Tuesday, January 31, 2012

Treasure Your Talented Employees

Researchers at Massachusetts Institute of Technology are bemoaning the profitability opportunities retailers miss when they shortchange staff on income, employee benefits, availability of full-time hours, predictable work schedules, in-service training, and opportunities for promotion. They build their case with examples from large retailers.
  • At Costco, about 98% of store managers are promoted from within. Sales per employee are about $986 at Costco, while at Sam’s Club, where there is significantly less promotion from within, the figure is $588.
  • At Trader Joe’s, full-time employees start at $40,000 or more per year. Sales per labor hour are more than 40% above that at an average grocery store, where starting salaries are about half as much.
  • At Mercadona, which is Spain’s largest supermarket chain, workers are trained to perform a variety of tasks so that as customer traffic patterns change, the workers can be shifted to different tasks rather than being deprived of work hours. Mercadona’s sales per employee are 18% higher than those at other Spanish supermarkets.
     These productivity advantages of Costco, Trader Joe’s, and Mercadona are surely attributable to more than just their labor practices. In addition, you won’t keep getting more productivity as you keep on increasing expenditures on employees. Still, overall, the research indicates that for every $1 bump up in payroll, monthly sales climb between $4 and $28.
     Many small to midsize retailers fail to set a budget and track expenditures. Those that do budget often overlook benchmarking—comparing their division of expenditures with how best-practices retailers in similar businesses do the division. Without budgeting and benchmarking, your store might be slowly going out of business each day without you realizing it.
     However, there’s also a potential danger when you budget and benchmark: It’s tough to find the treasure chest of maximum profitability if you’re looking in the rearview mirror at the expense of looking through the front windshield. The MIT researchers saw this danger with retailers who set expenditures for employees as a percentage of sales. When sales drop, staff are paid less and there are fewer work hours for the next time period. The rear-view-mirror problem here is that the retailer is assuming sales won’t increase in the months ahead with staff dedicated to the store’s profitability.
     Treasure your talented employees so they’ll be around when those customers come in expecting to see a familiar face and hear a recollection of the customers’ shopping preferences.

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

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Monday, January 30, 2012

Funnel Choices to Cultivate Creativity

A classic exercise to develop individual creativity is to give someone a few objects—like a paper clip, a facial tissue, and a scrub brush—and ask the person to list all the different ways the objects could be used together. The assumption is that this task—using all the objects together—would be more difficult with, let’s say, six objects than with, let’s say, three. But does this mean that the six-object task develops more creativity than the three-objects task?
     Research at New York University-Stern and University of British Columbia suggests that it does not when it comes to consumers behaving creatively. Their conclusion is that if shoppers have fewer options available—a smaller number of paint options for a decorating project or a smaller number of alternatives for preparing a dinner—creativity increases.
     When shoppers are making purchase decisions that they believe express their personal values, they’re happier if they believe they’re exercising creativity. It appears that you can help your customers do this by progressively limiting their choices as they move toward a purchase decision.
     This finding fits with other evidence that a well-organized store encourages customer creativity, as long as it’s not overdone. Consumers do require sufficient complexity to stay engaged.
     All this is more true for consumers who are highly experienced in combining the merchandise to meet objectives—the confident amateur interior decorators and chefs, for instance. The NYU/British Columbia researchers explain it by saying that the experts feel a greater need to evaluate all the available alternatives than do the novices, who want to keep things easy. With an abundance of choices, the experts become anxious, which can immobilize creativity.
     As a retailer, you want shoppers both to make purchases and to be satisfied with their shopping experiences. Observing shoppers might lead you think that having more options results in more satisfaction. Researchers at Cornell University explored that issue. They found that as the number of alternatives got large, additional shoppers are attracted to the store, but unless the retailer funnels the choices for each shopper, satisfaction fades.
     When it comes to cultivating creativity, one further step is important: Point out to the customer evidence of creativity. Restricted choice increased shopping enjoyment and objective creativity for experienced consumers. But the restricted choice often decreased the subjective feelings of creativity expressed by those consumers. Except if their creative output was pointed out to them.

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Sunday, January 29, 2012

Anthropomorphize Partners & Servants

What personality types does your store serve? The answer to that question determines—or at least heavily influences—brands you carry. However, even within a single brand line, there are different personalities.
     Some years ago, Adidas aimed to grab market share from Nike by defining eight different personalities to sell to. Among the personalities named by Adidas were “Gearhead,” the adult dedicated to running who says, “I’ll pay for shoes that bring me the joy of moving fast,” and “Aficionado,” the teen or preteen who says, “I won’t look at an athletic shoe unless it’s named after a famous player and costs a lot of money.” Adidas made fine distinctions between “Core Letterman,” the high school athlete who loves to help the team win, and “Contemporary Letterman,” who’s in it for the individual glory.
     In a parallel endeavor, electronics retailer Best Buy developed a typology of customers. One of them, termed “Devil,” was the sort of customer who purchases large quantities of loss leader items at Best Buy, waits until the items go back to the regular price, and then sells the items on eBay. Best Buy trained salespeople to deal with the different personality types.
     A way to generate sketches like these, and one you might want to try, is to ask focus group participants to imagine your store name has come to life. To generate their personality sketches, Adidas asked focus group participants to imagine that the brand went to a party. What would Adidas be doing there? Teens answered that Adidas would be hanging around the beer keg with its pals, talking about girls. They said that Nike would, instead, be with the girls.
     Recently, researchers recommended that, when anthropomorphizing your store name this way, you distinguish between partners and servants.
     A partner brand guides the shopper’s behavior. If the store name has a reputation for indulgence—the Krispy Kreme name was used in the study—consumers who consider the anthropomorphized brand as a partner aim to take the elevator rather than the stairs. If the store name has a healthy reputation, you’re likely to identify a group of shoppers who take the stairs.
     But if the store name is seen as a servant when coming to life, it’s as if a store’s reputation for promoting health gives the consumers an excuse to be unhealthy. They depend on the store to do all the heavy lifting.

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Mythologize Your Store

Saturday, January 28, 2012

Join the Real Modern Family

The Emmy-winning TV series “Modern Family” features non-traditional household compositions: A gay couple adopting a daughter. An older man married to a much younger woman raised in a different culture.
     But a study released last month by advertising agency Leo Burnett Chicago indicates that the TV show is behind the curve compared to actual modern family dynamics. Since maximum retailer profitability depends on staying ahead of the curve, take note of what that report, titled “Humankind 2012: The Transformation of Aspiration,” has to say about now compared to before:
  • More single parents. About 40% of children are born to an unmarried mother. This does not necessarily mean there’s no father in the home, though. About 60% of married couples had lived together before the wedding.
  • More househusbands. Some of this is because men account for almost 70% of job losses in this Great Recession. Almost 80% of men have no objection to giving up the traditional gender roles. About 77% are comfortable with their wives earning more than them, and about 72% accept staying at home to raise the children.
     Husbands are doing more of the household shopping than in the past, and when a wife does do the shopping, she’s more likely than in the past to bring along family or friends. Women would prefer to be home more with their families, but in many cases, this isn’t feasible.
     The variations in preferences within the population of women and within the population of men are, in many realms, more significant than the average differences overall between men and women.
     Still, research finds that, overall, men tend to think about shopping and conduct themselves as shoppers differently than do women. Researchers at Stanford University asked samples of men and women to contemplate the task of shopping for a new wardrobe. Later, each participant was assigned to plot the route for a cross-country road trip.
     The women in the study were much more likely than the men to plot out a scenic route rather than a direct route. Male shoppers are more purpose-driven. Women are more possibilities-driven. Men tend to like sharp contrast. Women tend to like harmonious flow. Along with this, women are more likely to find emotional comfort from shopping than are men.
     Recalibrate your merchandising and patterns of salesperson-shopper interactions to turn these shopper gender trends to your advantage and to that of your modern family shoppers.

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Friday, January 27, 2012

Disclose Ethically

Some years ago, video game retailer GameStation added the following to their website’s terms and conditions for placing an order:
“…You agree to grant Us a nontransferable option to claim, for now and forevermore, Your immortal soul. Should We wish to exercise this option, You agree to surrender Your immortal soul, and any claim You may have on it, within 5 (five) working days of receiving written notification….”
     About 88% of the transactions were with acceptance of those terms and conditions during one day alone. In fact, it was only for that one day alone, since the day happened to be April 1. On the second of the month, with April Fools’ Day having passed, GameStation removed the immortal soul clause, plus announced that they were nullifying for now and forevermore the pledges collected.
     Few people will read the terms and conditions thoroughly when making a purchase decision. As a New York Times article pointed out, merchants can swindle, and even endanger, their customers because of this. Disclosures of side effects on medicine bottles. Piles of documents presented for signature in order to move a mortgage loan into escrow. Written notices of possible conflict of interest from attorneys, accountants, and financial advisors. Those doing the selling can too often figure that their ethical responsibility ends when they’ve buried the prospect in disclaimers.
     It doesn’t. Retailing ethics requires giving to shoppers what they need to make an informed decision. Information overload corrupts informed decisions.
     Be selective. If you sense something is important for the customer to know, tell it to them. And if your intent is to mislead or betray, that’s sinful. But presenting information selectively usually assists the consumer. Researchers at University of Twente in the Netherlands, University of Indiana, and University of Cincinnati set out to confuse study participants by adding to the sales pitch technical jargon, unfamiliar words, illogical product groupings, and dollar prices restated as cents. The result was that the participants chose items more quickly and with more certainty than would be in their best interests.
     Researchers at European University Viadrina find that when a salesperson selectively volunteers negative information about a product that’s being considered by the shopper, the shopper becomes more likely to trust everything the salesperson says.
     Keep the words and logic simple. If there’s too much complexity, the shopper won’t hook the talk of negative information to the salesperson’s credibility.

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

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Thursday, January 26, 2012

Crow About Helping the Local Economy

Cities are hungry for tax revenues. Big Box stores and industrial parks often produce more tax revenues than do small to midsize retail businesses. As a result, cities these days may be overlooking the value of keeping local retailing corridors robust.
     To counteract the trend, crow with pride about how you help your community’s economy.
     Have numbers ready:
  • Sales revenue impact: An increase in profitability can mean maintenance or increases in sales tax and property tax revenues. The dollar figure for sales per square foot varies widely even within the same type of retailing, such as fashion varying between $510 and $1,731 in one sample. This variation indicates there is the opportunity for growth with the proper profitability tactics.
  • Job income impact: What is the median annual salary of a retail salesperson in your local area? For the U.S. overall, it’s currently about $23,600. For each retail job in your local area, how many more jobs are added in a community because of the income of the retail employee? In my home state of California, it is about 0.53 job positions. To calculate the value of this addition, determine the median income for all jobs in your local area. Use those numbers to calculate the economic value of keeping or adding each retail job in your community.
     But in the political arena, stories are more powerful than numbers. Last Tuesday’s State of the Union address by President Obama, like every other presidential State of the Union address I’ve ever heard, exploits stories.
  • Community quality of life: My favorite stories have to do with the results of studies. As one example, let’s start with how researchers at Virginia Tech, Babson College, and Florida Atlantic University found that improving the atmospherics in neighborhood retail stores tends to improve the self-esteem of the residents. Go ahead to gather testimonials to show instances of that effect, and you have yourself some influential stories.
     Here are some research-based tips on getting the best from stories:
  • Keep stories short
  • Make the point crystal clear
  • If you talk about specific individuals, ask their permission first
  • Keep important details the same each time you tell the story
     Sometimes your argument is best made by looking at specific retailing corridors. Researchers from London’s Imperial College Business School and Toronto’s Sunnybrook Health Sciences Centre found that both the numbers and stories supported the value of retail shops in hospitals.

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Wednesday, January 25, 2012

Notch a Niche for the Fair Trade Spirit

Just over the hill from my home in Vacaville, California is Soul Food Farm, where the chickens run free and the eggs are found in a pasture. This appeals to a cadre of customers willing to pay higher prices for fowl food which has not been raised or slaughtered in foul ways.
     This niche market covers items well beyond the chicken and the egg. And according to food studies researchers at New York University-Steinhardt, the niche market is growing.
     A market increasing in size provides opportunities for small to midsize retailers.
     One impetus for the growth is a concern about food safety. Another impetus is what I’ll call the fair trade spirit. Account for that spirit in your retailing—whether you sell food products or not—and the spirit could become embodied as increased profitability.
     The fair trade movement advocates a willingness to pay a premium to suppliers who treat workers humanely and conduct their operations in ways that sustain the environment. It’s origins were in sales by developing countries to developed countries of items like coffee and handicrafts. The spirit of free trade can now apply to sales within a developed country of a broad range of items, and of the humane treatment of animals, not just workers.
     We all want to be good. Well, most of us do. At least most of the time. Okay, maybe it’s not so much that we want to be good as that we want to view ourselves as intending to be good. In any case, it can be tough.
     Make it easier for your shoppers to pull it off when they’re in thrall to the fair trade spirit. Tempt your customers into being good.
     Both the challenge to doing this and a straightforward way to meet the challenge were highlighted by researchers at Washington State University and University of Texas-Austin The researchers noticed how consumers who intended to buy animal friendly cosmetics, sustainable wood furniture, and fair trade clothing very often failed to ask about those issues at the point of purchase. The consumers would use the information to make their selections if the salesperson told it to them, but otherwise seemed to prefer to stay unaware of it.
     To tempt your customers into being good, tell them at the point of purchase about the ethical aspects of the products you sell.

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Tuesday, January 24, 2012

Put Large Quantity Before Odd Price

Which of these two is more attractive to shoppers?
  • $29.99 for 70 rolls
  • 70 rolls for $29.99
     Researchers at Virginia Tech say to put the even quantity before the odd price. The second phrasing of the two above is more likely to draw buyers.
     How about these two?
  • $29.99 for 30 rolls
  • 30 rolls for $29.99
     Here the consumer appeal of the two is about the same. That’s because the consumer can easily calculate the per unit cost, so pays attention to both the $29.99 and the 30 equally. When the per unit calculation is more difficult, as in the 70 rolls for $29.99, the consumer will pay more attention to whatever is the first number given. A quantity of 70 seems like a lot for whatever you’re paying. A price of $29.99 is high enough to justify a second thought. So the appeal of the 70 units outweighs the appeal of the $29.99 price, making the “70 rolls for $29.99” the more attractive phrasing.
     Convincing the customer to purchase a large quantity of an item carries profitability potential beyond the one item. The quantity purchase puts the shopper into what University of Chicago researchers called a “flow state.” A flow state has these characteristics:
  • Highly focused attention, so your shopper stops vacillating about whether or not to purchase
  • Playfulness, so your shopper is willing to try out new products and new brands
  • Enjoyment of activities, so your shopper hesitates ending the trip to your store
  • Related to this, a distorted sense of time in a way that makes a shopper less concerned about how long the shopping will take
  • Confidence in overcoming any difficulties, so your shopper perseveres when searching for the best items to buy.
     Activating a flow state also is a consideration with quantity-dependent price discounts.
     Which of these two will lead to more profitability for you?
  • 20% off if you buy at least five packages
  • 20% off. Limit five packages per customer
     Research at Bryant University and University of Illinois finds that the first one is better. When customers are allowed to purchase only a limited number of items at the discounted price, they are less motivated to purchase multiple items. But when customers are required to buy a minimum quantity to achieve the discount, they are more motivated to purchase multiple items and then to go on to purchase multiple quantities of additional items.

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Monday, January 23, 2012

Get on Consumers’ Calendars

Is it January 23 already? You know what that means? Aura Cacia, purveyor of rose absolute oil and lavender spike, does: They’ve declared this National Day of Chill.
     Aura Cacia isn’t referring to the cold weather, at least not directly. Instead, the chill refers to counteracting the stress potential of this day. According to the Aura Cacia Facebook page, as dawn broke, we all realized we’re not going to keep all those New Year’s resolutions, the bills for Christmas extravagances have arrived, and the holiday season’s joy is only a memory.
     Chill out for fifteen minutes. It’s best done with the natural and organic essential oils from Aura Cacia, says the company. They have it on their calendar, and through use of social media, they’re aiming to get it onto the calendars of you and your friends.
     Creating a reason to come into your store shouldn’t be all that hard when it’s a pleasant place to shop and you carry appealing merchandise. Still, consumers might need the additional prompt of a special day.
     But only once a year? Well, no. According to a MarketingDaily article, chill outs are also scheduled this year for April 12 (it’s taxing), July 24 (tends to be the hottest day of the year), September 4 (summer’s over), November 5 (preparing to vote), and December 22 (more dark than light).
     Each of these dates now becomes an opportunity for promoting sales. It’s a classic technique. In the 1950’s in the San Francisco Bay Area, a popular advertising refrain was, “Tuesday is Red’s Tamale Day.” Or maybe, set a weekly quota. Blue Diamond Growers marketed their almonds with “A can a week, that’s all we ask.”
     Those are suppliers. You’re a retailer. You’ll do it with promotions like, “10% discount to senior citizens each Tuesday,” or with regularly scheduled special events.
     Once the customers have obeyed the calendar and come by your store, remember to sell.
  • Research at University of Colorado and Columbia Business School suggests that the nature of a special event should take into account whether shoppers perceive the items for sale as routine or risky purchases. For items that are fairly routine purchases, special events should emphasize free trials. For items carrying financial or social risk, emphasize how-to-use-it information.
  • Never let the crowds or the activities get in the way of your special event participants easily buying merchandise from you at any point.

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Sunday, January 22, 2012

Simplify the Shopping

In early 2010, sales per square foot at Lucky Brand stores equaled $380. The goal of a store revamp,was to raise this to $600 within five years. Fueling the profitability drive was simplification for the shopper via store redesign.
  • Whatever fashions are shown in the display window outside the store are stocked close to the front door for easy pickings.
  • Whole outfits are displayed together for those who question their eye-eye coordination.
  • Upper shelves inside the store are used for display rather than for holding merchandise, cutting down on the need to stretch the body while stretching the budget.
     Achieving simplicity for the shopper requires complex attention to details for store management and staff. Instructions required an inch-thick manual. Further, simplicity does not mean depriving the shopper of special touches. Although whole outfits are displayed together, the shopper can easily mix and match. And employees at the cash/wrap sheathe purchases in tissue paper before placing them in the shopping bag.
     Oh, yes. The design of the shopping bag has been simplified, too.
     Simplicity is defined differently for different shoppers. Lucky Brand has learned that women prefer to have jeans displayed on hangers for easier imagination of the look on the body, while men want jeans stacked on shelves for more quickly locating the suitable size and cut.
     Strategic branding firm Siegel+Gale surveyed 6,152 consumers across China, Dubai, Germany, India, Saudi Arabia, the UK, and the U.S. about what defines simplicity in retailing. The four primary components might not fit what you’d predict, although each is attainable by a conscientious retailer:
  • Clarity in communications
  • Honesty and trustworthiness
  • Efficiency in satisfying consumer needs and wants
  • Accessibility whenever there are questions
     And ensure simplicity in item returns:
  • You're posting the return policy. But if customers are queued at a returns desk, can they easily see the policy while waiting?
  • You've trained staff on all the terms of the return policy. But can staff members keep their explanations to angry customers brief?
  • You know that asking each customer the reason for the return is a good way both to improve merchandising and to curb fraud. But do your staff make this a service-oriented inquiry, not an inquisition?
  • You've empowered your staff to interpret policies flexibly. But is a manager readily available if questions about returns arise?

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

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Saturday, January 21, 2012

Fiddle Around with Expert Expectations

Changing the brand or item preferences of an expert can be difficult, even when a retailer has evidence that the change would benefit the expert. Consumers who consider themselves to have high expertise often like to show off their knowledge. If you say, “Here’s a product I think you should consider because it’s better than the one you’ve been buying,” the expert’s eyes will open wide and a smile will cross the lips, all in anticipation of the opportunity to debate.
     Experts also hesitate asking a full range of useful questions. This is because they fear that doing so would make them look less knowledgeable.
     How to change the preference? First off, instead of saying, “I know better than you do,” say, “Here’s a new alternative I hope you’ll consider.” Say this even if the alternative has been around for a while. The word “new” allows the experts to believe they’ve overlooked the better choice because it was not previously available.
     Next, blind the expert. Okay, maybe that sounds too harsh. Instead, I’ll phrase it as “fiddle around with the expert.” In a study conducted by researchers at Universit√© Paris 06, University of Michigan, violin maker Joseph Curtin Studios, and violin string manufacturer D‘Addario and Company, blinding and fiddling were pretty much the same thing.
     Twenty-one expert violinists were asked to compare high-quality new instruments with classic violins made by Stradivari and Guarneri del Gesu. But since experts would be likely, without question, to consider a Stradivarius and Guarnerius to be superior, the study was a blind design: The violinist was not told which instrument was a classic and which was of modern manufacture. The study was conducted in a darkened room. Each player wore welder’s goggles to cloud vision of the fiddle.
     The sense of smell was masked, too. The chin rest of each violin had been dabbed lightly with perfume in order to mask any hints from the fragrance of old wood or contemporary varnish.
     Indeed, the researchers found that the most-preferred violin was a newer one, the least preferred happened to be a Stradivarius, and most of the 21 experts couldn’t say whether the instrument most preferred was old or new.
     You won’t be able to have your expert consumers wear welding goggles unless that’s what they’re aiming to purchase. But you can invite them to try out alternatives, preferably without telling them which is which.

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Friday, January 20, 2012

Pay Your Dues, Then Do for Yourself

Retailing trade associations can be a fine source of ideas. You’ll learn from other retailers, even from retailers selling product lines quite different from what you sell. Some of the most useful lessons can come from the hits and misses of retailers who sell to the same sorts of markets as you, but sell those people different items. By quickly adapting the lessons to apply to your merchandise mix, you can gain an early-start advantage over your competitors.
     For the small to midsize retailer, retailing trade associations also might offer group discount benefits not available otherwise.
     But after you’ve paid your membership dues, avoid social loafing, the risky shift, and group polarization.
     “Social loafing” is the name given by psychologist Bibb Latan√© to the phenomenon in which we leave the work to others in a group to which we belong. When joining a trade group, take care that you monitor their actions—such as the organization’s stands on legislation—to check that those actions drive the interests of your store. If an expectation of membership is that you’ll contribute resources to accomplishing the organization’s objectives, do this, but don’t allow those contributions to cripple your maintenance of your own business.
     First described by researchers at Massachusetts Institute of Technology, the “risky shift” refers to how groups of people make more extreme recommendations than if those people acted individually. Being insulated from full responsibility by the group, members of a committee can find themselves tempted to take potentially perilous business chances.
     More recent research has found that a committee often doesn’t give in to the risky temptations, instead actually moving in an overly cautious direction. These days, social psychologists prefer the term “group polarization” to “risky shift.”
     A New York Times opinion piece described the tradeoffs in joining up with others versus conducting business by yourself. The nicely-documented argument of the article is that sometimes we do best functioning as part of a team and sometimes we do best by closing off the distractions from membership interchange.
     It would never work, of course, for a retailer to conduct business in solitary confinement. Each of us needs our suppliers and our customers. That’s the function retailing plays in the supply chain. As to how much you’d benefit from joining trade associations, also keep in mind that successful retailers are energized by socializing. It’s in the DNA of merchants.

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

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Thursday, January 19, 2012

Lavish Hugs in Your Shop

The National Retail Federation’s Annual Convention concluded yesterday in NYC. The confab was brimming with great ideas for small to midsize retailers. As one example, at “Independents’ Day,” Linda Hundt, owner/operator of Sweetie-licious Bakery Caf√© in DeWitt, Michigan, suggested you hug your good customers.
     Maybe that strikes you as a crazy idea, but crazy ideas can inspire really good ideas. It’s easier to tame down a wild idea into something sensible than it is to jazz up into profitable creativity the same old ways of thinking.
     With this in mind, be inspired by the results of a consumer behavior study done in the mid-1970’s at a university library. As the clerk returned the library card to some of the students, the clerk placed her hand directly over the student’s palm. Other student patrons of the library didn’t receive the brief touch. When the students were surveyed outside the library, those who’d received the touch rated the library significantly more favorably than did the non-touched students.
     Decades later, researchers at Tel Aviv University assessed the results of a retail employee touching customers in settings that included a supermarket, a restaurant, and a bookstore. There, a brief touch on the arm of a customer led to the customer feeling more positive about the retailer. And positive feelings toward a retailer increase the potential for financial profitability.
     Touch soothes and energizes at the same time. However, I’m obliged to point out that touch also can freak out a customer. What worked in the mid-1970’s might not work now. What is welcomed by Sweetie-licious customers in DeWitt, university students in Connecticut, or Israeli bookstore patrons might be offensive to the people frequenting your store. Keep the touching pleasant, but keep up actual and virtual hugging.
  • Shake hands, bump fists, place a hand on the arm—whatever is culturally and socially appropriate
  • Reach out toward customers with palms facing upward, or whatever else in the customer’s culture projects a welcoming attitude
  • Maintain the style of culturally appropriate eye contact to stay psychologically in touch
     Ms. Hundt reported hugging her employees as well in order to keep that loving feeling. Here, your version of the hug in your store might be personal delivery of paychecks or direct deposit advice slips. Not something you’ll do every pay period, but on occasion to individually recognize each employee as a crucial contributor to the profitability of your business.

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Touch Customers
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Wednesday, January 18, 2012

Incorporate Shopper When Refusing to Sell

Some years ago, my wife and I decided to replace the elaborate gold brocade draperies covering the large front window in our home. The problem for me was that the decorator would not sell me the drapes I told him I wanted. He firmly refused.
     Was it that he didn’t have a supplier for the fabric? No, he said. He made a remark about having decorated even for museum displays.
     I was irritated. It took my wife’s gentle coaching to lead me to conclude that my insistence on replacing the old drapes with another elaborate gold brocade fabric would be okay, but not the best alternative available to us. She ended by saying our decorator’s refusal was because of conscientiousness—the sort of trait we wanted in a tradesman. She said he almost surely wanted to have a superior outcome on display in the front of our house for all his potential customers to see.
     Gee, you know, I’m wondering now if my wife was really the one behind the refusal.
     There are circumstances where you’ll choose to refuse to sell a product or service to a shopper:
  • The sale would violate the law. A restaurant doesn’t want to serve liquor to an underage patron. A hunting shop won’t sell the gun unless the customer shows the proper ID.
  • The customer seems incapable of making a good decision right then. For example, as part of her psychotherapy, a regular customer previously told you she needs help handling a Compulsive Buying Disorder, and today, she’s already purchased three blouses from you.
  • There’s a better product alternative, and your concern is that your reputation will suffer. The decorator wants a good window treatment to be on display. The art supply dealer is concerned that the customer doesn’t yet have the skills to work with a certain medium and will become angry at the dealer if this point is not made forcefully.
     In handling these situations, remember that “No” is the shopper’s least favorite word. Avoid saying no. Instead, incorporate the shopper’s point of view. To the underage request for liquor, try, “Both you and I could be in trouble if I make that sale.” To the customer with CBD, use, “Let’s work together to do what’s best for you” To the drapery customer like me, who’s displaying abysmal aesthetic judgment, “I believe you retained my services because you respect my advice.”

Click below for more:
Compulsive Buying Disorder. Okay, Laugh
Dampen Involvement to Redirect Preference

Tuesday, January 17, 2012

Trash Ineffective Appeals to Recycle

Consumers are more likely to do what they understand how to do and agree it is worth doing. This applies whether we want the consumer to redecorate her house or to recycle her trash.
     But the appeal to the “how to do it” works differently than the appeal to the “why to do it.” Researchers at University of Calgary and University of British Columbia explored how to increase the rate of recycling. The problem has been that, although a great many people in a range of developed countries are saying they want to take increasingly decisive actions to sustain the environment, they’re not following through. Comedian Sean Lock has quipped that limiting yourself to recycling your jam jars feels about as helpful as turning up at the aftermath of a hurricane with dustpan and brush.
     Researchers at Suffolk University in the U.S. and York University in Canada say that consumers justify their wasteful consumption on the basis of needing to buy what is available, and what is available too often uses wasteful packaging or makes reuse of the product difficult.
     The Calgary/British Columbia researchers tried out two sorts of arguments with citizens:
  • Loss-framed, like “If you don’t recycle, we could run out of places to put our piles of trash.”
  • Gain-framed, like “If you recycle, we’ll be better able to save trees and reduce pollution from manufacturing.”
     The researchers paired each of these with either concrete “how to recycle” instructions or with more abstract “why we’re telling you about recycling” information. Both the how and the why influence consumers. But is one type of pairing better than another?
     Yes.
     The researchers found that the loss-framed arguments were most effective with the “how to” instructions and the gain-framed arguments were most effective with the “why we’re telling you” information. Effectiveness measures included the volume of material and the variety of materials recycled.
     The improved power of these proper pairings wasn’t a flash in the dustpan, either. It persisted for the six months that the researchers tracked results.
     The power of the loss/instructions pairing was even greater if the researchers talked about short-term results. On the other hand, the power of the gain/information pairing was even greater if the focus was on the longer-term.
     When you want to influence shoppers, these trios of loss/instructions/soon and gain/information/future should work not only with the recycling, but also with the redecorating and other retail offerings.

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

Click below for more:
See Through Anti-Waste Consumers
Know How Customers Dispose of Products

Monday, January 16, 2012

Keep Trucking with Transportation Cost Climbs

The National Retail Federation is predicting supplier costs to retailers will increase because of the recently revised Driver’s Hours-of-Service Final Rule issued by the U.S. Department of Transportation. Big rig drivers will be limited to 70 hours per week behind the steering wheel instead of the current limit of 82 hours. NRF says that the result will be a need for more trucks and truckers, thereby raising costs.
     The change from 82 to 70 hours doesn’t occur until 2013, but transportation companies might use news of the rule to raise costs sooner. Therefore, it’s a good time to start preparing your shoppers for price increases:

  • Strengthen store loyalty. Then shoppers are more likely to justify to themselves paying higher prices because of their desire to help you succeed. Social media and distinctive product lines can help build loyalty.
  • Research at Switzerland’s University of St. Gallen suggests that customers are more likely to justify to themselves paying higher prices when the salesperson tells them a story which dramatizes the benefits of the store. Fill the story with as much detail as the shopper’s attention span seems to allow.
  • Explain that you need to increase your prices when your suppliers increase their costs to you. Adapt the following to fit your style: “When our suppliers increase their prices to us, we need to pass those increases on to the customers so that we can stay in business and continue to serve shoppers like you and employ the people like me.” Although the basis for suppliers charging you more might be the rise in transportation and shipping costs, avoid using this as a reason with customers. Research finds that talk of such indirect costs won’t persuade customers.
  • When raising prices on items that many customers will see as necessities, use signage to describe less expensive alternatives. Prepare your sales staff to point out the alternatives if a customer complains about the cost. Researchers at University of Arizona, Arizona State University, and University of Pennsylvania find that this reduces a consumer’s drive—conscious or subconscious—to punish the retailer for the price increase.
  • Consider warning customers of upcoming price increases. There’s certainly the risk they’ll then start looking for other sources for the products they’ve been purchasing from you. But there’s also the opportunity for you to boost sales and book profits sooner if customers decide to stock up before the cost rises.

Click below for more:
Prepare Customers for Price Increases
Be Ready to Explain Price Increases
Tell Stories for Price Increase Acceptance

Sunday, January 15, 2012

Inject Distance for Price-Quality Link

Shopping is easier when customers see in your store a relationship between the price of an item and the quality of the item. When comparing a set of alternatives within a product or service category, the consumer is more comfortable when there is a price-quality link.
     This link is clearer for the consumer when the retailer injects psychological distance while selling:
     Researchers at Hong Kong University of Science and Technology told study participants how much had been paid for a set of items—ranging from yogurt to computers—and then asked each participant to guess the quality of each item. In some cases, the study participant was to assume that she herself had made the purchase. In the other cases, the participant was to assume that a friend had made the purchase.
     With the purchases made by friends, there was a more direct relationship between the price paid and the assumed quality of the item. A purchase made by someone else has more psychological distance than a purchase made by oneself.
     To strengthen the price-quality link in the shopper’s mind, a retail salesperson might talk about what other people have paid for the item in the past or what other suppliers are charging. This should be done in a way that highlights the good value offered by your store, and the information should be accurate. Another technique suggested by the researchers is to ask the customer what his friends would think of the product.
     The same researchers found similar results when the distance was temporal. In that study, consumers were asked to consider purchasing a computer. Some were asked to think about making the purchase the next day, while the rest were asked to think about making the purchase two months hence. Those people assigned to the “buy two months from now” group were more likely to relate price to quality.
     Looking at the same issue from a different angle, research findings from University of Mannheim indicate it’s good to offer higher-ticket items to layaway shoppers. People are more willing to pay a premium price for a product they desire if the retailer obtains a commitment well in advance of the product’s availability to the consumer. The announcement in advance encourages a longer-term perspective, which in turn relaxes budget restrictions. Here, too, when acquisition will occur at a somewhat distant time, the consumer correlates price more strongly with quality.

Click below for more:
Lay Away Reservations with Layaway
Commit Shoppers from a Distance for Expenses
Give Customers Long-Range Perspectives

Saturday, January 14, 2012

Temper Negotiating Tension

“Temper” is one of those words showing why English is hard to master. Among the meanings as a verb are both to soften and to harden. The meaning I’m aiming for in titling this post is “to dilute by the influence of something else.”
     I regularly hear from my consultation clients and workshop participants questions about negotiating with shoppers and reports of emotional tension accompanying the bargaining. There are advantages for the retailer in maintaining some tension during the process. Researchers at University of Maryland found that during the back and forth of negotiating a purchase price, the shopper will feel better about the final decision if the retailer waits a while before responding with an okay or a counteroffer during each round. The shopper interprets the hesitation to mean he’s gotten the best possible deal.
     When the tension becomes too great, though, the shopper might bolt from the store or showroom. That’s bad. One way to temper the tension while still using the silent treatment is to smile gently and nod. Another alternative is to smile broadly and joke around.
     A few years ago, I heard a story about a used-car dealer showing his shopper a 2005 Chevrolet in excellent condition and saying, “The price is only $7,000.” The customer replied, “I’m willing to give you $3,500.” The salesman nodded, then grinned mischievously, before responding, “If at all possible, I’d prefer to sell you the whole car.”
     Use humor with caution. We want to be laughing with the customer, never at the customer. Also keep in mind how history suggests most shoppers prefer not to negotiate. It was in 1846 that Alexander Turney Stewart introduced price tags to American retailing. A.T. Stewart’s Marble Dry Goods Palace in New York City was unusual because of its huge size, offering both luxuries and commodities in the same store, and what is thought to be the first use in America of street-level plate-glass display windows.
     Mr. Stewart said that the hard negotiating over price—at the time, the prevailing practice—left enough bad feelings among shoppers to interfere with customer loyalty. Most consumers viewed themselves as less skilled at haggling than were the retailers, who did it repeatedly each day. The customers often came away feeling they’d been exploited.
     The introduction of fixed pricing was largely responsible for the rapid growth of Mr. Stewart’s retail enterprises.

Click below for more:
Check Your Optimism When Dealing with Vendors
Negotiate Through Shopper Rituals
Respect Customers with Fixed Pricing

Friday, January 13, 2012

Sleep Away from Retailing Errors

An article in last Sunday’s San Francisco Chronicle took note of how consumer anger caused three retailers to significantly change plans:
  • Bank of America withdraw the idea for a $5 monthly debit card fee when a Facebook campaign convinced BofA customers to themselves do a withdrawal—closing their accounts. No apology from BofA for the bother, though
  • One day after announcing a $2 fee for online bill payments, Verizon Wireless dropped the idea, saying they’d responded to their customers’ objections. No apology from Verizon for the presumptuous tone of the original fee announcement.
  • Netflix, Inc. galumphed from one subscription arrangement to another. After things settled down, Netflix CEO Reed Hastings sent customers an apology starting, “I messed up,” and ending, “Respectfully yours.”
     How profusely and for how long should a retailer apologize after making an error which, let’s say, deeply offends two-thirds of their target market and severely irritates the remaining one-third.
     The shopper psychology answer: Apologize credibly and promptly move on.
     In the 1970’s, psychologists gave the name “sleeper effect” to a phenomenon in selling political candidates: When the arguments for a candidate were convincing, but the person making the arguments was irritating, the consumer would at first not be at all convinced, but after a period of time would forgot about the source and be persuaded by the message.
     Subsequent studies by consumer psychologists found that the sleeper effect works in a range of retailing situations, including apologizing for an error. Research centered at University of Illinois-Chicago Circle described the conditions essential to produce the sleeper effect. Here is my translation of the findings into the steps you—the retailer—can take to activate the sleeper effect when you think you’ve irritated customers:
  • Decide what you’re apologizing for. It might be the way in which you announced a change, not the change itself.
  • Ask the consumer if they have any questions you might answer. If they do, answer the questions promptly.
  • Tell consumers how much you appreciate their business and how continuing to do business with you will benefit them.
  • If a customer closes an account with you, wait one month and then send him an e-mail or postal mail invitation to come in to shop with you. Have the invitation signed with the store name, not your name. This is an exception to the rule that it’s better to use “I” than “we” in error recoveries.
Click below for more:
Put Customers to Sleep After Irritating Them
Apologize to Customers for Retailing Errors
Trick Me Once, I’m Outta Here

Thursday, January 12, 2012

Moderate In Using Research Findings

Please allow me to risk confusing you. I promise to then tell you why.
     Here goes:
     Researchers at National Chengchi University in Taiwan found that a happy consumer is more likely than a sad consumer to believe a retailer’s claim a promotional offer is high value. But this difference between happy and sad consumers is less pronounced when statements about the product being promoted are about attributes highly important to the consumer. The effect of the affect also is less pronounced if the consumer doesn’t plan to purchase the product soon or if the promotional offer initially strikes the consumer as being of low rather than high value.
     What does all this mean for you, the retailer? It means you should work to have happy consumers. But since you’ve less than absolute control over a shopper’s mood, present product attributes and benefits you find are highly important to that individual shopper. This is particularly important as the shopper comes close to deciding if the promotional offer is good enough to justify the purchase of the product.
     Well, why didn’t I just say that to begin with? Because I want to let you know about what behavioral scientists call moderating variables.
     In the Taiwan research, the value of the promotional offer was a moderating variable. The relationship between the mood of the shopper and the degree to which the shopper believed claims about a promotional offer depended on whether the promotional offer was initially seen by the consumer as high value or low value. For high-value offers, mood made a difference. For low-value offers, it didn’t make a difference. The advice to you can come across as, “It depends.”
     Making that “It depends” point is why I’ve risked confusing you. My task in writing RIMtailing posts, conducting seminars, and doing on-site consulting is to tell retailers what to do and what to avoid doing. I benefit you when I say why the tactics work. But that, too, must be straightforward.
     Because of the complexity of consumer behavior, the answer to many retailers’ questions is, “It depends.” That’s not what you prefer to hear. You want advice simple enough for you to remember and to communicate to staff.
     Still, when interpreting research findings on your own, be a moderator who teases out the moderating variables. This will help you reconcile what might appear at first to be contradictory recommendations for profitability.

Click below for more:
Take Occam’s Razor to Your Shoppers

Wednesday, January 11, 2012

Steal Attention with Rascal Appeal

Newell Rubbermaid has plans to grab notice for a product category considered one of the most mundane in any retail store—ink pens. According to Marketing Daily, the Paper Mate InkJoy is being launched in Australia, Brazil, Canada, Columbia, France, Mexico, New Zealand, Poland, and the U.S. with the tag line “World’s Most Stolen.” The notion is that once a consumer experiences the joy of the pen’s butter-smooth feel when writing, she won’t want to put it back down.
     That tag line is in the spirit of Steal This Book, the 1970’s tome written by counterculture guru Abbie Hoffman. Mr. Hoffman is reported to have responded to the success of the book by saying, “It’s embarrassing when you try to overthrow the government and you wind up on the best-seller’s list.”
     The mention of thievery lends a forbidden fruit appeal to retailing. This, in turn, draws attention in an overcrowded marketplace. Oscar Wilde, the Irish poet and playwright who could be considered a rascal, even if based solely on his surname, wrote, “There is only one thing worse than being talked about, and that is not being talked about.”
     A part of all of us enjoys dealing with a bit of a rascal. This is because there’s a part of all of us which is at least a bit of a rascal. Especially in individualistic cultures like the U.S., consumers are fascinated with famous rascals. When the retail store personality you aim for includes “exciting” and your target markets include people from individualistic cultures, you might decide to have your store project an image of testing the limits.
     We do want to set and enforce the limits, however. Video ads for the InkJoy end with the woman who’s ready to walk away with the pen being surprised by a voice saying, “Don’t. It’s a trap.” We all then see that the voice is from a man holding an InkJoy. He’s trapped in a net hanging from the ceiling.
     Most consumers are ready to be reminded of the consequences of crime, even though fascinated by rascal behavior. At the auction of belongings seized from convicted swindler Bernie Madoff, a pair of earrings for which the maximum expected bid was $9,800 actually sold for $70,000. Still, one of the items did not get a supersized bid—a famous Rolex watch known over the years by the nickname “The Prisoner Watch.”

Click below for more:
Consider Publicizing Your Rascal Image
Handle Employee Dishonesty Consistently
Cultivate Controversy Carefully

Tuesday, January 10, 2012

Slip in Superfluous Choices

Consumers make many purchases with scant attention to all the details. Often this is because the shopper acts from habit, so no thorough thought is necessary. In other cases, the shopper is limiting attention to one attribute—such as price—so doesn’t even notice other attributes—such as durability or delivery time—until after the purchase. Busy and stressed consumers are especially likely to take the shortcuts.
     This consumer psychology reality has effects which create challenges for the retailer:
  • Missed opportunities. If you believe there’s a better alternative for the shopper you’re assisting, you may have trouble slowing down the decision process.
  • Post-purchase regrets. When the customer ultimately takes time to fully evaluate the product or service, she may become less satisfied.
  • Wobbly store loyalty. With the limited focus and possibilities of post-purchase regrets, your customer is susceptible to sales pitches from other businesses.
     Research findings from Harvard University and Hong Kong University of Science and Technology suggest a way to address the challenges: Add superfluous choices early in the decision process. The researchers define superfluous choices as ones which, in themselves, have little impact on what item is ultimately selected. The power of superfluous choices is to slow down the decision process sufficiently for the consumer to take note of a broader range of attributes.
     Study participants were asked to make a selection from different alternatives for rewritable compact disks and cases. But prior to making the choice, one group of participants were first asked to decide how many different colors of cases they’d want to have. The researchers had earlier determined that, in itself, the number of case colors was not an important determinant for consumers in selecting from among alternative packages of rewritable CDs.
     However, introducing this superfluous choice increased customer loyalty. Of the study participants who were not asked about case colors before choosing the product, 47% chose the same alternative again subsequently. But of the study participants asked to make the superfluous decision before the product choice, 74% persisted in selecting the same package of rewritable CDs and cases again later. In addition, the superfluous-choice-first participants were more satisfied with their selections afterwards.
     This had to do with product loyalty. Similar techniques work for improving store loyalty and customer satisfaction with your store. Ask your shoppers to make a few choices—any sorts of choices they’ll see as interesting—early in the decision process.

Click below for more:
Number Costs and Benefits for Desired Effects
Dislodge Indecision with New Choice

Monday, January 9, 2012

Mirror Responsibility at Complaint Desks

Placing a mirror behind the places where you accept complaints reduces the intensity of customers’ dissatisfaction. This finding by researchers at Bayer Healthcare, Columbia University, and Maastricht University deserves an explanation: When a consumer sees an image of herself, her self-awareness increases. This leads to the consumer subconsciously considering what part she played in the unsatisfactory experience.
     Mirrors cause us to pause and look at ourselves. Moreover, the reflection in the mirror helps a person sense the emotions they’re experiencing, again arousing the sort of self-awareness that can ease extreme irritation.
     A video camera attached to a monitor, both of which are easily spotted by the consumer, accomplishes the same result. Research finds that just having the camera itself helps, although it’s not as effective as the full setup.
     Did I hear you say the placement of a large mirror won’t work out for you, and you’re concerned consumers won’t notice the video camera? Then use psychological mirrors. The Bayer/Columbia/Maastricht researchers suggest asking the consumer questions which include words like “you” and “your.” Researchers at National University of Singapore and Chinese suggest having words like “I,” “my,” and “mine” on signage in the area.
  • The effect occurs when the customer is asked or asks herself to evaluate the shopping trip or the experience with the product. It does not occur at the time of the experience itself. That’s why the mirror at the complaint desk works in this way.
  • The effect reduces the intensity of extreme positive emotions as well. The Bayer/Columbia/Maastricht researchers found that after looking at themselves in a mirror, customers were more likely to take credit for their part in highly pleasant shopping experiences, reducing the credit given to the retailer.
  • The effect makes extreme emotions more moderate, so it works best for you with people who are so upset it becomes difficult to resolve the complaint. When a mildly disappointed customer looks at himself in the mirror, it can increase the intensity of the negative emotion.
  • The effect occurs only when there is a plausible reason for the consumer to conclude they might have partial responsibility for an unsatisfactory experience, such as a failure to follow usage instructions.
     For the history of retailing, mirrors in stores have been recommended as a way to add light and dilute the perception of crowding. It turns out that this also holds true in lightening and diluting intense dissatisfaction.

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

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Pinpoint Feelings in Imagining of Benefits
Eyeball Shoppers So They Behave Themselves

Sunday, January 8, 2012

Pull Off the E-mail Mask When Irritated

What do you think about this reply to a customer’s complaint about late delivery on a preorder?
     “When you preorder, the delivery date can get moved. If you ordered some video game before the final release, delivery might be delayed due to the tweaks and bugs not being worked out in time.
     “I’m sure you wouldn’t complain to GameStop if they held your cash in that case. So put on your big boy hat and wait it out like everybody else. No one is special.
     “Anyway, feel free to cancel your order. The items are backordered, so your two will be gone fast. Maybe I’ll keep them for myself and resell them at a premium price.”
     A response very much like that was made to a customer who had preordered two videogame controllers from N-Control and complained that the controllers hadn’t arrived when promised. According to a RetailCustomerExperience.com posting, the man giving that response to the customer was subsequently fired.
     Oh, yes. There are two important details of this tale I’ve intentionally left out so far:
  • The toxic reply was made after a few cordial exchanges between the customer and the retailer’s complaint desk.
  • The toxic reply was made in an e-mail message to the customer, not face-to-face.
     Toxic replies are more likely when the retailer forgets they’re dealing with a customer. I can imagine some retail employee saying to a child at home when off work, “So put on your big boy hat and wait it out like everybody else.” There are employees in retailing who carry into the store rude behavior from their outside lives.
     Making it worse in the N-Control case, when behind the mask of e-mail, we can too easily forget the rules of retailer-to-customer communication. Check yourself and train your staff to guard against it happening. It’s more likely when the retailer is irritated, as it appears was the case here. The exchanges before the toxic reply were polite. But the customer kept pushing. Anger management is a valuable skill for retail employees.
     The mask of e-mail can work to your benefit. Smaller retailers can make at least as big an impression as larger competitors. Just remember the power of the mask.
     One of the most frequently reproduced New Yorker cartoons shows a canine sitting before a computer screen, paw on keyboard. The Peter Steiner caption: “On the Internet, nobody knows you’re a dog.”

Click below for more:
Show Complainers Respect, Concern, & Empathy
Join Customers in Role-Playing

Saturday, January 7, 2012

Sign Up to Explore Consignment

A couple of months ago, an organization called “Women at NBCU” surveyed a sample of 2,000 women selected to be representative of American female consumers ages 18 to 49. The “NBCU” stands for NBCUniversal. Women at NBCU develops advertising campaigns employing the NBCUniversal media channels.
     The major conclusion of the survey: When purchasing merchandise, most American women are now thinking about how they will dispose of the item, preferably by selling it.
     For instance, respondents were asked which of the following they’d be more likely to buy:
  • An item costing $100 which could be sold for about $35 after one year’s use.
  • An item costing $50 which could be disposed of only via donation.
     Two-thirds of the respondents said they’d be more likely to make the $100 purchase.
     This phenomenon suggests that your store might profit by buying and then reselling used merchandise. However, there’s a twist: Women at NBCU used the label “Auctionomics Marketplace” because most of the women said they wanted to handle the resale themselves rather than go through a store-based retailer. They’d use online auction sites or sites where consumers buy directly from each other.
     They expect to find fun in the selling process. Almost 90% of the survey respondents said they’d prefer to own and then resell a wide variety of items than to rent the same items. Other survey findings indicated women want to become expert collectors who can advise other consumers. The women want to have a personal participation in the transactions.
     But how personal will the women end up wanting to get? As the presence of “We’ll sell it for you on eBay” retailers shows, many consumers find that they appreciate a consignment arrangement. You—the retailer—accept the merchandise, facilitate the sale, and keep a portion of the sale price as your fee.
     Consider if this type of business model—whether arranging online sales or conducting store-based consignment sales—could become a profit center for you.
     An advantage of consignment over you purchasing the merchandise is that you’ve less tied up in inventory costs. An advantage to the seller is she can feel that desired personal involvement. So when an offer comes in for an item you’re selling on consignment, make it a point to emphasize to the prospective seller, “It’s your choice whether to accept this price,” and tell the prospective seller a little information about the prospective purchaser.

Click below for more:
Resell Consumers on Buying Used Items
Know How Customers Dispose of Products
Reconfigure Your Own Endowment Effect

Friday, January 6, 2012

Shoe Things for Higher Sales Revenues

Shoes are in the news:
  • A Los Angeles Times article highlighted shoe-of-the-month clubs in which members are offered a selection every time the calendar page turns. The selection is determined by answers to questions the member gave upon enrollment, the member’s past purchases, and the club’s data about all members’ purchasing preferences.
  • The Wall Street Journal described how retailer Foot Locker choreographed release of the $180 Jordan Retro 11 Concord sneaker to match when a prime demographic—service workers—were likely to have just received Christmas season tip income. One man interviewed for the WSJ article said he already owned fifteen pairs of Jordans.
  • ABC News is reporting that L.L. Bean’s duck boot with leather uppers and rubber soles is a current fashion hit on college campuses. Updated styles of the century-old design include bright blue and pink. Sales volume for the boots has more than tripled over the past four years.
     There are few sure things in retailing. The ability of shoes to increase sales revenues might be one of them. In 1999, retailer Nick Swinmurn convinced venture capital investors to begin the firm now known as Zappos and owned by Amazon.com. Mr. Swinmurn’s pitch was that footwear in the U.S. is a market worth $40 billion annually.
     Whatever line of merchandise you sell, consider if you can include shoes. Sporting goods? Shoes fit well. Toys? How about tiny shoes for the dolls? Home improvement products? Steel-tipped shoes could make the do-it-yourselfer feel like they’ve the heft of a professional carpenter.
     High heel shoes have a magical appeal for women consumers. Many claim the added height makes a woman feel more assertive. A few classic psychoanalysts said the high heels’ shape penetrates any penis envy. Hey, there are two of them rather than the man’s one. The psychoanalysts refer to this as overcompensation.
     Closer to scientific rationality, Psychology Today opined on how the elevation sculpts the calf and thrusts the pelvis forward, stimulating sexual attractiveness all around. Shoe designer Christian Louboutin was quoted in a New Yorker essay: “When a woman buys a pair of shoes, she never looks at the shoe. She stands up and looks in the mirror, she looks at the breast, the ass, from the front, from the side, blah blah blah. If she likes herself, then she considers the shoe.”
     Want to sell more merchandise? Including footwear in your mix is a shoe-in.

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Cultivate Store Prestige with Context
Adapt Lessons from Other Retailers

Thursday, January 5, 2012

Sensitize Customers to Degree of Certainty

Why is that a critical claim about your store which is obviously false won’t be instantly spotted as bogus by everybody who knows anything about your business?
     Researchers at Stanford University, Northwestern University, and HEC-Paris say it happens because the degree of certainty associated with the claim is forgotten much more quickly than is the content of the claim. The recommended remedy: Sensitize your ongoing customers to the degree of certainty in what’s said about your store and the items you sell.
  • When making a claim to a shopper, state the certainty with which you’re making the claim.
  • When customers bring claims to you, ask about the degree of certainty the customer gives to it.
  • Use puffery with caution. Puffery consists of lavish, often exaggerated, claims about a store or about products carried by the store. If you’ve quality products to offer and maintain a staff with acknowledged expertise, expose shoppers to your puffery. Let the puffery demonstrate the abundant enthusiasm you and your staff have for what you’re offering in your store. However, if shoppers in your store tell you about puffery from elsewhere which you consider to be misleading the consumer, expose the puffery.
     In one stomach-churning study, the researchers began a rumor that a particular restaurant was using worm meat in preparing the hamburgers. Highly unbelievable, you’d think, and sure enough, those people first exposed to the rumor tended to consider it as fanciful.
     However, also sure enough, as the transmission of the rumor was tracked, the attention to uncertainty faded. In my opinion, there are two reasons this tends to happen. First, putting doubts and qualifications aside makes it much more fun telling a friend there’s actually worm meat on the menu of a restaurant you both know about. Second, any story that is retold goes through processes called sharpening and leveling. The most interesting details are given sharper focus while the surrounding details fade from memory. Our brains can’t remember everything.
     So forgotten uncertainty turned a rumor into a plausible report. The researchers found it can work the other way around, too. In another experiment, a highly positive substantiated claim about a business was confidently generated. As the claim traveled, the degree of certainty associated with the report faded. The result was that consumers further along in the chain had more doubts about the accuracy. A fact moved toward being labeled as a rumor.

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Sell More by Being Less Certain
Expose Puffery for All It’s Worth
Avoid “Not” in Influencing Shoppers

Wednesday, January 4, 2012

Structure Your Layout for Shopper Mission

A major reason for the success of the convenience store format was the placement of the milk toward the front of the store. The traditional supermarket required the shopper to walk all the way to the back of the store to reach the dairy case. Since purchasing milk is one of the most common reasons for a stop at the store, the supermarket layout meant longer trips through the aisles, producing higher probabilities of other merchandise purchases.
     But shoppers were willing to pay more for the convenience of a quick stop where the milk and other commonly purchased items were right up front.
     In what ways has the increased price sensitivity of consumers in these tight economic times changed recommendations for store layout? Consider the results of a study about consumer packaged goods conducted by market researchers SymphonyIRI Group. Their analysis of more than 8,000,000 shopping trips produced a typology of four primary missions. Here is my version of those four:
  • Quick trip: “I need it right now.” Between 1 and 5 items are typically purchased.
  • Fill-in: “It’s time for a routine replenishment of regularly-consumed items.” The typical purchase consists of between 5 and 15 items.
  • Stock-up: “I’ll shop in advance for items I’m likely to need during the next week or so.” At least 15 items are typically purchased.
  • Special purpose: “I’m buying for a party or other distinctive event.” Between 2 and 10 items are typically purchased.
     The economic downturn produced a relative decrease in stock-up trips and a relative increase in quick trips. These days, there are differences among store formats in what types of shopper missions are resulting in financial success:
  • At grocery, supercenter, and club stores, between 35% and 50% of sales come from stock-up shoppers and about 20% from fill-in shoppers. Therefore, the store layout should facilitate traveling through the aisles. At the same time, between 17% and 20% of sales are from quick-trip shoppers, so there are advantages to having a special section at the front of the store carrying the most commonly-purchased items.
  • At drug stores and dollar stores, less than 7% of sales revenues come from stock-up shoppers. The quick-trip shopper accounts for about half of sales revenues. If you intend shopper convenience to be a benefit of your store, lay out the merchandise and arrange the cash/wrap areas to facilitate getting in, finding what’s wanted, and getting back out.

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

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Show Off New CPGs on Store Shelves
Notice Where Your Shoppers Look as They Enter

Tuesday, January 3, 2012

Understand Updated Product Name Changes

Suppose you run a golf pro shop. Callaway Golf Company notifies you that the Big Bertha driver is being replaced by the Great Big Bertha. Suppose you sell razors and you’re thinking of phasing out the Sensor in favor of the Fusion.
     What difference does the name change make?
     Researchers at Harvard University and London Business School distinguished between the two situations. Here’s my interpretation of their findings.
  • In the Callaway example, the name modification indicates a continuation. When such a product comes into your store, consumers expect to see improvements in the current features and consider switching to be relatively low risk. This eases resistances to making a switch. At the same time, there’s little excitement about upgrading, since it looks like nothing is dramatically improved. Why bother?
  • In the Gillette Sensor to Fusion example, the new name suggests fundamentally new product benefits. There are implications of substantial improvements in quality and thereby great satisfaction in usage. The other side of the coin here is that, compared to the name modification situation, consumers consider the product as having a higher likelihood of failure. This razor is closer to the cutting edge upon which purchasers could be sacrificed. Compounding the perception of risk, consumers are more likely to fear that once they start using the new product, it will be difficult to move back to using the older version.
     When the product being newly introduced in your store involves a name modification, not a complete name change, assess the risk tolerance of the shopper. With the shopper who wants to protect against losses, emphasize the comfort of staying with the familiar. This fits well with golfers, who prefer incremental improvements to chancing a noticeable deterioration in performance while on the course.
     If the shopper has a high risk tolerance and the newly introduced product has a name modification, not a name change, emphasize the value of the augmented capabilities of the product. Younger shoppers are, in general, more likely to want this than will older shoppers.
     The suggestions are largely just the reverse for the situation where there is a complete name change with the new product.
     In all the situations, there’s more to understand, aside from the significance of the nature of the name change and the risk tolerance of the shopper: Also understand thoroughly how to use the newly introduced product so you can fluently answer questions.

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Count on Numbers in Product Names
Sell Either Protection or Promotion

Monday, January 2, 2012

Vary Velocity for Loyalty Program Motivation

You’d like customers to remain motivated when accumulating points in your frequent shopper program. The challenge is that what motivates the customer starting the program is different from what works as the customer draws closer to the reward. Researchers at University of Texas-Austin distinguish between what I’ll call a “Will I ever buy enough to earn a reward?” mindset at the start and a “How much more do I have to buy to earn a reward?” mindset once deep into the program.
     What motivates the first mindset to keep coming to your store is a quick accumulation of points. This says that goal attainment is, in fact, possible. But what motivates the “How much more?” mindset is a relatively slower velocity. The reason for this second one is less direct: If it takes more effort to achieve a goal, as long as the goal is attainable, the payoff seems more valuable.
     The researchers tested how this works by comparing the effectiveness of two types of loyalty club cards at a coffee shop. The uniform velocity card gave the customer three points for each purchase, and when the customer got 24 points, there was a reward. The variable velocity card gave five points for each of the first four purchases, and then one point for each of the next four purchases. Again, when the customer got 24 points, there was a reward, so what was required for each card was a total of eight purchases.
     Consumers with the variable velocity card completed the card more quickly, evidencing higher motivation. The variable velocity card gave the consumer a jumpstart.
     Researchers at University of Southern California and University of Pennsylvania achieved the same sort of result in a different way. One group of customers were told they’d receive a reward after purchasing ten car washes, but they’d start off the program with a free credit for the first two washes. They had to get eight more. The other group were required to get eight washes before receiving the reward, and they didn’t start off with any free washes.
     Of customers in the “get eight, no jumpstart” group, about 20% ended up participating in the program to the point where they received a free wash, compared to 35% for the group getting the jumpstart. In addition, the jumpstart group completed their quota more quickly and kept coming to the car wash more often.

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Give Loyalty Program Head Starts