Monday, August 31, 2009

Monitor the Sales Floor to Avoid Out-of-Stocks

With shoppers feeling so uncertain, retailers' caution in ordering is perfectly understandable. Still, are you ready to be in stock on the items customers will want? One risk in being out-of-stock is that you'll miss the opportunity to make the sale. But the longer-term risk is that customers will stop thinking of your store as the place to go for an entire product category, and perhaps other product categories as well.
     A survey by the IHL Group, based in Franklin, Tennessee, found customers often say the store is OOS even when the retailer thinks the store is in-stock. This is because the customer has a broader definition of OOS than the retailer does.
  • The shelf is empty. Even when you attend to your point-of-sale and inventory level data—as you should be doing frequently—you might miss the fact that items to fill in the empty shelves have not made it from your receiving or storage area onto those shelves.
  • The merchandise is on a shelf, but not easily available to the customer. It could be on a high perch, which puts it out of sight, or in a locked cabinet, which puts it out of reach, when there aren't store staff right there to help.
  • The customer is looking for an item with characteristics you're not tracking. They want a specific pattern on the skirt or a smaller quantity in each package. Your recordkeeping systems indicate you have the item, but unless your staff are talking with the shoppers, you won't realize that in the customer's view, you're OOS.
     Maybe it's too late to ensure in-stock for all of Quarter 4. So be out there on the sales floor to check that shelves are replenished and staff are available to help customers find what they're seeking.

Sunday, August 30, 2009

Build Up Shopping Convenience

Retailers succeed by anticipating what customers will want. Survey research by The Integer Group and M/A/R/C finds that shoppers' interest in convenience is trending upwards. With all your focus on price sensitivity in the face of the economic downturn, now is time for you to attend to time. In what ways might you save time for your customers and potential customers, thereby adding to convenience for them?
  • Location. You've always been interested in selecting a store location that has good traffic of people constituting your target market. But do you have store vacancies in your immediate area for which you could recruit retailers offering products or services that would draw people from your target market? You then become the convenient location for shoppers buying what you sell.
  • Hours. You can't be the convenient place if your store is closed when people want to shop. If you've been opening later to save staff expenses, think about again expanding hours.
  • In-stock. And you can't be the convenient shopping place if you're out of stock for what shoppers expect to find. As with store hours, you may have been cutting back to preserve dollars and now is the time to consider expanding your in-stock position.
  • Product location, signage, staffing, & staff training. All these are key to pairing the customer with their product quickly. Are your products arranged according to shopper logic? The peanut butter with the jelly? Is signage easy to read and use? Are staff available to help customers locate products and to promptly suggest alternatives?
  • Checkout & returns. Can you use single-line queuing like the banks do in order to give a sense of faster movement? Are your payment and return procedures as convenient as they can be while protecting against employee and customer fraud?

Saturday, August 29, 2009

Share Selling Space with a Complementary Retailer

Is your selling space too large—and therefore too expensive—for your current customer volume? If the shortfalls seem to be only short-term, you could decide to tough it out until your need for the selling space grows again. If the shortfalls seem to be indicating significant long-term trends in your market, this might be a sign to find a smaller store. But if the timeframe is somewhere in-between, one option available to you is to lease out selling space to another retailer for a fixed number of years. Leased departments are a classic retailing practice. For instance, Meldisco Corporation has operated leased discount price shoe departments in Kmart and Rite Aide stores.
     Historically, leased departments were set up in most cases because they bring specialized expertise to the business or, as with the Starbucks outlets in many grocery stores and bookstores, they provide an extra service to the customer. What I'm talking about here, though, is leasing out space in order to pay the bills. A danger in doing this is that you'll move too quickly in desperation and select as a business partner a retailer whose operations will undercut your retailing image.
     Consumer psychology research says this could happen even with bringing in an excellent retailer if that excellent retailer's business is seen by customers as highly incompatible with yours. Help customers understand the ways in which your business and that of the leased department complement each other. How are you building value to the customers in the same ways? Decide what you and your lessee have in common.
     Recently in Northern California, a Mercedes-Benz dealership decided to free up some space so a white tablecloth restaurant well known in the area could set up shop there. What would you present to the consumers as the common element?

Friday, August 28, 2009

Change Brand Loyalty Habits Gradually

Shoppers often make decisions without great deliberation. A shopper observation study of laundry detergent purchases found that half the number took no more than 8.5 seconds to select their item. It's with these low-involvement decisions where you as a retailer can have the easiest time changing shopping habits into ones more profitable for you.
     But it's best if the changes are done gradually. Suppose you want to build in the customer a habit for buying a certain house brand product. You might start out with a coupon good for a free sample of the house brand. If your recordkeeping system allows, offer this free sample at checkout only to those customers who purchase a competing brand in the same product category. That's for two reasons. First, research says that giving a free sample to people already buying the house brand decreases the value of the house brand in that shopper's mind. Second, your prime audience for building the new purchase habit is among people already using the product category.
     The next step could be a coupon for an item that's imprinted with the house brand name, with the item given when the shopper purchases the product at full price. For example, the customer could get a free cloth shopping bag when they purchase two units of the product. Each time the customer takes their bag into your store, they'll be reminded of the pleasant experience of receiving a gift. Also, they and other shoppers seeing the bag will be reminded of the house brand.
     In this example, the last step would be a few coupons that give what amounts to a 20% discount on the price. Research indicates that 20% is just sufficient to motivate action.
     If the product quality is good enough, you've now built a new purchase habit.

Thursday, August 27, 2009

Encourage Customers to Buy Extra Items

Consider the "puppy on approval" sales technique. If a pet shop owner carefully analyzes the purchaser and decides they'd be a good match for the dog, the owner says, "Take the puppy home, and if you decide after a few days that you don't want to keep it, return the puppy along with any unopened bags of food and unused puppy play toys. I'll give you a full refund."
     Those puppies rarely are returned.
In Making Money Is Not Illegal, Immoral or Fattening, Art Freedman suggests a variation he calls "insurance." Here's what he has to say:
     "Some employees think it is fine to say to a customer, 'Well, if you need help, I'll be right over here stocking the tote. But if he'd asked me what project I'll be working on, and I said I'm going to be painting my bathroom, what's going through that employee's mind? What color paint will Art want? What else will he need, like rollers, masking tape, drop clothes.
     "I've trained and coached my employees on related-item selling because we want to make the larger sale and we want the customer to have everything they need to get the project done. I talk about insurance, and here is what I mean by that: If the customer says, 'I'm caulking the bathtub and think I need two tubes of caulk,' we'll say, 'As insurance, get three. If you don't use the third, you can always return it unopened.'"
     When the customer ends up finding they do, in fact, need the extras, they're grateful to you for saving them a trip back. When they find they don't need the extras, they have the opportunity, at the time of the return, to look over other items you carry.
     Want more details? See page 107 of the book.

Wednesday, August 26, 2009

Give a Vocabulary for Richer Shopping

Let's say you operate a wine shop. A customer you don't recall having seen before inquires if you carry a wine he had recently tried at a restaurant and truly enjoyed. The trouble is he can't remember the name of the wine. You ask him to describe what it tasted like. Your thought is that if you don't carry that particular wine, you can find something with parallel characteristics.
     Unfortunately, the man shakes his head side to side and says, "I'll know it when I taste it."
     You can't open every bottle. If only this shopper had a vocabulary to describe wine tastes. Dry. Sweet. Smooth. Pungent. Big. With such a vocabulary, you might not need to turn your question from "Can you describe the wine?" into "Can you describe the wine bottle label?"
     Consumer researchers talk about helping customers develop a consumption vocabulary so they can better describe to the salesperson what they're looking for. This can speed up the purchase of the item, and the faster you can take care of each customer, the more rapidly the profits can flow in. But actually, research finds that shoppers with consumption vocabularies don't spend less time in the store on average. They spend more time and they end up buying more items than the customer who lacks the vocabulary. This is because the vocabulary allows the shopper to appreciate the differences among products. To someone without the words, it all tastes the same.
     If you're that wine shop operator, you could run some wine tasting events to teach a consumption vocabulary. And whatever line of merchandise your store carries, you can develop for each major product category a vocabulary that will make the shopping experience richer for the customer and thereby the amount of the total sale richer for you.

Tuesday, August 25, 2009

Sprinkle In Discounted with Regular Priced Items

Discount prices in order to preserve sales. But don't give up profit dollars needlessly. Apply discounts to selected items, not to every item. Use your sales data to discover where discounts make a difference and where they don't.
     Then, since you've one set of items you'll be discounting and another set you won't, sprinkle in discounted items among regularly priced items on the shopping floor. In the place where the customer takes the item off the rack or pulls it from the shelf, surround the discounted items with regularly priced items. Here are some reasons why:
  • Locating the discounted items feels to the customer a bit more like a treasure hunt. We don't want to make it difficult for the customer to find featured items. In fact, make it easy. But we want them to feel lucky, since associating good fortune with their shopping at your store makes it more likely that they'll want to come back soon.
  • The value of the discount is made more apparent to the shopper by the easy comparison with surrounding items that are not discounted. This, too, adds to the positive excitement.
  • When merchandising is done well, the customer is likely to see surrounding items that they want to purchase. Because these other items don't carry the discount, they produce greater profit for you. The customer who has just selected one or more items at a good price now becomes much more likely to say, "With my money savings, I can buy some other items I need at a regular price, and getting them here instead of going to another store gives me another kind of savings—a savings in time. Plus, I'm happy to reward this store with my business for giving me a good deal on the discounted items."

Monday, August 24, 2009

Apologize to Customers for Retailing Errors

An item you intend to sell for $1,699.99 has some digits missing from the internet price. It's being offered for $9.99. That's what happened to electronics retailer Best Buy. What happened next is a case study about apologizing for sour lemonade mistakes.
  • Orders flooded in over the internet. Store shoppers lined up, many clutching a printout of the online ad.
  • Best Buy promptly shut down order-taking for the item, posting a statement saying, "We sincerely apologize for this error and make every effort to ensure issues like this do not happen…. While we are truly embarrassed that this occurred, Best Buy will not be able to honor the $9.99 price."
  • Some of the purchasers who'd already gotten their order confirmations now turned their flood from sweet to sour, filling online forums with bitter complaints and threatening legal action.
  • Then the sweetness came from a different source. Posts appeared on those forums reading, for example, "Yeah, someone screwed up, but Best Buy carries a lot of customer good will going into this. They usually have the best prices and treat customers well." Even a fellow who started a website to protest Best Buy's withdrawal of the $9.99 offer ended up writing, "… they have received a HUGE amount of publicity over this matter. Now, they seem to be the only ones walking around with a smile on there [sic] face knowing that they have received completely FREE advertising."
     Consistent with research at Stanford University, Best Buy came out of this looking so good because the stores have what is labeled as an "exciting" more than a "sincere" brand personality. What is the personality of your retail business, and what are the best ways for you to turn sour lemons into sweet lemonade when the inevitable mistakes happen?

Sunday, August 23, 2009

Keep the Checkout Lines Flowing

We want our customers thinking about their purchases. But if truth be told, we don't want them thinking too hard or for too long. Consumer psychology researchers at Northwestern University and at Radboud University in The Netherlands found that consumers tend to make worse decisions when they ruminate.
     These days, moving customers through the purchase process is particularly important in the checkout line. As many retailers are finding, if the customers don't pay promptly, they too often decide to put some products back or just give up and leave. In a troubled economy, sights and sounds at the cash wrap can trigger needless fretting. Add to the rumination plenty of irritation—the kind that comes from waiting—and it's no surprise customers flee.
     Some retailers consider checkout lines as opportunities for added sales. At these retailers' stores, lines snake through shelves filled with chewing gum, batteries, CDs, hair clips, or other items labeled as prime for impulse purchases. I'm all in favor of keeping those items in front of customers. But depending on having people stand in line in order to make sales is bad business. Sprinkle those fun purchase items throughout the store as well as at cash wraps.
     What can you do today to improve the speed of flow of customers through the checkout process? What steps will you be taking next? Should you be training more of your staff to handle cashier duties? Do you have systems set to open checkout stations when waits grow beyond three minutes? Are you able to make use of the wireless technologies that allow staff to carry out part of a customer's payment process while the customer is still in line? Do you announce to customers waiting to pay that help is coming, and do you thank them for their business?

Saturday, August 22, 2009

If It's to Be, It's Up to Me

Spinny Johnson—basketball virtuoso and valued friend of Art Freedman and me—emphasizes personal accountability with his saying, "If it is to be, it is up to me." In Making Money Is Not Illegal, Immoral or Fattening, Art tells a story to illustrate the same point:
"I'm sitting down with a couple of retailers in Chicago at dinnertime. The reason I'm sitting down with them is that they're very, very close to going out of business. So I'm sitting there, and the woman just starts beating up their co-op about everything. Oh, they did this wrong, they did that wrong.
"I've got about fifteen seconds worth of patience for that. I carry around with me what's called a retailer two-by-four. So after those fifteen seconds, I take that retailer two-by-four and just go whack, right upside the lady's head. When she comes to, she says, 'Why in heaven's name did you do that?' I answer, 'Well, we've got about two hours. If you want to sit here and talk about everything that went wrong for those two hours, I'm going to get up and leave because that is totally unproductive, and my time is worth more than that. If you want to talk about how to learn for the future, where you are today, where you need to go, and how we get you there, and you want to make a difference in your business, I'm your man. Otherwise, I'm gone.'
"I'm not going to spend twenty seconds with somebody who wants to blame other people for what went wrong. It is absolutely nonproductive. Nobody wins from it, and all the retailers are who do that is what I call energy vampires. They suck the positive energy right out of you."
Our book readers can see more on page 29.

Friday, August 21, 2009

Tailor Loyalty Programs to Customer Culture

Loyalty programs reward customers for repeat business and larger purchases. To get the most from any frequent buyer, frequent flier, and frequent guest programs you offer, tailor the program to the customer's culture.
     As one example, consider the preferences of customers from Western cultures compared to those from Asian cultures. Customers with a Western mindset tend to prefer loyalty programs in which rewards come incrementally. For each dollar or euro you spend, you get points. Smaller rewards are available for a small number of points and larger rewards are available to those who save up their points. Be sure the redemption rules are easy to understand. Then each time the customer makes a purchase, print the current point tally on the receipt. Minimize the surprises.
     On the other hand, customers with an Asian mindset tend to prefer loyalty programs which offer larger rewards earned with an element of fate. Give sweepstakes entries or lottery tickets. Name the program with words that signify good luck. Because many Asian cultures stress duty to the group over individual glory, avoid publicizing the identities of big winners. Otherwise, those big winners and all those who see the publicity may come to fear that the loyalty program tempts fate in ways that could bring bad fortune.
     Here, too, we minimize the surprises. In fact, it can be even more important to the Asian consumer than to the Western consumer that they know they earned the reward. Researchers from Baruch College, University of California-Berkeley, and San Francisco State University surprised people with completely unexpected promotional gifts of appreciation. Those from the United States enjoyed their surprise gifts more than did those from Hong Kong, Singapore, Taiwan or Vietnam. Because the reward appeared to be unearned, the East Asian recipients seemed to feel it produced a menacing imbalance.

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

Thursday, August 20, 2009

Encourage Specifics & Criticism in Word-of-Mouth

Word-of-mouth is influential information a source consumer tells a shopper who trusts the source. WOM usually occurs between friends or family, but considering the definition, it could include a trusted salesperson telling a shopper about the salesperson's experiences with a particular product, brand, or store. WOM traditionally happened face-to-face from one person to another. But now it often happens on blogs or via social network sites. The essential element, though, is trust. The shopper receiving the information trusts the consumer who provides it.
     Research says that WOM has a measurable influence on about two-thirds of all consumer goods sales and overall is more influential than media advertising. WOM is particularly powerful when a shopper doesn't know much about the product category. If I want a new exercise machine, but don't know much about exercise machines, I'm open to advice. If I want to dine at a nice restaurant in an unfamiliar city, I welcome leads from a native. But again, the influence of the advice depends on trust.
     Give your staff and customers ideas for what they can say to others to praise your store and your product mix in ways that the WOM sources are trusted. Based on research from the Free University of Berlin, one important key in establishing this trust is that the WOM communication include at least some criticisms or concerns about what's being recommended. If everything's coming up bright lights and lollipops, it sounds phony. Another key is that the advice include specifics.
     "When you use this exercise bike, you'll feel like you've had one excellent workout. But I have to say the instructions to use it were a little complicated," is more believable, and therefore more likely to convince the shopper than is, "This is without doubt the best exercise bike I've ever used."

Wednesday, August 19, 2009

Hire Staff Who Spiral In to Make Sales

Customers are accustomed to dropping by a store, taking however long they like in selecting items, and then going to a checkout counter. With self checkout, the customer can easily complete the whole deal never talking to store staff at all.
     In tight economic times, the customer can come to tolerate barebones self-service with the rationale that they're paying less for their purchases. Retailers might agree with them, viewing barebones customer self-service as an excellent way to cut personnel costs.
     Still, your profitability will suffer if you miss opportunities to make substantially bigger sales because of inadequate staffing levels and staff skills. Most shoppers like to be greeted when they enter a store or a department within a store. Beyond that initial contact, shoppers want staff available to answer any questions they do have. Don't confuse the customer tolerating barebones self-service with the customer liking barebones self-service.
     Your staff should be order getters, not just order takers. They should do this in a way that recognizes a prevailing truth: Customers like to buy, but do not like to be sold. Staff should have the skills of gently, but decisively, spiraling the customer in towards purchases that will both meet the customer's desires and boost your retailing profits. The order getters are skilled at helping customers recognize those desires. Order getters know not to squeeze the customer too hard, since that blocks the free, natural flow of the spiral. At the same time, order getters know not to be so loose that the spiral loses its disciplined shape.
     These same tight economic times which create a desire in customers for lower prices are also creating for employers opportunities to be more selective when hiring staff. Hire candidates who in the job interview show their skills by spiraling you into saying yes.

Tuesday, August 18, 2009

Advertise What Products Look Like

For the shopper browsing through an ad deciding whether to make a purchase, a picture could easily be worth a thousand words. For the shopper intent on spotting a particular item once they arrive at your store, having a product or package image in mind is valuable. For these people and others, feature in your advertising enough pictures of what the customer will see. If you're selling a sofa, have a photo or drawing of the sofa. If you're having a sale on soap, show us what the soap package looks like.
     There are lots of considerations in deciding how to format your ads. Images take up more space than just a listing of product names and prices, so you'll need to judge how many images to include. Similarly, when deciding which brands to carry in your store, you'll consider many factors. Include among them the content and format of the advertising that the manufacturer and supplier do for the brand. Do newspaper, magazine, and television ads feature pictures of the products?
     And how about in radio advertising? Do you and do the manufacturer show images of the product on the radio? Pulling that off is not as easy as flashing a photo on TV. On the radio, it takes descriptive words. "Headache relief in the easy-to-spot yellow and red box." "A pillow-top mattress with a distinctive quilted design."
     A classic finding in consumer psychology is that shoppers entering your store usually remember little specific content from advertising. Because of how much information is hitting our brains every day, we store only what's necessary. This is especially true with the senior citizen shopper. As a retailer, you'd like your customers to include in what they do store enough cues to easily select the product.
     Tell them what to look for.

Monday, August 17, 2009

Try Out Different Items in Your Register Areas

You might be surprised by what would sell well as your customers go to pay for their purchases. Here's a reminder from Making Money Is Not Illegal, Immoral or Fattening. Hardware retailer Art Freedman says:
"The number one selling item at our cash registers is balsa wood airplanes. These days, we sell hundreds and hundreds a year. You know, they wind them all up and then they let them go, and either the rubber band breaks or the blade breaks, so they've got to buy another one. So maybe it's only two or three customers buying the hundreds a year, but, hey, it brings those guys into the store.
"And right up there in the top group is Teflon tape. If you sell threaded stuff in your stores, like hose bibs and galvanized fittings, set up a small display of Teflon tape at the register. Then train your cashiers so that every single time a customer comes up to the register with anything that is threaded, okay, not nuts and bolts, the cashier reaches down into the bowl, picks up a roll, and says to the customer, 'Do you need any Teflon tape to stop that from leaking?'
"Since we began having our cashiers do that, half the customers buying threaded items add on the Teflon tape. Now, as you're reading me telling you this, I'll bet you are saying, 'Art, everybody in the world has at least six rolls of Teflon tape in their garage already.' Okay, you are right, but I'm shooting for ten."
In your store, you don't sell hose bibs and galvanized fittings? Then what will sell well at your cash and wrap might not be Teflon tape. Try out different possibilities.
Our book readers can learn more at the section starting on page 92.

Sunday, August 16, 2009

Give Elementary Schools Volunteer Time

Contact elementary schools in your target markets to learn how you might volunteer in classrooms. If your store budget and schedule allow, encourage your staff to spend one to two paid hours each month volunteering to help as well.
     Tell each school principal or volunteer coordinator that you're especially interested in educating children to be smarter consumers. But be equally clear that you won't use the volunteering to try to persuade the children to get people to shop at your store. You might need to prove your good intentions by tutoring students in areas having nothing to do directly with consumer issues, at least at the start. In this case, aim towards assisting with math lessons. That's because many elementary school math lessons have to do with money, buying, and selling.
     You and your staff are also in a good position to work with students who are learning critical thinking skills in reading, science, and social studies curricula. It's in the long-term interest of your business to have customers who can recognize true value. Consumer psychology research says that by the time children are in elementary school, most are able to identify what is an advertisement. But especially in the lower grades, they're not so good at realizing the intent of an ad is often to persuade the child to act impulsively and become bored with what they currently own.
     Publicize the ways in which your store is helping in the schools, but be sure to do this in a way that highlights the service aspects rather than leaving people with the impression that you're doing it only to build business. For instance, when you send out press releases, say that you hope your volunteering will inspire other businesses and citizens to join your staff by volunteering in the schools.

Saturday, August 15, 2009

Announce Commonalities with Shoppers

When a customer finds they have the same birthday or place of birth as a salesperson, the customer gets more interested in making a purchase and is more likely to be satisfied with their purchases.
     Researchers at University of British Columbia and INSEAD Singapore set up a study in which a personal trainer offered a fitness program to prospective enrollees. Participants who believed the fitness instructor was born on the same day as them became more likely to rate a sample program highly and to sign up for a membership. And dental patients who believed they were born in the same place as their dentist were more likely to rate their care highly and to schedule future appointments at that clinic.
     The influence doesn't operate in the negative, though. That is, if the customer sees that none of your salespeople share their birthday or birthplace, the customer doesn’t become less likely to make a purchase from your store. Putting all that together, it makes sense for you to let customers know the birthdays and hometowns of your sales staff. Many hospitality retailers already include hometown information on their employees' name badges, and some retailers announce the birthdays of floor employees loudly and proudly in the store.
     Discovering commonalities builds a feeling of trust, even when the trust is not necessarily justified. Customers prefer conducting transactions with salespeople who are the same religion, race, or ethnicity as them. However, the researchers found that having something in common can take you only so far. If the customer found the salesperson to be rude, the good will evaporated.
     In highlighting the similarities, also keep it clear that you're cultivating a business relationship. Talking about hometowns and astrological signs opens up the conversation, but the conversation needs to move on toward making the sale.

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

Friday, August 14, 2009

Scare Customers into Buying

Never overlook the value of a good scare. Yes, it's true that coming across to your customers as the villain from a horror movie might succeed only in scaring off the sale. But consider this: Life insurance sales professionals regularly bring up to prospects the rather frightening possibility that the prospects could die at any time.
     What are two lessons we can learn from the successful life insurance sales tactics to apply to our retail selling, whatever the product or service?
  • People usually avoid what they should prepare for. As a Californian, I can bear witness to how well we all ignore the possibilities of major earthquakes, for instance. When we as retailing professionals make customers aware of the true risks facing them, we are doing a favor.
  • Raise the fear because you've a product or service to offer that will substantially reduce the worry. Unless the customers come to believe that you've a remedy, many will ignore the risk in order to make the fear go away. But other customers won't ignore the risk. They'll stay afraid and probably just get quite irritated at you for getting the fear started. Either way, you've lost a sale. Many consultants advise retailers to arouse enough fear to scare people into action, but not so much that they tune out the retailer. In my opinion, a better guideline is to raise enough fear of a real danger to win the customer's attention, but only to the degree that you've a guaranteed way to substantially reduce the risk. Don't oversell.
  • And a bonus tip from retailers who sell skydiving lessons: There are customers who are not at all uncomfortable with a sales situation that raises fears. There are people who find that a good scare spices up the total experience.

Thursday, August 13, 2009

Know the Reasons for Customer Attitudes

Selling to a customer often requires you to change a negative attitude into a positive one. It's easier to change an attitude when you know what purpose the attitude is serving for the customer. According to research from University of Michigan, a customer is asking themselves at least one of the following questions when their attitude influences their purchases:
  • How easily can I make this purchase decision? If the shopper has had bad experiences with a brand of product, it can make decisions easier when the customer keeps a negative attitude toward everything carrying that brand name. If you want to change the attitude, make it easy for the customer to consider this particular item to be an exception to their rule. Say, "This product is superior to others carrying that brand name," when this is the case.
  • How well does this item express the values I pride myself on having and showing? If the customer asks where an item was produced, maybe they place special importance on buying what's made in their own country or on avoiding items that might be manufactured under bad conditions. So you could ask, "What's important to you when considering a product like this?"
  • What more do I want to know about this item before I'm comfortable with it? Some negative attitudes arise when the customer isn't sure what to do in an unfamiliar situation. Ask, "What questions may I answer for you about this product?." It also can be useful to take away some of the pressure, while not letting the customer leave altogether, by saying, "I suggest I help you find some of the other items you're shopping for here today, and then we can come back to considering this one."     

To change the shopper's attitude, answer their questions.

Wednesday, August 12, 2009

Don't Let Exceptions Rule Your Thinking

Here's a reminder from Art and me for readers of Making Money Is Not Illegal, Immoral or Fattening:
"Sometimes circumstances mean you bend a standard. Let’s say your standard is, 'Never point to another aisle. Walk the customer to the location of the product they’ve asked about.' Okay, but now there are four different customers standing around wanting the attention of your one employee in that department on the sales floor, and she’s gotten on her radio to call for backup help, but the help hasn’t come yet, and a guy walks up to the one employee and says, 'Where’s the men’s room?'
"Maybe it’s okay to point instead of giving a personal escort. There are always exceptions. Deal with the exceptions and move on. The important part is that you think through real carefully what your standards are, and especially the ones that are nonnegotiable."
It's the same idea with customers as with your staff. Don't get waylaid by the exceptions:
"If I really wanted to get your feathers up, get you so you’d start disagreeing with me, I’d say my opinion is with anything that comes back for a refund in the store, give the refund, take care of the customer. Now you go, 'Two years ago, I had somebody steal a drill. You mean I’m going to take care of that guy?' Then I ask, 'How many refunds do you do in your store?' 'Well, we do a whole bunch.' So isn’t what happened with the drill an exception? Just deal with it and move on. Don’t let that be the only thing you remember about refunds, please. Do not ever let one customer impact the way you think about all customers.
For more details, see the sections starting on pages 15 and 35 of the book.

Tuesday, August 11, 2009

Resolve Customer Complaints Carefully

Respond immediately to customer complaints. But also assess the real reason the customer is complaining and discover what the customer is expecting you to do. If it's not clear, ask: "What do you suggest I do to make things right?" This redirects the conversation from argument to teamwork. In addition, saying, "What do you suggest I do," instead of, "What do you suggest the store do," relaxes the customer's irritation. The customer's now talking with someone who has the motivation and hopefully the power to take action.
     The customer's proposal might not seem equitable, or even possible. In fact, some consumer behavior experts have been saying that there are customers around who extort retailers by using complaints. These customers make unreasonable demands under threat that unresolved complaints, justified or not, will go viral on internet social networking sites.
     These experts point to the case of the Dunkin' Donuts customer who started a website devoted to complaints about the chain. Dunkin' Donuts ended up buying the site in order to control the exaggerations and misstatements. The site founder's original complaint? The Dunkin' Donuts outlet he went to didn't have nonfat milk for his coffee.
     But compare that tale to what happened about three years later: A customer who was outraged about his problems with a Sony product got his complaint website up and spewing. Until Sony resolved the complaint, that is. At which point, the fellow converted the website to a depository for Sony fan messages.
     Research at Case Western Reserve University points out that customers with complaints range from those who just want to have an "I'm sorry" (again, "I'm sorry" is much better than "We're sorry") up to activists who plan to go to the media or to government agencies. When one of your customers complains, assess the agenda.

Monday, August 10, 2009

Use Accent Lighting to Build Shopper Interest

In an article published in the mid-1990's, a pair of researchers at Texas Tech University reported that shoppers became more likely to handle the bottles in a wine store when the brightness of the interior lighting was increased. Three subsequent events aroused interest in that finding among retailers who want to use consumer psychology research to build their profits:
     First, other researchers have been finding that when customers handle a product, they're more likely to buy it. Retailers might think things work like this because products such as clothing and linens feel so good that once we get our hands on them, we don't want to let them go. But do wine bottles feel so good to the touch? Well, yes, if getting the right bottle into our hands builds our associations with the sensual pleasures of drinking the wine. If brighter lights cause customers to handle the product—all sorts of products—we've another promising tactic to build sales.
     For many retailers, a second event was recognition that the age of their customer base is increasing, and older shoppers feel welcomed by brighter lighting.
     The third event was the arrival of the first outrageous invoice from the power company. If we're going to jack up the wattage of the lighting system, at least some of the profits from added sales could be consumed by the utility bills.
     The answer is to use accent lighting. You don't need to up the wattage of the whole place. In fact, accent lighting will work best to direct attention to particular areas and items if you pull back on the overall brightness of the store lighting. You could actually lower your costs.
     What steps will you be taking in your store today to start discovering which accent lighting configurations boost sales for you?

Sunday, August 9, 2009

Tip Off Your Staff About Shortcomings

Do you want your staff to correct shortcomings? Then let them know you do care about your standards.
     That point came to mind with a story told to me by Lou Rosenberg, a niche retailer now retired after a successful career in New York City. Lou owned a shop on Madison Avenue in Manhattan that created custom handbags for clientele that included, along with many others, Jacqueline Kennedy Onassis and Barbra Streisand:
"One evening a number of years ago, my wife Flora, my two daughters and I went for dinner at a nice restaurant. After our dinners were placed on the table, I asked the waiter for water for all of us. The water didn't come. I called the waiter over and asked again. He said he'd bring us water, but he didn't. I noticed that at other tables, customers were being served their wine and liquor, but for us, no water. So when I paid the bill and prepared to leave, I took out of my pocket two pennies and put those on the table. My daughters were shocked. 'Daddy,' they said, 'why are you leaving two pennies there?' I told them, 'I don't want the waiter to think I forgot the tip. I want him to know that is the tip.'"
     The two pennies were a message to the waiter. Would the waiter understand? Maybe not that one time, but if it happened a few times, my guess is that yes, the waiter would understand. Was the criticism given in a confrontational way? No, and avoiding confrontation should be a guide in correcting the shortcomings of your staff.
     There's much more to a manager talking to an employee than a patron leaving a tip for a waiter. But the importance of starting with recognizable feedback is the same.

Saturday, August 8, 2009

Be Ready to Help Customers Explore Alternatives

Sometimes, sales staff can see a shopper narrowing down purchase alternatives too quickly. One problem with this is when the shopper ends up taking home or to their own business a product which doesn't fit their needs well or won't function well for them. The result is that they'll think less of your business, and you're not with them then to straighten things out.
     The other problem comes up when the customer finds out there's a lack of fit to needs before they make the purchase. The alternatives get narrowed down, the customer realizes that none of the remaining alternatives will do the job for them, and they walk out without spending their money at your store.
     You can go only so far in protecting customers from themselves, and they might just know better than you what will fit their needs. In addition, it wouldn't come across at all well to the customer for you or one of your sales staff to say, "Even if you tell me you want to purchase that specific item from us right now, I'll simply refuse to sell it to you."
     Still, there are tactics you can try out in this situation. Here are a few:
  • Say it straight: "May I show you some alternatives that I think might help you make the best decision for your needs?"
  • Use the word "small." Researchers at University of Pennsylvania and Carnegie Mellon find that with tightwads, you boost your chances about 20% by saying, "Here are a few alternatives that would cost a SMALL amount more."
  • Researchers at USC and University of North Carolina find that presenting just ONE alternative which the customer considers to be a possibly better choice will make them significantly more willing to consider a range of alternatives again.

Friday, August 7, 2009

Always Know Where You Stand Financially

Here's a reminder from Art Freedman for readers of Making Money Is Not Illegal, Immoral or Fattening:
"There are only two numbers in your business that I need in order to know pretty much everything about your financial success or struggles. You give me those two numbers and show me your cash flow statement, and I'll tell you where your problems are.
"First, I want to know your final gross margin. That's the percentage margin on your profit for the products in your store, with you subtracting costs of markdowns, freight, all other transportation costs, taxes if applicable, and shrinkage.
"Then I want to know your expense base. That is the percentage of your sales that goes to pay for your payroll, occupancy, and all other expenses. This does not include amortization, depreciation, or payback on most principal debt. The place you'll see payback on principal debt is on the cash flow statement, so that's where I want to look at it.
"What I hear from retailers is, 'Art, our sales are about the same as they were last year. I don't know where the money is going.' I say, 'Well, I don't know where the money is going either, but I'll tell you what. In about half an hour, we can find out where the money is going because I'm going to look at your margins, I'm going to look at your expense base, and I'm going to look at your cash flow statement. With those three, I'll see pretty much everything I need to know about the business.'
"You take your final gross margin, after all markdowns, freight, and shrinkage. You subtract your expense base (payroll, occupancy, and all other). This is your bottom-line profit before taxes."
For the full version, start at page 58 of the book.

Thursday, August 6, 2009

Have Staff Who Show and Share Expertise

Your shoppers love being served by experts. In fact, they judge the salesperson's expertise even before the two start talking. The salesperson's dress and body language say a lot as the prospective customer asks, "How much does this salesperson look like somebody I'd like to trust?" If the store is busy, does the salesperson appear to have things under control? If so, that's the mark of an expert.
     Then as the salesperson asks questions and answers the customer's questions, it gets clearer. So do your floor staff know where all the merchandise is located? Do they show deserved respect for the shopper's expertise and for other retailers? Are they aware of the comparative features of brands in their department? Can they explain them to the customer if asked? Can they explain other things as well?
     Staff your store with experts who enjoy sharing their knowledge with customers in a team-oriented way. Customers want sales staff who know it all, but without acting like stuffy know-it-alls. Retired journeyman plumbers make terrible hardware store employees if they have trouble explaining the steps to replace a faucet. Teens with a wonderful sense of fashion style are bad clothing department advisors if they label some teen customers as beyond fashion rescue.
     An image of expertise can be built with an image of the employee: When we see a portrait-style photo of someone that's posted in a public location, and then we meet the person face-to-face, we subconsciously grant that person additional respect. You could benefit from this by including in store advertising and on your website some photos of your employees or posting an 8 x 10 in the department where the employee spends most of their time.
     Customers don't expect the salesperson to know everything. However they do expect the salesperson to get the answer when they don't know and to do a personal handoff to another salesperson when necessary.

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

Wednesday, August 5, 2009

Let Shoppers Go Through Their Rituals

Have you noticed how some shoppers will complain and complain about a product or service that seems ideally suited to the shopper's needs and desires, and then after all the complaining and what seems to be arguing with the salesperson, the shopper will go right ahead and buy the offering?
     Other shoppers come into your store asking for a specific product and brand, but before buying it, as they'll end up doing, they want to hear about at least a few alternatives, as if to convince themselves they're making the right decision.
     And then there are those customers who refuse to buy a product until they can take it out of the packaging and run their hands over it. This last group, not surprisingly, resist making purchases over the internet, although, according to researchers at University of Kentucky and University of Wisconsin, rituals of the grasp-and-caress crowd can be satisfied with written or spoken descriptions of all the different textures the product has.
     The complaining, arguing, searching, and caressing are shopping rituals. I'm sure there are many others you've seen as well, some even more bothersome than my three examples. As salespeople gain experience, they learn to respect the customer going through the ritual—or if not respecting the ritual, at least staying out of the way of the ritual as much as possible.
     Most shopping rituals are quite deep-seated in the personality because they were introduced early in life as the child watched others shop and was coached by parents. Some shopping rituals, such as a need to handle or smell products, often have their origins before birth, being hardwired in as the brain developed in the womb.
     Never allow your staff to be harassed. But coach your staff to take time to go along with the harmless rituals.

Tuesday, August 4, 2009

Have Staff Carry Copies of Store Ads

As I went to the cash wrap area to pay for the two shirts I'd spotted, the salesclerk asked me if I'd brought along the coupon that gave me a third shirt for free when I purchased two. I said, "No, where was the coupon?" She told me it was in the ad that appeared in yesterday's newspaper. Then she want on to say, "Don't worry. I have the coupons right here for you to use. Which shirt would you like as your free third one?"
     She handed me not just that single coupon, but a whole group of coupons. With my newfound gratitude and excitement, I added two belts, three pairs of pants, and three pairs of socks I hadn't even consciously thought about purchasing before that.
     Does each employee on your sales floor and at the checkout area have copies of your store's current advertisements, flyers, and circulars?
     It's a tactic that not only builds sales and good will, but also heads off destructive misunderstandings. If a customer thinks the ad said something different from what it really said, it's quick and easy for the employee to straighten out the problem. Having the ad itself takes it away from being customer versus store employee. There's the objective source that both of them can look at.
     These misunderstandings are more common than you might think. Researchers at University of Texas at Austin concluded that the average shopper has only about 65% accuracy when recalling what a printed ad actually says. Although the memory of older consumers is worse overall than that of younger ones, when it came to remembering what was in ads, the 65% accuracy rating generally held up across all age groups.
     Service your customers and your store by having staff carry copies of ads and coupons.

Monday, August 3, 2009

Notice Where Entering Shoppers Look

As shoppers enter your store, where do their eyes go to? That's where to consider placing a store directory, to position your staff member who welcomes the shopper to the store, to display a preview of products you're featuring, or to have whatever else it is you'd like the customer to see right away.
     People who make a habit of shopping with you are familiar with the store layout, so they're not depending on seeing a store directory. And, sure, your experienced shoppers might miss not being greeted the moment they enter, but they're coming back to shop again because they already feel welcome, and they probably have figured out where to go to return an item. So it's okay if they wait for their greeting until they see a salesperson.
     Does that mean you don't need to notice where your repeat customers are looking as they enter your store? Well, no. Once you make your observations, you might decide to reconfigure the entry area. As soon as you do that, your long-term shoppers are going to be as bewildered as customers coming into your store for the very first time. Know where all your customers are likely to look for guidance.
     Different types of shoppers in different sorts of retail stores will have different habits. The single-mission shopper, who comes to a familiar sporting goods store for one very specific item will promptly start looking for information about how to get to that item. On the other hand, the husband and wife walking into a furniture store with the intent of setting up a bedroom, dining room, and family room, will be looking in a number of different directions.
     This is why you'll want to watch your particular shoppers and make store layout decisions based on your particular observations.

Sunday, August 2, 2009

It Takes Two to Say No

Here's some advice from retailer Art Freedman and me about an important standard for store success:
     "It takes two to say no, but only one to say yes. That’s a motto to put on a poster in BIG LETTERS in the employee break room and to show on the BIG SCREEN at every staff meeting and training session for employees.
     "Why is that motto so important? Well, have you ever said no to a customer only to find out a minute, an hour, a day later that the correct answer was yes, but you just didn’t know it? If you have ever worked on the sales floor, I’m pretty sure it has happened to you. You can bet that it happened to me dozens of times."
     Some employees say no because it is the easiest answer. When they say no, the customer goes away, and the employee can get back to doing whatever they were doing before the customer came over to bother them. But you're in the process of pruning out those employees, aren't you? It won't remove all the no's, though. Sometimes we say no because we truly believe that we don’t have the product or we’re not able to provide the service the customer is asking for.
     "Whatever the reason for the no, let’s change things in ways that make the customer happier and make us some money. A customer comes into the store, they ask an employee a question, the employee wants so bad to say no to the customer, but they are not allowed to. We slow down the process. We slow it down to a crawl. That employee must check with another employee before they say no."
     There's more about this starting on page 95 in Making Money Is Not Illegal, Immoral or Fattening.

Saturday, August 1, 2009

Analyze the Details About Your Markdowns

Chances are that you're keeping records on when you mark down prices on your merchandise. You need that information for accurate financial accounting. Did you know it's valuable to also keep and analyze records on the reasons for the discounts and on both the percentages and the dollar amounts of discounts? The more you can reasonably do of this, the more accurate you can be in making best use of discounts in the future.
     Keep the recordkeeping simple. Have a checklist for the most common reasons your store marks down prices: To match or beat what the competition is charging? To create excitement that will draw in customers? Because it's nearing the end of the season? To reward purchasers of merchandise or packaging which looks as if it's picked over? To reduce stock accidentally ordered in excess? To sell off product lines or assortments your store is ready to phase out?
     Markdowns are most effective when shoppers feel they know the reason for the discount, so use your analyses to decide how to best present the markdowns.
     Track the timing of your discounts, especially when you have a series of markdowns on the same items. Researchers at Syracuse University and at Korea's Sogang University found that for some sorts of product lines, sales increased most when the retailer used a series of discounts, such as each at 20%, rather than a single large discount. But for other sorts of product lines, the progressive discount strategy doesn't boost sales enough, or even worse, the shoppers become convinced it's better to wait to purchase since the prices will soon be going down further.
     When you analyze the data you collect about markdowns, you'll be able to tell which discount tactic to use with each major class of merchandise.

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