Sunday, January 31, 2010

Deliver Fragrance to Customers Who Like It

The right store fragrance can cause more people to buy and can build your store’s brand identity. That’s why Samsung, Victoria’s Secret, and other retailers use signature store scents. But pick any fragrance and some shoppers won’t like it. Lots of people love to stop to smell the roses, but lots of other people would start sneezing nonstop.
     How can you deliver the right aroma only to the customers who welcome being exposed to it?
  • Stay with smells that most people like. Vanilla has pretty much universal appeal. Some preference are cultural. For example, if your shoppers come from an East Indian culture, try sandalwood. Some preferences are seasonal. Cinnamon is more strongly welcomed with Christmas shopping than with swimsuits.
  • Limit to very familiar smells and then use words to create the sensation. Take inspiration from the product named “Puffs Plus facial tissues with the scent of Vicks.” For those holding pleasant childhood memories of being soothed by Vicks VapoRub, seeing the word Vicks on a sign could be enough. Those who consider VapoRub as a cousin of toxic waste can look the other way.
  • Offer optional treats that carry the fragrance. Food samples might work. And research at Concordia University found some potential for odors being delivered via chewing gum. For example, when the cinnamon fragrance was delivered via Dentyne soft chew cinnamon gum, the users’ memory for merchandising messages improved.
  • In your store, provide odor-free areas and good ventilation. Remember the story of the “Got Milk” campaign and San Francisco bus shelters? To build longing for milk, the campaign pumped the odor of chocolate chip cookies into those shelters. Citizens got very angry. In my opinion, the problem was that people waiting for a bus in inclement weather had no escape from the aroma.

Saturday, January 30, 2010

Sound the Prices to Project Sound Value

How could a price of $7.66 ever sound better to a customer than a price of $7.22? Researchers at Clark University and University of Connecticut show it can:
     Suppose your store has an item regularly priced at about $10.00. You tell a bunch of your customers the price has been reduced to $7.22. Then you ask purchasers how good a deal they think they got. A few weeks later, you tell a different bunch of customers the price of the item has been reduced to $7.66 from the regular price of about $10.00. As before, you ask purchasers how good a deal they think they got.
     All the purchasers are likely to say they got a good deal on the item. But those who heard the price as $7.66 are more likely to rate themselves as having gotten a large discount.
     Why? It has to do with the sound of the words. The “s” sound conveys smallness and smoothness to the English-speaking brain. A price stated verbally as seven dollars, sixty-six cents tends to sound small, and the purchase decision seems smooth. But an “oo” sound, as in seven dollars, twenty two cents, tends to sound larger. Other researchers—at HEC School of Management in Paris and at University of Pennsylvania—found that when a high price is said slowly to the customer, the customer is less likely to object to the price.
     Sometimes sounds of smoothness and slowness can hurt sales. The developers of the BlackBerry PDA originally wanted to call it the Strawberry because the little buttons reminded them of that fruit. But naming consultants said the “s” in strawberry implied a slow device.
     However, when it comes to prices and customers, small and smooth sound great.

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

Friday, January 29, 2010

Systems, Not Trust, with Family

In Making Money Is Not Illegal, Immoral or Fattening, we warn about the importance of having financial control systems. Art Freedman tells this true tale to show that the rule holds even in families with bonds of trust:
     “A father wants to phase out of his retail business, so he gives his son the responsibility of operations of the floor, including ordering. He says to his daughter, ‘You take care of the back office in the business. You do all the accounting, all the deposits, the human resources.’ Two years pass by, at which point, the son goes to his father to say, ‘Dad, could you put some more money into the business?’ Dad says, ‘What do you mean?’ ‘Well,’ says the son, ‘I’ve some bills to pay, and there’s no money in the account.’ Dad says, ‘I haven’t pumped money into this business for 25 years.’ The son comes back with, ‘I don’t know what to tell you, Dad, but we’ve got bills, and we’ve got no money.’
     “Dad gets excited about it and hires a forensic auditor. They discovered that for the past two years, the daughter has been embezzling money out of the business to the tune of $750,000. A hit to the bottom line of three-quarters of a million dollars.
     “I’m told that when the daughter was interviewed, here’s exactly what she said: ‘Dad, all I was doing was getting my inheritance before you died.’ That’s the way they think. Thieves are going to make excuses, so you must be careful. You must have systems in place that include safeguards, checks, and balances.
     “Dad and his son did not press charges against the thief. She was, after all, a close member of the family. I can only imagine how their next Thanksgiving dinner came off, though.”

Thursday, January 28, 2010

Depend on Interactive Text in Web Ads

When placing internet ads, you might want to use graphics and animation to draw attention. Still, it is the informative text shoppers will focus on, and viewers want to easily read and interact with that text to get more information. To provide that easy interaction, make it unambiguous what can be clicked and what the click will give you, for instance.
     Those suggestions come from a research report titled Eyetracking Web Usability, based on analyzing 1.5 million instances of users looking at websites. When it came to ads on websites, about 52% of viewers looked at an ad containing solely text. When the text was superimposed on a graphic or image, the viewership percentage dropped to 35%, and when there was animation, viewership was only 29%. And ads placed around search boxes are unlikely to be consciously seen at all. In those circumstances, the viewer’s on a mission.
     The average time spent looking at a web ad was about one-third of a second. Other researchers find this is enough time for the ad to have a subconscious effect on shoppers. That’s fine for building intentions to visit your store or purchase what you offer if the consumer is to act on those intentions in the future. But if you want more immediate results, you’ll want to get the website visitor involved beyond a fraction of a second.
     Tracking consumers’ eye movements on websites won’t give you a complete picture of how to advertise most effectively on the internet. You’ll still want to look at patterns of clicking, routes through your store’s website, and time spent on each page, for instance. But the eye tracking results can help you decide if users will spend a long time with an ad because they’re digesting what’s there or because they can’t figure out what it means.

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

Wednesday, January 27, 2010

Attract with Social Consciousness

Yesterday, Target Corporation announced that their stores will no longer sell farm-raised salmon. They said they’re doing it to help preserve the health of the salmon species. It’s one of a number of socially conscious initiatives by Target: Last spring, Target featured organic fashions. Target now sells what they call green-friendly home products along with more than 700 organic food items. And they say that environmentally sustainable merchandise with a designer’s touch will be appearing later in 2010.
     Even if you don’t work for Target, you might be planning your own sorts of socially conscious initiatives. But how to measure the payoff? The answer is to analyze results not just for those products where you’re touting your contributions to improving the world, but instead for overall business performance. Socially conscious initiatives help draw today’s consumers into your store, but there’s a good chance they’ll end up buying products which aren’t the most environmentally friendly or manufactured with fair trade practices.
     The presence of socially conscious products frequently makes it more likely the customer will purchase products that do not embody social consciousness. It is as if having chosen the store is enough to satisfy the values. Studies at City University of New York, Loyola College, and Duke University suggest that even when this sort of thing doesn’t occur within the same shopping trip, it can occur over subsequent shopping trips. That is, if someone purchases a socially conscious item on this trip, they become more likely to purchase next time an item that shows little attention to social consciousness.
     The lesson? Be ethical, but stock enough items to allow customers to choose how much attention they want to pay to social consciousness. If all you have is wild-caught salmon, you’ll miss out on some sales to people seeking the farm-raised.

Tuesday, January 26, 2010

Build Buzz with Market Mavens

Positive word-of-mouth helps convince people to shop at your store, and market mavens are particularly effective at broadcasting positive word-of mouth. Market mavens are a special type of opinion leader. Rather than considering themselves expert advisors on only certain retail products and services, market mavens counsel others about the whole shopping experience and recommend specific stores.
     Consumer researchers at University of Pittsburgh and University of Arizona have used questionnaire items like the following to identify market mavens:
  • People ask me for information about products, places to shop, or sales.
  • I like helping people by providing them with information about many kinds of products.
  • If someone asked me where to get the best buy on several types of products, I could tell him or her where to shop.
     Here are a few ways to identify market mavens in your community:
  • Ask your staff to be aware of customers who offer suggestions for improvements. This is one trait that distinguishes market mavens from customers who only ask questions, give praise, and give criticism.
  • Regularly ask your customers who recommended they shop with you. When you start hearing a name repeatedly, you may have spotted a market maven.
  • Team up with other local retailers to exchange information on market mavens. Research at University of Mannheim and University of Texas-Austin finds that market mavens aim to keep current about all sorts of retailers.
     Once you contact market mavens, offer them gifts, including the gift of taking at least some of those suggestions for improvements. Why go to this trouble? A study based at Providence College and University of Connecticut indicates that a main reason for the value to you of market mavens is the stable self-confidence with which they make recommendations to all the people they know.

Monday, January 25, 2010

Meet Needs of Divorce Market

Want to make some fast money off all those folks who are getting divorced. Sound too much like preying on others’ misery? Well, done the wrong way, yes. But think instead about satisfying shoppers who can use what you provide as they set up their own housekeeping. Consider Debenhams, with its 153 department stores located across the UK and Ireland. They’ve started off January 2010 by announcing a divorce gift registry.
     What products and services could you profitably provide to the newly divorced? Before implementation, consider this, though:
  • In your market research, use the right statistics. You’re interested in the percentage of your target market who are newly divorced or have filed for divorce. That’s not the same as the percentage of marriages that end in divorce. Countries with the highest percentage of the population who get divorced include the U.S. and UK. But Brazil, Italy, and Mexico have very low rates. And the rates differ significantly within a country.
  • If you start a gift registry, include some high-end items. Friends of the divorced will want to soothe the suffering. Even the ex-mate might want to splurge on a present. Researchers at Oregon State University, University of Portland, and Old Dominion University found that a spouse who feels responsible for a breakup is open to “compensatory giving.”
  • If you advertise specifically to a divorce-ready market, be aware that some in your community will fault you for encouraging divorce. The Presbyterian Church in Northern Ireland responded to the Debenhams announcement by calling it “very bizarre.” Keep it dignified. Hallmark Cards has items for the newly divorced with text like “going through a difficult time.” Still, don’t make it somber. Hallmark also put out a card in 1958 reading, “Want to get rid of that ugly fat? Divorce him.”

Sunday, January 24, 2010

Have Checks & Balances in Money Handling

Here is another reminder from the pages of Making Money Is Not Illegal, Immoral or Fattening:
     “Let’s say you have somebody who comes in every day, opens up the safe, pulls out the drawers from the previous day, reconciles each one of the drawers back to whatever you have in the drawers on a regular basis, makes up a deposit, sits down at the computer, puts a little note in there on what the deposit is going to be, puts the money in a bag, puts it back in the safe, and goes about their day doing whatever they’re going to do.
     “Then at the end of the day, they get this bag, they take it to the bank, and they sit down in front of the banker, who counts the money, signs the deposit slip, and gives it back to the employee, who goes home, knowing the bank’s got the money. When that person comes back to work the following day, they go into the computer system and put a check mark next to the deposit, meaning it was all there, and they go about their day.
     “But wait. Let’s say that at the end of the month, you get an accounting of all your deposits and all your expenses, and the same person who did all of that stuff before is the same person as the one reconciling your checkbook.
“Unless that one person doing it all is you—the store owner/operator—a good system has developed a bad problem. There are not at all enough checks and balances in that system. If you have a money handling system with a problem like that, you are going to take a financial hit sooner or later that will dig into your profitability. It is just a matter of time.”

Saturday, January 23, 2010

Use Dissatisfaction as a Selling Opportunity

A complaining customer isn’t exactly the same as a dissatisfied customer. Customers with a succession of justified complaints about products or services you’ve sold them aren’t prime candidates for further sales. But dissatisfaction can be used by you as a selling opportunity.
     That’s because customers get dissatisfied when they want something different from what they have now. Dissatisfaction is inevitable. Every one of us sooner or later will want more from our possessions and experiences. No matter how satisfied the customer is at the time of purchase, they’ll become dissatisfied later.
     Research at Rice University and Duke University found that when a customer has spent lots of time and mental energy in making a purchase decision, they’re likely to be most satisfied right after the purchase, and dissatisfaction will gradually develop. To turn dissatisfaction into selling opportunities with these customers, stay in touch. Notify them of product upgrades and new service opportunities.
     The researchers also looked at what happens with customers who put little time or thought into a purchase. For many of these shoppers, the selection was a habit. They’re familiar with the item, so they’re not likely to get dissatisfied. But if the purchase price was high and/or using the item requires building new skills, then the most likely time for dissatisfaction is soon after the purchase has been made. Here, the way to turn dissatisfaction into a selling opportunity is to act quickly. When the customer sees you as having helped them out, their dissatisfaction turns into the sort of gratitude which produces repeat business.
  • With an expensive or high-tech item, point out where to find instructions for item use.
  • Offer follow-up help. Both Costco and Phillips Electronics learned that most merchandise returns occur because the purchaser couldn’t figure out how to use the item.
For your profitability: Sell Well: What Really Moves Your Shoppers

Friday, January 22, 2010

Keep a Store-Within-A-Store Compatible

Recently, there’s been extra interest in the idea of a retailer leasing out space within their store to another retailer or to a manufacturer for a store within the main store. The set of business models has been around for a long time. Usually the SWAS operator establishes their own rules for merchandising, pricing, staffing, training, and servicing. This is the case with Starbucks and Peet’s operations set up within supermarkets. Often the SWAS sells only one brand. This is the case with Sephora stores within J.C. Penny stores and Jil Sander within some Macy’s.
     Perhaps the extra interest in SWAS now is because of the economic downturn. Maybe you’re finding that with inventory and staff reductions, there is extra space in your store and a need for niche merchandising. In addition, store-based retailers are recognizing the extra excitement and shopper convenience a SWAS can bring.
     An upcoming article in the Journal of Marketing Research by professors at Carnegie Mellon University and University of Pennsylvania proposes some hypotheses about how SWAS concepts work best: Invite in manufacturer partners for product categories where consumers identify strongly with brands and where competition among retailers in selling favored brands is high.
     Also, it’s important to have SWAS tenants who reinforce, or at least won’t disrupt, the personality you want your overall operation to portray:
  • Sincere or witty: In what ways is the retailer honest? Wholesome? Cheerful? Teasing?
  • Exciting or predictable: To what degree is the retailer daring? Spirited? Imaginative? Trendy? Responsible? Dependable? Persistent?
  • Expert or inquisitive: In what ways is the retailer knowledgeable? Successful? Calm? Confident? Secure? Imaginative? Curious?
  • Sophisticated or approachable: To what degree is the retailer formal? Assertive? Ambitious? Casual? Sociable?
  • Rugged or luxurious: In what ways is the retailer gruff? Challenging? Cooperative? Trusting? Considerate? Indulgent?

Thursday, January 21, 2010

Consult Mirror Neurons with Vendors

Sometimes when you’re meeting with a vendor’s sales rep, you’ll have an intuitive uncomfortable feeling about the person or situation. These striking judgments almost always occur within the first few moments. Research indicates that if you’ve an abundance of experience dealing with sales reps, the quick judgments like this often pay off. They are good signals of whether you should continue working with the rep or the supplier. Overall, you’re best off dealing with vendors and sales reps you’re comfortable with from the start.
     But your discomfort might be for reasons which have little to do with the capabilities of this sales rep to help you achieve profitability. For instance, maybe it’s only that the clothes the sales rep is wearing seem wrong for the meeting. Or maybe the sales rep looks like an older version of a rival or bully from your high school days.
     How to tell if the discomfort is reason enough to stop dealing with the sales rep? According to some neuropsychologists, there are special cells inside your brain that might prove valuable. Those brain cells are called mirror neurons. Mirror neurons have also been called empathy neurons. Their role is to produce inside us what’s being experienced by the person we’re interacting with. Mirror neurons were first described by researchers at Italy’s University of Parma.
     Identify the negative emotions you began to experience as soon as you started talking with the sales rep. Fear? Insecurity? Impatience? Then do what you can to produce within yourself the kinds of emotions you’d like a sales rep to have: Courage, confidence, and patience, for example.
     If this empowers the sales rep’s mirror neurons to duplicate those desired emotions, you might be on your way to building a profitable partnership. Otherwise, you might want to trust that first intuition.

Wednesday, January 20, 2010

Give Experts Novel Product Categories

Your customers like you to place product offerings into categories. Most shoppers appreciate categorization by price, and some appreciate categorization by brand name. However, beyond that, novices and experts have different preferences for how you set up the categories. Novices—people less familiar with the product category—like the items to be categorized by what the alternatives can do for them. Give them features lists. Experts—people who consider themselves to be highly knowledgeable about the product category—prefer that items be categorized by technical specifications.
     Research at University of Pittsburgh and University of South Carolina finds that experts also are attracted to categorization in ways that surprise them. Sporting equipment might be categorized by the sizes of the items. Power tools might be categorized by the type of job they could be used to complete. Clothing might be categorized by color. Foods might be categorized by country of origin.
     How could setting up such strange divisions increase retailer profitability from selling to product experts? The answer: By surprising the expert, we get them to pay attention, and a customer who pays attention is more open to seeing the value in a higher priced option.
     Experts often make product selections without prolonged thought. They don’t need the features lists novices want because the experts already know—or think they know—what the products can do for them. Experts are interested in technical specifications largely because they’ll use those specifications to justify to themselves and others that they’ve made the right choices. In fact, the University of Pittsburgh and University of South Carolina researchers say experts are notoriously complacent about using the technical information before choosing what they’ll purchase.
     To appeal to the experts in your target markets, regularly set up displays and provide lists that categorize products in novel ways.

Tuesday, January 19, 2010

Train Staff to Implement Your Standards

As Art Freedman and I say in Making Money Is Not Illegal, Immoral or Fattening, successful retailers set clear standards for their store and their staff. Then we go on to say that setting standards is not enough. Here’s a reminder from Chapter 4:
“You must implement the standard. This means training staff, coaching staff, starting from the top down. A lot of people don’t understand how to introduce a standard and make it stick in their business. We’re all human beings, so think about how human beings learn. What we just hear, we often forget. What we see, we’re more likely to remember. What we do, we understand. But only what we can teach others, can we master.
“If you say, ‘Well, I told my staff what the standards are,’ we’d come back with, ‘Did you also give it to them in writing so they could go over it again later? Did you demonstrate to them how it’s done, and then did you observe them doing it and give them constructive criticism? When they were ready, did you have them teach the standard to others? And throughout it all, did you encourage them to ask you questions about anything they didn’t understand, and did you invite them to suggest improvements on the standards for you to consider? Did you look them in the eye and ask, ‘Can you do that?’
“Don’t assume that one-time training is enough. 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 most employees 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.”

Monday, January 18, 2010

Protect Shoppers from Too Many Choices

One weekend, customers at Draeger’s Grocery Store in Menlo Park, California were offered the opportunity to sample from Wilkin and Sons premium jams. Each shopper who accepted the invitation received a coupon for a one dollar discount on a purchase of any Wilkin and Sons jar.
     Sounds routine enough. However, the architects of this jam sampling were consumer psychology researchers from nearby Stanford University. The researchers wanted to know how the number of choices available to the shoppers affected the frequency of jam purchases.
     At some periods during the experiment, shoppers were presented 6 different jams from which to sample. Shoppers who came by at other times were offered 24 different jams.
     It turned out that shoppers presented with 6 choices to sample from were ten times as likely to end up purchasing a jar of jam as were the shoppers presented with 24 choices.
     This doesn’t happen only around Stanford University and with jams. At Columbia University, student participants were exposed to either 6 different varieties of Godiva chocolates or 30 different varieties. Yes, those exposed to the 6 were much more likely to subsequently select a box of Godiva chocolates rather than a cash payment for participation in the study.
     As a retailer, you want shoppers both to make purchases and to be satisfied with their shopping experiences. Observing shoppers might lead you think that having more options results in more satisfaction. Researchers intrigued by the Stanford/Columbia findings decided to explore that issue. A Cornell University study concluded that as the number of alternatives got large, shopper satisfaction went down.
     Your customers want choices and variety. But not too much. The article in the Journal of Personality and Social Psychology in which the Stanford/Columbia research was reported begins with the epigram “Ne quid nimis. (In all things, moderation).”

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

Sunday, January 17, 2010

Learn the Relationship B2B Customers Want

Business-to-business customers often expect a person-to-person relationship. According to research at University of Geneva, there are two dimensions to that expectation:
  • Secure business attachment. Your B2B customer may want to rely on you for quick answers to questions about purchases made from your business and for quick solutions to problems with purchases.
  • Close business attachment. Your B2B customer may want to develop personal bonds with you or your outside sales agent, exchanging information about family and friends, for instance.
     The research findings also suggest a way to learn the mix of secure business attachment and close business attachment each of your B2B customers wants: Watch as they interact with others who are close to them. This can mean paying attention to how the various participants in the purchase decision relate to each other. One description of the roles is:
  • Initiators identify the need for the product or service you provide.
  • Gatekeepers gather information and route it to the other participants in the purchase decision.
  • Influencers differ in the amount of knowledge they have, their motivation to sway the outcome, and the political power they can exert in organizational decision making.
  • Buyers authorize the purchase.
     In midsize to large organizations, these roles will probably be carried out by a set of individuals, so you can learn the type of relationship each wants by noting how that person interacts with the others. When the B2B customer is a small business, though, maybe it’s all done by one person. In this case, consider inviting that person and their romantic partner to join you for a leisurely dinner.
     Here’s why: The University of Geneva research says that B2B customers who demonstrate secure attachment with a romantic partner experience higher satisfaction, trust, and repurchase intentions in their B2B dealings.

Saturday, January 16, 2010

Stay Ready to Sell Luxury

What do your shoppers really want? Luxury. That’s the word from “The New Luxury Paradigm” at last week’s National Retail Federation confab in New York City. Panelist Tory Burch—in her role as fashion designer and boutique retailer—said, “Luxury means something very different now than it used to. Now it’s about how you live your life.”
     Maybe Ms. Burch was thinking that living your life is itself different now than it used to be. Going through security at airports, for instance. In her role as entrepreneur, Ms. Burch announced she’s developing a new product—luxury travel socks for those shoeless moments.
     That’s an inexpensive indulgence, and inexpensive indulgences are what have satisfied our consumers’ desire for luxury through the tough economic times. Panera Bread gives us specialty sandwiches and salads, but at a manageable price. Early on, Tiffany developed lower priced items to carry the luxury name, but for sale in mall stores that aren't Tiffany’s.
     With products you sell, how can you fulfill the quests of your shoppers who want to feel regal? Some years ago, SRI Consulting Business Intelligence identified three major motivations for these quests:
  • Luxury as functional. Pay more so that you are guaranteed lasting value. Products which are well-made. Design by craftsmen. Features customized to the customer.
  • Luxury as reward and show. Let others know that you are special. Be sure the luxury brand name is conspicuously displayed whenever the item is used in public. Shop for products which have distinctive designs to project a luxury image.
  • Luxury as indulgence. If it’s clothing, pamper yourself with the best available comfort, even if the item isn’t built to last. If it’s kitchen appliances, get the most powerful and the most roomy and the most capable, even if the appliances look absolutely clunky.

Friday, January 15, 2010

Maintain Customer Faith

Research based at University of North Florida found that South Korean consumers who are more religious are also more likely to be repeat store customers. This was true whether the religious folks were Protestants, Catholics, or Buddhists—the three alternatives represented in the study sample. Consumers showing lower levels of religiosity or declaring themselves to be non-religious were more likely to switch stores from one shopping trip to the next.
     What does this research finding mean for you? Allegiance to one’s religious faith is at a whole different dimension of personal importance than resisting store switching. But the stores which earned the repeat business probably maintained the faith of their customers. These retailers kept their promises. Another study—this one based in South Korea at Seoul National University—concluded that when employees are seen as showing good citizenship behavior, customer satisfaction grows.
     The Seoul National University study said more, though: The effectiveness of employee citizenship was highest when salespeople spent time interacting with the shoppers. If you leave the shoppers by themselves—unaware of the values held by the store operators—you lose some of the advantage. On the other hand, when you show shoppers the similarity of your store’s makeup to their own makeup, you build commitment to shopping with you.
     This last point leads to another lesson about long-term payoff: To attract customers who will shop with you religiously, you could get your store involved with religious activities in the community. However, if you fake your store’s personality and values, you’ll probably chase off customers when the fakery reveals itself. That one is a lesson from research out of University of British Columbia and INSEAD-Singapore. But if you and your staff members are people of faith, you don’t need research citations, since you already knew that, didn’t you?

Thursday, January 14, 2010

Lead with Your Retailing Knowledge

Do you make use of opportunities to lead by sharing your retailing knowledge with your staff and to have your staff members share their knowledge with each other? Here’s a reminder from Making Money Is Not Illegal, Immoral or Fattening:
     “You have some very smart people working in your business and other businesses where you know the people. How many of the very smart people who really do understand the business are willing to stand up in front of the group and share the knowledge that they have? Are you willing to do that? There are retailers who say, ‘I learned the hard way, and I’ve been in this business like for a thousand years. The others need to learn the hard way, the same way I did.’ And even though they’ve been in retailing a long, long time, they are still the amateurs. Let’s all be professionals. Let’s teach others what we know. Let’s educate them, and then let’s work with them together.
     “Another angle on this: If you’ve been in retailing for let’s say, twenty years, do you have twenty years worth of learning or do you have one year of learning repeated twenty times? Amateurs absolutely stop learning. They think that because they’ve been at it for twenty years that they’ve a vast amount of experience. When you start talking to them, though, you find out how limited their knowledge is. They really have one year of experience repeated twenty times.
     “Professionals show leadership in ways that energize. Now, I’m all for constructive criticism. What did we do right, what did we do wrong, and what do we need to do to fix it? Let’s go down the road and fix it. It does none of us any good if we fail to get the problems fixed.”

Wednesday, January 13, 2010

Analyze What Your Shoppers Say and Do

Listening to your customers and watching what they do is essential. But you also need to analyze what you find out and do that analysis using insights about your specific business and your specific shoppers.
     Asking questions of shoppers and then recording what they answer—as is done in consumer survey questionnaires—provides one kind of data. However, the answers you get can be incomplete or misleading. People often don’t know why they’re doing what they do. They shop in certain ways for reasons you can discover, but those reasons are often operating at a subconscious level. Even when shoppers know their reasons, they may not want to tell you. It gets even worse when your objective is to predict what your customers and potential customers will be doing next. And that is the rightful objective of business analytics. You don’t want to spend too much time looking in the rear view mirror.
     So don’t just ask. Watch and listen. Have your sales staff make notes on what they hear shoppers saying to the sales staff and to each other about your products, services, store appearance, and the rest. Watch and listen online. Retailers have access not just to what is said and done in the store, but also what is said and done about the store via internet postings.
     Then continually analyze so you turn data into information with implications for action. Understand the verbal and nonverbal language of your shoppers. Check that your interpretations of the words and actions match what the shoppers intend.

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

Tuesday, January 12, 2010

Survive Using Educated Optimism

In a CNBC interview at this week’s National Retail Federation’s annual convention in New York City, Stacy Janiak said store-based retailers have reason to worry about customers equipped with smart phones: “Transparency is about a consumer sitting in your aisle in your store and being able to find that same product at a lower price at another store or online…, and buying it right there over the phone…. [Sales] can walk out the door, even in your store.”
     Ms. Janiak, U.S. Retail leader at Deloitte LLP, reflected a tone at the NRF convention of needing to meet difficult challenges in 2010. News is that last month, U.S. import cargo volume picked up for the first time in 2½ years. That’s good. UPS continues to cut jobs. That’s bad.
     Equip yourself to succeed by maintaining a realistic optimism. There’s a good body of psychological research—much of it having come from University of Pennsylvania—documenting that focusing on the bright side tips the balance toward business success. Now, it’s true this body of research is currently being challenged in a book titled Smile or You Die: How Positive Thinking Fooled America and the World. Author Barbara Ehrenreich argues that overlooking the negative leads to catastrophic decisions.
     I agree. With both sides of the argument. Pay attention to retailing realities. Panelists at the NRF confab are saying how the survivors carefully monitored inventory levels. But motivate yourself and your staff by also acknowledging and embracing the good news.
     This same balance holds when servicing customers. In general, customers buy more when sales staff are happy. But research from Northeastern College of Business Administration says that if a customer has had some serious setbacks, chances are they won’t want to buy from a salesperson showing off a much better mood than their own.

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

Monday, January 11, 2010

Give Shoppers Variety for Control

If a large shopping cart is the only carrying option greeting the customer when entering your store, that customer could become irritated. The person might intend to purchase only a few items and would prefer to use a shopping basket which is smaller and can be carried quickly by hand.      Give your shoppers choices so they feel in control and do not feel as if they’re being manipulated. For example, according to research findings from Israel’s University of Haifa, a selling message will be more effective if the shopper has first granted the salesperson permission to deliver the message.
      Offering variety to the shopper gives a sense of control. Researchers at Columbia University and University of British Columbia had study participants shop for candy in an area with either wide or narrow aisles. The people shopping in the narrow aisles chose a greater variety of candy bars and more unfamiliar brands than did shoppers in wide aisles. The same sorts of results were found among supermarket shoppers. The researchers explain the results by saying that when customers in Western cultures are shopping in tight quarters, they feel a loss of control, and that being able to select from a variety of items helps restore the balance.
      Another effective technique is to remind the customer of the variety of experiences they’ve had when shopping in your store. Researchers at Carnegie Mellon University, University of Minnesota, and New York University say the reason this works is that we often forget all of the variety we’ve actually had in our lives and instead focus on how repetitive our experiences have been. By reminding the customer of prior buying trips—or asking the customer if there have been prior buying trips—we generate a sense of variety and then feelings of being in control.

Sunday, January 10, 2010

Sell Spendthrifts with Opportunity Costs

Spendthrifts have fewer hesitations about buying than tightwads do. As you might expect, spendthrifts find more joy in shopping. According to researchers at University of Pennsylvania and Carnegie Mellon University, younger shoppers are more likely to be spendthrifts than are older shoppers.
      Tightwads aren’t the same as frugal shoppers. The researchers found that frugality is driven by a pleasure of saving, but tightwads are driven by a pain of paying. When you survey tightwads, they admit to making smaller purchases than they think they should. And spendthrifts are not the same as people with Compulsive Shopping Disorder (CSD). People with CSD experience a painful struggle to keep from excessive buying, but spendthrifts enjoy buying.
      As retailing professionals, we’ve an ethical obligation to keep from intentionally driving spendthrifts into destructive levels of debt. When store staff members see an opportunity for a customer to meet the customer's needs by purchasing a product that costs less, we build advocacy and repeat business by pointing out the lower-priced alternative. That’s true whether the purchaser is a tightwad, a spendthrift, or somebody in-between. But at the same time, we want to profit from the spendthrift’s enjoyment of buying. We’d like to make add-on sales.
      According to research from Yale University, Singapore Management University, and Arizona State University, an effective method for doing this with spendthrifts is to point out what are called “opportunity costs.” We say something like, “This model has plenty of machine power to do all the tasks you’ve told me you’d like to get done. If you choose the higher-powered model, it will cost you $30 more that you could have otherwise put toward buying the carrying case.” When your sales staff spot a spendthrift, talking about opportunity costs is supercharging add-on sales by talking about savings from a different angle.

Saturday, January 9, 2010

Look to the Future

Here are Art Freedman’s words about why it is important to have a proper time orientation:
     “Amateurs dwell on the past. Professionals look to the future. A huge indicator. You’ve heard it plenty of times before. Learn from the past. I don’t want to make the same mistakes twice, and I don’t want you to make the same mistakes twice. I want to get better every day, and 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. Now I don’t know about you, but 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. And then all you want to do is go find a bar and get filthy drunk. 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 details, please see page 33 of Making Money Is Not Illegal, Immoral or Fattening.

Friday, January 8, 2010

Aim to Donate, Not Destroy, Merchandise

H&M, the international fashion retailer, is enduring heavy criticism now. A graduate student at City University of New York found bags of unused H&M clothing on the streets of New York. It turns out that staff at the store on 34th Street had taken box cutters and razors to excess merchandise and then trashed the remains.
     Why weren’t these clothes donated to charity? How could the fingers be cut off gloves and insulation ripped from jackets at a time that NYC has been struggling to open up shelter space for the homeless in the face of freezing winter temperatures? Outrage exploded in the media and across the Internet. Considering that H&M has stores in about 35 countries, reaction was international.
     H&M replied that over the past year, they’ve donated about 500,000 clothing items to myriad charitable organizations. A spokeswoman said destroying unsold clothing was against company policy, she was unaware that it was being done, and the company would now check to be sure no other H&M stores were doing it.
     Perhaps left unsaid was that retailers need to take care when giving away merchandise: The unscrupulous could get hold of items and try to return them for store credit. If the donated merchandise works its way to potential customers, this would undercut sales.
     We’ll see how it plays out for H&M. Comments on the New York magazine site—posted by people who claim to have worked for the company—say that the spokeswoman lied and the policy was in fact to destroy clothing which could have been donated. Other postings claim that a great many other retailers do the same sort of thing.
     Whatever the outcome, this is a high-profile time for you to take care that whenever you dispose of merchandise, you aim to donate, not to destroy.

Thursday, January 7, 2010

Build Profits by Training to Serve

A press release this week from the Conference Board is headlined “U.S. Job Satisfaction at Lowest Level in Two Decades.” That conclusion was based on about 2,900 answers to a survey of U.S. households.
     Surveys conducted by Gallup and University of Chicago have not shown such drops in job satisfaction. Still, the Conference Board findings can serve as a warning to retailers. Here’s why you might care:
  • Researchers and business consultants have given evidence that higher employee satisfaction produces higher customer satisfaction and higher customer satisfaction produces higher retailer profitability. If dissatisfaction is brewing among your staff, that could end up damaging your bottom line.
  • The Conference Board says that the highest levels of dissatisfaction are among younger employees. Compared to other sectors, retailing has more younger employees. Not surprisingly, then, job dissatisfaction rates have been higher among retail employees than among employees in general.
  • With the job market being so tight, people were grateful for having work, even if the workload increased and job benefits decreased. As time has passed, however, and early signs of economic improvement appear, it could be that the gratitude is turning to impressions of servitude, with retail employees feeling trapped in their jobs. Some employee turnover is always good for a retailing business, but excessive turnover could create problems for you.

     But decades of research on job satisfaction also suggests what measures you can take to build and maintain high satisfaction in the type of employees you’d like to keep. Among the top techniques is to train and coach your people to be of service to others. The Conference Board is only one of many organizations reporting that the employees who are most satisfied are those who view themselves as experts and have ample opportunities to be of service to customers.

Wednesday, January 6, 2010

Prime Customer Interest with Adjacencies

Retailing consultant Paco Underhill, author of Why We Buy, praises an imaginative use of product adjacencies by a Restoration Hardware store. An expensive chest being offered for sale had a large old-fashioned jar positioned on top. Inside the jar was a collection of chrome-plated ball-peen hammers also being offered for sale.
     This didn't follow from the peanut-butter-and-jelly principle of product adjacencies. We stock the jellies on shelves close to where we shelve the peanut butter because when a shopper puts a peanut butter jar into the shopping cart, they're likely to start thinking, "Where is the jelly?" Mr. Underhill has plenty of those sorts of examples, too. Have the windshield wipers adjacent to the motor oil, he advises.
     But the chest/hammers adjacency is more whimsical, and that serves a function known by consumer psychologists as priming. We can introduce ideas to the shopper's brain indirectly or subconsciously. For example, the shopper whose attention is caught by the ball-peen hammers will subconsciously realize there's a chest for sale. Or it could be that the customer who came in to buy a high-quality chest is exposed to fancy looking ball-peen hammers. In either case, ideas introduced this way have a special power. Because the perceptions arrive subconsciously, the person is less likely to mobilize reasons not to buy. The shoppers are more open to influence when they see the product again.
     The tactic, then, is to prime customers' interest by placing the target product adjacent to something the customer is looking for, and then featuring the target product at a point where the customer is likely to see it again. Behind this is the same principle used in showing newly introduced products or brands as a shopper enters the store. Upon entry, customers are generally moving too fast to consciously process information.

Tuesday, January 5, 2010

Skim the Data to Spot Leading Trends

There's already too much retailing data for you to comfortably analyze, and more keeps popping up. To make good decisions, know what's going on. But also avoid getting buried by the data. Here are data skimming tips:
  • Respect the value of educated intuition. In his book Blink, author Malcolm Gladwell gives a series of examples of how quick decisions, made without much thinking, can lead to results superior to decisions made after great deliberation. Researchers at Radboud University in The Netherlands and at Northwestern University found that beyond an initial assessment period, the more time consumers spent evaluating alternatives, the less satisfying they found their eventual choices to be. This was true whether the products were paintings, apartments, or jellybeans.
  • Look for the trends and select where to drill down for details. You want to decide what products to purchase for your store, what services to develop, how to advertise and publicize, what to prune out of your merchandising mix. All these require attention to where the marketplace is going, not only how things are now. Skim the data to spot the trends. Get an overview. At the same time, there will be areas where you need the details. What specific types of consumers are purchasing which products? Which suppliers are providing the best package for your situation—looking at point-of-purchase materials and staff training in addition to wholesale price? But be selective in drilling down.
  • Follow up and check back. The examples given by Malcolm Gladwell are of people skilled in decision making in their respective fields. The findings from the Radboud University/Northwestern University research need to be interpreted with an awareness that the type of decision satisfying a customer isn't necessarily what would satisfy your criterion to make a profit. Keep refining your skimming skills.

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

Monday, January 4, 2010

Know It's Okay to Fire an Employee

Here's another Art Freedman nugget from Making Money Is Not Illegal, Immoral or Fattening:
     "Amateurs make emotional decisions. Professionals make decisions based on what's best for the business. One part of that: Suppose you're moving your store a quarter mile down the road. How many of your employees are you going to keep in your new location? If you say anything less than 100%, then I've got a follow-up question: Why do you have them on the payroll now?
"You know, it is okay to fire an employee. I love to use Sherry (not her real name) as an example. I kept Sherry for years past the date that she should have been gone. I understand the challenges here. I've gone through those challenges as well in getting employees who will do what needs to be done, but sometimes we just hold on to them too long. Sherry ran the tool department for a long time, but she was never going to advance anywhere in our business at all. I kept her and kept trying to work with her. One day Eric, my son, came to work, and he said, 'I'm going to go down there and fire Sherry today.' Hey, why didn't he do that three years earlier?
     "When Eric told me what he was doing, it took a load off my mind. I was so emotionally attached that I just couldn't come to the decision. I felt like I had so much going on in running the business that I could not come to the decision to let her go. But we must make business decisions. We must make decisions based on what benefits the business, not just what feels comfortable to do. We must be able to make tough decisions. That's another sign of being a professional."

Sunday, January 3, 2010

Offer Family-Oriented Experiences

Consumers want to buy experiences that include family and friends. What group experiences can you can offer? Could you arrange product and service knowledge sessions in which couples, families, and groups of friends can participate? Wine tasting. How to plan a vacation. How to set up a model railroad. You might charge a fee to make this a direct source of profit or at least to defray expenses. Or you might offer activities at no fee in order to build footsteps into your store.
     As consumers spend fewer resources shopping for material goods, they're seeking ways to spend more time with others. And they're willing to pay for those experiences.
     Consumers are often operating on the assumption that they'll have more time in the future, but not necessarily more money. This doesn't mean at all that the consumers are satisfied to be wasting time. On the contrary, they want to feel in control of their time. An essential part of you offering family-oriented experiences is to advertise the benefits the experiences offer for shared enjoyment.
     What we're seeing now may well be cyclical. A few years from now, consumers might get more motivated to spend money on material goods and lose some interest in the family-oriented experiences. Still, recent psychological research at San Francisco State University and older psychological research at Cornell University verifies that, in general, possessions used just by the purchaser bring less happiness than experiences shared with others.

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

Saturday, January 2, 2010

Help Seniors to Shop Early

Senior citizens—an expanding target market—tend to be more profitable customers when shopping early in the day. One research study supporting this conclusion was based at University of Michigan, Singapore Management University, and Ben-Gurion University. The study participants, who were all at least sixty years old, were better able to analyze selling points in the morning than in the afternoon.
     Other research helps explain why and adds to the case for setting up ways to get the older customers into your aisles in the AM:
  • As the eyes age, they require more light. Marketers are wisely moving to the use of bolder colors and more contrast in product packing. But for stores that let daylight enter, the morning brightness can help seniors tell the blues from the greens and the foregrounds from the backgrounds.
  • Seniors are a valuable source of advice for retailers. When they complain, it is often with the intent to continue to do business with the store, not to start shopping elsewhere. This is more true than with complaints coming from your younger customers. Seniors are less mobile than younger customers and therefore have more of an investment in continuing to shop at the same stores. And age brings tolerance for imperfection. In any case, you—the retailer—can pick up some good ideas about improving your business from seniors. Morning is better than afternoon both because the seniors are likely to have more energy to talk and because you've more opportunity to listen than during busier afternoon and evening store hours.
  • Seniors are more concerned about their physical security than are younger shoppers. They feel more comfortable being out and about earlier in the day than later in the day.

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

Friday, January 1, 2010

Use Both Repetition and Progression in Ads

Almost all retailers depend on text advertising—either in print media or on a website—as the bedrock channel for carrying the sales message. Research at Baruch College has refined some assumptions about what gives the best payback for a retailer's advertising dollars when running a series of text ads:
  • Each ad should show movement forward from the prior ad. This is called bookend advertising. For instance, the first ad in the campaign might present a problem to be solved by using products from the advertiser's store. The second ad would show how the problem is solved in part with particular products or services. Each subsequent ad would show further progress in solving the problem, with the last ad portraying full achievement of the objectives. Bookend advertising is more effective than a campaign that repeats all the same content in each ad. This is true even for those consumers who miss out on seeing the initial ads which set up the problem to be solved.
  • In each ad, use some of the same elements that relate to the theme of the campaign. Although the ads show progress, repetition drills the messages into the consumer's long-term memory. Pictures can be effective devices for this. But the Baruch College research findings suggest that repeating the business logo will do the job only if the business logo is directly related to the main meaning of the campaign. Sure, in each ad, you'll include your business name, logo, main tag line, and how to find you. But you'll also want to repeat the selling points, such as, "We have the products plus the advice for you to landscape your yard within your budget."
  • Use ads to define a start and a conclusion to the campaign. This is another aspect of bookend advertising.