Wednesday, August 31, 2011

Assume Shoppers May Not Understand Why

We can become better retailing professionals by using our own experiences as consumers. As an example, I shall use an episode which ended with a restaurant server bringing me an extra cloth napkin:
     During a trip last week to train and consult with retailers in Modesto, California, I stopped for dinner at the Red Lobster in town. As those who have restaurant-hopped with me realize, I’m a two-napkin eater. I like to place one napkin on my lap and have the other at the ready on the table. Since buttery seafood can get messy, I hold out for two cloth napkins at Red Lobster.
     When my server—I’ll call her Carolyn because that is not the name she used—brought the entree, I said, “May I have a second cloth napkin?”
     She replied, “I can give you a paper napkin.”
     And I replied, “I’d like a cloth napkin. If it's a problem, please send the manager over. I’ll ask him if I can have a cloth napkin.”
     And she replied, “The manager is a woman.”
     Her last reply struck me as non sequitur nonsense. But as a psychologist, I was required to ask myself, “Why did she say that?”
     The reason, I believe, is that she interpreted my “please send the manager over” as code words for, “Carolyn, you are incompetent.” She then fired back with her code words for, “You really have no business thinking I’m incompetent. You’re not even able to wrap your head around the fact that a manager of a restaurant might be a woman. Where do you get off putting down women like you just did me?”
     In reality, though, my words were code for, “I’ll bet your manager told you that whenever a diner asks for an extra napkin, bring them a paper napkin so we can keep down costs. If my request for a cloth napkin places you in a tough situation, let’s please take you out of the middle of it.”
     But I failed to say this. I used a shorthand with the assumption that Carolyn understood what I was thinking. It’s the sort of thing a retailer might do when assuming a customer knows why a price on a favorite item has increased or the delivery of a special order has been delayed.
     Of course, regarding the episode I’ve told you about, it’s also possible Carolyn is, in fact, incompetent.

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Explain Yourself to Female Customers
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Tuesday, August 30, 2011

Let the Internet Set Your Price

“Can you meet the internet price?,” says the shopper as she flashes at you the result of her mobile device search.
     Bricks-and-mortar (B&M) retailers face that question repeatedly. When replying, avoid saying the word “No.” That word irritates shoppers. One alternative is to say “Here is what I can do.” Then talk about items like:
  • Discounts for quantity purchases by the shopper or by a group which the shopper brings together.
  • Delivery at times when demand is likely to be slow for you. For services, keep in mind perishability. If you don’t sell the appointment for an hour today, it’s gone forever from your stock.
  • Extras such as gift wrapping, training, and/or installation. You don’t need to give them away. Consider setting a price when they are value-added items the internet purchaser wouldn’t receive.
  • A discount on a subsequent purchase. Be sure you’re ready to offer the same deal to everybody who comes into your store saying, “I want what you gave to my friend.”
     Another alternative is to answer the “Can you meet the internet price” with, “Yes, I can.” Shoppers love those words.
     As I learned in a “Profitability Tactics for Small Retailers” seminar I conducted last week for retailers in Modesto, California, this is the way B&M retailer Phillips Lighting & Home handles the issue. With items they carry for which the manufacturer enforces an Internet Minimum Advertised Price, Phillips Lighting & Home finds a compelling advantage in letting the internet set the price: The shopper who comes in knowing what they’d pay on the internet is thrilled they can get the same base price locally and probably take possession of the item immediately.
     Allowing manufacturers to set minimum prices is a relatively recent development in American retailing. It followed a 2007 U.S. Supreme Court decision which said that prior rulings failed to recognize how the practice is not always anticompetitive. Along with this, the practice of letting the internet set the price is relatively new at Phillips Lighting & Home. Owner Chuck Arnold told me that he’d resisted suggestions he do it for fear his profit margins would drop sharply, but this didn’t happen.
     From my consumer psychology perspective, I recommend a general policy of setting a price on each item, taking into account factors like degree of demand and costs of inventory storage. However, as with all good rules, there are important exceptions.

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It Takes Two to Say No
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My thanks to Chuck Arnold and Carrie Arnold of Phillips Lighting & Home for teaching me about IMAP.

Monday, August 29, 2011

Prime for Good Behavior with Family Cues

Researchers at Harvard University and University of North Carolina found that adults behaved themselves better when in environments where childhood playthings—such as teddy bears and crayons—were around. In the study, participants carrying out business around the playthings lied less and were nicer to each other than those in surroundings lacking items associated with childhood. For instance, the frequency of cheating dropped almost 20%.
     The implication for retailing? If we have cues of childhood in stores, then shoppers and shopkeepers are at least slightly less likely to yell at each other or steal the merchandise. Using these sorts of cues to influence behavior is called priming. Other research finds that it’s not only reminders of the little kids, but also of the oldsters that can prime us to behave.
     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.
     This story might be more apocryphal than accurate. However, it’s true that two museums in Moscow and two in St. Petersburg have sat 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. You see, the explanation is that family associations stimulate personal accountability.
     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.
     The Harvard/North Carolina researchers suggest that the cues be subtle, though, to avoid the recipients feeling they’re being manipulated and so reacting with the opposite of what we intend.
     At the Russian museums, many of the babushkas are dressed to resemble the artwork they’re guarding.

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

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Sunday, August 28, 2011

Habituate Customers to Quick Return Trips

Boomerang retailing. When customers return soon and often to your store, the total of sales revenues for those customers averages a higher amount than that for customers who come infrequently. This is true even when the customer is making a large purchase on an infrequent visit and smaller purchases when shopping with you frequently.
     Two reasons for this are:
  • Coming in often increases the likelihood the shopper will have family or friends along. The shopping is combined with socializing. And somebody shopping with a group tends to spend more. Customers are more willing to tolerate the inevitable nuisances of shopping when they are with a group. This “misery loves company” effect has been noted by social psychologists at Vanderbilt University.
  • According to University of Pittsburgh and Baylor University research, more than 75% of shoppers plan to make purchases beyond what they came in for. However, there is a limit for each shopping trip. The more shopping trips, the more often the customer stumbles across needs they’d forgotten to include on their shopping list and items they didn’t realize they wanted until the items were in front of them or in their hands.
     High fuel prices and limited shopper time can cause consumers to shop with you less often. The type of merchandise you sell also affects the frequency of visits. If you’re running a shop that sells only large appliances, you might get concerned if you’re seeing the same faces coming in week after week. The merchandise mix also affects visit frequency in general merchandise stores. A recent St. Louis Post-Dispatch article points out that as the demand for tobacco products has faded, this important—even if deadly—daily draw into the store can no longer be counted on.
     According to the article, the solution for many retailers is to feature consumables—food in particular. You can buy soy milk at Dollar Tree and rice at Walgreens.
  • What items do you have now in your store and can you add to your merchandise mix which consumers need frequently?
  • How can you price those items to reflect the value of your giving shoppers the option of convenience while also recognizing you can guide the shoppers toward additional items for increased profitability?
  • How will you configure the displays of those frequently needed items so that the shopper’s eyes and minds are primed for buying your stock-in-trade merchandise and services?
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Saturday, August 27, 2011

Learn From the History of Giant Retailers

Small to midsize retailers can learn from large retailers. Discern where the large retailer seems clumsy, then grab market share by being more nimble. Assess how what is working superbly for the Big Box might be successfully scaled down.
     How about learning from the largest retailer in the world? No, I don’t mean Walmart, I mean the Great Atlantic and Pacific Tea Company. In the early 1920’s, A&P became the world’s largest retailer based on revenues. In 1950, A&P sold more goods annually than did any other business except General Motors. I’m talking about learning from the history of giant retailers. History gives perspective.
     NPR recently interviewed Marc Levinson, author of The Great A&P and the Struggle for Small Business in America. An analysis of the interview content yields tips for today’s smaller retailers when contesting for a share of the consumer’s dollar:
  • Avoid battles you won’t win. For more than twenty years, small retailers fought against A&P in the courts and among legislators, saying the big chain was stifling competition. Those efforts were hugely unsuccessful, particularly when the economy did well enough for there to be sufficient business all round. These days, when small to midsize retailers complain about the intrusion of Big Box stores into their communities, consumer psychology research findings indicate the best to be hoped for is a holding action. Consumers want value, and loyalty flees promptly. Devote your limited resources to providing distinctive value.
  • Select the right battles. A substantial contributor to A&P’s success was their ownership of manufacturers and suppliers. In the late 1940s and early 1950’s, legislative and public pressure caused A&P to change. The tag line mobilizing the pressure was not “buy from local shops,” but rather, “make predatory pricing illegal.”
  • Avoid misplaced romanticizing. A&P succeeded because the traditional way of buying groceries was burdensome. Since each shop carried only a limited line, the consumer had to go to separate stores for canned goods, fresh vegetables, meat and fish, baked goods, and household supplies. Then at each store, the customer had to depend on the merchant to retrieve the merchandise. These days, that system might work with luxury goods. It might even work when the shopper concludes they require expert advice, such as in a butcher shop. But even here, today’s consumers by and large would prefer to avoid shopping for commodities every day or two, as was necessary before A&P.
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Friday, August 26, 2011

Roll Those Price Quote Wheels-Within-Wheels

You can find research to support almost any approach you take to pricing. Some of the advice from the research seems to conflict with other advice. This suggests it all might be nonsense.
     To be sure, the reaction of a shopper to a retailer’s price quote depends to a certain extent on factors you—the retailer—would have trouble determining until you know the shopper well. Still, there are guidelines well-grounded in research that do make sense. They are like wheels-within-wheels, with the most applicable advice containing inside it tips for certain conditions and exceptions.
     That’s the form in which I’ll present them below. This way, you can proceed to the point where your brain starts yelling, “I’m full for now! Stop to give me a little rest!”
  • Set prices that end in a 99. $3.99 is better than $4.00 or $3.95. $499.00 will look more attractive to the shopper than $500.00 and will not look less attractive than $495.00.
  • But when quoting better-best alternatives to customers, say whole dollar amounts. If the items are priced at $29.99 and $39.99, say, “This one costs less than $30, and this one costs less than $40. Here are the extra benefits for the additional $10.”
  • Also use whole dollar pricing for gift items, luxury items, and fun items.
  • But if you’re broadly advertising a cut-rate store image, use odd-cents pricing, such as $8.37, to convey that you’ve cut every last penny from the cost.
  • When discounting, state the percentage of the discount rather than the dollar amount.
  • But you can make a discount look more attractive by filling it with 1’s and 2’s. For example, a discount from $222.99 to $211.99 looks more attractive to most customers than a discount from $199.99 to $188.99, although the second discount is actually a larger percentage of the regular price.
  • That last one applies when the signage and sales tag include both the regular price and the reduced price. However, if you are saying the price to a shopper, such as in a voice call, the rule is different. “We’ve reduced the price from ten dollars to seven dollars, sixty-six cents,” sounds like a better deal than, “We’ve reduced the price from ten dollars to seven dollars, twenty-two cents.” This is because the sounds of “s” in “sixty-six” imply “small” and “smooth,” but the sounds of “t” in “twenty-two” are sharper and imply “tension.”
For your profitability: Sell Well: What Really Moves Your Shoppers

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Thursday, August 25, 2011

Impassion Your Shoppers

“If you can find a better deal, TAKE IT!”
     That slogan’s being used by Pentagon Federal Credit Union in marketing their auto loans. Not “We guarantee you won’t find a better deal.” Not, “If you find a better deal, we’ll match it.” Not “We dare you to find a better deal.”
     The only vapor of passion in “If you can find a better deal, TAKE IT!,” is in the use of ALL CAPS and the exclamation point. The problem for this retailer is that passion sells. Consumers are guided toward purchase decisions by their emotions more than by their reasoning.
     There are countless ways to arouse passions. Among the most influential are those using sex appeal. Psychoanalyst Sigmund Freud claimed pretty much everything we do springs from the sex drive. Lots of people thought Sigmund was taking a good thing too far. Still, it's true that the sex drive does move the merchandise.
     In using this fact, realize the sex drive refers to much more than raw passion. In consumer psychology, it means the mutual attraction of masculinity and femininity toward each other. It's the Yin and the Yang. The complete package of passion is in the interaction.
     Researchers at University of Texas and University of Southern California observe that consumers associate masculinity with products and services which are disciplined, stable, and serious and associate femininity with products and services which are delicate, whimsical, and changeable.
     Your customers make purchase decisions based in part of how well the purchase can project their desired degrees of masculinity and femininity. It's true across age groups: Children as young as twenty months old distinguish toys intended for girls from those intended for boys. Northwestern University research found that boys are much more likely than girls to prefer rough chunky peanut butter to the smooth variety.
     It's true across cultures. Classic research by a psychologist working for IBM showed how the descriptions of masculinity and femininity differ from one culture to another. What stays the same is the drive of each type to show off their credentials.
     Use phrasing which your target audience associates with either masculinity or with femininity, and avoid mixing the two sets of words in the same message.
     For auto loans, the masculine in all of us might like, “After doing the research, you’ll come to us.” The feminine might like, “The best deal for you today and tomorrow.”

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

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Wednesday, August 24, 2011

Stock Your Cellar for the Perfect Storm

The dollar store business format is especially well-positioned to weather a confluence of intertwined negative forces facing retailers that could be called a perfect storm. The dollar stores are aiming for the bottom market, those shoppers who consider their storm cellar to be the bargain basement. The smaller retailer can emulate this with a thrift store format. But all retailers—including those catering to an upscale demographic—could benefit from incorporating two characteristics of dollar store retailing:
  • Feature limited-stock, limited-time offerings. The dollar stores do this largely from necessity. They get a good deal on merchandise which suppliers are anxious to sell. The message is “Buy it now because it may not be here for long.” Even with higher-priced items, this fear of missing an opportunity motivates purchase behavior. Realize this is related to, but different from, the “treasure hunt” appeal, which says you’ll be surprised by what you find. Treasure hunts work best with unusual items. “Buy it now” works best with commodity items.
  • Mix fun with functional. People shop at dollar stores because saving money is functional. Still, Dollar Tree made lots of profits toward the start of the Great Recession by selling party supplies at low prices. Many of the Dollar Tree stores have freezers and coolers to stock grocery items and then included among those grocery items fun alternatives such as ice cream. Researchers from New York University and University of Pennsylvania found that when people put a healthy food item into their grocery shopping cart, they become much more likely to select a fun food item next. In choosing the fun food item, they're still interested in the nutritional value, but from the opposite point of view. They might very well be selecting the fun item because it's not nutritious.
For your profitability: Sell Well: What Really Moves Your Shoppers

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Tuesday, August 23, 2011

Disassociate from the Undesirable

Retailer Abercrombie & Fitch is offering “substantial payment” to Mike “the Situation” Sorrentino and other members of the cast of the TV reality show The Jersey Shore. To receive the payment, the cast member must pledge not to wear A&F clothing on the show.
     “We are deeply concerned that Mr. Sorrentino’s association with our brand could cause significant damage to our image. We understand that the show is for entertainment purposes, but believe this association is contrary to the aspirational nature of our brand, and may be distressing to many of our fans,” read the announcement. “We have also extended this offer to other members of the cast, and are urgently waiting a response.”
     Well, first off, if what you’re aspiring to is proper grammar, make that, “…urgently awaiting a response.”
     Beyond this, even if only a silly bid for publicity, the A&F announcement is more about disassociation than aspiration. Consumer psychologists talk about aspirational groups, to which a shopper wants to belong, and dissociative groups, from which a shopper wants to distance themselves.
     Since The Jersey Shore is a hit show, envy plays a part. Research findings from Tilburg University in the Netherlands indicate that when a consumer shopping for a product envies someone who owns that product, they’re willing to spend more money on their purchase. In some cases, it’s more money on the product owned by the other person. In other cases, it’s more money on a competing product.
     When a shopper believes the other person earned the right to the advantages of owning the product, that shopper is willing to pay a premium for owning the product themselves. The extra money is like a tribute to the respected person.
     What about the shopper who believes the other person doesn’t deserve the good fortune? There is then a desire to show that what the other person possesses isn’t so great, after all. In the research study, people with this malicious envy were also willing to spend more money, but on a competing product.
     So did A&F do it properly? The day after the announcement that Abercrombie & Fitch would pay The Jersey Shore cast to stop wearing A&F fashions, the retailer’s stock ended down about 8%. Of course, the whole stock market took a substantial tumble as well, and I’m confident that had to do with the world’s economic situation, not The Jersey Shore’s The Situation.

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Monday, August 22, 2011

Pace Disclaimers to Build Faster Acceptance

When closing a sale, we might present a disclaimer to the consumer. With special sales promotions and contests, the disclaimer may have to do with exclusions. You can’t use the coupon on weekends, or it isn’t necessary to make a purchase in order to be a winner. For medications, the disclaimers may have to do with side effects and drug interactions.
     Regulations and business ethics won’t dictate the pace at which the disclaimer is delivered. However, because information processing takes mental energy, the pace at which we present the disclaimers affects how well the information leads to the trust we’d like to establish.
     The conventional gospel is that you deliver any disclaimers at the end of the ad in order to emboss the main message first. When you get to the end and your ad is on radio or TV, how quickly should you state the disclaimer? The general practice is to use an announcer skilled in talking as quickly as possible, again with the objective of not throwing interference into the ad’s overall thrust.
  • Research at Wake Forest University, Northwestern University, Saint Joseph’s University, and Duke University indicates these rapid-rate disclosures work well when your store has already built substantial trust among the audience for the ad.
  • However, the researchers suggest that when you’re establishing trust for your store brand, you deliver disclaimers at the same pace the body of the ad is delivered, and in the same tone of voice from the same announcer. The rapid rate will come across as trying to pull a fast one—tricking the shopper by confusing them. The change in tempo led to a decrease in purchase intentions.
  • With sales promotions and contests, always announce the restrictions with a patient tone. You don’t want shoppers arriving at your store expecting to get a better deal than you promised to deliver. This would eat away at trust even for the store that’s already established a deep reservoir. The negative feelings stimulated by this in shoppers are so strong that consumer psychologists refer to the package of emotions as “betrayal.” Because it’s so serious, also be sure the offer and disclaimers are in writing, and have each staff member carry a copy. It’s better to have the customer and salesperson be both looking at a printed ad as their reference point rather than resorting to memories of what the broadcast ad really said.
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Sunday, August 21, 2011

Limit Design Support for Personalized Gifts

Shoppers like to personalize items. To consumer psychologists, personalization goes beyond customization, in that personalization takes into account the characteristics of the particular individual. When selecting a gift, personalization requires the shopper to think in depth about the recipient and so enables presentation of the gift in an especially meaningful way. This dynamic holds true for more than adults; people like to personalize for the children and even for pets they love.
     At the same time, personalization demands knowledge of what alternatives are available and of the tradeoffs when selecting among combinations of options. The shopper may ask you for help. How much direction should you provide?
     Research findings from University of Colorado, Florida State University, and Indiana University indicate you should take care to limit the design support.
  • The more time and mental effort the gift giver devotes to the personalizing, the more they are willing to pay for the item. The researchers say this is because a shopper places value on their time and effort. Answer the shopper’s questions, but if asked, “What should I pick?,” give as a first answer, “Well, you know the recipient better than I do.”
  • Remind the shopper that coming into the brick-and-mortar store rather than shopping online in itself shows caring. A holiday season survey by international marketing consultants Millward Brown found that about 22% of the respondents who prefer B&M gift shopping said they believe that the act of personally going to a store adds value to the gift.
  • Suggest to the shopper brands that carry a less dominant product personality. When trying to personalize strong brands, the gift shopper felt they needed to share credit with the brand’s design staff for the outcome. They ended up less pleased with their personalization.
  • Provide many ways to personalize. Offer gift wrapping as a value-added service. Show a variety of tags or greeting cards from which the shopper can select.
  • If they are uncertain about the recipient, the shopper may want to choose a gift card. In a National Retail Federation survey, more than one out five shoppers said their main reason for not buying gift cards is because the cards are too impersonal. Let's find ways to help customers personalize. Individualize your gift cards and holders, with a selection of themes—such as sports and travel—a range of colors, and enough space to write a message to the recipient.
For your profitability: Sell Well: What Really Moves Your Shoppers

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Saturday, August 20, 2011

Season Your Store

Inspired by the plentiful back-to-school sales promotions at the time, a Wall Street Journal article marveled at how retailers use seasonal merchandising throughout the year. Retailers even make up seasons to create themes: Sam’s Club stores have celebrated “Fall Gatherings,” with displays that include, among other items, rakes, and at Target, the first few weeks of Januaries, have brought both “Storage and Organization” season and “Wellness Restock” season, with containers and exercise equipment to empower consumers’ New Year’s resolutions.
     Changing displays periodically is always a good idea for retailers, and moving the merchandise around works well as long as you leave habitually purchased items in locations already highly familiar to your shoppers. If the season themes help you do that as a retailer, great.
     However, my guess is that most consumers don’t recall having encountered “Fall Gatherings” or “Wellness Restock.” In addition, the merchandising changes that occur between flu season and allergy season can happen without you uttering the names. If you want to get the most from seasoning your store, announce each theme loudly and proudly.
  • Stimulate lots of senses. Stage music and fragrances which support the theme. See if you can select merchandise design in addition to merchandise type. The WSJ article reports that Kimberly-Clark produced Kleenex boxes shaped like watermelon slices for the summer season. Research at University of Michigan finds that stimulating multiple senses increases the potential for purchasing.
  • Keep it lively, but with breaks. Use brilliant colors and energetic sounds. Consider using animated displays. However, don’t overstimulate the prospects. Provide breaks in the music. Rotate the area of your store in which the season is celebrated so the overwhelmed shopper can retreat to routine territory. Researchers at University of Chicago and National University of Singapore say that nonstop celebration tenses muscles, and tense muscles will keep people from being sold what they’re not fully convinced they want.
  • Make it local, both in theme and in merchandise. If high school football is a big deal in your neighborhood, celebrate this rather than the more generic “football season.” The WSJ article reports how smart retailers contact their local school district to learn the contents of the list being sent out to parents in that district for supplies the student is to purchase.
  • Design your exit strategy. Toward the end of the season, how will you most profitably dispose of items which will soon become less attractive to shoppers?
For your profitability: Sell Well: What Really Moves Your Shoppers

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Friday, August 19, 2011

Solicit Information from New Employees

The manager was pleased at his decision to hire Marie as a salesclerk in the pharmacy. Older customers seemed much more comfortable asking Marie questions than asking the teenage salesclerks in the store. But the manager noted that Marie might be having some difficulties from being an older person herself: When a shopper would ask Marie for help in reading a package label, Marie often squinted and appeared to lack confidence.
     The manager wasn’t sure how to approach this. After all, there are laws protecting against discrimination, he thought. Maybe all Marie needed was an update in her eyeglass prescription. So he decided to come at it indirectly. “Marie,” he asked, “sometimes I’ll assign an employee to pick up pharmaceuticals. Do you need to wear glasses to drive your car?”
     “Boss,” replied Marie, “I need to wear glasses to find my car.”
     Marie’s answer opened up the opportunity for the manager to describe his observation that Marie appeared to be having difficulty reading labels, and the manager’s concern that an inaccurate reading of contents or dosage instructions could be a danger to a customer.
     I hold a certification called Senior Professional in Human Resources from the Society for Human Resource Management, so I’m aware of the cautions retail managers must exercise in soliciting information from employees. Besides, there’s so much we want the new employee to know. We frequently find it hard to carve out the time to truly listen.
     Respect the rules. Still, the more we discover about our staff, the more competent we can be in supervising them. Provide employees opportunities to talk, and ask questions that allow staff to share important facts about themselves. You might be highly impressed by what you learn.
     Another manager and another problem with an older employee: Albert, the new hand on deck had retired from the U.S. Navy, so the manager was surprised how Albert was habitually late coming to start his shift. Albert was very competent throughout the work day, and Albert clearly enjoyed sharing his technical expertise with customers and store staff. Still, the tardiness was becoming more than a nuisance. Other employees, including the group Albert supervised, were complaining.
     “Albert,” the manager finally asked, “What would your coworkers have said to you when you were in the military if you arrived late for duty in the morning?”
     Albert smiled slyly. “Most times, they’d say, ‘Good day, Admiral.’”

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Thursday, August 18, 2011

Build Purchase Habits by Relieving Reactance

Consumer psychologists call it “reactance.” It kicks in when shoppers sense that their freedom of choice is threatened. They rebel, becoming determined not to do what you’re trying to convince them to do. They start debating each idea you present and physically distance themselves from you.
     Reactance occurs across cultures. It’s found not only in places like the U.S., where individual initiative is treasured, but in collectivist cultures like South Korea. It’s found in all age groups. And it’s found among U.S. airline travelers irritated by Transportation Security Administration carry-on rules. That’s the one with a lesson for you about turning reactance into continuing sales.
     The TSA 3-1-1 rule restricts travelers to carrying onto a plane containers of liquids, gels and aerosols only if each container is no more than 3.4 oz. and all the containers fit inside one quart-sized zipper-top bag. Exceptions require the express permission of the screening officer.
     Many travelers were irritated by the restrictions when implemented in 2006 after a terrorism threat in the U.K. But the rules did provide a marketing opportunity for retailers like, which sells small sizes of a broad variety of affected items. understandably became interested in what would happen to demand for their product line if the TSA 3-1-1 rule were ever revoked. To find out, the company obtained questionnaire responses from 852 travelers.
     In my opinion, the survey procedures were not rigorous enough to place high trust in the numerical findings. At the same time, the tendencies shown in the survey results do illustrate a valuable lesson for retailers: Provide shoppers ways to say that the restrictions are really a good idea after all, and their reactance will fade.
     The survey project found that a substantial proportion of people who began using travel sizes only because they were required to do so say they would continue using travel sizes even if the 3-1-1 rule is dropped. These people said the smaller containers had become a part of their lives. In fact, many now pour from large containers into small containers to take products with them by train, bus, or auto, even though there are no government restrictions on the package sizes.
     Convenience and environmentalism are likely reasons.
     When your shoppers are irritated with restrictions on what they can purchase or use, focus their attention on ways those restricted choices could end up operating to the purchaser’s advantage.

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Wednesday, August 17, 2011

Test Out New Concepts

An article this week in The New York Times reports how Nordstrom, Inc. is testing the NYC market by opening a new store. The ways in which Nordstrom is doing this provide hints to other retailers about the value of testing and how to do it well.
  • Be clear with consumers that what you’re doing is a trial. This reduces any negative effects on your store brand that might occur. If what you’re testing is poorly received, you’d like to control the spread of the negative impressions to your mainline image. Even if the new concept is very well-received, there is a danger in it diluting the personality your current store brand projects. The new Nordstrom-owned store doesn’t carry the Nordstrom name anywhere. It is called Treasure&Bond. However, Nordstrom is making no effort to keep the relationship secret. They’re publicizing it. The Treasure&Bond name is a signal that this is a test bed incubator.
  • Earn good will from shoppers with the concept you’re testing. You’d like to ask consumers their impressions, using methods ranging from listening to the consumers to professionally designed and administered attitude surveys. To motivate the consumers, offer them something. Treasure&Bond aims to make shoppers feel good by announcing that all profits from operation of the store will be donated to charity. To maximize the effect, Treasure&Bond will rotate the charity recipients each three months and list the amount of donations on a website. Research at University of California-San Diego and Northwestern University supports the idea of not paying consumers directly for their opinions. The evidence is that doing so does not increase purchase likelihood as much as does offering good will in other ways.
  • Keep the introduction modest in size, but extravagant in excitement. Treasure&Bond comes in at about 25,000 square feet instead of the typical 250,000 square feet for a Nordstrom department store. It might seem that the merchandising and ambiance are also intentionally modest: The store has exposed pipes and wooden shipping crates as display cases. According to The New York Times article, the clothes for sale come mostly in gray, black, and taupe. Nothing flashy here, you’d think. But the truth is that part of what’s being tested is the flash of funky. Word is the store concept was inspired by Vogue editor Anna Wintour, who also is said to have inspired the title character in the movie “The Devil Wears Prada.”
Click below for more:
Introduce Unknown Products with Charity
Introduce Unfamiliar Products Like Old Friends
Tiptoe to International Markets via Ecommerce

Tuesday, August 16, 2011

Relax Caution About Comparative Imagining

For me, an important role of the RIMtailing blog is an opportunity to update you when new research findings point to a need for a change in advice I’ve given you. Today’s update has to do with comparative advertising.
     Based on past studies at University of Maryland, I’d suggested that in comparative advertising, you do not show pictures of people using the product. Those studies found that such pictures lead shoppers to start thinking about using the products themselves, and when they do this, they put too much mental energy into thinking about just the recommended product. They forget to pay attention to the comparative advantages. The power of the comparative ad fades away.
     Now research findings from Germany’s University of Bamberg indicate that under certain circumstances, it’s not so bad at all to springboard a shopper off the comparative ad into a daydream about using the product you’d like the shopper to buy:
  • The product you’re recommending is complex or innovative
  • Shoppers seeing the ad want to get involved in analyzing for the best choice rather than purchasing out of habit
  • These shoppers perceive themselves as having limited knowledge about the product category
  • Compared to the alternatives in the comparison, the product has at least one powerful advantage for the shoppers
     With the increasing degree of technology in products, there are many shopping situations meeting those four criteria. So call on the power of imagination as part of the comparative ad and in follow-up face-to-face selling.
     Researchers at National University of Singapore and Chinese University of Hong Kong discovered that a crucial element in the imagining is having the shopper tune into their personal emotions rather than stopping with their beliefs about what will happen when using the product. Give the shopper the minimum amount of technical information necessary to set up the imagining. Then be ready to provide more details if the shopper asks. The power of imagining is greater when a person fills in their own blanks.
     Findings from research I conducted at Stanford University suggest the best phrasing to use: Say to the shopper something like, “Considering the advantage over the alternative, imagine what it would be like to use this product,” rather than something like, “Considering the advantage over the alternative, see yourself using this product.” Many consumers believe they have poor visual imagery skills, so are more receptive to the request to “imagine.”

Click below for more:
In Comparative Ads, Don't Show Users
Pinpoint Feelings in Imagining of Benefits

Monday, August 15, 2011

Transform Necessary Difficulty into Value

The general rule is to make it as easy as possible for shoppers to locate and use any merchandise we want to sell them. But as with all other good rules, there are exceptions. When the shopper has searched long and hard for an item, finally finding it in your store, the item can command a premium price. This is an argument for you maintaining a merchandise niche so you become a destination location.
     Difficulty bestows prestige. Iowa State University researchers decades ago explored why certain farmers were purchasing innovative technologies while others did not in circumstances where the innovations were expensive when first made available. The answer to the why was that if the farmer could spare the funds, the fact that the innovation cost lots of money was actually attractive. It gave the farmer a head start and bragging rights that they had the latest and greatest before others could get it.
     As to difficulty in using what’s purchased, consider results from another classic study, this one from University of Texas-Arlington. Researchers investigated the relationship between the taste of a potato chip and the ease of opening the package. For some participants, the potato chips were packaged in a wax-coated bag which could be easily opened. For the other participants, the polyvinyl bag was so difficult to open that participants resorted to techniques like using their teeth or standing on the bag while pulling at a seam.
     In blind tests conducted before the main study, whether the chips were in the wax-coated bag or the polyvinyl bag had no effect on people’s ratings of crispness or overall taste—as long as the researcher, not the participant, opened the package and served the chips. But when the participants had to open their own packages, which of the two types of bag resulted in higher ratings of crispness and taste?
     Yes, the polyvinyl bag.
     Asking people, “Which tastes better?,” is not the same as asking, “Which would you probably buy?” People often settle for a lower quality alternative when they can get to it more easily or inexpensively. If deciding between providing your product in the equivalent of the wax-coated bag or the polyvinyl bag, you might choose the less burdensome alternative. But if your product comes with necessary barriers to usage, look for ways to leverage those negatives so as to increase the perceived value of the item.

Click below for more:
Maintain a Niche So You're a Destination Location
Leverage Barriers to Increase Value
Encourage Customers to Be Innovative

Sunday, August 14, 2011

Cool Down Customer Temper Tantrums

About 80% of respondents to the 2011 American Express Global Customer Service Barometer from each of ten nations say that small businesses place a greater emphasis on customer service than do large businesses.
     Over 70% of U.S. and Canadian consumers report they’ve spent more because they’ve experienced continuing good customer service from staff at that business. The highest percentages were 86% for Mexican consumers and 80% for consumers in India.
     However, when the small business doesn’t get it right, the results can be upsetting. About 56% of the U.S. survey respondents say they’ve lost their temper with a customer service professional. The highest figure, at 86%, was for Mexico, and the lowest, but still considerable at 37%, was for Germany. Of the U.S. and Canadian consumers, 16% said they used profanity when losing their temper. It was 13% for Mexico and 7% for Germany.
     Handling an angry consumer who’s using offensive language requires finesse. The formula for action:
  • Allow the person to express their anger in bursts of up to about thirty seconds. This gives you sufficient time to understand their point well enough to ask further questions of clarification. Beyond about thirty seconds, though, there’s the risk of the person getting more and more wound up rather than easing off on their anger.
  • Listen attentively. At the onset, resist the urge to interrupt or even to decide what you will say. Then as you get closer to the thirty-second mark, decide what you’d like to reply.
  • Avoid interrupting the person in the middle of a sentence. Wait for them to take a breath and then begin to talk. Keep your voice decisive, but calm.
  • When the shopping experience itself has been responsible for the consumer’s anger, ask questions like, “What may I do to make things right?” Then decide what action is wisest and either do it or tell the customer when you will do it.
  • If you conclude that the customer’s anger is not caused by experiences in your store, say something like, “I treasure our customer’s business, and I’m always looking for ways my store can improve. What suggestions do you have?”
     Keep it brief. 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 buy from you in the future.

Click below for more:
Redirect Consumer Boycott Anger
Avoid Locking In Bad Moods
Tally the Costs of Customer Service

Saturday, August 13, 2011

Hand Off Customers with Care and Caring

Writing in The New York Times Magazine, Darshak Sanghavi talked about the dangers of handoffs from his perspective as chief of pediatric cardiology at University of Massachusetts Medical School.
     He began with the report that medical schools adhering to standards of the Accreditation Council for Graduate Medical Education set a limit of 16 on the number of consecutive work hours for first-year residents. The previous limit of 30 consecutive hours qualified as a tradition in physician training.
     The rationale for the change was a body of research showing that interns working the traditional schedule made one-third more serious medical errors than interns working no more than the 16 consecutive hours.
     After describing the change, Dr. Sanghavi threw us a curve ball: For hospital physicians who have completed their residency training, the number of medical errors did not fall when the number of consecutive work hours was reduced. In fact, there is anecdotal evidence that the number of errors increased.
     One explanation has to with handoffs. When a physician works longer shifts, they are better able to follow a patient’s progress and keep in mind the peculiarities of each patient under their care. With truncated shifts—yes, 16 consecutive hours is a long tour of duty, but still shorter than 30—there are more instances of one physician briefing another. Crucial details often get waylaid in the process.
     Does this sort of thing happen with handoffs in your store?
  • When a salesperson refers a customer to another department which has different staffing? A handoff should never be hands-off. Does the salesperson walk the customer to the other department and find an employee to serve the customer?
  • When you have a special orders desk and the customer is placing a special order for an item not in stock? Does the salesperson briefly explain to the person taking the order what the customer wants? This saves the customer the trouble of repeating themselves. It also proves to the customer that your staff is listening carefully to them.
  • When the customer has a complaint which requires referral to a supervisor? Does your employee describe the problem to the supervisor in a way that shows respect for the customer, even if your employee thinks the complaint is foolish?
     Listen in on handoffs. Analyze your own handoffs. Then use your findings to coach your staff and set an example.

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

Click below for more:
Take Individual Responsibility for Customers
Honor Your Customer’s Point of View

Friday, August 12, 2011

“Check Out This Item!”

Shoppers depend on trusted salespeople to help in decision making. To do that competently, the salesperson should both have expertise about the product line and have clarified the distinctive needs and desires of the shopper at that time.
     When those are in place, a useful technique is for the salesperson to guide the shopper toward promising merchandise and say, “Check out this item!”
  • This can serve as a great opening line in circumstances where the salesperson knows the customer well and a new item has been placed in stock. The message is, “I’ve been thinking about you, waiting for you to come by the store, so I can share with you my excitement about something I think you’ll really like.” Except “Check out this item!” is much quicker to say, and both the customer and the salesperson might be in a hurry.
  • You’ll still want to greet most customers with “Welcome to my store” and then ask an open-ended question like, “What may I help you find?” Next, while collaborating with the customer in working through their shopping list, stay alert for opportunities to use, “Check out this item!” to produce add-on sales of merchandise the customer could benefit from knowing about.
  • Where a customer is extraordinarily guarded or you’re having trouble reading them for other reasons, an enthusiastic “Check out this item!” can help you gather information by observing the reaction. It is a foot-in-the-door technique designed to assess how much trust the shopper has in you at this point.
     I’m a fan of scripting what we say and do with shoppers. It’s not that I expect the retailer to recite the exact words I suggest or carry out the precise actions I propose. It’s that I find scripting a good way to explain what I mean. Then I recommend the retailer be flexible in adjusting the phrasing and behaviors to fit their style.
     Renowned retailing trainer Rick Segel has his own version of the “check it out.” He suggests asking, “Have you seen this?” If this is more natural, I urge you to use it instead. Still, I’d suggest my phrasing be in the back of your mind. The words in “Check out this item!” serve as a reminder that our objective is for the shopper to have the item in hand, basket, or cart when they’re ready to check out. At the cash wrap, that is.

Click below for more:
Use Closed-Ended Questions Selectively
Put Foot-in-the-Door to Build Trust
Branch Out Scripts to Allow for Rituals

Thursday, August 11, 2011

Inject Spending Power into Shoppers’ Pockets

This week, Walmart Stores Inc. announced they’re expanding the list of checks they’ll cash. In addition to payroll and government-issued checks which have been accepted for some time, Walmart stores will now accept insurance, pension, and student loan checks. The goal is to encourage shoppers to feel more wealthy while in the store so they’ll spend more. Having cash in your pocket does that.
     According to University of Iowa research, putting cash into shoppers’ pockets works especially well as a purchasing incentive when the cash consists of smaller denomination bills. The increased bulk of five $20 bills makes it subconsciously feel like greater wealth than a single $100 bill does.
     Also, consumers have a measurable resistance to breaking a bill. When the purchase price is $30, they’re a little more likely to use $20 bills than to break the $100 bill. It’s not a monumental effect, but it works. Many retailers catering to lower-income shoppers and/or selling naughty products have an ATM on the premises and give change in small bills.
     Another way the customer can avoid breaking a bill—and even breaking out the wad of cash—is to use a credit or debit card. People feel less pain when paying the same amount by credit card or, to a lesser extent, with a debit card than when paying cash. Walmart is inviting customers who are cashing a check for a large amount to load the funds onto a Walmart MoneyCard.
     Here are two more consumer psychology tips on injecting spending power into shoppers’ pockets:
  • When customers are restricted from using a credit or debit card, they expect to get a better price to compensate for the loss of convenience. Meet the expectation. It’s easier for you because you’re avoiding the transaction fees and any statement fees charged by the credit card company. Make a feature of it, saying, “Cash only so we can save you money.”
  • Evaluate the spending patterns of people using different types of credit cards. Compared to your average purchaser using a Discover card, does your average purchaser using an American Express card spend more in total and have a higher average item expenditure? Some survey research suggests that they do when it comes to luxury and status items. If you find this to be true, it might be worthwhile for you to accept the American Express card, even with the higher fee structure.
Click below for more:
Ease Customer Pain About Item Prices

Wednesday, August 10, 2011

Activate Sponsorship Marketing

Your store might financially support a business seminar for retailers in your community, staff the press room at a week-long local trade show using a few of your paid employees, or provide supplies from your store stock for a children’s soccer team for an entire season.
     When your store gains broad recognition for an activity like this, it can be called “sponsorship marketing.” Although sponsorship marketing is usually associated with charitable or nonprofit activities, tie-ins with other businesses also occur.
     A recent Harvard Business Review posting about sponsorship marketing reminds us of the opportunities and pitfalls. From a shopper psychology perspective, the advantages of sponsorship marketing accrue because people participating in the sponsored event or activity develop positive feelings toward your business. Here are some ways those positive feelings can enhance your profitability:
  • Soften objections to your expansion. If you choose to expand your store or carry new product lines, the good feelings about your care for the community can mean fewer and less vigorous complaints to the planning commission. For this advantage, you’re depending on consumers’ memory. The need for good will may come long after the sponsorship. It works best when there is a clear affinity between your store and what you’re sponsoring. A larger retailer sponsoring a business seminar for smaller retailers can count on more memorable payoffs than the larger retailer sponsoring an art exhibition.
  • Obtain enhanced information. People participating in the sponsored activity will have opinions about any supplies you contributed and about your store. Positive feelings open up people so you can listen in. If you’re a major sponsor, participants become more willing than usual to complete survey questionnaires. The effect is greater when your sponsorship presence includes interactions with the participants, such as staff from your store on site and fun games. Select sponsorships which attract the sorts of consumers whose information you value, and then don’t forget to make provision for the data gathering at the activity and for analysis of the data afterwards.
  • Verify your value to the community. Maybe you’re not expanding your store footprint or product and service offerings right now. Maybe you already have plenty of data about consumers to process. Even then, sponsorship marketing can pay off. The good feelings among event participants can lead to them wanting to spend dollars with you. Be sure your store name is featured prominently at each event you sponsor.
Click below for more:
Differentiate Yourself in Charity Sponsorship
Turn Your Image on a Dime

Tuesday, August 9, 2011

Attend to Context When Advertising

Consumers form attitudes about a product or service in terms of the context in which an ad for the product or service is presented. See context through the eyes of your shoppers.
     Some years ago, researchers at Northwestern University and University of Chicago had study participants look at an advertisement for shampoo. They wanted to evaluate the degree to which exposure to the shampoo ad would affect the participants’ impressions of a related product—hair conditioners. In a previous study, the same researchers had found that thinking about mayonnaise products builds a more positive impression of related condiments, such as ketchup.
     But when the ad presented to the participants was for a lice-killer shampoo, this instead led to more negative impressions of the hair conditioners. Consumers like their hair conditioners to have a pleasant sensual personality. Potions associated with killing and with bloodsuckers fail to project that personality.
     In contrast, thinking about the lice-killer had no significant effect on the participants’ liking of products from categories that don’t depend on being pleasantly sensual in order to motivate purchase. Flashlight batteries, for instance, as the lice-killer shampoo researchers predicted and then confirmed.
     Similarly, where you place an ad inside your store influences the effects of that ad.
     More recent research surprisingly suggested that the rules are different for outdoor advertising. Researchers at Hofstra University and Saint Louis University explored the effects of billboard location on the beliefs consumers formed about the advertised product or service, the consumers’ positive or negative feelings about the item, and the consumers’ intentions to purchase the item.
     They found no evidence of the background environment impacting the beliefs, emotions, or intentions.
     What’s going on? First off, consider a methodological issue: When research fails to find an effect, it might be because the researchers weren’t looking in the right place or in the right way. It’s possible the neighborhood in which the billboard is located does make a difference.
     But I suspect another explanation accounts for the findings. It has to do with what Colorado State University researchers refer to as the differences between “personal territory” and “public territory.” Most people looking at a billboard are inside their own automobile. That’s their context more than is the neighborhood.
     An important implication for retailers: When using outdoor advertising, choose the locations based on traffic patterns, not by the quality of the neighborhood where the billboard is positioned.

Click below for more:
Imbue Product Personality via Context
Cultivate Store Prestige with Context

Monday, August 8, 2011

Add Apparent Assortment in Tight Quarters

An article last week in The Tampa Tribune described a trend among retailers to open up or move into smaller stores to save money on rent, maintenance, and payroll.
     If this is the path of your business, you might be tempted to cut back on the breadth and width of your product selection, becoming a specialty shop. That might be a good decision. According to the Wall Street Journal, sales in the U.S. of specialty items are increasing more than three times as fast as traditional retail sales.
     Still, in the smaller store, quarters might be more cramped. Researchers at Columbia University and University of British Columbia found that when shoppers from Western cultures are in tight spaces, they want greater variety among products. If they have fewer choices, they’ll become less comfortable. Uncomfortable shoppers leave the store sooner and resist returning to shop with you again.
     What to do? Choose one of these:
  • Describe product differences to shoppers. University of Pennsylvania studies discovered that consumers who initially see a limited variety in the breadth and width of merchandise become much happier, and therefore stay around longer to buy, when the retail store helps them recognize the differences among the products. The consumers don’t feel so trapped by restrictions on their freedom to choose. In signage and in customer-salesperson conversations, you’ll want to categorize products because customers seek categories. But especially in the more cramped store, also highlight the differences among the product offerings.
  • If the products are somewhat substitutable—such as earrings or soups—arrange the stock randomly. University of Pennsylvania and University of Illinois researchers found that this gives the shopper a feeling of there being more to choose from. It takes some time for the shopper to scan the choices. The increased time translates in the shopper’s mind to the impression of a larger assortment.
  • Remind the customer of the variety of experiences they’ve had when shopping in your store. Researchers at Carnegie Mellon University, University of Minnesota, and New York University say the reason this works is that we often forget all of the variety we’ve actually had in our lives and instead focus on how repetitive our experiences have been. By reminding the customer of prior buying trips—or asking the customer if there have been prior buying trips—we generate a sense of variety, which, in turn, produces feelings of being in control.
Click below for more:
When Space is Tight, Show Product Differences
Give Shoppers Variety for Control
Randomly Arrange Limited Product Sets

Sunday, August 7, 2011

Expose Puffery for All It’s Worth

Puffery consists of lavish, often exaggerated, claims about a store or about products carried by the store. The U.S. Federal Trade Commission doesn’t consider puffery to be illegal lying. That’s because the FTC defines puffery as too subjective for the truth or falsity to be determined.
     Sometimes what’s said is obviously puffery: “We give the best store service you’ll ever find.” In other cases, the degree of puffery is harder for the consumer to spot because it consists of exaggerated importance placed on a trivial claim: “Our house brand ice cream uses only European flavors.”
     This second sort of puffery does influence shoppers in significant ways, according to University of Mannheim research:
  • Draws attention to the complete selling message
  • Impresses the shopper that the alternative is highly distinctive
  • Leaves the purchaser with the impression that the price paid is fair
  • Builds positive attitudes toward the store and/or other items carrying the brand name
     Should you engage in puffery? Research findings from University of Illinois-Urbana/Champaign, University of Michigan, and Northwestern University indicate that the effectiveness of the technique depends on the expertise of the shopper, the channel you use to deliver the message, and how you do the comparisons:
  • Puffery is more likely to influence a consumer to buy a product when the consumer believes other people know more about the particular store or particular product category than they themselves do.
  • Puffery is more likely to positively influence the consumer when delivered by a source the consumer considers to have expertise about shopping for products in the category they’re considering.
  • If presenting the shopper a comparison of three—such as three products you carry—puffery about one of them will influence the shopper to favor that one, but the same puffery about a trivial attribute possessed by two of the three will drastically undercut the influence of the puffery.
  • A risk in using puffery is that consumers who are not positively influenced will lose trust in the retailer’s other, validated claims of benefits.
     If you’ve quality products to offer and maintain a staff with acknowledged expertise, expose shoppers to your puffery. Let the puffery demonstrate the abundant enthusiasm you and your staff have for what you’re offering in your store.
     However, if shoppers in your store tell you about puffery from elsewhere which you consider to be misleading the consumer, expose the puffery for all it’s worth. Less than nothing.

Click below for more:
Combat Your Competitors’ Trivial Claims

Saturday, August 6, 2011

Follow Big Discounts with Smaller Discounts

One Tuesday morning, a shopper you don’t recall having seen before comes in carrying the ad announcing your deep-discount sale from the prior weekend. He says he was out of town.
     Would you grant his request to honor the sale price?
     Most retailers I ask about this say they would not.
     That makes good sense. If people miss a chance to buy merchandise you offer at a substantial discount, you’d like them to feel sorry about it. That way, they’ll stay alert for the next time you announce a sales event. You hold sales to draw traffic into your store so shoppers will buy not only the substantially discounted merchandise, but also the items you’re selling at higher profit margins. You want everybody to notice when there’s a big sale.
     Unfortunately, though, many shoppers who miss a big sale will experience regret in a way which leads them to dislike the retailer and criticize the merchandise. Maybe it’s because people blame the retailer for what was their own fault. Maybe it’s because people want to avoid reminders of the opportunity they missed.
     Studies at University of Miami and University of Kentucky uncovered two ways that a retailer can shortcut the consumer irritation about missing a big sale:
  • Use what the researchers call “steadily decreasing discounting.” Before returning the item to its pre-promotion regular price, offer one or more additional discounts on the same merchandise, each discount at a progressively lower percentage than the deep discount. There was no evidence of dislike of the retailer with this technique.
  • Offer customers another opportunity to purchase merchandise on sale. You still want shoppers to come into your store, so the sale should be on what the regretful shopper will find attractive. But if this follow-up sale is on merchandise different what was offered in the big sales event, the amount of the discount does not need to be nearly as deep as what was available in the big sales event.
     A recent Wall Street Journal article gives partial credit for the resurgence of profitability at department store chains like Macy’s Inc., Nordstrom Inc., and Kohl’s Corp. to the second of these methods, made possible because of the department store’s broad product range.
     The foundation of both techniques is that a customer coming in seeking a discount often is satisfied with getting less than the full percentage, as long as it is something.

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Follow a Big Sales Event with a Smaller One

Friday, August 5, 2011

Broaden Target Markets Beyond Yourself

A Bloomberg Businessweek posting titled “Don’t Market to the Mirror” cautions against assuming our prime customers are all highly similar to us.
     You might not spend time looking at circulars and discount coupons which arrive in your mailbox, but your prospective customers might. With running your store, you’ve less time to look at much of anything than does the typical shopper.
     You might think your store’s tag line is awfully clever and the store logo is a real grabber, but your prospective customers might not. You contemplated for long hours creating the tag line and logo, while shoppers have to comprehend the line and logo promptly or they’ll move on.
     Psychologists use the term “projection” to refer to the tendency we all have to assume that what we enjoy is embraced by those around us. In reality, this assumption can work for the very small retailer who is just getting the business started. The hobby shop owner and the purveyor of specialty foods can pay the bills for a little while by depending on a cadre of consumers who share the merchant’s niche passion. This cadre knows about the store without having to read circulars, they’re drawn even without discount coupons, and they can instantly decode the store’s tag line and logo.
     This is because the cadre consists of the retailer’s friends and family. To grow the business the retailer must broaden their target markets beyond themselves. The flip side of projection is called “introjection.” It consists of incorporating the perspectives of others into our own thinking. Allowing the preferences and predilections of others to guide our actions.
     Researchers at University of South Carolina, Loyola University, and Baruch College verified what any student of human behavior suspects: In the retail marketplace, it is more challenging for the parties to engage in introjection than in projection. What the researchers added was an explanation and then a workaround.
     The explanation is that most of us in individualistic cultures like the U.S., Canada, and Australia place a high value on being our own person. Each of us wants to be unique, exactly like everybody else!
     How to keep this from getting in the way of retailing success? As we incorporate the ideas of others into our business planning, begin by labeling those ideas as originating with others.
     This method also helps the retailer hold that passion from when they started their business.

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

Click below for more:
Sell to Values, Not Just Value
Design Business Logos For Fan Enthusiasm

Thursday, August 4, 2011

Acknowledge Inertia in Consumer Behavior

I once served on a team tasked with helping the State of California prison system predict how well men being considered for parole would do if released. As in consumer psychology, the challenge is to move beyond describing and understanding human behavior into adequately accurate guesses about what will happen in the future.
     A story I was told while working on the prison project nicely highlights a principle of consumer behavior:
     Sitting before the parole board, the inmate is asked, “What is the first thing you’ll do if we release you to the community?”
     “I’ll build the biggest bomb I can and blow up this place!”
     Based on that answer, the board promptly turns down the man’s bid for parole, telling him, “We’d like you to rethink and revise that decision. In twelve months, we’ll again consider releasing you.”
     Each year, the inmate appears before the board, each time he’s asked, “What is the first thing you’ll do if we release you to the community?,” he answers, “I’ll build the biggest bomb I can and blow up this place!,” and the parole board members recommend he develop a better plan.
     Then one year, the answer is dramatically different. The man says, “When I get out of prison, the first thing I’ll do is to find a job as an accountant, making use of the thorough training I’ve received while incarcerated here. I realize that because of my felony record, it will be a challenge to become a Certified Public Accountant, but I shall persevere. In any case, my research has shown me that there is a demand for talented accountants. My instructors have told me I am especially talented, so I fully expect to be very successful financially.”
     Highly impressed, one of the parole board members asks, “What will you do with all that money?”
     “To begin to compensate for the damage my crimes have inflicted on society, I’ll contribute to a variety of charities. But I’ll always be sure I save enough to support my wife, my children, and my aging parents. I’m confident there will be sufficient funds for all that and more.”
     “And then what?,” asks another board member.
     “I’ll buy the biggest bomb I can and blow up this place.”
     There is substantial inertia in human behavior. Prison inmates, consumers, and retailers change. Still, the best single predictor of future behavior is past behavior.

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

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Change Brand Loyalty Habits Gradually
Change Up How You Do Business
Weigh Flat-Fee Pricing

Wednesday, August 3, 2011

Reanalyze for Day-Parts with Potential

Regularly reanalyze ways in which you can build sales by catering to different consumer preferences at different points during the day.
  • Build sales around a core set of items. Convenience stores have done well by offering not only the lunchtime food items, but also other items the lunchtime shopper will want. Promote package discounts. Analyze the results, though. 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 this amount by much. The researchers knew that purchases at the convenience store averaged about $4.00. Therefore, it appears that the “Spend at least $2” customers were actually spending less than they would have without the coupon.
  • Senior citizens tend to be more profitable customers when shopping early in the day, so feature merchandise then that attracts them to your store. Researchers at University of Michigan, Singapore Management University, and Ben-Gurion University found that the study participants, who were all at least sixty years old, were better able to analyze selling points in the morning than in the afternoon. For stores which let daylight enter, the morning brightness can help seniors tell the blues from the greens and the foregrounds from the backgrounds, but still favor merchandise which uses bold colors, along with large fonts and high contrast in the product packaging.
  • Once you’ve drawn in the customers by meeting their particular day-part needs, expand the length of the day-part. Food retailers have learned that diners who enjoyed a good breakfast at the restaurant in the early morning would like to have the breakfast offerings also available at lunchtime for the diners’ future visits. Give a good shopping experience in the AM to the senior citizen and they’ll become more interested in PM visits.
For your profitability: Sell Well: What Really Moves Your Shoppers

Click below for more:
Acknowledge the Power of Cycles
Keep Discount Conditions Strict Enough
Help Seniors to Shop Early

Tuesday, August 2, 2011

Encourage Stimulus-Based Shopping Lists

Wise retailers want their customers to have fun. At the same time, wise retailers want customers to make purchases the customers won’t later regret. Your profitability depends on your customers coming back to your store soon and often.
     Probably for as long as retailing has existed, shoppers have been advised to make a list before entering the store. The shopping list protects against unwise impulsive purchases, it’s said. With list in hand, the shopper can relax enough to have fun, knowing they’ll get what they need, but not much more.
     Does it work? Well, it turns out that the value of the shopping list for the shopper depends on how the list is made. Researchers at Duke University, University of California-Los Angeles, and University of Florida found that people who carry around the store shopping lists created from memory—the consumer trying to remember what they need and what the store carries—actually end up more likely to make purchases they will later regret.
     Results from the three studies conducted by the researchers indicate the reason is this: Making a shopping list from memory uses mental energy. Every shopper has a limited pool of mental energy, and when a great deal of it is consumed in making the list, there is less mental energy left to resist the foolish, unhealthy, even sinful items.
     How to have shopping lists work to benefit your customers? Encourage them to make what the researchers call “stimulus-based shopping lists,” since stimulus-based lists require less mental energy. Give them the tools to look at what they have on their shelves and in the cabinets at home before coming to your store.
  • In your advertising pieces, include a checklist the customer can use at home while surveying their supplies, and then carry the list with them as they shop. Have copies of the checklist available in the store.
  • Cook up recipes, suggesting combinations of foods or wardrobe items that fit well together. Prod the shopper to recognize that when they buy the beer, they’ll want the chips and when they buy the paint, they’ll want the primer. You’ll serve as their memory.
     Be sure to leave lots of blank lines on the shopping lists. This allows the customer to improvise beyond the rigidity of a list. Departing from the preplanning makes great sense for both you and the shopper when you are offering surprise in-store specials.

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

Click below for more:
Cook Up Recipes for Patrons
Increase Repeat Customers’ Unplanned Buying