Tuesday, April 30, 2013

Influence Shopping List Behavior

Acknowledge the ways your customers’ shopping lists affect their purchasing and the ways in which you can affect your customers’ use of shopping lists.
     A Hartman Group survey finds that most people don’t prepare a shopping list in advance, whether on a piece of paper or on a mobile device. The highest usage was for grocery shopping, where 44% of survey respondents said they always make a list. Only 18% of dollar store shoppers prepared a list.
     The difference is probably because dollar store shoppers are less sure of what will be available at the store. Yet with the grocery shoppers, too, consumers aren’t beholden to a list. In the Hartman survey, only about 35% of the list-makers stick to what’s on their list. Researchers at University of Pittsburgh and Baylor University say that about 75% of shoppers expect to come across both needs they’d forgotten to include on their shopping lists and items they wouldn’t realize they wanted until the items were in front of them or in their hands.
     Researchers at Duke University, University of California-Los Angeles, and University of Florida found that people who carry around the store shopping lists they created in advance—the consumer trying to remember what they need and what the store carries—end up more likely to make purchases they will later regret. Making the list leaves less mental energy left to resist the foolish items.
     How to have shopping lists work to benefit your customers? Encourage them to make what the researchers call “stimulus-based shopping lists,” which require less mental energy. Give them tools to look at what they have on their shelves and in the cabinets before coming to your store.
  • In your advertising pieces, include a checklist the customer can use at home while surveying their supplies, and then carry the list with them as they shop. Have copies of the checklist available in the store. 
  • Cook up recipes, suggesting combinations of foods or wardrobe items that fit well together. Prod the shopper to recognize that when they buy the beer, they’ll want the chips and when they buy the paint, they’ll want the primer. You’ll serve as their memory. 
  • Leave blank lines on the shopping lists. This allows the customer to improvise beyond the rigidity of a list. Departing from the preplanning makes great sense for both you and the shopper when you’re offering surprise in-store specials. 
Click below for more: 
Encourage Stimulus-Based Shopping Lists 
Increase Repeat Customers’ Unplanned Buying

Monday, April 29, 2013

Stomp Discount Scams from High Time Pressure

Earn the appreciation of shoppers under high time pressure: Help them overcome the lure of rigged discounts from other retailers.
     Researchers at University of Memphis, Wayne State University, and India’s IFHE explored the effects of time pressure on shopper’s perceptions of the value of a purchase if given an inaccurately high reference price. Merchandise which is functionally equivalent might carry different model numbers or come in different configurations at your competitors. This complicates comparison shopping for the consumer. Your customer may come to you believing your competitor is offering a good promotional discount when that belief arises from what is, in truth, an exaggerated advertised reference price.
     The researchers found that even when there is no time pressure, shoppers are too often suckered. The shoppers in the study rated the value of a deal about 25% better when the reference price was, in the opinion of a retailer, exaggerated rather than plausible. But the difference was 48% when the shopper was under high time pressure.
     It’s a challenge to ask a customer who is rushed to slow down and accurately compare your deal with that of the misleading competitor. Still, when you succeed, the result is customer gratitude.
     Assess how much time pressure a shopper appears to be experiencing. Do they look rushed or say they’re in a rush? Are they shopping for items associated with being in a rush, such as over-the-counter medicine for a child? Are they shopping at times associated with making quick purchases, such as flowers at 5 PM on Valentine’s Day? If you conclude that the shopper is under high time pressure, move briskly to complete the sale.
     With the customer who’s under high time pressure, next assess if they are in a positive or negative mood. The parent shopping for children’s medicine is probably feeling bad. The Valentine’s Day bouquet bon vivant is likely to be in a positive mood.
     When a shopper is in a positive mood, their decision making is more flexible than when they’re in a negative mood, and they’re more likely to persevere in the shopping process. Decide on your recommended purchase alternative and talk about how the positives outweigh the negatives. But when the shopper is in a negative mood, quickly decide on your recommended purchase and then talk about how it is the least bad alternative. Be ready to answer questions about the negatives of each alternative.

Click below for more: 
Attend to Negatives When High Time Pressure 
Reflect on Reference Prices in B2B Selling

Sunday, April 28, 2013

Reveal the Folly of Shopper/Product Rivalries

Shoppers can feel they’re competing with the products they’re thinking of purchasing.
     Study results provided this insight for Columbia University researchers. They noted the outcomes when shoppers who viewed themselves as uncreative thought about purchasing an Apple computer—considered to have a creative product personality. The thinking about the purchasing led to the shoppers’ estimates of the Apple computer’s creativity growing greater. The shoppers felt themselves to be competing on creativity with the product, which made them less likely to buy it.
     The Columbia researchers suggest that, before pushing to close the sale, the retailer build the shopper’s confidence in having personality traits which would be strengthened further if the product is purchased. For the Apple computer, help the consumer reveal their creativity to themselves and then show ways in which the product can help the owner become more creative.
     A consumer phenomenon related to this is called “parody display.” Usually, people purchase and display items they associate with groups to which they aspire to belong. But sometimes they’ll want items associated with a lower-status group. Among Americans, tattoos were more popular in low socioeconomic classes before the prevalence moved uptown. Among Brazilians, dancing capoeira was done most often in the slums before upper classes took it on as a form of parody display. Blue jeans. Pickup trucks. Work boots. And on and on.
     What’s behind parody display, and how can you use these motivations to build your profitability?
  • Easy competition. Researchers at New York University and Israel Institute of Technology found that college students were more interested in learning about a T-shirt tattooed with a sophisticated design when the T-shirt was worn by a grocery store packer than when by another college student. In a related study, students developed higher likelihoods of buying a wireless charger when they saw it used by a security guard than by a college student. 
  • A desire to be distinctive. Everyone else is wearing the aspirational wardrobe. Create a striking image by incorporating artifacts others don’t expect, these shoppers say. The retailer leverages this motivation via contrast in marketing and merchandising. Show the lower-class item surrounded by the usual aspirational things. 
  • A wish to relax. Your customers could be sick from “affluenza,” worn down by the pursuit of high status. Parody display items project an attitude of, “I’m here to kick back and enjoy life.” The retailer addresses this one by creating a shopping context of fun. 
For your profitability: Sell Well: What Really Moves Your Shoppers

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Plumb for Consumers’ Desire to Slum 
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Saturday, April 27, 2013

Accelerate Purchases with WOM

Incentivize your customers to talk about your store to others. Word-of-mouth initiatives can expand your customer base, bringing you customers who would otherwise not have come in so soon. WOM also can lead to current customers buying from you items they would otherwise not have purchased so soon. Don’t overlook this second type of payoff.
     Purchase acceleration is not the major effect of WOM, according to a consumer science inquiry headquartered at New York University and Hebrew University of Jerusalem. Overall, about 70% of the profitability from retailers’ WOM initiatives derives from market expansion and 30% from purchase acceleration. A 30% impact on profitability is still quite worthwhile. Also, the researchers found that the proportions can vary widely across the real-world range of market conditions.
  • When starting up a WOM program, stores with a larger existing share of the market see relatively more profitability from acceleration than will those with a smaller market share at the start. 
  • When retailers offer incentives to influential customers for talking about the store, this usually increases the relative advantages of acceleration compared to expansion. 
  • As a WOM campaign continues, the value of acceleration grows and the value of expansion shrinks. However, the profitability from purchase acceleration shows itself more quickly than the profitability from market expansion. 
     Ask your customers where they’re looking for recommendations and then encourage them to furnish their recommendations in those sorts of places. As part of incentivizing, mention to the customers reasons important to them for giving specific, balanced information to others.
     The frequencies with which consumers read and write reviews differ by product category. With a toy, about 20% will read reviews when shopping and about 10% will write a review after purchase. With an automobile purchase, about 40% will read reviews when shopping, but only about 5% will write a review after purchase. So for automobile-related products, your encouragement to do WOM should be more vigorous.
     In general, family and friends are the most popular WOM sources. For restaurants, casual acquaintances are the second most popular source. For financial products, family and friends take second place to expert and professional WOM.
     For almost all products and services, consumers are motivated to help other people make smart purchases. With automobiles and with entertainment, a distinctive motivator is to display expertise. With the home furnishings and food/beverages categories, a distinctive motivator is the opportunity to help improve the products.

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Generate WOM in the Right Places 
Have Shoppers Share Word-of-Mouth with You

Friday, April 26, 2013

Yo-Yo with Yin-Yang Cues

Statistically, the best predictor of future behavior is past behavior. That’s the defining principle of Big Data and predictive analytics—the use of data from the past to foretell what will happen next.
     But trends vacillate. An overdependence on the past resembles driving a car forward while spending most of your time looking in the rearview mirror. It’s bad for retailers and for our shoppers. There are circumstances in which we’d all benefit from the yin-yang philosophy of balancing cycles which is associated with Asian cultures.
     Researchers from New York University-Stern and Princeton University asked study participants to allocate $1,000 across a selection of stocks with varying past performance. The European-American participants were more likely than the Chinese participants to put the money into stocks which had previously shown uniform growth. The Chinese participants were more likely to invest in ambiguously-performing stocks, anticipating that a balance would lead to an uptick in the stock value for any prior underperformance.
     Next a twist: When another particular group of European-American participants were shown a yin-yang symbol prior to the stock allocation task, they put more into the ambiguously-performing portfolio than had their counterparts not shown the symbol. As I say, this was a particular group—Princeton University undergraduates, a population that had already been shown to have good familiarity with the cultural associations of the yin-yang symbol.
     The hint for you: To encourage your shoppers and yourself to break free of the fallacy of the rearview mirror, use cues which are associated with change and balance. It could be a yin-yang poster on the wall, but it also could be a financial advisor talking about how past performance is no guarantee of future performance or a menswear salesperson showing the shopper examples of tie thicknesses from different years.
     Another effective technique is to remind the customer of the variety of experiences they’ve had when shopping in your store. Researchers at Carnegie Mellon University, University of Minnesota, and New York University say the reason this works is that we often forget all of the variety we’ve actually had in our lives and instead focus on how repetitive our experiences have been. By reminding the customer of prior buying trips or asking the customer if there have been prior buying trips, we generate a sensitivity to the variety of experiences and the frequency with which that variety is the result of yin-yang cycles.

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Thursday, April 25, 2013

Infuse Your Twitter with a Past

A rule of thumb in human resource management is to consult with an employee who’s been working in a job for about six months if you want to understand what’s involved in the job. Employees much newer than that are still striving to get the tasks straight and spot the shortcuts. The old hands on the job do so much automatically that they’d have trouble accurately giving HR the right facts for a job analysis.
     I’ve been on Twitter for somewhat more than six months now, so I’m feeling qualified to analyze all of Twitterdom. That’s shameless overconfidence, but it’s completely okay, since shameless overconfidence is a given among Twitter users.
     There’s a shameless overconfidence among those who think that retail professionals using Twitter for business purposes want to know trivial details of other users’ daily lives. And that they want to get five or ten tweets telling them about it from different angles. Or worse yet, a bunch of messages with identical wording sent out over the period of a day or so.
     In tweets which do happen to be appropriately business-focused the impression of shameless overconfidence arises from the preference for very short messages. To make it more tempting for others to retweet your contribution to their Followers, you keep your original tweet brief. And extreme brevity tolerates no “Here’s an interesting idea, but please carefully evaluate how well it applies in your store” or “This advice works wonders sometimes, but in other cases, it could kill your current business.”
     Still, perhaps the major reason for undeserved overconfidence is that Twitter lacks a past. People generally start out looking at their most recent messages and then work back until they run out of interest. The longer the time that goes by after you send your message, the greater the probability it’s buried out of reach.
     In addition, the ecommerce brain treasures the latest information. Even if the recipient of your tweet makes it to the day-old message, there’s a fair chance they’ll consider it less valuable.
     Rather than retweet without adding value, I use the Reply function to add a comment and link to a past blog post. So it goes to all my Followers, like a retweet, I then place the originating Twitter user’s @ handle after, not before, my comment and link.
     I recommend this as a way to help useful retailing history retweet itself.

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Wednesday, April 24, 2013

Involve Friends in Product Placement Plots

Stay aware of product placements in blockbuster movies and on popular TV shows of items your store carries or could carry. Then take two more steps: First, stock up on those items so you have them ready for sale. Second, encourage your shoppers to go see the movie or watch the TV show with friends who are likely to get involved in the plot.
     Notice not only what product is used, but also the personality of the character using the product and the nature of the use. Then in your advertising and personal selling, reinforce the image. This builds sales even further.
     Researchers at Griffith University in Australia analyzed product placements in James Bond movies. They concluded that there were major image types, depending on what character in the story used the product and how the character used it. These researchers along with others at Coastal Carolina University and Boston College fit the image types into a framework based on the work of psychoanalyst Carl Jung. Here’s my adaptation of that typology:
  • Superheroes take responsibility for rescuing us. Ads and personal selling should promise to go above and beyond. 
  • Coaches reassure us. Shoppers want to be encouraged to buy the product. 
  • Gurus bring experience and a sharp mind. The customer expects the ads and salespersons to magically identify the customer’s needs. 
  • Playmates love fun. Place more emphasis on how the shopping experience feels than in how the product or service works. 
  • Rascals help the customer take advantage of the good will of others. 
     Research findings from Eastern Illinois University, Southern Illinois University, and Illinois Institute of Technology indicate that all this works best when the shopper has seen the product placement in a high-involvement story while sitting with friends.
     The Illinois researchers instructed study participants to silently watch a situation comedy while beside either a friend or someone the participant didn’t know. Woven into the situation comedy plot line were products with brand names the viewer would remember. After watching the episode, each study participant was asked individually about opinions toward the product.
     In cases where the plot line was of limited interest to the participant, opinions of the product were not affected by whether the co-viewer was a friend or stranger. But when the participant got involved in the plot, attitudes toward the product were more favorable when the silent co-viewer was a friend than when a stranger.

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

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Sell to Fit Story Product Placement 
Mythologize Your Store

Tuesday, April 23, 2013

Depend on Interdependency for Price-Quality

Consumers see a relationship between price and quality: If you purchase the higher-priced alternative from a set with equivalent features, you’ll receive a more reliable embodiment of those features. Research at Israel’s INSEAD and at Stanford University confirms that when people buy at what they consider to be deeply discounted prices, they end up feeling the benefits are less than if they’d paid full price.
     The price-quality link does yield to experience, though. Any consumer with a few years of purchases behind her can tell you about the high-priced national brand items she came across which were inferior to the discount-tagged house brands and how many low-cost items bring the reliability of basics not seen in over-the-top-priced alternatives.
     After looking into how the price-quality link functions in different societies, researchers at Indiana University and University of Illinois-Urbana/Champaign concluded that the link is strongest in the minds of consumers who are feeling they’re dependent on others. This could be because of cultural background. People who identify with collectivist cultures—such as from Greece, Portugal, South Korea, and the Asian and Pacific Island nations—rely on the price-quality link more than do people who identify with individualistic cultures like Australia, Canada, the Netherlands, the UK, and the U.S.
     Other studies suggest that you can strengthen the sense of interdependency, and therefore the power of the price-quality link, by bringing friends into the frame. 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 asked 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.
     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.

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

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Monday, April 22, 2013

Breed Family Pride to Motivate Choice

“I’m a Yankees fan,” announces the New York City school teacher to her class. “Who else here roots for the Yankees to always win?”
     All the students enthusiastically raise their hands. Except for one.
     Puzzled, the teacher asks, “Erica, why aren’t you raising your hand?” “
     I’m not a Yankees fan, Miss Fredericks. I root for the Boston Red Sox.”
     Now even more puzzled, Miss Fredericks asks Erica, “How could you possibly be a Red Sox fan?”
     “Because my mom and my dad are both Red Sox fans.”
     Sensing a teachable moment for the class, Ms. Fredericks moves into lecture mode. “You know, you don’t always have to be exactly like your parents. You can be your own person and still love them.” Then, gaining momentum, the teacher goes on. “Erica, what if your mom and your dad were absolute morons. What do you think you’d be then?”
     “Well, probably a Yankees fan.”
     Children and adults alike select products, services, activities, and ideas with attention to family loyalty and family pride. There’s an even greater pull when the family itself or the object of choice is an underdog.
     People like to help out a friend, particularly when the friend is at a disadvantage. This drive carries over to their relationships with stores and brands. Researchers at Harvard University, Simmons College, and Boston College found that when a choice of chocolate bar brands was offered to study participants, the brand positioned as the underdog was selected about 70% of the time.
     If the allegiance is to the customer’s country, we call it patriotism. Researchers at Duke University, Cornell University, and University of Waterloo discovered that when Americans felt their country was under verbal attack, they became more likely to buy American. Study participants perceiving America was being threatened were more likely to choose a Chevrolet than a Toyota, everything else being equal. They chose athletic items from Nike over Germany-based Adidas.
     With families, there are also the genes. Researchers at Stanford University and University of Florida-Gainesville identified likings for specific products having a genetic component, such that if one member of the family likes it, there’s a good chance others in the family will, too. This can be helpful to you in making sales when a family is shopping together at your store and in guiding gift selections. Those product categories include chocolate, mustard, hybrid cars, science fiction movies, and jazz.

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Attend to Genetic Influences in Selling 
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Sunday, April 21, 2013

Ping Consumers with Cause-and-Effect

Preface the purchase by showing the item and the benefit in close proximity. During the purchase, unless the shopper is planning for or hoping for delayed benefits from the acquisition, implant in the shopper’s mind an impression of prompt effectiveness. After the purchase, encourage returning customers to share with you news of how what they obtained from your store did produce the promised benefits.
  • Researchers at University of British Columbia and National University of Singapore showed study participants a picture of a facial cream to treat acne and a picture of the product benefit—a smooth face. The researchers found that participant groups shown the two pictures adjacent to each other were more likely to consider the facial cream to be effective than those shown the photos physically separated from each other. 
  • London Business School researchers told some study participants there was a relationship between chewing a certain gum they’d been given and doing well on an attention task. The other study participants weren’t told there was a cause-and-effect connection. Those in the first group not only expected to do better on the attention task, but also gave shorter estimates of the time interval between the gum chewing and the attention performance. We never want to lie to our shoppers, but talk of cause-and-effect leaves the impression of speedy payback. 
  • According to researchers at Stanford University, University of Utah, and University of Iowa, customers usually want specifications pre-purchase, but after making the purchase, they're usually seeking reassurance. So right after the purchase, tell the customer that they’ve made a good decision. Keep it general. Then when the customer returns to your store later or contacts you to place a telephone or ecommerce order, deliver a different sort of reassurance about their prior purchase: Emphasize cause and effect. Point out to them how what they obtained from you generated benefits important to them. 
     With so much going on in their busy lives, consumers too easily forget to give credit to a service or product for the benefits the consumers obtain. And sales staff can too easily forget to hook the effect to the cause in the customer’s mind. This oversight often is because the sales staff are themselves so busy. But there’s another reason as well: Sales staff who are thoroughly familiar with how well a particular item produces benefits can take it for granted that the customer knows, too.

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Saturday, April 20, 2013

Record Pleasures of Limited-Supply Nostalgia

Today is Record Store Day, with events in Belgium, Canada, France, Germany, the Netherlands, the UK, and the U.S., all celebrating the tactile pleasures of picking up and placing a vinyl disk onto a turntable after having purchased the disk at an independent music shop.
     During the first Record Store Day five years ago, about 30,000 disks were sold. USA Today estimates that 7,000,000 will be sold this time around, many as gifts for devotees of classic rock music tracks.
     There’s a hint of desperation—or maybe only strong determination—in the Record Store Day promotion. Deep Purple’s Ian Gillan warns, “Buy real records in real shops or I’ll come round your house and scream at your mother.”
     However, the threatening is probably unnecessary. The appeal of nostalgia may wax and wane, but it’s always in vogue as at least a niche market. Australian entertainer Peter Allen thought enough of the saying “Everything old is new again” to coauthor a song by that title. Merchants are accommodating nostalgia fans who want the cutting edge by offering items like antique toasters sold as accent pieces, music tracks from old LP records reissued as MP3 downloads, and traditional house calls augmented with internet ordering.
     Among consumer psychologists, there’s a sense that the nostalgia appeal in recent shopping seasons has been due to feelings of social uncertainty from the economic downturn. Researchers from Arizona State University and Erasmus University in the Netherlands concluded that when people are feeling lonely, they become interested in nostalgia. If made to feel socially uncertain by the experimental manipulation, consumers became more likely to prefer automobile makes, food brands, TV shows, movies, and even shower soaps which reminded them of their personal history.
     You’ll get more sales from the nostalgia if you also point out the scarcity of the items. The Record Store Day site warns, “ALL STORES MAY NOT GET EVERYTHING THEY ORDER. Record Store Day titles are limited….” A couple of years ago, Heinz Ketchup brought back the eight-sided glass bottle from the 1990s, but announced it was there for only a matter of months. Prior to the talk of Twinkies perhaps disappearing forever because of the financial problems of the manufacturer, some Hostess Cakes snack brands reappeared with retro packaging, and Twinkies cupcakes took the inside track with the same style banana filling of old. But the Brigadoon-flavor appearance was for only one month.

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Prolong Your Reputation as Cutting Edge 
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Friday, April 19, 2013

Ask “Whither Art Thou Helping?”

Why did the Lutheran minister like to build brick walls for his family of parishioners?
     I’m sure that, lurking somewhere, there’s an uproarious answer to that riddle. However, the answer from the Lutheran minister I’m referring to was more thought-provoking pun than gut-busting laughter. When I asked, he replied that he liked to build brick walls because the creative construction was concrete. It was a change from his usual days carrying out religious duties, in which his results were harder to keep in place.
     Some other men would have different motivations for brickwork, different benefits they received from doing it. Since retailers sell benefits, it’s useful for us to know what all the attractions are for the range of shoppers we serve. Researchers at California State University-Long Beach. University of Nebraska, and Bath University expanded this query beyond building brick walls to the overall Do-It-Yourself (DIY) home projects market.
     The researchers discovered that an important determinant of consumer motivation is social class. Here’s my adaptation of their dichotomy, incorporating additional research findings:
  • Family men of relatively high social class with more resources in their lives often are drawn to the relief from knowledge work, a relief achieved as they work with their hands. These consumers consider DIY projects as leisure activities to be relished, never rushed. They’ll browse at stores and introduce artistry into their projects as a form of personal expression. 
  • Family men of lower social class with fewer resources in their lives often view the residence as an extension of the workplace. They’re responsible for maintenance, and good stewardship means saving money by doing repairs and improvements yourself. Artistry in the DIY’s projects will benefit the family by distinguishing the family from other families that have limited resources and from the routine life to which many families of limited means are consigned. 
     The researchers’ conclusion that consumers’ motivations range along a dimension is a good reminder, but does not qualify as foundation-building. That conclusion is already well-known by retailers.
     More useful, though, is the researchers’ insight that at both ends of the dimension, and therefore probably all along it, consumers seek to express themselves as artists. Handmade craftsmanship for all sorts of do-it-yourselfers gives a backstory the consumer can tell to family and friends who see the creation.
     In what ways and to what ends are you helping your shoppers fulfill their personalized passions for artistic expression?

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Back the Appeal with a Backstory

Thursday, April 18, 2013

Don’t Waste Time on Social Media Marketing

Manta, which bills themselves as “the largest online community dedicated entirely to small business,” reports that over 60% of respondents to their survey of members say they’ve seen no measurable return on investment from their social media marketing activities. Of those who did see a measurable ROI, 70% said it amounted to no more than $2,000.
     Yet 49% of the respondents said they’ve increased the amount of employee time devoted to social media, and only 7% said they’ve pulled back. The impression is that operators of small businesses, including retailers, sense there are big payoffs from using social media correctly, but they’re not sure how to use it correctly. One source for a USA Today article about the Manta study said small business operators initiate social media marketing campaigns mostly because everybody else is doing it.
     Unless you’ve a better reason than that, you’re wasting your time on social media. Here are tips for avoiding this:
  • Recognize that the retailing ROI differs among social media platforms. In the Manta survey, Facebook was rated as the hardest platform to maintain. About 40%% said they have a Facebook page, but about 60% said they saw little value in Facebook for their business. There were uniformly more positive impressions for LinkedIn. In your business, however, it could be that Facebook produces more money than LinkedIn. The point is to assess time-wasting by platform rather than overall. 
  • Continue to assess the ROI. As children develop into full-fledged retail consumers, we might very well see social media gain greater marketing influence. Evidence for this comes from the fact that in a Harris Interactive poll a couple of years ago, a significantly higher number of young adults than older adults said they’d received a helpful suggestion from social media for a product or store to try. 
  • In social media marketing, emphasize “social” over “marketing.” The contract with the consumer changes when moving from traditional to social media. 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. 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 with social media marketing will take root and arouse the consumer’s thinking. 
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Wednesday, April 17, 2013

Ease Maximizing by Using Choice Overload

Pretend you’re planning a trip. Which flight to take? Where to rent the car? What hotel to stay at?
     Flight. Car rental. Hotel. That might be the order in which you’ll use the services, but researchers at Stanford University and Columbia University wanted to see what happened when the order was changed around. How do the number of alternatives interact with the choice order in the speed of consumers’ decisions?
     They asked study participants to choose one each from among five flight options, fifteen car rental arrangements, and ten hotels. But the order of the three choices was varied for different groups of the participants.
     It turned out that the choice of the hotel was quicker when it followed the choice among the fifteen rental cars than when it followed the choice among the five flights. Why was this, and how can you put this finding to use with your shoppers?
     The Stanford/Columbia researchers’ explanation is that the consumers faced with selecting one from among fifteen options were overwhelmed by the possibilities, so adopted a “good enough” mindset. Other researchers have called it “satisficing.” With this mindset, the consumers make the choice of the hotel relatively quickly.
     On the other hand, those consumers who started with the filtering of five options could hold out for “find the best.” When they moved on to the hotel choice, that mindset caused them to spend more time on the task. Researchers refer to this as “maximizing,” and maximizing can freeze consumers into indecision.
     The Stanford/Columbia researchers say that once you get into either a satisficing or maximizing frame of mind, you’ll tend to shop that way for the rest of your store visit.
     Other researchers would explain the finding a little differently: It’s more tiring to choose among fifteen alternatives than among five. Making purchase decisions takes energy. Therefore, those who started out with the fifteen-alternative task didn’t have as much perseverance when they got to the hotel task, so they got it over with quickly.
     These researchers would say that if the study participants had been given a brief break before moving on to the hotel choice, they would have taken the time to do it more carefully.
     The implication for you: If you want to encourage satisficing in your shopper, begin with the more complex decisions among alternatives and then promptly move on through the other choices to be made.

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Tuesday, April 16, 2013

Pair Images with Indirect Comparisons

In guiding shopper choices via comparisons, you can choose the direct format or indirect format. A direct format claim would be “Total Corn Flakes are more nutritious than Kellogg’s Corn Flakes” or “Our store has a better return policy than Walmart.” The indirect equivalents would be “Total Corn Flakes are more nutritious than other corn flakes” or “Our store has a better return policy than the Big Box stores.”
     If making the claim in an ad, you might be tempted to include a photo or illustration in order to draw attention. Researchers at Great Lakes Institute of Management and Indian Institute of Technology recommend that you yield to the temptation only if using the indirect format. With the direct format comparisons, images were more likely to lead to shoppers concluding the retailer is attempting to manipulate them. With the indirect format, images enhanced a positive feeling toward the ad and left the impression of clear differences between the alternatives being compared.
     This research adds to the advice from past studies about the use of photos and illustrations in comparison ads.
  • Include tables and charts which make differences easy to recognize. Remember that what you can figure out from looking at the comparison might be too complicated for the shopper in a hurry. 
  • Show an image of what you’re recommending. You're wanting to prime the shopper's brain to feel comfortable with the image. Familiarity—even recent familiarity—breeds comfort. 
     University of Maryland researchers had suggested that in comparative advertising, you do not show pictures of people using the product. Those studies found that such pictures lead shoppers to start thinking about using the products themselves, and when they do this, they put too much mental energy into thinking about just the recommended product. They forget to pay attention to the comparative advantages.
     Then research findings from Germany’s University of Bamberg indicated that under certain circumstances, it’s not so bad at all to springboard a shopper off the comparative ad into a daydream about using the product you’d like the shopper to buy:
  • The product you’re recommending is complex or innovative 
  • Shoppers seeing the ad want to get involved in analyzing for the best choice rather than purchasing out of habit 
  • These shoppers perceive themselves as having limited knowledge about the product category 
  • Compared to the alternatives in the comparison, the product has at least one powerful advantage for the shoppers 
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Relax Caution About Comparative Imagining 
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Monday, April 15, 2013

Shock Consumers, But Morally

Researchers at Bangor University, Glyndwr University, and Loughborough University, all in the U.K., say they were shocked, absolutely shocked. The cause was the use of shock itself, specifically the broad consumer acceptance of shocking images and descriptions in advertising.
     “Shockvertising” has been around for a long time. A TV ad from a decade ago for a product called X-cite employed the technique to convince the viewer that using the product would eliminate even the worst of bad breath—what the ad referred to as “dog breath.” At the start of the ad was a disheveled man awakening on a couch, and at the end of the ad, he quickly swallowed an X-cite before being kissed by a woman who has entered the room. In between the beginning and end of the ad, the man opens his mouth and, via special effects magic, regurgitates a dog.
     Researchers at University of Saskatchewan and Santa Clara University explored the appeal of macabre fashion ads. The researchers included a Jimmy Choo ad showing a woman pulling a purse out of a swimming pool in which it appears that a man’s corpse is floating. And a Dolce & Gabbana ad portrayed one woman skewering another in the neck.
     Another example is a pair of TV ads for the Volkswagen Jetta, inspired by the car having garnered top safety scores in crash tests. In each ad, the view is from inside a Jetta when a truck crashes into the car so severely that the air bags inflate. The crashes were real, with stunt actors inside the cars. Volkswagen says the ad campaign caused shoppers to get more interested in buying a Jetta.
     Shocking images and descriptions trigger storytelling in the consumer’s mind. Structured interviews with study participants reveal that once having been stopped in their tracks, the viewers ask themselves questions like “What is happening here?,” “What led up to this scene?,” and “What’s likely to happen next?” They spend more time contemplating the situation and so potentially thinking about the product.
     But the Bangor/Glyndwr/Loughborough research indicates the X-cite ad might work better than the Jimmy Choo ad. Viewers prefer a morally correct resolution to the story they’re telling themselves. A moral tone can come from the type of advertiser. Study participants were more accepting of shockvertising from nonprofits than from for-profit retailers. So if you’re a for-profit retailer, shock first and then resolve happily.

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Stake Out Promotional Vampire Risks 
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Shock Shoppers, But End Happily

Sunday, April 14, 2013

Inform Consent in Shoppers & Yourself

Informed consent is at the base of ethical retailing. When asking a shopper to agree to a purchase from you, give enough information to adequately guide the selection. Offering choices isn’t enough in itself. Don’t stack the deck against the consumer’s interests.
     To achieve this, recognize that you might need to work at staying aware of stacking the deck. Bias frequently operates subconsciously, and bias is slippery. A minor transgression repeated a few times will easily become the revised standard for what’s perfectly proper.
     A recent Time magazine article analyzed the practice of brands paying bloggers to tout the brand’s products. No ethical problem there, as long as the bloggers sincerely believe in the products and clearly declare they’re being paid. It’s called advertising, and adult consumers should be expected to suspect that bias lurks within ads. But, according to the Time article, full disclosure is not the prevailing standard among the promotional bloggers.
     As a consequence, these bloggers might begin by recommending products in which they genuinely believe, with the side benefit that they’re paid to do so, and then slip into praise for pay. The temptations are great. Fashion blogger Kelley Lilien says she earned about $120,000 in 2012 for touting products. There’s a network of talent scouts who help bloggers connect with marketers. Or you can do it yourself at conferences such as New Media Live, TwtrCon, and Savvy Blogging Summit.
     With in-store selling, the chances of undetected advertising are less, but they still exist. A couple of years ago, researchers at Princeton University, University of Sydney, and McKinsey & Company-Paris outlined questions sellers can ask themselves to check for subconscious, potentially slippery bias. Here’s my version:
  • What information that you don’t have would you like to have in order to help you make more accurate claims for the product without losing what could be a valuable opportunity? 
  • To what degree are you basing your recommendation on the outcome of a similar recommendation you’ve made yourself or was made by others whose judgment you trust? Check that the degree to which you’re doing this is not more than the degree of similarity of the current situation facing you to the situation occurring with the basis decision. 
  • What is the evidence that the numbers and stories you’re using to make your decision are overall averages that mask a wide range or are extremes that mask typical situations? 
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Saturday, April 13, 2013

Change Methodically

Ron Johnson, who brought to J.C. Penny his retailing philosophy and former colleagues from the company once known as Apple Computer, has been voted off the island by the Penny board of directors. And “Retail Customer Experience” reports rumors that Apple itself is looking to change the design of its retail outlets.
     Is the polish off the Apple?
     No, the problem is less with the polish than with the way change is handled. If Apple retail stores change design, it would be best if those changes are made incrementally. And the increments for change in an Apple store almost surely can be larger than in a J.C. Penny store, considering the relative openness to innovation of the two target markets.
     Every retail business changes. It might be a change in your mix of products and/or services because of a need to reduce inventory or opportunities to expand your offerings. A change in business location or format to better meet the preferences of your target markets. Changes in staffing that will be noticed by your regular customers.
     A general rule for making changes in retailing is to lead your customers gradually. This reduces the possibilities that you’ll lose your loyal shoppers.
     Researchers at University of Minnesota, Emory University, and George Mason University suggest that you determine where you want to end up, and if this ending point is quite different from where you are now, then introduce at least one intermediate step. If you currently sell paint and you want to end up adding draperies, consider introducing wallpaper first. If you plan to phase out your entire stock of draperies, reduce the product assortment for a while before eliminating the product category completely.
     There are some changes where intermediate steps are unrealistic. For instance, if you want to close your current store location and open up for business across town, it wouldn’t work to open up a store halfway across town for a while as an intermediate step. Here the principle becomes “Ease your customers into making the changes.” Is it realistic to keep the old place going for a while after opening up the new location? Can you announce the change at least a month in advance of making it and show a map of how to get from the old store to the new store? Can you post large drawings of the new store in the old store?

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Friday, April 12, 2013

Trade Off Serial Entrepreneurship

Many successful owners of small to midsize retail businesses are serial entrepreneurs. They occupy themselves with one business concept at a time rather than undertake a range of diverse business enterprises simultaneously. An academic from Babson College, consultant from Innovation Associates, and journalist from the New York Times collaborated to assess what valuable habits distinguish the most profitable serial entrepreneurs. The trio identified three:
  • When successful serial entrepreneurs have positive results, they move quickly to build on those results. Because they’re focused on the one business concept, they can recognize successful results promptly and then devote all their resources to carrying out the next steps in their plan. 
  • Their close attention to the one business concept at a time helps them see trends and thereby not only predict the likely future of their retail business, but also plan for how to create the future they desire for their retail business. 
  • They are not discouraged by failures. The unanticipated obstacles are seen as learning opportunities, and prolonged setbacks motivate a search for better alternatives. Those alternatives might include abandoning the current enterprise and promptly moving on to the next entrepreneurial challenge. Successful serial entrepreneurs know when to cut their losses. 
     It follows that less successful serial entrepreneurs fail to spot when to cut their losses. Researchers at Warwick Business School, Durham Business School, and Nottingham University compared serial entrepreneurs to portfolio entrepreneurs. The latter group are those business people who diversify in their retailing endeavors, running a set of businesses at the same time. The researchers found that the portfolio entrepreneurs learned better from failure because they have less investment in defending their prior actions. Their pride isn’t tied so tightly to one enterprise. They experience less pain from the failure.
     Associated with this, serial entrepreneurs are less likely than portfolio entrepreneurs to see accurately what they themselves did wrong. Their zeal to move on could result in serial failures.
     Together, both these sets of research findings point out the tradeoffs for you, retailer, in focusing on one business at a time. Even within one small to midsize store, the owner/operator must carry out a broad range of duties. Taking on more than one business at the same time could quickly corrode effectiveness in any of them. But beware of overinvestment in the one business to the point where the pain of admitting failure prevents you from initiating essential corrections.

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

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Thursday, April 11, 2013

Sell Optimism

The California Lottery aimed to leverage consumer optimism with their tag line, “Believe in Something Bigger.” backed up with a choral arrangement of the song “California Dreamin’.”
     Since the odds of a net gain on the lottery are truly small, any optimism might be considered misplaced. Still, optimism itself is a valuable commodity. As long as costs to the consumer are not too great, using existing optimism to sell an item which prolongs optimism makes sense.
     By and large, we’re an optimistic lot. Researchers find that, 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 favorite of those research studies found that 80% of us even believe we are more likely than are our neighbors to go to Heaven.
     Combine even unrealistic optimism with an irrational belief in magic, such as you might find in purchasers of lottery tickets, and it becomes a force of consumer motivation. Researchers at HEC-Montreal and at Queen’s University-Kingston analyzed how magical thinking helps people stay on a diet. The researchers recommend against confronting dieters with the objective odds of success, since those odds would discourage them from persevering.
     Don’t lie to consumers. The California Lottery website said in boldface type that the odds of winning anything in the MEGA Millions lottery are only about 1 in 40. However, stoking the magical optimism can facilitate success. Keep things in the spirit of the children’s book The Little Engine That Could, with its mantra of “I think I can, I think I can.”
     Acknowledge the power of shopper superstitions and distinguish between two types. Researchers at University of Texas-Pan American, Ohio University, and China’s Chongqing Technology and Business University differentiate between consumers who do things like carry good luck charms and those who believe in the power of fate or karma regardless of what lucky charms they're packing.
     Researchers at Dartmouth College and Columbia University suggest that for those who respect karma, you show extra perseverance in resolving any complaints. Research at St. Louis University and Oklahoma University suggests that the other type of superstitious consumer will become a fan of your store if you pair positive shopping experiences with a memory aid, like items carrying your store logo.

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

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Wednesday, April 10, 2013

Notice How Teens Are Into Exclusive Resale

Resale retail is attractive to teen fashionistas, according to a feature article in last Sunday’s Hartford Courant. The article attributes the popularity to both a social consciousness and desire for extra funds which the teenagers satisfy by recycling their clothes for cash they can then spend on the low-priced merchandise at the resale store.
     Operating a successful resale store takes planning. You'll require expertise about what to pay for the used merchandise, knowledge of what used merchandise you can legally sell, polices about returns of used merchandise, and more. Still, consider joining in on this opportunity for profitability.
     For the strongest appeal to teens, think “exclusive.”
  • Devote an entire department exclusively to teen fashions. Along with the appeal to teenagers of the resale model, there’s a stigma springing from associations of “resale” with “outdated.” This stigma is exaggerated when there’s resale clothing for older adults directly adjacent to that for the teens. One of stores named in the Hartford Courant article is This Ain’t Your Momma’s Closet. Other shops use names like Teenage Wasteland and The Dresscode to let it be known they’re for teens only. 
  • A related point is that marketing methods helpful with adult resale stores won’t work as well with teen resale retailing. For instance, with adult resale, a tie-in of your for-profit business to charity can overcome resistances to patronage, since many adult consumers think of resale as benefitting charities. Savers, with nearly 300 stores, uses as a slogan “Good deeds. Good deals.” to portray that it gives a percentage of its profits to nonprofits. The appeal of that is less attractive to teen shoppers than to the adults. 
  • It’s best to sell used items exclusively. If you do have both new and resale for teens, merchandise the two in completely different areas. Auto dealers don’t mix new and used cars. A stigma can rub off on new merchandise if it’s physically close to the used. There’s even evidence that having the same salesperson handle both the new and the used can decrease the willingness of the shopper to pay full price for unused items. 
  • Market the exclusivity of the items you sell. The Hartford Courant article quotes the executive director of the Association of Resale Professionals as saying, “Teens… don’t want to go to the mall and get the exact same items as everyone else. Shopping resale allows them [to] find one-of-a-kind items….” 
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Tuesday, April 9, 2013

Ready Men for Good Deals Using Red

Put promotional prices in red ink, advise researchers at Fairleigh Dickinson University, Babson College, Drexel University, and Oxford University. When a sale price appears in red rather than black, it increases the perception of savings by about 70% among male shoppers. Related to this, the men in the studies liked retail ads better when prices were presented in red.
     The effect was much smaller for women shoppers. The increase in perceptions of promotional savings with red instead of black ink was about 8%, a difference too small for the researchers to consider it significant, given the variation among people in price perceptions. However, there was no evidence women liked sales prices in black over red, so there’s no reason for you not to use the red prices.
     Why does red have this effect? Other research finds that the color facilitates purchasing and consumption in general. It’s physiological. Red on the walls of the shop or restaurant speed up the consumer. Reds create excitement associated with fast movement and enhanced appetite. In a McDonald's, red means you eat more quickly, leaving space sooner for the next customer. In a Target store, red means you pile your purchases into the cart more quickly.
     It does depend on context. When you see a stop sign or a red light on the traffic signal at a busy intersection, you stop. The red raises alertness. So if you don’t stop, you’ll probably drive through the intersection faster than otherwise.
     But with the red prices, why did it make much more of a difference with men than with women? Because women pay closer attention to analyzing prices than men do, the color on the sign or in the ad isn’t as much of an influence. In fact, the Fairleigh Dickinson/Babson/Drexel/Oxford researchers discovered that when they managed to get the men more involved in analyzing the purchase possibilities, the red/black savings perception difference pretty much faded away.
     You can increase the effect of red on female shoppers in merchandise appraisal, even if not in savings perception, by giving red some personality. Research findings from Boston College and University of Pennsylvania indicate that Shakespeare’s Juliet had her accuracy clouded by love when she uttered “What's in a name? that which we call a rose By any other name would smell as sweet.” Retailers sold more items when packages carried the label “cherry red” instead of just “red.”

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

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Monday, April 8, 2013

Defend Against Store Name Dilution

According to a Bloomberg Businessweek article, business education retailer WBF is being sued by trustees of the University of Pennsylvania. The reason is that WBF is the nickname of Wharton Business Foundation and University of Pennsylvania includes Wharton School, the oldest business school in America. The lawsuit understandably claims that consumers are likely to think the services they’d get from WBF have lots to do with Wharton School.
     BBW says that WBF hasn’t even applied for a U.S. trademark registration for the name “Wharton University” or “Wharton Business Foundation University,” while Wharton School has been using the Wharton registered mark for business education since 1881.
     The Penn lawsuit is a reminder of the importance of trade protecting the name of your store and then monitoring for violations of your rights. U.S. federal law protects against trademark dilution. The Trademark Dilution Revision Act of 2006, which amended prior legislation going back to 1946, allows for legal action when there is a likelihood of dilution, not just proven dilution.
     Researchers at Rutgers University, California State University-Long Beach, and Ohio State University demonstrated the reality of dilution. They measured the proportion of study participants who think exclusively of one brand’s products when asked about a given brand name. They found that a single exposure to a logo similar to the logo for the given brand name, but for a different business, diluted exclusivity by about 35%.
     Defend against store name dilution by maintaining strong associations between your store name and store image. Market in all the channels the shopper uses when engaging in searches that could end up with purchases from you. Here’s my augmentation of a list compiled by researchers at University of Texas-Austin and University of Southern California:
  • Personal contacts. When people visit your store, be sure they’re exposed to the name in signage, shopping bags, what salespersons are saying, and more. 
  • Non-internet advertising. Use a full range of channels and have the store name in distinctive fonts and in a memorable logo design. 
  • Interpersonal contacts. Beyond social media are the face-to-face interactions your satisfied customers have with other consumers. Give to those customers business cards with the store name in prominence. 
  • Colleagues. If you operate under a franchise or in a retailer cooperative, the name you use is probably used by others. How well are you teaming up with those others to maintain the quality of the brand? 
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Sunday, April 7, 2013

Bill Right by Considering Sample Constitution

In deriving from survey findings and study results the recommendations I make to you, I attend to characteristics of the people constituting the sample used in the survey or study. For instance, a great deal of consumer behavior research is conducted on college students because of the easy availability of the students to the researchers. Therefore, I assess how generalizable those findings are to consumers you aim to serve in operating a small to midsize retail operation.
     The matter of sample constitution arises with a report this month by Thumbtack.com, which rates locally-owned businesses, of a survey conducted in partnership with the Ewing Marion Kauffman Foundation, a booster of entrepreneurship. The objective of the survey was to identify areas of America which are most and least friendly to small businesses.
     Here are a few of the findings:
  • Of the business friendliness factors surveyed, the one most important to the respondents was the ease of continuing to satisfy regulations, especially licensing regulations. 
  • Among states, those seen as most friendly to small businesses included Alabama, Idaho, New Hampshire, and Utah, all at A+. Ratings of least friendly, with a grade of F, were given to Hawaii, Maine, and Rhode Island. 
  • Among the 57 U.S. metropolitan areas assessed, an A+ went to Austin, Colorado Springs, Houston, San Antonio, and Virginia Beach. Notice that three of these cities are in Texas, which received a grade of A overall. Ratings of F went to Cincinnati, Newark, Sacramento, and San Diego. California received a grade of D overall. 
  • Most improved state from last year’s survey was North Carolina, although its grade was still only a B+. 
     But how representative was the composition of the survey sample?
  • On the positive side, the 7,766 survey respondents were truly from small businesses. About 96% had fewer than ten employees. 
  • Also good is that the self-reported race, ethnicity, and gender distribution of the sample closely matched that reported for American small business ownership. So did the statistics for the small business longevity. 
  • However, because the sample was composed completely of Thumbtack.com clients, there was a substantial overrepresentation of retailers who primarily sell services and underrepresentation of retailers who primarily sell products. This skew might explain why more than half of the respondent sample said they believe the level of taxes they pay is about right. 
     The constitution of the survey sample influences the value to you of the results.

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Saturday, April 6, 2013

Never End Staff Recruitment

Do you occasionally post in your store a sign reading something like, “We’re a great place to shop, aren’t we? We’re also a great place to work. Please ask for a job application if you’d like to learn more.”?
     Don’t post the sign continuously. If you’re a small retail business, your staff turnover shouldn’t be so substantial that you’re hiring nonstop. A sign implying you do goes against the sign’s claim that you’re a great place to work. Still, even if you’re a one-person operation, always have in mind people to hire. For the short term, the one person needs a break and, if he or she never takes a break, will likely need backup when he or she falls ill. For the long term, prospective employees could become prospective purchasers of the business when you’re ready to sell.
     Are you be ready to replace employees who accept jobs elsewhere or return to school? Now is the time to start building your list of candidates. If you wait until there’s an immediate need for new faces, you’re likely to have to settle for lower quality than you should have on the selling floor, at the cash registers, and in the back office.
     The signage I’m suggesting takes account of the fact that people who shop frequently in your store can turn out to be excellent employees. They know the store well, and your staff have had an opportunity to interact with them. Your frequent shoppers are also members of your store’s community who will praise your store and defend it against criticism.
     Retail experts at University of Manchester and the Association of Corporate Treasurers suggest current and past employees as another source of recruits. Here’s my adaptation of the list of steps they’ve found to be successful:
  • Research. Ascertain what your current and past employees are saying about you. Ask them, listen to their conversations, conduct exit interviews with departing employees, do internet searches on your business name. 
  • Remedy. Address the causes of negative word-of-mouth from staff. Some of this might involve explaining to your employees why what seems negative actually helps keep jobs for them. 
  • Inform & motivate. Equip your employees with information which will interest the right kinds of people for your store. Then incentivize by pointing out the advantages to your current and past employees of you having high-quality store staff. 
For your profitability: Sell Well: What Really Moves Your Shoppers

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Friday, April 5, 2013

Resolve to Investigate by Attribute Type

When you ask an ongoing customer how things are working out with a product the customer purchased from you a while back, the customer might reply that they are disappointed with certain aspects. Or an ongoing customer, with no prompt from you, might say they’re dissatisfied with a past purchase.
     If either of these happens, assess whether the characteristic of the product leading to the customer’s disappointment is a “resolvable attribute” or an “irresolvable attribute.” Researchers from Indiana University and University of Pittsburg say that this distinction affects how you should respond.
  • Resolvable attributes are those which can be corrected or repaired. The noise filtering characteristics of hearing aids could be corrected with an adjustment by the audiologist. A broken heater in a car often can be repaired. 
  • Irresolvable product attributes are those for which correction requires purchase of a replacement item. The size of the hearing aids and the car’s acceleration power are irresolvable attributes. 
     Whether an attribute is resolvable or irresolvable comes from how the customer thinks about it. If the rotating food platform inside the microwave oven stops working smoothly, it might be least expensive to replace the entire microwave unless the rotating food platform is still under warranty. As another example, your customer who is a tinkerer might welcome the challenge to come up with a way to eliminate a nuisance.
     How the customer classifies the nuisance might not be the same as how you, the retailer, think about it. Therefore, it’s important for you to investigate the customer’s thinking. More fundamentally, when a customer expresses disappointment or dissatisfaction with a past purchase, find out which specific attributes are leading to the negative appraisal.
     The Indiana/Pittsburg researchers tracked the experiences of 17,000 automobile owners during the manufacturer warranty period. They found that for attributes considered resolvable by the consumer, the consumer would be anxious until the shortfall was remedied. However, for dissatisfactions the consumer viewed as due to irresolvable attributes, the consumer learned to live with the problem and so, even when nothing was done, would become less anxious.
     The implications for your action:
  • With resolvable attributes, work with the ongoing customer to at least minimize the nuisance. 
  • With irresolvable attributes, let sufficient time pass so that any residual anxiety motivates a purchase decision and is not directed at you as the cause. Then propose purchase of a new product which will eliminate the nuisance. 
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Thursday, April 4, 2013

Offer Bonus Packs of Virtue, Discounts on Vice

With a bonus pack, you offer more of the product at no additional price. With a price discount, you offer the same amount of the product at a reduced price.
     University of Utah researchers find that with healthy food items, shoppers prefer a bonus pack to a price discount, while the preference is for a price discount when the shopper identifies the food as unhealthy.
     If an item is a vice, the price discount helps the shopper to justify the purchase. Getting an additional quantity, even if at no additional monetary outlay, would seem overly sinful.
     However, with items not considered unhealthy by the consumer, there is a general preference for bonus packs over economically equivalent price discounts. To understand why, consider a field experiment conducted by researchers at Texas A&M University, University of Miami, and University of Minnesota:
     The site of the experiment was a small retail store in a suburb of a large city. The product in the experiment was a 9 oz. container of Fruits & Passion hand lotion, which at the time of the study carried a regular price of $13.50. The nature of the experiment was to reduce the selling price to $9.00 and advertise a special sale in two different ways at different times:
  • “35% price discount.” Actually, it was one-third, or about 33.33% off. 
  • “50% more for free.” The pro-rated price for 6 oz. was $9.00, so the extra 3 oz. was at no extra charge. 
     Sales of the product during the “50% more for free” sales were about 75% higher than sales during the “35% price discount” weeks.
     Why? Probably because 50% is a larger number than 35%, even though the true economic gain for the purchaser was the same. Consumers are, in general, not good in making sense of percentages. A couple of the researchers who did this Fruits & Passion study had previously found that consumers will choose a double price discount of “25% off plus an additional 20% off” over a single discount of 40% off. If you calculate 25% off and then take the 20% off from the remaining 75%, you’ll find that it leaves 60%, which is 40% off!
     In your store, offer bonus packs of virtue and discounts on vice. When selling items which include both utilitarian and indulgent components, emphasize the discount on the indulgent, thereby giving the shopper permission to purchase them, too.

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Wednesday, April 3, 2013

Knock Out Rage from the Old One-Two

In boxing lexicon, “the old one-two” is a left-hand jab followed immediately by a right cross. Because of its effectiveness in knocking out an opponent, the old one-two often eliminates rage in the ring. But according to a research study from Australia’s Griffith University, University of South Wales, and University of Queensland, a different kind of old one-two often precipitates rage in the retail store.
     The one-two here consists of:
  • A customer complains to a retailer about what the customer perceives as a failure in adequate service. 
  • The customer concludes that the retailer’s response to the complaint is offensive. 
     One important contribution of this research for retailing practices is the reminder that the retailer has an opportunity to head off rage by ensuring the response to a complaint is considered adequate by the customer. You won’t always be able to satisfy every customer, but try.
     A second important contribution of the research is identification of the most common reasons the customer considers a retailer’s response to be inadequate:
  • “What you did made me lose time, money, or both time and money.” Knock out rage by acknowledging the customer’s loss. 
  • “You’ve insulted me by considering my complaint to be unimportant.” Start by assuming the customer does consider it to be important. Listen attentively. 
  • “You’re violating rules of fairness.” Many consumers carry into retail transactions a strong sense of right and wrong. Whenever a customer complains about a service failure, ask “What might I do to make things right?” 
  • “I want to be in control of this situation, and you’re not letting me.” Resolving a complaint is a collaborative process. You can’t let the complaining customer take complete control. However, you can allow that customer to feel a sense of control in the situation by not rushing the process. 
  • “What you’ve done jeopardized my physical well-being.” This one is limited to items you sell which could injure a customer or someone the customer cares about. If you sense this is the customer’s concern, ask lots of questions. Then tell the customer you’ll review your procedures to take account of what you’ve learned and you’ll tell the customer what changes you make for the future. 
     A third important contribution of the research was in indicating that particular rage triggers for North American customers concern loss of resources, while for East Asian consumers, rage triggers are more likely to concern threats to self-esteem.

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