Tuesday, August 31, 2010

Ease the Guilt for Adult Unhealthy Eaters

Talking about the origins of a fast food success store, Wallace Fowler, who owns sixty KFC franchises, told Bloomberg Businessweek, “Kentucky Fried Chicken hit the streets with eleven herbs and spices, pressure-cooked, and by and large, the general public doesn’t give a damn how many calories are in it.” The stimulus for his statement was efforts by KFC Corporation to reach health-conscious consumers by emphasizing grilled chicken over the fried chicken recipe.
     My advice to you, retailer, is that if your adult customers choose to take the unhealthy route, ease the guilt for them. Feel no need to go beyond fully informing them and obeying the law. When Giant Foods, reportedly inspired by President John. F. Kennedy’s “Consumer Bill of Rights,” formulated their own list of rights decades ago, it included “Right to choose. Consumers who want to purchase possibly harmful or hazardous products (such as food with additives) can do so.”
      My advice is different regarding child consumers. There, choices need to be restricted and to the degree that the retailer can arouse guilt in a child for making unhealthy choices, it could help parents and guardians shape the child’s long-term eating preferences. This is an important issue where retailers can fulfill a social responsibility. The U.S. National Center for Chronic Disease Prevention and Health Promotion says that over the past thirty years, obesity rates among preteens has tripled and among adolescents has nearly quadrupled.
     But when it comes to adults, the customer likes to be in control, so there are better health motivators than retailer-induced guilt.

Click below for more:
Balance Healthy and Indulgent in Merchandise
Have Fun Items Throughout the Store
Inform Consumers, But Don’t Intrude

Monday, August 30, 2010

Clarify Cause & Effect with Users

Be sure your customers recognize the benefits that came from their purchases. With so much going on in their busy lives, the customer can too easily forget to give credit to a service or product for the benefits they obtained. And sales staff can too easily forget to hook the effect to the cause in the customer’s mind.
     Again, this oversight can be because sales staff are busy. But there’s another reason as well: Sales staff who are thoroughly familiar with how well a particular item produces benefits can take it for granted that the customer knows, too.
     Customers usually want specifications pre-purchase, but after making the purchase, they're usually seeking reassurance. So right after the purchase, tell the customer that they’ve made a good decision. Keep it general.
     Then when the customer returns to your store later or contacts you to place a telephone or ecommerce order, assume they are now ready to sample and to shop. Deliver a different sort of reassurance about their prior purchase: Emphasize cause and effect. Point out to them how what they obtained from you produced benefits important to them.
     Do you recall what they bought? If so, ask a question like, “How did you feel the evening after you had your last massage here?” or “How did that carpeting work out for you in your family room?”
     If you don’t recall the prior purchase and can’t promptly obtain the information from your customer database, start with, “What are some of your most recent purchases from us?” It’s better to assume the person is a prior customer and be wrong than to assume the person has never shopped with you before and insult a loyal client.
  • If the customer was displeased with the product, make it right with an exchange or a refund.
  • If the customer has trouble coming up with benefits, say, “Here are some of the benefits I’ve heard other users talk about….”
  • Then when the customer tells you the benefits, say something in the format, “I’m pleased that your purchase of [the product or service] resulted in [one or two of the benefits that seem to be most important to the customer].”
Click below for more:
Use Partitioned Pricing to Highlight Benefits
Ask Shoppers to Imagine Usage Benefits
Sell Benefits to Fit Shoppers’ Values
Answer Customer Questions with Enthusiasm

Sunday, August 29, 2010

Meter Your Customer Service

“Too much of a good thing can be wonderful,” according to Mae West, preeminent American sex symbol of the 1930s. Still, an international study conducted by the Corporate Executive Board, which is headquartered in Arlington, Virginia, indicates that Ms. West’s advice doesn’t hold well when it comes to retail customer service. Too much customer service can be a financial drag on a business.
     About 75,000 people who had interacted with customer service staff were surveyed in the study, and hundreds of customer service staff members were interviewed. The results? By and large, what customers seek is not an ever-escalating drive to surprise and delight them. They want to be dazzled by customer service, all right, but what does the trick is for the retailer to find ways to simplify problem resolution.
     A more formal study by researchers at University of Mannheim in Germany and University of Texas-Austin found that customers who are adequately satisfied are willing to pay higher prices than are customers who are barely satisfied. But the researchers also found that developing customer willingness to pay even higher prices generally requires ensuring those customers are consistently very highly satisfied. The costs of doing that might make it unprofitable. Your best course might be to be satisfied with delivering adequate customer satisfaction.
     Businesses have found that good customer service can distinguish them from the competition and so earn them additional sales. Yet it is akin to superstition to believe that if some customer service is good, that loads of customer service must be great.
     To be sure, some retailers gain success by pampering their clientele in ways that create legendary tales. It’s a form of niche retailing which requires premium pricing. And there are deep-discount retailers who are financially successful in the face of legendary flawed customer service. Meter and regularly monitor your business’s level of customer service to find what works best for your store personality and target markets.
     Just as it is superstitious to believe that if a little is good, more is better, it’s superstitious to stop trying out variations on the customer service you offer. Mae West would agree, I think. You see, she also said, “Between two evils, I always pick the one I never tried before.”

Click below for more:
Assess the Costs of Customer Satisfaction
Implement Tactics Strategically

Saturday, August 28, 2010

Choose Between Percentages & Frequencies

Is it better to say “73% of our 70 products currently meet all applicable ANSI safety standards” or “51 of our 70 products currently meet all applicable ANSI safety standards”?
  • A classic finding in consumer research is that percentages are easier than raw frequencies for a person to understand and remember. Therefore, if ease of comprehension is important, present the percentage format. This would be especially true if your statement has lots of elements to understand and remember aside from the frequency itself. The ANSI safety standards example has enough gobbledygook to meet that criterion.
  • If you’re asking prospects to average a set of frequencies, use percentages when your prospects have low motivation to understand the results, but present raw frequencies if the prospects aim to be highly confident of the results. Researchers at Bentley University in Massachusetts, University of Kansas, and Columbia University concluded that people who are clearly interested in the results will work harder to analyze the data when they’re presented raw frequencies than when presented percentages to average. The averages will be more accurate, and the people will be more confident of the calculations. So it’s best to say, “51 out of the 70 case mountings and 13 out of the 18 leveling devices meet your specifications,” and expect the prospect to calculate the percentages.
  • If you’re asking prospects to calculate a percentage of a percentage, do the work for them and present the outcome. For instance, say: “73% of our 70 products currently meet all applicable ANSI safety standards, and of those 73%, you’ll find that 80% meet the parameters you’ve stated in your proposal. So this means that 41 out of our total set of 70, or between 58% and 59% meet both the ANSI safety standards and your parameters.” Research at University of Miami and University of Minnesota suggests that most consumers come up with erroneous frequency conclusions when calculating percentages of percentages.
  • Unless absolute precision is required, ease the cognitive load for all parties by rounding off percentages once you’ve come up with the final result. “About 60%....” is easier for the prospect to work with in their head than “Between 58% and 59%.”
Click below for more:
Tell Positive Stories About Your Products
Have Discounted Prices End In $1.99 or $2.99

Friday, August 27, 2010

Avoid Satire in Comparatives

To influence your shoppers, compare what you offer to what others offer. And compare benefits or features of the various alternatives you offer. But avoid satire in your comparisons.
     For an example of the risks of satirical comparisons, consider the “What Happens in Blank” TV spot created by R&R Partners and used last year by the Las Vegas Convention and Visitors Authority. The original “What happens here, stays here” campaign designed by R&R nicely projected the naughtiness which is a prime marketing point for Las Vegas. Once hitting public exposure, the tag line morphed into “What happens in Vegas, stays in Vegas,” and that, in turn, inspired the 2008 20th Century Fox flick, “What Happens in Vegas.”
     Much better success in retailing location marketing than, let’s say, New Hampshire’s “You’re going to love it here” or New Jersey’s “Come see for yourself.”
     The “What Happens in Blank” spot features a satirical edge, apparently aiming to point out how inserting your own town’s name into the slogan will only highlight how your own town falls far short of Las Vegas by comparison. My analysis is that the ad could produce some hearty chuckles in viewers, but leaves a bitter aftertaste for many of these consumers.
  • Satire is ridicule packaged in humor. The problem is that what some people consider to be funny, others don’t. If the humor falls flat, all that’s left is the ridicule. If you use satirical comparisons, you risk being seen by the consumer as mean-spirited, and that can interfere with your selling appeal. Researchers at University of Massachusetts-Amherst demonstrated how humor differs even between the U.S. and the U.K., both of them individualistic cultures. Other research has shown how collectivist cultures—like in Japan—and family-oriented cultures—like in Mexico—come to dislike retailers that seem to depend on ridicule to make a point.
  • Researchers at Northwestern University and Ohio State University find that humor in selling functions as a source of distraction. The laughter keeps the shopper from thinking about counterarguments. The problem with satire in comparatives is in order to get the joke, the audience has to be thinking too closely about arguments and counterarguments. The “What Happens in Blank” ad makes fun of the elderly, the handicapped, the overweight, and even county fairs, all within a span of thirty seconds.
Click below for more:
Compare Unknown Brands to Best-Known Brands
Be Aware How Shoppers Compare Products
Joke Around to Facilitate the Sale

Thursday, August 26, 2010

Correct for Corruption from Candor

Let’s say a vendor is trying to convince you to double the size of your order. They’ll be telling you why it’s in your best interest to have more of the merchandise on hand. You might trust them about that. But with you being a retailer, you’ll also be aware of the seller’s motivation that is shared by you and your vendor: In this transaction, the more money you spend with the vendor, the more money they make. Since you’re a smart retailer, you’ll aim to correct for that bias as you decide whether to double up on your order.
     However, sometimes a vendor’s bias is not so obvious. This time, the vendor says to you, “I recommend you try out a different brand. The cost to you will be the same as for what you’ve been carrying in the past, but my figures indicate you’ll sell more units more quickly.”
     What the vendor isn’t telling you is that they’ll earn a substantially higher commission from selling you the new line rather than the old line. The vendor has a conflict of interest.
     This might be okay. If you’ll sell more units more quickly, both you and your vendor profit. So you ask the vendor two questions: “Is your sales commission higher for this new product line?” and “How many units do you estimate I’ll sell in the first three months after I change over?”
     And then, according to findings from research at Yale University and Carnegie Mellon University, something might happen that is not okay: If the vendor says, “I’ll be honest with you. I’m recommending the changeover because my commission will be higher,” the vendor’s estimate of unit sales is likely to be much more inflated than if they don’t admit to their conflict of interest.
     In a transaction between a buyer and a seller, when the seller feels they’re being honest with the buyer about one aspect of the transaction, they’ll tend to give themselves permission to be dishonest with the buyer about other aspects of the transaction.
     Take care to make a correction in your thinking for the corruption that comes from a seller’s candor. The Yale/Carnegie Mellon researchers found that not only did the disclosure of conflict of interest lead to exaggerated estimates, but also that the buyers failed to sufficiently discount the exaggeration.

Click below for more:
Check Your Optimism When Dealing with Vendors
Consult Mirror Neurons with Vendors

Wednesday, August 25, 2010

Distinguish Accelerating from Slowing Trends

Retailing professionals—especially those who gained most of their experience during the fifteen bountiful years that preceded the global economic crash—know the rules have changed, but they’re not sure how. Which changes in consumers’ thinking are accelerating, so retailers need to move quickly to stay ahead of the curve? Which changes are slowing, so retailers might want to rein in resources being expended on them?
     To answer those questions, researchers at London-based Trajectory Partnership analyzed the effects of previous economic downturns and recoveries on consumer psychology. They then took into account how bad the latest downturn is compared to those previous ones, and they overlaid all this on consumer psychology trends that are operating independently of the downturn.
     Here are two changes in consumers’ thinking that seem to be accelerating:
  • A desire for simple alternatives. A recent New York Times article begins with the tale of a couple who achieved greater happiness by giving away loads of their possessions—including their cars—and finally moving to a studio apartment. Most consumers won’t go to those extremes, but the article gives more evidence of seeking simplicity. A corollary of this is that people are spending money on experiences—where the memories don’t cost much to maintain—instead of merchandise that has to be cleaned, repaired, and eventually replaced. In a Euro RSCG Worldwide survey of 5,700 adults residing in France, the Netherlands, England, the U.S., Brazil, Japan, or China, about 70% said they wished simple products were available to them.
  • Seeking variety. The Trajectory researchers call it “a tendency to flit from one offering to another.” There will continue to be less brand loyalty and more openness to trying out unknown brands. Give your shoppers choices so they feel in control and do not feel as if they’re being manipulated.
     On the other hand, here are two trends that seem to be waning:
  • Green consumption. The Trajectory researchers believe this trend will resume its prerecession upwards movement when the economy recovers, though. Target stores will be ready. They now sell what they call green-friendly home products along with more than 700 organic food items.
  • Seeking extreme experiences. Experiences are in, but for most consumers, risk tolerance is way down for the count. The Trajectory researchers point out how many people who lived through the Depression pinched pennies for the rest of their lives.
Click below for more:
Offer Fundamental Indulgences
Sell More by Adding Variety
Give Shoppers Variety for Control
Attract with Social Consciousness
Reduce Unwanted Risks for Your Shoppers

Tuesday, August 24, 2010

Eyeball Shoppers So They Behave Themselves

It’s said that Sam Walton introduced the idea of using elderly men and women as store greeters because they’d be approachable by customers looking for help, but that Mr. Walton was most firmly convinced to keep the greeters because shoplifting dropped so dramatically. “Nobody would steal from their grandmother,” he’s been quoted as saying.
     That story might be more apocryphal than accurate. However, it’s true that two museums in Moscow and two in St. Petersburg sit a Russian grandmother by each of the museum’s most treasured artworks, the seated babushka silently underlining the message “Do not touch.”
     What about your store’s “do not” messages? “Do not steal.” “Do not try to take the item off the shelf by yourself.” “Do not smoke here.”
     You could post some signs and then hire a grandmother to sit by each one. Or you could put a picture of a pair of eyes on each of the signs. University of Newcastle researchers alternated between a picture of flowers and a picture of eyeballs on a sign instructing people not to cheat by failing to put money for their beverages into an “honesty box.” When the eyes were displayed, people paid nearly three times as much per ounce for their drinks than when the flowers were displayed.
     Don’t like my idea of using a printed pair of eyes? Okay, I’m flexible. How about putting a mirror by the sign? Let people look at their own eyeballs. A classic study of trick-or-treaters involved instructing each child not to take more than one candy after the adult left the area. When a mirror was placed in back of the candy container, the University of Montana, University of Illinois-Urbana/Champaign, and Purdue University researchers found that the children were more likely to respect the instruction than when no mirror was there.
     But this was true only if the adult had asked the child their name and repeated the name before leaving the room. The name, the mirror, the pair of eyes, the grandma's gaze. All these build personal accountability in most of us, so use them for your “do not” messages. Keep the messages gentle enough not to offend, though. Making them fit in with the surroundings can help.
     At the Russian art museums, many of the babushkas are dressed or selected to resemble the artwork they’re guarding.

Click below for more:
Let Older Employees Use Their Skills
Use Shopper Psychology to Curb Shoplifting
Fight Employee Theft with Expectations
Use Psychology for Shopper Crowd Management

Monday, August 23, 2010

Set Store Searches for Ecommerce Mentalities

Ecommerce experiences create in consumers a mentality about shopping, a set of expectations that when met well by brick-and-mortar (B&M) stores gives those stores a retailer’s edge. One shopping function where this is true is the shopper’s search for the right product.
     Scientists at the Massachusetts Institute of Technology’s Media Lab identified some of these expectations. The scientists then used this information to design what they call “The Glass Infrastructure,” intended, among other things, to be a forerunner of search systems we’ll see in retail stores.
     Until those futuristic systems appear, here are ways to configure searches in your B&M store to meet the expectations of shoppers with ecommerce mentalities:
  • Personalize the search. The Glass Infrastructure depends on each regular customer having an RFID (Radio Frequency Identification) tag containing information about what that particular consumer has tried out, rejected, and purchased. The hint for B&M salespeople: As part of selling, ask the shopper what alternatives they’ve tried out and what characteristics they seek in the product they’re searching for. Use data from frequent shopper programs to make in-store suggestions to the customer. Anticipate what the customer will be searching for next by considering not just what they select, but also what they reject. When a shopper turns down the top quality pillows in favor of the budget alternative, but selects the top quality mattress, and then asks us to recommend a sofa, which sofa are they most likely to purchase?
  • Narrow down searches, but progressively. The Media Lab researchers noted two characteristics about B&M store searches: First, consumers often weren’t aware of every alternative available to them, since they’d have to walk all the aisles to see everything. Second, store directories—even electronic ones—often all read the same. The Glass Infrastructure starts out with a directory that covers a great many alternatives in which the consumer might be interested. But as the consumer moves toward one part of the selection, the directory narrows itself. In your B&M store, progressively narrow the search list the consumer is using
  • Encourage collaborative searching. The Glass Infrastructure includes networked large LCD screens so that a set of consumers can each display and discuss their searching progress and intentions. In your B&M store designed to serve the ecommerce mentality of social networking, provide places where shoppers can collaborate.
Click below for more:
Keep Your Ecommerce Easy to Use
Use Search Engines to Influence Merchandising
Design Store Operations for Ecommerce Brains
Anticipate Intentions of Ecommerce Shoppers
Reduce Uncertainty for Ecommerce Customers

Sunday, August 22, 2010

Engage Future Customers

A Wall Street Journal article reports that cemeteries across America are holding band concerts, barbeques, and sky-diving exhibitions. The main objective, say the funeral directors interviewed for the article, is to position cemeteries and mortuaries as pleasant places that are able to be of service in the future. “Meet us before you need us.”
     Whether or not your line of retailing is in the funeral industry, here are some consumer psychology tips inspired by what these cemeteries are doing:
  • Always be building interest in your business among future customers. The nature of a cemetery is to stay in business for a long time. The people attending the special events might choose to buy burial plots or make cremation arrangements for use years from now. And even the young people attending these special events have parents and grandparents, some of whom might need funeral arrangements in the nearer future. What is the length of time of your retail business’s planning horizon, and what steps will you take to cultivate prospects for all points out to that horizon?
  • Hold a continuing series of special events for prospective customers. The cemeteries featured in the WSJ article don’t conduct just one event. For years, Hollywood Forever in Los Angeles has held movie nights in which the film is projected onto the mausoleum walls. Even a single special event gives you the opportunity to educate your target markets about the value you can offer them. But an ongoing series of events increases sales by maintaining in your current and potential customers the habit of regularly coming to your site. How will you allocate your special events budget so that you’ll produce a continuing series of events rather than spend it all on a few events?
  • Leave prospects with the right impressions of your business. The challenge for the cemeteries in producing special events is balancing fun and respect, excitement and dignity. Management of Fairmount Cemetery in Denver applies that to acceptable movie titles: “Arsenic and Old Lace” would be okay, they’ve decided. “The Texas Chainsaw Massacre” would not. What criteria will you use in selecting the special events?
     A comment posted to the WSJ article does give some guidance for the cemeteries: “Anything but clowns. The cemetery doesn't need to be any creepier than it already is.”

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

Click below for more:
Stage Special Events to Build Sales
Hold Monthly Clinics
Cultivate Kids as Future Customers
Project Your Store’s Personality

Saturday, August 21, 2010

Shoo Away Negative Customer Feelings

Form a partnership with your customer. The customer gets a product and/or service that meets their needs well. You gain profitability from this sale and the enhanced probability of future sales.
     For it to work best, you’ll want a customer welcoming you achieving a gain. As it turns out, if the customer is in a negative mood, even your best intentions to help out the customer might fall short of producing feelings of reciprocity.
     Here’s a laboratory example of what I mean: Researchers at University of California-Berkeley and Duke University showed a group of study participants a film clip designed to irritate them: In the clip, an arrogant boss fires an employee, after which the employee destroys company property. Another group was shown a clip of the same length from the TV show “Friends.”
     Next, each participant was offered money to be split with a partner. The participant had to make a joint decision with the partner (actually one of the researchers) whether or not to accept $20. Unless both agreed to accept the money, neither would get anything.
     In some cases, the partner said, “Let’s take the money and split it evenly, with $10 for each of us.” No problem there. The participant was happy to agree to accept the money.
     In other cases, the partner said, “The only way I’ll agree to accept the $20 is if I get $15 and you get $5.” Something quite strange happened with this group. The participants who had been exposed to the irritating clip were more much more likely to turn down the offer than were those who had seen “Friends.” Their negative mood led to them wanting to deny the $15 to the other participant, even though this meant depriving themselves of $5.
     The same sort of thing that happened in the university laboratory can happen in your store. A clearly negative mood can lead to a customer wanting to deny you profitability. The remedy? Keep the transaction short. Findings from research at University of Maryland and Yale University indicate that too much talking will lock into the shopper's mind the bad feelings they're experiencing, and those negative memories make it less likely they'll return to your store in the future.

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Avoid Locking In Bad Moods

Friday, August 20, 2010

Offer Neatness to Creative Shoppers

Last week, I hung around the Lululemon Athletica store in Corte Madera, California. Lulu, as some have nicknamed the chain, has fully stocked stores and limited selection showrooms in Canada, the U.S., Australia, and Hong Kong. They also sell their branded merchandise through other retailers, and they have an ecommerce site. The company has gained attention for friendly store design.
     I wanted to observe that friendliness for myself. One impression that came through to me was a handmade look. Another was neatness. Research at University of Colorado suggests that a handmade look might not appeal to all types of consumers, but would be attractive to shoppers who see themselves as creative or aspire to be more creative. Findings from surveys conducted by the Boston Consulting Group indicate that women shoppers—the major target audience for Lululemon—like their creativity combined with practicality.
     Here are two lessons about creativity and practicality from Lululemon:
  • Although the stores carry a range of apparel, the company home page says they sell “technical yoga clothes.” The store I visited had large full-color photo posters on the walls, each poster featuring a yoga instructor affiliated with that store. Yoga is a disciplined art. Are you doing ustrasana? Hey, there’s only one right way and many wrong ways to channel the spirit of the camel when posing as one. At the same time, yoga practices are designed to relax constraints on creative thought. Which of your lines of merchandise and services would appeal to creative shoppers? For those lines, what words, phrases, and images can you use in ads, signage, and personal selling to project your technical approach to relaxing constraints on creativity?
  • On a main window outside the store was what looked like a hand-painted calendar of special in-store and area events to be held during the month. It was done neatly, so it was easy to read. Inside the store, the shelves and racks were well-stocked with merchandise neatly arranged. Large shelf tags describing the different types of merchandise were done in a handwriting font. On the website and in the store, the Lululemon Manifesto resembles a collage, with mottos facing in a variety of directions, but everything printed neatly. What presentation styles, including standards for employee dress, can you use to portray a blend of creativity and neatness that your shoppers will find appealing?
Click below for more:
Help Shoppers Use Their Imagination
Exercise Cultural Sensitivity in Color Use
Manage Store Clutter Strategically
Train Staff About Dress Standards

Thursday, August 19, 2010

Maintain Purchase Momentum in Customers

Consumer psychologists talk of a “flow state” in which a customer who makes a purchase becomes more likely to make another purchase and then another. Consider what happened in a study conducted by researchers at Yale University, Duke University, and Carnegie Mellon University:
     Some study participants were invited to buy a CD that had been previously judged as appealing to people like the participants. The rest of the participants were invited, instead, to buy a light bulb. Yes, the butt of so many “how many does it take” jokes.” A lowly light bulb. As you might expect, a higher percentage of the CD group than the light bulb group decided to make the purchase.
     Next, all participants—regardless of what they’d been offered before and whether they made a purchase—were invited to buy a keychain. Shopping momentum evidenced itself. A higher percentage from the CD group than from the light bulb group decided to buy the keychain, and those in the light bulb group who did make the purchase were more likely to buy the key chain than those who turned down the light bulb offer.
     Don’t exploit purchase momentum—such as in children or people with a compulsive buying disorder. But allow customers to both build your profitability and build their enjoyment from shopping with you by maintaining purchase momentum.
  • Start your shoppers saying yes. Begin with purchases the shopper is most likely to agree to. Even nodding yes builds momentum. University of Amsterdam researchers found that people who were induced to nod their heads up and down would then think more positively about purchase alternatives than those who had not done the pre-evaluation nodding.
  • Give customers a head start. Researchers at University of Southern California and University of Pennsylvania set up an experimental loyalty card program at a car wash: Each customer could receive a free car wash after paying for eight. However, some customers were give a head start of two washes and had to get a total of ten. Those given the head start were much more likely to purchase the eight additional washes and to come to the car wash more frequently.
Click below for more:
Compulsive Buying Disorder. Okay, Laugh
Start Your Shoppers Feeling Yes
Give Loyalty Program Head Starts

Wednesday, August 18, 2010

Keep Discount Conditions Strict Enough

I’m home today, it’s lunchtime, so interspersed with my keystrokes writing this posting, I’m taking bites from a delicious pastrami sandwich. I got it for free at a local sandwich shop using a two-for-one coupon I’d clipped out of the newspaper. Or maybe it was my wife’s sandwich I got for free.
     I’m not telling you the name of the sandwich shop because I wouldn’t want you to look them up and blab about my secret: See, I’m so accustomed to the two-for-one coupon that appears each week in the newspaper that I won’t buy a sandwich there unless I have the coupon. Oh, I give excuses for being that way. I tell myself that although the sandwiches are great, they don’t have enough counter help. Since I have to wait, I deserve a free sandwich, I mumble.
     But the truth is that if the coupon offers weren’t so frequent and liberal, I wouldn’t wait for a coupon. I’d be spending more money there. The truth is that a discount coupon can hurt sales.
     Researchers at Massachusetts Institute of Technology gave promotional coupons to customers who came into a convenience store. For some, the offer was, “Spend at least $6 and get $1 off.” For others, it was, “Spend at least $2 and get $1 off.”
     Customers lived up—or down—to the goal set by the retailer’s coupon. Those required to spend at least $6.00 did that, while those required to spend only $2.00 didn’t exceed that amount by much. To make sense of this, it’s important for me to tell you something else: The researchers knew that purchases at the convenience store averaged about $4.00. So it appears that the “Spend at least $2” customers were actually spending less than they would have without the coupon.
     Now, I see a methodological problem with this field study. It’s possible the “Spend $2” people grabbed their 50% rebate and ended up with such good will that they got in the habit of visiting the store quite frequently, spending lots more money there. Whether that sort of thing happens is something you might want measure in your store.

Click below for more:
Customize Your Discount Coupons
Give Coupons Early and Proudly

Tuesday, August 17, 2010

Move Shoppers Beyond Fixating on Price

Are your shoppers getting stuck at the point where they look at the prices of items? Are they failing to move beyond that point to even notice much about the other measures of value to them, such as effective life of the product and how well the product is customized to their needs and characteristics?
     Using results from their marketing studies, researchers at London Business School and European School of Management and Technology suggest four alternatives for grabbing and redirecting the shopper’s attention. Here is my adaptation of the four alternatives to the world of the retailer:
  • Only pennies a day. State the price in terms of units of use. A tire retailer could state prices in terms of how much it costs per 1,000 miles. An insurance agent could point out that the superior policy costs only fifty cents per day more than the bargain policy. A related technique is to get customers thinking about how much money they can afford to spend in the long run. Researchers from Princeton, University of Chicago, and Digitas-Boston found that focusing on the long-term raised by about 35% the amount the shopper was willing to pay.
  • You pay for quality. Catch the curiosity of the shopper by highlighting that the product carries a high price. Then say why. Research at INSEAD-Israel and at Stanford University confirms that when people buy products or services at what they consider to be unusually low prices, they tend to end up feeling that that the benefits are less than if they'd paid a higher price.
  • A piece at a time. Partitioned pricing presents an item’s cost as a main price plus one or more additional charges. This highlights benefits. The London/European researchers give the example of IKEA charging separately for the table top and the table legs.
  • Buffet pricing. Northwestern University researchers find that consumers are more likely to purchase certain types of items when presented with a group of similar alternatives all at the same price. The reason is that parity pricing—which is what this is called—eases the decision process. Parity pricing is most effective as a selling technique with items where the prospective buyer considers the purchase to be particularly risky. That might be because the buyer believes the price to be high, which involves financial risk.
For your profitability: Sell Well: What Really Moves Your Shoppers

Click below for more:
Give Customers Long-Range Perspectives
Allow Modest Expectations of Discounted Products
Move the Customer to Accept Higher Prices
Use Partitioned Pricing to Highlight Benefits
Offer Customers Basics Plus Add-Ons
Use Parity Pricing to Help Customers Decide

Monday, August 16, 2010

Sweeten Scarcity with Ample Warning

A most fundamental law of economics is supply and demand. When a product or service desired by consumers is in short supply, you can get a higher price. But there’s sometimes a price you pay for charging higher prices.
     Suppose major flooding hits your area, resulting in a shortage of flashlight batteries on your shelves. If you raise prices on your remaining stock, you might make out like a bandit in the short run, but be thought of as a crook in the longer term. Customers who pay more for a scarce item may end up developing ill will toward the retailer.
     Researchers at Stanford University came up with a surprising twist to all this, plus a suggestion for retailers to dissolve the ill will: Some participants in a study were given a gift, while the rest were denied the gift. Each participant was then asked how much they’d be willing to pay for the gift if purchasing it at a store. The average price was about 45% higher among those denied the gift than among those having gotten it. No surprise so far. The sort of denial experienced with scarcity raised the perceived value.
     Next, those participants denied the gift earlier were given the gift. Now every participant had the gift, and each of them was asked if they’d like to trade the gift for another item, which the researchers had determined was of about equal value. Of those who got the gift at first, about 40% said they’d trade. Among those denied the gift at first, about 80% said they’d trade. Denial led to dislike.
     In a follow-up study, the researchers promised some participants they could get Guess sunglasses if supplies lasted. Later, they were told the stock had run out. Those denied the Guess sunglasses ended up rating Guess watches lower and Calvin Klein watches higher than the other study participants, who hadn’t expected to win Guess sunglasses. The dislike spread to other products carrying the same brand name.
     There were a few more twists in the Stanford findings. Putting it all together, the researchers suggest that retailers can financially profit from pricing scarce items higher, but for longer-term good will toward the store, the retailer should give ample notice to customers. Warn customers about any shortages. Tell them how long you expect the shortages to last. Suggest alternatives they could purchase until the shortages ease.

Click below for more:
Show Fair Pricing By Contributing
Follow a Big Sales Event with a Smaller One
Boost Profits by Making Items Collectibles

Sunday, August 15, 2010

Let Your Shoppers Enjoy Being Influenced

Mary Hunt suspects you of being a deceitful rascal, retailer. Here are instructions from the multi-book consumer advocate to people who come into your store:
  • Don’t browse. If you linger, the retailer’s music and lighting will seduce you into buying unneeded items.
  • Carefully notice the predominant colors in the store. They’re there to direct your shopping speed. If you concentrate on resisting, you’ll take back control.
  • When you come to store carpeting, avoid walking on it, since the carpeting is set up to pull you through the store as the retailer wishes.
  • Never touch an item—even to look at the price tag—unless you’re sure you want to buy it.
  • Ask a salesperson for assistance only if really necessary. Retailers know that the more shopper-employee contact, the greater the average sale.
     Those are from Ms. Hunt’s article in the August 2010 issue of Woman’s Day. She introduces her list by writing, “…I’m no fool,” implying that the rest of us may very well be fools unless we take her advice.
     In his 1957 book The Hidden Persuaders, Vance Packard detailed the consumer psychology tactics being used to sell people what they wouldn’t buy otherwise. An outcome of Mr. Packard’s book was that he made lots of money. Over one million copies have been sold. Another outcome was that psychologist Ernest Dichter—whose techniques were a major focus in the book—gained abundant fame and an abundance of consulting gigs. And a third result was that people had great fun trying to figure out how their unconscious motives were getting tickled. Everybody gained.
     Mary Hunt might be overlooking the ways in which ethical retailers aim to provide full value to consumers. But the suspicions she expresses are common enough that ethical retailers need to acknowledge them.
     I’ll bet readers of Ms. Hunt’s article are going to have fun figuring out how they’re being influenced by the shopkeepers whose stores they enter. And as decades of consumer psychology research confirms, when customers pay attention while shopping, the retailers profit.
     Let your shoppers get a kick out of being influenced. There’s a part of all of us which enjoys dealing with a bit of a rascal. That’s because there’s a part of all of us which is at least a bit of a rascal.

Click below for more:
Analyze the Role the Customer Expects
Consider Publicizing Your Rascal Image
Exercise Cultural Sensitivity in Color
Encourage Customers to Touch the Products

Saturday, August 14, 2010

Show Customers the Right Picture

Whether you’re asking me to purchase something from your store or contribute money to your charity, I’m probably more likely to agree if you show me the right picture.
     University of Chicago undergraduates were told that UChicago zoology students had been soliciting donations to rescue an endangered panda they’d found in a remote Asian area. On a form asking the undergraduate the most they’d be willing to donate, some of the study participants were shown a picture of a panda, while others were shown just a dot to represent the panda to be rescued.
     Students shown the picture said they’d donate $19.49 on average. The average for the dot group was $11.67. It looked like the picture increased the willingness to contribute. The lesson for retailers? Show customers what they’re getting for their money.
     Pictures are especially important with ecommerce and with the website of a bricks-and-mortar store. Here, you can’t directly stimulate the senses of touch, smell, and taste as you can in the store, and the more senses you pleasantly stimulate—even if indirectly through a picture—the greater the chance of you closing the sale.
     But realize that pictures don’t always make a difference. In another part of the UChicago study, participants were told that the number of pandas to be rescued was four, not one. In this case, the average donation amount was statistically the same with four dots as with four identical pictures of a panda. The researchers speculate that if the picture had been cuter, it would have made a difference.
     Sometimes pictures can hurt. In comparative ads, show a picture of the product or product package you want the person to select, but not pictures of the products or product packages to which you're comparing the recommended item. Those other pictures dilute the memory of the target product package. We want to shopper to keep the comparative advantages top-of-mind, not picture the competing products.
     And in comparative ads, don’t show pictures of people using the product. University of Maryland researchers discovered that such pictures lead shoppers to start thinking about using the products themselves. When they do this, the shoppers put too much mental energy into thinking about just the recommended product. They forget to pay attention to the comparative advantages, so the power of the comparative ad fades away.
     Why is that bad? I think you get the picture.

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

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Advertise What Products Look Like
Talk to Multiple Senses with New Products
In Comparative Ads, Don’t Show Users

Friday, August 13, 2010

Monitor Your Vendors’ Websites

When you carry products produced by someone else or supply services under a name licensed to you by someone else, that someone else often maintains a website shoppers can use to locate you. The shopper enters their ZIP code or other locale identifier, or a search engine recognizes where the shopper is. Then the name of your store along with your address and phone number appear.
     This is an excellent way to build referral business. All else being equal, do your purchasing from vendors who provide this for you. However, be aware that the characteristics of the vendor’s website influence how a consumer perceives your business. Research at Stanford University finds that consumers tend to perceive a retail business along five major dimensions:
  • Sincere or witty. In what ways are you honest? Wholesome? Cheerful? Teasing?
  • Exciting or predictable. To what degree are you daring? Spirited? Imaginative? Trendy? Responsible? Dependable? Persistent?
  • Expert or inquisitive. In what ways are you knowledgeable? Successful? Calm? Confident? Secure? Stimulating? Curious?
  • Sophisticated or approachable. To what degree are you formal? Assertive? Ambitious? Casual? Sociable?
  • Rugged or luxurious. In what ways are you gruff? Challenging? Cooperative? Trusting? Considerate? Indulgent?
     The personality of the vendor’s website can muddy the image you’re aiming for if the website’s personality differs greatly from that intended image. If the vendor’s website is overly exciting at the expense of predictability, it might even turn away prospective customers.
     For example, the J.D. Power and Associates 2010 Manufacturer Web Site Evaluation Study®—Wave2 ranks the Cadillac and the Scion websites as lowest among the 33 automobile manufacturers they rated, based on responses from more than 10,600 prospective new car shoppers. The best of the sites—Honda’s and Kia’s—were distinguished by an uncluttered appearance and easy-to-understand site navigation tools. The result was speedy retrieval of the information the shopper was seeking.
     Research results from University of Alberta and University of Illinois-Champaign-Urbana suggest that Cadillac would have been wise to have a simpler website design for another reason as well: Absence of clutter subtly signals elegance to shoppers.
     Monitor your vendors’ websites to be sure information is not only correct, but also presented in a way that enhances your store’s marketability. If the site falls short, work with the vendor to resolve the problems and recognize that the site may not be as valuable to your profitability as you’d thought.

Click below for more:
Project Your Store’s Personality
Know the Tradeoffs in Being Sincere
Manage Store Clutter Strategically
Offer Aspirational Shoppers Subtle Signals

Thursday, August 12, 2010

Take Individual Responsibility for Customers

In his 2009 book, The Mom and Pop Store, Robert Spector quotes Bill Kodilla, who was among the most prized employees in the butcher shop owned by Robert’s dad: “You never waited on somebody else’s regular customer…. I would never work on your father’s customer or Sid’s customer.”
     I don’t support the idea of refusing to serve a shopper or making them hang around for a long time to be served. But Bill’s approach is a nice reminder of the research-backed advice to honor relationships between a salesperson and a customer.
  • Coach employees to use “I” instead of “we” when addressing customer questions and problems. “How can I make this right?” instead of “How can the store make this right?”
  • Post photos of staff along with their names. You might choose to use just first names or names in the format “Ms. Jones.”
  • Encourage employees to thank customers by name, using a credit card imprint, completed special order form, or bank check for information about the name.
  • Provide business cards for employees to hand out to customers.
     All this is a quite different approach than that taken by Citibank when sending out customer service letters to credit card customers. A Wall Street Journal piece titled “Mystery Writer: Does Citibank's S. Larson Really Exist?” points out how for years all those letters have been signed in the neat hand of S. Larson, but with no more about S. Larson’s identity or role at Citibank.
     In my opinion, it’s okay that there’s no first name. I’ve consulted with retailers in the hospitality sector and in complaint resolution who find employees are concerned about security risks in revealing the employee’s full name. But with S. Larson, you can’t even get her on the phone when you call.
     The WSJ article was whimsical. Still, at least some recipients of letters from S. Larson seem far from amused by the lack of person-to-person communication. Here’s my adaptation of a comment posted on the WSJ article: “If you’re a disgruntled Citibank customer, you surely won’t get satisfaction by telephoning and asking for S. Larson. If you want to know why this is, consider that S. Larson’s supervisor is Mrs. Helen Louise Waite. Yes, if you expect Citibank to solve a credit card problem for you, go to Helen Waite.”

Click below for more:
Use Your Employees’ Favorite Words
Use Psychology for Shopper Crowd Management
Announce Commonalities with Shoppers

Wednesday, August 11, 2010

Offer a Buffet of Loyalty Program Rewards

Shoppers want to customize. This affects the merchandise they buy. Fortune Magazine reported that fully 40% of Lands’ End shoppers are willing to pay more and tolerate longer delivery times so they can order a blend of precise sizes. It affects gift card purchases. In a National Retail Federation survey, about 20% of respondents said their main reason for not buying gift cards—even though gift cards are exceeded only by cold cash in the ability to customize their use—is because the cards are too impersonal. The appeal of the idea of customizing affects advertising. The viral popularity of the Old Spice Guy campaign shows how people get a kick out of a humorous personalized ad.
     The urge to customize also influences consumers’ preferences in loyalty programs. According to loyalty marketing consultants Colloquy, one reason for the outstanding success of these programs in Canada is that customers can choose among an especially broad range of rewards.
     A recent Marketing Daily posting describes another feature at which the Canadian programs excel—coalitions in which participants can accumulate points from grocery, gasoline, financial services, and other retailers. More than 100 firms give points in the Air Miles Reward Program, the most popular of the Canadian frequent shopper initiatives. With that many partners, the program can offer about 1,200 different rewards.
     Do you want to form a loyalty program coalition with other retailers in order to increase the breadth of rewards you offer? If so, one decision you’ll make is whether to partner with retailers that sell merchandise lines competing with yours. Some points to consider:
  • Research on branding says that franchisees and members of retailer cooperatives benefit when a loyalty program carries the name of the franchisor or cooperative, even if consumers can redeem at your store points they accumulated at another outlet. Just be sure that when the person comes into your store to make the redemption, you treat them as a prospect for additional sales.
  • At a time when sales revenues at many shopping malls are falling short, a rewards program based on a coalition of mall merchants can draw traffic and give valuable brand identity.
  • Developing partnerships around frequent shopper programs could help you screen partners for other profitable endeavors, such as special events and pooled purchasing.
Click below for more:
Tailor Loyalty Programs to Customer Culture
Give Loyalty Program Members Prestige
Offer Frequent Shopper Discounts Beyond Discounts
Help Customers Personalize Gift Cards

Tuesday, August 10, 2010

Flatter Shoppers with Care and Caring

Professors Elaine Chan and Jaideep Sengupta at Hong Kong University of Science and Technology decided to measure the power of phony flattery. The Chan/Sengupta findings were startling enough that they’re being described now in many publications and blogs, including an item in Harvard Business Review. Unfortunately, almost all the descriptions I’ve read are misleading for retailers because important details are omitted. I’d like to highlight for you what was really discovered.
     In the study, prospective clothing shoppers were given a flyer advertising a department store. The flyer read, “We’re contacting you because you’re fashionable and stylish,” and then asked the shopper to visit the store.
  • It would seem that such obviously insincere flattery would at best amuse a shopper and at worst irritate them. But surprisingly, due to the flattery, shoppers rated the store more highly. But not all the shoppers did. More about that in a minute.
  • In a second experiment, participants were offered a discount coupon from the store that gave the flattery or from a store whose flyer offered no flattery. About 80% of shoppers chose the coupon from the phony flattery store. But only under certain conditions.
  • In the third experiment, flattered participants were told that the store charged especially high prices and had a restricted range of clothing. Even when confronted with these negatives, participants held onto their positive views. Unless they did a certain thing first.
     Here, then, is the rest of the story:
  • In the first experiment, the phony flattery had the clearest effect when participants were told they had only five seconds to respond to each question about how much they liked the store.
  • In the second experiment, the 80% figure was from shoppers who chose the coupon three days after reading the phony flattery. For those who chose the coupon right after reading it, the figure was only 54%.
  • In the third experiment, the negative information did push the ratings toward the negative if the participants, before receiving the phony flattery, were made to feel good about themselves by writing about a positive trait.
     With customers hungry for self-esteem, phony flattery can facilitate sales. This works best if the customer is distracted from thinking about the flattery having been phony, such as by being rushed or making a selection after some time has passed.
     But for best long-term results, give genuine praise.

Click below for more:
Build Self-Esteem of Your Teen Customers
Respect Customers Who Claim Expertise
Preoccupy Shoppers for Indulgent Choices

Monday, August 9, 2010

Respect Zipf’s Law

Some questions to get you thinking:
  • Of all the words written and spoken in American English, which are the three most common? (Hint: I’ve used those three in the preceding sentence. Can you spot them?)
  • How much more common is the most common word than the second most common word? (For instance, is the most common word in American English used about twice as often as the second most common word?)
  • What’s any of this have to do with boosting retailer profitability?
     Please take a little time to come up with your answers. Then read on for my answers:
  • Based on an analysis of a million-word representative compilation by researchers at Brown University, the three most common words, in order, are “the,” “of,” and “and.”
  • The most common word does indeed occur about twice as often as the second most common word. That second most common word occurs about 125% as often as the third most common. This sort of frequency distribution occurs with other phenomena, too, such as the sales figures for the top seller in a category compared to sales figures for the second-best seller. It’s called Zipf’s Law after Harvard University linguistics professor George Kingsley Zipf, who described it.
  • Why am I telling you about this? Because Zipf’s Law is a reminder that we can boost profitability by looking at how to get the best from current resources before deciding to add on the expenses of new resources. You see, researchers at Santa Fe Institute and Spain’s Universitat Pompeu Fabra say that Zipf’s Law holds for word frequency because we want to be as efficient as possible in our communications. People add words to their language only if the current words can’t do the job adequately. Therefore, the top-ranked words get not just a little more, but rather much more, usage than the ones further down the line.
     Adding new customers is necessary for retailing success. But remember that it’s much less expensive to keep a current customer than to prospect for new customers. Exploring new sales channels might be a good move for you. But take care not to be attracted solely by the novelty at the risk of closing off existing sales channels.

Click below for more:
Keep Creating Advocates for Your Business
Integrate Multiple Shopping Channels

Sunday, August 8, 2010

Expect Shoppers to Expect Nonexistent Discounts

“Opulence. I has it. I like the best…. But I also like savings zee money.” So speaks the Russian rich guy in a DIRECTV video ad. And that brief monologue nicely reflects what you should aim for now with the segment of your target markets suffering recession fatigue. Offer them a sense of luxury, but in a way that they feel they’re getting extraordinary savings.
     Then they may very well want to brag about the savings, even if this means lying. Researchers at University of Alberta, University of Calgary, and University of British Columbia concluded that when people believe they might have been able to wrangle a better deal on a product or service, this conclusion leads to them feeling a threat to their self-esteem and their self-image. They fear not only that others will see them as being suckers, but also that they’ll see themselves that way.
     The researchers found that people are especially likely to lie to coworkers about the good deals they got. Since a natural follow-up question from a coworker is, “Where did you get such a good price?,” you—the retailer—might expect some people to come into your store these days looking for discounts you’re not offering. They were lied to.
     How nice to have them come to your store! So be ready to turn confusion about pricing into conviction to make a purchase from you:
  • Have each employee on your sales floor and at the checkout area carry copies of your store’s current ads and discount announcements. If a customer thinks the ad said something different from what it really said, it’s quick and easy for the employee to straighten out the problem. Having the ad itself takes it away from being customer versus store employee. There’s the objective source both of them can look at.
  • Offer the shopper an opportunity to purchase merchandise that is actually on sale. The sale should be on what the skeptical shopper will find attractive. If the discount is on merchandise different from what the shopper believes was offered in a bigger sales event, the amount of the discount does not need to be as deep as what they had in mind when they entered your store. They feel they’ve still gotten a good deal.
Click below for more:
Stand Ready to Sell Luxury
Head Off After-Order Regrets
Have Staff Carry Copies of Store Ads
Follow a Big Sales Event with a Smaller One

Saturday, August 7, 2010

Spot Values by Asking Shoppers for Reasons

A team of researchers from Australia and France told study participants they'd be given either a beef sausage roll or a vegetarian roll to eat. But those tricky researchers had lied to half the participants, who actually were served the other entrée from the one they were promised.
     One group of those participants granted a high rating to what they ate, regardless of whether they actually ate the meat or vegetable version, as long as they thought it was meat. What distinguished this group? Unlike the veggie fans, these meat elitists showed up on psychological testing as embracing values of power and strength.
     The values held by a consumer influence what that person will purchase. When members of a group—such as Baby Boomers or believers in Lindsay Lohan—expect other members and prospective members to share certain values, those values can become important drivers for large slices of your target markets.
     How do you determine what those values are? One way is to ask shoppers their reasons for selecting certain items over others. It’s best not to ask the questions in a “Why?” format. Many consumer decisions are made intuitively or based on emotion. When asked, “Why did you make that choice?,” some consumers get defensive, as if their judgment is being ridiculed.
     You’re likely to get better results and avoid jeopardizing the sale if you use a phrasing that assumes the shopper is making a sound decision: “What is important to you when choosing a product like this?” or “In what ways do you find this one to be better than the other possibilities?”
     When you have the answers, you’ll want to analyze them. One methodology is based on the values categories used in an instrument called the List of Values. Researchers at University of Oregon, University of Alabama, and University of Texas-Austin find that the nine values assessed by the LOV do a good job of describing what characterizes different groups of consumers:
  • Fun
  • Excitement
  • Sense of accomplishment
  • Self-fulfillment
  • Security
  • Self-respect
  • Respect from others
  • Warm relationships with others
  • Sense of belonging
For your profitability: Sell Well: What Really Moves Your Shoppers

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Notice Customers’ Cultural Aspirations

Friday, August 6, 2010

Manage Store Clutter Strategically

Is store clutter bad? A Practical eCommerce article this week recommends that online retailers cut down the clutter. Keep the site neat and simple, so goes the advice. Supporting this idea, researchers at Nielsen Norman Group in Northern California found in their eye-tracking studies that people look at about 50% of online ads that contain just text, but only about 35% when text is superimposed on an image. If there’s animation to muddle up the ad further, the figure drops to 30%.
     I agree that sales can be lost because of excess messiness—not only on ecommerce pages, but also with in-store sales. Still, on the other hand, we do need sufficient complexity—what some retailing consultants might call clutter—to engage the shopper. A classic and repeated finding in consumer psychology is that we want to introduce enough incongruity, enough surprise, so that the shopper slows down for a moment to appreciate the sales message. If the layout is overly sterile, the viewer processes it all immediately and then moves on—beyond the range of a possible add-on or upgrade that would benefit both the shopper and the retailer.
     Interpreted simplistically, the Nielsen Norman Group findings mean we should have advertising and sales messages composed solely of text. No graphics. No animation. My guess is such advice doesn’t ring true for professional retailers, and when advice from a retailing consultant to a retailer doesn’t ring true, it’s a signal to consider the advice with suspicion.
     A broader scope of research indicates the suspiciousness is justified. Researchers at University of Florida-Gainesville find that messages we see out of the corner of our eyes still influence us. For instance, when a customer walks briskly into your store, eyes straight ahead, any displays of featured product packages off to the left and, off to the right, brief statements of the featured products’ benefits increase the motivation to buy. In this case, the clutter helps keep the shopper’s mind from devising reasons not to buy.
     And too little mess restrains purchases in another way as well: Retailing consultant Paco Underhill tells a story about an Einstein Bros. Bagels prototype store in Utah. The problem was the bags of bagel chips were being shelved with such precision that customers hesitated touching the bags, let alone buying one. The solution? Regularly checking that the shelves were sufficiently cluttered.

Click below for more:
Introduce Featured Products as Customers Enter
Interpret Brain Science Advice Cautiously

Thursday, August 5, 2010

Reassess Your Pricing Assumptions

Here are some updates to the research-based tactics in Retailer’s Edge about pricing. (I described most of the tactics in chapter four, “The Price is Right.”)
  • Reassess the sensitivity of your target audiences to price discounts now. Consumers in countries such as Japan that in the past generally considered discounting to indicate inferior merchandise have become much more likely to use coupons and be attracted by promotional pricing. You might do a formal study of the pricing assumptions for your major product categories by employing tools like the Van Westendorp questions. A less formal look would come from tallying and analyzing the results of different price discount systems you’ve tried out.
  • Analyze the reasons for changes in reactions to markdowns and then use this information to adjust your pricing strategies. For example, with consumers in Japan, the changes in attitudes seem to be due to the prolonged economic downturn and the burgeoning availability of price comparison technologies.
  • In Retailer’s Edge, I described the research that said consumers pay more attention to percentage discounts than to the dollar-or-cents (or other currency) amount of the discount. There’s evidence this is changing so that dollar-or-cents-off is increasingly attractive.
  • In Retailer’s Edge, I presented the compelling evidence for using just-below pricing, such as prices that end in $.99 rather than $.95. A chief exception to the rule, I said, was when your major selling point is low prices. In this case, the odd endings, such as $.43 and $.87 project the message, “We’ve trimmed every last penny off the price.” Now because consumers have become much more price sensitive, consider modifying the just-below rule. Those who are discount shoppers are reacting to $.99 prices by saying, “Are you trying to fool me into thinking I’m spending a dollar less?,” and status-seeking shoppers might consider a price ending in $.99 cents to be low-class. And most consumer mindsets are vacillating between discount and status, with the middle continuing to shrink.
     The consumer behavior findings which lead to what I'm recommending here are not as time-tested as those backing up what’s in Retailer’s Edge. I present the updates to you as cautions. That’s why I say in the title of this post you should reassess, rather than say you should necessarily revise, your pricing assumptions.

Click below for more:
Answer Van Westendorp Pricing Questions
Analyze the Details About Your Markdowns
Round Prices to Whole Dollars for Better-Best

Wednesday, August 4, 2010

Identify Influencers in Family Decision Making

When a group shops together, the total of the purchases is more than would be the total if each of those people were shopping on their own. The energy of the group and the opportunity to exchange reactions stimulate buying. Special events encourage people to shop in groups with this sort of excitement.
     When that group is a family rather than a set of friends, though, it gets more complicated. For one thing, if young children are along, the store should be set up to allow the adults to access and try out merchandise while keeping an eye on the little ones. Beyond this, selling to a family involves keeping aware of the different roles played by the family members.
  • Just as with purchasing by businesses, the person doing the buying may not be the one intended as the user of the product or service. Present the appropriate benefits to each participant in the decision. For the prospective purchaser, the benefit might be cost, while for the prospective user, it might be novelty. With adults, focus on each participant as you present the benefits that will be of interest to that person. With children, be sure to look at the child when discussing benefits of interest to them, but also spend time looking at the responsible adult so it’s clear you’re not aiming to undercut the adult’s authority.
  • Attend to attitudes toward spending. Researchers at University of Michigan, University of Pennsylvania and Northwestern University provide some intriguing evidence that tightwads—who recognize they should be more willing to spend money—tend to marry spendthrifts—who recognize they should be more cautious in spending money. Rather than viewing such couples as having opposite attitudes, view them as having complementary approaches. They married each other to help moderate the extremes. When making a sale, give them sufficient time to work their magic with each other.
  • Attend to attitudes toward innovation. When asking a family group to try a new product category or an unfamiliar brand, you’re appealing to their attraction to novelty and innovation. Researchers at University of Western Ontario and University of South Carolina find that when the family group includes young adults and their parents, the parents’ attitude toward innovation carries more weight than the siblings’ views. The researchers advise that if you want to get the next generation to try new products, target their parents.
For your profitability: Sell Well: What Really Moves Your Shoppers

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Encourage Group Shopping
Stage Special Events to Build Sales
Offer Family-Oriented Experiences
Stay in Touch for B2B Sales
Sell Spendthrifts with Opportunity Costs

Tuesday, August 3, 2010

Boast About Underdog Determination

Decades ago, Avis Rent A Car System unveiled a series of ads that the trade journal Advertising Age later called one of the top ten campaigns of the 20th century. The theme of the ads: “We’re number 2 in rent a cars behind Hertz, so we try harder.”
     More recently, researchers at Harvard University, Simmons College, and Boston College found that the underdog’s appeal to consumers endures. Among other things, when a choice of chocolate bar brands was offered to the study participants, the brand positioned as the underdog was selected about 70% of the time.
     The researchers say the power of the come-from-behind fits well with the distinctively American stories of successful immigrants and of second chances met with passionate determination. Supporting this argument, it’s true that the study participants in the U.S. were more influenced than were those in Singapore by the underdog positioning. But even those in Singapore were affected. After all, every consumer in the world has felt they’re behind the leader in something at one time or another, so every consumer cheers for others in that position.
     Your retail store portrays a brand image that is as important to your success as the candy bar brand image is to the candy bar manufacturer. In your advertising, your coaching of employees, and your staff’s personal selling with customers, boast about having the determination of an underdog who is intent on being the best. For instance, share with employees and customers any stories of humble beginnings of your retail business and demonstrate the respect for customers and fellow employees that is associated with humility.
     However, do all this with care. At the same time that people root for the underdog, employees and consumers also like to associate with winners. The Avis campaign was profitable because the fundamental message was, “We’re not settling for being number 2. We’re striving to be number 1, and if we are number 1, we’ll be so accustomed to striving that we won’t be pulling back at all on our passionate determination to serving you.”

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

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Brag About Your Retailing Humility
Show Respect in Front of Customers

Monday, August 2, 2010

Juice Up Sales with Flavorful Names

The color of a product strongly influences its attractiveness to consumers. Researchers at University of British Columbia and University of Florida found that the color of orange juice was more of an influence on how taste was perceived than was information about the price of the juice or claims about its quality. And shoppers searching for the right shirt, interior paint, or nail polish pay lots of attention to hue.
     But what about the names given to colors? Is a retailer better off carrying products labeled “cherry red” rather than just “red” on the package? Is a car salesman or interior designer likely to make better sales saying “passion blue” instead of “medium blue,” even though the automobile or the carpet swatch is right there for the customer to see for themselves?
     Well, research at Boston College and University of Pennsylvania implies that Shakespeare’s Juliet may have had her accuracy clouded by love when she uttered “What's in a name? that which we call a rose By any other name would smell as sweet.”
     Unexpected color names—like “Florida orange” and “freckle brown” build interest. Color names which venture beyond surprise to blatant ambiguity—names like “antique red” and “millennium orange”—might be better still. Ambiguous names work best when the shopper doesn’t see the actual product color first, while unexpected descriptive names work best when the product color is seen. The reason for all this is that the shopper spends mental energy trying to figure out why the particular color name was used, and consumer psychology studies find that mental involvement increases purchase likelihood.
     Are there circumstances in which it’s best not to use color names oozing with personality or ambiguity? In Art and Copy, a 2009 documentary about creative geniuses in the U.S. advertising trade, Hal Riney (who died before release of the film) described his recommendations to General Motors about introducing the Saturn automobile line. Aiming for a down-home, go-for-basics appeal, Mr. Riney advised that if the car is red, call it “red.”
     One might claim that the Saturn is no longer being manufactured because the color names didn’t have enough personality. But that would be twisting the evidence a whole bunch. GM didn’t stay with Mr. Riney’s advice. Color names for the Saturn included “chili pepper red,” “evening blue,” and “forest green.”

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