Monday, May 31, 2010

Head Off After-Order Regrets

Why do customers so often place a special order for an item and then before delivery, suffer post-purchase regrets? “I don’t think I made the right pick.” What can you—the retailer—do to head off or reverse the bad effects of these after-order doubts where a customer believes they selected the wrong fork in the road?
  • First off, realize that you might be able to turn post-purchase regrets to your advantage. Is the customer sorry they didn’t choose the upgraded model or choose the lower-priced house brand alternative? Either of those might yield a higher profit for you on this sale. In addition, it can produce the sort of customer loyalty which yields continuing profits on future sales. Customers love to hear a retailer respond to a request by enthusiastically saying, “Yes, you can!” In fact, knowing they can change their mind sometimes takes the pressure off enough for the customer to say, “No, I’ll stick with my original choice.”
  • If fulfillment is likely to occur more than a few weeks after the order is placed, ask the customer about delivery arrangements, plans for installation, training in use, or something else that has to do with the practical realities of getting the best from the item. A number of consumer psychology studies discovered that when consumers order an item far in advance, they pay so much attention to the desirable features of the item that they fail to think enough about the feasibility of acquiring and using the item. Researchers at University of North Carolina, Vanderbilt University, and University of Pennsylvania found a solution to the problem was to ask the customer to carefully imagine getting and starting to use the item. Customers who did this were significantly less likely to reverse themselves after placing the order.

Sunday, May 30, 2010

Emphasize Emotions with Older Consumers

Older consumers respond better to emotion-laden sales messages (“The aroma of our coffee brings waves of contentment”) than to purely rational sales messages (“Award-winning taste at a lower price”). This is what’s suggested by research at University of Pennsylvania, UCLA, and University of California-Irvine. Emotional appeals also help senior shoppers remember details about sources of sales messages more accurately, according to researchers at Trinity College, College of Charleston, and University of Toronto.
  • As a general rule, talk about achieving positive emotions (comfort, contentment, joy) rather than about avoiding negative emotions (fear, sorrow, envy). However, combining the two can be powerful, if not done too often. Start out by talking about avoiding the negative and then segue into talking about achieving the positive. All emotions—positive and negative—arouse interest among older consumers, and as people age, they get better at turning the negative into the positive (such as the comfort from having control over fear).
  • Add to the effect of the emotional messages by tying into socializing (“What’s better than enjoying this game with grandchildren?” “Don’t let embarrassment keep you from lunching with friends.”) In many of today’s cultures, elderly people experience increasingly limited participation in social events. This can be because younger family members pull away, because physical problems make it more difficult or more fearsome to socialize freely, or for other reasons. Sales promises to ease loneliness enhance emotional appeals.
  • Then supercharge the emotional appeal by reminding the senior of time limits: “This offer is good for just the next three days.” “Why wait to start enjoying the benefits?” Researchers discovered that what’s behind the attractiveness of emotional appeals for seniors is the realization that the seniors’ time on earth is limited. Young consumers don’t think about this much. Older consumers recognize the realities better.
For your profitability: Sell Well: What Really Moves Your Shoppers

Saturday, May 29, 2010

Predict Consumer Preferences by Asking Why

To most accurately predict consumer preferences, go beyond tracking trends. Also know reasons behind each trend. An opportunity to do that came this past week with the release of a Pew Internet & American Life Project report about online confidentiality. The conclusion of the report is that young adults are becoming more cautious in what they reveal about themselves online. This was less true with older adults.
     You therefore might decide that a trend has begun for your customers—especially younger ecommerce customers—to want to keep more information to themselves. That, in fact, is what some retail consultants concluded.
     But wait. Let’s also look at what Pew said is why these young adults are getting more cautious about what they share online: It turns out that behind the fear of losing privacy is a wish to gain financial security. Savvy in the ways of Google, these folks recognize the importance of ensuring prospective employers are positively impressed during a tight job market. Nearly half of the 18- to 29-year olds report deleting comments others have made on their social networking profiles. More than 40% report removing their names from photos.
     The trend here is to be more careful when seeking a job, not for young adults to be more protective of confidentiality when buying retail. Actually, according to researchers at Quinnipiac University and Providence College, all adults are relatively willing to share personal information about themselves if it helps a retailer better meet their needs.
     Why did the Pew survey find that young adults are more concerned with confidentiality protection than older adults? Again, job seeking might be behind it. The News & Observer in Charlotte quotes a University of North Carolina-Chapel Hill researcher as opining, “…if you’ve got a pension, you can pretty much say what you want.”

Friday, May 28, 2010

Integrate Multiple Shopping Channels

Give your customers multiple channels to use to buy your product and service offerings: Brochures with order forms. Catalogs. Telephone orders. A booth at community events. All those might work for you. One key to successful use of multiple channels, though, is that they are integrated. For example, information about pending orders is available via all the channels.
     The most popular channel to augment store-based retailing is a website. A well-integrated website makes money for you. Retailing consultants report that Saks Fifth Avenue customers who shopped at both Saks.com and at a Saks store spent five times as much as did customers who used just one or the other.
     Retailers who maintain the online channel do worry about what they call “shopping cart abandoners.” These are people who put items into the online shopping cart and then leave the website before completing the purchase. But for the multichannel retailer, shopping cart abandonment can sometimes be great news: Studies have found that about one-fourth of the customers of hybrid store/website retailers like to do their browsing online, but prefer to make their purchases in the store.
     So it is not online shopping cart abandonment as much as it is having purchase-ready customers arriving at your store where you can show them other items they can use. When an REI.com customer comes into the REI store to pick up the items they ordered online, as more than one-third of them choose to do, those customers, on average, buy an additional $75 in merchandise.
     Do you encourage your online shoppers to surf on into your store? Are there easy-to-follow driving directions on the website along with store hours and phone numbers? When I go to your website, will I see photos of your friendly salespeople just waiting to enthusiastically welcome the arriving me?

Thursday, May 27, 2010

Get Endorsements from Groups

When your store or the brands you sell are presented with celebrity endorsements, the endorser’s characteristics rub off on the product image. Researchers at INSEAD-Fontainebleau, Erasmus University, and University of Florida find clear advantages in arranging for endorsements from a group—such as a sports team—rather from an individual—such as a particular star on the team.
  • Endorsement from an individual makes you too dependent on the behavior of that individual. The researchers point to the damage to the image of Accenture when news of Tiger Woods’ infidelity hit the media. When the endorsement is from a group, you’ve more flexibility to craft the evidence: If one member of the group behaves improperly, you can feature another member of the group. With a sports team, if they’re winning, you’ll play on how your store or brands are winners. When the team is losing, you’ll play on how your store and brands stay the course and keep getting even better. The researchers contrast the Accenture use of Tiger Woods with the fact that Nike sponsors a group of about 55 National Basketball Association players.
  • The researchers find that when the endorsement is from a group, the association is at a deeper emotional level than when the endorsement is from an individual. And consumer psychology studies have repeatedly shown how it is emotions which motivate commitment to a store and a brand.
     University of South Carolina research findings suggest how to structure TV and video ads for maximum effectiveness from the group endorsement.
  • First, show one or more of the endorsers using your product or service.
  • Next, while explaining the logical relationship of the endorsers to your brand, show the brand.
     The power of the endorsement is weaker when you show the brand before showing the endorser.

Wednesday, May 26, 2010

Interpret Brain Science Advice Cautiously

As a psychologist, I’ve seen the proof: What people say they’ll do and what they actually do often don’t match. Consumers’ reasoning below the level of consciousness influences buying decisions. We can learn more about those subconscious processes by using brain scan technologies like Functional Magnetic Resonance Imaging (fMRI) and Steady-State Typography (SST).
     At the same time, as a psychologist, I’ve a professional responsibility to warn you about brain science nonsense. The fMRI and SST technologies being used in many of these projects give a valuable—but only a partial—view of business management reality. In his cleverly-titled book Buyology, marketing consultant Martin Lindstrom describes many profitable insights about why we buy—insights achieved via brain scans. But if you read the text beyond the claims on the book jacket, you see that Mr. Lindstrom validates his conclusions with more meaningful measures, such as sales figures.
     Reaching further into the basket of silly science, a recent article in the Kansas City Star reports that brain scan evidence shows supervisory feedback to employees is pretty much fruitless. When it comes to helping your store employees build their decision making skills, don’t waste time telling them what worked out well and what didn’t. The machines can’t find any significant systematic effect on brain activity, so the feedback must be useless.
     Nonsense.
     Our brains are extraordinarily complex, with overlapping functions and individual differences. Moreover, the brain scan technologies are imperfect. According to a paper in Social Cognitive and Affective Neuroscience, a postdoctoral fellow in neurological sciences at University of California-Santa Barbara performed fMRI measurements as part of a brain study to show the limitations of the methodology. The readings gave evidence of activity in a region of the brain associated with empathy. Almost surely a false reading, though. See, the brain was of a salmon. A dead salmon.

Tuesday, May 25, 2010

Reduce Uncertainty for Ecommerce Customers

The Hartford surpasses the auto insurance competition when it comes to ease of use of their website. That’s the conclusion of a report just released by New York-based Change Sciences Group. The assessment methodology counts keystrokes, mouse movements, and website delays. The methodology also considers the readability of what’s on the site.
     Change Sciences says their results show there are substantial areas for improving how companies communicate with their ecommerce shoppers. I agree, and I see these areas for improving as opportunities for you to achieve a retailer’s edge over your competition.
     My chief advice: Reduce uncertainty for your ecommerce customers.
  • Give ongoing status reports. As a rule, ecommerce customers don’t like to wait. But what they hate even more than a long wait is not knowing how long they’ll need to wait. For instance, the Change Sciences report points out that auto insurance websites must deal with all the complexities of recommending coverage options and then generating a rate quote. Good ecommerce sites show an hourglass icon while the system is working. Better ecommerce sites show an animated progress bar moving toward 100%.
  • Provide prompt access to answers. The Change Sciences report says that in about 75% of the cases, a person wouldn’t be able to find an answer to a question when using the site. Maybe that’s because users weren’t looking hard enough and long enough. Chances are that a number of the people you want as customers have not yet fully refined their skills at locating answers on even a well-designed ecommerce site. Good sites have a “Contact Us” button that produces an e-mail address. On better ecommerce sites, the button would read “Have a question?,” and clicking the button produces the toll-free number of a phone that will be answered before the second ring.

Monday, May 24, 2010

Navigate Shoppers Toward Distinctiveness

Consumers are getting more interested in being distinctive rather than conforming to group preferences. You’ll increase sales when you help your shoppers reach their favorite spot on the conformity-distinctiveness scale. Research findings from University of South Carolina, Loyola University, and Baruch College suggest that one tool you have for doing this is the phrasing of a certain preferences question:
  • If you ask your customer, “What about this product do you like that your friends would also like?,” this prompts individual distinctiveness, since it puts your customer in the role of advisor and perhaps opinion leader.
  • On the other hand, if you ask your customer, “What about this product do your friends like and you also like?,” this prompts the customer to think about the comfort of adhering to group preferences.
     Here is some of what determines which of the two formats you should use:
  • The age and culture of the shoppers. Older shoppers are more likely to seek distinctiveness than conformity. Teenagers tend to opt for conformity with groups they aspire to belong to.
  • The nature of the item. Consumers are more interested in conformity when it comes to fashion items, such as clothing and entertainment products. They’re relatively less interested in conformity with functional items, like appliances and foods. With functional items, shoppers are interested in what others think, but it is more what the others think of a product than it is what others think of people who use that product.
  • The degree of group shopper conformity. People buy more when shopping in groups, so encourage group shopping. Then in your merchandising, allow for both conformity and distinctiveness. Research at Sorbonne-Assas and University of Adelaide suggests that when the degree of product choice conformity reaches about 80%, a drive for distinctiveness takes over.

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

Sunday, May 23, 2010

Recognize a Need, Then Fill It

Decades ago, cement mixers patrolled the San Francisco Bay Area with their slogan on the rotating drum reading “Find a Need, Then Fill It.” Those trucks were carrying cement from a company founded by industrialist Henry J. Kaiser, whose name might now be uttered most often in the phrase “Kaiser Health Plan.”
     In developing a strategic business plan, a retailer is well advised to find a need before attempting to fill it. For the store-based retailer, this determines where you locate. For all retailers, it determines what merchandise you carry and services you offer.
     But in the day-to-day retailer-to-customer interactions, it might be less a matter of finding a need and more a matter of recognizing the set of needs of a particular individual. And recognizing how each person’s needs will change over time—even very short times.
     Psychological research has for a long time and in many ways confirmed that when we’re hungry, we get more interested in food. No surprise there. And a hungry person becomes less discriminating about foods they’ll value positively. Foods which a person would dislike when not hungry get a less negative evaluation from the same person when hungry. Maybe not astounding either.
     Here’s one that goes beyond that. Researchers at INSEAD-Fontainebleau, University of Texas-Austin, and Universität Basel found that when people are hungry, they rate brands of shampoo less positively than when they’ve eaten. Deprive smokers of their nicotine fix and you’ll get fewer rave ratings of the shampoo. Or of a range of other consumer products or even interest in buying raffle tickets, according to the researchers.
     The advice for retailers: Show customers what you recognize they’re hungry for. Or as some other industrialist may have said at one time or another, “There's more to life than chocolate, but not right now.”

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

Saturday, May 22, 2010

Accommodate Your Suppliers’ Direct Ecommerce

This week, Procter & Gamble Co., the world’s largest consumer packaged goods (CPG) supplier, announced that its ecommerce site at http://www.pgestore.com/ is open. How might you best accommodate the fact that your customers can now purchase any of more than 2,000 P&G products online and directly from the company?
  • Be ready for your current suppliers to increasingly use ecommerce to scoop up consumer business directly. A press release from Alice.com says that more and more CPG companies are using the Alice.com engine to set up online stores. The threat to the retailer is greatest with habitual purchases of well-known brands. Consumers seeking convenience will be tempted to buy their Tide, Pampers, and Olay online. However, consumers seeking low prices and needing to purchase a full range of items may not be. At this point, the prices being charged by P&G don’t clearly undercut the prices at other ecommerce sites and at stores. The tips: Watch your pricing. Stay aware of what the suppliers’ ecommerce sites do to pricing on items you carry. Carry items that are not habitual purchases and work to change purchase preferences toward those items. Offer educated advice to help your ecommerce and in-store customers make the right purchases.
  • In announcing the move, P&G says their major objective is to get closer to the customer. Like other manufacturers, the company has been using social networks to gather information about customer preferences. But they know the value of behavioral data and that the bulls eye target behavior is product purchase. By hooking purchase or absence of purchase to other data gathered on their ecommerce site, P&G could be faster to market with innovations profitable to retailers. The tip: Build on the insights gathered by P&G and the others by discovering why your customers buy or not.

Friday, May 21, 2010

Ask Shoppers to Imagine Usage Benefits

Researchers at New Mexico State University, Arizona State University, and Claremont Graduate School described to neighborhood residents features of a newly available cable TV service. Then about half the residents were asked to imagine themselves using the features. The remaining residents were not asked to imagine usage.
     Some weeks later, sales representatives from the cable company solicited the neighborhood’s residents for orders. Of those who had only heard about the features, about 20% chose to subscribe. Of those who had been asked to imagine using the features, almost 50% chose to subscribe.
     The lesson for retailers? After presenting attractive service or product benefits to a shopper, consider asking them to imagine themselves making use of the benefits. Here are some tips and cautions:
  • Give the shopper the minimum amount of technical information necessary to set up the imagining. Then be ready to provide more details if the shopper asks. The power of imagining is greater when a person fills in their own blanks.
  • In advertisements or store signage showing pictures of people using the merchandise or service, aim to include some people who resemble your target audience in age, ethnicity, likely physical possessions, and so on. This makes the imagining easier than when there is no plausible match.
  • Allowing the shopper to handle a product—or even the package—and to smell any fragrances associated with use of the product or service will facilitate imagination.
  • When asking a shopper to make comparisons among products, wait before asking them to imagine themselves using the product. Research at University of Maryland finds that involving the imagination distracts the shopper’s attention from the influence of the comparison.
  • Imagining motivates, but doesn’t close the sale. Remember that the cable TV sales reps had to come back to do that.

Thursday, May 20, 2010

Switch Brand Selection with Shopper Anxiety

Have you noticed how brand loyalty is fairly low these days? Certainly, there’s been some drop in customer commitment to both brands and stores because of a dramatic rise in price sensitivity among consumers. But retailer attention to brand loyalty covers almost the entire history of retailing.
     If you get tuned into when a customer’s brand loyalty is low, it opens opportunities for you to switch the customer to a brand that better fits their needs and better helps your store’s bottom line. Yes, there are what consumer behavior experts call “fortress brands.” These are the ones which win deep allegiance from the consumer by becoming highly integrated into daily rituals—including quite mundane routines. Brushing my teeth doesn’t feel right unless the taste of the paste and the look and feel of the tube are familiar.
     A force operating on the other side is a drive we all have to try alternatives. For some shoppers, the drive comes from wanting to lead a fashion. For some, it’s a spirit of thrift plus curiosity to see if the house brand really is as good as the name brand. For all of us, it’s the pioneering spirit we carry in our genes. Venturing boldly where we have not gone before may seem better suited to Star Trek interstellar voyages than to a choice of toothpaste, but the basic principle is the same.
     Research by a team in Belgium suggests that the itch to switch is strongest when the customer is anxious to fill a need. Your salespeople might be assuming that the customer who is most anxious to solve a problem is the one least flexible about considering different brands. The truth is that customer anxiety might be the perfect cue for the salesperson to explore alternative solutions with the customer.

Wednesday, May 19, 2010

Give Staff Specific Feedback

Do your staff know what you expect of them? If you answer, “Of course they do,” I’ve some follow-up questions for you: Do you watch your employees in action so you personally see that expectations are being fully met? When you see expectations being met well, do you praise the employee with specific feedback, such as, “Jean, thanks for reminding the customer that we can special order many items the customer doesn’t find on our shelves”?
     Specific feedback is much better than something like, “Good comeback when the customer said they couldn’t find the product, Jean.” With specific feedback, the employee recognizes what to do again or do better. With general feedback, the employee may have no idea what you’re praising or criticizing, but might not take the time or have the courage to ask what you meant. When they sense that you’re praising them, asking for details feels like fishing for a compliment. With criticism, the employee might fear making things worse by asking for more details.
     New employees are at special risk of missing what the supervisor expects. That’s not surprising. But it did surprise me when I first recognized how often supervisors and managers with excellent technical skills fail to clearly express expectations to the team members they oversee.
     Here’s why it happens: Some of those supervisors/managers were selected for promotion because they excelled on job tasks. It seemed to come naturally to them. But the downside of being a natural is that it’s too easy to forget how challenging the job can be for others.
     Use staff meetings, huddles at the start of each workday, and other opportunities to clearly say what you specifically expect of your employees. Don’t assume that one discussion of expectations is enough for forever. The human brain doesn’t work that way.

Tuesday, May 18, 2010

Serve the Underserved

According to an AP article appearing in today’s Miami Herald, a highly unusual event for American retailing occurred within the past few days: Dawn Frierdich, age 52, wanted to purchase three loaves of Panera bread and an iced tea. But when she asked how much it would cost, she was told by cashier Michael Miller, age 21, she didn’t have to pay anything if she didn’t want to.
     What’s going on here? “Flexible pricing” is an accepted retailing practice, in which different customers are charged different prices for the same item or service. However, in flexible pricing, the charge is generally thought of as based on criteria such as the size of the order or the prior business relationship with the customer. Quantity discounts and introductory offers.
     Another variety of flexible pricing involves the shopper bidding a price that is then accepted by the seller. In the case of Ms. Frierdich, it happens that the seller would accept a bid of any amount, no matter how small.
     The back story is that Panera Bread Co. has opened the first of many planned stores to serve the underserved. The concept is by no means new. I remember when I was a young kid, my Uncle Jack—an attorney who was as interested in justice being served as in charging prevailing rates—would take me to eat at Clifton’s Cafeteria on Olive Street in Los Angeles, where a neon sign flashed “PAY WHAT YOU WISH.”
     In my opinion, each retailer has an obligation to help their community. At the base, this means respecting business fundamentals so that you maintain profitability sufficient to stay open. You can’t serve your customers and employees if you close your doors. Beyond this base, though, always have in mind ways you can provide service to the underserved.

Monday, May 17, 2010

Sell to Fit Story Product Placement

Have Dr Pepper soda on your store shelves? Then you might be noticing an uptick in sales lately. Preparing to stock the LC Ally smartphone? Then get ready for a big sales kickoff. The reason is that Dr Pepper and the LC Ally are two products seen in the current hit movie “Iron Man 2.” When consumers encounter a product in an entertaining story, their usual defenses against advertising are relaxed. The result is that they become more likely to seek out and buy the product.
     Researchers at Griffith University in Australia analyzed product placements in James Bond movies. They concluded that there were major image types, depending on what character in the story used the product and how the character used it. These researchers along with others at Coastal Carolina University and Boston College fit the image types into a framework based on the work of psychoanalyst Carl Jung.
     Stay up-to-date on product placements for items your store carries. Notice not only what product is used, but also the personality of the character using the product and the nature of the use. Then in your advertising and personal selling, reinforce the image. That builds sales even further.
     Here are the five major image types, using my adaptation of the language of Jungian theory:
  • Superheroes take responsibility for rescuing us. Ads and personal selling should promise to go above and beyond.
  • Coaches reassure us. Shoppers want to be encouraged to buy the product.
  • Gurus bring experience and a sharp mind. The customer expects the ads and salespersons to magically identify the customer’s needs.
  • Playmates love fun. Place more emphasis on how the shopping experience feels than in how the product or service works.
  • Rascals help the customer take advantage of the good will of others.

Sunday, May 16, 2010

Avoid Price Wars with Price Guarantees

Today Taco Bell kicks off the TV ad campaign for its “$2 Meal Deals,” in which you get an entrée, side dish, and drink for two bucks. Greg Creed, president of the fast food giant, was quoted by USA Today as saying about the promotion, “If we just tossed a pebble into the pond, the ripple effect wouldn’t find its way to shore…. We’re throwing a boulder….”
     Mr. Creed’s creed here is key to keeping a game of price war limbo from sending your business fortunes into a state of limbo or worse. Unless you are a retailer with substantial leverage in the communities in which you do business, price wars are deadly. You lower a price as a promotion. Your competitor lowers it further. You respond by meeting the competitor’s price and then lowering it even more, at which point the competitor meets your additional reduction, and so on. Your customers find themselves expecting prices to continue to slide downwards. When you can’t maintain the drops while maintaining adequate profitability, your customers’ disappointment might cause them to take their footsteps and money somewhere else.
     If you’re a major retailer player in your market, one of the tactics to avoid price wars makes use of a principle of social psychology: “Anticipate how others will respond to what you do.” The tactic is a “We’ll meet their price” assurance.
     Yes, low-price guarantees add logistical and legal complications. And yes, if you’re a minor-league retailer in town, low-price guarantees might allow a competitor to drive you out of business by slicing you down. But for a retailer with substantial community leverage, the message to competitors is, “You won’t get any lasting advantage from slashing your prices, since we’ll be right there with you.” That message dampens enthusiasm all around for price wars.

Saturday, May 15, 2010

Arouse Curiosity for Special Effect

Make your retailing intentions perfectly clear—almost always. Advertising claims should be honest, return policies should be easy to understand, and you should use every opportunity to burn into the minds of consumers the name of your store.
     But occasionally be vague. Your objective in doing so is to generate the sort of curiosity that can lead to increased sales.
  • Costco’s use of in-store surprise specials is often presented as an example of arousing curiosity to motivate the shopper to come to the store often and then walk through the aisles, looking carefully all along the way. The retailing consultants at Envirosell, based in New York City, report that in-store surprise specials produce results for all types of retailers across countries and cultures.
  • Researchers at Indiana University and University of Colorado-Boulder find that mystery ads help consumers place an unknown brand or new type of item into the proper product category. A mystery ad is one in which the identity of the sponsor is not revealed until the end. Shoppers like to place brands, items, and stores into categories: “What sorts of products carry this brand name?” “What is the item used for, and how is it best used?” “For what types of merchandise and services would I go to that store?”
     If you’re counting on shopper curiosity, make it part of a coordinated marketing and merchandising campaign. In-store surprise specials produce maximum profitability only when there are items with higher profit margins that the shopper will see while searching for the specials—and then put into the cart. The increased mental involvement from mystery ads helps the shopper identify how this brand, item, and store might satisfy their needs and desires, but you then have to follow up by unambiguously describing and demonstrating the benefits you’re promising.

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

Friday, May 14, 2010

Facilitate Customer Truth-Telling

Ask customers what they want and then use their answers to develop your offerings. Be sure to facilitate their truth-telling, though.
     Taco Bell asked customers about new items to add to the menu. The replies included suggestions like, “We want you to put on your menu a burrito that’s much healthier than the ones on there now.” So the company gathered together a group of the customers and gave them the tools to design such a burrito. The customers could choose from among ten categories of ingredients, including three preparations of chicken and eleven different sauces.
     The amateur burrito designers settled on a three-cheese rich-tasting high-calorie entrée. Not notably healthy. What happened here? Some consumer psychologists explain the Taco Bell contradiction by saying consumers are unable to tell you what they want. Don’t ask them questions. Instead, watch what they do.
     I agree that limiting yourself to asking is a bad idea and that watching what consumers do is valuable. Still, I believe there is another important lesson: In addition to consumers sometimes being unable to tell you the truth, they sometimes are unwilling to tell you the truth. The Taco Bell customers probably felt better about themselves saying they yearned for healthy entrees, knowing all along that great, rich taste was much more important.
     When you ask people in your target audiences what they’d like you to offer, give them time to think about their answers and give them time to provide you full answers. After a suggestion is offered, ask, “And what else?”
     Then assign more weight to the answers that come later. Unless customers are clearly dissatisfied with you, they’re likely to start out by giving you the answers they think you want to hear. After doing this, they’re more willing to tell you their actual preferences.

Thursday, May 13, 2010

Personalize by Respecting Privacy Concerns

The National Retail Federation reports that retailers today want to personalize each customer’s shopping experience. The retailers say they’re collecting and analyzing information about their current in-store shoppers (two-thirds of NRF survey respondents call it a priority) and increasingly profiling online shoppers (almost half say it’s a priority).
     Are you already great at personalizing the shopping experience? Then the NRF report serves as a reminder to think about alternatives for obtaining the necessary information:
  • Legacy data mining includes looking at forms, such as a customer’s frequent shopper enrollment and record of prior purchases, to discover the individual customer’s likes and dislikes. It’s most practical with major customers and business accounts.
  • Explicit profiling involves asking in-store and ecommerce shoppers to complete questionnaires to tell you their preferences in merchandise, services, pricing, and more.
  • Implicit profiling tracks the customer’s shopping behavior, usually without the person being aware of it. With online shoppers, the progress through a retailer’s website can be gathered using cookies. With in-store shoppers, a salesperson could observe how the customer browses and could listen to and analyze the sorts of questions the shopper is asking.
     Although it seems every shopper would welcome personalization, privacy concerns are a barrier. The Ponemon Institute, which conducts independent research on consumer trust, says that over 95% of the companies they surveyed report not fully exploiting the potential of personalizing because the companies fear customer pushback against the data collection required.
     How to break through so you’ll get the full potential as a retailer? According to researchers at Quinnipiac University in Connecticut and Providence College in Rhode Island, the answer is to tell customers what information you’d like to gather about them and just how you’ll be using the information to make their individual shopping experiences more efficient and fruitful.

Wednesday, May 12, 2010

Use Partitioned Pricing to Highlight Benefits

In discussing partitioned pricing, researchers at Harvard University say, “The price tag is evolving.”
     Partitioned pricing presents an item’s cost as a main price plus one or more surcharges. With ecommerce, surcharges might include shipping. For store sales, they might include layaway fees. For all selling channels, there might be sales taxes and the costs of options like accessories and setup.
     The opposite of partitioned pricing has been called combined or bundled pricing. Consumer psychology research over the years sometimes concluded that partitioned pricing increases sales more than does bundled pricing, and sometimes concluded bundled pricing is better. Gradually but inexorably, the trend in research findings has been toward favoring partitioned pricing.
     Based on research at Adelphi University, University of Alabama-Huntsville, and University of Dayton, here are tips on using partitioned pricing:
  • Partitioned pricing calls attention to each of the components for which a cost is stated. Use partitioned pricing to highlight what you see as benefits to the shopper: Expedited delivery. The budgeting aid from layaway plans. Knowing that the product can be personalized with accessories.
  • Compared to bundled pricing, partitioned pricing increases purchase intentions with products and services that carry some financial or psychological risk for the shopper. Partitioned pricing makes little difference in purchase intentions for routine purchases. An important exception, though, is that even for routine purchases, ecommerce customers get irritated when they can’t quickly and easily discover shipping and handling charges. So as a general rule, use partitioned pricing in ecommerce.
  • Do the partitioning so that the amount of each surcharge is no more than 20% of the base price. If any surcharge is a high percentage, consumers will consider the entire pricing structure unfair. That affects not only the current purchase, but also the potential for future business from that shopper.

Tuesday, May 11, 2010

Know the Tradeoffs in Being Sincere

Customers carry in their minds pictures of your store personality. Consumer psychologists have named two of the dimensions in that personality profile Sincere-Witty and Exciting-Predictable.
     Researchers at Stanford University and Dartmouth College created two online photo processing and album websites. One of the websites was designed with content, fonts, images, and colors that had previously been found to portray a sincere ecommerce personality. The other website was designed to portray an exciting personality.
     Participants were randomly assigned to one or the other website. Then the diabolical psychological manipulation: Two months after the start of the beta test, half of the participants using each of the websites were told a lie: “Your online photo album was accidentally erased.” An apology letter followed, and then three days later, the participants were told, “Your album has been fully restored.”
     Here’s what the researchers found out about those participants who experienced the album erasure:
  • Participants dealing with the sincere website developed and maintained strong commitment and satisfaction until the point of the album loss. From then on, their commitment and satisfaction nosedived and did not recover, even with the album restoration news.
  • Participants dealing with the exciting website started out with strong commitment and satisfaction, but this slowly faded until the album destruction and recovery, at which point the commitment and satisfaction grew markedly.
     Stores with a sincere personality are usually highly respected, but may have trouble keeping customers after a product recall or bad customer service. That’s because the target market members don’t like surprises when the surprises make it look like the retailer is inept. But with stores that project an exciting personality, customers are ready for a reaction like, “We make your shopping more fun with the unexpected,” and, “We’re always learning so we can get better and better.”

Monday, May 10, 2010

Uncover Why Your Advertising Works

The best ads pull a variety of triggers. That’s valuable because a prospective purchaser might respond to one appeal more intensely than to another. It’s also valuable because every prospect is more likely to purchase when there’s a bunch of triggers.
     Uncovering why your successful advertising works gives you tools for improving your marketing. Consumer behavior research can help reveal the true triggers.
     Researchers at University of Saskatchewan and Santa Clara University explored the appeal of macabre fashion ads. The researchers included a Jimmy Choo ad showing a woman pulling a purse out of a swimming pool in which it appears that a man’s corpse is floating and a Dolce & Gabbana ad portraying one woman skewering another in the neck.
     Such ads stop the consumer via shock. Another example from a few years ago was a pair of TV ads for the Volkswagen Jetta inspired by the car having garnered top safety scores in crash tests. In each ad, the view is from inside a Jetta when a truck crashes into the car so severely that the air bags inflate. The crashes were real, with stunt actors inside the cars. Volkswagen says the ad campaign caused shoppers to get more interested in buying a Jetta.
     The Saskatchewan/Santa Clara fashion ad researchers said there was more than shock value, though: The macabre images triggered storytelling in the viewers’ minds. Structured interviews with research participants revealed that once having been stopped in their tracks, the viewers asked themselves questions like “What is happening here?,” “What led up to this scene?,” and “What’s likely to happen next?” They spent more time contemplating the situation and so potentially thinking about the product.
     Knowing all this, you might decide to skip the shock and find other ways to stick your story to consumers.

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

Sunday, May 9, 2010

Head Off Dangers to Your Image

How about closing down your business for a few hours so you and your staff can go spend their money with a direct competitor?
     That’s what the owner of a Durham, North Carolina BBQ restaurant, The Original Q Shack, decided to do last week. Staff from about a dozen other restaurants also came. Their destination was another Durham restaurant, Bullock’s BBQ. The announced reason was to help out a respected colleague who had suffered a business setback: After Bullock’s food came under suspicion of causing salmonella poisoning a few weeks ago, business dropped about 80%.
     Not far behind the announced reason was another motivation: Protect the image of Durham restaurants at a time when people are again getting financially comfortable with eating out. The Bullock’s event was organized by the marketing director of the Durham Convention and Visitors Bureau. He’s a former restaurant operator himself.
     I’ve seen reports of the event in three newspapers and on the websites of two TV stations. People learned that Bullock’s has been in business for well over half a century, is operated by the son of the founder, has never received a food sanitation grade lower than A, and has hosted celebrities like Dolly Parton, Garth Brooks, Kris Kristofferson, and quite recently, U.S. Vice President Joe Biden. The message was clear: Durham dining is good enough for all these people, so it’s good enough for you, your family, and your friends.
     If the misfortunes of a competitor are due to incompetence or evil, distance yourself and show you are a responsible, conscientious retailer. When those misfortunes are due to circumstances outside the control of your competitor, it’s ethically right to help them out. And when it’s a matter of heading off dangers to your retailing image, helping out the competition is also good business.

Saturday, May 8, 2010

Drop Modesty Protections For Now

If your store carries feminine hygiene products, then blasting onto your shelves of floral designs in gentle pastels—all seeming to want to shyly fade into the background—you’ll probably be featuring tampon packages yelling out to be noticed. Kimberly-Clark’s “U by Kotex Click” are packed in reusable tin containers, each carrying one of 56 patterns, and the brand name appears on shelves in strikingly bold colors over a black background. Along with this, K-C products for incontinence and urine leakage are coming out from the shadows.
     All this reflects a trend toward decreases in personal modesty. It’s a trend that affects all sorts of product and service retailers. Clothing. Physical fitness. Residential construction. Even furniture. It influences what you offer and how you display the alternatives.
     But recognize this as a trend, and realize the pendulum does swing both ways. Kimberly-Clark has been there before with results which were not positive. In late 2001, K-C announced “the most significant category innovation since toilet paper first appeared in roll form in 1890.” Moist Cottonelle Fresh Rollwipes came in a plastic dispenser which clipped onto a regular toilet paper holder. Although market research said that almost two-thirds of adults were in the habit of wetting toilet paper or using a moist wipe, the product failed to sell well. A post-mortem concluded that shoppers had absolutely no interest in making their store purchases of this sort of body maintenance product any more noticeable by going for innovation.
     As for the pendulum’s swing back? In an article due for publication in next month’s Journal of Consumer Research, researchers at Bilkent University in Turkey report that young woman are increasingly wearing the veil to declare their rebellion against their mothers’ generation, which the younger woman view as having abdicated proper standards of personal modesty.

Friday, May 7, 2010

Prime Your Shoppers Below Awareness

When we’re primed for an experience or action, we’re better prepared for it and therefore more receptive to it. Nag me about getting apples as I leave to buy the groceries, and I’m more likely to remember the apples. If I decide to place a special order at your store, start me out by going over the basics of how it’s done, and I’m more comfortable with the whole process.
     When consumer psychologists talk about priming a shopper, there’s an extra element: We’re usually referring to planting an idea in such a way that the customer doesn’t recognize you’re doing it. This is important because research says that delivering the prompt below the level of awareness makes the prompt more influential over a shopper’s behavior. When a shopper is aware of the priming, they’re more likely to feel manipulated and fight back. Subconscious primes result in fewer counterarguments.
     Prefer visual prompts over verbal prompts. Newspaper ads and in-store signage are better avenues for priming than presentations by salespeople. Television works better than radio. This is because it’s easier for the consumer to spot a prompt when the prompt is said to you than when you sense it out of the corner of your eye. For instance, research findings from University of Florida-Gainesville indicate that a consumer entering a store will become more likely to buy a product if an image of the product or package is displayed to the side of the entrance aisle.
     Other research suggests delivering the prompt in advance of the shopper entering the store. A subconscious influence is a seed inside the brain, and seeds take at least a little time to sprout.
     Also keep in mind that priming nudges the consumer toward what they’d like doing anyway. Primes won’t wrestle the consumer into completely changing.

Thursday, May 6, 2010

Psych Out Employee Theft

If an employees steals from you, you have a snake in the grass. That term is defined by The Free Dictionary as “a deceitful or treacherous person.”
     Fewer of those thieves would have committed their crimes if they’d had doubts they would get away with it. So psych out the tempted. “Psych out” is defined by The Free Dictionary as “The act or an instance of undermining someone's confidence by psychological means.”
     One tactic is to keep merchandise itself from becoming a snake in the grass. I coined this term just now to describe items which are so easy to steal, it’s almost as if they walk off by themselves. My coining was inspired by a current posting on a National Retail Federation blog. This posting reported an interview with Kelly Gorman, Vice President of Loss Prevention for pet specialty retailer PETCO. According to the posting, Ms. Gorman comments how loss prevention people are accustomed to scolding store employees, “It didn’t just get up and walk away,” but when it comes to PETCO merchandise, maybe it did, in fact, get up and walk away. Or slither away.
  • Keep the storage areas in your store unlocked only to the degree necessary. Require an employee who is thinking of stealing to acknowledge that the thievery will involve a series of dishonest steps.
  • In staff training, periodically give evidence of how employee theft damages the organization. Do not discuss the topic at every training session, though. Research suggests the frequency makes thievery seem to your employees almost routinely expected.
  • Inform employees you’ll be conducting surprise audits.
     As a rule, retailing staff consider it wrong to steal from their employer. Conscientiously maintain an atmosphere where it is difficult for employees to rationalize theft by saying, “It was asking to be stolen.”

Wednesday, May 5, 2010

Cultivate Store Prestige with Context

Customers often pay more for the identical item when sold by a higher prestige store. And store prestige is hooked to context.
     Researchers at University of Wisconsin and University of Minnesota showed ads for athletic shoes and then asked the viewers to describe people who would own these shoes. The shoes in all versions of the ad were absolutely indistinguishable. But for some participants, the shoes were identified as coming from Kmart. For the other participants, the ad identified the shoes as available at Nike stores.
     The eight-year-old participants gave similar descriptions of the shoe owners. Shoes are shoes. With children only four years older, however, the Kmart shoppers were less likely to be described as smart or popular than were the shoppers who had made their purchase at a Nike retailer.
     But even eight-year-old consumers make contextual assumptions. Researchers at University of Utah showed children pairs of pictures of houses and cars. One of each pair had a substantially higher market value than the other. For example, one of the cars was a large family car and the other was a small economy car. Each child was asked to pick the car or house that would be owned by a certain type of person—for instance, “a doctor” or “a grandfather.” Doctors and grandfathers go for bigger cars and houses, said children ages eight and above.
     Create prestige for items you sell by displaying to your shoppers the contextual cues for the values your shoppers hold. Show the clothing worn, the other products used, and the sorts of physical locations that consumers associate with the people your shoppers want to be like. Do this in advertising, store displays, e-commerce pages, and to the extent you can, even in what your salespeople wear and the type of language they use.

Tuesday, May 4, 2010

Profit from Shoppers’ Positive Moods

Most often, when customers are in a positive mood, they will buy more. If you understand why it works this way, it gives you power to use the positive mood and also helps you recognize the limits of that power.
     Researchers at Cornell University find that when a person is feeling happy, two things happen that affect their shopping behavior. First, their thinking gets more flexible. They’re more receptive to new ideas, and that means they’re more receptive to considering new products they haven’t tried before. If you want to change brand preferences or introduce the shopper to an innovative service your store or website offers, begin by developing a positive mood and then present the new idea.
     The other important effect of happiness on shopping behavior is that the person is willing to persevere. They’ll stay with you for a more extended selling pitch—as long as they feel you’re bringing them closer to satisfying their needs and wants. So if you realize it will take you a while to explain why a particular product choice is best for this customer, but the customer seems impatient, aim to improve their mood first.
     How to improve their mood? Gentle humor can help whether in advertising or personal selling. Or in e-commerce, develop a positive mood by showing pictures of scenes your target audience is likely to find appealing. The format of the website page should include more flowing, smooth shapes than sharp angles.
     But the power of the positive mood does have certain limitations. The Cornell University researchers explored what happens when a shopper starts out with a clearly negative feeling about a product, store, or salesperson. In these circumstances, developing a happy frame of mind did not lead to more flexibility or perseverance regarding the product, store, or salesperson.

Monday, May 3, 2010

Look At Mean, Median, Mode, and Range

When analyzing your store statistics—especially the financial indicators—slice and dice the numbers in different ways depending on your objective. For example, consider the size of your typical retail sale. That helps you improve income when setting profit margins, cut losses by spotting cashier fraud, and much more. But don’t depend on just a statistic called the mean.
     Suppose it’s been a slow morning with only ten transactions. Two of those were for $100 and eight of them were for $5. The easiest way to calculate the average is to add up the total value and divide by the number of transactions. The total is $240, so the mean average for the ten transactions is $240 divided by ten, or $24. But $24 certainly isn’t the typical transaction. It’s $5, with two exceptions of $100 transactions.
     Instead of using only the mean, also look at the mode, the median, and the range. For the mode, group transaction amounts, such as everything from $10 to $19.99 into one bucket, everything from $20 to $29.99 into another bucket, and so on. Then see which bucket has the most entries. In my example, the mode is $0-$9.99.
     To get the median, line up the amounts from highest to lowest and then find the point where half the amounts are above it and half the amounts are below it.
     To get the range, look at the lowest and highest values.
     In real retailing life, don’t do the groupings, lineup, and calculations manually. Delegate to something like a Point-of-Sale system or Excel formulas. But the idea is the same: Retailers make more money when they aren’t deceived by looking at just the mean. Instead, planning is based on conclusions like, “Our typical transaction was $5, the lowest was $5, and the highest was $100.”

Sunday, May 2, 2010

Ask Shoppers for Reasons to Buy

“What are good reasons for you to buy this product?” “Why are people shopping with us instead of somewhere else?”
     Those questions in ads and personal selling help make the sale.
  • According to research at Hong Kong University of Science and Technology, asking questions like these is useful for changing brand, item, and store preferences the consumer has been following without any real thought. Reason-to-buy questions make the shopper stop to consider, therefore increasing your opportunities to influence them. Most people rise to the challenge when asked a question. They might not answer aloud, but at least they’ll start thinking.
  • Asking these questions personalizes the selling arguments. People make each purchase decision for all sorts of reasons, and each of us has a distinctive consumer personality. For instance, some shoppers primarily want to play it safe while others primarily want to acquire new advantages. The shopper can take your reason-to-buy questions in whatever direction fits them best.
  • When a group of family or friends comes together to your store, being asked these questions can kick off a brainstorming session in which answers given by each person become a selling point for the others who are listening in.
  • In some Latin American and Asian cultures, asking questions like these serves as a gentle form of comparative advertising which will be better received than the head-to-head type Americans and Australians appreciate (“Our store is much better than theirs”).
     It is not a matter of the more reasons, the better, though. Research findings from Universität Heidelberg and Universität Mannheim indicate that if you ask the consumer to generate loads of reasons to buy the particular product or to shop at your store, the task becomes more difficult for the customer, and this actually makes your preferred alternative less attractive.

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

Saturday, May 1, 2010

Know Correlation Won’t Tell Causation

Retailer’s Edge is now in the resource libraries of about 80 U.S. Small Business Development Centers around the U.S. That’s great. SBDC services fill in a set of skills essential for retailer profitability, such as the abilities to develop a business plan, deal with regulatory requirements, and monitor operating indicators.
     One skill SBDC clients might pick up from the book is the ability to recognize that correlation isn’t causation. When two indicators in retailing are related to each other, this doesn’t tell you which one causes the other or even if there is causation. Do the chickens cause the eggs or the eggs cause the chickens?
     Okay, here’s an example more fitting for retailers: Research by Envirosell, the international retailing consultants, noticed a direct link between the percentage of shoppers using a shopping basket or shopping cart and the total amount of the customer’s purchase. Higher frequency of shopping cart usage is correlated with higher amount of money spent.
     But does this mean that if we pressure more of our customers into using a shopping cart, the average transaction amount climbs? If we double the size of the cart, will the amount of the average transaction double? No. At least not necessarily. The direction of causation isn’t clear. Maybe people are selecting a shopping cart because they plan to buy more. Force a gigantic shopping cart onto somebody intent on buying only enough to carry in their hands, and you might irritate them. Envirosell says that as cart size at Wal-Mart, Target, Carrefour, and Auchan ballooned, the popularity of carts dropped.
     [Please note that I attribute the use of Retailer’s Edge by the SBDC libraries to their decision that retailers might find the content useful. To my knowledge, Retailer’s Edge hasn’t been endorsed by the United States Small Business Administration.]

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