Saturday, December 31, 2011

Work Daily Deal Customers to Return

Reports of the death of daily deal programs are not only exaggerated, but, it appears, incorrect. In a MerchantCircle survey conducted last month, fully 75% of small business owners who had offered a daily deal said they’d offer another one in the future.
     Their reasons reflect the merchants’ growing sophistication in overcoming two of the most common complaints about the programs: One is that bargain hunters use the coupon, only then to flit on to another bargain at another retailer. The second is that the combination of discount price with administrative costs results in a net loss.
     In the MerchantCircle survey, 37% of merchants who used daily deals reported solid profitability. This is still a minority, but a noticeable increase from the 24% figure in last June’s survey. And more than 60% of those merchants saying they’d repeat a daily deal gave as a reason its effectiveness for customer acquisition.
     At the same time, of those who said they wouldn’t repeat a daily deal, 42% said it was not effective for customer acquisition.
     What made the difference? Probably emotional connection. When any customer comes to your place of business with a daily deal coupon, build an emotional connection. And as you choose among emotions, go for gratitude over happy. It's more profitable to have our customers grateful to us for what we're doing for them than happy about the consumption experience.
     Research at Università Commerciale Luigi Bocconi in Milan, Italy looked at relationships between six emotions and what the shopper with those emotions did after completion of the purchase. The six emotions were anger, gratitude, guilt, happiness, pride, and sadness.
     The greater the extent to which customers said they felt grateful to the retailer for helping to solve a problem or satisfy a need, the more likely the customer was to praise the retailer to others and to say they intended to spend their money with that retailer again. In the study, there was no significant relationship between customer happiness and either positive word of mouth or repurchase intention.
     There are a great many considerations in your deciding whether to launch a daily deal promotion. If you do, be sure to cultivate in each daily deal customer a sense that they owe you for what you’ve done. When the deed being done is a substantial discount on quality products or services, working the relationship for gratitude is a natural.

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Update Perspectives on Daily Deals
Fine-Tune Your Social Couponing
Go for Customer Gratitude and Guilt
Have Unannounced Discounts on Common Purchases

Friday, December 30, 2011

Inspire Customers to Post Repeatedly

What makes it more likely that your satisfied customers will use social networking to recommend your store? The strength of relationship a customer feels with others makes a difference. But more powerful than this is the frequency with which the customer communicates online, regardless of the strength of interpersonal ties. The implication: Inspire customers to post repeatedly.
     That conclusion is suggested by research findings from Forethought Research and Monash University, both located in Australia. The study reinforces two previous research findings:
  • A special category of customer called a “market maven” is especially valuable to you. Market mavens are a type of opinion leader. Rather than considering themselves as expert advisors on only certain retail products and services, market mavens counsel others about the whole shopping experience and will then recommend specific stores.
  • Go beyond saying to customers, “Please recommend us to your friends.” Say “Please recommend us to your friends and to friends of your friends.” Attend to weak-link referrals.
     Here are a few ways to identify market mavens in your community:
  • Ask your staff to be aware of customers who offer suggestions for improvements. This is one trait that distinguishes market mavens from customers who only ask questions, give praise, and give criticism.
  • Regularly ask your customers who recommended they shop with you. When you start hearing a name repeatedly, you may have spotted a market maven.
  • Team up with other local retailers to exchange information on market mavens. Research at University of Mannheim and University of Texas-Austin finds that market mavens aim to keep current about all sorts of retailers.
     As to the friends of friends, keep in mind that even in these days of raging social networking, word-of-mouth (WOM) about your store is most likely to be passed on via face-to-face conversations.
  • Encourage customers to shop with you in groups so you can benefit from what you hear them talking about. Hold special events. Carry enough of a range of items to appeal to friends of friends. Then while they’re shopping, listen to the group members’ chatter. Have sales staff ask customers for specifics about what they like and areas for improvement.
  • Give shoppers materials and internet links they can take away with them as conversation starters to share with a broad network of family and friends. This is especially useful for newly introduced products and items for which the purchaser incurs monetary and/or self-concept risk.

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Court Market Mavens for Social Media
Attend to Face-to-Face Word-of-Mouth
Grab On with Weak Connections

Thursday, December 29, 2011

Promote Packages to Decrease Refund Demands

When consumers are asked why they stopped patronizing a particular store, many times the answer has to do with how returns and refunds were handled. Therefore, it is in your interest to have liberal policies and procedures when it comes to accepting returns and giving refunds.
     Along with this, it’s nice to have as few refund requests as possible. One tactic is to carry quality merchandise and then let customers know about the quality. Stanley Marcus, former chief executive of Neiman Marcus said, “I believe that retail merchandising is actually very simple. It consists of two factors, customers and products. If you take good care in the buying of the product, it doesn’t come back. If you take good care of your customers, they do come back.”
     Avoid deep discounts. Research at Israel's INSEAD and at Stanford University confirms that when people buy items at what they consider to be deeply discounted prices, they tend to end up feeling the benefits are less than if they'd paid full price. And people who think a product or service is inferior are more likely to request refunds.
     Other research suggests another tactic: Promote the sale of packages of products. Researchers at Harvard University and Hong Kong University of Science and Technology began by noting the frequency of what’s called price bundling. Liquor stores sell wine by the case. Restaurants offer four-course meals. Theatre companies and sports teams promote season tickets.
     The researchers then found that when consumers buy the package, they are less concerned if any one of the components in the package fails to satisfy. One bottle of wine being off is not as likely to lead to a request for corrective action when you’ve a whole bunch of other bottles in the case. If the appetizer fails to meet expectations, that disappointment may be soon forgotten when the delicious entrée arrives.
     There are three sorts of reasons for refund demands decreasing when the consumer has purchased a package:
  • The overall experience is satisfying. In accord with Mr. Marcus’s suggestion, don’t allow package sales to become an excuse for inferior merchandise or services.
  • The consumer has trouble allocating value to an individual item. This argues for telling the shopper the percentage they’re saving by purchasing the package, but not stating the dollar savings or listing the price of each item.
  • The user has had enough before consuming the whole package.
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Let Customers Get Away With It
Bundle Pricing, But Limit BOGOs

Wednesday, December 28, 2011

Creep Out Shoppers, But Explain

What could be more appropriate for the holiday season than making your shoppers feel creepy? Wait! This is the wrong holiday for that. It’s Christmas now, not Halloween.
     Still, Minnesota retailer Mainstream Fashions for Men currently has a store window display that, according to the Duluth News Tribune, is creeping out some passersby. The display consists of a live person standing motionless, serving as a store mannequin.
     How could that be creepy?
     It has to do with what Japanese robotics researchers call the “uncanny valley.” When we can’t tell whether a robot, a mannequin, or some other representation of a human is real or not, we experience revulsion. If the android looks exactly like an attractive human being, we’re attracted to it. If it looks similar to a human, but we can easily tell it’s not real, we’re amused. However, when the resemblance is very close, but we’re not sure if it’s real, we feel creepy. That dip in the positive emotion is why the effect is called the uncanny valley.
     The term was applied this week in a New York Times article about international fashion retailer H&M superimposing the heads of human models onto computer-generated bodies in ads. Aside from the media kerfuffle about setting unrealistic standards for women’s body shapes, the technique seemed to work. We pay more attention to the fine details of facial appearance than to fine details of body appearance. No creepiness.
     H&M was not at all subtle about what they’d done. The positions of the arms are identical in a series of pictures, even as the head and the skin tone vary.
     A couple of years ago, H&M disgusted consumers by cutting the fingers off gloves, but that wasn’t for an advertising campaign. A graduate student at City University of New York found bags of unused H&M clothing on the streets of NYC. It turns out that staff at the store on 34th Street had taken box cutters and razors to excess merchandise and then trashed the remains. Why weren’t these clothes donated to charity?, people asked.
     In that instance, H&M loudly proclaimed that destroying unused clothing is against company policy. In the case of the head-body stitching, H&M eased the creepiness by explaining what they did was simply an extension of their online shopping aid which allows someone to click on an outfit and see how it would look on a person.

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Aim to Donate, Not Destroy, Merchandise
Uncover Why Your Advertising Works

Tuesday, December 27, 2011

Clear Search Paths for Shoppers

E-tailing expert Peter Laudin, whose enterprises include The Pattycake Doll Company, recently told me an important lesson he learned about making it easier for shoppers to use his company’s website: “Cute does not help the customer! I once had a tab that read ‘From Cinnamon to Chocolate,’ meaning I had a range of brown dolls. I quickly learned to just call it ‘Dolls for Black Children’! Clarity is everything!”
     Peter then gave a personal example from bricks-and-mortar retailing: “Imagine store signage that is so cute the customer scratches their head and wonders if the store even sells what they are looking for. I remember going into a Best Buy and not being able to find what I wanted under any of the signage where I thought it should be. I was in a hurry and floor help were all tied up with other customers. They lost the sale.”
     Classic research by psychologist Edward Wheeler Scripture found that a bit of puzzlement in an advertising headline stimulates interest for reading what follows. In an 1895 book, Dr. Scripture used his studies’ findings to even suggest putting commercial notices upside down in order to attract attention.
     You might have noticed that many of the headlines I use for RIMtailing postings intend to entice through whimsy.
     However, when it comes to serving consumers who are searching, clarity is more important than whimsy. Last year, a front-page article in the Baltimore Sun carried the headline “Opposing votes limn difference in race.” The newspaper’s readers reacted as if they’d like to rip the editors limn from limn. Whoops, I mean limb from limb, which is pronounced the same way.
     “Limn” shares its word root with illuminate and means to give clear, sharp detail. The headline meant that a set of opposing votes portrayed differences between the current electoral candidates in clear, sharp detail.
     But readers were irritated at the Baltimore Sun for creating an unnecessary difficulty. One reader opined, “To put a word like ‘limn’ in the headline for the lead article on the front page of this newspaper seems to me to be unbelievably arrogant and patronizing. Could the headline writer not have fashioned a head around the word ‘illuminate,’ ‘delineate’ or ‘depict’? Perhaps then more readers would not only understand what the article is about but actually might want to read it.”
     Keep search paths clear of limbs shoppers might trip over.

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Stand Out
Limn Words Shoppers Won’t Understand

Monday, December 26, 2011

Promote Promotional Pricing over EDLP

Promotional pricing—in which your store periodically discounts a specific set of items—usually holds more promise than an everyday low price (EDLP) strategy. One reason is that EDLP is the province of Big Box retailers, and in prolonged price wars on all the merchandise you carry, Big Boxes probably can outlast you.
     More reasons for the superiority of promotional pricing come from an econometric analysis at Stanford University and University of Rochester. The study involved only supermarkets. However, the fact that supermarkets carry a wide range of merchandise and the comprehensiveness of the study’s database indicate to me that the conclusions have a broader application. Included in the econometric analysis were revenue figures and price-format decisions for every retail supermarket and Walmart in the United States from 1994 to 2000.
     An impetus for the study was the entry of Walmart into the grocery business. Some grocery stores, such as Wegman’s in New York, switched to EDLP. Most others competed with Walmart using a promotional strategy.
     EDLP does have certain inventory management advantages for the smaller retailer. Demand is more predictable, allowing supply chains to be better coordinated, less money to be spent on merchandise storage, and less irritation of shoppers because of out-of-stocks.
     However, the Stanford/Rochester study found that, on average, promotional pricing yielded $6.2 million more per year in revenues than did an EDLP format. Moreover, changing from a promotional strategy to an EDLP strategy is expensive. Wegmans Food Market found it necessary to produce countless videos explaining their switch. Beyond educating, other costs of a change from promotional to EDLP include reworking supply relationships and gaining employee acceptance of a bargain store image.
     For the years analyzed, the opening of a Walmart resulted in a revenue loss of about $690,000 a year for the store using a promotional strategy, but about $1.7 million for the EDLP store.
     Shopper psychology research finds still another advantage of promotional pricing over EDLP: The excitement of a special event. In fact, Walmart has had what they call “selective rollbacks” on certain items in order to generate sales from that sort of excitement.
     The Stanford/Rochester researchers say Walmart’s selective rollbacks were an error, contributing to drops in same-store sales among U.S. stores. When customers saw prices going even lower, they questioned the Walmart claim of EDLP on everything.
     If you stay with promotional pricing in your store, you can safely promote your promotions.

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Use Low-Price Guarantees Strategically

Sunday, December 25, 2011

Adjust Ethical Expectations to Surroundings

A recent USA Today article reports medical offices, churches, and schools moving into shopping mall spaces. These less-traditional tenants are still retailers, in that they’re offering products or services to end consumers and therefore must show the consumer a return on investment.
     The way a small to midsize retail store does business is influenced by how the surrounding retailers are doing business. The unitary identity and physical proximity of retailers in a shopping mall strengthens this influence. When your neighbor is a medical office, church, or school, the ways in which your shoppers define business ethics may change.
     Researchers at University of Colorado-Boulder, Tulane University, and University of Pennsylvania distinguish between market-based and communal ethical standards. Imagine the situation where a church announced they’d be outsourcing backlogged prayer requests to priests in India in order to save on operating expenses. Based on results from their studies, the researchers say consumers of the services offered by the church would be disturbed by the prayer outsourcing. Yet consumers would generally accept a dress shop announcing that, in order to keep selling prices lower, the shop sells clothes produced in India.
     Or consider the retailer selling pharmaceuticals who announces special programs to allow those without adequate funds to get the drugs at a reduced fee. Most consumers would consider this to be ethical, although not surprising. On the other hand, if the dress shop said they’d charge less to the economically disadvantaged, consumers would consider this surprising. If the consumers thought other customers were being charged more as a result of this policy, they might even consider the discount pricing to be unethical.
     People expect communal ethics from churches and medical offices, while accepting market-driven ethics from commercial businesses. They also are likely to expect a higher degree of communal ethics from a commercial business operating next to a church or medical office. Within a store, shoppers are more likely to be outraged by suspiciously high prices on educational supplies than on cosmetics. And beyond this, they are more likely to be disturbed by luxury-priced products immediately adjacent to the educational supplies than by those same products neighboring merchandise without a public service association.
     And what if you are the church in the mall? The researchers found that consumers were less upset with outsourced prayers when the church pointed out how everyone is part of God’s community. An explanation using communal ethics.

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Anticipate Ethics Slippage
Disclose Product Cautions
Earn Permission to Misbehave
Have Fun Items Throughout the Store

Saturday, December 24, 2011

Discount “My Best Friend” Price Survey Data?

Maximize your profitability by asking your target consumers the Van Westendorp questions, each beginning with “At what price would shoppers consider this product or service to be….” Here is my version of the ends of the four questions:
     …inexpensive enough that they’d think hard before deciding not to purchase it?
     …expensive enough that they’d think hard before deciding whether to purchase it?
     …so inexpensive they’d think there might be something wrong with the item?
     …so expensive that they’d immediately reject the idea of buying the item?
     Notice my wording uses “would shoppers consider” instead of “would you consider.” A number of studies by survey experts conclude that people tend to give more useful answers when the questionnaire takes a “my best friend” orientation. Ask each respondent what others like her believe, feel, and intend.
     Recently announced research findings strengthen the case for using the “my best friend” technique. I’ll add, though, that those doing the research don’t agree with me about this. I’ll tell you the findings and let you decide for yourself.
     Researchers at Yale University asked study participants about willingness to pay for items ranging from DVDs to iPhones to chocolate truffles to books to artwork to sporting goods to teddy bears. They even asked about imaginary items like a trip to the moon and a pill that would allow the consumer to speak French.
     Across that range, a representative sample of the U.S. population gave estimates. Analysis of the results showed that estimates of what others would be willing to pay were repeatedly about 40% higher than estimates of what the study participants said they themselves would be willing to pay.
     The researchers say this indicates a “my best friend” orientation to the questions gives unrealistically high dollar amounts. However, I believe it is the estimates of self-willingness which are unrealistically low. My reason is that consumers like to brag about getting a better deal than others.
     Researchers at University of Alberta, University of Calgary, and University of British Columbia concluded that when people believe they might have been able to wrangle a better deal on a product or service, this conclusion leads to them feeling a threat to their self-esteem and their self-image. They fear not only that others will see them as being suckers, but also that they’ll see themselves that way. The researchers found that people generally lie about good deals they got.

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Answer Van Westendorp Pricing Questions
Expect Shoppers to Expect Nonexistent Discounts
Help Consumers Build Useful Attitudes

Friday, December 23, 2011

Highlight Humility with Humor

Consumers respect retailers who know it all. But they avoid retailers who act like know-it-alls. Expertise is best seasoned with a dash of humility. This thought came to my mind as a ricochet off of the announcement of the December 13 death of Edie Stevenson.
     Ms. Stevenson wrote one of history’s most successful ads: “Let’s get Mikey. He won’t eat it. He hates everything.” And then, “He likes it.”
     Do you remember the product being advertised? If you watched much television during the ten years the ad ran, of course you remember it was for Life Cereal.
     That’s not the particular ad I associate with using humor to highlight humility, though. Two decades after the Mikey ad, Snapple reworked it so the dialogue went, “I’m not going to try it. You try it. “I’m not going to try it.” “Let’s get Mikey… He’ll try anything.” And then, “He didn’t like it….,” followed by the tag line, “With over forty Snapple flavors to choose from, there’s bound to be one you don’t like.”
     Snapple admitted their limitations. Last Christmas season, Allstar Products Group, the manufacturer and marketer of the Snuggie—that blanket with sleeves—used a similar technique. The first generation of TV ads for the Snuggie masterfully explained, in a straightforward way, the benefits of the product: “The ultra soft fleece keeps you totally warm, and the sleeves keep your hands free.” But the outlandish appearance of a person wearing a blanket promptly led to a seemingly endless procession of jokes and parodies.
     The crop of Snuggie ads introduced for the 2010 holiday season showed people joining in the fun with broad smiles on their faces, looking as silly and as warm as ever.
     Being able to laugh at yourself shows a humility which most shoppers find attractive. In many cultures, such as Latino and Chinese, ridiculing a retailer or product that competes with yours is considered offensive. Here, you’re ridiculing yourself. Humor usually relaxes tensions and lifts spirits, both of which enhance the desire to finalize the purchase.
     Even Mikey himself—being so cute and adventuresome—had to be brought down to size. That’s no mean feat with a kid who’s already little. Well, actually it was a mean feat. False rumors began that John Gilchrist, the actor playing Mikey, had died when he mixed fizzy candy Pop Rocks with Coke. The cause of death? His stomach exploded.

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Get Consumers to Laugh With You, Not At You
Know Where to Go for Answers

Thursday, December 22, 2011

Elevate Your Profitability

My guess is that it’s because of the well-publicized death of Suzanne Hart in an NYC elevator accident last week that The New Yorker website is currently featuring an April 2008 essay about elevators.
     Ms. Hart’s death was tragic. I have no desire to trivialize her death as I use elevator industry trivia from the New Yorker essay to derive these reminders about profitability:
  • What pushes consumers’ buttons? In China, elevator riders accept much tighter quarters than in the U.S. Know your culture when designing vertical transportation vehicles and retailing experiences. In both realms, also be ready to accommodate discomfort about change. A new generation of elevators, called “destination dispatch,” have no buttons inside the cab. You enter your destination floor number on a console in the lobby and are instructed which cab to take. The wait in the lobby might be longer, but the ride itself is shorter. New users report discomfort during the trip, wanting to reach out to push a button to confirm that the machine got the instructions right.
  • The long ascent to profits. Profitability on super-high-rise jobs does not come from the construction. It comes from the maintenance contracts. Use that fact as a reminder that a retail sale of a product could be only part of the story. A second story might come from training in product usage and a third story from repair services, for example.
  • Free fall isn’t the worst. What’s more dangerous than free fall in an elevator shaft? Stopping too suddenly, of course. It isn’t the falling that does you in. If an elevator car is dropping at a rate 25% faster than its maximum designated speed, safety brakes stop the cab promptly, but not so abruptly as to injure the passengers. If your business fortunes are going into free fall, then act promptly and decisively, but not so abruptly as to cause needless damage.
  • Leave the silo vision. Since we’re talking about vertical transportation, I’ll say “silo vision” instead of “tunnel vision” when referring to a quote in the New Yorker essay from an elevator company executive: “We’ll wait ten to fifteen minutes for a train without complaining. But wait thirty seconds for an elevator and the world’s coming to an end.” Yes, but if my time on the elevator is that of a typical train ride, you’ll hear me complain for much, much more than thirty seconds.

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Bind Yourself to Your Plan

Wednesday, December 21, 2011

See What’s Changed When Customers Return

The same bank is held up by the same robber five days in a row. The same police officer interviews the bank staff after the robbery each of the days. Arriving this fifth day, the officer says to the staff, “Look, at this point, I’ve gotten a really thorough description of the guy who’s doing this. I’ve talked to you four times already. But on the off chance you’ve something to add, I’ll ask if there is anything more you can tell me about what this robber looks like.”
     “Well,” says one of the tellers, “I have noticed that each time he comes in now, he’s a little better dressed than the last time.”
     Each time one of your repeat customers comes in, do you and your staff notice what’s new with the customer? If the customer doesn’t show you or tell you, do you ask? Do you make a mental note about changes soon after the customer arrives at your store so that you’ll remember the changes better? If you think the person would like you to notice the changes, do you comment on them?
     The bank robber in that story probably wouldn’t want bank staff commenting on his improving sartorial state. But bank staff wouldn’t want him coming back repeatedly anyway. When you do want the customer to return, the comment on what’s different makes the customer feel important. It also helps you keep your impressions of the shopper up-to-date so purchase recommendations you make are more accurate.
     People who know you care will come in again to your store sooner and more frequently. Coming in often increases the likelihood the shopper will have family or friends along. The shopping is combined with socializing. And somebody shopping with a group tends to spend more. Customers are more willing to tolerate the inevitable nuisances of shopping when they are with a group. This “misery loves company” effect has been noted by social psychologists at Vanderbilt University.
     According to University of Pittsburgh and Baylor University research, more than 75% of shoppers plan to make purchases beyond what they came in for. However, there is a limit for each shopping trip. The more shopping trips, the more often the customer stumbles across needs they’d forgotten to include on their shopping list and items they didn’t realize they wanted until the items were in front of them or in their hands.

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Habituate Customers to Quick Return Trips

Tuesday, December 20, 2011

Burn Out Resignation of Skilled Staff

Burnout corrodes the quality of service to shoppers, and quality of service is essential to your profitability. Both the owner/operator and the retailing staff are at risk for burnout. Not surprisingly, researchers at Hong Kong Polytechnic University and University of Hong Kong conclude that a significant cause of retailing staff burnout is the owner/operator herself or himself being burned out. Protect your business by heading off burnout in yourself.
     Organizational psychologists see the hallmarks of burnout as feelings of exhaustion, suspiciousness about the intentions of others, and doubts about the effectiveness of one’s own efforts on the job. Conscientious employees are at especially high risk for burnout. They end up resigning themselves to doing lower quality work than they believe they’re capable of doing and perhaps resigning from their employment. You don’t want to lose the contributions of your hard-working employees. Protect your business by heading off burnout in your staff.
     The findings of the Hong Kong researchers support the following as techniques to use:
  • Tell yourself and your staff how you are doing. Encourage shoppers to give you feedback. Use a positive frame like, “In what ways might we do even better?,” rather than a negative frame like, “What you dislike about our store?” From your knowledge as a retailing professional, carve out time each workday to assess your business performance, and at least once each week, give performance feedback—or have a supervisor give performance feedback—to each staff member.
  • Remind yourself and your staff of the importance of the work you do. Shoppers are more likely to complain about flawed service than to praise skilled service. As a result, retailers can too easily forget that skilled service does make a difference in attracting and keeping customers.
  • Rearrange job duties so people have new responsibilities. The researchers found that variety energizes burned-out staff by giving them a fresh perspective. Changes also relieve staff from the sorts of tasks most likely to cause burnout.
  • To the degree that you can, allow each staff member to serve the customer throughout the purchase process. Organizational psychologists refer to this as “task identity.” By identifying with the complete task, the retail worker enhances identification with the shopper as a complete person rather than as a list of impersonal steps. One aspect of this is empowering employees to make decisions in areas associated with burnout. Handling complaints is one such area.

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Deliver Friendliness If Outcomes Are Uncertain

Monday, December 19, 2011

Function Better by Noticing Function Words

Of all the words written and spoken in American English, which are the three most common? (Hint: I’ve used all three in the preceding sentence.)
     The answer, based on an analysis of a million-word representative compilation by researchers at Brown University: the, of, and.
     Social psychologists have called these three “function words.” Pronouns, such as I, you, and they, are also function words. Of the 100,000 words in the average American adult’s vocabulary, about 500 are function words. They are distinguished from what are called content words—nouns, verbs, adjectives, and most adverbs.
     Research findings from University of Texas-Austin and Ohio State University indicate that retailers can increase their effectiveness both as sellers and as buyers by noticing the function words in what they hear, speak, read, and write.
     Here’s an example: Imagine that three different shoppers come into your store and end up looking at a particular item.
  • The first prospect says, “I think I’ll consider buying this item.”
  • The second person says, “I am considering buying this item.”
  • The third one says, “This is the item I am considering buying.”
     If you’d heard all three statements within minutes of each other, so you had the opportunity to notice the subtle differences in phrasing, you’d probably realize that the first person is the furthest of the three from closing the deal.
     How about the difference between the second and third statements?
     The research indicates that when hearing the second statement, which leads off with “I,” the salesperson should respond by focusing on the shopper’s individual needs. Reduce the social and psychological risks for this consumer.
     With the third statement, the salesperson can assume the shopper is close to a final buy decision. Don’t oversell, but do consider that the consumer would be influenced by how the purchase could benefit other people who are important to the purchaser.
     The research says that an abundance of “I” statements indicates uncertainty and maybe even hopelessness in a consumer. People who are depressed use “I” more often than people who are emotionally stable. People who are confident about their leadership abilities use “we” more often than those who doubt their leadership skills.
     To be sure, the phrasing an individual uses is influenced by many factors, including the phrasing he’s accustomed to encountering. Still, an attention to the pronouns and other function words can help the astute retailer pose hunches to check out.

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Respect Zipf’s Law
Be Just a Little More Upbeat Than Your Customer

Sunday, December 18, 2011

Personalize Discount Coupons

Database management techniques these days allow retailers to personalize discount coupons. By keeping track of what the customer has bought—and perhaps even what the shopper has considered, but not bought—you develop a profile and then offer that individual what the profile suggests would carry special appeal.
     Researchers at University of Virginia find that the draw of such customized discounts occurs even if the person doesn’t use the coupons. In fact, mere exposure to a personalized coupon campaign had a bigger impact on store sales figures than did the frequency of coupon redemption. The effect was greater when the customer hadn’t expected the discount.
     How can this be explained?
  • A surprise discount generates appreciation in the consumer. And consumers who are grateful spend greater amounts of money with you over time.
  • Customers are more likely to notice and to remember a discount when the items you’ve discounted on the coupon are of higher interest to them. In turn, discounts which are noticed increase the customer’s impression that all prices at your store offer good value. An important exception to this phenomenon, however, is if you regularly offer very large discounts—let’s say more than 50%. In this case, the frequent large discounts can lead the consumer to conclude that all your regular prices are inflated. They will then buy from you only if you give them a coupon for the items.
  • Most important of all, people like to be recognized as individuals. Personalized discounts communicate caring.
     People love the opportunity to put their personal imprint on all aspects of their purchases. Researchers at Colorado State University found that consumers choose to personalize even if it means accepting design quality inferior to what professional designers would produce. Another study concluded shoppers in a marketing atmosphere filled with fears of privacy being violated still will volunteer ample amounts of information about themselves to a retailer if they see the retailer using this to personalize the shopping experience for them.
     It's easier for you to offer personalization when you accept special orders. Offering accessories as add-on purchases is another approach. And in fact, just having sales staff call customers by name is a bit of personalizing the shopping experience.
     Personalize discount coupons. Then, in analyzing the effectiveness of a coupon campaign, look at the changes in total store sales figures, not just sales of the particular items covered by the coupon.

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Personalize the Shopping Experience
Go for Customer Gratitude and Guilt
Customize Your Discount Coupons

Saturday, December 17, 2011

Engender Trust for New Ecommerce Sales

Online mortgage lending service LendGo tells you your inquiry will be encrypted for privacy protection. On the home page, LendGo highlights that the service is free, and they show Better Business Bureau, VeriSign Trusted, and TrustE logos. When it comes time to finalize the details, they arrange to telephone you.
     So far, so good. When a shopper isn’t familiar with your business, online salesmanship requires building and maintaining trust. But then, LendGo falls short. The message telling you about the call reads, “We’ll call you shorty.”
     “Shorty” instead of “shortly”? Could such a little error result in shopping cart abandonment? Well, it did lead to ridicule. The latest issue of Consumer Reports shows a screen shot of “What Happens Next? We’ll call you shorty” with the caption, “And we’ll call you chubby.”
     But the consequences of a spelling error can be more dire than ridicule. Or from the positive side, good proofreading can build ecommerce sales. A Practical eCommerce posting tells how the rate of converting browsers to purchasers increased about 80% when the misspelling “tihgts” on the TightsPlease.co.uk was corrected to “tights.”
     Sloppy spelling and grammar imply sloppy business practices. Once you’ve established a relationship of trust with your ecommerce customer, you can afford to slip up a bit occasionally. But not with the first-time visitor.
     Here are a few related suggestions:
  • Be abundantly clear about all costs. An important cause of shopping cart abandonment is uncertainty about shipping costs, for instance.
  • At each step of the purchase process, allow the shopper to move back to review what she’s done and make desired changes.
  • Go beyond arranging to telephone the shopper. Provide a toll-free hotline he can use to call with concerns and to give a credit card number to a real person, if that’s the shopper’s preference.
  • Collect from the shopper only the information you need. Anything more sets off consumer suspicions.
  • Provide a cancel button so that the shopper can abandon the shopping cart without needing to close the window. This allows you to give a message such as, “We hope you’ll come back to shop with us soon.”
     Some retailing consultants recommend use of a service which allows you to promptly email shopping cart abandoners to ask why they left. Consumer research findings recommend against doing this. It corresponds to chasing after a browser who’s left your store. Consumers want their privacy and dignity respected.

Click below for more:
Mind Your Ps & Qs in Reviews
Personalize by Respecting Privacy Concerns

Friday, December 16, 2011

Put On Soft Contact Lenses for Shoppers

In the 1980’s, the Social Security Administration got concerned about the amount of eye contact the claims representatives were making with their clients, the benefits applicants. SSA was installing computers in all the field offices and wanted to be sure that taking claims with an on-screen form didn’t keep the claims rep from delivering the personal touch of looking at the consumer. Eye contact communicates interest, confirms understanding, and checks for possible fraud.
     During that transition from paper to computer, I was the chief outside consultant to SSA on human factors. We learned that proper positioning of the terminal and ongoing coaching of the staff accomplished our objectives.
     Proper eye contact continues to be a success tool for every organization aiming to provide products and services face-to-face. In the latest Harvard Business Review, Ron Johnson analyzes why so many people buy Apple products at full price at an Apple Store when they could get them at a discount online. Mr. Johnson is in a position to know, having been the senior VP for retail at Apple Inc. before assuming his current position as CEO of JC Penny. Mr. Johnson’s answer is that store staff at each Apple Store look out for the shopper and communicate their commitment by looking at the shopper.
     Eye contact is tougher with online shoppers, and successful retailers are multichannel retailers. Researchers at University of Pennsylvania and market research consultancy The Verde Group estimate that although 76% of U.S. retail purchases are made at bricks-and-mortar stores, this still leaves 23% being made online and 1% via paper catalogs. Statisticians at Forrester Research estimate that 7% of total U.S. retail sales dollars are spent for online purchases.
     The Pennsylvania/Verde research findings indicate that two sorts of consumers are especially likely to seek the personal touch of bricks-and-mortar shopping:
  • There are those who enjoy browsing among displays of many different types of products. These shoppers are predominantly older females. They tend not to have store loyalty, so the good will from good glances might not carry over powerfully to encouraging use of your e-tailing business.
  • And there are those whose interest in online purchasing is clearly strengthened with the personal touch they receive in the bricks-and-mortar store. Many shoppers in this group are somewhat lower income male shoppers.
     The look that works is not harsh, but rather welcoming. Train your staff to use their soft contact lenses.

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Thursday, December 15, 2011

Add Rentals as a Profit Center

The walls of Every Baking Moment in Dixon, California are filled with cake pans. One in the fanciful shape of a set of lips. Another in the fancy shape of the breast cancer awareness ribbon. And one in the shape of—fancy this—a lopsided triple-decker cake.
     The store will sell you any of those pans, but most people rent one and save their buying for the cake decoration supplies. The customers figure they’re unlikely to bake the same particular strangely-shaped cake real often.
     Similarly, customers see benefits in being able to try out toys before deciding whether to buy them. That’s especially useful when the purchaser of a toy—the adult—is not the same person who will be using it—the kid.
     If you don’t currently rent out merchandise, consider introducing rentals as a service to your shoppers and as a source of income for your business. If you do currently rent out merchandise, rethink the most profitable ways to feature your rental center as a place shoppers can try out products and then have an opportunity to purchase a used or new version.
     In doing so, you’re acknowledging that there are at least a few shoppers who see your store as a lending library. You don’t want people purchasing merchandise from your store with the intent in advance of using the items and then making a return with a demand for a full refund or credit. A rental arrangement accommodates the short-term user.
     Rental programs also can benefit your shoppers indirectly. GameStop stores have rental programs to allow their staff to master the games. Serious gamers come to store employees to learn the tips, traps, and tricks. When a GameStop staff member praises a game, the endorsement is coming with the expertise of experience.
     A potential downsize for retailers in maintaining rental programs: If a renter damages an item, you might be in the position of harassing the customer for more money. You probably can get the money, but you also can easily irritate a customer, who doesn’t even get to keep the item.
     The solution? Offer breakage insurance for, say, 10% of the rental price. Done well, rental breakage insurance is yet another profit center for you.

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

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Wednesday, December 14, 2011

Top Off Skilled Product Selection

Most RIMtailing postings are about how to best sell the merchandise and services you have. But you and I and all the others with an interest in your profitability as a retailer need to keep in mind that, regardless of your sales skills, your success really depends on you choosing the right items to sell. Shopper psychology tactics top off skilled product selection.
     How fitting, then, that it is a top which illustrates characteristics of a hot-selling item. Beyblades from Hasbro are a toy with the right spin:
  • Proven record. Each player launches his Beyblades top into battle, and the last one standing wins. The toy had a successful run about ten years ago, but just as important is that battling tops have been around for what? The history of humankind? Ask yourself if an item you’re considering for inventory has a parallel in a product or service that has done well for you or for a similar retail business in the past.
  • High-tech & customizable. This year’s Beyblades are different from last decade’s model because of the tie-ins to our target markets’ fascination with technology, the internet, and personalization. There are instructional videos on YouTube, a video game version of Beyblades, and a Hasbro website for virtual battles. All three highlight how proper selection of components for the top by the player and proper launch technique are essential to winning.
  • Collectible. In order to have a full repertoire of parts, the Beyblades owner must have a broader collection of models. With certain product lines, the small to midsize retail business can’t stock every item in the collection all at once. One alternative is to accept special orders. Accepting special orders does bring up complications—such as how to handle merchandise returns—which you might choose to avoid. Offering accessories as add-on purchases is another approach.
  • A back story. Products and services sell much better when each item comes with a tale to give it distinction. Retailers of antiques find that easy to do. Beyblades include tops with different names and personalities. In addition, there is a storyline, reinforced by a TV cartoon series, which talks of the tops drawing their power from the spirit of the constellations.
  • Nostalgia. This selected list of characteristics of top merchandise comes back around, like a toy top, when we consider how an item with a proven record also carries a nostalgia appeal.
Click below for more:
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Tuesday, December 13, 2011

Stagger Positive Product Information

Retailers attempting to persuade a consumer might choose to present all the best arguments as soon as possible. Research findings from University of Northern British Columbia and University of Alberta acknowledge that if you wait too long to make your case, you may lose the sale. Still, they suggest it is usually better to stagger the presentation of your good arguments.

  • At early stages in the decision process, the shopper is deciding what criteria to use to screen the available alternatives, including the alternative of not buying anything. At this point, describe the features of your preferred choice on which that choice excels. Then for each feature, describe the benefit to the shopper. Limit yourself to three to five of these feature-benefit sets. Beyond this, it will be difficult for the consumer to remember all you’ve said, and therefore hard for the shopper to formulate the criteria which incorporate the features you’d like them to consider. Another reason to limit the extent of your presentation is to avoid the impression you’re pressuring the shopper.
  • If the shopper wants to consider alternative items, discuss those items in terms of the criteria you’d encouraged him to formulate.
  • Allow the shopper to choose the item you’ve pointed her toward. There’s no advantage, and potential harm, in overselling.
  • If the shopper is still wrestling with the decision, this is the point at which to present the rest of the good arguments. Space them out, giving no more than a few at a time. The staggered release of information gives an impression that there are limitless numbers of benefits. This gives an extra lift to the alternative you’re wanting to sell, increasing its appeal over the other choices, for which there appear to be no more advantages. In addition, coming later in the decision making process, these additional arguments arouse less resistance from the shopper’s mind. The mind is tired of juggling bunches of information and wants to resolve the indecision.
  • You might choose to present price later in the sequence. According to researchers from Hong Kong University of Science and Technology, if your shopper is considering a lot of information in making a purchase decision, he becomes willing to buy the higher-priced alternative when the alternatives are presented in order from most expensive to least expensive. The price of the first item becomes an anchor for what your shopper will expect to pay.

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Guide Choice by Sequence of Presentation
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Monday, December 12, 2011

Corner Risks with Partitioned Pricing

So this consumer psychologist says to his wife, “I got the strangest message from Dean. He wants me to get together with him to go shopping for a good corn dog.”
     “Are you sure you heard that right?,” asks the wife, with understandable skepticism.
     “Yep. I listened to it twice. Maybe it’s Dean’s way of saying he’s getting together a group for the state fair. I called him back, but nobody answered.”
     Then the consumer psychologist starts thinking about what goes into somebody deciding what’s a legitimate price to pay for a corn dog at a state fair. Are people willing to pay more than if they’d gotten it at a fast food restaurant? Does the excitement of eating a corn dog at a state fair add value? Do the memories of other corn dogs eaten at fairs up the threshold for an acceptable purchase price?
     Consumer psychologists think about these things. This one relates to the topic of partitioned pricing. Partitioned pricing presents an item’s cost as a main price plus one or more surcharges. For the state fair vendor, adding a special souvenir wrapper or napkin to the corn dog makes acceptance of a higher price more likely by the shopper.
     Research findings from Adelphi University, University of Alabama-Huntsville, and University of Dayton suggest the following 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 the product can be personalized.
  • Do the partitioning so that the amount of each surcharge is no more than 20% of the base price. If any surcharge is a higher percentage, consumers will consider the entire pricing structure unfair.
  • Compared to bundled pricing, partitioned pricing increases purchase intentions with items that carry financial or psychological risk. Partitioned pricing makes little difference in purchase intentions for routine purchases.
  • The rules for e-tailing are a bit complicated: E-tailing customers get irritated when they can’t quickly and easily discover shipping or handling charges. So as a general rule, use partitioned pricing in e-tailing. But the research also finds that for e-tailing purchases of luxury items, bundled pricing works better.
     Later, the consumer psychologist gets a return call, only to find his buddy’s invitation was for an outing to buy a coon dog.

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

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Use Partitioned Pricing to Highlight Benefits
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Sunday, December 11, 2011

Double Duty to Prevent Shoplifting

A recent Washington Post “On Small Business” article proposed double-duty tactics retailers can use to head off losses from shoplifting. The double duty comes because each tactic is also a way to increase store sales.
     Here is my adaptation of that list, including research-based augmentations to make the tactics work even better for you:
  • Remind yourself and your employees of the consequences of shoplifting. When profitability is lost to shoplifting, less money is available to pay salaries and benefits. Survey research indicates a greater acceptance of shoplifting now than five years ago. One explanation is that people are feeling deprived and losing hope during these tough economic times. This acceptance of shoplifting affects not just the frequency of the crime, but also the willingness of retail employees to let it happen. Reminding employees that their job security depends on store profitability is always a good way to motivate selling.
  • Offer good customer service. Another explanation for the increased acceptance of shoplifting is that people perceive big businesses as exploiting consumers and accepting government favors not available to the consumers. Show how you’re intent on helping, not exploiting, people. When you treat all customers with respect, concern, and empathy, people prone to shoplifting are less likely to steal from you, even when the opportunity is there.
  • Instruct your employees to vary the routes they take as they walk around. Salespeople are more likely to walk through the center of the area for which they are responsible rather than along the perimeter. By taking the routes less traveled, staff can both provide shopping assistance to more people and deprive prospective shoplifters of predictability in surveillance.
  • Keep shopping areas organized. Organized shopping areas help customers make selections more quickly, increasing the shopping cart totals. However, many retailers have upped the clutter in their stores, attending to the finding that total purchase size increases among today’s shoppers when there is more to see. The motto seems to have become, “If they trip over it, they might decide to buy it.” In addition, research says clutter implies low prices. However, when the abundance is disorganized, it’s harder for store staff to spot that merchandise is gone or that someone in the store has positioned an item to be subsequently shoplifted. From another angle, the Washington Post article says that the temptation to shoplift is greater when a browser thinks, “They wouldn’t notice it’s missing.”
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Saturday, December 10, 2011

Attack with Credibility

American voters think of successful Republicans in Congress as being reliable and practical. The same voters think of successful Democratic members of Congress as intelligent and empathic.
     So say researchers at Emory University and University of British Columbia.
     Even if they are correct, what does it have to do with running a retail business? As I think you’ll see, the link has to do with keeping your credibility.
     The Emory/British Columbia researchers began their project by assembling a collection of photos of actual candidates in U.S. congressional races during years 2000, 2002, and 2004. Then they asked the participants in the study to rate a selection of the photos on a number of personality traits. These traits included ones related to competence, such as reliability, effectiveness, and practicality. The list also included traits associated with intelligence, such as cleverness and talent in discerning the motivations of others. The study participants were not told the name, party affiliation, or congressional district of the candidates in the photos.
     The research found that when the physical appearance of a Republican candidate had higher associations of competence than of intelligence, the candidate was more likely to have won her or his election battle. For Democratic candidates, the winning combo was a physical appearance with higher associations of intelligence than of competence.
     Why?
     Because voters are more likely to believe campaign promises from a candidate fitting the personality image associated with the political party.
     If an attack ad during the campaign had been targeted at a Republican candidate who looked more intelligent than competent, votes migrated toward the Democrat. But not so much if the Republican candidate looked more competent than intelligent, as the terms “competent” and “intelligence” had been defined by the researchers. With attack ads lobbed against the Democratic candidates, it worked the other way around.
     The effect was strong enough to give an edge to candidates with mugs which fit.
     Salesmanship consists of persuading other people that what is of benefit to you is also of benefit to them. It’s easier when the seller and shopper share a common view of the product, service, idea, or political candidate. Your credibility as an expert helps. So does the credibility of your claim. Claims which are more consistent with the shopper’s current view are more likely to persuade.
     When you choose to attack stable shopping habits, work within the perceptions of your audiences.

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

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Friday, December 9, 2011

Redeem Gift Card Profitability

Starting in year 2007, gift card sales by retailers dropped sharply. This was disappointing, since gift cards are good moneymakers. The shopper with a gift card is more likely to browse your aisles than is the shopper without a gift card. At the least, they become better acquainted with the scope of your merchandise selection. At best, they’ll see a great many items they want, so they’ll spend some of their own money in addition to the gift card allotment. In addition, research indicates that when a customer purchases a product with a gift card rather than with other types of payment, the probability of him returning the item is lower.
     Now gift card sales are climbing again, many in the form of e-cards. This provides you and your staff opportunities to turn those advantages to your advantage. Based on BIGresearch survey findings, the National Retailer Federation estimates 80% of holiday season shoppers will purchase at least one gift card during this holiday season, and the average amount per card will be about $43.00. NRF predicts that men will spend a total of about $164.00 on gift cards, while for women, the total will be about $147.00.
     But that’s only part of the story. The most common occasion for gift cards is not the holidays. That’s in second place. First place is birthdays, and birthdays come on every page of your retailing calendar.
     When redeeming gift cards, recognize that browsing does have a downside. Many gift card shoppers enter the store without a clear idea of what they want. Their objective is to buy something rather than to acquire the benefits of a particular sort of item. Invite the guy or gal with the gift card to look around. However, as soon as you sense any sort of frustration, help the shopper funnel the alternatives. Absent this, the shopper’s too likely to leave your store without making a purchase. In addition, because of the feelings of frustration, he becomes at least a bit less likely to return to your store.
     One reason for the increase is gift card sales is retailer attention to personalization. Gift cards and holders can be customized with themes, such as sports and travel. At the time of redemption, notice the customization. Use that information to guide the shopper toward the right items. Never miss an opportunity like this to learn more about your customer.

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Reenergize Gift Card Sales

Thursday, December 8, 2011

Mind Your Windows

If your store space includes display windows, take heed of their influence on the shopper. The Christmas season brings out innovative store windows. It’s a nice prompt to consider what makes windows work. A recent feature article in USA Today describes an EyeTrackShop study which concluded that motion and surprise in store window displays draw the sort of attention that translates into higher sales.
     A traditional English proverb, perhaps based on a biblical quote, reads, “The eyes are the window of the soul.” Consumer psychologists might reply, “The store windows are the mirror of the retailer’s mind.”
  • Know your audience. Window displays designed for drive-by viewers need to be larger and bolder than those designed for walk-by traffic.
  • Featuring merchandise in a store window primes the shopper to consider those items of merchandise as having special appeal when the shopper subsequently sees them in the store. This effect operates on the same psychological principle as does a celebrity endorsement.
  • Displays that portray the product or service being used trigger imagination of usage by those looking at the window, and imagining usage makes purchase more likely. This is most likely when the consumer who is viewing the window display considers the usage portrayed to be by someone the consumers consider to be like them or like someone they want to become.
  • Consumers seek shortcuts when making shopping decisions. This fact is of benefit to retailers as well as to shoppers. Window displays can qualify prospects by showing the types of merchandise you carry and the price level. If your store carries a good-better-best range, shoppers will appreciate indications in the display of where in the store to find the price-quality category of items they’re seeking. Including representative items from the range tells the shopper you’re not limited.
  • Changes stimulate interest. Because it’s easier to reconfigure a window display than to remerchandise the shopping area, changing window displays regularly is a cost-effective way to give consumers the novelty they like and convince them you’re not in a rut.
  • You also want to convince the consumers you pay attention to store cleanliness. Keep those window displays tidy. You and your staff are likely to be spending more time looking at the body of the store than at the windows, but when your windows fulfill their full potential, the shoppers will be introduced to the body when viewing those mirrors into your mind.
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Wednesday, December 7, 2011

Get Small with Big Convenience

Small trumps all, it might seem. Smaller store footprints, more concentrated packaged goods formulations, tinier electronics on shelves.
     Were the signals there decades ago with Steve Martin’s 1978 Grammy-award-winning album “Let’s Get Small”? Mr. Martin did allude to the portability advantages of miniaturization when he riffed on getting arrested for being too small while driving: “And they can't put you in a regular cell either, because you walk right out.”
     Then last July, The New Yorker used “Let’s Get Small” to title their article analyzing the tiny-house movement—the growing, even if still, umm, miniscule, popularity of homes containing kitchens, bathrooms, and sleeping areas all in a building of no more than 130 square feet. Tiny house advocates find advantages in lower purchase costs, lower property taxes, and a sense of environmental responsibility. These consumers favor small.
     Yet a recent survey by online advertising consultant Limelight Networks proves that small comes with tradeoffs. Respondents to the survey were 520 consumers who said they had purchased a product on a shopping site using an internet-connected mobile device.
     Limelight reports that these 520 constitute almost 50% of the more general population of consumers who initially agreed to participate in the survey. This 50% statistic suggests the popularity of mobile devices for retail purchases, although other surveys indicate the true penetration rate is currently lower than 50%. Also relevant is that one-third of the 520 said they use the device to make a purchase only every three to six months.
     What’s the appeal of the mobile device? It’s small, which means portability and quick access. About 90% of survey respondents rated as important the time it takes for a retailer’s site to appear on the screen What do users dislike? Small means it can be difficult to clearly see images and read text and it can require side-to-side scrolling. About 80% of survey respondents rated as important how a site fits appropriately on the screen. A substantial percentage of the respondents reported that they abandon the site on their mobile device and might go back later on their computer.
     The tiny-house architect designs for small to keep it acceptably convenient. One driver of smaller footprint retail store design is the appeal of convenience for senior citizen shoppers, who have less physical stamina than youngsters. And the wise retailer expects small with big convenience when signing off on marketing campaigns for mobile devices.

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Downsize for Elderly Shoppers

Tuesday, December 6, 2011

Decontaminate the Shopping Environment

Last Saturday night, awaiting the arrival of my scrumptious parmesan-caked sole at a busy Kentfield, California restaurant, I passed the time scanning the place. What stopped my head in mid-rotation was the sight of a server coughing into her hands, then immediately picking up the orders from the kitchen to deliver them to the table.
     No washing of the hands, not even a pause to think about the possibility of making diners ill. The diners who didn’t see the cough and ate the contaminated food. Plus the ones like me who did see the cough and felt disgusted.
     During the rest of my time there, I saw this same server wiping her nose before walking over to the ice cream counter to dish out a treat for a kid waiting there. Plus enough running her hands through her hair to convince me she’s aiming to be a fashion model. I made a mental note not to request that server’s table when I dine at the restaurant in the future.
     If my family and I do dine at that restaurant in the future. It was because Mary Mallon, working as a cook, is suspected of infecting more than fifty people, three of whom died, that she became known as Typhoid Mary.
     Had I been able to spot the manager, I’d have commented on what I saw. Since I couldn’t spot the manager, I filed my report on Yelp and started thinking about the profitability value from having healthy employees in the shopping environment. A recent BusinessNewsDaily posting discusses how job stresses in this tight economy are both making worker illness more likely and keeping employees from staying home when they’re ill these days.
     The BusinessNewsDaily posting makes a case for retailers offering health benefits to employees. From another perspective, help customers to decontaminate themselves. Let’s say your store uses shopping carts. How about putting a disinfectant wipe dispenser right by the carts?
  • In ads and displays, tell your customers you're protecting them. Use a message like, "We want you to stay healthy. Our complimentary wipe kills 99.9% of germs on shopping cart surfaces." You're saying, "We care about you," and your saying that earns you a lot.
  • Include a waste basket for used wipes, and be sure the waste basket is emptied frequently.
  • Have a display nearby where shoppers can buy packages of disinfectant wipes from you to take home.

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Monday, December 5, 2011

Protect Ads Against Overwhelming Emotion

The Christmas 2011 TV ad from Great Britain’s John Lewis department store ended on an unexpected twist—a twist which should rightfully have come with a money-back guarantee it would arouse strong emotion. If you’d like to check me out on that claim, view the ad for yourself. For maximum effect, do it right now, though, because I’ll reveal the surprise ending in the next paragraph of this posting.
     As we watch the ad, we assume a little boy is having a difficult time waiting for Christmas Day because of how much he wants to receive his presents. But as the ad draws to its close, we see the boy walk right by the pile of presents left for him without a glance and bring to his parents still in bed the present he has for them. That’s what he had such a difficult time waiting for.
     A tear-in-the-eye moment followed by the tag line in the ad, “For gifts you can’t wait to give. John Lewis.”
     Because John Lewis is such a well-known department store name in Great Britain, the emotion increases interest in shopping with them. But if the emotion aroused in an ad is too strong, it will overwhelm the message you want to deliver.
     Talk about the joys the purchase will bring and how sorry a shopper will be if they miss this opportunity to buy. You'll do this because, in general, people make more purchases whenever their emotions kick in. The boost works best with positive emotions, but activating consumer emotions we think of as less pleasant—such as fear, anger, and even disgust—can also stimulate purchasing.
     Research at University of British Columbia found that a substantial percentage of consumers said they'd chosen an item because they had the right feelings about it, not because the item came out best in any mental accounting of advantages and disadvantages. Further, those who let themselves be led by their emotions expressed more satisfaction with their purchase afterwards.
     However, researchers at National University of Singapore and Nanyang Technological University found that while for certain consumers, emotion sells, for others, strong emotions irritate. This is especially true with those negative emotions.
     When the colors and the music in an ad plus the content of the TV programming surrounding the ad are all congruent with the emotion aroused in the ad, there is less disruption and greater sales promotion.

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

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Sunday, December 4, 2011

Crosstab Overall Trends by Age Bands

Online shopping’s rate of growth is slowing.
     Transactis tracked the purchases of 39 million consumers across 205 brands of fashion items, household goods, children’s merchandise, home furnishings, and more. During the first half of 2011, growth in online shopping was about 14%—well below a 58% takeoff in 2007 and 35% increase in 2008. Between 2006 and 2010, online spending grew more than 173%. For 2010 looked at on its own, the climb was only 8%.
     Transactis experts predict that online purchasing will continue to grow, but at a substantially slower pace than in the past. This is important for store-based retailers to understand as they confront the shopper’s question, “Can you beat the internet price?”
     Still more value comes for the retailer who slices and dices the data by age band. How quickly is online shopping changing for people of different ages? Part of the answer is that online shopping climbed 46% for consumers ages 18-24 between 2009 and 2010, it climbed only 3% for ages 55-64, stayed flat for those 65-74, and actually dropped 4% for those at least age 75.
     By crosstabbing the data in this way, we gain a better understanding of why the trend is occurring and therefore, how we can stay ahead of the trend. In this case, it appears that the growth has come largely from young adult consumers. As the average age of the consumer population increases notably, we can expect to see a slowing in the growth rate for online purchases.
     People will still purchase on the web. TechCrunch says 7% of total U.S. retail sales this year will be made online. That percentage will continue to grow, but not as quickly. The prediction for 2014 is that 8% of retail sales will be made online. Bricks-and-mortar retailers have plenty of market share to divide up by showing older consumers the advantages of coming on into the store.
     Reaching down further than young adults’ ages, crosstabbing trends by age range can spot emerging retailing opportunities. For instance, look to children’s toys and games. Children are a future market, with their high potential to remain or become primary customers in five to fifteen years. They’ll bring with them some of their attitudes as they move from kiddy playthings to teen and adult playthings.
     And before this happens, children are an influence market, giving suggestions to the adults on what to purchase.

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Look to Toys & Games for Retailing Trends

Saturday, December 3, 2011

Extract Uncertainty When Pulling Teeth

During the Great Recession, the profitability of auto repair services accelerated while the profitability of American dental practices decayed. Still, in other ways, these two retailing endeavors have similarities.
     According to a Sageworks, Inc. analysis of 7,852 U.S. dental practices, both revenue and net income dropped roughly 3% during the first nine months of 2011. This 3% figure is small by comparison to what happened to construction companies, let’s say. But, as described in an article in the Los Angeles Times, the dentists are taking decisive steps now to stop the bleeding.
  • Redesigning websites to inject excitement and consumer education
  • Launching blogs and e-mail marketing to sell teeth whitening and other elective cosmetic services
  • Rearranging office hours to add convenience for patients
  • Brushing up waiting room and in-chair amenities
     Now back to the riddle: How is a dental practice similar to an auto repair shop?
     In both, the core target market consists of people who are coming there by necessity and people who anticipate experiencing pain. In the auto shop, it’s anticipation of the emotional pain of large bills and having the car out of commission for a while.
     Here are shopper psychology tips to all those types of retailers where physical or emotional discomfort is a backdrop:
  • Keep to time commitments. When you set an appointment, be ready to greet the client promptly if she arrives on time. It’s best to start delivery of the service on schedule, but if you can’t, at least welcome the person with a promise of how long he’ll need to wait. Consumers of dental services and, to a lesser extent, auto repair services do manage to arrive late or not at all. Here, use your business sense as to how to reschedule, but still keep to your time commitments.
  • Stay in touch with the client. When my car’s in the repair shop, I want to know how it’s coming along. When I’m in the dental chair, I get uncomfortable if left by myself for long periods of time. Most other consumers are like me, research says.
  • Maintain a clear impression of competence. Researchers at UCLA found that consumers describe competent retailers as reliable, intelligent, and successful. Impressions of being daring, spirited, and exciting can detract from the image of competence.
     All three of these address the importance of minimizing uncertainty for the consumer who is anticipating pain.

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

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Practice Personality
Know the Tradeoffs in Being Sincere

Friday, December 2, 2011

Make Your Next Best Offer

Decide what type of product or service your customer will want before he himself knows. This way, after he completes the purchase of one item, you can guide him toward the best selection in the next category. Researchers at Babson College, Citibank, and Deloitte Consulting LLP refer to this as the salesperson’s skill at identifying the NBO—Next Best Offer.
     They find the timing of the NBO as well as the NBO item itself is determined by more than what will satisfy the shopper’s needs. As important is what will serve the retailer’s goals. If the goal is to increase the current sale, the NBO might be made immediately and be for an item stocked close to the one just selected. If the goal is to add on sales by tempting the shopper to return to the store soon and often, the NBO might involve giving the customer a coupon for a discount on a specified item on her next visit.
     The more you know about the customer, the better you’ll be at NBOs. On the other hand, you must be selective in your information gathering. Ask too much and you’ll frighten the shopper. Spend too much time asking questions and you’ll irritate the shopper.
     Something too often overlooked in analyzing the data is that shoppers’ preferences move in cycles. Researchers at University of Utah and University of Iowa find that monthly paycheck cycles affect not only how much money people will spend on merchandise, but also the types of merchandise they’ll find most attractive.
     In the days soon after receiving a paycheck, consumers with full-time jobs become more interested in products and services which help them gain more than what they currently have. This is a time for you to suggest the latest technologies and the toothpaste claiming to whiten teeth.
     Then as the days after the paycheck pass, the person becomes progressively more attracted to products and services which help them avoid losing what they have now. They'll become more interested in nostalgia items, familiar brands, and the cavity-fighter toothpaste. The researchers determined that this cycling was not due to a declining checking account balance or to the pricing of different types of products.
     The retailer using NBOs should also cycle, according to the Babson/Citibank/ Deloitte researchers. The best salespeople learn from the results of past NBOs, building their skills for the next round with the consumer.

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Predict Consumer Preferences by Asking Why
Merchandise to Fit Purchasing Cycles

Thursday, December 1, 2011

Take Refuge from Controversy in Principles

“I don't care what they say, as long as they spell my name right.”
     Researchers at University of Delaware and University of Hartford published their findings with this as the title. The studies tested the claim that any publicity, even if negative, improves profitability.
     The researchers say it doesn’t. However, research also identifies an exception: If you can take refuge in principles important to your target audience, the controversy tossed around by negative publicity can lead to you being noticed without being hurt.
     A decade ago, Chrysler Group—the company selling the Dodge Ram truck—paid for a marketing campaign which included hate mail about Dodge Ram drivers. The objective was to stimulate protestations of love for the truck.
     The campaign’s designers set up a website on which was posted a video of a drag race won by a Dodge Ram. There was no mention of the name, only images of the distinctive grill design. The impression from looking at the site was that it was designed by and intended for fans of the Dodge Ram. In fact, though, it had been set up by a marketing team.
     Next, the team starting sending letters to newspaper editors bemoaning the increase in drag racing and blaming Dodge Ram drivers for it. This produced spontaneous statements of praise about the truck and its owners. The praise was for upholding the principle of the open road.
     An example these days comes from the yoga-based retailer lululemon athletica using the slogan “Who is JOHN GALT?” on their shopping bags.
     First off, this action seems to be the company upholding the right to completely shun upper-case letters in proper names or use only upper-case letters in proper names, at will.
     But there’s more to it. Some people say that because the John Galt slogan is an integral part of Atlas Shrugged by Ayn Rand and because Atlas Shrugged advocates self-interest over social responsibility, these people now hate doing business with lululemon.
     How do I know that some people are saying this? There are articles about it in Maclean’s, The New York Times, Retail Customer Experience, and Daily Finance. The last of those four includes a recommendation to buy stock in the company.
     The articles also report how supporters of lululemon athletica praise the company for advocating principles of personal empowerment: The slogan is about John Galt, not about Ayn Rand.
     Nice PR outcome, lululemon?

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Arouse Lovers by Flaunting Haters
Cultivate Controversy Carefully
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