Tuesday, November 30, 2010

Sell Upgraded Loyalty Programs

The Los Angeles Times business section recently reported on what I consider to be a potentially risky trend among retailers: Significantly increase the value of discounts given to loyalty program members. For example, Toys R Us Inc. says they’re tripling the rebate amount on purchases.
     The danger comes when the additional largesse is reined back in. Unless the retailer plans to make it a permanent change, there are likely to be disgruntled customers who have been shopping with you regularly. The beliefs, feelings, and intentions of the consumers will be like what happens when you raise the price on merchandise. But we can justify price increases with explanations of costs of the product to us. We can’t use that explanation when revoking a rebate or discount privilege that had been granted.
     One way to avoid the problems is to, from the start, set a clear time limit on the augmented program. Toys R Us says theirs lasts through Christmas eve. If you choose this route, giving an explanation helps convince consumers that your pricing and loyalty program policies are reasonable, not arbitrary. You might say something like, “We realize that for many of our customers, budgeting for the holidays is tougher than in years past. So we’re running a special promotion over the next two months in order to help out.”
     Another option is to sell upgraded loyalty programs. Videogame retailer GameStop Corp. offers customers PowerUp Rewards for free and PowerUp Rewards Pro, which grants additional discounts, for $14.99 annually. Borders Rewards is free, while the additional 10% discount with Borders Rewards Plus is available for $20 a year. One clear advantage of this approach is that you can later change the rules of the upgraded program—the fee for the upgrade, the additional privileges—without polluting the feelings about the free program.
     Here are two shopper psychology tips about selling upgraded loyalty programs:
  • Use the same research-based pricing tactics you would with merchandise. The use of $.99 pricing by GameStop is better than the whole dollar pricing used by Borders.
  • You’ll make a little money from sales of the upgrades. Still, the primary purpose is to strengthen the purchasing habits of your customer. Because they have paid for the ability to get rewards rather than receiving them for free, the customer will be more motivated to use the privileges. Consumer psychologists call this the “endowment effect.”
Click below for more:
Use Partitioned Pricing to Highlight Benefits
Round Prices for Whole Dollars for Better-Best
Reconfigure Your Own Endowment Effect

Monday, November 29, 2010

Answer the Question You Wanted Asked

Robert S. McNamara who was, among other accomplishments, the president of Ford Motor Company, said, “Answer the question that you wish had been asked.” There’s wisdom in this for retail sales if we change the phrasing to, “Often, you’ll do best to eloquently answer the question you wished the customer had asked you rather than the question the customer actually asked.”
     Researchers at Harvard University found that consumers are quite likely to trust the advice of someone who answers a related question convincingly. There’s a good chance the consumer will forget about the original question they were asking and will conclude their question has been answered.
     Why does this happen?
  • A shopper often feels a need to ask questions of the salesperson, especially if the shopper has to convince others the shopper is making a good decision. The shopper thinks they’ll be challenged by friends or family with “Did you ask questions before you made that big purchase?” For this shopper, it is the process of asking questions as much as the specific content of the questions that are being asked.
  • The shopper might be markedly less familiar with the product than is the salesperson and therefore is less knowledgeable than the salesperson about what it’s important to ask about. This shopper appreciates the salesperson’s help in redirecting or rephrasing the question.
  • In asking the question, the shopper is wanting to build their confidence when making the purchase decision. Because the salesperson is familiar with giving the answer to the question they wish they’d be asked, the salesperson can answer with the enthusiasm and fluency that projects confidence to the shopper.
     Based on the Harvard research findings, here are the steps to follow in order to answer the question you want to have been asked:
  • Start by saying, “I’m glad you asked me that.”
  • Give a general description of the question that allows a transition to what you want to answer: “You’re asking me about….”
  • Eloquently answer the question you wish you had been asked.
  • After giving what you believe to be a sufficient answer, check with the shopper. Say, “Did I address your question?” This is better than, “Did I answer your question?” If the shopper says that you did not, ask the customer to pose the question again. Then in your answer, come closer to what the shopper is asking.
Click below for more:
Answer Customer Questions with Enthusiasm
Learn the Relationship B2B Customers Want

Sunday, November 28, 2010

Entertain with Story-Based Advertisements

Why are U.S. Hispanics more likely to enjoy television ads more than their non-Hispanic counterparts are? Based on survey research, market research company comScore estimates that 30% of Hispanics enjoy watching advertisements, while this is true for only 20% of non-Hispanics.
     The explanation for the difference may be in the personality of the television programs in which these ads appear. Hispanic viewers—in both North America and Central America—are passionate fans of telenovelas—what non-Hispanic viewers would know as soap operas, but with extra doses of emotion and social significance. Among the most popular programs has been “Sin Tetas No Hay Paraíso” (Without Breasts, There Is No Paradise), a 23-segment serialized drama about a teenager who is dangerously concerned about her body image.
     Advertisements that tell a story would fit nicely in such programming. In the comScore survey, 48% of Hispanic respondents said they expect ads they watch to be entertaining.
     Researchers at Baruch College suggest that this serialization works well with text ads, too. Their study results indicate that each ad should show movement forward from the prior ad. This is called bookend advertising.
     For instance, the first ad in the campaign might present a problem to be solved by using products from the advertiser's store. The second ad would show how the problem is solved in part with particular products or services. Each subsequent ad would show further progress in solving the problem, with the last ad portraying full achievement of the objectives.
     Bookend advertising is found to be more effective than a campaign that repeats all the same content in each ad. This is true even for those consumers who miss out on seeing the initial ads which set up the problem.
     People love a story, so story-based ads can be highly effective as marketing tools for retailers. Still, a caution: To the degree that you can, position story-based ads at resting points in the story portrayed in the television program or the publication. Researchers from University of Iowa and Northwestern University find that if the ad interrupts the flow in the middle, the consumer will dislike the ad.
     Ironically, the more relevant the story in the ad is to the consumer’s personal goals, the more negative the reaction to the interruption. The consumer is frustrated that the suspense in the main story is keeping them from concentrating on the story in your ad.

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

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Accent Values of Your Hispanic Target Markets
Tell Positive Stories About Your Products
Use Both Repetition and Progression in Ads

Saturday, November 27, 2010

Give Shoppers a Comparison Point

Would your customers be more impressed if you give them five free Christmas candies with their purchase than if you give them ten? Maybe so, according to an article due for the June 2011 issue of Journal of Consumer Research.
     Here’s how the researchers at Monash University in Australia would explain: If you’ve been giving each customer one free candy with each purchase and you now up that to five, the customer says, “Wow! That’s five times as much!” But if you’ve not given out candies to customers in the past and you now give out ten, the customer has zero as a comparison point for the ten, and our human brains don’t do well with zero as a comparison point. The research says that the customer is quite likely to be less impressed than the recipient of the five candies.
     The researchers extend this to other situations. For example, consider a sales promotion in which the purchaser of a digital camera is offered photo paper sufficient to print out 200 pictures. The offer will be more attractive if marketed as “We’ve been giving you paper for 10 pictures, but now we’ve upped that to enough for 200!,” than if the offer is, “For the first time, free paper to print out your photos, and it’s enough for 200!”
     And when the outlay is an expense, such as the interest rate on unpaid balances, the researchers suggest that your customers might actually be happier with a drop from a 5% interest rate to a 1% rate than if the drop is from 5% to 0%. Again, this is because zero doesn’t serve well as a consumer’s anchor for appreciating the magnitude.
     Give your shoppers an unambiguous comparison point when presenting numbers. Let’s extend it to qualitative comparisons, too. When presenting the shopper with a choice between two or more items that differ in qualities—such as ease of setup, adaptability to different body sizes, attention by professional reviewers, and so on—comment on these qualities for each of the choices if you want the consumer to fully appreciate the power of the comparison.
     At the same time, there is other research indicating that if you want the shopper to believe they’re making a comparison when, in fact, they are not, omitting the qualitative information about one of the choices tends to eliminate that choice from the shopper’s consideration set.

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Compare Features to Ease Overload
In Comparative Ads, Don’t Show Users
Be Aware How Shoppers Compare Products
Avoid Satire in Comparatives

Friday, November 26, 2010

Guard Your Promotions Against Being Gamed

Customers have always loved to play games used by retailers as sales promotions. Scratch-off discounts. Sweepstakes. “Design our new logo” or “Name our new service” or, decades ago, “Tell us in 25 words or less why you shop at our store.”
     Retailers and manufacturers learned that there needed to be real, tangible prizes for maximum participant involvement, but the value of the prizes often could be quite modest. People got involved for the joy of the contest.
     This love of the game has blossomed further as a side effect of the popularity of ecommerce and the mobile and desktop devices shoppers use for ecommerce. The word “gaming” has morphed from serving as a euphemism for “gambling” into a shorthand for “playing games on a computerized gadget.”
     The problem with this for retailers is the increased chance that the promotions themselves will be gamed. Retailing consultant Bob Phibbs is currently ranting that social couponing is, “killing the freedom of private businesses to operate competitively for profit.” Bob argues that social couponing—where a retailer offers a substantial discount to consumers who are told the offer is activated only when a certain number of people sign up for it—will draw hoards of hit-and-run bargain hunters unconcerned about gaming the retailer into bankruptcy.
     Other retailing consultants are concerned about the value of mobile device check-ins—in which a consumer earns points by using their location-sensitive mobile device to confirm they’ve visited a brick-and-mortar sales location. Last week, Mashable reported that Virgin America will be giving frequent flier points to people who check in at the airline’s baggage claim or ticketing areas.
     The concern about all this? Mashable says the Virgin America program signals a trend that could result in “dummy check-ins,” which verify foot traffic, but are no more than a game to collect points without the consumer even thinking about buying something.
     To head off being gamed, know the rules of the game, and recognize how those rules compare to those from the past. What’s different? The ecommerce brain is more open to satisfaction from virtual rewards. For Starbucks, if you check in with your mobile device at five different store locations, you earn a virtual Barista Badge. Get a virtual Red Cup just for loading the app.
     What’s the same? Shoppers still can be quite happy to get involved just for the joy of the contest.

Click below for more:
Fine-Tune Your Social Couponing
Design Store Operations for Ecommerce Brains
Earn Good Will in Giving Discounts

Thursday, November 25, 2010

Satisfy Desires for Luxury

Want to add a splash of elegance to that degrading U.S. Transportation Security Administration pat-down? How about ordering the Travel Sock from fashion designer and boutique retailer Tory Burch? The catalog copy says the product will “…make taking off your shoes for those long airport security lines more stylish.”
     The Travel Sock is listed at $48. This does buy you one sock for each foot, however, in spite of the singular in the product name. At the National Retail Federation conference in New York City last January, Ms. Burch announced her intention to add the Travel Sock to her product line this year. She predicted that 2010 would see a substantial uptick in high-end sales.
     The prediction appears to have come true, according to a report in Advertising Age this week. For example, in the beauty products segment, Estee Lauder reports a 14% jump in sales of organic beauty products quarter-to-quarter. By comparison, mass market beauty products from Procter & Gamble Co. and Unilever came in with a 6% climb. A 6% climb in sales is fine news—indicating that consumers are feeling more optimistic and spending beyond bare necessities. Still 14% is substantially higher than 6%—indicating luxury has a special appeal.
     In deciding how your merchandising can appeal to the luxury segment, consider the different meanings that indulging in luxury carries for shoppers. Some years ago, SRI Consulting Business Intelligence identified a set of major motivations. Here’s an update of that list:
  • Luxury as show. Be sure the luxury brand name is conspicuously displayed whenever the item is used in public. Each Travel Sock has an easily visible Tory Burch logo.
  • Luxury as a password. When the consumer already belongs to an exclusive group, they’ll be looking for more subtle cues—what corresponds to the secret handshake that allows members to recognize each other while not tipping off the outsiders. This was a lesson learned some years back by Lacoste, which discovered that their crocodile logo stopped portraying as much status if it was displayed too prominently.
  • Luxury as functional. Your shopper pays more in order to guarantee lasting value. The Travel Sock is 100% wool and comes with a sturdy carrying bag.
  • Luxury as celebration. The Advertising Age article connects an increase in luxury orientation to survey evidence of celebration at the Republican midterm election gains.
Click below for more:
Stay Ready to Sell Luxury
Offer Aspirational Shoppers Subtle Signals
Use Terror Management Theory for Status Items

Wednesday, November 24, 2010

Stand With Your Advertising

Most of your customers don’t completely trust your advertising. That’s the implication of results from a survey of over 2,000 U.S. adults conducted last month by Harris Interactive. Only about 20% of respondents said that advertising claims can be trusted most or all of the time. About 15% said they never trust advertising claims.
     Whether or not your retailing business is in the U.S, where this survey was done, distrust in advertising is an issue for you to act on.
  • Assess the personality of your retailing that you project to your target audiences. Using the terminology of Stanford University researchers, lack of trust in your advertising is less likely to damage your store profitability if your business is seen as witty, exciting, or inquisitive than if you’re seen as sincere, predictable, or expert.
  • You’ve the opportunity to distinguish yourself from the competition by building trust in what you promise. This Harris poll suggests that adult consumers start out being more trusting. The rate of saying ads can be trusted most or all of the time was one and a half times as high in 18-34 year olds as in those over age 54. Even among youngsters, a classic finding in consumer psychology is that children become less trusting of commercials as they get older.
  • Some distrust comes from genuine misunderstanding. Researchers at University of Texas at Austin concluded that the average shopper has only about 65% accuracy when recalling what a printed ad actually says. Since the memory of older consumers is worse overall than that of younger ones, it might seem this would account for the lower trust in advertising among older adults. However, when it came to remembering what was in ads, the 65% accuracy rating generally held up across all age groups. The answer is to have ads available for ready reference in the store.
  • Support regulation of advertising. Your philosophy might lead you to choose industry self-regulation or regulation by non-government organizations, such as the Better Business Bureau. But it is in the interest of retailers to have clear advertising standards along with meaningful penalties for violations. In the Harris survey, about half the respondents said they consider neither regulation by the government nor regulation by advertisers and the advertising industry sufficient to ensure advertising is honest.
Click below for more:
Project Your Store’s Personality
Have Staff Carry Copies of Store Ads

Tuesday, November 23, 2010

Praise Your Customers

People want to feel good about themselves. They seek self-esteem. By praising your customers, you build repeat business.
  • Flatter expertise. Researchers at Duke University saw that a motivator for many experts is showing off their knowledge, but that a challenge with those considering themselves to be experts is that they too often don’t update their knowledge about the product category. Say to the expert something like, “It is clear that you know a lot about this type of product. May I share with you some of the latest versions we have and ask you what benefits you see that these new products hold for our customers?”
  • For best long-term results, give genuine praise. But researchers at Hong Kong University of Science and Technology find that even insincere flattery can be effective. This works best if the customer is distracted from thinking about the flattery having been phony, such as by being rushed into buying or by making a product selection when time has passed after the praise. In these cases, the person is more likely to remember the compliments but forget about the salesperson’s insincerity.
  • Each time you personalize the selling message by referring to a characteristic of the shopper, you’re delivering a compliment. Even the smallest things can give you a retailer’s edge. For example, researchers at Universiteit Leuven in Belgium find that across languages and cultures, people’s self-esteem is heightened at least a bit not only when their name is used, but also when they are shown or given products with brand names starting with the first letter in their own names.
  • When the customer is completing their purchase, they are more interested in reassurance than in benefits statements. This is a prime opportunity for praise. Compliment them on the good decisions they made. Invite them to return to tell you how their purchases worked out for them.
     Shoppers who feel more involved in their purchases give closer attention to getting value for their money. This doesn't always mean a higher total sale for the retailer. Still, increased customer involvement does mean shoppers are more likely to return to your store and more likely to listen to staff's advice about things such as switching to house brands. Those results are good for profitability.
     To build customer involvement, personalize the selling message. And what better way to personalize than to praise your customer.

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

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Flatter Shoppers with Care and Caring
Woo Item Experts
Name Your Customers
Announce Commonalities with Shoppers
Personalize the Selling Message

Monday, November 22, 2010

Unchain for Health

May our customers live long and prosper! Prosper so they’ll have money each week to spend with us. Live long so they’ll have many weeks ahead.
     For them to live long, let’s keep them healthy. Giving them a sense of control helps, such as when they’re eating.
     Researchers at University of Chicago used one of three instruction sets with study participants. The first group was told their task was to sample all of a food item described to them as “healthy.” The second group was told their task was to sample all of a food item described as “tasty.” The third group was told to choose whether they’d like to sample all of a healthy food or a tasty food and then given the sample to eat.
     The thing is, all the samples were actually the same food item. The only difference was in the description.
     After sampling the food, each person was asked how hungry they were.
  • The people who had been told to eat the “healthy” food rated themselves as hungrier afterwards than did the people who had been told to eat the “tasty” food. This wasn’t surprising. Lots of consumer psychology research has found that people rate “healthy” food as less satisfying than “tasty” food, even when the two items are objectively indistinguishable.
  • But now the twist: For the group allowed to choose whether they wanted a healthy or tasty item and then given the item (the same item regardless of which they said), there were no significant differences between the hunger reports from those who requested the healthy and those who requested the tasty item. The sense of being in control led to gastronomical satisfaction.
     All the participants in the Chicago study were adults, and the message is that when we unchain adults to give them a sense of control, they are more likely to be satisfied with healthy choices.
     The same principle holds for younger consumers. Because of justified concerns about childhood obesity, there are well-intentioned initiatives to limit what foods are available to children at home and in school cafeterias. I support this. Restrict the choices. But these initiatives are most likely to succeed when the children find themselves able to have as much choice as possible. Even choices as to what color plate they use and where they are able to sit can help.

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

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Ease the Guilt for Adult Unhealthy Eaters
Give Shoppers Variety for Control
Let Your Shoppers Enjoy Being Influenced

Sunday, November 21, 2010

Respect the Limits of Your Influence

Tactics in this RIMtailing blog are powerful. For example, even a brief mental nudge of a customer toward thinking in the long-term significantly increases the possibility they’ll spend more money in your store.
     However, it’s also important to recognize the limits of our influence on the purchase behavior of customers. Respect other forces in each consumer’s life.
  • Genetics. Whether a shopper prefers innovative or more cautious alternatives. Whether a person likes or dislikes chocolate, mustard, hybrid cars, or science fiction movies. At what point the shopper stops gathering information and makes a purchase decision. According to research findings from Stanford University and University of Florida-Gainesville, these are transmitted biologically to us from our parents as tendencies. People differ in these characteristics as much because of different genetics as because of the shopper psychology tactics we employ.
  • The time of day, week, or month. In the afternoon, senior citizens are more resistant to logical arguments for making a purchase than in the morning. Researchers at University of Utah and University of Iowa find that monthly paycheck cycles affect not only how much money people will spend on merchandise, but also the types of merchandise they’ll find most attractive. In the days soon after receiving a paycheck, consumers with full-time jobs become more interested in products and services that help them gain more than what they currently have. Then as the days after the paycheck pass, the person becomes progressively more interested in items to help them avoid losing whatever they have now.
  • What happened to the shopper just before they interacted with us. Maybe they took a medication for depression that cooled the urge to shop. Maybe they saw a cute baby or puppy. Researchers at Claremont Graduate University find that seeing something cute sets off the release into our brain of a substance called oxytocin, which has been called “the love hormone.” That hormone increases our willingness to spend money if we believe it will be helpful to others—such as helpful to people for whom we’ll buy a gift or the salespeople from whom we’ll buy it.
     The importance of recognizing our limitations? For one thing, if you try a shopping psychology tactic that doesn’t work out well, try it out a few times again before dismissing it as useless. Trying it out only once and then dismissing it is as bad as superstition.

Click below for more:
Give Customers Long-Range Perspectives
Attend to Genetic Influences in Selling
Identify Influencers in Family Decision Making
Help Seniors to Shop Early
Acknowledge the Power of Cycles
Merchandise to Fit Purchasing Cycles
Avoid Panic When Cash Flow Drops

Saturday, November 20, 2010

Break Up with Customers Graciously

Sometimes you’re no longer able to adequately satisfy a customer who’s been frequenting your store. It’s time for a breakup. When this happens, the emotions probably won’t be nearly as intense as in the breakup of a relationship with a lover or the termination of an employment relationship with one of your staff. Still, there will indeed be emotions, and unless you handle matters properly, those emotions might result in consequences harmful to your business.
     Those emotions often include shame and insecurity, according to researchers at University of Western Ontario and Queens University in Kingston, Ontario. The consequences, the researchers found, spring from this ashamed, insecure former customer deciding to hurt the business by spreading as much negative word-of-mouth as possible. The root of it all is the customer’s belief that the retailer has betrayed the customer’s trust in them. The loss for the retailer is from the customers’ future purchases, but potentially much more than that, from others who are influenced by the negative reviews.
  • As promptly as you can, find out what is bothering the customer. A good diagnostic question to ask is, “What can I do to make things right?” Research at Case Western Reserve University points out that customers with complaints range from those who just want to have an “I’m sorry” up to activists who plan to go to the media or to government agencies.
  • Aim to resolve the problems out of the earshot of other shoppers, especially shoppers who have accompanied the complainer into the store. People who are ashamed or insecure are better able to maintain their rational thinking when they don’t have the expectation or opportunity to act out their outrage in front of a group.
  • Remember that people can decode an unreasonable complaint. The Ontario researchers present this example of a real posting: “I used to love [that store]. Let me tell you all why I plan to never go back there again; I hate them with a passion now,….” Research indicates that readers of such a posting, which talks of “hate” and “passion,” will suspect that this reviewer isn’t objectively accurate.
  • Keep the relationship alive. Make the last memory that person has of your store one of gracious respect. After they get away long enough to relax their shame and insecurity and to correct their belief that you’ve betrayed their trust, they might come back.
For your profitability: Sell Well: What Really Moves Your Shoppers

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Resolve Customer Complaints Carefully

Friday, November 19, 2010

Bind Yourself to Your Plan

Plan your work, then work your plan. Sometimes, though, it’s difficult to maintain the discipline to do the second part of this. Address the problem by staying sensitive to what gear you are in.
  • Open minds. Here’s where you welcome all sorts of input, realizing it’s always easier to tame down an unrealistic idea than to try to make the same old ideas exciting. This stage calls upon your creativity and teamwork talents. Don’t expect yourself to be working your plan here because the plan is not yet fully formed.
  • Open roads. This is the “work your plan” implementation stage. You cut back on the brainstorming, critically evaluate what you’ve got, develop your plan based on what’s most likely to work for the long-term, and move ahead decisively. It is a stage of determined action.
  • Open wounds. You hope to minimize use of this gear, but inevitably, there will be times the bad news floods in so fast that you must take immediate steps. You might ask others for ideas, but your focus is on short-term bandages. Understandably, you’ll deviate from your original plan until the crisis is resolved.
     A New Yorker feature piece analyzed a big reason we don’t keep on top of working our plan—procrastination. Procrastination is discussed there as a matter of the divided self, which in the terms I’ve used is the struggle our open minds gear mounts against our open roads gear.
     A solution is to bind ourselves to our task. The New Yorker piece dramatizes this point by discussing how in The Odyssey, Ulysses avoids the temptation of the Sirens by having his crew bind him to the mast so that he won’t deviate from his intended route when he hears the Sirens’ calls. Beyond that, Ulysses orders his seamen to stuff their ears with wax, which they are to keep there until the craft had passed the Sirens’ island.
     Ensuring that our crew helps us stick to the plan is a good idea. However, there’s a danger in preventing all our people and ourselves from sensing distractions that should legitimately lead to us deviating from our previous intentions. The life of a retailer is filled with the unpredictable.
     Bind yourself to your plan. At the same time, make provision for monitoring developments and responding to crises. That’s wisdom, not procrastination.

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

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Be Creative, But Only Sometimes
Recognize a Need, Then Fill It

Thursday, November 18, 2010

Name Your Customers

What does handling cows have to do with handling customers?
     I’ll start by asking if you’ve seen “Temple Grandin,” the HBO-produced movie which won seven Primetime Emmys for chronicling the accomplishments of the Colorado State University professor of animal science. Along with her students, Prof. Grandin designs humane methods for handling livestock.
     Next, I’ll ask if you’ve heard of the Ig Noble Awards. You know about the Nobel Prizes. However, as I point out in my book, Sell Well, many people have been completely unaware of another set of awards, called the Ig Nobel Prizes. They are given out each year by the Annals of Improbable Research for studies that come across as so odd as to usually draw a chuckle.
     The 2009 Ig Nobel Award in Veterinary Medicine was awarded to Catherine Bertenshaw Douglas and Peter Rowlinson of Newcastle University in the United Kingdom. Their research concluded that cows on commercial farms where cows are called by name will produce nearly 70 gallons per year more of milk than cows on commercial farms where cow names are considered silly.
     Naming a cow made it more likely the cow was treated as an individual rather than as part of a herd. As Temple Grandin is quoted as saying about cows on commercial farms, “We owe them some respect.”
     And that brings me around to what this all has to do with handling customers. Too often, we think of customers as a herd rather than as individuals. Too often, our staff forget to look at the customer and think, “The money this customer is spending here is helping to pay my salary, is helping to keep this store open so I can have a job.”
     Calling a customer by name is a reminder. It gives the person an individual identity. I recognize that you must be careful when using a name. Many people would be offended if you call them by their first name, sometimes because it seems overly familiar and sometimes because everybody they know calls them Bucky and nobody they know uses Edgar.
     So err on the side of the more formal, and if the customer gives you permission, ease up. Or stay with the formal. When people call me Dr. Sanders and I respond that they are welcome to call me Bruce, some of them then call me Dr. Bruce. That’s fine. It feels quite respectful.

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

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Personalize the Selling Message
Use Your Employees’ Favorite Words

Wednesday, November 17, 2010

Compete with Larger Retailers

Comparable-store sales at U.S. Walmarts have dropped for the sixth straight quarter, reports Marketing Daily. Although this quarter’s drop isn’t large, it appears to have been both in terms of less customer traffic and lower average ticket sales.
     Marketing Daily believes that the decreases are because the deep recession drove more shoppers to Walmart but those shoppers were not happy with their experiences at the stores.
     All this is a reminder that there are clear opportunities for the small to midsize retail business to compete with large retailers.
  • Provide the right level of customer service. Consumers are moving toward the extremes, expecting either superb customer service to justify higher prices or adequate customer service justified by bargain prices. Superb customer service requires rich staffing and ongoing staff training. Those can be expensive investments. Assess if the return on those investments is sufficient.
  • Carry distinctive merchandise and/or provide distinctive services. If the large retailer is carrying the latest in a collectible series, you might carry not only the latest, but some from years past. If the hairdresser leasing space in the Big Box provides standard high volume/low cost services, you might feature distinctive hairdressing services that are not called for as often.
  • Brag about your local ties. Never try to make shoppers feel guilty for shopping at stores owned by corporate entities located far away. But do give reminders that a higher percentage of money spent with a local retailer will stay in the local community than is the case with corporate-owned stores.
  • Cultivate the determination of an underdog. People like to identify with a winner, but they also cheer for the underdog who is determined to prevail. This spirit of perseverance is also crucial for your internal mental state. Competing with large retailers is a marathon, not a sprint.
  • Diversify. The small to midsize retail business can be more flexible than the Big Box. If you sell products, try adding services. If you sell services, consider marketing products. But a caution: Keep a clear business personality. Your actions should be deliberative or you’ll confuse your target markets.
     These are among the many tactics I’ll be covering tomorrow in a seminar sponsored by the City of Fairfield, California, and the Solano College Small Business Development Center. For information, please call (707) 864-3382 or click here.

Click below for more:
Strengthen Your Barbell Retailing
Assess the Costs of Customer Satisfaction
Boast About Underdog Determination
Project Your Store’s Personality

Tuesday, November 16, 2010

Flow Shoppers into Extra Purchases

During some of my time in graduate school at Stanford University, I studied at the Laboratory of Hypnosis Research under the leadership of Prof. Ernest Hilgard. I explored hypnosis as a state in which a person flows through experiences without distractions from doubts.
     Shoppers in a flow state buy more merchandise, and more merchandise sales result in higher profitability. Therefore, the nature of the flow state should be of interest to you, retailer.
     Seminal research at University of Chicago identified these characteristics of the flow state:
  • Highly focused attention, so the shopper is less likely to go back-and-forth about making purchases
  • Playfulness, so willing to try out new products and new brands
  • Enjoyment of activities for the experience of the activity, so a hesitation to stop shopping once shopping in the flow state
  • A distorted sense of time in a way that makes a shopper less concerned about how long the shopping trip will take
     Another characteristic of the flow state is that the shopper feels that they have the skills to handle any difficulties. This is true even when there are substantial difficulties. The person in a flow state feels in control, even if they are not.
     This opens up possibilities for abuse of the flow state by unscrupulous retailers. I'd never suggest to a retailer that they refuse to sell an item to a customer when the retailer suspects the person is in a flow state or has a compulsive buying disorder. But I would suggest that you and your staff refrain from sales pressure on customers who seem to be struggling to keep from buying more.
     Keeping those cautions in mind, here are two research-based techniques for encouraging a flow state:
  • A website or bricks-and-mortar store design that is easy to navigate. On a website, this means very smooth transitions from the search through the selection through the purchase and payment. In a store, this means a clear path from the point of entry to allowing the shopper to navigate around the perimeter of the shopping area to swooping in to make selections to natural paths for checkout.
  • Background music without lyrics. Researchers at Columbia University and Northwestern University find that music at just-noticeable levels helps head off arguments shoppers might make to themselves about the purchase. Music with lyrics or music that is loud or highly rhythmic can disrupt the flow state.
For your profitability: Sell Well: What Really Moves Your Shoppers

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Deal with Compulsive Shopping Disorder
Balloon Your Profitability with Music

Monday, November 15, 2010

Capture Multichannel Shoppers

We might think that consumers who shop around among a variety of sources for their needs are spending less money than those who engage in one-stop shopping. But at least when purchasing consumer packaged goods (CPGs), multichannel shoppers actually spend significantly more money than single-channel shoppers.
     This is according to a recent report from The Nielsen Company. Across the fifteen product categories examined in the Nielsen survey, people who purchased from at least four channels spent three to five times as much as people who used only one channel. The ratios were most dramatic for the categories of pet food, disposable diapers, and carbonated beverages.
     Why might this be?
  • Researchers at University of Pennsylvania and Columbia University have speculated that when what consumers are buying is experiences, any novelty increases the amount the consumer is willing to pay. Your customers might be shopping around even for products they could purchase from your store because they want a variety of shopping experiences.
  • Researchers at University of Texas-Arlington found that when consumers worked harder to get at a desired item, the consumers came to value the item more highly. Driving around town with a shopping list gives the consumer a feeling they’re working harder. In turn, this can lead the consumer to conclude that they deserve to spend more. A current angle on this is that shoppers have increasingly come to believe they are supposed to hunt around for the best price on an item before making the buy.
     Rather than let go of these multichannel shoppers, explore ways to make their shopping experience more varied and even a bit challenging.
     The categories of channels Nielsen included for place of purchase of CPGs were grocery store, dollar store, club store, mass merchandise outlet, and a minor category they called “other.” But shopping channels can also include ecommerce, catalog orders, telephone orders, and even booths at special events. You probably won’t choose to capture multichannel shoppers by opening a store with a wholly different retailing personality—such as a dollar store in addition to a grocery store. But if you’ve a store format, you might be able to expand the availability of merchandise via ecommerce, catalog, or telephone order, for example.
     The Nielsen Company is ready to help you with doing this. Their report suggests to manufacturers that they seek a broader variety of channels for retail sales of products.

Click below for more:
Leverage Barriers to Increase Value
Integrate Multiple Shopping Channels

Sunday, November 14, 2010

Design Stores with Visual Aesthetics

Research results from Brazil’s University of Paraná indicate that if shoppers judge the exterior and interior design and décor of your store to be visually beautiful—what the researchers called visual aesthetics—the shoppers are more likely to become advocates for your store.
  • Advocates spend time with you, and this makes it likely they'll buy a range of products and services.
  • They are loyal to your business and want it to succeed. If they see something they know they could buy at another store or website for a bit less, they still prefer to give their money to you.
  • They'll tell family and friends, and even shoppers they come across in your store or in competing stores, what a good job you do. If they hear criticisms of your business, they want to reassure themselves they're right in their feelings, so they'll talk down the criticisms.
     Visual aesthetics made the biggest difference when used in store departments carrying merchandise shoppers thought carefully about before purchasing.
     What different target populations of consumers judge to be visually pleasing may seem to vary widely. And those judgments do. But research does find three underlying elements:
  • Symmetry with a few surprises. The underlying design should be balanced, with matching elements on the left and right and on the front and rear. But there also should be a few surprising asymmetries.
  • Unifying themes. Consider the mandala—the form of artwork central to the Hindu and Buddhist faiths. The basic form is a square with four gates containing a circle having a center point, each gate in the shape of a T. Variations on this theme in religious and nonreligious contexts use four projections of the same image. Customers find visual aesthetic pleasure in store designs and décor that repeat themes. If a visual design theme is also reflected in sounds or aromas in the store, this augments the aesthetics.
  • Familiarity. Researchers at University of Western Australia find that human faces incorporating an average appearance for a culture are more likely to be judged as beautiful by people in that culture. This is because what is average is more familiar to us. The familiarity may come about because of a principle of design common in a culture. In China, stores designed according to the principle of feng shui would be familiar, and therefore more aesthetically pleasing visually.
Click below for more:
Keep Creating Advocates for Your Business
Offer Neatness to Creative Shoppers

Saturday, November 13, 2010

Shrink Brand Alliances When They Contaminate

To strengthen the brand image of your store name, you might choose to develop a brand alliance, in which you associate your name with the names of one or more other retailers.
     There are different possibilities:
  • Share physical facilities with another retailer. The names of both retailers appear on exterior and/or interior signage. It could be a store-within-a-store, where you lease out space or lease space.
  • Become part of an advertising cooperative in which your store name appears along with others in media.
  • Participate in cross-retailer marketing administered by a manufacturer.
     This third one comes to mind because of the recent decision of GM—General Motors Company—to discontinue the joint marketing of Chevrolet, Cadillac, Buick, and GMC vehicle repair services. Brandweek described the development as sending Mr. Goodwrench to the junkyard.
     The reason seems to be the uncertainty about the future of the individual dealership brands. After all, Pontiac is being phased out next month following a run of over eighty years under the GM umbrella. An alliance with a brand that is going extinct contaminates the image of reliability and perseverance vital to repair services.
     The concern is a variant of what happened a few months ago when, reportedly, there were Arco gasoline station retailers who considered removing the BP name and symbol from signage at their stations. The reason was the evil reputation British Petroleum had garnered after the Gulf oil spill.
     Consumer psychology research findings suggest that the Arco dealers would be better off shrinking the size of the name and logo than in eliminating them altogether. Similarly, there are advantages for the remaining GM brand retailers in maintaining some alliances, even if at a reduced level.
     In other circumstances, developing new brand alliances can be profitable. If you find yourself in those circumstances, researchers at University of Pittsburgh and University of Minnesota have a tip: Look for an alliance with a retail brand that provides products or services similar to what you do, but one with a brand image that includes strengths in areas where your brand image doesn’t. You’d expect, of course, that your partner will want your brand image to have strengths where theirs is less strong.
     Then once you form this new alliance, choose any brand character with care. The current Mr. Goodwrench is shown as on his knees. That’s not an image of strength.

Click below for more:
Project Your Brand Positively
Keep a Store-Within-A-Store Compatible
Keep Your Store’s Dress Code in Fashion

Friday, November 12, 2010

Sidestep Stroop Interference

Do you want your customers to sidestep mental thunderstorms of indecision when they’re shopping with you? Your understanding of the Stroop Test is one tool to help you help those indecisive customers.
     The Stroop Test, which you can take yourself online, is used by psychologists to assess conflicts among beliefs, emotions, and intentions. These three are what a consumer is trying to blend as they shop:
  • What do they consciously and logically believe to be the best course of action?
  • What are their feelings—often experienced at a subconscious level—as to what’s best?
  • What do they say they intend to do, and in what direction is their subconscious steering their purchase behavior?
     When everything is in line, the shopper makes the purchase decision quickly and is satisfied with the decision. When there are conflicts among the beliefs, emotions, consciously experienced intentions, and subconscious drivers, then the shopper feels uncomfortable. They are, after all, experiencing the equivalent of a thunderstorm inside their heads.
     The Stroop Test measures the extent of this interference by having a person look at words, each word the name of a color. The tricky part is that most of the words are written in a color different from the color the word names. The word GOLD might appear in green, for instance. The person is asked not to read the word, but to name the color.
     People find it much easier to read the words—a behavior which corresponds to the logical beliefs we have—than to attend to the colors—a behavior which corresponds to emotions because of the emotional arousal colors cause. The time it takes a person to complete the test and the number of errors made are used to calculate a measure called Stroop Interference. That corresponds to shopper indecision.
     How to reduce Stroop Interference? One way is to cultivate a positive mood in the test taker. For example, researchers at Germany’s University of Osnabrück pretty much eliminated Stroop Interference by having people read through words—in black ink—describing positive emotions.
     You almost surely won’t be administering the Stroop Test to indecisive shoppers in your store. But I do suggest that you create a positive mood in the indecisive shopper so their indecision will be sidestepped. Simply saying positive words and flashing a genuine smile could be enough.

Click below for more:
Profit from Shoppers’ Positive Moods
Know How Much Emotion to Deliver
Dislodge Indecision with New Choice

Thursday, November 11, 2010

Set Moderately High Purchase Thresholds

What irritates your customers the most? When DailyFinance recently asked their readers, 350 people responded. At the top of the list of “Retailer’s 15 Most Annoying Habits” were complaints that retailers require shoppers to buy unneeded products in order to receive a discount. You must buy ten packages of pasta for the cut-rate price. Who wants to miss out on the discount? On the other hand, who wants ten packages when all you’ll be using for a while is one package?
     But what if your customer was planning to buy one package and you offer a great discount on the three-package purchase? The research evidence indicates this will encourage your shoppers to spend more money with you sooner than they would have otherwise.
     Consumers dislike a feeling that you’re forcing them to buy. In general, they don’t object at all to being tempted, coaxed, or even challenged by purchase thresholds. When setting purchase thresholds for discounts or loyalty programs, go for what is out of grasp for the shopper, but within reach. Set moderately high purchase thresholds that shoppers feel they can achieve and that they’ve earned.
     Researchers at University of Pennsylvania and University of Southern California explored what happens when a retailer introduces new award levels in a loyalty program. Up to now, there’s been a gold level at the top. Now we’re adding a platinum level above for which only some gold members will qualify because the purchase thresholds are higher. The researchers found that consumers actually prefer retailers that offer elite loyalty program tiers, even when those consumers know they’re unlikely to themselves qualify.
     It’s the same theme when it comes to thresholds for price discounts. Researchers at Bryant University and University of Illinois tracked the thoughts and emotions of customers who chose to come close to fulfilling the terms of an offer in the form “15% off all purchases when you spend at least $75.” These customers actually reported higher satisfaction levels than did those who received the discount. The customers who chose to spend toward the threshold, but hold back, generated thoughts of empowerment.
     Whatever the purchase thresholds, though, be clear and consistent about the terms. In second place on the DailyFinance list were complaints like, “The sign said ten packages for a discount price of $10, but you could actually buy one package for $1.”

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Give Loyalty Program Participants Prestige
Tailor Loyalty Programs to Customer Culture
Keep Discount Conditions Strict Enough

Wednesday, November 10, 2010

Generate WOM in the Right Places

People look to others for advice before making purchases. That’s why we encourage customers to talk to friends and post online reviews. But a report from marketing consultancy Harbinger gives reason for caution in word-of-mouth campaigns: The ways in which consumers access and use recommendations differ by product category.
     Harbinger specializes in marketing research and communications with women consumers. This study surveyed 2,134 women in Canada and the United States through the Ipsos online panel. I believe that many of the study conclusions would also hold for men in principle. My advice to retailers is to find out from your customers where they’re looking for recommendations and then encourage them to furnish their recommendations in those sorts of places. Verbal encouragement will come from mentioning to the customers reasons important to them for giving specific, balanced information to others.
  • The frequencies with which the women read and write reviews differ by product category. With a toy, about 20% will read reviews when shopping and about 10% will write a review after purchase. On the other hand, with an automobile, about 40% will read reviews when shopping, but only about 5% will write a review after purchase. With automobile-related products, your encouragement to women to give reviews will need to be more vigorous.
  • For almost all product and services categories, family and friends were the most popular sources for recommendations. But for restaurants, casual acquaintances were the second most popular source, and for financial products, family and friends took second place to expert and professional reviews.
  • For almost all product and service categories, the consumers were motivated to give and post recommendations in order to help other people make smart purchases. With automobiles and with entertainment, a distinctive motivator was for the consumer to display her expertise. With the home furnishings and food/beverages categories, a distinctive motivator for sharing was the opportunity to help improve the products.
     With some consumers—such as market mavens—you might choose to go beyond verbal encouragement. Market mavens are a special type of opinion leader who counsel others about the whole shopping experience and recommend specific stores. When you’ve identified a market maven, offer gifts to encourage them to consider your store. A study based at Providence College and University of Connecticut indicates that the confidence with which market mavens issue their recommendations means they can be influential for you.

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Attend to Face-to-Face Word-of-Mouth
Encourage Specifics & Criticism in Word-of-Mouth
Build Buzz with Market Mavens

Tuesday, November 9, 2010

Produce Aha Experiences for Shoppers

Can you guess what the following sentence means?
     “The haystack was important because the cloth would rip.”
     Researchers at State University of New York-Stony Brook, University of Minnesota, and Vanderbilt University asked people to remember sentences like that, which at first hearing seem to be nonsense.
     It’s the sort of thing your customer might experience when they ask you a question and you assume they have knowledge they don’t have. You’d be requiring your customer to make a guess, to fill in the blanks. The customer might do this for you or might say, “I don’t understand what you mean. Please tell me more.” But there’s also a good chance they’ll turn around and walk away from the sale you’d like to make.
     Sometimes it is only one word that makes all the difference. In my guessing game, I’ll make a guess. I think that if I say to you the word “parachute,” the sentence “The haystack was important because the cloth would rip” not only makes sense, but also produces a memorable mental image.
     This is the sort of phenomenon we’d like to produce when answering a customer’s question. An aha experience in which what you’ve said to the customer brings things together for them.
     Want another example from the research study? The sentence is “The notes were sour because the seam was split.”
     Again, one word can make all the difference, turning nonsense into perfect sense. In your retailing, it often will take more than one word to produce the aha experience as you explain an answer you’ve given to a customer. But in this case, the word “bagpipe” should do it.
     Am I recommending that you give encyclopedic answers to each question a customer asks? No, actually I’m recommending the opposite. If you assess that the customer is an expert, you might actually hold back on a comprehensive answer to signal respect for the person’s knowledge. With all customers, keep each answer brief and to the point. Finish it off with the item of information that brings it all together. The punch line.
     That’s how the best stories produce the aha experience. An example? With credit to Reader’s Digest and emailsanta.com, here’s what seven-year-old Bri wrote to the big guy: “I’m sorry for putting all that Ex-lax in your milk last year, but I wasn’t sure if you were real. My dad was really mad.”

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Give a Vocabulary for Richer Shopping
Respect Customers Who Claim Expertise
Offer Aspirational Shoppers Subtle Signals
Joke Around to Facilitate the Sale
Use Humor in Unexpected Ways

Monday, November 8, 2010

Appeal to Holiday Shoppers’ Ecommerce Brains

The Christmas shopping season is underway.
  • The New York Times reports that Sears has started running “Black Friday” ads, and the week before Halloween, Abercrombie & Fitch sent e-mails to customers with the subject line: “We’re feeling naughty and sneaking Christmas in early!”
  • Ecommerce retailers are even further along. According to the latest eHoliday survey sponsored by the National Retail Federation’s Shop.org, about 80% of online stores have already launched their holiday promotions.
     Recognize that ecommerce has changed the mentality of the shopper. Here are a few consumer psychology tips on appealing to holiday shoppers’ ecommerce brains:
  • Help shoppers avoid unwanted crowds. Yes, many people find enjoyment in the busy bustle of holiday shopping. The ecommerce brain—especially the female ecommerce brain—finds that being with others who are in a holiday mood gives a sense of community energy. But although these women love the bustle, they hate to be jostled. It’s the unwanted crowds which make the shopper want to run home to their computer to finish the purchases. In the bricks-and-mortar store, establish store operating hours that spread out any crowds. Up the merchandise density for the holidays, but leave spaces—such as pristine restrooms—to which shoppers can retreat from crowds for a few minutes.
  • Let customers say thank you. Customers wish to deal with retailers who help them out, and one way customers express this wish is to say thanks to store staff. Research findings from Università Commerciale Luigi Bocconi and another set from University of Maryland and Yale University together suggest that giving the customer an opportunity to express gratitude to staff facilitates loyalty to the retailer. This seems to become more important during the holiday season because of the spirit of giving. Where are the opportunities for the purchaser to say thanks to a salesperson or cashier when online? On some sites, the answer comes with “click to chat online” features. It is the opportunity to say thank you rather than an obligation to say it which makes the difference. Lots of shoppers want to complete their transaction as quickly as possible.
  • Give shopper rewards right now. The ecommerce brain expects speed. JCPenney predicts their holiday JCPca$h promotion—which offers 20% instant rebates—will have a clear advantage for shoppers over programs such as Kohl’s Cash—which rewards with a 20% discount for the customer’s next shopping trip.
Click below for more:
Design Store Operations for Ecommerce Brains
Set Store Searches for Ecommerce Mentalities
Help Ecommerce Customers Thank You

Sunday, November 7, 2010

Attend to Genetic Influences in Selling

When selling to a family shopping together, do you have a sense the family’s preferences are so strong they’re attributable more to genes than experience? Researchers at Stanford University and University of Florida-Gainesville say you’re on to something.
     The reason? Adenine, guanine, cytosine, and thymine. AGCT are the four bases in each strand of DNA, our genetics, and some consumer tendencies have a strong genetic component. If you find that tendency in one family member shopping with you, expect to find it in others:
  • Whether to select a compromise option or go for the choices further out. Given the choice among the $10, $20, and $30 sizes, some people will select the $20. If the choice is presented as among $20, $30, and $40, they will tend to choose the $30. When having the $30 version would serve the needs of the consumer well, present the alternatives to favor that selection.
  • Whether the shopper is prevention-focused or promotion-focused. Prevention-focused shoppers put top priority on purchases which help them avoid losing what they have now. Promotion-focused shoppers put top priority on items which help them gain more than they have now. Because this tendency is genetic, a person is usually either protection-focused or promotion-focused over the course of their lifetime as a shopper. And if one member of the family is prevention-focused, other members of the family are likely to be, too.
  • Whether the shopper is a satisficer or a maximizer. When considering a purchase, people will gather information until they reach a point where the effort to gather more information isn’t worth it to them because of the weight of evidence they’ve already gathered. For satisficers, this balance point is substantially lower than it is for maximizers. When you’re selling to a family of maximizers, be ready to keep feeding more information and then anticipate a series of visits to the store or website.
     The researchers also found that likings for specific products have a genetic component, such that if one member of the family likes it, there’s a good chance others in the family will, too. This can be helpful in guiding gift selections. Those product categories include chocolate, mustard, hybrid cars, science fiction movies, and jazz.
     On the other hand, there was no evidence for a genetic component in liking tattoos. Even if Caitlin is itching to get some ink, it could be tough to sell Mom on the idea.

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

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Identify Influencers in Family Decision Making
Move the Customer to Accept Higher Prices
Sell Either Protection or Promotion

Saturday, November 6, 2010

Reconfigure Your Own Endowment Effect

With the increasing popularity of virtual goods, you would do well to rethink and reconfigure your endowment effect as a retailer.
     The “endowment effect” refers to people placing a higher value on objects they own than equivalent objects that they do not. Among other consumer behaviors, it helps explain why people resist selling used items at a price others will find attractive and why people hesitate tossing foods with an expiration date from last week when they wouldn’t eat the same food at a friend’s house if the expiration date has passed.
     The endowment effect is set off when the purchaser takes physical possession of the product. In a bricks-and-mortar store, this often occurs before the customer pays for the product, as they grasp the product to place it in the shopping cart or as they carry it to the cash/wrap.
     With ecommerce—as with phone and mail orders—the purchase occurs before physical possession. Researchers at California State University-Sacramento found that when a direct marketing customer has confirmation of payment and shipment, there are signs of the endowment effect, but it is not at its strongest until the customer is holding the product.
     It’s natural to think about the customer experiencing the endowment effect and about it applying to physical goods. What about the retailer experiencing it, and what about virtual goods? Do you overvalue virtual goods? According to a recent StorefrontBacktalk article, it’s likely you’ll be called upon to set a value attractive to the customer for ebooks, ring tones, video games, rights to use cloud software, and other virtual goods from you.
  • What, if anything, should you charge the purchaser for the rights to loan that virtual good to someone else?
  • Should you consider the loan as allowing the other person to preview the virtual good and therefore become a potential customer? Should you reward the person doing the sharing, such as by giving them a discount on a subsequent purchase?
  • What fee structure should you set for resale by the customer of virtual goods they’ve purchased from you? Unlike with physical goods—such as a hardcover book—the physical characteristics of the goods don’t suffer from being a used item. In fact, if you’ve provided upgrades of the virtual good, the value may be even greater at the time of resale.
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Purge Expired Products
Consider Having Resale Merchandise

Friday, November 5, 2010

Give Your Sales Pitches Changeups

One of the more surprising consumer research findings of the past couple of years was reported in an article titled, “Enhancing the Television Viewing Experience through Commercial Interruptions.” The University of California-San Diego, New York University, and Carnegie Mellon University researchers discovered that people give higher average ratings of TV programs when the programs include advertising breaks than when the programs don’t.
  • Some consumer behavior researchers’ conclusions won’t make sense to you because they are actually error-filled nonsense. But before dismissing these findings about commercial breaks improving viewer enjoyment, ask yourself if you might have overlooked factors the researchers discovered.
  • People are often bad at predicting their behavior when asked directly. Consumers say they’d enjoy programs more without ads. They pay for devices to eliminate ads and to see commercial-free programming. But this does not, in itself, mean that those people would rate programming with commercials as less enjoyable.
  • Being a retailer, you’re probably more interested in how much people liked the commercials than how much they liked the TV programs. It’s the commercials that do the selling for you. How would liking the programming help bring in the money?
     Well, those who had the ads were willing to pay about 30% more for a DVD compilation of programs by the same director. Participants who watched a nature documentary with commercial breaks were willing to donate more to a nature charity after viewing. The enjoyment of the programming did translate into greater financial returns.
     The explanation: Interruptions increase enjoyment. It’s an example of what psychologists call habituation. Consider the massage therapy category of services retailing. Massage therapists report that the client generally likes the massage more when they’re rubbed for a while, pounded for a while, kneaded for a while, and then rubbed again than if there’s no change.
     The nature of habituation is related to age. The researchers found that commercial breaks improved the enjoyment more for younger than for older people.
     If you’re producing infomercials, deliver the pitch in brief segments with changeups, especially for younger audiences. The in-store version of the infomercial follows the same rules. When you do all the talking nonstop, you’ll lose the prospect’s attention, whether that prospect is a customer in your store or one of your employees you’re wanting to sell on a better way of increasing your business profitability.

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Sell More by Adding Variety

Thursday, November 4, 2010

Fine-Tune Your Social Couponing

“Social couponing” is a promotion tactic in which a substantial discount is offered to consumers who are told the offer is activated only when a certain number of people sign up for it online. Restaurants, educational services, and salons/spas have been the most frequent users of social couponing.
     The logic of social couponing is that, even if the retailer loses money on each coupon transaction, users of the coupon will be working to get loads of their friends to give the retailer a try. The profitability from social couponing depends on convincing the right kinds of coupon users to come back soon and often.
     Rice University researchers report that about 40% of retailers who have used social couponing during the past year say they would not do it again. The major complaints were that coupon users too often failed to buy anything beyond the face value of the coupon on their visit and/or didn’t come back to make a purchase at regular prices.
     Still, this leaves the majority who said their results were positive enough that they might give social couponing a try in the future. Here are shopper psychology tips on fine-tuning social couponing so that you profit:
  • Establish reasonable expectations. Social couponing draws bargain hunters. If discount prices are a marketing point for your store, fine. If your criterion of success is that people spend more than the face value of the coupon, make that a condition of the coupon use.
  • On the bill you present, state the discounted price, but state the undiscounted price more prominently. There are a few reasons for this: It builds appreciation in the customer for the value they’ve received. It reduces expectations that the service they’ve received is worth less than the price you’ll expect them to pay next time they come. And in a restaurant or spa, it encourages the customer to give a tip based on the undiscounted price. This keeps your staff supportive of the coupon program. In turn, supportive staff make the coupon redeemer’s experience memorable so they’ll want to return and bring along other people.
  • Be sure your services to your current customers aren’t compromised by services to the coupon customers. Tell your current customers about the coupon offer and encourage them to enroll online for their next visit. Have sufficient staff, which often means increasing your staffing.
Click below for more:
Keep Discount Conditions Strict Enough
Customize Your Discount Coupons
Give Coupons Early and Proudly
Offer Exclusive Price Discounts Cautiously
Have Unannounced Discounts on Common Purchases

Wednesday, November 3, 2010

Help People Pass the Time

A university professor and a health care researcher found that many people like to shop mostly to pass the time.
     This finding seems too obvious to justify a research study. But the details do lead to valuable ideas for retailers, in my opinion.
     The researchers—from London’s Imperial College Business School and Toronto’s Sunnybrook Health Sciences Centre—surveyed more than 3,000 visitors and outpatients at a total of seven hospitals. About 70% of their respondents said that retail businesses in a hospital added great value to the consumers’ experiences under difficult circumstances. Around the same percentage said that a retailer’s presence at a hospital would make it more likely they’d purchase from that business at another location and speak positively to others about the retailer.
     What types of stores did the visitors and patients want? The types of places you could browse in: Clothing, electronics, bookstores. Hairdressers, where you can let yourself go and primp yourself up. Banks and grocery stores, where you can pass the time without feeling you’re wasting time.
     Researchers at Envirosell report finding the same sorts of desires for retail stores among airport visitors, and again with the same motivation: To pass the time in an interesting way in a setting that could otherwise be uncomfortable.
     Here are a few tips to build good will for the store’s brand name:
  • Offer the consumer options for when to complete the purchase. This gives a sense of control that can in itself ease stress. If the customer who is told, “I can check out your purchases over here,” responds with, “I can wait,” the store staff response should be an understanding nod rather than a puzzled or irritated look.
  • Graciously answer the same questions more than once. Some people deal with their anxiety by seeking more information or developing a plan for making a purchase. However, if the questioning seems to become a never-ending waste of your time, say, “You might want to think about it some more on your own and then get back to me.”
  • Be ready for delay to become sudden action. Some people shiver at the side of the pool and then suddenly grit their teeth, think a happy thought, and jump into the freezing water. When that happens, let your customer quickly get into the swim and get it over with.
For your profitability: Sell Well: What Really Moves Your Shoppers

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Help Customers Buy Unpleasant Necessities

Tuesday, November 2, 2010

Collect Collectors

In the psychiatric literature, there’s a case of a man who owned over 2,000 wrenches and was continually alert to find new wrenches. He was labeled as mentally ill, in part because he never used any of the wrenches as hand tools. He’d take them out, look at them, feel them, show the wrenches to others, and then put them away.
     Suppose I said this guy owned 2,000 paintings. He enjoyed looking at the paintings and showing them to others. Wouldn’t you agree that as long as he pays his bills, this is okay? As a psychologist, I’m ready to say that the man with the wrenches may not be mentally ill at all.
     Actually, if I ran a store with a hand tool department, I could learn to love this guy. I might ask him to recruit a group of his buddies to form a “wrench-of-the-month” club. I’d spring for the refreshments if they’d hold the meetings at my store.
     Let’s encourage our customers to be collectors. Here are three research-based motivations we can use:
  • Fantasy identification. More people will be interested in collecting figurines, bells, or dolls than wrenches. Researchers at University of Minnesota, University of Arizona, and Notre Dame University found that collectors often view each item in their collection as a fantasy image of themselves. Past research suggested that adults developmentally outgrow the appeal of fantasy. However, the popularity of fantasy football leagues, the Home Shopping Network, and Internet pornography would seem to prove those research findings incomplete. In selling collectibles, give each item a personality the customer wants.
  • Reminders of experiences. University of Minnesota researchers pointed out how some items in a collection gain special importance because of the wealth of the owner’s personal experiences that have become associated with the items. Even an exact replica of a lost or broken item wouldn’t be a sufficient replacement. Before offering a new item in a collectible series, ask the customer to tell you their experiences with the items they’ve had.
  • Sense of completeness. University of Nebraska-Lincoln research found that as children approach age 11, their desire to have complete collections grows. In most adults up through middle age, the urge for completeness often comes to play less of a role in purchasing behavior. To sell to the adult collector, you might want to redefine what constitutes a complete collection.
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Monday, November 1, 2010

Loosen Up Shoppers to Reveal Flaws

People shop to correct shortcomings. When somebody admits to a flaw, there’s the opportunity to make a sale. So how do we make it more likely that our shoppers will drop the defensiveness?
     What would work if you were the customer? Please think now of a flaw you have that would make it more likely you’d purchase something sold in your store. Some shortcoming you admit you have, but don’t talk about to everybody, maybe because it’s embarrassing.
     Got that personal flaw in mind? Okay, read on.
     Suppose you’re shopping on my ecommerce site for the first time. I present you with a questionnaire saying I’d like to get to know more about you so I can better meet your needs. An item on the questionnaire asks specifically about that flaw.
     The question is the same on both versions of the questionnaire. Yes, there are two versions. On one version, the website header has the store logo on the left and on the right reads, “Survey on Strengths & Weaknesses” in a professional black font. On the other version of the questionnaire, the website header has on the left a cartoon devil logo and on the right reads, “How BAD Are U???” in a bright red font.
     On which of those two would you be more likely to admit to a flaw? The questionnaire with the professional look or the one with the very casual look? Please make your pick and then read on. (I realize the title of this posting could be a spoiler. You couldn’t help looking back at the title, could you? But if that’s your biggest flaw, you’re fine.)
     Researchers at Carnegie Mellon University explored this issue of people revealing their shortcomings. What did they find? If you are like most of the people who were in that study, you’d be more likely to admit to your flaw when the questionnaire is casual.
     With our shoppers, elicit information about flaws by loosening them up. We don’t want to leave the impression of an unprofessional business, though. In some retail settings, the “How BAD Are U???” approach works fine, but in other settings with other sorts of customer expectations, you’ll want to use techniques like gentle humor and casual conversation to do the loosening.
     Then once the flaw is revealed, promptly move toward the sale by describing the remedy you can provide.

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Personalize by Respecting Privacy Concerns