Saturday, October 31, 2009

Provide Refresher Training to Staff

Staff training is a necessary investment whenever you change your merchandise mix or you hire new employees. Okay, you already knew that. What many retailers find it easy to forget, though, is the importance of ongoing refresher training. Yes, for those folks who have worked with you for a long time and have heard it all before, regular retraining helps ensure they continue to fulfill your expectations of them.
Ongoing training is especially important about systems that directly affect your profits and losses. Here are some words about this point that readers of Making Money Is Not Illegal, Immoral or Fattening might remember from page 37:
"Don't assume that one-time training is enough. It certainly isn't. Give refresher training, including asking each employee to recommit to the standard. Maybe you think employees will object to all this, but the truth is that employees, being people, are more comfortable at work when they know what's expected of them. Even for those employees who don't like the standards, the training, and the refresher training, doing this is a good business decision. That's what really counts, because you are up against the competition. You're a professional.
"Training, coaching, and follow-up also are essential when it comes to systems, such as systems for handling money. Your computer system most likely prints off the amount of money that should be deposited into a bank every day, and then you check it against the bank deposits to make sure the money did get into the bank. So I'm thinking that you have an individual in your store who counts money and makes deposits. If the person doing that is you, the store owner/operator, that's fine with me. But if it's anybody else, you need a system, you need training, you need coaching, and you need follow-up."

Friday, October 30, 2009

Ask for Specifics on Merchandise Returns

The Return Fraud Survey conducted this month by the National Retail Federation reports that the most common reason for fraudulent returns is a person wanting money or credit for what turns out to be stolen merchandise. NRF also says that a significant percentage of retailers are fine-tuning their return policies for the 2009 holiday shopping season to head off fraud. Most notably, shoppers are being encouraged to save receipts and to attach price-omitted gift receipts to presents they give.
     Attention to receipts might not be enough, though. About 43% of the retailers responding to the survey said that people are using counterfeit receipts. So add another procedure: When someone comes to the returns counter, ask them to tell you the reasons for the return, and then record those reasons along with the person's identification information. Never make this procedure a prolonged inquisition, and always have in mind that it is more important to keep a customer than to keep to a policy.
     But your request should be more than the formality of checking a box for the category of reason. It should be a brief interview. As word gets around that you do this, the dishonest consumers become more likely to decide to take their business elsewhere. And that's fine with you, since their business is fraud.
     The key to doing this well is to show your honest customers the advantages to them of telling you the reasons for the return. Your staff might say something like, "I know it's a bother to you to have to return merchandise you've bought here. We want to be sure we deal with suppliers who will provide you, your family, and your friends with reliable products the first time, every time."
     Then do regularly summarize the reasons and make merchandising changes when indicated.

Thursday, October 29, 2009

Earn Sales Giving Social Network Advice

What are the most profitable ways for you to use social networking, such as Facebook, LinkedIn, Twitter, and themed message boards? Among those ways is for you to contribute valuable advice to potential customers. When readers recognize the value, they'll build trust in your expertise and gratitude towards your business. Survey findings say that trust is among the most important determinants of which retailer a consumer selects. And gratitude opens up the consumer to award you their business.
     For your advice to end up being seen as valuable, it must be both accurate and actionable. Regarding accuracy, notice how much bogus information appears on social networking sites. Many observers lament how gullible we all must be. They point to how readily so many of us accepted last week that six year old "Balloon Boy" Falcon Heene could be airlifted long distances in what a New York Times op-ed piece later called a "supersized Jiffy Pop bag." And a Newsweek article complains about former television personality Suzanne Somers, with no formal medical or scientific training, spreading wild ideas about preventing and curing cancer.
     But it is this supposed gullibility which provides the opportunity for you, the retailer, to use social networking to your advantage. The active exchange of messages on these sites lets you visibly scrub out the nonsense. And that brings us to the second point: Give actionable advice, not just criticisms of what's been posted. If you sell products or services actually shown to help head off cancer, for instance, tell the world what to do.
     Findings from consumer psychology research at Cleveland State University and Case Western Reserve suggest that social networking users are most likely to put your advice into action when you reflect on the stories of others, refine what's already been posted, and explore alternatives.

Wednesday, October 28, 2009

Play and Sell Store Theme Music

Music sets the mood for shoppers, so think carefully about what you play as background. Then since you've put all the thought into it, sell the music. Have a selection of CDs featuring the melodies your shoppers are hearing. In fact, even if you choose not to play background music, strengthen your store brand and profits by selling the right CDs.
  • Start by selecting music consistent with the personality your business aims for. Cracker Barrel projects a family-oriented country and bluegrass personality in the music they sell. On the other hand, Starbucks aims for a cosmopolitan, cool personality, as reflected by music you'll hear there and the CDs they feature.
  • Describe the music that's playing as free samples of what's available for purchase on the CDs. Have signage throughout the store that reads, "The music you're hearing is available for purchase when you check out." Coach cashiers to watch for customers who show interest in an album, and when that interest is there to say, "Thank you for shopping with us. Would you like to take a look at the CD containing the music you're hearing play now?"
  • Once you get going, expand the CD selection to include some extensions of the core store personality. Then notice which CDs people buy. This can help you sense any changes your profit-producing customers are expressing in the personality they'd like your store to have.
     Cracker Barrel, Starbucks, Wal-Mart and Target each have arranged to sell house brand special edition CDs which include tracks not available elsewhere. If you can do this, it is clearly a selling point. But even if you choose not to start your own record label, use the "Play It, Then Sell It" tactic. When the consumer listens to the music, they'll think about your store.

Tuesday, October 27, 2009

Sell More by Being Less Certain

In a Journal of Consumer Research article wonderfully titled "Believe Me, I Have No Idea What I'm Talking About," researchers from Stanford University reported that expert restaurant reviewers are more influential when the reviewers say they're less than completely certain about their conclusions.
     Based on that finding, here's the hint for retail salespeople who are seen as product or service experts by shoppers: Avoid coming across to the customer as absolutely certain in the recommendations you're making. The bit of uncertainty makes the customer more comfortable in asking questions and expressing concerns. Those questions and concerns are highly valuable to you when facilitating the sale. You can present counterarguments or you can steer the customer toward an alternative which will better fit their needs.
     But that's not the whole story from the Stanford study: In three different experiments, the researchers gave study participants a well-written restaurant review identified as coming from either an expert or a novice critic. In some of the reviews of each type, the authors had an attitude of certainty, while in the other reviews, the tone was of some uncertainty. Again, the participants who read reviews by somewhat uncertain experts were more influenced by what was said than when the tone was of certainty. But the findings were reversed when the reviewer was identified as a novice. Here it was certainty that prevailed. Why? In my opinion, it's because the combination of "novice" and "uncertain" led the consumers to pretty much discount what the restaurant critic said.
     If customers will see the salesperson as a novice, it might help for that salesperson to come across with a tone of certainty in the recommendations they make. But a better alternative is for the salesperson to learn their trade so well they're consistently seen as an expert.

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

Monday, October 26, 2009

Learn from the Past for the Future

Optimism brings retailing success. But it's a particular kind of optimism. It's not a belief that everything will turn out fine, no matter what. Instead it's a conviction that you are capable of using the strengths of your business to achieve high profitability. How do you identify those strengths? You learn from the past. How do you mobilize those strengths? You focus on the future. Here's a reminder about this from Making Money Is Not Illegal, Immoral or Fattening:
     "Professional retailers look to the future. Learn from the past. I don't want you to make the same mistakes twice. I want you to get better every day. But let's not spend energy dwelling on the past. Let's move on. It's done. Get over it. Where do we have to go? That's what matters. Focus on where we are going, not on where we have been. Where we've been was yesterday. Today I want to know what you've done for me today. Where are we going today?
     "I've worked with retailers where all they want to do is dwell on the past, and it's totally nonproductive. You have a limited amount of time, you have a limited amount of resources—let's put money attached to that—and you have a limited amount of energy. I'm big on using that energy correctly. I'm big on it because if you work with those retailers I call energy vampires, they'll suck every bit of energy out of your body in about thirty seconds. Instead of moving forward, after those experiences, we move backward.
     "Why do people spend time living in the past? The past is known. They are more comfortable talking about what they know. Professionals move beyond this. Professionals are comfortable talking about the future."
     For more, see page 33 of the book.

Sunday, October 25, 2009

Ask Job Applicants About Situations

"Stupid Customer Tricks." That's the title given to some true life items in Reader's Digest. Here's one of my favorites from the November 2009 issue: "A customer called our rental store to ask about rectangular tables. I told him we had six-foot and eight-foot tables. His response: 'What's the difference?'"
     The story is one of my favorites because it gives me a chance to make a point. Yes, I know it's absolutely cruel to analyze a funny story. Still, I'll do it in my never-ending drive to help you make more money. I'm figuring money trumps funny in this case.
     So if you were a salesclerk at that rental store and you were asked by a caller, "What's the difference between your six-foot table and your eight-foot table?," how would you respond? I'm hoping you wouldn't roll with laughter and then say, "You sure are a stupid customer." I'm hoping your reply would be something like, "Well our customers find that the six-foot table seats up to eight people, and the eight-foot table can comfortably seat up to ten people."
     The fact is I like that Reader's Digest true story so much I suggest you include it as one of the items in your interviews of job applicants. Organizational psychologists find that some of the best ways of predicting job performance in applicants is to ask them how they'd handle specific situations and then follow that up with asking why they answered as they did. With the six-foot, eight-foot question, you'll be assessing the ability of the prospective employee to figure out what a shopper is really asking, not staying stuck at their words.
     Among the best questions to ask of people applying for jobs in retailing are those of the form, "How would you handle this customer interaction situation?"

Saturday, October 24, 2009

Feature Socially Responsible Trade-Ins

If you're The Home Depot in the U.S. you're using social responsibility as a sales stimulus. The Home Depot is encouraging customers to bring in old power drills, broken or not, to get 15% off on a cordless lithium-ion power drill, touted as good for the environment. If people want to bring in their old Christmas lights later, they'll get a discount on an energy-efficient LED set. And if you're Toys"R"Us, you urged your customers last month to trade in old cribs, car seats and other baby items, perhaps part of the estimated 30% of unsafe items never returned, for a 20% credit towards new items that have been stocked since past product recalls.
     Encouraging trade-ins is a fine way to build your sales. Auto dealers have been doing it for a long while, haven't they? Adding the socially responsible angle can put it over the top.
     Here are a few tips:
  • Decide how you will dispose of the trade-ins. Auto dealers could get Cash for Clunkers from the federal government. But what would you do with a bunch of old broken drills?
  • Give the trade-in promotion a time limit and a distinctive name. The "Power Drill Trade In, Trade Up," "Eco Options Christmas Light Trade In," and "Toys"R"Us Great Trade-In" were given a two-week to four-week span. The time limit and distinctive name protect against long-term consumer devaluation of product types purchased with the discount.
  • Tell shoppers how their one trade-in will make a difference. So in advertising, store signage, and personal selling, say things like how many extra hours of HDTV watching customers get with the energy they'll save using the new Christmas lights.

Friday, October 23, 2009

Use Promotions with Lasting Payoffs

Do your sales promotions have legs and do they draw in the right kinds of footsteps? By promotions with legs, I mean those that continue to be effective in generating profitability for you for a while rather than having effectiveness limited just to the time of the promotion. And the right kinds of footsteps are those of shoppers who buy not just the low-margin items you're featuring, but also items which carry higher profit margins.
     Your best sales promotions will be based on data you've gathered in the past about the shopping habits of your customers. When they buy the type of item you're thinking of promoting with a price cut, what other types of items do they purchase in the same trip? With this information, order those other products in adequate quantities and enough in advance so you're unlikely to run out. Then stock the items in places where they're easy to find for the person buying a promoted product.
     On the other hand, the worst sales promotions lower the perception of item value in the minds of the shoppers. BOGOs—Buy one, get one for free—carry this risk. Researchers at University of California-Berkeley, University of Southern California, Stony Brook University, and Indiana University found that if a product is offered for free, the shopper becomes less likely to buy the product at full price afterwards.
     Prolonged price wars are also risky. You lower a price as a promotion. Your competitor lowers it further. You respond by meeting the competitor's price and then lowering it even more, at which point the competitor meets your additional reduction, and so on. Your customers can find themselves expecting prices to continue to move downwards. When you can't maintain the drops, your customers' disappointment might cause them to take their footsteps somewhere else.

Thursday, October 22, 2009

In Comparative Ads, Don't Show Users

In media advertising and store-based signage, we might choose to market a product by comparing it to alternatives. "Buy our house brand because you get a larger package size for the same price." "Choose our new merchandise addition because it offers superior safety features."
     Here are a few tips about comparative advertising:
  • Include tables and charts that make the differences easy to recognize. Remember that the shopper will be spending lots less time looking at the ad or sign than you spent designing it. What you can figure out from looking at the comparison might be too complicated for the shopper who's in a hurry.
  • Include a picture of the product you're recommending to the customer. If the product comes in a package, show the package, not the product itself. You're wanting to prime the shopper's brain to feel comfortable with the product package when they see it on the shelf. Familiarity—even recent familiarity—breeds comfort. This is especially important when what you're recommending is a product new to your shelves or is an unfamiliar brand.
  • Do not show pictures of the products or product packages to which you're comparing the recommended item. Those other pictures would dilute the memory of the target product package. We want to shopper to keep the comparative advantages top-of-mind, but not be picturing the competing products.
  • And here's one you might find surprising: In comparative ads, do not show pictures of people using the product. University of Maryland researchers discovered that such pictures lead shoppers to start thinking about using the products themselves, and when they do this, they put too much mental energy into thinking about just the recommended product. They forget to pay attention to the comparative advantages, so the power of the comparative ad fades away.

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

Wednesday, October 21, 2009

Update Your Elevator Speech

As we say in Making Money Is Not Illegal, Immoral or Fattening, retailer profitability comes from being distinctive. Keep in mind that what makes your store distinctive may need to change and expand as the marketplace changes and as your potential target market expands. Regularly update a brief description for your customers, your staff, and yourself about what you are world-class at doing.
Here are some words about this from page 45 of the book:
"What specifically do you do in your business that’s going to boost your success and maximize the chances your business will still be operating three years from now? You’ve got to be absolutely world-class at something. Otherwise, some competitor will come in to rip market share away from you. Before you know it, your business is gone from the face of the earth.
"Think of it in terms of what’s called an elevator speech. Let’s say that as you’re waiting for an elevator, the person you’re standing with asks, 'Why should I shop at your store?' And then the elevator doors open, you and the other person get in, and you’ve got about thirty seconds, while the elevator is moving, to answer the question.
"What do you say? Keep it focused because you don’t have much time.
"Okay, now I’ll give you more time than thirty seconds, but in exchange, I’ll make the question a little more complicated: What are the top ten reasons for somebody to shop at your store? See, you really need to have multiple differentiators. It will start with your staff being better, your customer service dazzling the customer, but don’t let your people be your only differentiator. The more competition that comes into your market area and the tougher the competition gets, the better it is to have multiple differentiators."

Tuesday, October 20, 2009

Encourage Customers to Be Innovative

Pioneering products and trendy clothing fashions usually carry higher profit margins than older versions. To sell innovative items, appeal to distinctive purchase triggers.
     Venturesome innovators say, "I want the latest features, even if all the problems with the item haven't been worked out yet." Show them the most surprising things about the item.
     Respectable early adopters say, "I want a taste of where the world is heading." Explain to these shoppers the ways in which the item is an example of what the future holds.
     The deliberative early majority say, "I'll buy the item after it's proven to reliably meet my needs." Tell them about the good reputation of the item's designers and brand name.
     The skeptical late majority say, "Let lots of other people use it for a while before I buy." If you choose to make a sales effort with these shoppers, your best bet is to encourage them to try using the item with an offer to accept it back for a refund or store credit if they don’t like it.
     Tradition-bound laggards avoid innovations. You probably won't be able to convince them to purchase the new, trendy version, but by listening to their reasoning, you might pick up some ideas for selling to the other groups.
     With all shoppers, appeal to the prestige trigger. Iowa State University researchers decades ago explored why certain farmers were purchasing innovative technologies while others did not in circumstances where the innovations were expensive when first made available. The answer to the why was that if the farmer could spare the funds, the fact that the innovation cost lots of money was actually attractive. It gave the farmer a head start and bragging rights that he had the latest and greatest before others could get it.

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

Monday, October 19, 2009

Help Loyalty Program Members Progress

Remember that a major objective of a shopper loyalty program is for you to maintain up-to-date information about your customers, including what they purchase and how to contact them with marketing materials. That can become harder to do when your customers are paying more attention to price than to other elements in the value equation, such as helpful sales staff or customer-friendly return policies. Those loyalty program participants start shopping at another store, and you get out of touch with them.
     And even if you're the price leader overall, another store might be offering a highly discounted special on selected items, so the shopper who is feeling short on cash will go there for those items. For these customers, the loyalty program loses momentum, since they don't see themselves progressing towards the payoff.
     Research findings from University of Southern California and University of Pennsylvania provide a tactic for addressing the problem: Maintain customers' interest in their loyalty program participation by giving them credits for coming to your store, even when they don't make a purchase. In fact, this method is also effective in convincing new shoppers to sign up for the loyalty program.
     There are two key points to making it work, though:
  • What you want to produce is a feeling of regular progress towards the loyalty program reward while building the habit in the shopper of keeping your store in mind. Therefore, you might offer a bonus stamp or credit once each week for the shopper just coming into your store.
  • Customers tend to assess their progress in terms of percentage of completion more than in terms of the dollar value of the bonus or number of bonus points. Therefore, build the momentum by keeping participants aware of how close they are to the next reward benchmark.

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

Sunday, October 18, 2009

Team Up in Making Your Purchases

Anheuser-Busch InBev and PepsiCo recently announced that the two companies will be doing joint purchasing. They say the objective is to save money. Well, if industry behemoths like these truly believe that teaming up to make purchases can further enhance profitability, what does it mean for your purchasing operations?
     Chances are you're already doing cooperative buying, or have at least looked into it. The Federation of Pharmacy Networks, The Doneger Group, IGA, Orgill, and countless numbers of business format franchisers all aim to negotiate volume discounts from vendors for supplies central to providing the core products and services of the participants' individual businesses.
     But the Anheuser-Busch/PepsiCo endeavor is about something else. At this point, they're not talking about joint purchases of the commodities they each use to produce their respective beverages. Instead, the purchasing staff from each company will be collaborating in obtaining items that range from maintenance supplies & services to travel & facilities to information technology hardware.
     With what goods and services would it be profitable for you to expand the extent to which you are already joining with another retailer or retailers to make your purchases? And what would need to happen for this teamwork to be successful? For one thing, in teaming up with other retailers, you'll want to attend to what the laws in your geographical area say about avoiding illegal restraints of trade. This could determine how much and what sorts of information about your business operations you're allowed to share with each other.
     But once you've accommodated that, the major adjustment is psychological: How comfortable will you be in sharing the information? Even though the government will want to see you and your purchasing partners as marketplace competitors, in what areas of cooperative buying will you be able to see them as teammates?

Saturday, October 17, 2009

Use Store Décor to Create Shopper Excitement

Shoppers like excitement. The retail store has opportunities to create multidimensional, multisensory experiences to excite shoppers in ways a website can't do. The customer expectations bar is being raised, though, because of the recent announcement that all 340 Disney Store locations in the U.S. and Europe are being redesigned to add a bunch of interactive technology pixie dust. Jim Fielding, president of Disney Stores Worldwide, was quoted as saying, "The world does not need another place to sell Disney merchandise. This only works if it's an experience."
     You're probably not ready to do the sort of makeover to your stores that the Walt Disney Company is doing to theirs. For one thing, the changes are expected to cost an average of $1,000,000 per site. In addition, Disney stores are a special kind of retailer. They sell discretionary goods and gifts, while many other retailers sell necessities and commodities. Still, every retailer is selling the brand—their store name and personality—so whether or not you're operating a Disney store, you want the shopper's experience to build the brand identity.
     A powerful way to do this is through store décor and decorating. Applebee's restaurants hang all sorts of conversation starters on the walls, and at least some Cracker Barrel restaurants position board games around for customers to play. Tour a Bass Pro Shop, as I did in the Charlotte, North Carolina area this past week, and you'll pick up plenty more ideas to fit a range of retailer budgets.
     From Halloween through New Year's, most retailers pay close attention to putting up decorations. That creates a seasonal personality, all right, but not the sort of distinctive store brand personality which enhances repeat visits and higher store sales. What will you do this week to use store décor to build shopper excitement?

Friday, October 16, 2009

Develop Managers as Backup Talent

A central theme in Making Money Is Not Illegal, Immoral or Fattening is the importance of being a professional retailer rather than an amateur retailer. Here's a reminder about one difference between the two:
"In your business, mentor professionals, not amateurs. There are many too many amateurs in retailing. I don't care what position you have in the store. It doesn't matter to me if you're pushing a broom cleaning, I don't care if you're running a multi-billion dollar organization. You're an amateur or you're a professional, and some people have characteristics of both amateurs and professionals.
"First off, with amateurs, the business runs you. All the amateur has done is buy themselves a job. If you spend all of your day on the floor, who is running the store? You cannot run a business by spending all day, every day on the floor because you have no clue what is happening to the finances in your business when you do that.
"Let's say you don't go back to your store today. Let's say you don't go back to your store for three months. What happens to your business? Think about that now, please, and if you say something like, 'Well, if I'm gone, nobody will do the ordering,' then your business is in big trouble. That's the way amateurs operate, and they're not really smart business operators. They're really self-employed because if you take them out of the business, the business has no value at all. Zero.
"You want to be able to take somebody out of a business and have that business still have a value. Now with professionals, they work on the business, not just in the business."
For more complete coverage of the differences between amateur retailers and professional retailers, see Chapter 4 in the book.

Thursday, October 15, 2009

Gather Comments from Your Customers

When my wife and I recently watched episodes of the BBC series Planet Earth, we were awed by the beautiful scenes of nature. The problem was that the programs covered not only migrations and hibernations, but also loads of bloody portrayals of animals eating other animals. When I returned the DVD to Netflix and they asked me to rate Planet Earth by clicking from one to five stars, how could I tell the online recommendation agent I loved the nature, but found the gore to be an unpleasantly unhappy ending?
     No matter. My wife and I don't watch all that much TV, so we could switch genres: We love movies with strong story lines and nuanced acting. We'd order up some of those. Based on our past ratings, the Netflix recommendation agent pointed me towards "The Visitor." I put it in the queue, and after it arrived, we did indeed experience 94 minutes of superb story telling. Unfortunately, the movie lasted 104 minutes, not just 94, and those last ten were thoroughly dissatisfying. How to tell Netflix to reorient their recommendations to me towards movies with happy endings?
     Maybe that new recommendation agent software, for which Netflix awarded the developers $1,000,000, will do the trick. For it to pull this off, I'll need to be asked to give more than a single rating of one to five stars. I'll need to also be asked why I like and don't like what I say I like and dislike. It is the same sort of thing when you analyze what your customers will like and won't like. For best results, you'll want to do more than observe them in shopping action or get simpleminded answers to survey questionnaires. You'll want to get their comments.
     That's a key to happy endings in retailing.

Wednesday, October 14, 2009

Make Your Business Name Easy to Say

A while ago, I got an email with a frightful warning: The writer said that the name I'd chosen for my blog—RIMtailing—was generally understood in his neck of the woods to refer to an obscene physical act involving not so much the neck as the tongue. The writer advised that if I invited people to look in on my blog, those people were mighty unlikely to say the name aloud in mentioning my blog to colleagues.
     I promptly did online searches in three slang dictionaries. No mention there of rimtailing at all. Not even with its proper etymology as a mashup of the "Retailing In Motion" acronym and "retailing."
     All this did remind me, though, that we want to make it easy for people to say the name of our business. After all, we don't want to create any impediment to them mentioning us to their friends. So I'm thinking about Emigh Ace Hardware in Sacramento, California, which features above the store entrance and alongside the store name, a picture of a girl in coveralls saying, "Call me Amy." And I'm thinking about the GEICO gecko. But I'm also thinking about the fashion house in the United Kingdom called fcuk. Some businesses might intentionally choose an edgy name because target market members get a kick out of saying it.
     As for me, if "RIMtailing" does have negative associations which make people hesitate saying the name, my mission is to restore a sterling reputation to the term. And as soon as I'm done with this, my next task is to see that consumers worldwide have only the most positive associations with another business name I can easily imagine being unfairly dinged: They install lawns. Great company. Deliver right to the customer's door. Business name is Sod To Me.

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

Tuesday, October 13, 2009

Talk to Multiple Senses with New Products

In an atmosphere of pleasant aromas, shoppers are more likely to buy, especially when the aromas are relevant to the product being sold. People spend more on cleansers if there's a faint odor of Formula 409 in the air, and people buy more cookies and milk if there's a faint odor of fresh chocolate chip cookies.
     Gustatory sensations are highly relevant with food items. There are two items important to understand about taste: First, it can be stimulated through associations from the other senses of smell, texture, sight and even sound. Second, it can be stimulated by verbal descriptions, not just by the sensory experiences themselves. And the more of these senses that are pleasantly stimulated, the more likely you are to move towards the sale.
     University of Michigan researchers presented one of two chewing gum ads to consumers. The first was designed to appeal to multiple senses, reading "Stimulate your senses." The other ad mentioned only taste, reading, "Long-lasting flavor." All the study participants then sampled the gum. Those people reading the multiple-sensory version before the sampling gave higher ratings to the flavor of the gum. The researchers repeated the multiple-sensory versus taste-only advertising/sampling with potato chips and with popcorn. The results were fundamentally the same.
     Having customers fully enjoy that first sample of a new product is crucial. You don't have a second chance to make a good first impression. When you include descriptions that appeal to the full range of sensations in your ads, promotional materials, signage and packaging text or menu text, you gain an edge at the time the consumer puts your product into their mouth. And this means of achieving an advantage works even with non-food items. Whether it's detergent, sporting goods, or hardware, the fuller the preparation of the shopper's senses, the better.

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

Monday, October 12, 2009

Ease Customer Pain About Item Prices

If your shoppers are like most these days, they're paying especially close attention to paying. Here are a few more tips for easing your customers' pain about item prices:
  • The tactic at the top, the single most important one, the one that is in fact essential is to be sure that the items you sell are perceived by shoppers as delivering value for whatever they pay.
  • When possible, present items as collectibles or as gift items. Shoppers lose price sensitivity when purchasing collectible items, and they're willing to spend more on gift items, even when the gifts will end up being given to themselves.
  • Encourage credit card payments. People feel less pain when paying the same amount by credit card than with cash. This effect appears to be less powerful with payments by debit card, though.
  • For cash purchases, give change in smaller bills unless the customer asks otherwise. University of Iowa research suggests that when your store is associated in consumers' minds with small denomination bills, customers are more willing to spend their money with you.
  • And here's the oddest one of this set, so I saved it for last: If it looks to the salesperson as if the customer doesn't want to think about the price because it's painful, avoid mentioning the price, but if asked, say the price slooowly. I'm serious. Researchers at HEC School of Management, Paris and at University of Pennsylvania find that this makes the shopper less sensitive to the price. So if the price is $148.29, instead of saying "one forty-eight twenty nine," say, "the price of this item is one hundred forty eight dollars and twenty nine cents." Maybe this tactic works because you don't notice the sour taste of the medicine when it goes down slowly.

Sunday, October 11, 2009

Use Software for Margin Management

Merchandise pricing for optimal margin management is a task where technology can help. But the software is useless unless you use it regularly. Here's advice adapted from page 87 of Making Money Is Not Illegal, Immoral or Fattening about what to look for in this software:
  • The ability to easily input basic product information, such as department, class, product group, item code, item description, vendor data, cost, retail price and monthly sales quantities.
  • The ability to easily drill down from the product class level towards the item level in order to determine where in your assortment of products you can go to achieve the best bottom-line profit.
  • Sets rules for rounding off prices in ways that maximize your profitability on every item sold without losing sales.
  • Allows numerous "what-if" scenarios without committing to actually making the changes.
  • Quickly calculates the annual and month-by-month dollar and sales percentage impacts of "what-if" changes in pricing.
  • Quickly calculates results by store, department, supplier or other ways you categorize your inventory.
  • Saves retail pricing strategies so that you can call them up later without needing to recreate the strategy each time your product mix changes.
  • Smoothly interfaces with a way to produce bin tags containing the new prices.
  • Allows you to see at a glance where the gross profit dollars in your company are coming from as it relates to item segmentation, item price thresholds and item velocity.
  • Is backed by a company that has support staff with retailing experience.

As a reference point, all these features are found in Margin Master from RetailerSoft, so you might want to begin your search there.

Saturday, October 10, 2009

Keep Customers Happy About Data Collection

Get ready for more restrictions on the data you analyze about your customers. Opt-in systems—in which the customer needs to give explicit permission for you to collect data on their individual shopping habits—are likely to spread, replacing the opt-out systems now used in the U.S.—in which the customer needs to explicitly say they don't want the data collected. Because collection and analysis of data about your shoppers is so valuable for your profitability, keep your customers happy about data collection. Show them how your data analysis helps you target advertising to their particular interests, saving them from spam.
     One impetus for more government regulation is a recently released survey research study titled "Americans Reject Tailored Advertising." The researchers are based at University of Pennsylvania and UC Berkeley. My opinion after looking at the study report is that the methodology was excellent and the results are more trustworthy than prior survey research sponsored by groups advocating for online advertising.
     The report recommends steps you can take. Here's a more complete list which was proposed in the past by an expert at SUNY, Potsdam:
  • Inform customers what data you collect on them and how you use and protect that data.
  • Let customers have a say about what information you collect on them and who you give it to. Make it easy to opt out, but also make your case for your shoppers opting in.
  • Help customers correct any errors in the personal information you maintain on them.
  • Maintain secure data storage.
  • Enforce your information practices. Your customers are serious about this. In the survey, 70% of the representative sample of Americans said a business should be fined a large amount if they violate privacy, and 35% said the executives responsible should go to jail.

Friday, October 9, 2009

Consider Using a Business Character Icon

Retailing experts recommend using the same easy-to-remember visual elements across the marketing mix, from advertising to store signage and more. One alternative is with a celebrity who appears in ads and whose picture appears on signage. For years, Ace Hardware used John Madden and, before that, used Suzanne Summers. Another way to have a strong visual element across the marketing mix is with characters, such as MetLife's use of Snoopy and how the Burger King was used by, well, Burger King.
     You might find it useful to select or create a character icon for your store. An advantage of created characters over real people is that the behavior of real people is less predictable, and if that behavior veers over into scandal, this can negatively impact the image of your business. Of course, a sense of mischief might be what you're looking for to liven up consumer perceptions of your store. Burger King reached beyond having just the King himself to also featuring characters from the Simpsons in the marketing mix.
     Burger King hasn't shut out living celebrities from serving. The company tried to build buzz with motorsports race driver Tony Stewart: That endeavor points out another advantage of using a cartoon or mascot you create. The issue could be called the Tiger Woods Dilemma. Tony Stewart testified to the virtues of not just Burger King, but also Office Depot and Old Spice. In his heyday, Tiger Woods became a celebrity icon for so many sponsors that the power of his endorsement was highly diluted.
     Two more things: Even though your business character icon is only a drawing or a costume, you still must keep them up with the times. Do you recall all those makeovers Betty Crocker and the Michelin Man have endured as decades passed?
     And take care that your masked marvel doesn't end up creeping out prospective customers. With that in mind, you might want to eliminate consideration of clowns.

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

Thursday, October 8, 2009

Exercise Cultural Sensitivity in Color Use

Anybody who tells you retailing is exactly the same regardless of culture is failing to pay close enough attention. Yes, the fundamental principles, such as always delivering value for price, are the same. But the devil is in the details. For instance, exercise cultural sensitivity when selecting color schemes for your store décor, product packaging, and media advertising.
     There are some universals in how shoppers tend to respond to colors. Reds create excitement associated with fast movement and enhanced appetite. In a McDonald's, red means you eat more quickly, leaving space sooner for the next customer. In a Target store, red means you pile your purchases into the cart more quickly.
     On the other hand, blues are associated with leisurely, deliberative shopping. People prefer ads with a backdrop of blue to those with a backdrop of red. American Express named its credit card Blue because their market research showed the color was associated with positive feelings about the future.
     Perhaps another advantage of blue for the American Express card is in building its brand image as the international card. University of British Columbia research found that blue's appeal crosses cultures widely.
     That's not the case with all colors. For example, in most of North America, white brings to mind purity and cleanliness, while in most Asian countries, white is associated with death. Shoppers in India, Japan and many parts of Europe think of black as a negative color, but in the Middle East, black has generally positive associations.
     Even colors with near universal appeal don't work well in every culture. Show consumers from throughout the world green product packaging and you'll probably hear descriptions like new, organic, healthy, and refreshing. Green has a particular appeal in most Muslim cultures. Except in the Middle East, that is. There, avoid green schemes.

Click below for more:
Spring Your Colors

Wednesday, October 7, 2009

Meet Customers’ Desires for Nostalgia

Shoppers seem to be getting nostalgic—favoring products which remind them of the past. Are you ready to satisfy that desire? A recent Associated Press feature points out how Home Depot threw out plans for a purple and brown 2009 Christmas in favor of the traditional red, green and gold. Saks Fifth Avenue will be featuring gingerbread houses, ball ornaments, suspenders and cufflinks.
     There have always been shoppers who treasure mementoes from years ago, and it's not news that there are merchants who accommodate them with antique toasters, music tracks from old LP records reissued as MP3 downloads, and out-of-print etiquette books. In 2004, Pacific Cycle brought out a redo of the Schwinn Sting-Ray, arousing memories of a bicycle loved by kids growing up a generation before.
     What is new is the more widespread draw of nostalgia. Why? I agree with the many other retailing consultants who attribute it in large part to the economic downturn. People yearn for softer times—or what they recall as being softer times. The fact is a fair amount of research indicates that when things get really tough, we often distort memories of the past to accentuate the positive and eliminate the negative. A New York Times piece described how Russians are reacting to their economic hammering by buying fashions with hammer-and-sickle logos to remind them of the supposedly good days of dictatorship.
     So go with nostalgia, but do keep in mind the buyer psychology pendulum will swing back again. That Schwinn Sting-Ray bicycle garnered an award as the 2004 Toy Industry Association Outdoor Toy of the Year. But two years later, Dorel, the Pacific Cycles parent company by then, decided to take a loss of $3.5 million on its remaining Sting-Ray bicycle inventory in order to convince retailers to sell off the bikes.

Tuesday, October 6, 2009

Know Your Expense Base

Here's a reminder from Making Money Is Not Illegal, Immoral or Fattening:
"To calculate your Bottom Line Profit, we need to know your Expense Base. This means that for every dollar that goes through your registers, how much of that dollar is used for payroll, occupancy, and all other expenses.
"When we talk about payroll, we are talking about fully burdened payroll, which includes the grand total dollars for the number of hours that your hourly employees work times their respective wages. Then add in the salaries for all of your salaried employees. Now add in the amounts you have to match for any of the employee taxes.
"Occupancy includes rent on the building housing your store. If you own your building, you're still paying yourself rent, taxes, insurance and maintenance on the building. Many people call this 'rent plus triple nets.' This includes common area maintenance or CAM charges. Some retailers will also add all utility costs into this calculation.
"The third component in the Expense Base is other expenses. In our calculations, this does not include principal payback on long-term debt. It does include interest charges. The biggest expense in here for you might be advertising and marketing. The next biggest expense might be bank card charges. That's what you pay for the privilege of using Visa, MasterCard, American Express, and so on. And don't forget travel, interest charges on debt, entertainment, any service contracts you have in the store, and so on. These and the rest of the expenses not already assigned to payroll and occupancy all go into one bucket and you divide that amount by the amount of sales to give you a percentage. Other expenses will cost a retailer about 8% to 12% of their sales."
Details start on page 68 of the book.

Monday, October 5, 2009

Personalize the Selling Message

When shoppers feel more involved in their purchases, they give closer attention to getting value for their money. The truth is that this doesn’t always mean a higher total sale for the retailer. Highly involved customers shop more slowly and are less decisive than customers who bolt into the store, rocket directly from one set of shelves to another, toss each item into the basket without much thought, and then quickly pay and leave.
     Still, increased customer involvement does mean shoppers are more likely to return to your store and more likely to listen to staff’s advice about things such as switching to house brands. Those results are good for profitability.
     To build customer involvement, personalize the selling message:
  • Maintain pleasant eye contact. Your staff shouldn’t be looking harshly at customers, but they should be maintaining eye contact with the customer while talking to them. At the same time, be aware how among some cultures, direct prolonged eye contact is considered aggressive, flirtatious, or worse. In these cases, use briefer and less continuous glances.
  • Call customers by name whenever possible. Certainly, this is easiest to do with the regulars who come into the store and talk with staff. In other cases, you’ll see the person’s name on a credit card, need to ask for it when filling out a special order form, or overhear a shopper’s companion call them by name. Be sensitive to whether the customer objects to being called by their first name. It’s usually safer to use the last name.
  • Ask questions that include the word “you.” This is a tactic you can use in signage, not solely in personal selling. “Would you like to improve your golf score?” “When was the last time you sat in a chair as comfortable as this one?”

Sunday, October 4, 2009

Hold Monthly Clinics

Increase sales by maintaining in your customers the habit of regularly coming into your store. Give those who haven't been in for a while a reason to return. Opportunities to learn can serve as one reason. For instance, consider how Starbucks—a company that has seen noticeable decreases in store traffic—chose to launch their VIA™ Ready Brew instant coffee recently: Although you could order a free sample using a Starbucks website, the company put the real marketing punch into encouraging all of us to drop into a Starbucks shop for a complimentary cup.
     Successful retailers are always looking to use good ideas pioneered by others, and then to get even better results by improving on the ideas. So how might you improve on the Starbucks VIA™ Ready Brew launch? One way that comes to my mind is to hold a coffee tasting clinic.
     What sorts of clinics might you conduct on a monthly schedule to help your customers and prospective customers learn more about how to get the best from your products and services?
     Here are a few tips about holding these clinics:
  • Distribute ads and press releases about the clinic a couple of weeks in advance. If store space is limited, require advance signups. In any case, get contact information for everyone who attends so you can develop a marketing list.
  • Unless you've a public meeting area already set up in your store, you'll almost certainly need to do some rearranging of the store layout to comfortably accommodate the group.
  • Take great care in selecting who conducts the clinic, especially if you're thinking of using the services of a vendor. You need someone who is a skilled salesperson. You also need someone who can answer any questions with expertise. This might mean having two leaders.

Saturday, October 3, 2009

Boost Profits by Making Items Collectibles

Here's a snippet from the New York Times: "The weak economy notwithstanding,…collectibles buffs paid the highest prices ever.…" Well, I did leave out a bunch of important details. For example, the snippet is from the January 17, 1991 edition.
     The fundamentals of retailing history do repeat themselves. Rare coin prices, along with the selling prices of many other collectibles, actually rose during the Great Depression. In our latest economic downturn, the sales of high quality collectibles have indeed held up much better than most other retailing sectors. When it comes to collectibles, the urge to possess the whole set means there is less consumer sensitivity to price and more drive in the shopper to buy now.
     If you own an antique shop or sell mounted sets of rare butterflies, chances are you've personally benefited from the relatively good profitability in high-quality collectibles. And whatever you sell, think about including in your merchandise mix collectibles like the latest annual releases of Christmas tree ornaments, Lladro figurines, and Painted Ponies offerings.
     But just as important as this, for any merchandise lines that are not necessities for the customer, consider giving them the appeal of collectibles:
  • Feature items in groups, each one a distinctive member of the family. If parallel products are available for different age groups, have those items in the same ad and on the same sign. Stock them on the same end cap.
  • Introduce new items in the set regularly, at which point you rotate out older versions. This encourages shoppers to buy now.
  • Take special orders and publicize resale markets. When your customer is having trouble getting that special item to fill in the missing spot in the collection, help them buy it from you or from a collectors' group. Keep your customers as dedicated collectors.

Friday, October 2, 2009

Give Your Products & Services Sex Appeal

Psychoanalyst Sigmund Freud claimed that pretty much everything we do springs from the sex drive. Lots of people thought Sigmund was taking a good thing too far. Still, it's true the sex drive does sell. In using that fact to improve your retailing profitability, realize the sex drive refers to more than raw passion.
     In consumer psychology, it means the mutual attraction of masculinity and femininity towards each other. It's the Yin and the Yang.
     Researchers at University of Texas and University of Southern California observe that consumers associate masculinity with products and services that are disciplined, stable and serious and associate femininity with products and services that are delicate, whimsical and changeable.
     Your customers make purchase decisions based in part of how well the purchase will project their desired degrees of masculinity and femininity. It's true across age groups: Children as young as twenty months old distinguish toys intended for girls from those intended for boys.
     Northwestern University research found that boys are much more likely than girls to prefer rough chunky peanut butter to the smooth variety.
     It's true across cultures. Classic research by a psychologist working for IBM showed how the descriptions of masculinity and femininity differ from one culture to another. What stays the same is the drive of each type to show off their credentials via product use.
     Consider cell phones. In America, many men prefer a compact-looking cell phone to project a serious high-tech image. But a Wall Street Journal article reported that many Indonesian businessmen aimed to achieve their serious look with a old Nokia model nicknamed The Brick because of its heft.
     In your marketing and selling, use words that your target audience associates with either masculinity or with femininity, and avoid mixing the two sets of words in the same message.

Thursday, October 1, 2009

Coach Staff to Think About Consequences

It's October. Ready for Halloween sales? To get you in the mood, here's a truly frightful story from Making Money Is Not Illegal, Immoral or Fattening. I hope it scares you into coaching your staff to think about consequences.
"A customer goes into a store one weekend. His purchase comes to $487.62. The man goes home and installs everything. He finds that he has a clamp left over. It's a 29¢ clamp. That Friday, he goes back into the store and buys more stuff to work on his project. After the cashier rings it all up, he says something like, 'Oh, by the way, I need to return this cable clamp.' The cashier says, 'Do you have your receipt?' He pulls it out, and she looks for the 29¢ item on the receipt so she can circle it. Then she says, 'You know, we sell those in a plastic bag so we can scan them. Do you have your plastic bag with you?'
"He says, 'No, I don't have the plastic bag.' The cashier says, 'I think we've got a problem.' The man says, 'I don't have a problem. Call your manager.' The on-duty manager comes to the register and says to the cashier, 'What's the problem?' The cashier says, 'This customer is trying to return this cable clamp, and he doesn't have the plastic bag.' The manager says to the customer, 'Do you have your plastic bag?' "The customer takes his items and walks out of the store. A couple of days later, he contacts the store owner and says, 'I'll never be inside your store again.'"
"The guy had been spending more than $5,000 a year in this store, and they turned him away over a plastic bag."
Want more painful details? See page 114 of the book.