Sunday, May 31, 2009

Give Loyalty Program Members Prestige

Customer loyalty programs—-sometimes called frequent shopper programs—-reward customers for their continuing business. When well-designed, loyalty programs motivate those customers to keep coming back soon and often in order to obtain the rewards.
     Overall, the reward most popular with customers is a percentage discount on future purchases of items selected by the customer. Other popular rewards include discounts on items selected by the retailer and a free gift with a purchase.
     Customer loyalty programs add to your profitability by increasing sales and by helping you target your sales promotions. At the time of enrollment, you can gather information like the person's address, family size, and self-expressed objectives in shopping with you. Then you can track each participant's shopping frequency and what items are purchased. The low costs of database management make it realistic for almost any retailer to collect and analyze the information. But prospective enrollees do want to be convinced their privacy will be protected.
     One selling point for shoppers which is often overlooked by retailers is the sense of prestige participation gives. According to frequent shopper program researchers at University of Pennsylvania and USC, people like to be recognized for store loyalty.
     To get the most from frequent shopper programs, be able to answer "Yes" to these questions:
  • Do the enrollment materials, the enrollment procedures, and the participant card all clearly refer to the customer as a "member"?
  • Do you have multistep programs, in which a member can move from green to gold status, for example, by increasing the total amount and/or the frequency of purchases?
  • When the customer shows the card to the cashier at the time of checkout, does the cashier give extra acknowledgement, such as by looking at the customer, smiling, and saying, "Thanks for being a green step member"?

Saturday, May 30, 2009

Offer Customers Basic Plus Add-Ons

Offering stripped-down models with the option of add-ons has always been a great way to woo entry-level customers. But the appeal of add-on accessories can go beyond this. Researchers from London Business School, Harvard Business School, and Duke University found that when a shopper learns add-on accessories, such as a tripod for a camera, are available, the shopper's opinion of the basic product becomes more positive. This increases the profit potential.
     It's the availability of the add-ons, not necessarily their purchase, which improves the consumer's ratings of the basic product. And it is add-on accessories, not add-on features, which do the job. Offer a 32MB memory card for that base 64MB camera and the consumer's evaluation of the base camera goes down.
     Add-ons of all sorts appeal to the loads of customers who like to customize. The NikeId page invites you to "Customize your game" by selecting add-on designs and colors. And at a Mars site, you can add on to M&M candies your messages and photos, "as long as it doesn't leave a bad taste in anyone's mouth," which does seem to be a sensible requirement when it comes to M&M's.
     From another angle, offer add-ons because many consumers are learning to start simple even if they can afford the fancier version. Philips Electronics says that more than 50% of Philips products which shoppers end up returning have absolutely nothing wrong with them except that the purchaser couldn't figure out how to use all those features they'd bought.
     The advice for retailers: Merchandise and price your items to feature both basic models and packaged upgrades. Whatever the customer buys, you can follow up in a few months to let them know about the add-ons you have for sale.

Friday, May 29, 2009

Walk the Parking Areas

A shopping experience that welcomes the customer and motivates them to come back for more should begin before the customer even enters your store. How easy it is for them to find a parking space? How well-maintained is the parking lot? If your store is open at night, how well-lit is the parking lot and/or street parking? Stroll through your parking areas with clipboard or voice recorder in hand to compile your task list.
Then do the same with the parking areas for your competitors' stores. Again, look around thoroughly and take notes about what you learn.
While you're at it, there is something important to add to your notes and task list. Use the opportunity to build Top-of-Mind Awareness. This from Making Money Is Not Illegal, Immoral, or Fattening:
"Do you go over to your competition, not just to walk through the stores regularly, but also to drive through the parking lot? Write down the names and phone numbers of the businesses that are in your competition's parking lots. Then come back to your store and have your outside sales person, you yourself, or somebody else contact these people to say, "Hey, you know what? You've got to come down here to OUR store. We have an excellent trade program….
"Do it in your own parking lot, too, because a lot of those people who are shopping are business-to-business shoppers, but you don't know that because they don't yet have an account with you. They have an account or accounts somewhere else. They're coming into your store to pick up one or two items, and then they're leaving. Get their business names from their trucks or cars in your parking lot. Look up the phone numbers, get in contact with them, and build those relationships."

Thursday, May 28, 2009

Check Your Optimism When Dealing with Vendors

The most dangerous time to make purchases from a vendor is when you're both very busy and very happy. Researchers at University of Hong Kong and National University of Singapore found that joyful customers don't adequately evaluate all purchase alternatives. These customers tend to just select either the first alternative or the last alternative.
     This insight is helpful when you're in the role of the seller and your shoppers are in the role of customers. But if dealing with vendors, you are the customer. So when you're in high spirits, stop to check that you're not entering some zone of excessive optimism which includes mumbling, "A good retailer can sell anything to anybody."
     Maybe the reason you're really happy is that your store is bustling, which means you're especially busy. Then an added danger in negotiating with the vendors is that you won't take time to verify you are making good business decisions instead of only easy, time-saving ones.
     Does this mean you should wait until business is dead before setting appointments with vendors or deciding on your refill order? Well, no. Hopefully, the rate of your business will never die out. And as to refill orders, these are less sensitive to the dangers of making purchase decisions when you are busy. If the products are selling and the order system is in place, chances are it makes excellent business sense to place the reorder. But with orders for new items, carve out time to think it through with care.
     And do the research findings mean you should get yourself all grouchy before placing an order? Again, no. What the findings do mean is to check on your joy while evaluating the alternatives and to keep unrealistic optimism in check when making the decision.

Wednesday, May 27, 2009

Have Bilingual Staff for Bilingual Shoppers

Retailers often assume that if a customer is able to speak two languages, the customer is equally comfortable carrying out shopping transactions in either language. But the truth is that the whole personality of the customer and of the transaction might change between languages. Researchers at Baruch College and University of Wisconsin-Milwaukee studied what happened to bilingual Hispanic women as they switched between speaking English and speaking Spanish in American settings.
     The researchers found that the women tended to feel more assertive when speaking Spanish than when speaking English. And when these women read Spanish text, as might be used in ads or on signage, the women were more likely to think of acting independently and taking educated risks. An assertive willingness to take educated risks is the sort of thing that can lead to larger purchases and so more profitability for you.
     If your target market includes many people who speak more than one language, here are some tips:
  • Look for job candidates who have, in addition to all the other retailing skills, the ability to fluently speak and write the languages used by your customers.
  • Schedule staff so that at any time, you have at least one salesperson on the floor able to understand and fluently speak the language of almost anyone who comes into your store. Then have the monolingual staff tag team whenever it's needed.
  • Train and coach staff to understand the retail shopping expectations of people from different cultures who give you business. This is important not only for closing sales, but also for teaming with the customer to head off misunderstandings about item return policies, how to place a special order, what might appear to be shoplifting, and how to arrange for services offered by the business.

Tuesday, May 26, 2009

Sell Either Protection or Promotion

Every customer walking into your store is either protection-focused or promotion-focused. Prevention-focused shoppers put top priority on products and services which help them avoid losing what they have now. Promotion-focused shoppers put top priority on products and services which help them gain more than they have now. A person is usually either protection-focused or promotion-focused over the course of their lifetime as a shopper.
     To help our customers make decisions they'll be happy with, and so come back to us again, we should use sales strategies that fit the individual's prevention/promotion category. In one study conducted at Northwestern University, people who would end up happiest when they ate healthy foods were offered the choice between an apple and a chocolate bar. But wait! Before being offered the choice, each person took a psychological test to find if they were prevention-focused or promotion-focused. Later, some of each type were asked to answer a protection-focused question, "What are some of the things you can do to avoid anything that could go wrong?" The rest—again some from each type—were asked a promotion-focused question, "What are some things you can do to make sure everything goes right?" And immediately after that, the apple and the candy bar were presented.
     Here's what happened: When the question the person was asked fit the type of shopper they were, they selected the apple about 80% of the time. But when the question the person was asked was opposite of the type of shopper the person was, they selected the apple only about 20% of the time.
     The lesson for retailers? Assess if the shopper you're dealing with is mostly prevention-focused or mostly promotion-focused. Then ask your questions of the shopper and present your selling points to fit that individual's focus.

Monday, May 25, 2009

Encourage Group Shopping

When people shop in groups, they buy more than when they shop alone. This is especially true for female shoppers and is the principle behind Avon and Tupperware® parties. It also holds for in-store shopping, and now some businesses are seeing if it works even in the online world:
     Cultural arts retailer Novica is using Sesh to allow customers to discuss the jewelry, paintings, home d├ęcor, and clothing they're thinking of buying. Fashion retailer Charlotte Russe is using ShopTogether™ to allow small groups, each person working from their own computer, to collaborate in making shopping decisions. ShopTogether™ user features include "Show your friend what you are looking at," "See what your friend is looking at," and "Chat with your friend as you shop together."
     Charlotte Russe and Novica are great examples of where group shopping is at its best. With fashion purchases, shoppers are keenly aware of the social risks as they make their selections. Learning what others have to say reduces the downside risk. It also means that if a woman and a few of her close friends all walk into a party wearing the same outfit, it's more likely to have been intentional, not an embarrassing accident.
     With cultural arts purchases, there are background stories which add value to the items. When my buddies and I are all looking at the Novica Axe Carnaval mask at the same time, one might reminisce with a story of his experiences in Brazil at the time of Carnaval and another might share how the Axe mask reminds him of an African mask he has hanging in his office.
     Whatever the shopping channel—home party, in-store, online, or other—build sales by making it fun for customers to invite their friends to shop along.

Sunday, May 24, 2009

Charge for Some Services

Do your staff go beyond the basics in servicing customers? Do they assemble items the customer buys, make minor repairs on items purchased from your store in the past, tailor clothing purchases, or more? The busy retailer might overlook the range of these special services or be inconsistent in charging a fee for them. Here's a little of what Making Money Is Not Illegal, Immoral, or Fattening has to say:
"What services, such as home delivery or gift wrapping, will you do that the competition cannot or will not do? But, you know, just having the services isn't enough. How do you train your staff on telling customers about the services and in providing these services in world-class ways? Sometime soon, make a list of every service you do in your business. And when was the last time you looked at what you were charging for your services?"
If you decide to start charging for a service, here are four tips:
  • Based on findings by researchers at George Mason University and University of Texas-San Antonio, aim for services that have a clear dollar value for the customer, not just time savings. Customers are more receptive to new fees for repair services than for assembly services, for instance.
  • Give warning. Announce the new or increased fees at least one month in advance. Post a list of the fees with the effective date. For the first few months, have the staff person confirm the fee with the customer.
  • Be sure that when a customer declines the service, your staff NEVER ask, "Are you sure?" Especially in this tough economic environment, many customers feel shame about not opting for extra-cost items.
  • Provide continuing training and coaching of staff to make certain the priced service will dazzle the customer.

Friday, May 22, 2009

Cut Back on Stocking Unprofitable Products

With the tough economy, it's especially important that you don't waste money. Among other things, this means cutting back on stocking merchandise which fails to earn you an adequate profit.
     I'm not saying to eliminate this merchandise altogether. You might be carrying items with very low turnover—and therefore very low payback by themselves—because stocking these items lets customers know you carry a complete set. The buy-it-once-in-a-lifetime fasteners are on the shelf because your store is known for carrying whatever-you-need-in-your-lifetime fasteners. But don't carry more than a couple of each of those slow sellers.
     Cut back duplicate lines. Can you reduce your Good-Better-Best assortment choices to Better-Best choices? Do you need to have five different bedroom ensembles on display when you could have three on the floor and offer to special order others?
     Avoid carrying products that fit into limited categories for the customer. Retailers who stocked products labeled Jell-O® Gelatin Flavors for Salads learned that buyers used the products just for salads. In tight economic times for the retailer, it works better to carry boxes labeled Jell-O® with serving suggestions that include salads, among others. Over the years, the Church & Dwight Company has done a masterful job of positioning Arm & Hammer® Baking Soda in a considerable variety of categories for the consumer, from odor control to cleanser to, well, baking soda.
     In some situations, cutting back on unprofitable products results in you having empty shelves or unfilled racks. In usual times, that could project the wrong image, as customers start gazing around, trying to find the "Going Out of Business" signs. But these are not usual times. Whether you've a few empty spots or not, keeping things trim lets customers know you recognize they are wanting to trim needless expenses in their own lives.

Thursday, May 21, 2009

Explain How Quick Service Is Worth More

So this guy brings in a grandfather clock—-a family heirloom—-to a repair shop because the clock has neither ticks nor tocks. The repairman spends just short of three minutes carefully looking over the clock, listening to the clock, feeling the gears inside the clock, and it even appears that he's smelling the case. Then the repairman folds his hand into a fist, sharply knocks the left top side of the clock case, hands the ticking clock back to the customer, and says, "That will be $80, sir."      It takes a few seconds for the guy to wipe the smile off his face. He's thrilled the clock is working again. Finally, he musters up a scowl to go along with saying to the repairman, "Where do you get off charging me $80 for simply tapping the side of my clock?"      The repairman nods, as though he's heard this sort of thing before. He answers, "Oh, for tapping the side of the clock, I'm charging you $5. The other $75 is for knowing where to tap."      Then the repairman remembered reading about consumer behavior research conducted at the University of Singapore and University of Toronto. The researchers found that when service duration is shorter than the customer expected, the customer thinks the service is inferior.      So the clock repairman says to the guy, " You didn't need to stand here for a long time waiting for me to fix the clock. You didn't incur the time, expense, and bother it would be if I'd said, 'Leave the clock with me and come back in a week.'"      And the guy with the clock understood. If questions come up about your fee for quick services, do you remind your customers how quicker service is better? Unless you're a massage therapist, of course.

Wednesday, May 20, 2009

Build Self-Esteem of Your Teen Customers

Many California retailers know the name "John Vasconcellos." John was a highly popular California State Assemblyman from 1967 to 1997—becoming chairman of the influential Assembly Ways and Means Committee—and then a California State Senator for 8 years, not running for reelection in each case only because of term limits. But to those outside California, he might be best known as the founder of the California Task Force to Promote Self Esteem and Personal and Social Responsibility. John, a firm advocate of positive psychology, pushed forward legislation to fund programs based on the idea that raising teenagers' good feelings about themselves would make them behave more responsibly.
     John did insist that since taxpayer money was being spent, the programs should be rigorously evaluated. It turned out that teenage gang leaders whose self-esteem was raised did not change their criminal behaviors much. They kept up the stealing, beatings, and revenge killings. It's that they felt better about themselves while doing it all.
     John Vasconcellos was ridiculed. California government funding for those programs ended.
     As far as I know, evaluators of the Vasconcellos-sponsored California programs never looked at the relationships between increasing teenagers' self-esteem and their retail buying habits. This mantle was assumed more recently by some Illinois and Minnesota researchers who discovered that when teenagers are praised for their legitimate accomplishments, those teenagers become less likely to make foolish retail purchases.
     Retailers who come to know their teenage customers and then learn about their academic, sports, and other large and small victories can help create repeat shoppers for the long term by giving justified praise. The teens are bound to blush and stammer when praised, but they'll buy more wisely. Their families, and eventually the teens themselves, will end up appreciating you for that.

Tuesday, May 19, 2009

Focus on Profitability

To maximize the profitability of your business like magic, start and end each day with a focus on what will bring you profitability. This from Making Money Is Not Illegal, Immoral, or Fattening:
"Now imagine that the next time you start to walk into your store, I walk up behind you, put my hand on your shoulder, and ask you, 'What are you going to do to make a difference in here today?' I expect an answer. Remember, no warm and fuzzies. I don't want you looking back at me like Bambi caught in the headlights. I'll be mighty disappointed if you say, 'I'm not sure' or 'Gee, I never thought about it.' I want to know exactly what you are going to do. If I stopped my store manager right there at the opening in the morning, and I put my hand on his shoulder and said, 'What are we going to do in here today to make a difference?,' my store manager had better have a whole list of things, and it better not be, 'Let me go inside and check my notes from yesterday.' What are we going to do to be better today, and let's know it before we walk into the store, because once we walk in, we've got all kinds of distractions to handle.
"That’s the start of the day. How about at the end of your day? When you go to bed tonight, you know your head’s going to hit the pillow and some of you are going to do what I probably do and you kind of think about what you did during the day. So when that happens to you tonight, think about this: What did you do to make a difference in your world?"

Monday, May 18, 2009

Respect Customers Who Claim Expertise

Please think of a product category you carry that has technical specifications. A television? Weed killer? Batting practice machine? Parquet flooring?
     Imagine that the Three Musketeers stroll into your store looking to buy an item in that category. The thing is they don't come in together. First, Anthos arrives. It turns out he knows very little about the product category. An hour after Anthos leaves, Aramis arrives. He knows a moderate amount about the category. And one hour after Aramis' departure, Porthos bounds by. He's not only an expert in the product category, but is considered to be an opinion leader.
     Remember how in the Academy Award winning Slumdog Millionaire, a question about the Three Musketeers played a central role? Well, today you are on the RIMtailer version of "Who Wants to Be a Millionaire?"
     FOR ONE MILLION AIR GUITAR PICKS, which of the Three Musketeers is likely to ask the most questions of salespeople about the technical specifications for that product category you carry? Will it be Anthos the Novice, Porthos the Expert, or Aramis the In-Between?
     Is this your FINAL ANSWER? If so, I sure hope you said Aramis. 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.
     Experts buy the upgrades. They're profit centers. Coach your sales staff to project respect whenever a shopper flashes their expertise. Make it easy for the expert. Let's team up with them, never challenge their self-proclaimed knowledge.

Sunday, May 17, 2009

Consider Having Resale Merchandise

When you think of resale merchandise, do you think just about Goodwill, Salvation Army, hospice fundraising, and other nonprofit stores? Well, don't forget the profit-making business models of stores like Children's Orchard and Howie Mack and those with great names like Play it Again, Chic to Chic, and Once Upon a Child.
     Resale retail is thriving now. The National Association of Resale & Thrift Shops reports that 63% of respondents to their membership survey said 1st quarter 2009 sales were better than 1st quarter 2008 sales, with an average increase of almost one-third. Two areas of especially strong growth in resale retail are in clothing for teens and in furniture.
     Resale retail has three things going for it in a down economy:
  • The merchandise is priced lower than brand new equivalents.
  • Shoppers can reduce their output of money by trading in used belongings when making a purchase.
  • The whole notion of resale feels like we're going recycle green, and research says that the stress for economically strapped consumers eases when they feel they're doing something noble.
     Yes, I know that setting up a resale section in your store isn't simple. You need expertise about what to pay out for the used merchandise, knowledge of what used merchandise you can legally sell, polices about returns of used merchandise that might be different from your policies about returns of new merchandise, and more. But when a professional retailer sees a trend that can make them money, the question is not, "Should we find a way to make use of this trend?" The question is, "In what ways can we make use of this trend?"
     And you are a professional retailer, aren’t you?

Saturday, May 16, 2009

Sell Product Families

Adding to a sale with more items than the shopper first intended to buy improves profitability. For instance, the customer buys one item and then the salesperson suggests others that fit together with that item like members of a family fit together. If a woman comes in with her daughter and buys a casual dress for herself, the salesperson asks the woman if she'd like to go on to shop for a casual dress for the daughter.
     It's not just with clothing. Ask the man shopping for fishing gear for himself if he'd like to look at fishing equipment for his wife and children who are there with him. And it goes beyond items to be used by different family members.
     Research done at the University of Toronto and University of Chicago says that a shopper who comes into the store to purchase a large first aid kit is more likely to buy a second kit if the two kits are described as fitting together like a family. "Keep the big kit in your auto and carry the littler one on hikes."
     This emotional appeal to the shopper is not the same as, "You bought the paint, did you remember the brushes and sandpaper pads?" It's more like, "Would you also like some smaller sandpaper pads so the kids can participate in the project?" It's for items that have family associations for the shopper and where you carry a variety of product sizes.
     Also, culture makes a difference. Shoppers raised in Latino cultures, which place special importance on the family, will be more open to add-on sales of a family of products than shoppers whose cultural backgrounds are less family-oriented.
     Are your staff seeing opportunities to sell families of products and then selling all in the family?

Friday, May 15, 2009

Ask Customers & Staff for Ideas

Want ideas to improve your operations? Ask your customers, ask your staff, and ask your staff to ask your customers:
"What do you like about shopping here? What would make this a better place to shop?"
What do you like about working here? What would make this a better place to work?"
"What are customers asking for that we don't carry?"
     Still, even with those open-ended questions, your customers and shoppers may not be honest with you. They could choose not to tell you the truth. Then, even if they're interested in telling you the truth, they might not know what the truth is.
     They might not know what the truth is because they really haven't been thinking much about it. Give them time to answer. After you ask the question, wait a moment before moving on. Maybe invite them to consider the question and get back to you next time they see you.
     Your employees may choose not to tell you the truth because they're frightened that they'll get in trouble for complaining or that you'll take their praise to mean you won't correct problems they HAVE spotted. Customers might think that if they tell you how great it is to shop with you, you'll run right back to your office and raise all the prices.
     Don't punish people for being honest. And be honest back with them. They should know you won't make major changes based on feedback you get from one person and unless it improves your profitability. Still, you can always think about what you're told, express genuine gratitude, carefully consider it all, and then, when you do implement changes, announce how it all started with what you discovered from your customers and employees. Make them teammates.

Thursday, May 14, 2009

Give One Staff Member Responsibility

Making Money Is Not Illegal, Immoral, or Fattening describes the profitable excitement that comes from having special events at your store. "Pop A Balloon to See What Discount You Get." "This Weekend, Ride the Miniature Train in Our Parking Lot." "Find the George Washington Portrait to Get 20% Off Your Purchase Today."
Advertising and holding special events are opportunities to build excitement not just for your customers, but also for your sales staff:
"With events, I'm big into champions. I'm big into holding people accountable. Whenever we schedule an event, there is going to be an individual, one person, responsible for executing that event in our store. They own that event. Over time, we learn who the winners are, the great employees who show leadership and initiative. We all should have more champions taking care of different areas in running the store."
You don't need to wait for major special events to give that pride of ownership. Have a Product of the Week that you assign to an employee who has shown a particular interest in that product line. The employee sets up the display, keeps an eye on the shelves to see that the item is properly stocked, and gets a special bonus that week for sales of the product.
But won't that discourage teamwork among your staff? Actually, it's the opposite if you do it right. The employee won't be around every hour the store is open, so will need to arrange with other employees to watch out for that Product of the Week. "You watch out for my niche, and when it's your turn, I'll watch out for yours."
Give them a niche to develop and your people will take you miles forward in profitability.

Wednesday, May 13, 2009

Use Signage to Categorize Items

When we think of customer service, we naturally think about the one-to-one staff-to-shopper interaction. For instance, we want to be sure that every staff member is trained and coached to turn their attention to the shopper whenever a shopper approaches. But also keep in mind how powerful the signs and point-of-purchase displays in your store are in determining the quality of service you're providing.
     Researchers at Columbia University found that an important element in signage is placing product choices into categories for the shopper. Categories help us break down the decision into more manageable steps. That soothes shoppers most dramatically when they're unfamiliar with the products they're selecting from. It speeds up decision making, and time IS money for both you and your customers.
     The power of categorizing is so great that even meaningless groupings make customers happier: Those Columbia University researchers invited shoppers at a mall food court to select a free cup of coffee from a menu listing different blends. Consumers unfamiliar with the alternatives who chose from a menu listing the choices under headings Category A, Category B, and Category C were as satisfied as those who chose from the meaningful categories "Mild,", "Nutty," and "Dark Roast." Both groups presented with the categories were happier than those presented just an uncategorized list.
     Of course, when you're requiring people to PAY for the merchandise, they'll start asking, "What's the meaning of Category A, B, and C?," so it's best that the division is designed to give useful information. As you walk the aisles of your store today, search for ways you might improve your signage to better serve your category-seeking shoppers.

Monday, May 11, 2009

Feature Inexpensive Comforts Now

A violent storm is approaching where most of your customers live. Because other stores in your city might run out of merchandise—sending people scrambling in the face of all those warnings to stock up on important items—you figure this is a chance to bring competitors' shoppers into your store to generate interest in your business.
     But those people are going to want to get in, make their buys, and get out. How should you merchandise the shelves towards the front of the store? You look over your list of what you carry. Your eyes zero in on three "B" items. It's time to decide whether the people bursting through your doors are more interested in Batteries, Beer, or Boots.
     What's your decision?
     Did you pick beer? Sales data says that stores sell more beer than batteries or boots when all are available in that situation.
     Okay, you guessed it right. I'm not surprised. It did surprise me, though, that news of an approaching storm boosts Wal-Mart's sales of Strawberry Pop-Tarts® by more than 500%.
     When stressed, we go for comfort. cheap comfort has a special appeal, and this is what beer and Strawberry Pop-Tarts® offer, I guess. Some consumer psychologists think that because of today's environment of economic stress, the draw to cheap comforts is even greater. Let's rename it "inexpensive comforts" and merchandise our stores and websites to satisfy the desire.
     With emotional and meteorological storms, also take care to protect your customers. Predatory pricing because of product shortages may earn you a short-term gain, but unless you're planning to close up your business and move to a different part of the country, the decision whether to gouge your shoppers is a slam dunk: Don't.

Saturday, May 9, 2009

Move Ahead With Incomplete Information

Making Money Is Not Illegal, Immoral, or Fattening argues for moving ahead with decisions before we have all possible data:
     “With some retailers, every time I suggest a nugget, they think about the exceptions, where it might not work. I know that there are exceptions to almost everything. But if you deal just with exceptions in your world, you won’t do anything. You won’t be able to move ahead quickly enough for retailing success. I like to take action which is based on what is true most of the time, not on exceptions. And I will not wait until I have every piece of information possible to make a decision. When I have about 70%, I’m moving.”
     Maybe you want to hold out for 80% of the available information. But the problem with waiting for 100% is that all the information will never be in. We work in a retailing world of information overload. Herbert Simon, a professor of psychology at Carnegie Mellon University talked about what he called satisficing. He verified how people who make profitable business decisions never hold out for the whole information bundle
     Even if we could get all the information, we lack the brain power to accurately juggle it all. Hey, we’re only human! For his research on satisficing, Professor Simon was awarded a Nobel Prize in Economics. Since I’m a psychologist, I wish it had been a Nobel Prize in Psychology, but unfortunately for my wish, there is no such animal.
     Are you allowing yourself to shy away from the tough decisions by saying, “First, I need to get all the data”? Do you spend more time analyzing sales than building sales? The retailer who stands still is falling behind. What will you do today to free yourself from the paralysis of over-analysis?

Wednesday, May 6, 2009

Analyze the Role the Customer Expects

Fans of psychiatrist Carl Jung say that when people shop, they see the salesperson as playing a dramatic role. People shop to solve problems, and clinical research convinced Jungians we expect specific sorts of problem solvers in our lives. Here are the five big ones, using my adaptation of the language of Jungians:
  • The Superhero takes responsibility for rescuing us. The customer expects the Superhero to go above and beyond what most salespeople are able or willing to do.
  • The Coach reassures us. The customer expects the Coach to be available until the problem is solved and to encourage the customer to buy whatever is needed to solve it.
  • The Guru brings experience and a sharp mind. The customer expects the Guru to pretty much know the customer's needs without asking lots of questions.
  • The Playmate loves fun. The customer expects the Playmate to be more interested in how the shopping experience feels than in how the product or service works.
  • The Rascal exploits other people. Customers with strong morals don't like being around the Rascal. But there are plenty of shoppers who count on the Rascal to help them solve problems by taking advantage of others.
     Jung and his students discovered that people throughout different cultures of the world all use these same five roles in their thinking. This convinces Jungians that each of us arrives in the world with these templates inside our brains. Not only are we born to shop, but we're also born with clear expectations of shopkeepers. If that's what our customers expect, don't let them down. Coach your staff to form a team with each shopper by analyzing if the shopper wants a Superhero, Coach, Guru, Playmate, or Rascal.

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

Tuesday, May 5, 2009

Have Post-Sale Product Literature

Whenever I complete an important purchase in your store, I'd like to walk out the door confident I made the right decision. I don't think much about it with the automatic purchases, the ones I make week after week from habit. But especially if it's a big-ticket item or one where I think other people will be judging me, I want to win the bet that I got it right.
     I want it so much that I'll put energy into convincing myself and others what a smart shopper I was. Let's say my purchase decision was a ticket at a horse track betting window. In a classic consumer behavior study done at a race track, the researchers found that after somebody bet on a horse, they became even more confident the horse would win.
     If we're uncertain about the bet, we get downright worried. Researchers at Arizona State University noticed how powerful this is while themselves participating in an office betting pool about the outcome of the TV show "Survivor." People predicted that their bets would boost their pleasure in watching the show, since they'd get more involved. But the outcome was the opposite. Betting made watching the show less pleasant.
     We don't want our customers leaving our store or our website worried they might have bet wrong. Follow up with purchasers by telling them specific reasons you think they made a good decision. Have product literature available to your shoppers to take away with them not just before they complete the purchase, but also afterwards. Invite them to come back to tell you how the purchase worked out, and when they come back with a happy story, admire their skills in making the right bet.

Monday, May 4, 2009

Be Sure a Receipt Gives the Right to Return

I'm grateful to Murray Armstrong, President, Ace Hardware International, for writing the foreword to Making Money Is Not Illegal, Immoral, or Fattening. Murray knows international retailing.
In the foreword, Murray advises us about returns: "A customer will come into the store with an item to return, and the salesperson will treat the customer with suspicion rather than servicing the customer. 'Why are you returning this? What's wrong with it? The product wasn't like this when you left the store with it.'"
Then Murray writes about the importance of a policy on returns: "Include in this policy, 'We guarantee your satisfaction' and 'Your receipt gives you the right to return whatever you buy here.'"
Murray emphasizes that doing this isn't being soft in your business dealings. Keeping customers happy about a return results in many hard-currency customer return trips.
Yesterday, I took my grandson, Eli, to return a toy. I'd made the terrible mistake of selecting a Star Wars kit for him, not realizing Star Wars is so last year. When we entered the store, I was ready to give a long explanation and then wait for a bunch of paperwork to be completed. Instead, Lynn looked at the toy, checked my receipt, kept smiling, and said, "Would you like the refund as a gift card?"
Quick, painless, pleasant.
Holding the gift card instead of cash had an interesting effect. Hey, it was like free money. As the research about gift cards says, I found no problem spending more than the value of the card, increasing the profit for the store.
Of course, it didn't hurt that the upgraded purchase was for my grandson. He'd granted me wisdom suited to Obi Wan Kenobi: I now realize Clone Wars is where the action's at.
At least for him for this month.

Sunday, May 3, 2009

Let Older Employees Use Their Skills

If you've spent any time in retailing, you've discovered the special advantages of hiring employees who are over 65 years old. Often, they bring with them decades of knowledge and a patient acceptance of the customer rudeness and staff politics which frustrate younger workers. Empty nesters appreciate the chance to get out of the house to be with other people on a regular schedule. Much retail employment is part-time, and for those seniors whose retirement benefits haven't disappeared in the current economic implosion, part-time work is fine. They aren't dependent on your business for high pay or comprehensive health coverage.
     But older employees do have their senior moments. With advanced age comes trouble remembering details. Instructions get confused. Names of customers and customer preferences are forgotten.
     What's a boss to do? Well often, when a senior citizen employee starts showing signs of forgetting, the supervisor cuts back on the physical demands. No more climbing ladders, less walking up and down stairs, fewer requests to go to the receiving dock to fetch restock merchandise.
     The trouble, though, is this makes things worse. A research review by psychologists at the Beckman Institute in Illinois says energetic physical activity is one of the best remedies when memory abilities start to fade in older adults. Be overprotective and the abilities of your older employees will deteriorate even more. It also makes other employees angry at the older employees for not pulling their own weight and angry at you for letting it happen.
     Do you let your senior citizen employees fully use their abilities to help you achieve maximum profitability? When you think it best to protect employees and customers by limiting the duties of an older employee, do you discuss it with the older employee to get their ideas first?

Saturday, May 2, 2009

Ask Customers for Their Opinions of Items

Most salespeople see it as their role to give out information about the merchandise, not to ask the customer for opinions about the merchandise. But researchers at the Hong Kong University of Science and Technology found that asking a customer for his or her opinion is a powerful selling technique.
      To use this tactic, you need to understand something surprising about how it works: Being asked to select which of a small group of products the shopper prefers makes it more likely the shopper will want to buy the next product considered. The effect is strongest when a shopper is in a hurry to buy a number of different items.
     This technique can be of special value in making add-on sales. The salesperson asks, "What do you think of these different items you've looked at?," and then after listening to the answer, "What other items may I help you find today?" The cashier at the checkout counter asks, "What do you think of the items you found here today?," and then after listening, at least briefly, to the answer, suggests an add-on item for the customer to look at next time they are in the store.
     The traditional meaning of the phrase "Ask for the sale" is, "After you've presented all the information, don't forget to finish by asking the customer to make a purchase before they wander away." Now, an additional meaning is to make the sale by asking customers for their opinions.

Friday, May 1, 2009

Anticipate Swine Flu Worries Among Shoppers

Suppose my wife, Irene, is one of your regular customers. You see, Irene, who is an elementary school teacher, got a memo from her principal last Monday: Because of swine flu concerns, Irene is to lay bare all classroom counter and desk surfaces at the end of each school day so the custodians can disinfect them.
     Now imagine Irene makes a stop right after school to do some shopping with you. As she walks over to get her cart, she sees a customer sneeze onto the handle of the one Irene was aiming for. Irene selects another cart, but then starts thinking, "I have no idea if anybody sneezed on this one."
     Your shoppers, like Irene, are worried about swine flu. Yesterday, Vice President Biden warned people against flying on airplanes or even using the subway. His office later revised that to say, "If you feel ill, stay home." That means they stay away from your store.
     Protect your customers. Don't take away their shopping carts, for goodness sakes. Ever since Sylvan Nathan Goldman received his patent for the shopping cart on March 15, 1938, conventional wisdom is that you boost sales whenever you get a shopping cart into the hands of a customer. But how about putting a disinfectant wipe dispenser right by the carts?
  • In ads and displays, tell your customers you're protecting them. Use a message like, "We want you to stay healthy. Our complimentary wipe kills 99.9% of germs on shopping cart surfaces." You're saying, "We care about you," and your saying that earns you a lot.
  • Include a waste basket for used wipes, and be sure the waste basket is emptied frequently.
  • Have a display nearby where shoppers can buy packages of disinfectant wipes from you to take home.