopping more efficient once the customers are with you? Survey your customers for ideas.
     Stay aware of special events taking place around your store or stores, and decide what accommodations you can make to stay convenient. Parades and plays. Football games and fairs. They bring more people into the area, and they extend the hours people might be interested in shopping with you. What are you doing to welcome them with open doors? How do you be sure you're providing superb, convenient customer service to those shoppers from out of town so they'll want to shop with you soon and often again?

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

Friday, June 5, 2009

Log How You're Handling the Bad Economy

Old habits. Superstitions. Hand-me-downs. Do those three drive your retailing practices?
     Hand-me-downs happen most often in family-run businesses. The adult kids take over the reins, having grown up doing things in certain ways because that's how their parents said things were to be done. Hand-me-downs also happen when inexperienced retailers buy a business.
     Superstitions are a driver when the owners/operators try out something, it fails miserably, and the retailer vows never to try it again, not really analyzing why it failed. If you don't try it again, you can't discover if it'll work.
     And old habits are always a driver because retailers are so busy that they find it hard to carve out the time to build new habits.
     Old habits, superstitions, and hand-me-downs aren't all bad. But to maximize your profitability, also...
  • Learn about what works for other businesses like yours
  • Apply findings from consumer psychology research
  • Keep a computer log of notes about your experiences in trying out tactics
     Making notes for future reference is especially important because retailing is now in unusual circumstances. The width and depth of the upset in today's broader economy is something many retailers have never experienced before. What was successful in the past should serve as a bedrock for what you do now, but learning just from what worked five years ago in retailing has dangerous limitations. Respected experts are saying that the shopping mindsets of your potential customers will stay much the same for a while, even as the economy recovers.
     What should the notes in your computer log contain?
  • The tactics you try out to build profitability
  • How well each tactic works
  • Your analysis of whether to continue the tactic and, if you continue, how to make the tactic work even better

Thursday, June 4, 2009

Sell Multi-Solution Products

Some years ago, Unilever learned a lesson about selling cleaning products to Italians. The company knew that Italian women wash their kitchen and bathroom floors about four times as often as American women do and so, not surprisingly, buy more cleaning supplies. Unilever launched Cif spray cleaner in Italy as a one-swab solution, suitable for all sorts of cleaning tasks.
     Unilever failed to clean up. When they asked why sales of Cif were so bad among Italians, Unilever learned that Italian women found it hard to believe a spray cleaner could truly handle, say, kitchen grease. Unilever had failed to note that 72% of Italians own at least eight different cleaning products. Based on what they learned, Unilever changed direction, introducing a set of products, each designed to solve a particular cleaning problem in the home.
     That was then and in Italy. But what about now and in other parts of the world? A March 2009 study by Information Resources, Inc. (IRI) found that American consumers are currently looking for multi-solution products. One customer motivation for multi-solution purchases is so whatever is purchased will be used to full advantage. About 55% of the 1,067 respondents to the IRI survey said they want their cleaning products and personal care products to last longer. Another motivation is to cut down on the expenses of going from store to store. Shoppers now are placing a high importance on price. They are willing to travel a bit more for savings. But once they get to a store, they prefer to do lots of their shopping right there. For the retailer who wants to control inventory costs by limiting the number of different products carried, it makes sense to have products that can be advertised as meeting a range of customer needs and desires.

Wednesday, June 3, 2009

Tell Your Staff Where Sales Dollars Go

In Making Money Is Not Illegal, Immoral, or Fattening, Art Freedman asks, "For every dollar that goes through the front registers, how much of that dollar is profit you could reinvest in your company? If you don't know, guess. I'm talking annual average."
Then Art has another question: "If you asked your hourly employees to write down that number, what would they write? In my experience, they'll write down some number between 30% and 50%. They really think that for every $100 that goes through the registers, you are keeping $30 to $50 in profit. I'm not criticizing them. I'm just saying that, based on my experience, many of your hourly employees, as well as some managers, simply don't understand your business."
To get your staff on board in boosting profitability, they should know how thin retailers' profit percentages really are. Then they can see how even small mistakes, if repeated, might drive you out of business, losing the jobs for them and their coworkers.
"The reason that the employees come up with the 30% to 50% in profit is that they forget about the largest investment of all. It's inventory replenishment. I tell them, 'We sold it. We've got to buy more.' About 50¢ of every dollar I take in at the register goes to restocking inventory."
Tell your staff where sales dollars go. It will build their trust and motivate their job performance.
To educate your staff in this way, start by asking yourself another question or two: Did you need to make a guess when asked how much of every dollar that goes through the front registers is profit you could reinvest in your company? If it was no more than a guess, what will you be doing today to find out the real answer?

Tuesday, June 2, 2009

Sell Benefits to Fit Shoppers' Values

"Sell the sizzle, not the steak." American advertising pioneer Albert Lasker said this in the days when almost everybody agreed that eating red meat was good for you and the sound of sizzling fat made it an even better treat. Mr. Lasker was advising us to tell our shoppers about the benefits of using our products and services, not about the technical specifications.
     But now our shoppers want to know about both specifications and benefits. They also want to know how the products and services we sell fit into their values systems. Not just good value for their money, but a good fit with their values. Sell the sizzle as well as the steak. Sell the values as well as the value.
     Sell to the values because what we consume is less important than what we think we're consuming: A team of researchers from France, Australia, and the U.S. told study participants they'd be given either a beef sausage roll or a vegetarian roll to eat. But those tricky researchers had lied to half the participants, who actually were served the other entrée from the one they were promised.
     One group of those participants granted a high rating to what they ate, regardless of whether they actually ate the meat or vegetable version, as long as they thought it was meat. What does this have to do with values? Unlike the veggie fans, these meat elitists showed up on psychological testing as embracing values of power and strength.
     Do you know the values of your target market—-what they consider to be especially important in their lives? Is it power and strength? Safety and security? Trust? Perseverance? Playfulness? Craftiness? Friendships? Something else altogether?
     How well are you weaving messages about those crucial values into your advertising and your salesperson-to-customer contacts?

Monday, June 1, 2009

Eavesdrop on Customers

When shoppers approach a staff member in your store, that staff member should turn full attention to the shoppers. It's time to stop stocking the shelves, sweeping the floor, coaching new hires, or whatever else. Full attention goes to the shoppers.
     But there also are times you or a staff member will find it best to let the shoppers browse on their own. In those situations, you can learn a lot by listening to what shoppers say to each other or on their cell phones. The lessons can later be turned into merchandising pay dirt.
     Do you hear comments like, "All brands are pretty much the same," and, "When you see packages with the store's name on it, it's the same contents as the big name brand, but only at a lower price"? If you are hearing lots of those kinds of comments, consider increasing shelf space devoted to house brands, which bring in extra margin.
     Are you hearing comments like, "When a product first comes out, they'll charge more for it than they will after it's been out for a while," and "Don't buy products when they've first come out since it takes a while for the company to fix any manufacturing problems"? That's a signal you'll need to build extra trust with customers whenever introducing new products. For example, you might want to introduce new products that come as a natural extension under brand names the customer already knows well.
     Those are two examples of the many where a retailer listened in and then took action which paid off big. Never make decisions based on only one or two comments. But when there's a trend, decide what actions to take to make best use of that trend to boost your profitability.