Saturday, July 31, 2010

Acknowledge the Power of Cycles

Among the hundreds of brief posts I’ve written for this RIMtailing blog, I’ve not devoted a single one to those services retailers who sell lap dances in gentlemen’s clubs. It’s about time, don’t you think?
     But since I suspect that members of that group by no means comprise a majority of my RIMtailing readership, I want the lesson here to be useful for a wide range of retailers. That lesson: There are important cycles influencing shopper behavior which are beyond our awareness and often beyond our control. The reminder from that lesson: Give the techniques I suggest to you a chance to work. What doesn’t result in a retailer’s edge this week might make a difference next week.
     My example comes from a research report titled “Ovulatory Cycle Effects on Tip Earnings by Lap Dancers” which occupied seven pages in a 2007 issue of the journal Evolution and Human Behavior. The study was conducted by three researchers from the University of New Mexico Department of Psychology.
     Prior research had indicated that women near the most fertile point of their monthly cycle tend to be more attractive to males, as manifested in measures ranging from appealing body fragrance to selecting more fashionable clothing to enhanced verbal creativity. But does this make any difference in economic profitability?
     Yes, it does, as least in the retailing situation examined by the researchers. With what I view as an adequate methodology for data collection and a very good methodology for statistical analyses, it was found that each dancer averaged $335 in tips per five-hour shift at the time of highest fertility. This was compared to averages of $185 and $260 per shift at the other measured points in the monthly cycle. The researchers’ review of their own data plus that from prior studies showed no evidence that the dancers were conscious of the reasons for the differences in sales revenue.
     Your retailing staff and your customers—male and female—go through many sorts of cycles—biological and psychological—each day, each week, each month, each year. Businesses go through cycles, too. So keep at it. Give the profit-making tactics a chance.

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

Click below for more:
Help Seniors to Shop Early
Meet Customers’ Desires for Nostalgia
Avoid Panic When Cash Flow Drops
Check Your Optimism When Dealing with Vendors

Friday, July 30, 2010

Attend to Negatives When High Time Pressure

If a customer’s racing against time to choose which item to purchase from among alternatives, the customer’s likely to attend to the gloomy grays—the negative features of each alternative—over the positives. This truth of shopper psychology allows you to guide the customer toward selecting what will both best satisfy the customer’s needs and best augment your profitability.
     When under high time pressure, people often end up backing away from purchases they’d wanted to complete. Researchers at University of Southern California, University of Massachusetts-Amherst, and Indiana University find that one reason is the shopper gets bogged down focusing on the negatives and so decides not to choose anything.
     Here’s a selling sequence based on what research says is most likely to work:
  • First, assess how much time pressure a shopper appears to be experiencing. Do they look rushed or say they’re in a rush? Are they shopping for items associated with being in a rush, such as over-the-counter medicine for a child? Are they shopping at times associated with making quick purchases, such as flowers at 5 PM on Valentine’s Day? If you conclude that the shopper is under high time pressure, move briskly to complete the sale.
  • With the customer who’s under high time pressure, next assess if they are in a positive or negative mood. The parent shopping for children’s medicine is probably feeling bad. The Valentine’s Day bouquet bon vivant is likely to be in a positive mood. When a shopper is in a positive mood, their decision making is more flexible than when they’re in a negative mood, and they’re more likely to persevere in the shopping process. Decide on your recommended purchase alternative and talk about how the positives outweigh the negatives. But when the shopper is in a negative mood, quickly decide on your recommended purchase and then talk about how it is the least bad alternative. Be ready to answer questions about the negatives of each alternative.
  • If the shopper seems to be backing off from the purchase, ease the stress, while not letting the customer leave altogether, by saying, “I suggest I help you find some of the other items you’re shopping for here today, and then we can come back to considering this decision.”
  • Once the customer makes the selection, talk about positives, but with reassurance, not technical specifications.
For your profitability: Sell Well: What Really Moves Your Shoppers

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Selectively Keep Information From Customers
Know the Reasons for Customer Attitudes
Sell Ease of Use to Last-Minute Shoppers
Profit from Shoppers’ Positive Moods

Thursday, July 29, 2010

Inform Consumers, But Don’t Intrude

Retailers can achieve a distinctive edge by providing advice to consumers when asked. When the consumer doesn’t ask and the retailer provides the advice anyway, the consumer might see that as intrusive. So my advice to retailers is not to give advice to shoppers unless asked. Inform without intruding.
     I do make an exception from that general rule when it comes to safety issues. Warn your customer if you believe they are about to make a clearly dangerous purchase decision. Retailer’s Edge readers might recall my true-life failure-to-warn story on pages 57-58 as an example.
     That story concerned a chain saw. Okay, does the same exception apply when it comes to personal safety issues from eating an unhealthy diet? Last week, an article in the Wall Street Journal described a trend for supermarkets to highlight health ratings of items. Kroger, Price Chopper, and Meijer stores are using the NuVal scale, which is maintained and licensed by a joint venture of a nonprofit community hospital and a retailing cooperative. Each food item rated has a number from 1 to 100 inside a double-hexagon emblem on the shelf tag next to the price. The higher the score, the better the claimed nutritional value.
     From your perspective as a professional retailer, what do you think of providing this additional information? Well, then, let’s move it up a notch: Safeway, Giant Eagle, and ShopRite are testing systems in which loyalty-card data is used to suggest healthier alternatives to shoppers via coupons, for instance. Does that cross the line into intrusiveness?
     From a shopper psychology perspective, here are a few suggestions about advice systems:
  • A scale ranging from 1 to 100 risks conveying a misleading precision. Is there really that much difference between a rating of 35 and 38? A one-star to five-star rating system might be more accurate and meaningful for the shopper.
  • Make it easy for the shopper to ignore the advice if they want to. If your shoppers are using the ratings as a primary purchase aid, sure, put the ratings in a double-hexagon emblem on the price tag. Otherwise, put the ratings in a brochure in-store or on an easily accessible web page.
  • Give advice before the purchase. After the purchase, give reassurance that the shopper has made a good decision.
Click below for more:
Protect Customers From Dangerous Decisions
Reduce Unwanted Risks for Your Shoppers
Acknowledge Customers’ Willful Ignorance
Have Post-Sale Product Literature

Wednesday, July 28, 2010

Accent Values of Your Hispanic Target Markets

U.S. retailers have been advised by many experts to shape their marketing, advertising, and selling to Hispanic markets. An Advertising Age feature this week uses demographic evidence to buttress that advice and confirm what you’ve probably noticed on your own: According to 2010 U.S. Census Bureau data, the Hispanic population has grown about 40% over the past decade, while the non-Hispanic population has grown only about 5%. You’ve increasing numbers of customers and potential customers who identify themselves as Hispanic.
     Because you’ve already noticed, you’ve also probably made some changes to appeal to the Hispanic market. Continue doing that, but don’t overdo it. The adjustments should be a change in accent rather than dramatic alterations in what’s been working for you up to now. Here’s why:
  • The distribution of Hispanics in America is not uniform. About half the number of Hispanic consumers live in California and Texas. And within any city, Hispanic-Americans are more likely than Asian-Americans, for example, to live in primarily Hispanic-American communities. While American retailers overall will see their target markets include mushrooming numbers of Hispanic-Americans, this might not be the case for your store.
  • Overall, there are still about four times as many white non-Hispanics as Hispanics in America. You succeed as a retailer by appealing to consumers’ values. There are some differences between those who identify with Hispanic culture and those who do not. You’ll not want to ignore the majority values system. You’ll want to gracefully accommodate both.
  • American consumers with a Hispanic ancestry are over time becoming assimilated into mainstream American society and, in the process, are embracing the mainstream’s values.
  • There are substantial differences in values among groups of consumers who identify themselves as Hispanic. That’s not at all surprising, since there is not one monolithic Hispanic culture.
     So once we realize we’re talking about tendencies, not boxes, accent values of the Hispanic market:
  • Family. Retailers like La Curacao design around family in ways ranging from store merchandising and layout to in-store entertainment.
  • Color. Researchers at St. Joseph’s University say that Hispanic-Americans generally prefer brighter colors than do non-Hispanics.
  • Adventuresomeness. In the U.S., about 35% of Hispanics are under age 18, as compared to about a 20% rate for non-Hispanics. The result is relatively more emphasis among Hispanic-Americans on the adventuresomeness associated with youth.
Click below for more:
Have Bilingual Staff for Bilingual Shoppers
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Show Commitment to the Underserved

Tuesday, July 27, 2010

Keep Ecommerce Product Returns Pleasant

In a survey of 2,000 United Kingdom ecommerce shoppers, 60% of them said they'd completely stop doing business with an online retailer who handles deliveries or returns badly. The survey was commissioned by Collect+, a parcel service that provides over 3,500 UK locations to which customers can have packages delivered or can return merchandise to the retailer. The survey was conducted by YouGov, an independent consumer research company.
     Smart in-store retailers long ago recognized the profitability which comes from making product returns pleasant. Customers become more willing to buy when they know they can receive a refund or exchange if things don’t work out. Use the same approach with your ecommerce business.
  • Keep the policy clear and announce the policy clearly. At the store, when customers are waiting in line at a returns desk, can they easily see the policy? On your website, is the policy easy to access? In the Collect+ survey, about 50% of respondents said they always check the return policy before making an ecommerce purchase.
  • Ask the reason for the return and use an analysis of the reasons to improve your merchandising. When someone comes to the returns counter in-store or is completing the form for a return to be shipped, 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. And tell your customers the advantages to them of sharing those reasons. Your staff and the screen message might say something like, “I know it’s a bother to you to have to return merchandise you’ve bought from us. I 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.”
  • Encourage ecommerce customers to make returns at your store. Then once a dissatisfied consumer is in the store, transform them into a curious shopper. This is especially useful when the person making the return received the item as a gift. People returning a gift may not know your store. Here’s a wonderful opportunity to introduce to them all the products and services you offer.
For your profitability: Sell Well: What Really Moves Your Shoppers

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Simplify Item Returns for Customers
Ask for Specifics on Merchandise Returns

Monday, July 26, 2010

Reward the Purchase with a Pleasing Sound

Sounds from the shopping experience can burn themselves into the brains of consumers. Since some of the last sounds the shopper hears before leaving the store are those associated with making the purchase, those sounds are especially important. We want the customer to come back soon and often, so we want them to take away pleasing memories.
     A New York Times article titled “A Sound Approach to Marketing” started with an example of painful—not pleasant—memories and with the source being a prison—not a store. The metallic thump when the cell door closed, the jangling of the jailor’s keys, the unrelenting continuous kathump of the ceiling fan. The paroled felons interviewed for the article became agitated as they recalled those sounds.
     There’s a world of difference between being in prison and being in a shopping mall. The opportunity to move around freely, for instance. But wait, how about at the point where your customer is getting set to pay for the purchase at the cash/wrap or is waiting while the screen on the mobile device reads, “Your transaction is being processed”? I admit it’s not as bad as being in lockdown, but the customer is still feeling a sense of entrapment.
     Reward the purchaser with sound effects they’ll find pleasant. This protects the good will you’ve built to that point.
  • Give sounds of confirmation as the transaction progresses. A brief series of tones tells the customer that completion of the sale is getting closer. On the other hand, silence breeds annoying uncertainty.
  • Keep it gentle. Loud cutting-edge music tells customers your store is trendy. Fast-paced music speeds up the shopper. But with sound effects when the customer is anxious to leave, the loud and the fast can irritate even people who crave excitement.
  • Make it distinctive. Brand marketing consultant Martin Lindstrom has shown the advantages of signature sensory sensations—visuals and fragrances associated with a particular store name. The same principle holds for sounds. Make the brief transaction confirmation melody echo a little bit of the music that plays in your radio ad, for instance.
  • Top it off with the most pleasing sound of all. Say “thank you,” dear.
Click below for more:
Use Sound Effects to Sell
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Saturday, July 24, 2010

Compulsive Buying Disorder. Okay, Laugh

Bloggers Unite has called for bloggers to do postings today about empowering the disabled. To honor that, I’ll now describe the heartbreak of compulsive buying.
     Yes, I hear you asking, “Are you really putting compulsive buying in the same category as blindness or being wheelchair-bound?” I can even imagine somebody asking, “Hey, since I’m a retailer interested in making sales, how do I find me a bunch of people with this problem?” And after the giggles pass, a legitimate question is, “Why should I, as a retailer, be concerned about compulsive buying?”
     First a definition: Compulsive buying is a compelling urge to keep on buying products or services in self-destructive ways. Many mental health professionals have been referring to it as Compulsive Shopping Disorder. However, the latest research indicates a more accurate name is Compulsive Buying Disorder, since the person’s tension is released when they make a purchase, not when they shop. Shopping is the foreplay.
     And now to your questions:
  • Is it serious? Based on research at University of Minnesota and University of Wisconsin, this disorder clearly meets the Americans with Disabilities criterion of interfering with activities of daily living. This is not impulse buying. Compulsive buyers frequently don’t use the items they purchase. It’s not pathological hoarding. Pathological hoarders can’t bring themselves to discard what they have, even if their welfare or the health of their family is at risk. Compulsive buyers can’t bring themselves to stop making needless purchases, even if they can’t afford to feed their families.
  • How to find these folks? Watch for people who struggle to keep from buying when they’re emotionally upset. I'd never suggest that you refuse to sell an item to a customer because you suspect the person is a compulsive buyer. But I would suggest that you and your staff refrain from sales pressure on customers who seem to be struggling to keep from buying when appearing to be emotionally upset. Researchers at University of Richmond and University of Illinois-Urbana-Champaign estimate that 9% of adults suffer some form of compulsive shopping disorder. Researchers say it’s serious in about 2% of adults.
  • Why should you care? Well, among other things, compulsive buyers are less likely than other customers to pay their bills and more likely to return items. Help empower these consumers to fight their addiction. Recognize compulsive buying as a disorder. No kidding.
Click below for more:
Deal with Compulsive Shopping Disorder

Use Terror Management Theory for Status Items

Researchers at London Business School and Cornell University gave 150 study participants information designed to temporarily threaten the participants’ self-esteem. One consequence was that the amount participants were willing to pay for fancy cars, luxury watches, and other high-status goods climbed. The agreeable amount did not climb for non-status items. By comparison, the amount people were willing to pay for high-status goods did not climb when the participants’ self-esteem was not threatened.
     Terror Management Theory (TMT) says that our realization we will someday die leads us to crave the promise of life in an afterworld and to us building legacies of children, fame, and fortune. Research projects at Stanford University find that a related protection against death anxiety is high self-esteem. The colloquial phrase “I was so embarrassed I could’ve died” reflects a relationship between threats to self-esteem and one’s demise.
     What this means to you as a retailer is that whenever you heighten a shopper’s low self-esteem, you’re appealing to an especially deep and compelling need in that shopper. Since consumers associate self-esteem with items having social status, the effectiveness of self-esteem appeals is greatest with status items.
     TMT says that one consumer motivation for buying luxury products is to build enough self-esteem to protect against death anxiety. To maximize the effectiveness of that motivation, make it a point to remind shoppers to enjoy themselves before it’s too late and then give genuine and generous praise whenever the shopper purchases a luxury item.
  • Build self-esteem after the purchase is made. The London/Cornell researchers found that when praise is given before the purchase, the urge to splurge fades.
  • Be ethically comfortable with using an underlying fear of death as a sales motivator. In my opinion, it’s fine to deliver value by relieving your customers’ anxiety. The three caveats for me are: Don’t violate the law to make customers feel good. Don’t gouge people by charging excessive prices. And don’t pressure people to buy when they’re seeming to struggle with temptation. But those are my rules. You need to decide for yourself.
  • Recognize that TMT motivation is reserved for adults. Reminding children they’ll inevitably die is nothing if not ghoulish. And teenagers—those reckless rascals—behave and misbehave on the assumption they’ll never die.
For your profitability: Sell Well: What Really Moves Your Shoppers

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Friday, July 23, 2010

Turn Product Training into a Profit Center

All sorts of retailers can turn a profit by training customers. Think about computer stores that charge people for lessons on how to get the best from the devices they’ve purchased. But the opportunities aren’t limited to high-tech items. Specialty food retailers are charging for cooking lessons, and mountain bike retailers for skill-building clinics.
     Even if you don’t charge a fee, training customers can help your bottom line. People often buy more features in a product than they know how to use, and they then become more likely to return the product when they’re unable to master the features. Or they'll rate down not only the product, but also the store, in word-of-mouth and fingers-to-keyboard reviews. Frequent product returns and negative reviews can reduce your profitability.
     When it comes to the value-added of training, you could end up making money overall, even if you lose money on doing the training.
     Here are a few research-based tips on getting the best from product training:
  • Set reasonable expectations regarding the ease of learning. If the nature of the product or the nature of your trainees leads you to think the process will be tough, warn the people. If there are multiple skills to learn, teach one at a time before asking the learner to combine them. Researchers at University of South Carolina and University of Colorado-Boulder find that when consumers have reasonable expectations, their evaluations of the products are more accurate. On the other hand, if the learning process is much more difficult than they’d anticipated, they rate the product quality more negatively, generally not realizing why they’re doing this.
  • Involve a variety of the learners’ senses and capabilities. Tell them in words, give it to them in writing, demonstrate it to them, have them move their muscles to demonstrate it to you or others. A broad range of research over the years confirms that this helps people acquire skills more easily and use the skills in more situations.
  • Accommodate different learning styles with different sorts of training. An important example of this comes from research at State University of New York-Buffalo and Indiana University: With the people who learn best by following instructions, give brief lessons with some spacing between. With the people who learn best by actual experience, give longer lessons and/or lessons that come closer together.
For your profitability: Sell Well: What Really Moves Your Shoppers

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Thursday, July 22, 2010

Motivate Shoppers Using Their Time Benchmarks

When it comes to money, researchers at Colorado State University and Washington State University confirm that a price of $3.99 seems noticeably less to a shopper than does a price of $4.00. There’s a motivational dividing point between $3.99 and $4.00.
     When it comes to time, there are also important dividing points. Researchers at University of South Carolina offered a movie pass to theatre patrons one summer. For about half of the patrons, getting the movie pass required completing a survey, which took about seven minutes. So that the researchers could compare time with money, a matching set of patrons were offered the movie pass for $3—no survey completion required.
     Now another wrinkle in the experimental design: About half the tickets in each group were marked for use later that summer. The others were marked for use the following fall.
     What difference did this make? For those who spent the $3, the percentage of fall ticket usage was the same as that for the summer tickets. People put out the money, and they were going to get their money’s worth. But among the patrons who earned their ticket by spending seven minutes of time, the season of usage made a big difference. People were significantly more likely to end up using the ticket if marked for the summer than if marked for the fall.
     It appears that when it comes to time, benchmarks like a change in the season go into defining benefits and value. Money spent in the summer can be redeemed for a reward in the fall, but time spent in the summer tends to lose value as the calendar rolls over to the next season.
     If checking on product or service availability, you’ll need to find out the actual date the customer wants the item. But whenever motivating the shopper by describing product or service benefits, determine whether they define that date as soon or as the future.
     Consumers pay attention to different features depending upon when they plan to start using the purchase. If usage is planned for soon, ease of use is especially important. If usage is planned for the future, distinctive features are especially important. The difference between soon and the future is defined by the consumer’s particular time benchmarks.

Click below for more:
Sell Ease of Use to Last-Minute Shoppers
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Wednesday, July 21, 2010

Know the “Don’t Know” Answer Frequency

When you ask your shoppers for their attitudes and they answer they don’t know or have no real opinion, that’s not an agree or a disagree.
     Here’s why I consider this a timely reminder:
     Findings from the 2010 “American Express Global Customer Service Barometer” are out. The findings—based on work by the Echo Group—were nicely formatted in one summary covering American consumers and in another summary covering consumers in Australia, Canada, France, Germany, India, Italy, Japan, Mexico, the Netherlands, Spain, and the UK, in addition to the U.S.
     But even with the nice formatting, I’m coming across retailers distorting what the findings mean. Some of the distortions arise from the sort of thing retailing analyst Marshal Cohen of the NPD Group calls “the thinning middle.” The American Express project summary presents mean averages. However, when it comes to customer service ratings and expectations, the consumer’s standards for luxury retailers are almost surely different from their standards for budget-oriented retailers. And the trend in retailing has been for a thinning of the middle between luxury and budget-oriented. The overall mean average is not representative enough.
     The American Express survey finds that 58% of U.S. consumers say they’ll spend more with companies they believe provide excellent service, and those 58% are willing to spend 9% more. But that 9% is an overall mean average. When dealing with luxury retailers, consumers might be willing to spend 19% more for superb customer service. When dealing with budget-oriented retailers, they might be willing to spend 0% more.
     The available summaries don’t allow us to slice the data well enough to know, so I wasn’t shocked when I encountered retailers using the 9% figure in discussing how to turn the statistics into profit-making tactics. They’re using a best guess.
     I did experience shock, though, when I overheard an influential retailer say, “Okay, so 58% of the people tell us they’ll spend more when there’s excellent service. That means 42% won’t.” This retailer hadn’t acknowledged the 17% in the chart. That’s the percentage answering, “Don’t know.” The percentage saying they wouldn’t pay more for excellent customer service was closer to 25% than to 42%.
     When interpreting survey statistics, certainly bounce off the numbers. Just be sure you’ve a good foundation before bouncing. Always know the “don’t know” answer frequency.

Click below for more:
Use Consumer Attitude Survey Findings
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Tuesday, July 20, 2010

Offer Superstitious Shoppers Good Luck Charms

When Apple Inc. brought their latest iPhone to market recently, should they have called it the iPhone 5, even though the prior version was the iPhone 3?
     According to a Los Angeles Times article, guidelines in Chinese culture say skipping from 3 directly to 5 might have avoided a bunch of misfortune, principally frustrated purchasers who couldn’t get a connection to the Internet. After all, the Canon PowerShot G series goes from G3 to G5, and there’s no Nokia cell phone series beginning with 4. Hong Kong hotels often don’t have a fourth floor. Many Asian retailers avoid phone numbers that include a 4.
     In some Chinese dialects, the word for 4 is pronounced almost identically to the Chinese word for death. In what Western consumers might call superstition and certain Chinese, Korean, and Japanese consumers would call good judgment, using 4 requires special caution.
     But if 4 is so unlucky, how did four-leaf clovers get such a great reputation in other parts of the world? And if we stay with China, take note that 4 is considered lucky—not unlucky—by some residents of the Chiu Chow area, who speak a different dialect.
     Acknowledge the power of shopper superstitions, even if you don’t accommodate every one of them. Superstitions are most likely to influence consumers at times of uncertainty and when there is information overload. Because we’re living in times of worldwide economic uncertainty and because today’s shoppers are exposed to monumental amounts of advertising and advice, we’d expect to see more of what resembles shopper superstitions.
     Use this fact to improve your profitability. First off, distinguish two flavors of being superstitious. Researchers at University of Texas-Pan American, Ohio University, and China’s Chongqing Technology and Business University differentiate between consumers who do things like carry good luck charms and those who believe in the power of fate or karma regardless of what lucky charms they're packing.
     Research at Dartmouth College and Columbia University suggests that for those who respect karma, you show extra perseverance in resolving any customer service complaints. Research at St. Louis University and Oklahoma University suggests that the other type of superstitious consumer will become a fan of your store if you pair positive shopping experiences with a memory aid, such as small items carrying your store logo.

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Tailor Loyalty Programs to Customer Culture
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Monday, July 19, 2010

Monitor Your Community Involvement Payoffs

I recommend that retailers do well by doing good: By contributing to your community, you fulfill your ethical obligations as a member of the community as well as earn the sort of gratitude from your target markets that can build lasting profitability.
     There are many ways to contribute to your community and many factors you’ll want to consider when deciding which of those ways to implement. University of South Florida research indicates that pairing charitable contributions with the sale of brands unfamiliar to the consumer will boost sales of those unfamiliar brands. It doesn’t seem to matter much whether there’s any logical connection between the product or service category of the unfamiliar brand and the cause supported by the contribution.
     On the other hand, the charity you select does seem to make a difference if your contribution is to head off any suspicions of price gouging. Suppose major flooding hits a store’s target market area, resulting in a demand spike for flashlight batteries. If the store increases the price of batteries, but announces how a portion of the profits will be contributed to the Red Cross, acceptance of the price increase could be a slam dunk.
     In addition, whenever you organize a charitable activity, offer a variety of ways for your older customers to pitch in to help. Researchers find that altruism is especially important to elderly consumers. Seniors like to give their business to retailers who are compassionate, and seniors like to view themselves as generous.
     In all these cases, what counts is that the cause is something important to the customers. And that’s where it’s valuable to monitor the payoffs from your community involvement. Regularly assess how to allocate your charitable donations and how to publicize those partnerships to attain the most profitable payoffs.

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

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Sunday, July 18, 2010

Smile Often

What distinguishes a flirtatious leer from a gracious smile might differ among cultures, but across cultures, a gracious smile helps you achieve your retail business goals. Since today is Nelson Mandela’s 92nd birthday, I’ll first illustrate that point by recalling a snippet of dialogue from the Academy Award-nominated 2009 movie “Invictus.”
     The movie’s story line is of South African president Mandela guiding his nation’s citizens toward reconciliation after the long pain of apartheid. In one scene, President Mandela’s aide is giving instructions to the security detail who will guard the president’s safety at a rugby match where many white participants are likely to hate the new president. The aide instructs the security detail to maintain smiles, saying it is important to smile at the people you are asking to move.
     Retailer, you’re asking people to move in their thinking and their behavior. So smile often when greeting customers. And smile often when building teamwork with your employees. Yes, there are retailing situations in which a smile is all wrong: When a customer is distraught, and a smile would make you look uncaring. When you’re delivering corrective discipline to a staff member, and a smile would make what you’re saying seem unimportant. Or when a prolonged smile threatens to make you look simply dopey.
     Researchers at University of California-San Diego, University of Michigan, and University of Wisconsin-Madison offered thirsty study participants a serving of a beverage. Along with this, some of the participants were exposed to a brief image of a frowning face and some to a brief image of a smiling face. The exposure was so brief that any notice of the emotion would almost surely be subconscious. In addition, the exposure of the emotion-laden face occurred along with the person being shown an emotionally neutral face for a long enough time to be consciously perceived.
     The thirsty people shown the smiling face didn’t report feeling much different from those shown the frowning face. However, those shown the smiling face poured more beverage from the pitcher into their cup, drank more from their cup, and were willing to pay about twice as much for the beverage. A smile—even one so brief as to have no conscious effect—made for more motivated consumers.

Click below for more:
Profit from Shoppers’ Positive Moods
Prime Your Shoppers Below Awareness

Saturday, July 17, 2010

Join Customers in Role-Playing

“On the Internet, nobody knows you’re a dog.” This was Peter Steiner’s caption for his July 1993 single-panel New Yorker cartoon showing a canine sitting before the desktop screen, paw on keyboard.
     In December 2000, that panel was reported by the New York Times to be the most frequently reproduced New Yorker cartoon in history. The cartoon was the inspiration for a play titled “Nobody Knows I’m a Dog,” which has been presented in Bulgaria, Germany, Taiwan, and the United Arab Emirates, in addition to at least a dozen North American locations.
     Mr. Steiner was quoted as saying, “I feel a little like the person—whoever it is—who invented the smiley face.” This feeling’s not surprising in view of how the cartoon’s message resonates with so many people.
     What is the message exactly? To retailers, the message might be stated as, “On the Internet, I can role-play the kind of shopper I’d like retailers to see me as being.” For retailers, the hint which follows from this message is for them to play along with the role-playing.
     Researchers at Concordia University explored this theme by analyzing the characteristics consumers specify for their online profiles. The researchers provide evidence that retailers can use these characteristics to successfully market and sell to the real people behind the profiles. The tactic works because the characteristics a person will choose for their Internet persona is almost always an extension of their real personality, not completely divorced from it.
     But wait, there’s more: Although it’s harder to pass yourself as a human when you’re a dog doing in-store shopping instead of ecommerce shopping, in-store shoppers still often have what consumer psychologists refer to as a “fantasy orientation.” Consider the man standing in the middle of the Harley-Davidson dealership with feet apart and hands much too firmly on hips. Consider the woman entering the Sephora store with head tilted upwards enough to look down at the sales help. Each of them is adding to the enjoyment of shopping by playing a role.
     Play along, and you build the potential for the sale.

Click below for more:
Cast Magic Spells for Escape Benefits
Coach Your Staff with Stories
Analyze the Role the Customer Expects

Friday, July 16, 2010

Make Your Product Reviews Credible is 15 years old today. How far they’ve come from that two-car garage in Bellevue, Washington. Among the most important retailing tools pioneered by Amazon is the use of purchaser-generated Internet-available reviews to help sell products. And those products offered by Amazon now extend well beyond Amazon’s 1995 inventory of only books.
     Today, then, is a good opportunity to recall the value to you of putting your shoppers in touch with credible online reviews of all types of products and services in your store and on your ecommerce site.
  • Reviews are not the same as testimonials. Having a customer give credit for their personal success or pleasure to a product you’re selling does carry weight. But survey research by the e-tailing group and PowerReviews indicates that these days it is not as trustworthy to the shopper as is a more balanced statement of what worked and what didn’t. And trust comes up repeatedly as a prime consideration in whether a person will purchase a product. According to Advertising Age/ARC, trust trumps for in-store purchases. And Get Elastic blog reports that OneUpWeb finds trust also counts a lot with ecommerce purchases. So make it tempting for your customers to post product reviews on your store’s website and in the prompt, say something like, “Your review will be most useful for shoppers reading it if you comment on both the positives and the negatives. What did you like? In what ways did the product fall short?”
  • Research at Stanford University finds that a product review is especially effective when the person qualifies themselves as an expert and then presents their conclusions with a bit of uncertainty. One way for a reviewer to qualify themselves as an expert is to give specific points of comparison of the product with alternatives that would fulfill an equivalent function. Therefore, say something like, “In your product review, please describe some of the ways this product compares favorably and unfavorably to alternatives a shopper might consider.”
  • A review is more influential with a shopper if the shopper feels a similarity to the reviewer. So encourage reviewers—even those who choose to stay anonymous—to also post a profile of themselves. Then link the real or fictitious name in the review to the profile.
Click below for more:
Encourage Balanced Customer Reviews
Encourage Specifics & Criticism in Word-of-Mouth

Thursday, July 15, 2010

Help Ecommerce Customers Thank You

Were you watching what happened when the cashier handed change back to that customer in the store? Did you notice how the customer said “Thanks” to the cashier? Did this expression of gratitude make sense to you? The change wasn’t a gift. It belonged to the customer. What sort of favor was the cashier doing that deserved a thanks?
     Okay, the truth is the “Thanks” probably was a subconscious reflex. But it wasn’t empty of meaning. It had some significance: Customers wish to deal with retailers who help them out, and one way customers express this wish is to say thanks to store staff.
     Research findings from Universit√† Commerciale Luigi Bocconi and another set from University of Maryland and Yale University together suggest that giving the customer an opportunity to express gratitude to one or more store staff facilitates loyalty to the retailer. And research at Trinity College, College of Charleston, and University of Toronto indicates this is especially true for elderly consumers.
     Creating opportunities to say thanks is easier for you to accomplish with in-store transactions than with ecommerce transactions, though. Where are the opportunities for the purchaser to say thanks to a salesperson or cashier when online? On some sites, the answer comes with “click to chat online” features.
     My advice to ecommerce retailers: Allow time for the customer to say thanks. Script the online helper to finish up with an open-ended question like, “What else may I help you with?,” and lastly, with a closed-ended question like, “Have I answered everything you wanted to ask for now?”
     At that point, the thank you is bound to come—as long as you and your staff have worked to earn the gratitude. When it does come, be sure to acknowledge the thanks with a personal touch.

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

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Go for Customer Gratitude and Guilt
Emphasize Emotions with Older Customers
Use Closed-Ended Questions Selectively

Wednesday, July 14, 2010

Answer Van Westendorp Pricing Questions

When setting prices, you could be missing opportunities to increase your profitability: You might be able to charge more without hurting sales or to increase sales greatly by lowering a price point a notch.
     Redoing all your pricing at once could easily overwhelm you and your staff. It’s also probably unnecessary. But periodic pricing reviews and adjustments that you roll through your product and service inventories are an essential part of running your business.
     Setting prices properly on unfamiliar brands or items is especially challenging as well as especially important. Set the price too high and you’ll chase away the early adapters you’ll need in order to spread the word. Set the price too low—especially if you don’t clearly call it an introductory offer—and you burn a low value for the product into the brains of shoppers.
     A useful template for price reviews is based on a set of four questions developed by Dutch behavioral economist Peter van Westendorp and used by a great many retail pricing specialists. Here’s my version of the four Van Westendorp questions, each beginning with the words “At what price would shoppers consider this product or service to be…”
  • …inexpensive enough that they’d think hard before deciding not to purchase it?
  • …expensive enough that they’d think hard before deciding whether to purchase it?
  • …so inexpensive that they’d think there might very well be something wrong with the item?
  • …so expensive that they’d immediately reject the idea of buying the item?
     Pricing consultants have developed techniques for getting this information from people with a minimum of bias. If your business is using the services of such a consultant, have them tell you how they do this. When doing your own analyses, answer the Van Westendorp questions not only by watching the sales results, but also by watching and listening to people shopping in your store and on your ecommerce sites. Also, to the degree you can, watch and listen to shoppers in other places that sell what you sell.
     An analysis of answers to the Van Westendorp questions gives you ranges in which to set your prices for maximum profitability.

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

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Allow Modest Expectations of Discounted Products
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Tuesday, July 13, 2010

Promise Tightwads Responsibility

     Now, don’t worry about me, retailer. Mr. Yeager’s not likely to sue for defamation of character. You see, Jeff Yeager himself brags about being cheap. In an article about him, North Carolina’s Salisbury Post says he calls himself “the ultimate cheapskate.”
     As it turns out, cheapskates—also known as tightwads—are an underappreciated market for retailers. An international survey of 13,000 shoppers finds that annual income is similar for tightwads compared to the spendthrifts who feel they spend more than they should. Tightwads have the money to spend. In addition, the survey found that tightwads generally believe they should be willing to spend more money. They don’t feel poor, and this is not the same motivation as with those who fret about the future because of the worldwide economic difficulties.
     Research indicates that the key to having tightwads spend their money with you is to reinforce their sense of responsibility. Here are a few tactics and why they work with tightwads:
  • Congratulate tightwads on how they shop carefully. Tightwads take pride in limiting their spending. Jeff Yeager brags that to save energy costs, he soft-boils his eggs in the dishwasher during the wash cycle. In his new book, he reports finding a sense of social responsibility and even religious convictions tied to being extraordinarily thrifty.
  • Remind tightwads that you’ll be responsible in what you sell them. Then keep your promise by being able to explain how the products and services you sell give full value. Researchers at University of Pennsylvania and Carnegie Mellon University—the researchers who conducted that international survey—say tightwads suffer emotional pain when spending. Dealing with a responsible retailer eases the pain.
  • Don’t tell tightwads about opportunity costs. In advertising and selling, opportunity cost appeals take the form, “By paying less for this item, you’ll have more money available to buy other items.” Spendthrifts respond to opportunity cost appeals, but tightwads are much less responsive. The researchers speculate that this is because tightwads have already figured out the opportunity cost angles for themselves. They’d consider a retailer telling them about it to be a waste of time.
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Profit by Showing Social Responsibility
Feature Socially Responsible Trade-Ins
Maintain Customer Faith
Give Low-Income Customers Dignity
Sell Spendthrifts with Opportunity Costs

Monday, July 12, 2010

Cast Magic Spells for Escape Benefits

For many consumers in many lands and at many times, shopping provides an escape. Perhaps an escape from drab, routine reality. Perhaps an escape from uncomfortable circumstances. People browse even when they think they’re unable to buy.
     To woo shoppers on the basis of escape benefits, create an atmosphere of magic. This might begin with your advertising. In a thirty-second TV spot for the Charleston Area Convention and Visitor Bureau, the background music echoes the sort of melody reminiscent of Disney fairy tales.
     Then an atmosphere of magical luxury at the shopping site itself lays out an escape route for any discomfort. This phenomenon was demonstrated in the laboratory by psychologists at University of Minnesota, Florida State University, and China’s Sun Yat-Sen University. One group of study participants were assigned to count out eighty $100 bills. A matching group were assigned to count out eighty blank pieces of paper. All participants were then exposed to tasks in which they experienced social rejection and physical stress. The people who had worked with the $100 bills reported less discomfort during and after the tasks. Handling the money gave magical relief.
     Special promotions and events in your store help cast magic spells for escape benefits. An example comes from the Fashion’s Night Out events held last fall at thousands of participating stores in Brazil, Britain, China, France, Germany, Greece, India, Italy, Japan, Russia, Spain, Taiwan, and the U.S. Browsers came to retailers to look at fashions the browsers would love to have.
     The profit payoffs from magic spells usually don’t come immediately. A New York Times article about FNO, quoted one shopper as saying the event was, “effective in terms of speaking to my aspirations and desires, but maybe not my pocketbook.” When asked about sales results, Macy's executives said that profits from the event would at least cover the expenses of keeping eight Macy's stores nationwide open a few hours later than usual.
     The Charleston Area Convention and Visitor Bureau ad takes account of the trigger delay from magic. The protagonist in the spot turns down an offer to stay for a while, at which point his host reminds him that he’s welcome to come later.

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Use Music to Motivate, Not Disrupt
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Sunday, July 11, 2010

Design Store Operations for Ecommerce Brains

When you’re running a retail store, who’s your competition? It includes more than the local shop down the boulevard or the Big Box across town. No, it also includes the computer on the consumer’s desk and the mobile device in their pocket or purse. Ecommerce changes the ways people think about shopping. If your business is to thrive—and maybe even to survive—carefully note what ecommerce is doing to the brains of your target markets.
     Clearly, there are wide individual differences in ecommerce brains. Some differences are related to age. Younger consumers’ brains are more likely than older consumers’ to enjoy multitasking when shopping. Some has to do with gender. As a general rule, women’s ecommerce brains are more likely than men’s to miss the social and sensory experiences store-based shopping provides. Their brains will search for those experiences.
     Then there’s a different sort of search all ecommerce brains continually perform: The search for information filtering shortcuts. When shopping now, there’s too much to know. The brains look for ways to categorize and subcategorize so purchase decisions can be made in stages. To depend on resources—like rating sites or acknowledged experts—to make part or all of the decision. To decide what to buy based on intuition or emotion instead of a thoroughly systematic analysis of the data. And for some ecommerce brains, to be satisfied with a less-than-ideal purchase choice so we can get ’er done and move on to enjoying what we got.
     The smartest ecommerce retailers are regularly testing their web pages and optimizing them to achieve best results based on five sorts of questions their shoppers’ brains ask:
  • “Why am I here?” “Is it to make a repeat purchase, consider changing to a new item, gather information for future use? Was I brought here by an ad that promised me a discount or other distinctive shopping advantage?”
  • “What are my options?” “Now that I’m here, what can I do? Are there attractive possibilities I didn’t know about?”
  • “Which options should I choose and why?”
  • “How do I do it?” “Is that the button to click?”
  • “What should I do next?”
     You want to be in the same league as the smartest retailers. Use those five questions as the basis for designing your store operations as well as your ecommerce presence.

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

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Use Signage to Categorize Items
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Saturday, July 10, 2010

Create Your Future by Anticipating Resistance

To maximize your success as a retailer, don’t just predict your future. Create your future. Don’t trap yourself by waiting for the marketplace or the broader economy to force you into reacting. Instead, do your best job of predicting what the government, regulatory agencies, your retailing competition, and your shoppers are likely to do. Then consult your predictions to grab the initiative.
     But to put this grand sounding philosophy into workable form, keep in mind the inevitability of resistance. Retailing requires human interactions, and a universal component of human interactions is resistance. For every retailer seller, there is a purchaser, and purchasers fight back against feelings they’re relinquishing free will.
     So persuade instead of manipulating. When using powerful psychological techniques to create the future for you and your shoppers, proceed patiently. Plant the seed and give it some time to grow. For instance, when shoppers might resist purchasing a product because of its country of origin, research findings indicate those resistances are less when country of origin information is presented in advance.
     Moving beyond shoppers, for many retailing initiatives, there are restrictions enforced by human regulators. Those regulators, just like your customers, want to feel important. They want their knowledge and influence to be acknowledged. And in you creating your future, sometimes you might decide patience isn’t enough. Sometimes you’ll meet resistance with force.
     Consider how Wal-Mart is responding to a fine levied by the U.S. Occupational Safety and Health Administration: Wal-Mart worker Jdimytai Damour was trampled to death by Black Friday shoppers in November 2008 while attending the front doors at the Valley Stream, NY store. In May 2009, OSHA levied the fine after finding Wal-Mart responsible for failing to protect employees from “crowd surge or crowd trampling.” Wal-Mart has refused to pay, OSHA has not surprisingly resisted that refusal, and Wal-Mart has met that resistance with the force of lawyers.
     According to a New York Times article, Wal-Mart’s spent about two million dollars on legal fees so far. The OSHA fine was only $7,000. There is a larger issue involved, according to Wal-Mart: The threat of creating a future in which retailers are held responsible for events outside their control.
     Wal-Mart has the deep pockets to mount this sort of resistance against resistance. In creating their future, smaller retailers might do better to meet inevitable resistance with patient negotiation.

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Be Creative, But Only Sometimes
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Feature Country of Origin Advantages
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Friday, July 9, 2010

Handle Employee Dishonesty Consistently

Your employees should know what you define as dishonesty and what to expect if they are found to have acted in a dishonest manner. This has become more important because of compelling evidence that a substantial percentage of young people who are entering the retailing workforce are accustomed to cheating.
     A New York Times article described how University of Central Florida—America’s third-largest campus as measured by student enrollment—initiated a broad range of methods to curb dishonesty. The article reported that about 60% of college undergraduates admitted to cheating on assignments or exams.
  • Decide on the degree of honesty you want your store to project. Does this sound to you like a strange suggestion, retailer? Well, the fact is that some customers prefer to deal with salespeople who are what I call Rascals. The Rascal exploits other people. Especially in individualistic cultures like the U.S., consumers are fascinated with famous rascals. When the retail personality you aim for includes “exciting” and your target markets include people from individualistic cultures, you might decide to have your salespeople project an image of testing the limits and squeezing around authority. Petty cheating is tolerated.
  • Once you’ve decided on the degree of honesty you want your store to project, be as sure as you can that employees know your expectations. This in itself is a bit tricky, since retail owner/operators who tolerate or even encourage Rascal behavior may be unlikely to say that out loud. You can communicate your expectations through your behavior, though. Do you fudge the truth when talking to employees and then laugh it off? Are you obvious about using store equipment and supplies for non-business purposes? And then there’s another layer of possible confusion: You might have different expectations of strict honesty for different types of employees. Maybe it’s fine for a salesperson to tell customers, “I’m 100% sure this product is ideally suited for you,” even if they aren’t 100% sure, but you don’t want your bookkeeper to say, “I’m sure our cashiers were 100% accurate yesterday,” when your bookkeeper really isn’t so sure.
  • Because of these sources of confusion, also communicate your expectations via consequences. Have consistent consequences for any unacceptable dishonesty. Minimize the surprises. Provide your staff opportunities to discover what is okay and what’s not.
For your profitability: Sell Well: What Really Moves Your Shoppers

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Analyze the Role the Customer Expects
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Thursday, July 8, 2010

Put Foot-in-the-Door to Build Trust

Every retailing transaction involves the customer placing some trust in the retailer. Sometimes, as with online banking, a significant amount of trust is required. Research at Athens University of Economics and Business in collaboration with National Bank of Greece suggests that a good way to build higher degrees of trust is to use one of the oldest selling tactics in the world—the foot-in-the-door technique.
     FITD consists of starting out with such a small request that the shopper is very likely to say yes and then using this yes as a base for presenting a series of larger requests. Consumer psychologists have repeatedly found that getting a yes to a small request makes the person much more likely to agree to a larger request if benefits follow that yes to the small request.
     FITD is a natural when it comes to building trust: Prove you deserve a little trust and the customer is willing to extend you some more rope. The Athens/National Bank findings indicate you can make FITD more efficient with tweaking: The researchers investigated the role of trust in consumers’ accepting Internet and phone banking. Consumers were assessed for their beliefs that the bank was trustworthy, their showing evidence of extending trust, and their intentions to use the newer banking services.
     The research conclusion is that convincing the consumer you’re worthy of trust is important, but to grow that trust most efficiently, get the consumer to behave in a trusting way. The advice for retailers is to make a point with customers when they show trust and their trust pays off. Not only keep your promises to the customer, but also point out to the customer that the promise has been kept and there have been benefits to this.
     FITD to build trust is especially useful:
  • With online retailing transactions. Researchers at Universit√© de Bretagne-Sud in France find that FITD carries over nicely to ecommerce transactions.
  • With new products, delivery methods, or usage methods. Move from the familiar toward the unfamiliar in a series of trust-building steps.
  • With consumers who are skeptical about innovations. The venturesome innovators say, “I want the latest, even if all the problems haven’t been worked out.” The respectable early adopters say, “I want a taste of where the world is heading.” But the rest of your shoppers need to build bigger trust before they take a bigger step.
For your profitability: Sell Well: What Really Moves Your Shoppers

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Make the Sale a Slice at a Time
Keep Your Promises
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Wednesday, July 7, 2010

Promote Sales from Product Recalls

What’s in the news can lead to profits for you, and product recalls are in the news: During this past week, a feature article about product recalls appeared in The Washington Post followed by a segment on Comedy Central’s “The Daily Show.”
     Look at product recalls as traffic builders. If the consumer is instructed to return the item to your store, use the opportunity to show off both your customer service and alternatives to the recalled product. If the consumer is instructed to destroy the product or return it to the manufacturer, include a notice in your ad next to a promotion on one of those alternatives. You earn community gratitude as a good citizen, plus you sell some merchandise.
     The challenge, though, is that many people resist returning recalled merchandise. In a Journal of Consumer Research article appropriately titled “Why My Mother Never Threw Anything Out,” researchers at Baruch College attribute this sort of behavior to what consumer psychologists call the endowment effect: After we’ve acquired a product and worked through any initial regrets, we tend to overvalue the product. To paraphrase the Baruch College researchers: If people saw cheese with some mold on it being offered at a buffet, they’d probably pass on the cheese altogether, but if those same people had that same cheese in their refrigerator, they might very well say, “Hey, what’s a little mold?”
     This might explain why The Washington Post article says 12% of Americans who knew they had food at home that had been recalled ended up eating it. Yes, there are reasons other than the endowment effect. “It’s too much trouble taking it back.” “We’ve already used it, and we’re fine.” “It’s a shame to waste it by throwing it out.” But when the Baruch College researchers statistically corrected for those influences, the endowment effect still pulled weight. Ownership led to lower estimates of risk.
     So you’ll need to convince people to buy an alternative from you. But as a professional retailer, you’re in the business of persuading consumers to do what’s in their best interests and yours. During the 2009 holiday season, Toys “R” Us urged customers to trade in old cribs, car seats, and other baby items for a 20% credit toward new items. One motivation for the promotion was evidence that of baby items recalled because of safety, about one-third are never returned to the seller.

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Protect Customers from Dangerous Decisions
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Tuesday, July 6, 2010

Preoccupy Shoppers for Indulgent Choices

When you’d like your customer to choose the indulgent alternative—the higher-priced luxury model or the item that’s more fun than necessity—get the customer preoccupied.
  • Researchers at Indiana University and University of Houston asked one set of consumers to watch an emotionally arousing movie clip and another set to watch a movie clip that was emotionally bland. Each participant was then invited to choose as a snack either a cup of grapes or a cup of M&M candies. The consumers who had watched the arousing movie clip were more likely to choose the candies than were those who watched the bland clip. In ecommerce, showing the shopper a video with lots of emotional punch will sway them toward the indulgent.
  • Physical preoccupation works, too. The Indiana/Houston researchers took a bland movie group and asked some of them to also exercise their muscles for a while on a stepstool. This addition of light exercise increased the probability the consumers would choose the M&Ms. The implication is that asking in-store shoppers to walk from one section of the building to another gives an edge to the indulgence.
  • And cognitive preoccupation works. The researchers asked some people to memorize a seven-digit number and others a two-digit number. The seven-digit memorizers were more likely to choose the candies over the grapes. When you ask shoppers to do mental work with the price or think about alternatives for product delivery of the indulgent alternative, they become more likely to purchase it.
     Other studies support what the Indiana/Houston researchers found. But there are three conditions to consider:
  • The preoccupation moves the customer toward purchasing the indulgence only when it has to do with things other than the product itself. It’s getting the person to experience emotion from the advertising, not from thoughts about consuming the product. Physical exercise in finding the product, not in practicing use of the product. Cognitive work in thinking about the price of the one product, not in comparing prices among products.
  • This tactic is an influencer, not a determiner. Preoccupation makes the consumer more likely to choose the indulgent alternative. But it doesn’t guarantee they’ll select that choice.
  • Think ethics. Will the purchaser find full value in the indulgent, or are you manipulating them into spending money on something that is not in their best interests?
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Use Parity Pricing to Help Customers Decide
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Monday, July 5, 2010

Lead Your Customers Through Changes Gradually

Every retail business changes. It might be a change in your mix of products and/or services because of a need to reduce inventory or opportunities to expand your offerings. A change in business location or format to better meet the preferences of your target markets. Changes in staffing that will be noticed by your regular customers.
     A general rule for making changes in retailing is to lead your customers gradually. This reduces the possibilities that you’ll lose your loyal customers.
     Here are tips about applying that general rule:
  • Determine where you want to end up, and if this ending point is quite different from where you are now, then introduce at least one intermediate step. If you currently sell paint and you want to end up adding draperies, consider introducing wallpaper first. If you plan to phase out your entire stock of draperies, reduce the product assortment for a while before eliminating the product category completely.
  • There are some changes where intermediate steps are unrealistic. For instance, if you want to close down your current store and open up for business across town, it wouldn’t work to open up a store halfway across town for a while as an intermediate step. Here the principle becomes “Ease your customers into making the changes.” Is it realistic to keep the old location open for a while after opening up the new location? Can you announce the change at least a month in advance of making it and show a map of how to get from the old store to the new store? Can you post large drawings of the new store in the old store?
  • Recognize that customers like some changes. It makes shopping less tedious. It’s the large changes that can lead to customer discomfort. Research at University of California-Los Angeles, University of Cincinnati, and Miami University indicates that you can make an extreme change seem like a moderate change by clearly pointing out ways in which the new is similar to the old.
  • Cultures differ in their receptivity to change. Consumers in individualistic cultures (U.S., Canada, Australia) tend to welcome changes more than do consumers in collectivist cultures (Turkey, Greece, China).
For your profitability: Sell Well: What Really Moves Your Shoppers

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Sunday, July 4, 2010

Ease Fears with Detail-Oriented Shoppers

A long line of consumer psychology studies indicates that almost every customer walking into your store is either prevention-focused or promotion-focused. Prevention-focused shoppers put top priority on products and services which help them avoid losing what they have now. Promotion-focused shoppers put top priority on products and services which help them gain more than they have now.
     Knowing which one a customer is allows you to customize your messages to produce more sales. It’s not just in the product benefits the salesperson will talk about, but also the general style the salesperson takes on.
  • Promotion-focused shoppers operate from ambition. They like salespersons to serve as coaches: Cheering the customer on when things are going well and reassuring the customer when challenges arise. Staying available until the customer’s objectives are achieved and encouraging the shopper to purchase whatever is necessary.
  • Prevention-focused consumers prefer the salesperson to be like a superhero who will help prevent them from making the wrong decisions and, in fact, takes some of the responsibility away from the customer for making decisions. The superhero salesperson goes above and beyond what the customer expects other types of salespeople to do.
     How can you and your staff tell when you’re dealing with a promotion-focused shopper and when you’re dealing with a prevention-focused one? Research findings from Columbia University and Singapore Management University suggest that one diagnostic indicator is the amount of time the shopper pays attending to details. Prevention-focused shoppers tend to drill down, while promotion-focused shoppers tend to worry less about the details.
     The researchers illustrate their point with what happened when study participants were asked to select dinner items from a menu. The promotion-focused consumers started out by spending time considering the overall categories (soups, appetizers, entrees, deserts, and so on). On the other hand, the prevention-focused consumers immediately dove into looking at the specific descriptions of the individual offerings.
     When you and your staff find yourselves dealing with a prevention-focused customer, realize these customers are operating from fear more than from ambition. Give them some detailed information and get ready to be asked for further details.
     The Columbia/Singapore researchers point out that when prevention-focused consumers were given detail-oriented formats, they became willing to pay about 17% more on their purchases than when presented less detail-oriented formats.
     That’s an opportunity to boost profits!

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Sell Either Protection or Promotion
Analyze the Role the Customer Expects