Friday, April 30, 2010

Encourage Balanced Customer Reviews

The 2010 Social Shopping Survey, to be released soon by the e-tailing group and PowerReviews, describes the important influence of online reviews when shoppers select retailers. Encourage your customers to post reviews on Internet sites which your target audience of prospective shoppers might use.
     And suggest to people that the reviews they post go beyond glowing praise to point out areas for improvement.
     Encouraging criticism may seem like a strange way to attract new customers. Here’s why it makes sense:
  • You want site visitors to trust the positive information in the reviews. When respondents to the 2010 Social Shopping Survey were asked what would lessen trust in online reviews, almost 40% replied that when there was no mention in the reviews of areas for improvement, trust faded.
  • Reviews that include both strong positives and a few negatives will develop curiosity in prospective shoppers. The curiosity can lead to the shoppers wanting to check things out for themselves at your store or website. When positives far outweigh negatives, you’ve won a customer. Research at Rutgers University concluded that direct experience with the retailer affects how the negative information is interpreted. Almost 60% of the 2010 Social Shopping Survey respondents said they use customer reviews to compare with other information, such as their own experiences. If after visiting your store, a customer concludes that the criticism was not justified or complaints were exaggerated, there’s a good chance the customer will become an advocate for your store—working to convince others to give you business.
  • Retailing thrives on change, so you’ll always be interested in how to make an excellent shopping experience even better. When you ask your customers to post reviews that specify areas for improvement and you then consider the suggestions, you’re building the strength of your business.

Thursday, April 29, 2010

Sell Self-Esteem After Times of Fear

We are all going to die. It’s only a question of when. Get used to it by feeling good about yourself while you’re still alive.
     Research indicates that people confronted with their mortality spend more money at retailers. During a natural disaster, when consumers are hearing about widespread causalities, they’ll stock up on emergency supplies. But after the dust settles, they’ll go for the indulgences over the necessities. Consumer psychologists call this Terror Management Theory.
     Is it morally right to take advantage of people’s desires for merchandise if they’re shopping because of a fear of death? My answer is that it’s fine for you to deliver value by relieving your customers’ anxiety. The three caveats for me are these: Don’t violate the law to make them feel good. Don’t gouge people by charging excessive prices. And don’t pressure people to buy when they’re seeming to struggle with temptation.
     TMT research finds that the urge to splurge sets in after the extreme fear passes. And the motivation to buy comes from a desire to increase self-esteem, since self-esteem gives a sense of control. So your selling message is that the purchase will help shoppers feel better about themselves.
     Because different people have different sources of self-esteem, they’ll seek different items. Researchers at Stanford University and Duke University had women think about a terrorist attack and then choose a reward of chocolate cake or fruit salad. Among those who had previously said that their body image contributed greatly to their self-esteem, thinking about the terrorist attack increased the frequency of selecting the fruit salad by 15 percentage points. But among those who had previously said that their self-esteem came from considerations other than their body image, thinking about the terrorist attack increased the frequency of selecting the cake by 50 percentage points.

Wednesday, April 28, 2010

Distribute Worksheets for Child Consumers

Want to build a deep appreciation among your shoppers who are parents? Do it by helping the parents teach their children to be better consumers. And one tactic for accomplishing this is to—in consultation with educators from your community—develop and distribute worksheets to build consumer skills at different age ranges. University of Minnesota research findings suggest this:
  • Ages 3 to 6. These children are learning how to classify products. For the younger children, it’s by size and color, which lets the child select the right product to assist in shopping and meal preparation. For children closer to age 6, the classification is by function. This helps the child accept a substitute product when a desired one isn’t available. Worksheets could show pictures of actual products in your store and ask the child to draw lines between ones that are similar.
  • Ages 7 to 11. Around age 7, children’s consumer skills start to blossom. They become better at recognizing the benefits made possible by product features, moving beyond a focus on the features themselves. Their understanding increases for the correlation between money and value. They gain a greater ability to compare products and to do it on more than one dimension (such as ease of use and duration of use) at the same time. Worksheets could present a task that products in your store could be used to accomplish and then ask the child to select which of the pictured items would be the best set and write why.
  • Ages 12 to 16. Consumer skills to develop for this age range include an appreciation of multiple perspectives. Worksheet themes might include asking the future adult shopper to propose return/exchange policies and pricing structures which take account of the interests of both the customer and the retailer.

Tuesday, April 27, 2010

Keep Your Ecommerce Easy to Use

Just over a quarter century ago, Springer-Verlag published a book I wrote titled Computer Confidence: A Human Approach to Computers. A year later, McGraw-Hill Japan published a Japanese translation.
     I quickly lost interest in the McGraw-Hill version. The only text there in English was my name. And these days, it’s downright embarrassing to me to read through the Springer-Verlag version. What I wrote there is now so out-of-date.
     Except for one thing, and that one thing has to do with how I’d come to write the book: I got my doctoral training in psychology at Stanford University, which is right in the midst of Silicon Valley. As desktop computer systems were being introduced into businesses, it quickly became clear that the systems lacked human engineering. People like Steve Jobs were recruiting psychologists to help move beyond a world of computerization where a major difference between hardware and software was that you could kick the hardware, but only curse at the software.
     I wrote Computer Confidence as a call to action. I wanted to equip businesspeople—including retailers—with specific tactics for smoothly integrating the then-current computer system capabilities into their strategies for making and saving more money. And I wanted to equip computer system designers with specific tactics for maximizing ease of use by people who were much more interested in spending their precious time serving customers than in figuring out how quickly they had to escape the room when “Fatal Error” appeared on their terminal screen.
     Which brings me to the one thing from Computer Confidence that is not at all out-of-date. We must continually strive to design our systems around the users rather than around the available technologies. As you build ecommerce into your retailing, what are the bumps for shoppers you’re working to straighten out this week?

Monday, April 26, 2010

Leverage Barriers to Increase Value

When George Herbert Leigh Mallory was asked why he wanted to climb Mount Everest, his reputed response became what has been termed the most famous three words in mountaineering: “Because it’s there.” The need to overcome barriers can make the objective more attractive.
     To see how this applies to retailing, let’s move from the world’s highest mountain peak to the world’s toughest potato chip package. In a classic study based at University of Texas-Arlington, researchers investigated the relationship between the taste of a potato chip and the ease of opening the package. For some participants, the potato chips were packaged in a wax-coated bag which could be easily opened. For the other participants, the polyvinyl bag was so difficult to open that participants resorted to techniques like using their teeth or standing on the bag while pulling at a seam.
     In blind tests conducted before the main study, whether the chips were in the wax-coated bag or the polyvinyl bag had no effect on people’s ratings of crispness or overall taste—as long as the researcher, not the participant, opened the package and served the chips. But when the participants had to open their own packages, which of the two types of bag resulted in higher ratings of crispness and taste?
     Yes, the polyvinyl bag.
     Asking people, “Which tastes better?,” is not the same as asking, “Which would you probably buy?” People often settle for a lower quality alternative when they can get to it more easily or inexpensively. If deciding between providing your product in the equivalent of the wax-coated bag or the polyvinyl bag, you might choose the less burdensome alternative. But if your product comes with necessary barriers to usage, look for ways to leverage those negatives so as to increase the perceived value of the item.

Sunday, April 25, 2010

Track Internet Gossip About You

Even if you are a store-based retailer with no website, you still might have a very active web presence—a web presence you don't know anything about. That's because many of your customers are spending time on Twitter, MySpace, and/or Facebook, and with all the time they're spending there, they are bound to run out of interesting things to say. So if they went shopping in your store recently, there's a chance they're talking about you behind your back.
     What are they saying, and how does the conversation among the participants develop? A set of researchers at Indiana University found that with online social networks, any criticism of your store tends to get even more negative as the stories bounce around. The researchers also found that criticism is much more likely to crowd out praise than the other way around. People don't want to be caught recommending an online friend go shopping at your store only to have that online friend announce afterwards to every Twitter twittee that the friendship is over with a flaming, "How could you ever recommend I go there?" It's socially safer to criticize the store. Then the online friends might never give you business, avoiding any chance they'll discover it if the criticism happens to be all wrong.
  • Work hard to develop your Advocates—the customers who enthusiastically recommend you to others and are ready to actively argue against unjustified criticism of your store. With online social networking, those Advocates are swimming upstream.
  • Know what's being said about you on the Internet. Set up a Google Alert (www.google.com/alerts) for your store name. If the name of your store has more than one word, place the whole name in quotes for the Google Alert.

     To protect your profitability, check to protect your good name.

Saturday, April 24, 2010

Use Your Employees' Favorite Words

What set of words do your employees most love to hear others in their lives say to them? They like it more than "Thank you" or "Time to go home." Although they'll no doubt flash an especially bright smile at, "Job well done," followed by, "You're getting a pay raise," the phrase I'm thinking of is even more motivating when said in the right way.
     That phrase is the employee's own name. We each love to hear others say our name as long as it's said to support us. Your employees enjoy positive recognition. The form that favorite recognition takes is different for different people. Some get a big thrill out of having the boss say their name at a staff meeting, followed by "Please stand up so we can all give you a round of applause." Others would consider that a punishing experience. Rather than be the center of attention or risk getting teased by coworkers, those employees would much prefer to have the boss come by their work area, say their name, and give them praise for specifics the boss has identified as profit making.
     Put this favorite phrase—the employee's own name—on a business card they can hand out to their customers, and a sense of pride kicks in. The employee becomes more driven to provide dazzling service.
     Not every employee should get a set of business cards. Make it a part of the rite of passage as an employee moves from probationary to regular employment status. And not every customer gets a business card from the employee. The cards are reserved for staff-customer interactions where the employee has special pride in what has happened.
     Motivated employees boost your profits. The employee's name, said with deserved praise and printed on business cards, is a powerful motivator.

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

Friday, April 23, 2010

Give Coupons Early and Proudly

According to a March 31 press release from Valassis, the use of discount coupons by shoppers is climbing significantly. Because a major revenue source for Valassis is managing coupon distribution and redemption for their retailing and manufacturing clients—including through the Valassis RedPlum Network—you might choose to discount the press release’s enthusiasm a little. Still, the evidence from other sources is that your potential customers love their coupons. Valassis says that more than three out of four of the consumers they surveyed report using coupons regularly.
     Here are a few shopper psychology tips to get the most from your coupon programs:
  • Distribute coupons as early in the shopping process as possible. Researchers at MIT found that coupons presented at the store entrance drive up sales much more than do coupons available in the aisles of stores. RedPlum.com distributes coupons online before the customer even leaves home for the store.
  • Use conditions on coupons to influence the size of the entire store purchase. Those MIT researchers also found that when coupon redemption required the customer to spend more on an item than they’d planned to, the customer tends to increase the total shopping trip amount.
  • Help people be proud to use their coupons. Being thrifty has gotten more stylish. Still, a psychological stigma is associated with coupon use. Researchers at University of Colorado-Boulder, University of Virginia, Duke University, and University of Bologna described associations between coupon use and being a tightwad. Researchers at University of Alberta and University of Manitoba found that when people in a store saw someone using a coupon, judgments of the coupon-users were tugged in a negative direction. One way to add status is to hook a noble cause to coupon use. RedPlum brags about their sponsorship of a missing children location program.

Thursday, April 22, 2010

Ask Customers Their Opinions Promptly

When your customer is considering whether to make a particular purchase, chances are their decision will be influenced by whatever they believe other people think about the product. Sometimes the agents of influence are not who you’d expect. Research at University of Western Ontario and University of South Carolina found that an adult customer’s views about how innovative their parents are has surprisingly strong influence on how willing the customer is to buy something different.
     Knowing all this, it would seem that in personal selling, if the customer hesitates buying a product you’ve concluded would both fulfill their needs and benefit your store’s bottom line, you’d want to discover the customer’s beliefs about what others think of the item and who is influencing their opinions.
     Wait, though. Other research at University of South Carolina, joined with that at Loyola University and Baruch College found risks in asking, “How do you think your friends, your family, and other people would rate this product choice?” if the question comes too early in the conversation. Namely, this sort of question shouldn’t come before you ask the customer what they themselves think of the item. The risk in asking too soon about the preferences of others is that many consumers take pride in thinking independently. They prefer seeing themselves as exerting strong influence over others than seeing themselves as yielding to strong influence by others. Ask too soon about the opinions of others and the shopper will reject your purchase preference.
     This is most true when doing business with shoppers from individualistic cultures like the U.S., Canada, and Australia. It is somewhat less true if your customers identify with norms of collectivist cultures like Korea, Turkey, or Taiwan. But wherever in the world you’re selling, it’s best to promptly ask each customer their opinions.

Wednesday, April 21, 2010

Sell Patiently for Sentimental Value

In the era before we pulled out our telephones to check the time of day, a wristwatch or even pocket watch was a treasured gift for landmark events such as retirement after years of employment in the same job. A watch acquired under those circumstances came with sentimental value. It could never be fully replaced if lost or stolen. Even if the watch stopped working as a timepiece, the recipient would resist discarding it.
     When you’re able to add sentimental value to items you’re selling, this value-added makes the items more attractive to consumers. You can set higher prices for the items.
     Two keys to sentimental value are occasion and location. A successful tactic for Swatch Group in the mid-1980’s was to sell obviously different wristwatch models in different locations. As a result, many women would go Swatch watch shopping at retailers while traveling on vacation. Special location and special occasion.
     Beyond store settings, the special location could be a street fair. A distinctive item sold there by a part-time retailer can carry with it all the memories of a fun day. Or it could be at a home shopping party, pairing the warmth of companionship with the purchase. The shopper realizes that each time they’ll use the item or even look at it, fond recollections will come.
     Still, location and occasion aren’t enough. A third key to sentimental value is salesperson patience. If the vacation visit to the store, day at the street fair, or evening at the home of an acquaintance feels pressured, it’s not sentimental value which is added. Consumers don’t get at all sentimental when in a rush to buy or when they feel they’re being rushed. Cultivate conversation and encourage browsing. Because you’re setting a price premium for sentiment, you can afford the extra time.

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

Tuesday, April 20, 2010

Use Fragrances to Pace Shoppers

Want to increase the length of customers’ visits to your store so that they have more time to browse around at all the products you carry? Or would you prefer that your shoppers move more quickly through their trip in order to free up parking spaces and staff time for newly arriving customers? Either way or somewhere in-between, colors, music, and even fragrances can set the shopper’s speed.
     Calming colors such as blue slow down the shopper, while bright colors like red increase the pace. The tempo of background music in the store—slow to fast—influences how slow or fast shoppers move. And researchers at Drake University in Iowa and Washington State University report that fragrances in a store distort the customer’s sense of time. People shopping in scented surroundings find that time passes more slowly. The result is that they’re more likely to stay longer in the store. When research subjects shopped in a no-scent environment, time tended to drag. If not able to check themselves against a clock, these shoppers estimated the time spent shopping as being much longer than it actually was.
     Not all smells make consumers want to hang around longer. And strong doses of even pleasant odors can quickly become unpleasant. But when the fragrance is appealing, the people linger.
     The most powerful pacing effects from fragrance come if there’s compatibility among the sensory signals. For example, researchers at Pennsylvania State University and University of Singapore found that when scent and music cued the same sort of pacing, impulse buying went up and customers reported higher satisfaction with their shopping experience. This was true both when the store wanted customers to stay longer (lavender scent and slow tempo music) and when the store wanted customers to move briskly (grapefruit scent and fast tempo music).

Monday, April 19, 2010

Add Pizzazz to Dull Promotions

This last weekend’s Charlotte Observer reports that North Carolina retailers have been gearing up for next weekend’s “Cash for Appliances” promotion. Purchases of qualifying energy-efficient refrigerators, freezers, clothes washers, or dishwashers get a 15% instant rebate.
     Trouble is that asking a consumer to replace an appliance which is working fine can be a tough sell right now. Most appliance purchases are made because the current machine has broken down. When it comes to excitement, buying a refrigerator, freezer, clothes washer, or dishwasher is not too far above replacing a water heater. And that’s downright dull.
     The solution is to add pizzazz to the promotion, and this solution can be adapted to boost sales of any dull major purchase:
  • Limit the time of the promotion. It’s being announced as running for no more than four days and only until funds from the federal allotment are gone. This creates an urgency to purchase. Still, leave yourself an out. For the North Carolina program, if sales don’t exhaust the funds, retailers will have another go at it in June.
  • Begin selling at unusual hours. This is the trigger used for video game releases and movie premieres. One retailer—Queen City—says they’ll open their stores at 11 PM—one hour before the official starting date—and sell through the night and next day.
  • Develop a distinctive theme and promotion name. The retailers chose next weekend for the energy-efficient promotion because it coincides with this year’s Earth Day. Expect to see retailers come up with names more exciting than “Cash for Appliances.” Late last year, The Home Depot called their promotion “Power Drill Trade In, Trade Up.”

     The North Carolina retailers had better stay skilled at adding pizzazz. On the horizon is an offer of $200 rebates on, yes, water heaters.

Sunday, April 18, 2010

Interpret Survey Results as a Retailer

Often, advice to retailers is given on the basis of survey results. For example, a few days ago, the National Retail Federation announced that in a recent survey, more than two-thirds of the retailers said customer database mining will be a priority for 2010. The implication from NRF was that retailers should seriously consider ramping up their targeted marketing and advertising.
     This might be excellent advice. But always interpret survey results with care.
  • How objective is the survey sponsor? If they’re trying to sell you something, they may have had an interest in the results coming out a certain way. In my example, NRF is interested in selling you the full report, so that might possibly tempt them to announce the more extreme findings or to overemphasize the implications.
  • Who carried out the survey and analyzed the results? Wise survey sponsors recognize that conducting a valid survey project requires professional talents. Little things mean a lot. Researchers from London Business School and Duke University found that people tend to answer the same survey question differently when the survey is conducted over a computer than when it’s conducted in an interview. The Advertising Research Foundation concluded that giving cash incentives to survey respondents for their participation decreased the care exercised in answering. If a sponsor with a stake in the outcome contracts with a reputable organization to carry out the project, that adds trustworthiness.
  • Through your eyes as a professional retailer, how much sense do the recommendations from the survey make? If the recommendations seem strange or surprising, that doesn’t necessarily mean they’re flawed. Busy retailers risk being trapped by old habits, superstitions, and hand-me-downs. But your experience does count for a lot in deciding if and in what ways you’ll adapt the recommendations to fit your business.

Saturday, April 17, 2010

Feature Country-of-Origin Advantages

Shoppers associate certain countries of origin with desirable product characteristics. Sometimes the association is product-specific: Cheeses and perfumes from France have a special cachet, as do cutlery and timepieces from Switzerland.
     Sometimes the association springs from a nationalistic spirit. Based on results from surveys and in-depth interviews, researchers at University of Queensland in Australia and University of Alaska-Fairbanks say that Chinese consumers are so uncomfortable buying products from the West that they mentally work to connect the brands to important moments in Chinese history, like Mao Zedong’s Cultural Revolution and Deng Xiaoping’s economic reforms.
     The association between country of origin and perceptions of quality can change. Decades ago, American consumers generally avoided any item they learned was manufactured in Japan, since Japan was associated with slapdash production. Then publicity surrounding Japanese attention to quality assurance and the high marks given by objective raters—particularly to Japanese-manufactured automobiles—led to American retailers considering a “Made in Japan” label as a selling aid. Now with the current troubles Toyota is having, perceptions of Japanese quality might fade again, augmented by a rise in “Keep Americans Working” spirit.
     When country-of-origin information helps you make the sale, feature it. Findings from researchers at University of Illinois and Hanyang University in South Korea indicate that featuring it means presenting country-of-origin information well before you present other information about the product. Even mentioning country-of-origin immediately before describing other product attributes didn’t generate maximum effectiveness. The research findings say to do it about a day in advance.
     This would mean stating country-of-origin in ads a shopper would see before arranging to come to buy from you. To feature country-of-origin information in personal selling, state it as the first item and pause for a few seconds after saying it so the information starts brewing in the shopper’s brain.

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

Friday, April 16, 2010

Keep Targeted Selling Appealing

When you—the retailer—target your selling precisely to what your consumers want now, you save time for your business and for the customer. When you target your merchandising to what customers will be buying in coming months, you can keep your inventory trim.
     To target your selling, you need to gather information from the customer, and to target merchandising, you must gather information from groups of customers. Some retailing experts have concluded that consumers—especially younger adults—are quite willing to share information about themselves. The experts base this conclusion on how social networking users—especially younger ones—are willing—even driven—to reveal absolutely everything.
     But researchers at University of California-Berkeley and University of Pennsylvania report that when it comes to dealing with retailers, consumers of all age groups say they hesitate sharing an abundance of information. Younger consumers are indeed more willing than older consumers to help the retailer customize to them, yet they seem to be saying they’re not interested in complete openness. For example, when a representative sample of American young adults were asked a question similar to, “Would you like the ads you see to be based on information gathered about you while you are in a store?,” 90% said no.
     Because of the value of targeting, keep the information gathering appealing to your customers.
  • Whenever gathering information in a formal way, tell consumers you’re gathering information on them in order to save them time, find products and services to best meet their needs, and keep costs down so you can keep prices lower.
  • If you keep customer information, such as what is gathered from a frequent shopper program, make it easy for customers both to look at the privacy practices you follow and to request corrections in or deletion of information.

Thursday, April 15, 2010

Tap into Reasons to Recommend You

Let’s say you’re planning to buy some new furniture for your living room at home. Which is a better predictor of the set you select?
  • Your best guess of what your friends and family would think of each set you’re considering.
  • Your personal opinion of each set, doing your best to put aside what your friends and family would think.

     If you’re like the people in a Michigan State University study, the better predictor would be your best guess about the opinions of your friends and family. That’s not really surprising. One function of living room furniture is to make visitors and family members comfortable. What others think powerfully influences the purchase decisions we will make.
     That’s true not only for the products and services the shopper selects, but also for the particular stores they shop at. You’d like one of those stores to be yours, so tap into the reasons that your current customers would recommend to their families and friends your store and the items you’d like those others to purchase from you.
     How to do that? Here are some tips, based on findings from a review by a researcher at University of Manchester in the United Kingdom:

  • Encourage customers to talk about their preferences with store personnel and on social networking sites. Many consumers share advice mostly because they love to talk.
  • Allow customers to show off their expertise when they’re in your store. Many consumers recommend a store and particular products after their self-esteem is raised.
  • Give customers warnings they can share with friends. Many consumers become more likely to recommend your store when they feel you’ve rescued them from problems. And some consumers are more likely to recommend products when they can balance praise with warnings of traps to avoid.

Wednesday, April 14, 2010

Randomly Arrange Limited Product Sets

Long ago, I’d hear grocery store operators claim that shoppers buy more varieties of soup when the varieties are shelved in random order rather than alphabetically. The explanation went like this: The shopper’s interested in finding a particular variety. Maybe chicken noodle, maybe tomato, maybe clam chowder. They look for that particular variety, but because there’s no order, the shopper’s eyes run over many varieties. As they do so, they start thinking, “Gee, maybe I could use that variety, too.” They end up selecting extras.
     More recently, researchers at University of Pennsylvania and University of Illinois confirmed that random arrangement of a product set can lead to more buying, but not necessarily for the reason the grocery store operators had told me. The reason the random arrangement works, it seems, is that it gives the shopper a feeling of there being more to choose from. It takes some time for the shopper to run their eyes over what’s there, and the increased time translates in the shopper’s mind to the impression of a larger assortment.
     An impression of more to choose from is helpful to you, the retailer, when the actual number of choices is limited. But the researchers found that if there are lots of soup varieties or toothpastes or baseball gloves, creating for the shopper a sense that the assortment is even larger is a problem. Immobilized with indecision, the shopper turns around and leaves.
     Also, a random arrangement irritates shoppers when there’s a logical order to the assortment. Let’s say you run a hardware store and somebody comes in looking for a particular size screw. “Oh, they’re all mixed up on the shelves,” you say. “Keep looking until you find it.”
     When you’re offering many choices, categorize. But when the alternatives are quite limited, arrange alternatives randomly.

Tuesday, April 13, 2010

Publicize Social Consciousness

What do the Catholic Church and Nike have in common? Both are pushing back against negative publicity for actions they’ve taken—or more accurately, actions they’ve not taken. With the Catholic Church, the issue is abuse of children. In a much less well-known matter, the issue with Nike is severance pay.
     Two Honduran subcontractors to Nike refused to pay a total of about $2.6 million to workers who lost their jobs when factories were suddenly closed. Protestors say the severance payments are required under Honduran law. Last week, University of Wisconsin-Madison announced that because of Nike’s failure to take action in the matter, the university is terminating its licensing agreement with Nike.
     The University of Wisconsin announcement read to me like the licensing termination was a negotiating tactic—not only with Nike, but also with the groups pressuring the university to take action. The chancellor praised Nike’s previous commitment to ethical working conditions worldwide and said she remains hopeful the severance pay matter can be resolved.
     If you find yourself subjected to negative publicity about your ethics, research suggests that one way to get out in front of the story is to demonstrate your social consciousness. Where to begin? Nike has said they’re paying for training and job placement for the displaced workers.
     But maybe you hesitate addressing employee rights because your business operates in societies which think government oversight is excessive. In this case, you might start with social responsibility issues designed to bring you largely supportive attention within the societies that matter to your business.
     For instance, almost everybody supports reducing the amount of trash we generate. Your first publicizing of social responsibility might involve ways you sell products which use refillable containers, favor vendors that minimize unnecessary packing, and accept old products for recycling. It's a start.

Monday, April 12, 2010

Lift the Spirits of Your Customers

It was in spring 2005 that Ben & Jerry's ice cream shops introduced customers to a special selection of new flavors. With names like Chocolate Therapy, Apple-y Ever After, and The Last Straw, these flavors were not, as it happens, designed to stimulate the romantic urges we associate with spring. No, the Ben & Jerry’s folks intended the new flavors to soothe rather than stimulate.
     You see, Ben & Jerry’s had been receiving what Advertising Age called “scads of letters” about what an entire sorority had named their “breakup ice cream brand of choice.” The ice cream shops were ready to lift the spirits of their recently-dumped customers.
     An abundance of research finds that if store staff exude a positive mood, it increases sales. But there can be too much of a good thing when the customer is feeling down. Customers in a bad mood still buy, and if your customer is feeling grumpy, that customer usually doesn’t want the salesperson flaunting all this happiness. It comes across as insensitive. Research from the Northeastern College of Business Administration finds that a customer who is in a bad mood is especially unlikely to buy from a salesperson who is obviously in a much better mood than they are.
     The exception to that rule? When the customer has endured the last straw. If the shopper is feeling truly desperate, they’ve no objection at all to dealing with a highly cheerful salesperson. So if you’re working at the Ben & Jerry’s counter, have a bit of a “you poor dear” attitude when the customer orders Chocolate Therapy. But it’s fine to yell “you go girl (or guy)” when the request is for a cone filled with The Last Straw.
     Not working the Ben & Jerry’s counter these days? Adapt the tactics to fit.

Sunday, April 11, 2010

Use Music to Motivate, Not Disrupt

A mystery inspired Rebecca Logan at the Fayetteville Observer newspaper in North Carolina to do an article about noticing music while shopping. The mystery began with people telling Ms. Logan they’d lately enjoyed the music at their local Food Lion grocery store. What had changed?, she wondered. Food Lion told Ms. Logan the store had been using Muzak’s FM1 channel for some time, and the Muzak spokeswoman said there’d been only minor changes in the FM1 mix recently.
     The answer to the mystery may reside in initiatives like the Music Genome Project from Pandora. It claims that the effects of a piece of music are determined by the standing on about 400 attributes, ranging from rhythm and instrumentation to the themes of any lyrics.
  • Research by psychologists at University of Melbourne shows the value of using styles of music that reinforce the personality you want your store to project. This should be a personality that fits how your target customers want to see themselves. A fundamental choice in store personality is between exciting and sincere, and different music styles will project one or the other.
  • If you want the shopper to carefully analyze the purchase decision, either do not have music or use music that is barely noticeable. Researchers at Columbia University and Northwestern University find that when a customer listens to the music in the store, their attention is taken away from analyzing the purchase decision. If you’re wanting the customers to try new brands or new products, eliminate intrusive music.
  • Based on those same research findings, use noticeable music—such as music with lyrics—if you both expect and want the shopper to select items from habit without much thought. Noticeable music helps head off arguments the shopper might make to themselves about the purchase.

Saturday, April 10, 2010

Implement Tactics Strategically

You can do it all. You just can’t do it all at the same time. And the fact is that you won’t really want to do it all at any time.
     There are so many ways to improve your profitability as a retailer. You almost certainly don’t have the resources to implement them all at the same time. And on the basis of costs and benefits, you probably won’t want to implement all of them anyway. Select the tactics that give you the best return on your expenditures of resources. Then prioritize among those, and recognize that more is not always better.
  • Researchers at University of Mannheim in Germany and University of Texas-Austin found that customers who are adequately satisfied are willing to pay higher prices than are customers who are barely satisfied. But the researchers also found that developing customer willingness to pay even higher prices generally requires ensuring those customers are consistently very highly satisfied. The costs of doing that might make it not profitable. If so, why not be satisfied with adequate customer satisfaction?
  • Researchers at Duke University and University of California-Berkeley find that advertising a warranty has no effect on consumer perceptions of retailer and product quality unless both retailer reputation and manufacturer reputation are in other ways clearly positive. So until you’re confident that your shoppers are confident about your reputation, why offer warranties?
  • A traditional rule of thumb in retailing has been that a promotional discount must be at least 20% to produce enough increases in purchases to offset the decreased profit margin. But with shoppers having lately become highly price sensitive, retailers are reporting success with promotional discounts of less than 10%. So why discount your profits unnecessarily in those cases where shoppers are attracted by promotional discounts of 10%?

Friday, April 9, 2010

Adjust Merchandising to News Events

Emotional influences often outweigh logical thought with products carrying strong personalities. News events arouse emotions, so you’ll want to pay attention to what’s happening in the news as you fine-tune your merchandising.
     This month, it might be the high school prom and the Master’s Golf Tournament. In what ways do these influence what your customers will be shopping for? At any time of year, news of a natural disaster near or far away can lead consumers to stock up on batteries and food.
     Getting batteries makes sense, but guess what Wal-Mart reports to be among their best selling items when there’s news of natural disasters: Beer and pastries. Talk about products with strong personalities! Talk about emotion winning out over logic!
     A compelling example of the influence of news events on purchase preferences comes from researchers at University of Maryland and University of Missouri-Columbia. Here the products were Coke and Pepsi. As the Coca-Cola Company learned when they tried to introduce a reformulation of Coke, the beverage has a very strong identification with being an American. Pepsi doesn’t have this strong identification.
     The researchers gave thirsty people a choice between Coke and Pepsi. But before allowing them to announce their choice, participants were reminded of an actual news event. Some were reminded of the response of Americans following the September 11 World Trade Center attacks. The other participants were reminded of the anthrax scare in the U.S. Those participants reminded of 9/11 responses were much more likely to select Coke than were those who had been reminded of the anthrax news. Why? The researchers say it was because the news of the 9/11 responses aroused a pride in America that the anthrax news did not.
     Smart retailers will have Coke on the shelves when news events arouse pride in America.

Thursday, April 8, 2010

Tell Stories for Price Increase Acceptance

Over the past year, it seems that consumers have gotten more suspicious of retailers, especially when it comes to price increases. There are times you’ll need to increase prices. To maximize customer acceptance of these price increases, head off coming across as manipulative by telling the customer a story. A detailed true story. Ah, and as to why a detailed true story can cancel out impressions that a retailer is being manipulative? That, my friend, is a tale in itself.
     The tale begins with the abundance of research documenting the power of a story in persuading customers to take a retailer’s recommendation. Among the latest of these research findings is a report from researchers at University of St. Gallen in Switzerland. They showed how, as a general rule, it’s better to say, “May I tell you a true story to show the advantages of this product?,” than to say, “May I list for you the advantages of this product?”
     Then comes the twist to the University of St. Gallen tale: If the customer senses that the retailer is being manipulative, the advantages of telling the story disappear. That happens even if the customer’s suspiciousness didn’t arise because of the retailer telling the true story.
     And as in any good tale, there is still another twist from the University of St. Gallen research findings. It’s something that might actually be considered a surprise ending: Even if the customer senses the retailer is being manipulative, there is a way for the retailer to restore the persuasive advantages of the story. It is to fill the story with as much detail as the customer’s attention span seems to allow.
     Therefore, you might want to say, “May I tell you a true story with all the details that show the advantages of this product?”

Wednesday, April 7, 2010

Touch Customers

How about giving every customer a big hug as they leave your store? Maybe that’s crazy, but crazy ideas can inspire really good ideas. It’s easier to tame down a wild idea into something sensible than it is to jazz up into profitable creativity the same old ways of thinking.
     With this in mind, be inspired by the results of a consumer behavior study done in the mid-1970’s at a university library. As the clerk returned the library card to some of the students, the clerk placed their hand directly over the student’s palm. Other student patrons of the library didn’t receive the brief touch. When the students were surveyed outside the library, those who had the touch rated the library significantly more favorably than did the non-touched students.
     Decades later, researchers at Tel Aviv University assessed the results of a retail employee touching customers in settings that included a supermarket, a restaurant, and a bookstore. There, a brief touch on the arm of a customer led to the customer feeling more positive about the retailer. And positive feelings toward a retailer increase the potential for financial profitability.
     Touch soothes and energizes at the same time. However, I want to point out that touch also can freak out a customer. What worked in the mid-1970’s might not work now. What’s welcomed by university students or Israeli bookstore patrons might be offensive to the people frequenting your store. Keep the touching pleasant for the customer, but keep touching customers.
  • Shake hands, bump fists, place a hand on the arm—whatever is culturally and socially appropriate.
  • Reach out toward customers with palms facing upward, or whatever else in the customer’s culture projects a welcoming attitude.
  • Maintain the style of culturally appropriate eye contact to stay psychologically in touch.

Tuesday, April 6, 2010

Base Your Changes on Your Strengths

The retailer who stands still is by definition falling behind. Profitable retailing is based on making changes. A literature review by researchers at University of Minnesota, Emory University, and George Mason University indicates that the changes most likely to succeed for retailers are gradual and based on the retailer’s existing strengths.
     Ace Hardware’s current repositioning of their branding can be seen as consistent with this principle. The need for change was clear. Annual revenues have tumbled 10.4%. Current competition is keen from the Big Box home improvement stores, especially Lowe’s. That Big Box chain saw a dip in revenues of only 2.1%, and for some years, Lowe’s has been making a concerted effort to meet the needs of the consumer who feels unsure about their own home repair skills.
     In an ad campaign breaking this week, Ace positions themselves as the resource for advice and convenience when taking care of home repair and minor fix-up projects. Regarding claims of helpful advice, Ace clearly is building on a recognized strength. RetailWire.com points out that for the past three years, both J.D. Power and Corporate Research International survey findings ranked Ace as highest in customer satisfaction in the home improvement retail category.
     Regarding convenience, most U.S. consumers live closer to an Ace store than to a Big Box. And people generally find it easier to navigate through the Ace store because it’s more compact. The Home Depot experimented with a small store format, but seems to have stumbled.
     Implementation of the Ace Corporate repositioning at the store level could be a challenge: Each Ace store is independently owned. Training, coaching, and pruning out deficient stores is essential. But regardless of how the Ace Hardware initiative turns out, the idea of basing changes on your strengths is a good lesson for all retailers.

Monday, April 5, 2010

Profit from Product-Service Synergy

Geek Squad is Best Buy’s killer app. So wrote retailing writer Jackie Crosby of the Minneapolis Star Tribune newspaper. She’s describing the consumer electronics installation and repair service. Over the 7½ years that Geek Squad has been a part of Best Buy, annual revenue has grown from about $3 million to about $1.25 billion.
     But in a February 2008 San Francisco presentation, Geek Squad founder Robert Stephens warned that for a retail store operator, services by themselves aren’t sufficiently profitable. If your principal commodity is services, link up with a product. Spas and salons stock potions recommended by staff. Truck rental centers sell merchandise to people who are moving to a new home.
     From the other side, if you make your living from retailing products, consider how you can most fully use services as a profit center. Keep the product-service synergy and identity strong, though. Consumer psychology research verifies the importance of you projecting a consistent personality across products and services.
     For example, Geek Squad “agents” wear their white button-down shirts, black pants, and clip-on ties whether the agent is male or female. For making house calls, many of them drive a distinctive-looking “Geekmobile.” When Best Buy introduced the Magnolia Home Theatre line and mobile phones, they followed by folding the installers into the Geek Squad brand.
     Because of Best Buy’s store size and the technical expertise required, it works well to have a Geek Squad separate from sales staff. But for a smaller non-technical operation, keep in mind the perishability of services. If a day goes by that a service staff member’s help isn’t called for, you can’t store those hours for another day. You might be better off not following the Geek Squad model, instead having services staff who can also provide other functions, such as selling products.

Sunday, April 4, 2010

Ethically Develop Kids into Collectors

Researchers at University of Nebraska-Lincoln verified what parents already know: Children love to collect items—ranging from dolls to sports cards to rocks. But the researchers also identified how the motivation for collecting changes as the child gets older.
     As a general consumer rule, males are quite competitive and females are quite collaborative. But age also makes a difference when it comes to collecting. Compared to first-grade boys and girls, fifth-graders assemble their collections for more social reasons. They enjoy knowing what others have, are open to trading items, want to fill in their collections with items others don’t have, and are aware items in a collection differ in value.
     First-grade boys and girls aim for quantity. The more you have, the better, and there is a competition with other first-graders. Merchandising collectibles for first graders means carrying items in easily distinguishable colors or shapes. Because the emphasis is on quantity, the parents and grandparents doing the purchasing will be happier with the retailer when the items are small and inexpensive.
     For fifth-grade collectors, merchandise using items that have easily distinguishable capabilities. Each alternative can do something different. This one jumps, and this one talks. Show those distinctive capabilities in ads and store signage. Keep parents happy by having a range of price points to match the sophistication of capabilities.
     Actually, this range can end up making the kids happier, too. Stanford University researchers decades ago found that children who learn to delay getting items they yearn for turn into more responsible adults. The children do it by finding enjoyment in anticipating what’s to come.
     There are ethical issues for retailers who exploit a child’s urge to collect in ways that damage the child’s family. The way around this is to encourage your young customers to maintain wish lists.

Saturday, April 3, 2010

Help Shoppers Use Their Imagination

Ask your customer to picture the enjoyment they’ll experience with usage of the product or service you’re suggesting. Imagination brings benefits alive, and it is the benefits of features, not just the features themselves, which are most influential with shoppers overall.
     Asking shoppers to use their imagination does mentally tax them. To make the sale, make imagining easy:
  • Separate requests to imagine from requests to analyze product features. Researchers at Arizona State University asked consumers to logically analyze sets of product features and then make rational purchase decisions. For some of these consumers, the researchers described the products using vivid language intended to evoke imagination. Those called upon to use their imagination were less likely to choose a product to purchase.
  • Give aids for imagination. As long as you’re not asking the shopper to analyze or compare, use the vivid language designed to stimulate the senses: “As you enter your room, you’ll be tempted to take off your shoes immediately so your feet can sink into the plush carpeting.”
  • Including illustrations in advertising is good. However, be sure the illustrations are effortless to interpret. The Arizona State University researchers compared the effects on prospective vacationers of an ad with a photograph and an ad with the photo modified to resemble a creative abstract painting. The stimulation of creativity was outweighed by the trouble of interpretation. Those people shown the version with the literal photograph were more positively persuaded by the ad.
  • Research findings from West Virginia University and Georgia State University find value in asking the shopper to imagine usage by whomever would end up actually using the product. Usually, this is the person who is making the purchase. But with products like pet foods and birthday gifts, the user is different from the purchaser.

Friday, April 2, 2010

Intrigue, But Don’t Mislead

“Trick me once, shame on you. Trick me twice, shame on me.”
     Using shopper psychology, retailers have the power to trick consumers into making decisions which profit the retailer, but are not in the best interests of the customer. That’s unethical. It’s also a bad business practice because you might fool your customer once, but chances of doing it again plunge substantially. The profit for the retailer is short-term as the customer concludes they’ve been cheated by the store.
     Researchers at University of Central Florida-Orlando and Erasmus University in the Netherlands looked at this issue from the standpoint of what consumer psychologists call “biasing cues.” These are bits of information given by the retailer in a way that can mislead a customer. For instance, most of us carry around a price-quality bias. We tend to assume that if we pay more for something, it must be better. Yet, many lower-priced products are quite good and many higher-priced products are quite bad. If a retailer sets an exorbitant price just to indicate higher product quality, that's a biasing cue.
     Using purchase decisions about orange juice, polo shirts, and paper towels, the researchers found that biasing cues could influence a shopper once. But the probability of fooling them again was pretty much gone after the purchaser actually tried the product.
     There are times we increase a price point specifically to indicate better quality. Researchers at Northwestern University suggest this as a way to overcome the suspiciousness shoppers have that multifunction products are inferior to single function products. But we should set a higher price only when we believe the customer will find the purchase of the multifunction product was to their benefit.
     Our customers hate being tricked twice. They’ll stay away from our stores if that’s what they conclude we’re up to.

Thursday, April 1, 2010

Sell More by Adding Variety

People buy more jelly beans when they’re offered an assortment of colors. This is true even if all the different-colored jelly beans taste exactly the same. After reviewing 50 experiments that involved more than 5,000 consumers, researchers at University of Basel in Switzerland, University of Mannheim in Germany, and Indiana University in the U.S. concluded that the more choices for the shopper, the better.
     There are two sorts of product lines where you are especially likely to realize sales increases when you augment the merchandise mix variety:
  • Product categories where you’re seeing a dramatic increase in sales. These increases are a sign you could be a destination location for that sort of merchandise. If you’re selling lots of soccer equipment, expand the merchandise assortment to draw even more soccer equipment buyers.
  • Product categories which are underperforming in sales compared to what you’d expect. If you’ve evidence that other retailers are selling more baked goods than you are per square foot of merchandise space, consider expanding the variety of baked goods you offer within the merchandise space.

     But it’s not enough just to load on variety. It’s essential that you give the shopper a way to smoothly sort through the choices. Otherwise the abundance of alternatives will overwhelm and immobilize the shopper. As you introduce expanded alternatives, give meaningful categories that the shopper can use.
     Researchers at Stanford University and Columbia University find that categories enhance the empowering sense of control by allowing the consumer to give reasons to themselves for the choices they’re making. For foods and beverages, the categories might be by taste (coffees are mild, dark roast, or nutty). For clothing the categories might be by usage occasion (leisure, office, party). For power tools and sports equipment, the categories might be by level of expertise recommended.