Thursday, May 31, 2012

Craft Powerful Stories

Want to convince me to purchase an appliance maintenance contract from you? Tell me true stories.
     A set of researchers at Ohio State University wanted to compare the effectiveness of narratives and statistics in influencing consumers' opinions. In one study, they asked participants to estimate how likely it is that a refrigerator they might purchase would break down at some point. Before stating the estimate, each participant was told they'd be given information to help them with the task. For one group, the information consisted of stories told by consumers about the times they'd had to deal with a refrigerator breaking down. Participants in the other group were given actual statistics about the frequency of appliance breakdowns.
     Frequency estimates from the group who were told just the stories averaged about one-third higher than did the estimates from the group given just the statistics. The stories of trouble led the consumers to exaggerate the actual frequency of trouble. As a general rule, narratives are more influential—and more memorable—than numbers.
     What makes a story most powerful? Researchers at National Tsing Hua University, National Central University, and Wistron Corporation, all headquartered in Taiwan, isolated four characteristics:
  • Authenticity. Make the story believable. Keep the important details the same each time you tell the story. Reports of outrageous outcomes in bizarre circumstances aren’t influential. 
  • Conciseness. Keep it short. Make the point of each story crystal clear. 
  • Reversal. Use contrast in your story. Good versus evil. Natural versus artificial. 
  • Humor. This heads off mental counterarguments. The shopper is too busy chuckling to challenge the points of your story. 
     The relative importance of these four characteristics depends on the type of product or service you’re selling. The researchers distinguished “search goods” from“experience goods.”
  • Search goods have features, the value of which can be relatively easily assessed before purchase. A refrigerator is a search good. Conciseness and humor add power to stories about search goods more than to stories about experience goods. 
  • The value of an experience good’s features is more difficult for the shopper to assess until it’s been purchased and used. A maintenance contract for a refrigerator is an experience good. Authenticity and reversal are especially important in stories about experience goods. 
     Consumers do like to be shown product specifications. Give shoppers those specifications, then lock in evidence of advantages using great stories.

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

Click below for more: 
Tell Positive Stories About Your Products 
Coach Your Staff with Stories 
Humor Your Customers

Wednesday, May 30, 2012

Wean Consumers Off Coupons by Force Feeding

Consumer behavior research gives valuable insight when interventions fall short. We can then decide what to do next. An example is the failure of J.C. Penny Co. to meet its goals under the leadership of Ron Johnson.
  • Same-store sales dropped 19% from the corresponding quarter in the prior year
  • Weekday store traffic was down 9%, and weekend store traffic down 12% 
  • Internet sales dropped 28% 
     Mr. Johnson’s explanation, as quoted in a Retail Customer Experience posting: “Our customer just doesn’t understand our pricing.” Among the changes championed by Mr. Johnson: A switch away from coupons. “Coupons were a drug,” he said. Instead, J.C. Penny moved to an Everyday Low Price (EDLP) strategy. This made sense when looking at the fact that less than 1% of J.C. Penny’s revenues were coming from items purchased at full price.
     However, the cold-turkey withdrawal didn’t make sense when considering the psychology of the coupon shopper. The relevant research concept is “pricing tactics persuasion knowledge” (PTPK). This refers to the understanding a consumer has about how retailers use pricing tactics to influence the consumer to buy. 
     Researchers at Georgia State University and University of Leeds found that consumers who are prone to use coupons have low PTPK. Overall, these shoppers don’t appreciate that EDLPs could result in savings equal to or greater than that obtained with coupons. They enjoy the excitement of using a coupon for a discount as much as, or maybe more than, saving the money.
     The Georgia/Leeds researchers also analyzed consumers who are low on coupon proneness and high on value consciousness. These consumers had good PTPK. They were much better skilled in figuring out what pricing tactic the retailer was using to tempt purchasing. These shoppers also appreciated why the retailer was using the tactic and could calibrate what difference it really made. And those with the good PTPK were confident in their assessments, meaning they could avoid defensiveness when it was advisable to change their opinions. The coupon users stayed locked into their addiction.
     If you choose to move away from issuing coupons to promote sales, recognize that there will be consumers who are high on PTPK, and will therefore pick up on the other ways you’re delivering value to them. For your shoppers who are high on coupon proneness rather than PTPK, you’ll need to assertively and continually pump into them evidence of that value.

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

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Clip Mistaken Notions About Coupon Users
Use Bounce-Back Coupons 
Promote Promotional Pricing over EDLP 
Watch Ron Johnson

Tuesday, May 29, 2012

Turn Comparisons Right Side Up

Suppose you have two items on sale: An item you usually sell for $95.99 is now discounted to $75.99, and you’re discounting a $35.99 item to $15.99. In each case, the savings to the buyer is $20. However, the percentage discount on the $95.99 item is about 21%, while on the $35.99 item, it’s closer to a whopping 56%!
     Whether you present the price comparisons in a horizontal or vertical format affects whether the shopper is more likely to think of the absolute value of the discount—the $20—or of the percentage discount. According to researchers at Clark University, a horizontal arrangement, like the top example in this posting, nudges the consumer to think about the $20 off for both Items A and B. This would make the two items seem equally attractive from the perspective of added value because of the sale price.
     Now rotate the table so it looks like the second example in this posting, and the consumer’s mind will turn toward considering the percentage of the discount, and away from the absolute dollar amount. People are generally poor in calculating percentages, but almost all will be skilled enough to realize that the sale on the $35.99 item is a better deal.
     The orientation of information in the shopping environment makes a difference in the shopper’s mental orientation. For instance, immediately to the right of a deeply discounted item, have products priced for a healthy profit margin that are natural accompaniments to the deeply discounted item.
     Why to the right? Because that’s where the shopper’s eyes tend to go the instant after they recognize that they’ve gotten a really good deal on a purchase. Our eyes move rightward when the left hemisphere of the brain gets active. Not up and down. It’s that left hemisphere which specializes in doing the math and telling the whole brain, “Hey, we saved some real money here!” and gets more likely to ask, “Are we ready to splurge?”
     And our brains perceive horizontal size along a different scale than vertical size. This can be seen most dramatically in young children. Swiss psychologist Jean Piaget would pour liquid from a short, squat glass cup into a tall, thin drinking glass. The preschoolers watching would insist that the quantity of liquid was now greater than it had been before.
     To best serve yourself and your shoppers, turn comparisons the right way.

Click below for more: 
Keep Your Eye on Merchandising to the Right
Try Out Dollar Over Percentage Discounts

Monday, May 28, 2012

Fill In Blanks Positively With Consumers

Who is most likely to vote against Mitt Romney due to negative portrayals of Mr. Romney’s Mormon faith? Someone who…
  • Has a Mormon family member or close friend 
  • Has only a Mormon co-worker or neighbor 
  • Doesn’t know any Mormons 
     In a recently published study, researchers at University of Notre Dame, University of Akron, and Brigham Young University conclude it’s the second group. The first group—those who have close, long-term contact with someone who is Mormon—are informed by their personal experiences. They won’t be significantly affected by sales pitches against the faith.
     The third group can be influenced by the negative portrayals, but they are also open to being influenced by positive portrayals of the religion. They are the most persuadable in either direction.
     The second group, who have only passing contact, respond to the negative, but are largely impervious to positive counterarguments about Mormonism. The researchers attribute this to what they call the perceived “social insularity” of Mormons. The voters in the second group fill in the blanks with the negatives because they view the insularity as justification for suspicions.
     For retailers, one point of all this: Shoppers will fill in the blanks in their impressions of your store and your products using whatever information they can quickly process, so be sure you have positive information available.
     An additional point: Be abundantly clear about your interest in answering any questions the shopper wants to ask. Counteract any perceptions of insularity.
     A few other research-based points to fine-tune my advice:
  • Offering to answer questions doesn’t mean the questions will come. A repeated finding in consumer behavior research is that people who know lots about a product category or know only a little about it usually ask fewer questions than the shoppers who know a moderate amount. People with little knowledge say they couldn't think of questions to ask. And those with lots of knowledge? One reason they limit their inquiries is that they fear looking like less than experts. 
  • When asking the shopper to imagine product or service usage, having them fill in the blanks helps make the sale. Give the shopper the minimum amount of technical information necessary to set up the imagining. Then be ready to provide more details if the shopper asks. The power of imagining is greater when a person fills in their own blanks. Again, be sure accurate positive information is easily available. 
Click below for more: 
Respect Customers Who Claim Expertise
Relax Caution About Comparative Imagining

Sunday, May 27, 2012

Spring Hope Eternal

The adage “Hope springs eternal” is an optimistic sentiment. Studies by economists at Massachusetts Institute of Technology indicate the optimism is misplaced when it comes to the psychology of poverty. There’s also evidence community development initiatives can help correct this exception to the rule. Retailing is how it happens.
     The general research finding is that families suffering prolonged, severe economic disadvantages become pessimistic and risk averse. Both these impede progress toward self-sufficiency throughout a community.
     Initiatives such as Bandhan’s “Targeting the Hard Core Poor” were both inspired by and analyzed by the MIT research. In one program, each participant was given a cow, goats, or chickens; training sessions in how to turn the output from the animals to profit; a small stipend to discourage the owners from simply eating the animals; and coaching in money management.
     The recipients earned 20% more each month than those in a comparison group. This might be expected. But as The Economist reported, the benefits were substantially more pervasive and persistent than this: The rate of depression dropped. Participants worked 28% more hours, and they became more likely to consider other earning opportunities.
     The research indicates that such optimism and energy move from one generation to the next. It is as if a magical force of nature has been mobilized. The pessimism and risk aversion are not a natural state. By and large, we’re an optimistic lot. If asked to compare ourselves to others, about 80% of us will say we perform better than the average person. That is, of course, a mathematical impossibility. You can’t have 80% better than the 50% benchmark.
     My very favorite of those research studies found that 80% of us even believe we are more likely than are our neighbors to go to Heaven.
     Hmm, I can’t locate the study right now. I’m sure I remember correctly that it said 80%. I’m also sure that since I mentioned the study to you, it will show up soon. Sort of like how when you buy a purple car, you start seeing loads of purple cars.
     It's like magic.
     Certainly, hope and activity among a community of merchants are not magical enough to ensure lasting community development. Consumers need marketable job skills, retailers need marketable offerings, and both need money-management abilities. Even when hope does spring eternal, its role is as the motivator for the rest.
     But the motivation is essential.

Click below for more: 
Transform Shoppers with Magical Thinking 
Mobilize Collective Efficacy for Health 
Dress Up Your Neighborhood

Saturday, May 26, 2012

Open Up Shoppers So You Can Personalize

People love to put their personal imprint on 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.
     For you, as a retailer, to personalize, you need to open up the shopper enough to gather information. Personalizing goes beyond customizing, in that it requires you to spiral in on the shopper’s characteristics. There’s a series of exchanges about preferences, availability, substitutability, and more. Personalizing the shopping experience is an important way brick-and-mortar stores can surpass internet commerce.
     Some past consumer behavior research concluded that shoppers in a marketing atmosphere filled with fears of privacy being violated still will volunteer information about themselves to a retailer if they see the retailer using this to personalize the shopping experience. More recent research at Carnegie Mellon University and Harvard University hints that the candor is less than what we’d thought. People may be ashamed to reveal to you certain sorts of information that would help you know the shopper better.
     The research also suggests ways to increase the shopper’s candor with you. Here’s my translation of the findings into a five-step process:
  • Start by establishing rapport with the shopper. Ask questions which aren’t sensitive.
  • Next, give a few examples of the sensitive information shoppers have shared with you in the past. Be sure to protect the identity of the past customers. You certainly don’t want to leave this shopper with the impression that you’ll tell their secrets to others. Instead, your objective is to increase comfort in sharing sensitive information with you because you’ve heard it all before.
  • Ask an intrusive question in the form, “May I ask you….?” This is a yes-no, closed-ended question. Your question should aim to gather information you’ll find useful in suggesting a personalized solution to the shopper.
  • If the shopper answers yes, be ready to remember what you’re told. If the shopper seems uncomfortable with your question, follow up with a somewhat less intrusive question and then say, “Here’s why I’d find your answer helpful in giving you the products and services which will best fit you.”
  • When the transaction is complete, thank the shopper for helping you by giving you the sensitive information, and assure the customer you will protect their confidentiality. You’ve now formed a bond with the person, transforming them from a customer into a client.
For your profitability: Sell Well: What Really Moves Your Shoppers

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Personalize the Shopping Experience 
Limit Design Support for Personalized Gifts

Friday, May 25, 2012

Shape Staff Behavior with Self-Queries

Some years ago, I obtained a consulting contract to write content for Employee Appraiser software. I provided suggestions which were generated for employees and their supervisors when performance problems of various sorts arouse.
     In completing the assignment, I developed an outline I called the “Nine-Layer Onion.” These days, students in the Performance Management class I teach at University of Nevada Reno Extended Studies have told me they find the questions and answers generated by the Nine-Layer Onion to be useful.
     When faced with an employee performance problem which impedes your store profitability, peel away the layers one-by-one until you find the cause and have taken effective corrective action. At each layer, shape the employee’s behavior with well-formed questions to yourself:
  • Situational problem. Does this appear to be a short-term problem? If so, put your energies into addressing other issues while keeping an eye on the employee. 
  • Expectations. How well have you communicated to the employee specifically what you expect? Busy retailers too often assume that new employees are aware of the difficulties caused by flawed behavior. 
  • Trust. Does the employee trust what you’re saying? A store’s mission, vision, and values statements come across as meaningless if the owner/operator fails to exemplify them. 
  • Resources. Does the employee have sufficient time to learn the skills and to carry out the behaviors you’re requiring? 
  • Incentive/disincentive ratio. Are the incentives for doing what you ask sufficient to overcome the disincentives? A disincentive might be social rejection by coworkers for raising the bar. Or it might be time away from family. 
  • Self-management skills. For instance, is the employee a perfectionist who spends too much time on a task? If self-management is the issue, teach project management skills. 
  • Technical skills. Yes, this should be obvious at first, but it often lies buried. 
  • Interpersonal skills. Do you find yourself calling it a problem of “attitude”? Because attitude is difficult to discuss with an employee, it often works best to leave it alone and address the earlier layers first. If you do get to this point, describe to the employee a set of behaviors as examples of what you want rather than talking in terms of attitudes. 
  • Disability. If all else hasn’t corrected the problem, does the employee have a disability as defined in the American with Disabilities Act? Before probing here, ask yourself if you’re sure you know your legal obligations to accommodate disabilities. 
For your profitability: Sell Well: What Really Moves Your Shoppers

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Manage Staff Performance with Respect

Thursday, May 24, 2012

Offer What They’ve Never Seen Before

As the support ship R/V Lulu was lowering the deep-sea submarine Alvin into the ocean, the cradle support cables broke. Because the hatch on Alvin had not yet been completely closed, Alvin began taking on water.
     The three crew members quickly escaped with no more than a single sprained ankle among them. But, alas, there was insufficient time to extricate the crew’s bologna sandwiches. The lunch and Alvin itself gently sank to 5,000 feet below sea level.
     It was nearly one year before the submarine could be retrieved. Understandably, the bologna sandwiches were soggy. But how tasty were they?, the scientists, being scientists, wondered. Quite salty and otherwise quite fine was the conclusion from sampling.
     This led to the next question: At 5,000 feet down, you wouldn’t expect fish or crabs to be around to nibble the bologna. However, what about bacteria? Cold sea water can be an excellent preservative, but if you leave bologna sandwiches in cold salt water for a year on your kitchen counter, the bacteria will have had a feast.
     The scientists’ answer to the question: At that depth, there are no bacteria. Life has its limits.
     This was in 1969. Over the decades, the original answer has been declared dead wrong. Or more accurately, wrong about dead. There are plenty of bacteria and other life forms at 5,000 feet down and beyond. The current salty answer regarding the highly-seasoned sandwiches comes from John Parkes, a geomicrobiologist at Cardiff University: “It was just that at that depth the bugs had never seen a bologna sandwich before.”
     They hadn’t physically evolved to consume bologna. And your shoppers may not have intellectually and emotionally evolved to consume highly novel products and services. What you’re selling could be sitting there perfectly preserved for a year, and still no bites.
     Small to midsize retailers commonly avoid this happening by waiting for others to go first before introducing the product or service in their stores. That’s okay except for you missing out on opportunities to gain a foothold in the marketplace before others imitate you.
     An alternative to waiting for others to go first takes inspiration from the scientists who tasted the bologna sandwiches: Offer shoppers a sample while describing to them the benefits of purchase. And, research findings from University of Michigan suggest, stimulate a number of senses with descriptions in promotional materials, signage, packaging text, and face-to-face selling.

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Talk to Multiple Senses with New Products 
Show Them What They’ll Never See Again

Wednesday, May 23, 2012

Cheat the Notion Spirituality Means Honesty

“He’s a good Christian.”
     Over the years as I’ve consulted with retailers far and wide, I’ve occasionally heard that phrase used to signify honesty in a merchant or vendor. My reaction, generally confined to inside my head, is that the speaker probably thinks spirituality guarantees business ethics.
     Research at Appalachian State University and University of Nevada-Reno suggests that the precise opposite is true, at least in America. The researchers administered to 149 MBA candidates in the U.S. and Europe the Human Spirituality Scale (HSS). The HSS asks a person how strongly they agree or disagree with each of a set of twenty items that have been found to reflect three themes generally accepted as constituting spirituality:
  • A reverent compassion for the welfare of others 
  • A larger context or structure in which to view one's life 
  • An awareness of life itself and other living things 
     The study participants were also presented with a set of situations measuring business ethics, such as reactions to a case of an auto dealer overcharging for repairs.
     For the European MBA candidates, there was no relationship between the HSS score and evidence of ethics. For the Americans, there was an inverse relationship: Overall, those scoring highest on the HSS showed the lowest adherence to business ethics. The researchers conclude that the current generation of students of business are more likely to consider spirituality in personal terms than in terms of what benefits society.
     A patina of religiosity can lead consumers into assuming honesty. This may have been true over the history of American retailing. According to researchers at St. Joseph’s University in Philadelphia, itinerant peddlers during the mid- to late 1800’s, who were often Jewish, would sometimes dress as Quakers because Quakers had a reputation for being shrewd, but fair.
     Look deeper within yourself, your staff, and your consumers than spirituality to sincerely project ethics. In fact, the rigidity associated with some religiosity can undermine the efforts.
     A couple of years ago, Kmart offered selected customers a half-price discount coupon. Missing from the coupon was a notice that it could be used only in certain locations. When shoppers presented the coupons in the wrong locations, many store staff rigidly believed the coupons were fraudulent. Store staff said to customers, “This coupon is fraudulent,” and the customer heard, “You’re a dishonest cheat.”
     …which would naturally result in the customers thinking these store staff were the cheats.

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Stem the Tide of Female Shopper Discomfort 
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Tuesday, May 22, 2012

Unthink Complexity

When young children were presented a challenge in which 60% of the time, at random, getting the reward required opening the door on the left and 40% of the time, opening the door on the right, the young children soon came to always open the door on the left. When Yale University undergraduates were given a parallel challenge, they pondered for a pattern in what was randomness, wasting brain power and obtaining a success rate significantly lower than the 60%.
     An article in the current issue of Intelligent Life uses this finding to make a case for jettisoning pondering. That argument is supported by psychologist Daniel Kahneman, who says that what we call “intuition” consists of subconscious shortcuts when we’re faced with complexity.
     He also shows that our biases can lead us to believe our intuition paid off when it actually sabotaged us. Those shortcuts are not always useful. Fretting less about a decision works best if we know the topic thoroughly. The danger with the familiar is over-analysis.
     Researchers find that we try to make things complicated when we consider the topic to be important. We want to make important decisions complex. Researchers at University of Florida and University of Pennsylvania nicknamed this phenomenon “decision quicksand” because of a peculiar way it operates: The more important the highly familiar decision, the more likely we are to succumb. And then the more time we spend pondering, the more important the decision becomes to us. It takes effort to pull out of this loop.
     Study participants were assigned to set up an air travel itinerary. Some were given the flight information in a small, low-contrast font which was hard to read. The others received the information in an easy-to-read larger, high-contrast font. Those with the harder task ended up saying they considered the assignment to be more important than did those in the “easy” group. And this difference was more pronounced among study participants who had been told at the start that the task was unimportant rather than important.
     Researchers at Radboud University in the Netherlands and at Northwestern University discovered that beyond an initial assessment period, the more time consumers spent evaluating alternatives, the less satisfying they found their eventual choices to be. As a retailer, you’re a consumer when handling complicated, but relatively unimportant purchase decisions. Bulk up on the requisite knowledge. Then let the your decisions flow.

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Skim the Data to Spot Leading Trends

Monday, May 21, 2012

Resolve Complaints Promptly

Valuable truths you may have been overlooking about customer service:
  •  About one out of every five Americans say retailers are paying less attention to customer service than they did in the past. 
  • About two out of every three American consumers claim they’re willing to spend more with a retailer who provides them excellent customer service. How much more? The average is about 13%. 
  • Because of social media, consumer dissatisfaction is spreading about three times as widely. Those posting complaints estimate they tell 53 people about their dissatisfaction. Among those not using social media, the estimate is 17 people. On a positive note, those using social media say they’re willing to spend 21% more when receiving excellent customer service, a notable notch higher than the 13% for the overall sample. 
     Here are three of the most common gripes about the complaint resolution process along with tips for heading off shopper aggravation.
  • Getting the brushoff. Check that you and your employees consider a complaint to be an opportunity, not a nuisance. Resolved properly, a  complaint is a priceless opening to earn customer loyalty. 
  • Being referred from one employee to another. Coach staff to say, “I’ll take care of this,” rather than “The store will take care of this,” or even, “We’ll take care of this.” When it is indeed best to hand off the customer to a supervisor, the employee should describe the problem to the supervisor in a way that shows respect for the customer, even if the employee thinks the complaint is foolish. 
  • Waiting a long time before feeling the issue has been completely resolved. Respond to internet inquiries with immediate internet acknowledgements which include an estimate of when you’ll be back with a substantive answer. Make it as soon as possible. Then keep to the commitment. With in-store inquiries, use the same guidelines. If you don’t know, say you’ll find out and tell the customer now when you’ll get back to them. Encourage the person to shop for their other needs. Arrange to meet the customer at another part of the store. If it will take you more time than their shopping trip, ask how you can get in touch with them by phone or e-mail.

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

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Hand Off Customers with Care and Caring 
Tell Questioners Now When You’ll Answer

Sunday, May 20, 2012

Dissolve Decision Paralysis

Researchers at Germany’s Mainz University and Dortmund University extracted from data three main reasons shoppers become paralyzed when intending to complete a purchase:
  • A reluctance to make changes 
  • A fear of making choices 
  • A wish to preserve the opportunity to choose 
     More than one of these can be operating at the same time.
     The researchers also verified that consumers differ substantially in the extent to which they suffer decision paralysis. One characteristic of those who experience it more often is that they are accustomed to fretting about past decisions, wondering if they chose what was best.
     This new study of an old topic concludes that decision paralysis is more likely when there are more considerations to compare and it is more difficult to figure out tradeoffs.
     Other research findings suggest these ways to head off and unfreeze ties:
  • If you offer a limited selection, point out a few differences among the items. 
  • With a large selection, list no more than five of the most important product features and no more than five of the product alternatives. However, if the product alternatives are very similar in what features they have, then include one or two trivial features that one or two of the alternatives have, but the others don’t. This helps unfreeze the decision maker who is immobilized by information overload. 
  • Use similar wording in describing the features of each product. And provide tables that list features across the top, the names of a small selection of product alternatives along the left side, and checkmarks in the cells to indicate which product has which features. 
  • In the product descriptions and in the table, list features concisely. But also outside the table, state the benefit of each feature: “Low rolling resistance gives you better fuel efficiency.” 
  • Offer a clearly inferior alternative. Say, “May I show you one more model that I think would help you decide? I hate for you to need to go shopping somewhere else.” Researchers at University of Toronto report that this often dislodges a tie and results in a purchase decision. 
  • Add a gift to accompany one of the alternatives. Researchers at University of Chicago and Columbia University find that with financial investment decisions, it even works to offer a small gift with both of two alternatives because this moves the decision toward the riskier choice, breaking the tie. The researchers call this the “mere token effect.” 
For your profitability: Sell Well: What Really Moves Your Shoppers

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Break Ties When There’s Limited Selection 
Compare Features to Ease Overload

Saturday, May 19, 2012

Dampen Excessive Noise

The positive noises of retailing stimulate purchasing. Excessive noise levels, however, repel shoppers and disrupt salesmanship.
     Excessive noise leads us to tighten our muscles, and as research from National University of Singapore and University of Chicago confirms, tense muscles keep people from being sold what they’re not fully convinced they want. In his latest book, Drop Dead Healthy, humorist A.J. Jacobs devotes an entire chapter to the topic of avoiding the destructive effects caused by loud, prolonged sounds: You don’t remember as well. You get more irritable.
     To facilitate the sale and soothe the savage shopper, determine where you should be lowering the decibels. A little peace and quiet also soothes the harried salesperson.
     About 24% of respondents to the Zagat 2012 New York City Restaurants Survey said excessive noise was their biggest complaint about eating out. This statistic surely was having its say in the mind of restaurateur John Paluska when he designed Comal, which opened in Berkeley, California earlier this month. The San Francisco Chronicle reports that even the paintings on the walls were printed on acoustic transparent cloth in order to better dampen the din.
     Mr. Paluska walks the premises to check for and remedy offensive sound levels. He sets different thresholds when in the bar than when around the tablecloths. You’ll want to do the same sort of checking and differential correcting in your restaurant, store, shop, or clinic.
     Recognize that certain types of sounds, such as the voices of agitated consumers, require a psychological technology which goes beyond the acoustic transparent cloth, fiberglass duct liners, and 123-component sound-cancelling system Mr. Paluska has mobilized at Comal.
  • When a customer, client, or patient seems to be getting progressively more upset, invite the person to move to a quieter location. Turn down the music, if possible. Speak loudly enough for the person to easily hear you, and not louder than that. 
  • If a shopper makes what seems to you to be an unreasonable request, pause. Face the person straight on. Be briefly silent while building within yourself a “You are somebody who can help me pay my bills. I want to find a way to say yes to you” frame of mind. Then reply. 
     Eliminating negative noises opens up space to appreciate the positive sounds of retailing. Like the series of tones at the cash wrap signaling to all that completion of the sale is getting closer.

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Soothe the Savage Shopper with Silence 
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Friday, May 18, 2012

Encourage Customers to Pay What’s Right

At the top of the window of Der Wiener Deewan in Vienna, Austria is printed “All You Can Eat.” Look to the right and see above the entry door “Pay As You Wish.” This restaurant was the site for a pricing study by researchers from University of California-San Diego, University of California-Berkeley, University of Amsterdam, and Friedrich Schiller University. What they found might puzzle you at first, as it did me.
     One group of customers were asked, before paying, to announce how much they’d pay for the meal. Another group were to pay secretly. In this group, the researchers didn’t know how much each person paid, only that a meal was purchased and what total amount was collected from all the purchasers together.
     Which group paid more on average? Think about that for a moment, choose your answer, and then read on.
     The researchers say the inspiration for the study was their interest in which was a stronger influence in a consumer deciding how much to pay for an item—concern about how he looks to his peers or concern about what he thinks of himself.
     The researchers found that the average price was higher for those purchasers who paid secretly. It appears that self-image was more important than public image.
     I’d guessed it would be higher among those who announced the purchase price publically. The outcome puzzled me until I heard about results from another study done by these researchers: People who were photographed riding a rollercoaster were invited to purchase the photo. All the people were told the regular price was $15. Then the prospects got one of three offers. Some were offered the photo at the regular price of $15. A second group was offered the photo for $5. A third group was invited to set their own price.
     Here, people were more likely to purchase the photo when the price was quoted as $5 instead of $15. Consumers love a bargain. That result is expected. But the surprise was with the group invited to set their own price. Those consumers were the least likely to buy the photo.
     The consumers were uncomfortable at the thought of appearing cheap both to others and to themselves, so without the anchor of $5 as okay to pay, the “quote your own” group preferred not to buy at all.
     Help customers by giving them guidelines to pay what’s right.

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Serve the Underserved 
Anchor Browsers onto Higher Prices

Thursday, May 17, 2012

Compare to a Set of Standards

Compared to what? That’s the question to ask when you’re wondering how well you’re doing.
      Take service quality. A useful measurement instrument called SERVQUAL is far from perfect, but does illustrate “compared to what?” features. You measure consumers’ expectations of service quality from retailers like you, measure consumers’ perceptions of service quality provided by you, measure your own expectations and perceptions from your perspective as a retailer, and compare the different measures.
     Another good feature of instruments like SERVQUAL is dividing complex considerations into subtopics. SERVQUAL began with ten dimensions. This was later refined down to five. Here are those five with an example of an Expectations and a Perceptions degree-of-agreement rating item for each:
  • Reliability. Excellent stores of this type perform the service right the first time. This store performs the service right the first time. 
  • Assurance. The behavior of employees at excellent stores of this type instills confidence in customers. The behavior of employees at this store instills confidence in customers. 
  • Tangibles. The physical facilities at excellent stores of this type are visually appealing. The physical facilities at this store are visually appealing. 
  • Empathy. Excellent stores of this type have their customers’ best interests at heart. This store has customers’ best interests at heart. 
  • Responsiveness. Excellent stores of this type are always willing to help customers. Employees at this store are always willing to help customers. 
     A third desirable feature of SERVQUAL is asking for an importance rating for each dimension. When you discover more than one wide discrepancy between where you are and where you want to be, which discrepancy will you address first? The averages of importance ratings allow you to prioritize.
     One last tip: Attend to the “Don’t Know” answer frequency. When you ask your shoppers for their attitudes and they answer they don’t know or have no real opinion, that’s not an agree or a disagree.
     A while back, an American Express survey found that 58% of U.S. consumers said they’ll spend more with companies they believe provide excellent service, and those 58% are willing to spend 9% more.
     I overheard an experienced retailer say, “So 58% tell us they’ll spend more when there’s excellent service. That means 42% won’t.” This retailer hadn’t acknowledged the 17% in the chart. That’s the percentage answering, “Don’t know.” The percentage saying they wouldn’t pay more for excellent customer service was closer to 25% than to 42%.

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

Click below for more: 
Give Shoppers a Comparison Point 
Know the “Don’t Know” Answer Frequency

Wednesday, May 16, 2012

Burn In Ethical Branding of Your Store

Instill in the minds of consumers characteristics of your business that are associated with the name, logo, tag lines, and even celebrity endorsers of your store. It’s called “branding.” Do it competently and the images are indelible.
     Forbes reported last week that the “Fair and Square” branding currently used by JC Penny is indelible enough to have kindled a brouhaha: Hudson + Broad claims they were retained by JC Penny to design a display fixture in the shape and spirit of the “Fair and Square” box logo; JC Penny assured Hudson + Broad that rights to the design would not be assigned to any Hudson + Broad competitor; but JC Penny then contracted with another firm to manufacture the display fixtures.
     This fits the spirit of neither fair nor square, says Hudson + Broad. They’ve filed a $40 million lawsuit against JC Penny. The merit of those allegations will be decided in the legal system.
     What I find more significant, though, is that Hudson + Broad’s president, James Maharg, also posted a three-minute YouTube video appealing to JC Penny advertising spokeswoman Ellen DeGeneres to get involved. Remember your widely publicized commitments to honesty and to treating people the way you want to be treated, urges Mr. Maharg. Tell JC Penny to be fair and square with us.
     After analyzing all this, the Forbes article goes on to list golden rules for ethical branding. Here’s my adaptation of that list:
  • Before marketing the associations to your brand, think about all the ways it impacts your business behavior. The mission, vision, and values statements apply not only to dealings with your customers, but also to dealings with your employees, vendors, regulatory bodies, and more. 
  • Incorporate the branding message into your criteria for selecting and training staff. Be careful of words that might be misinterpreted. When Memorial Sloan-Kettering Cancer Center introduced the tagline “The Best Cancer Care Anywhere,” some consumers took “care” to refer to interactions with the billing clerk and even the custodial staff. This wasn’t what was originally intended, but the Center staff had to select and train for the consumers’ interpretation. 
  • Make corrections as you go. Ethical branding is a process, not an event. 
     The consumer psychology perspective on all this is clear: If you waver in the ethical branding of your store, consumers may very well begin to doubt your willingness to keep all your promises to them.

Click below for more: 
Less Store Clutter, More Store Branding 
Publicize Social Consciousness 
Adjust Ethical Expectations to Surroundings 
Anticipate Ethics Slippage

Tuesday, May 15, 2012

Remember Customer Preferences

 An “Econsultancy” report reminds us that people patronize your small to midsize business over a larger retailer because those people expect to receive special attention to their preferences.
  • About 45% of consumers say they’d walk away from a retailer who contacted them in a way they’d specifically asked not be used to contact them. 
  • About 50% from a retailer who tried to sell them something they’d already clearly said was not of interest to them. 
  • About 85% from a retailer they sense doesn’t listen to their preferences. 
     Consider these percentages, derived from an Experian Marketing Services project, as only estimates of consumer sentiments in your community of merchants. They do indicate the degree to which consumers place importance on being heard.
     On the upside are these statistics:
  • A total of about 75% of consumers would respond positively in one or more ways to a retailer they sense understands them. 
  • About 60% would actively recommend the retailer to others, with about half this amount saying they’d leave a positive review online. 
  • About 45% would agree to receive future advertising and marketing materials from the retailer. 
  • About 30% would make additional purchases because of their positive feelings. 
     Experian did have an interest in their survey results coming out this way. The company sells products and services to provide what they call a “Single Customer View” by integrating information across a number of sources about each shopper. If your retail business is one in which the same customer might be served by a variety of salespeople, a formal SCV system could be valuable.
     Whatever system you use, among the top challenges facing a retailer in remembering customer preferences are these:
  • Shoppers can express their preferences in subtle ways, then assume the retailer understands what they mean. Reflect back to the shopper what you understand so you can correct misperceptions. 
  • Shoppers’ preferences move in cycles. For example, 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. 
  • Preferences change when people shop in a group. For instance, when shopping with family members along, a consumer is more likely to take financial risks in purchases than when shopping with a group of friends. But the shopper with family members is less likely to select highly unusual products or services. 

Click below for more: 
Make Your Next Best Offer
Pair Preferences with the Shopper’s Entourage

Monday, May 14, 2012

Limit Terms in Customers’ Vocabulary

Require your customers to talk right. If they don’t, shame them into compliance. That’s the advice restaurant owner The Soup Nazi from “Seinfeld” Episode 116 would have given if he went into management consulting. Insist on the free bread everybody else is getting with their soup, and the rest of the customers will witness you being refused service.
     Fortunately, we don’t need The Soup Nazi. Anne Morriss, managing director of Concire Leadership Institute, gives a variant of the same advice. The centerpiece of her argument is Starbucks, where long waiting lines resulted from customers using a broad variety of terms to order their beverages. In a video interview with Harvard Business Review, Ms. Morriss explains the motivation for compliance when one’s language is corrected publically. Request, quite precisely, a 20-ounce beverage size and the barista yells out, “Venti.”
     As a general rule, I recommend against shaming customers. Still, there’s a good argument for limiting the terms shoppers use by training them with what consumer researchers call a “consumption vocabulary.”
     Say you operate a wine shop. A customer you don’t recall having seen before inquires if you carry a wine he had recently tried at a restaurant and truly enjoyed. The trouble is he can’t remember the name of the wine. You ask him to describe what it tasted like. Your thought is that if you don’t carry that particular wine, you can find something with parallel characteristics.
     The man shakes his head. “I’ll know it when I taste it.”
     You can’t open every bottle. If only this shopper had a vocabulary to describe wine tastes. Dry. Sweet. Smooth. Pungent. Big. With such a vocabulary, you might not need to turn your question from “Can you describe the wine?” into “Can you describe the wine bottle label?”
     A proper consumption vocabulary speeds up the purchase of the item, and the faster you can take care of each customer, the more rapidly the profits can flow in.
     But actually, research finds that shoppers with consumption vocabularies don’t spend less time in the store on average. They spend more time and they end up buying more items than the customer who lacks the vocabulary. This is because the vocabulary allows the shopper to appreciate the differences among products. To someone without the words, the brain’s more likely to say it all tastes the same.
     Refining the vocabulary makes the shopping experience richer.

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

Click below for more: 
Give a Vocabulary for Richer Shopping 
Teach Sensory Terms to Avoid Misleading

Sunday, May 13, 2012

Keep It Simple, Whatever That Means!

Shoppers in your store may be attracted by technological complexity, but most often, what they’re seeking from the complexity is life simplicity. That’s the conclusion of a survey conducted by Ipsos and sponsored by Ketchum Global Research & Analytics, a consultancy specializing in how to position products, brands, and businesses in consumers’ minds.
     The message is to discern what life simplicity means to your shopper before you describe the benefits of purchasing what you’re selling. Keep it simple, whatever that means to the individual consumer.
     The Ketchum study divides consumers into four groups, based on analyses of the survey responses of a total of about 6,000 consumers in the U.S., U.K, France, Germany, Spain and China. Here’s my version of that typology, using the Ketchum names for the groups:
  • About 1 out of 6 consumers is a “Disconnect.” These shoppers view technology as introducing unnecessary confusion. Offer them basic products, or if a product has many technological capabilities, mention only the few that are directly relevant to the needs of the shopper. Prevent shopper suffocation from what the Ketchum consultants call “jargon monoxide.” 
  • About 1 in 5 consumers is a “Pragmatist,” who views technology as a tool helpful in accomplishing tasks and maintaining contact with friends and family. Pragmatists also have a particular interest in using technology to manage their health. Those are the benefits you should be describing to these shoppers. 
  • “Informaniacs” constitute about 1 in 4 consumers. Like the Pragmatists, the Informaniacs consider technology a tool to accomplish certain objectives. However, the objectives have more to do with getting information and discovering opportunities than in relating to people. Quick search capabilities are important features in electronics products. Easy and comprehensive personalization are valued in all products. As you might expect, many Informaniacs love telling others what they’ve discovered, so these people can be good referral sources for you. 
  • Over 1 in 3 consumers is an “Enthusiast” about the latest technology for its own sake. Unlike the majority of consumers, Enthusiasts are happy to take on the complexity because the mastery empowers them, making them feel superior to others. As you minimize the capabilities list when selling to Disconnects, you’ll open the spigot wide when bragging about technological innovations to Enthusiasts. 
     There are important differences among countries and cultures. About 44% of Chinese respondents said they love their smartphones, while only 24% of respondents in France said this.

Click below for more: 
Offer Fundamental Indulgences
Personalize the Shopping Experience

Saturday, May 12, 2012

Change Your Name to Reintroduce Yourself

A valued client called me this week to ask my advice about changing the name of her store. She’s ready to expand the range of merchandise she carries, and she’s concerned that the current store name might not adequately project the change to her past customers.
     She’s right. A new business name is often a good way to reintroduce yourself to your customers. At the same time, though, a dramatic change in name would risk wasting all the good will her brand has earned. The option we discussed most was crafting a new name using a variant of the current one.
     In her situation, you might decide to keep the same name. Or if the public had formed negative associations with a retail business you’ve purchased, you might change the name to a completely different moniker. Or if you decide to keep the identical business name, introduce your own name.
     According to The Record newspaper in Hackensack, New Jersey, that’s what historic A&P is doing. Now that the supermarket chain has emerged from bankruptcy and is a privately-held company, President and CEO Sam Martin is appearing in a series of ads. The tag line: “Shopping just got a whole lot better.”
     Here, the objective is to change the associations to your business’s name. I had to think through a related issue a couple of years ago: I received an email with a frightful warning: The writer said that the name I'd chosen for my blog—RIMtailing—was generally understood in his neck of the woods to refer to an obscene physical act. The writer advised that people were mighty unlikely to say the name aloud in mentioning my blog to colleagues.
     I promptly did online searches in three slang dictionaries. No mention there of rimtailing at all. Not even with its proper etymology as a mashup of the “Retailing In Motion” acronym and  “retailing.”
     I decided that if “RIMtailing” does have negative associations which make people hesitate saying the name, my mission is to restore a sterling reputation to the term. And as soon as I'm done with this, my next task is to see that consumers worldwide have only the most positive associations with the often misunderstood business name of one of my other clients. They install lawns. Great company. Deliver right to the customer's door. The business name is Sod To Me.
     …I’m kidding about that part.

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Make Your Business Name Easy to Say

Friday, May 11, 2012

Repair to the Fix-It Shop

In an era way before “recycling” and “repurposing” were so common in consumers’ vocabularies, haughty people would speak of “repairing to the parlor” after dinner. Now that recycling has become a highly competitive endeavor, repairing to the fix-it shop might work out nicely after lunch for down-to-earth-friendly retailers.
     E-waste recycler EnvironCom in the UK gets an edge over the competition by repairing broken televisions, washing machines, and refrigerators. An article in this week’s Bloomberg Businessweek reports that the company makes higher profit from doing the repairs than from disassembling items that can’t be fixed.
     EnvironCom is not a small to midsize retail business. The tag line on the website is “The UK’s largest independent electrical reuse and recycling specialist.” They employ about 200 people and operate on a ten acre site. The items they refurbish come in bulk from large organizations and local recycling centers.
     Still, the possibilities of you making money from doing repairs do carry over. What might make sense for you?
  • Offer advice to shoppers on how to do their own repairs, then sell them the supplies to do it. 
  • Give customers credit for trade-ins to encourage purchase of new items, then refurbish the used items to sell them. 
  • To distinguish your store from others carrying similar merchandise, offer extended service contracts (ESCs) on the merchandise you sell and ensure quick turnaround by doing necessary repairs on the premises.
     Extended service contracts are a profitable add-on sale for you. They also can add to customer satisfaction, since if a product fails to function properly, a good ESC avoids the customer having to exchange or discard the item.
     Researchers at University of Maryland, Rice University, and Carnegie Mellon University suggest there are situations where an ESC is a worthwhile expenditure for the consumer:
  • Purchasers who operate on a limited budget can find it difficult to pay for replacing the product if it breaks or in handling any unexpected costs for repairs.
  • Purchasers of pleasure-related technology products don't want to be deprived of use of the item. They're willing to pay for an ESC that offers prompt replacement of the product if the defect can't be fixed immediately.
  • Purchasers who are expected to repair every broken product in the home—maybe a husband being viewed this way by his wife—might be happy to pay a fee to avoid the trouble of repairing at least this one product.
Click below for more: 
Base Your Changes on Your Strengths 
Make Extended Service Contracts Worthwhile

Thursday, May 10, 2012

Flex Your Influence for Shopper Flexibility

When we’re wanting to influence a shopper, we’d like to cultivate a flexible frame of mind in him or her.
     University of Colorado researchers explored ways to increase this sort of flexibility. The situation they used was introduction of an innovative product. The most common questions the shopper has when considering an unfamiliar offering concern comparison with products they already are familiar with: “What type of product is it? What category should I place it into?” “How might this product be of greater benefit to me than other products which claim to serve the same purposes?”
     We’d like the shopper to have an open approach when answering such questions. Based on their findings, the researchers suggest specific tactics. Here’s my adaptation of those tactics to take account of other research and retailers’ experiences:
  • If the shopper appears to be in a positive mood, begin with pleasant conversation. Your objective is to build that positive mood further. Happiness increases cognitive flexibility. 
  • If the shopper appears to be sad, don’t appear too much happier than the shopper. Otherwise, you might irritate the shopper. Here, achieve a flexible frame of mind by showing the shopper a variety of options. Researchers at National Central University and Hungkuang University in Taiwan find that sadness tends to lead to variety seeking. 
  • If the shopper appears to be inconsolable, aim to arrange another time to encourage flexible thinking. Extreme emotions precipitate rigid thinking. 
  • Prepare the shopper to be impressed. The Colorado researchers found that preannouncements are particularly useful when you’re asking the consumer to make a big cognitive leap. This would be the case, for instance, when an innovative product is extremely incongruent with current offerings. Your script might include, “I’ll be showing you an item quite different from what you’re accustomed to seeing. I think you’ll be as enthusiastic about it as I am once you learn about it.” If you sense that the shopper is the type of person who enjoys being surprised, work that into the script, too. 
  • Before introducing the new item or idea, show the shopper and discuss a few more familiar items or ideas.
  • Be sure to describe the benefits to this individual shopper in what you’re asking the shopper to consider. Researchers who have observed salespeople in action frequently report that the salesperson seemed to assume the shopper knew all the benefits so didn’t list the benefits clearly enough. 
Click below for more: 
Encourage Customers to Be Innovative 
Use Customer Life Changes to Switch Brands 
Profit from Shoppers’ Positive Moods

Wednesday, May 9, 2012

Sow the “Social” in Social Media

Early last year, ForeSee Results, based on a high-quality survey of 10,000 U.S. adults, concluded that social media campaigns appear not to be worthwhile for retailers. Only 8% of survey respondents named social media as their preferred method of interchange with a retailer, and only 5% of visits to a retailer’s website were attributable to social media.
     Today, Larry Friedman, chief research officer at TNS, North America, proposed what might be an explanation for those Foresee Results findings: Retailers place too much emphasis on the word “media” and too little on the “social.” Writing on an Advertising Age blog, Dr. Friedman views the contract with the consumer as changing significantly when moving from traditional to social media. And Dr. Friedman’s views carry particular weight, considering his training as a Ph.D. in social psychology at Columbia University.
     With traditional media, people accept the retailer’s marketing message as a necessary nuisance to get the content of interest. The advertiser is paying the bills. However, with social media, the consumer expects to be listened to as much as spoken to. In the TNS “Digital Life” survey, about 60% of a representative sample of U.S. consumers said they consider social networks a place where they don’t want to be bothered by companies or organizations. Dr. Friedman cautions against pushing the message, given this view.
     I agree. The metaphor I recommend is one of sowing the seeds. Tossing instead of pushing. If you’ve cultivated the ground properly, the prompts you’re distributing will take root and arouse the consumer’s thinking. A dialogue results.
     On a related point, though, I do disagree with Dr. Friedman. Sowing the seeds is also a good metaphor when it comes to traditional media. It’s no longer that different. With how social media has permeated consumer culture, your prospective shoppers often want a dialogue with retailers to whom they’ll give their business.
     Still, not always. Sometimes it’s best for the retailer to be less approachable. Based on their results, advertising agency Wong, Doody, Crandall, Wiener says this holds for luxury goods, as contrasted with “fast moving consumer goods.” FMCGs are characterized by low prices and relatively frequent repeat purchases by consumers. Soft drinks, cleaning supplies, and toiletries are examples of FMCGs. Luxury brands in the study included Giorgio Armani, Burberry, Cartier, and Gucci.
     Always sow the seeds for social, but provide more opportunities for mutual interaction when you retail FMCG items.

Click below for more: 
Distinguish Customers from Friends 
Limit Social Media for Prestige Appeal

Tuesday, May 8, 2012

Keep Baby Boomers Alive & Active

Members of the Baby Boomer cohort are now aged in their late 40’s to late 60’s. And my, how they do buy cars and trucks! According to a Marketing Daily post, Boomers have been purchasing about two-thirds of all those vehicles being sold in the U.S. Over half the recent growth in auto sales is from purchasers at least age 50, and sales of environmentally-friendly vehicles like hybrids are disproportionately due to the Baby Boomers.
     But at the same time, points out the Marketing Daily post, the Boomers are getting a disproportionately low share of auto retailers’ marketing dollars.
     One might argue that this dearth of marketing doesn’t seem to be pinching sales to older drivers much, as evidenced by the sales figures. Still, the argument holds that the auto segment of retailing may be overlooking opportunities among seniors. And other retailing segments might be doing the same.
     It’s understandable. America is youth-oriented.
     As the world was getting set to be one century older—on December 28, 1999— Hallmark Cards filed for a U.S. trademark on the phrase “The Time of Your Life.” Hallmark’s marketing group had noticed that nearly 80 million American Baby Boomers were turning age 50. Hallmark said they wanted to use the phrase on products ranging from greeting cards to journals to paperweights, all targeted to older consumers. Special sections appeared in Hallmark Stores carrying “The Time of Your Life” merchandise.
     When time came to renew the trademark, toward the end of 2007, Hallmark cancelled the registration. “The Time of Your Life” merchandise had not sold well. The greeting cards and the other items were all quite upbeat—showing healthy-looking senior citizens enjoying themselves. But it appeared that few people were interested in buying items that made a point of the recipient being old.
     Skechers took a different approach to woo the older consumer. Their “Comeback” campaign featured retired sports stars like Wayne Gretzky, Joe Montana, Karl Malone, and Kareem Abdul-Jabbar. In the campaign, each of the stars talked about how products from Skechers could help them return to professional-level game performance.
     Older consumers are equipped to actively spend money with retailers. Job losses have hit the younger adults harder. Compared to Millennials in your target consumer audience, for instance, Boomers have about a 20% higher median household income these days.
     Keep the Baby Boomer cohort alive and active in your marketing, advertising, and promotions.

Click below for more: 
Offer the Time of Their Lives to Senior Citizens 
Market to Seniors, not to Elderly

Monday, May 7, 2012

Serve as a Recommendation Agent

“Retailer” is derived from a French term meaning to sell in small quantities. The retailer buys from wholesalers and then breaks down each purchase in order to vend to individual consumers. As the last link in the supply chain, the retailer is expected to carry a range of alternatives and recommend to the shopper which alternatives to purchase.
     This applies to retailers of services as well as of products. Consumers expect services retailers to advise which blend of alternatives would be best or at least ethically inform the shopper when the sole service available wouldn’t be appropriate for this shopper. A services retailer like a real estate agent does well to maintain a wide inventory and to caution the shopper when none of the choices in the current inventory fits.
     To fulfill these expectations whenever the shopper is making more than a routine, habitual purchase, the retailer should become what consumer researchers call a “recommendation agent.”
     Research at University of Alabama and Brigham Young University identified five major sources that shoppers use to gather information to help them make purchase decisions.
    Three are in the retailer’s purview:
  • Visiting stores and retailers’ websites 
  • Advertisements 
  • Sampling 
     The profitable retailer will use those three to reinforce or to redirect from advice given by the remaining two major sources:
  • Friends 
  • Independent reviews, such as Consumer Reports 
     Researchers at Erasmus University and University of Alberta explored how decision processes change for shoppers when a retail salesperson aims to be accepted as a recommendation agent. The researchers found that the shopper assesses the recommended alternative against more options than otherwise. This doesn’t necessarily prolong the selection, though.
     If your customer quickly goes through comparing your top choice to the alternatives, this could be evidence you have gained the trust reserved for a recommendation agent. You might want to use this to go on giving more recommendations.
     The Erasmus/Alberta research findings also suggest the sorts of purchase decisions where you could best go on—ones where there is substantial variability among the choices.
     You might think that when there are broad differences among the alternatives, the shopper would find it easier to make a choice. And you’d be right in circumstances where the shopper has not come to trust the salesperson as a recommendation agent. However, the trust reverses the classical consumer behavior finding: The more variability, the greater the influence of the face-to-face recommendation agent.

Click below for more: 
Ask Customers Where They Get Pre-Purchase Info 
Correct for Corruption from Candor

Sunday, May 6, 2012

Dazzle Your Customers

In an opinion piece, The Economist argued that many retailers do quite fine and are highly profitable even though they are not seen as mollycoddling customers. The article gave as an example Ryanair, known for low-cost, admittedly uncomfortable air travel. Ryanair holds the distinction of being the first European airline to carry more than seven million passengers during a single month.
     A common motto for retailing is “Exceed the customer’s expectations.” Although fine-sounding, this motto doesn’t work in practice. Each time you exceed expectations, it nudges the expectations up for the next time the customer visits. At some point, it’s no longer profitable to keep raising the bar for yourself.
     Actually, the customer might not even notice if you do manage to exceed their expectations unless the excess is dramatic. Researchers at University of Georgia and University of Southern California looked at situations where shoppers ended up feeling either somewhat better or somewhat worse about their experience than they’d expected. When shoppers’ expectations were exceeded, the shoppers often took it for granted and didn’t give lots of credit. It was when expectations were not met that there was more likely to be an impact on the customer’s evaluation.
     So to maintain a satisfactory level of satisfaction, all it might require is to consistently keep your promises. Do you promise the lowest prices in the area? The broadest selection? The latest distinctive merchandise? The quickest checkouts? Whatever it is, provide it.
     Rather than aiming to always exceed customer expectations, regularly dazzle your customers. Unanticipated special prices and combination deals are some of the ways to dazzle customers. But keep the deals modest if you prefer not to get on the escalator of continually increasing expectations.
     At first glance, it might seem to be really bad business to offer customers especially low prices on items they had already intended to buy. After all, they’d probably buy the items at the price they had expected, so why give up any of the profit? Because consumer behavior researchers at University of Arizona, Arizona State University, and University of Pennsylvania found that just such a practice builds profits.
     Grateful customers buy more, and nothing brings out gratitude in a customer better than finding a surprisingly low price on an item they already intended to buy. It’s the same sort of joy they had when finding an Easter egg as a kid.

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

Click below for more: 
Provide Group Support with Customer Discomfort 
Keep Your Promises 
Dazzle Customers with Surprise Gifts

Saturday, May 5, 2012

Come On Now with Shopper Assumptions

Two decades ago, researchers at University of Colorado-Boulder cataloged a set of common assumptions made by consumers. All these assumptions had stood the test of time, even though some were incorrect and a number of them contradicted each other.
     Those assumptions are still around. You’re better able to steer shoppers toward what will benefit them and you by understanding where they’re standing to start. Be aware of these common beliefs:
  • Generic brands are name brands sold under a different name at a lower price 
  • Brands that are purchased most often are usually the best brands 
  • Brands that are advertised heavily often are not the best values 
  • Manufacturers coupons offer better value than store coupons
  • Salespeople in specialty stores know more than other salespeople
  • When a store first goes into business, it will offer better prices than later on 
  • Larger stores offer better prices than smaller stores 
  • The larger the store, the more lenient the policy for returning items 
  • Locally owned stores give better service than national chain outlets 
  • A store that offers good value on one product probably offers good value on all 
  • Most sales are run to get rid of merchandise people don’t want  
  • Stores that are constantly having sales raise their usual prices 
  • When you buy a newly introduced product, you’re paying for the novelty 
  • Large size containers are a better value than small size containers of a product 
  • Newly introduced products are more likely to give problems than products which have been around for a while
  • Within a store, higher prices usually indicate higher quality 
  • Products made with natural materials are higher quality than products made with synthetic materials.
  • Hard-sell sales pitches indicate the merchandise is of lower quality 
  • Items offered for free are not of high value 
  • Buy products with as many features as you can afford, since you might need the features later 
     Repetition is a powerful persuasion technique for retailers to counteract the mistaken assumptions. Repeat often enough and the shopper becomes convinced what you are saying is true. Consumer psychologists use the term “truth effect” to refer to this.
     However, repetition works best if you repeat the facts in different ways. When you deliver an identical message again and again and again, the shopper might come to believe it, but at some point, they also start disliking you and the product. Consumer psychologists have a name for this one, too: wear out.

Click below for more: 
Climb Out of Mistaken Assumptions 
Repeat the Truth in Different Ways

Friday, May 4, 2012

Drive Toward Quality via Budgets

You ask the shopper, “About how much did you intend to spend on this item?” Your objective is to save time by limiting the alternatives. Once a candidate to be purchased is selected, you can present higher-priced options.
     You might think encouraging your shoppers to set a budget on their expenditures would lead to them spending less money with you. Surprise! Researchers at Brigham Young University and Emory University find that making a purchase with a budget in mind can lead the shopper to spend more if the budget is for one item, not the total shopping expenditure. The reason is that budgeting encourages attention to quality, and people who attend to quality are willing to put out extra money.
     Here’s my adaptation of the examples given by the researchers: Your customer has decided to spend no more than $150 on a mobile device. He sees price points at $80, $120, and $160. Sticking to the budget, the customer eliminates from consideration the $160 alternative. Because of how a consumer’s brain works, this decision to scratch the highest-priced model has two effects. First, it leads the customer to consider the other two models to both be okay to purchase. Second, it speeds the decision because there are now fewer alternatives.
     The result is that product quality and the inclusion of extra features become relatively more important and price relatively less important. The customer is now more likely to select the $120 model, if it’s higher quality, than if budget wasn’t in mind at the time of choice.
     This outcome depends on the budget being for a specific item (“I’ll spend no more than $150 on this mobile device”) rather than being for an entire shopping trip. It depends on how the budget was made.
     Other researchers, at Duke University, University of California-Los Angeles, and University of Florida, found parallel results regarding shopping lists: It depends how the list was made.
     People who carry around store shopping lists created from memory—the consumer trying to remember what they need and what the store carries—actually end up more likely to make purchases they will later regret.
     Making a shopping list from memory uses mental energy. Every shopper has a limited pool of mental energy, and when a great deal of it is consumed in making the list, there is less mental energy left to resist purchasing unnecessary or foolish items.

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Encourage Stimulus-Based Shopping Lists

Thursday, May 3, 2012

Hook Experts on Scarcity

Why is it that because of the global financial crisis, consumers have become willing to spend more time and money to acquire scarce items?
     Enough months have elapsed since the start of the crisis for high quality research to be conducted about the effects. That connection between fear of financial deprivation and the appeal of scarcity is a finding of research at New York University. In one of the studies, participants who felt financially deprived not only consumed more M&M candies than did those who felt financially well-off, but also were much more likely to choose the scarce colors above the common colors.
     I think the answer to the “why” goes back decades and is found in work conducted on the opposite coast from NYU, at University of Southern California, and was about career paths, not consumer psychology.
     The researchers had noted how there were successful sales representatives at IBM who chose to become sales managers for the additional compensation and ended up failing in the management positions. And at IBM, there were chemists, physicists, and engineers who, in order to earn more, chose to become managers of chemists, physicists, or engineers, only to find that they yearned to go back to their specialties.
     These researchers then distinguished between “Linears,” who want power and authority, so are motivated to move up in the organizational hierarchy, and “Experts,” who prefer to get better and better at a technical skill.
     The Experts want job security. The USC researchers said that the mindset left from the Great Depression of the 1930s produced more Experts. The Experts said, “If I have technical skills nobody else in the organization possesses to the degree I do, bosses will think about it a real long time before even considering letting me go.”
     What the Experts were aiming for concerned scarcity. Acquiring skills which were scarce. Similarly, the more recent Great Recession aroused in consumers a desire to be experts and to place a premium on scarce items. “I’ll corner the market, and when others need these items, I can make them pay lots.”
     The NYU researchers found the scarcity appeal disappeared when study participants were told their scarce items were not highly marketable.
     If you, as a retailer, see a shopper flaunting expertise, trot out your scarcer items. When a product or service desired by consumers is in short supply, you can command a higher price.

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Offer Scam-Free Scarcity
Sweeten Scarcity with Ample Warning 
Give Experts Novel Product Categories 
Boost Profits by Making Items Collectibles