Friday, August 31, 2012

Try Being a Tribe Without Reservations

When a group of your customers share not only an allegiance to your store, but also a passion for shopping with you, and when those customers share their passion with each other, you’ve what researchers call a “consumer tribe.”
     The phenomenon of consumer tribes has been studied for decades, and retailers have been advised to welcome consumer tribes as a way to build business at their stores. Holding special events just for favored customers and encouraging group shopping were among the methods for nourishing consumer tribes.
     More recently, research findings from University of Arizona and Canada’s Queens University indicate that the nature of consumer tribes has changed over the years. Based on the findings, here’s my shopper psychology advice to you:
  • Historically, consumer tribes have been more exclusive than inclusive. A source of the members’ emotional devotion was a conviction that they were distinctive. But in recent years, consumer tribes have shown interest in expanding their membership. The Arizona/Queens researchers analyzed trends in the community of long-distance runners. Thirty years ago, this community was male-dominated and maintained challenging physical stamina standards for admission. These days, mentoring and leadership diversity are valued. This is helpful to you. The larger and more wide-ranging the membership, the greater the cumulative influence of passionate recruiters for shopping with you. My advice: Put more emphasis on encouraging fans to invite others in than on you creating a sense of entitlement for tribe members. 
  • A downside of consumer tribes has been that they resist changes in your business which are useful for full profitability. In many cases, the tribe members structure significant parts of their lifestyle around the store’s characteristics, so when the retailer executes changes, the effects on the tribe are more than trivial. In my experience, the valuing of diversity has resulted in more tolerance for changes. However, I still advise that you give plenty advance notice to the consumer tribe, invite their ideas without yielding your prerogatives, and unroll changes rather than impose changes all at once. 
  • Historically, a substantial part of the consumer tribe’s social interactions would be conducted outside your presence at their own gatherings. This limited your influence with the tribe somewhat. Now social networking is frequently a medium for exchange among the tribe members. This lets you tune in. Use the opportunity. This isn’t a replacement for special events, though, in which you express your gratitude to your tribe. 
For your profitability: Sell Well: What Really Moves Your Shoppers

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Keep Creating Advocates for Your Business

Thursday, August 30, 2012

Guide through Rituals with Ceremonial Language

Talk with your shoppers.
     That straightforward valuable advice really deserves to be made more complicated, according to consumer researchers at University of Illinois at Urbana-Champaign, Purdue University North Central, and University of Missouri-Kansas City. The researchers tell us we should stay aware of the three different categories of language retailers can use with consumers:
  • Conventional language. The hairdresser or barber making conversation about the latest reality show episode or local sports team’s performance is developing rapport with the customer and making the time of the service or product delivery pass more pleasantly. 
  • Commercial language. We’d like our verbal transactions with shoppers to end in commercial transactions with customers. We’ll want to remember to ask for the sale. 
  • Ceremonial language. Culture dictates what we say to the consumer if we want to create store loyalty. With certain people, it might be “Hello, sir,” while others expect, “What’s up?” The “Have a nice day” will fit fine with some shoppers, but strike others as smarmy. 
     Ceremonial language serves the important function of guiding shoppers through the rituals they prefer. Have you noticed how some shoppers will complain and complain about a product or service that seems ideally suited to the shopper's needs and desires, and then after all the complaining and what seems to be arguing with the salesperson, the shopper will go right ahead and buy the offering?
     Other shoppers come into your store asking for a specific product and brand, but before buying it, as they'll end up doing, they want to hear about at least a few alternatives, as if to convince themselves they're making the right decision.
     And then there are those customers who refuse to buy a product until they can take it out of the packaging and run their hands over it. This last group, not surprisingly, resist making purchases over the internet, although, according to researchers at University of Kentucky and University of Wisconsin, rituals of the grasp-and-caress crowd can be satisfied with written or spoken descriptions of all the different textures the product has.
     The complaining, arguing, searching, and caressing are shopping rituals. Most shopping rituals are quite deep-seated in the personality because they were introduced early in life as the child watched others shop and was coached by parents.
     Researchers at New York University have verified how uncomfortable consumers become when retailers’ service scripts don’t take account of the individual’s shopping rituals.

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

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Branch Out Scripts to Allow for Rituals

Wednesday, August 29, 2012

Be All You Can Be with Day-Parts

bee’s Late Night may be coming to your town, but it won’t require any new building. bee’s Late Night is the name Applebee’s is using to designate the karaoke-and-trivia-game-filled club scene into which the family-themed restaurant transmogrifies from 10 PM to 2 AM.
     The concept has worked well for the chain in selected locations. Bloomberg Businessweek reports it’s going nationwide at all 1,870 Applebee’s locations. Family restaurants generally close around 10 PM. Now, with the unveiling of bee’s Late Night, the diner who comes to Applebee’s for a family dinner can say, “Instead of going to a club late tonight with my friends, I’ll come back here.”
     The chief objective of the change is to expand target markets by distinguishing day parts. So let’s use bee’s Late Night as a reminder for you to regularly reanalyze ways in which you can increase sales in your business by catering to different consumer preferences at different points during the day.
  • For cost-effective inventory management, build sales around a core set of items. Then think through the likely consumer preferences for each part of the day. Retail consultant Paco Underhill talked about a bookstore he worked with that used rotating shelves to showcase retirement advice for early morning mall walkers, child care books for the young mothers shopping before noon, and business books later in the day. 
  • 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 just enjoyed a good breakfast at the restaurant in the early morning often would like to have the breakfast offerings also available at future lunchtimes. Give a good shopping experience in the AM to the senior citizen and they’ll become more interested in PM visits. 
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Reanalyze for Day-Parts with Potential

Tuesday, August 28, 2012

Squirrel Away Profits from Discard Reluctance

Millennials, senior citizens, and many in age cadres in-between aren’t able to keep all that they buy close by them. This has opened up a market for retailers who store the stash for a fee.
     With Millennials, one reason for the storage shortage is a desire to live in city areas, where housing prices often dictate small quarters. For the seniors, there’s often the need to downsize.
     The Economist reports that one in every ten American families uses a self-storage facility. Share prices in self-storage firms Public Storage, Extra Space, and Sovran have increased between 30% and 140% since fall 2007.
     One reason for the robustness of the self-storage business is that facilities generally are sited on low-priced real estate. This fact leads to a consumer psychology hint for succeeding in the self-storage business: Be sure you and your staff show that you treasure the treasures being left with you for safekeeping. In run-down areas of town, prospective customers may be concerned about break-ins. This worry will build if the shopper sees open gates left unattended. The prospective shoppers will like 24/7 access abilities, even though they might never come at night. But if they see poor security or poor lighting, they might decide not to trust you.
     Another consumer psychology angle on the robustness of self-storage businesses is the reluctance of people to discard their belongings. Some years ago, researchers at University of Utah, University of Arizona, and Northwestern University wrote about the ways in which individuals come to consider many of their belongings as “sacred,” valuing the items in ways reminiscent of the valuing of religious artifacts.
     Given all this, why do the Millennials continue purchasing stuff? Well, there’s evidence they’re not, and that opens up markets for another retailing endeavor—renting. A Fast Company posting says “ownership” is going extinct because Millennials want to spend their money to connect to values and to others, not for possession.
     An intriguing analysis, to be sure. Still, I’m quick to admit that the article’s author, who “helps leaders design work environments” may have generated more psychobabble than even I, as a consumer psychologist, could get away with. If so, these propensities to be a renter might recede. The first comment added by a reader to the Fast Company posting was from “Gina,” who wrote, “In all honesty, I think my generation isn't buying products because we can't afford them.”

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Discover What Purchasers Never Use 
Maintain Customer Faith

Monday, August 27, 2012

Yield to Power Distance Belief

The amount of power a shopper feels compared to others affects the type of impulse buying they do. Recognizing this, it’s in your interest as a retailer to stay aware of what’s called Power Distance Belief and to consider influencing the amount of power a shopper feels when in your store.
     Power Distance Belief (PDB) is a concept articulated by researchers at University of Texas-San Antonio, Pennsylvania State University, and Rice University. The “power” refers to the degree of influence people have over others. The “distance belief” refers to the degree to which a consumer accepts that there are wide differences in the amount of power possessed by people the consumer knows about.
     The researchers analyzed the effects on purchase behavior of PDB in a nationally representative sample of adults in the U.S., where PDB scores are relatively low, as well as in fifteen Asia-Pacific markets, where PDB scores are relatively high.
     The study results indicate that when a shopper believes that there are broad differences in the distribution of power, they become less likely to impulsively purchase products like candy bars. These are the sorts of products others might criticize, and the shoppers yield to the assumed power of others. This didn’t hold true with impulsive purchases of granola bars, which could be viewed as healthy rather than indulgent.
     Here are shopper psychology tactics suggested by these research findings:
  • Know what products your shoppers consider to be indulgent and which they do not. The Texas/Pennsylvania/Rice researchers say that in India, a luxury brand of a staple like tea may be considered indulgent. 
  • If your customers associate with a culture which assumes broad power differences, position your products as utilitarian rather than indulgent, when possible and with respect for the health consequences on your customers. With products not positioned as utilitarian, don’t expect the same amount of impulse sales as with your customers who associate with a low PDB culture. 
     Northwestern University research findings indicate you can influence the amount of power a shopper feels, and so indirectly change the effects of the shopper’s PDB. Here’s my adaptation of those research findings to what could work in a retail setting:
  • Show advertisements and store signage which emphasize the power possessed by the shopper (“At our store, you’re the boss) or deemphasize the power (“At our store, we take care of you”). 
  • Treat the shopper with deference or with authority. 
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Manipulate the Shopper’s Sense of Power

Sunday, August 26, 2012

Screw the Torture of Customer Waits

A New York Times article titled “Why Waiting Is Torture” detailed how the psychology of consumer delays counts for more than what shows on the stopwatch. Principally, you can turn around the torture by entertaining the person. For instance, put mirrors or the right sorts of impulse-buy items in areas where shoppers might encounter delays, and you’ll get from the shopper less than the average 36% overestimation of the waiting time.
     Other forms of entertainment include showing the consumer the work you’re doing on their behalf and/or telling them about it.
  • Work in front of the customer and give a running rendition about the progress being made. Say how far along you are and how much further you have to go. In e-tailing, a progress bar is better than an hourglass. Researchers at University of Singapore and University of Toronto found that consumers evaluated the price of a locksmith service as a better value when the service took longer than when the lock was picked faster, as long as they were kept informed of the progress. 
  • Build anticipation. Researchers at University of California-San Diego and Duke University discovered that although people say they would never pay more money if it meant waiting longer for delivery, those same people report experiencing substantial pleasure from anticipation during the wait. Consumers sometimes don’t know what they’d like, or they prefer not to tell the retailer. Consumer psychologists at University of Chicago found that with products like theatre tickets or premium chocolate candies, the average purchaser enjoyed it more if there was a delay before use of the product. 
  • A set of Harvard University studies found that you can ease waiting anxiety and produce higher satisfaction even by depicting work that you didn’t really do. This struck the researchers as lying to the customer. Another way to view it is as entertaining the customer, and remember that entertainment helps pass the time. 
     All this will work, though, only if the outcome of the wait is satisfying. One of the Harvard University studies analyzed consumer waits in using a matchmaking service. Even when regular status reports were given on the progress of finding the right one, there were howls of irritation about the long delay if the consumer was also shrieking, “You made me wait for all this time, and you think this is the person who best fits with me?”

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

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Fill In the Hourglass for Customers 
Make Waiting in Line Interesting 
Wait a Minute Before Purging Customer Waits 
Keep the Checkout Lines Flowing

Saturday, August 25, 2012

Detail Subsequent Upgrade Price Comparisons

Once your shopper has made the decision to purchase an item from a product category, they might consider an upgrade. If this is the first upgrade decision the shopper has made during this visit to your store, research indicates they’re more likely to choose the more expensive alternative if the prices for the two are presented as round prices instead of as just-below prices. So if the prices on the bin tags are $19.99 and $29.99, the salesperson says, “For only $10 more, here are the additional features you’d get.” The easy comparison facilitates acceptance of the upgrade.
     But during this same shopping trip, you might subsequently be offering upgrade opportunities in other product categories. The first task for you is to confirm to yourself that this upgrade will actually be of benefit to the shopper. The next task is to convince the shopper of the benefits. The third task is to gain acceptance for the additional expenditure. Here, shopper agreement to the upgrade is more likely when the price comparison is more difficult. Researchers at Babson College and Baruch College found that people tend to perceive the differences in prices between the regular and upgraded versions to be smaller if the comparison is harder to compute than in a prior upgrade decision.
     For these subsequent upgrade price comparisons:
  • Quote the actual price points rather than rounding. 
  • Lengthen the conversation by encouraging the customer to ask you questions about the prices. 
  • Be more comprehensive in discussing the prices, such as talking about per unit costs or percentage differences. 
     Statements in unexpected units increase the consumer’s interest in understanding reasons to make the purchase. Researchers at University of Cincinnati, University of Indiana, and University of Twente told study participants that a tuition increase of 7500 cents was slated. The participants given this information, rather than being given the amount in more conventional dollar figures, showed increased acceptance of the cost difference.
     How to explain why this works? When the shopper has expended mental energy in deciding whether to put out money for an upgrade, two conflicting processes occur:
  • Their reservations about spending even more money on another item upgrade increases. 
  • Their resistance to accepting an upgrade which benefits them is worn down. 
     The way out of this for the shopper is to convince themselves they’ve made the upgrade decision carefully. Having a bunch of details available to them accomplishes this.

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Round Prices to Whole Dollars for Better-Best 
Number Costs and Benefits for Desired Effects

Friday, August 24, 2012

Alert Yourself to Awareness Payoff from Ads

After reviewing findings from their studies, researchers at Stanford University and Germany’s Goethe University had a warning of importance to retailers: Even if your advertising isn’t increasing sales right now, it still might be serving you well by bringing your store into the shopper’s consideration set. Without the ads, people might not have even been thinking about your store as a place to get what they were seeking.
     Consumers are faced with an abundance of alternatives competing for their attention. To tolerate the complexity, the consumers usually begin their shopping by pruning down the list of possible sources. You could make it into that pruned set, but because your store isn’t ultimately selected, you could stay unaware of this. Do be alert to the possibility because it signals a need for you to increase consumer preferences for your store, not to give up on the advertising you’ve been using.
     To determine the extent to which your ads bring awareness without follow-through purchase, there are three alternatives, ranging from the most to least expensive:
  • Contract for focus groups and professional surveys with your target audience. 
  • Visit other stores that sell what you sell and talk with the shoppers there, or listen to their conversations. 
  • Ask your shoppers how they learned about your store. 
     Ad group ads can get you into the consideration set without giving you the ultimate payoff of the purchase. Teaming up with other retailers to fund a media campaign can save you money and allow you to diversify marketing dollars. But researchers at New York University and University of Florida recommend caution. They point out the importance of your store's distinctive advantages being featured in the advertising.
     When it comes to retailer advertising groups in which you participate, restricting the ad messages to characteristics all members have in common might not be realistic. Instead, solve the problem by being sure funds are allocated in a way that allows for a set of advertising messages, not only a single message. Different ads can feature different distinctive advantages of the ad group members' businesses.
     The best ads pull a variety of triggers. That’s valuable because a prospective purchaser might respond to one appeal more intensely than to another. It’s also valuable because every prospect is more likely to purchase when there’s a bunch of triggers.
     Uncovering how your successful advertising is working gives you tools for improving your marketing.

Click below for more: 
Declare WAR on Customer Loyalty Measures 
Probe for Intentions in Focus Groups 
Survey Consumers Person-to-Person 
Hobnob with Your Neighborhood Retailers 
In Ad Group Ads, Feature Your Advantages 
Uncover Why Your Advertising Works

Thursday, August 23, 2012

Discount Partner Items Simultaneously or Not?

Researchers at University of Toronto and University of Alberta asked whether it’s better for a retailer to give discounts on associated items at the same time or at different times. If you’re advertising a big sale on the pasta sauce, should you also deeply discount the pasta?
     They concluded yes. If two types of products are often purchased together, the units purchased of each during the time of the sale will be greater if both are sold at a discount.
     That’s to be expected. Charge less for the pasta, and you will sell more. But it goes beyond this. The sales of the pasta will be greater if discounted during the same time period as the promotion on the pasta sauce than if the price promotions on the two product categories are during successive time periods. The shopper who’s thrilled at getting the pasta sauce at a big savings is saying, “Now what can I buy right now to put it on?” There’s less cross-category motivation when the discounts come in separate weeks.
     Note that the researchers’ “yes” answer seems to conflict with shopper psychology advice traditionally given to retailers: The peanut-butter-and-jelly principle of product adjacencies says that when you’ve assigned the peanut butter a bargain price to draw footsteps into your store, shelve the popular jelly flavors—priced for your profitability—next to the peanut butter.
     Is there a contradiction here? My answer to that one is no. The Toronto/Alberta study measured the number of units purchased, not the profitability of the sale. We certainly don’t want to put you in the position of thinking, “I’m losing money on every sale, but making it up on volume.”
     Therefore, let’s use these new findings to refine rather than reject the traditional advice: If you set your promotional pricing such that an increased quantity sale of each will produce a greater profit, then feature the discounts on the different categories during the same time period. Otherwise, though, promote brands across the two categories in different time periods.
     Previous research suggests an additional refinement as well: If one product is at a bargain price and the other is at the regular price, shelve the regularly priced one to the right of the other. Why to the right? Because that’s where a shopper’s eyes tend to go the instant after they recognize that they’ve gotten a really good deal on a purchase.

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

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Keep Your Eye on Merchandising to the Right

Wednesday, August 22, 2012

Expect Paycheck Cycles Internationally

Last year, as Walmart Stores, Inc. was on its way to turning around eight successive quarters of declining same-store sales, the company noticed how daily revenues during the first few days of each month were higher than daily sales during other days. Walmart attributed this to when paychecks were received and said it was evidence their customers were living paycheck to paycheck. Walmart changed their tactics to take full advantage of the cycle. They began to feature the higher-priced merchandise at the start of each month.
     Now Walmart has announced sales at U.S. stores open at least one year rose 2.2% during this last calendar quarter, and The Wall Street Journal reports that Walmart is seeing the paycheck cycle at their stores in other countries as well, notably in the U.K.
     Shoppers go through many sorts of cycles. It makes sense to cycle the merchandise to fit changing preferences. Before adapting this principle to your retailing business, consider a couple of points. First, your target demographic might be getting their paychecks weekly or biweekly rather than monthly. Within the monthly cycle, there could very well be smaller bumps at weekly intervals.
     The second point to consider is that Walmart depends strongly on an image of everyday low prices on all items. The competitiveness of your business model may not depend that much on price. Do the paycheck cycles still make a difference in optimal merchandising techniques? Yes, but from a different angle. Research at University of Utah and University of Iowa finds that the effects are due to more than the consumer running out of money each interval. Paycheck cycles were found to affect not only how much money people will spend on merchandise, but also the types of merchandise they will find most attractive.
     In the days soon after receiving a paycheck, consumers with full-time jobs become very interested in products and services that help them gain more than what they currently have. This is a time for you to feature the latest technologies and the toothpaste which promises to whiten teeth.
     Then as the days after the paycheck pass, the person becomes progressively more interested in products and services which help them avoid losing what they have now. They'll pay greater attention to nostalgia items, familiar brands, and the cavity-fighter toothpaste.
     The researchers determined that this cycling was not principally because of cycles in consumers’ disposable income.

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Cycle the Merchandise by Paycheck Interval

Tuesday, August 21, 2012

Dissect the Shopper’s Risk Tolerance

A familiar ritual with an investment advisor is the interrogation regarding the client’s tolerance for risk. The answers form the framework for the investment portfolio the advisor builds.
     What if the client’s answers are inaccurate? Not intentionally inaccurate, but instead wrong because they’re incomplete.
     Behavioral finance researchers at Santa Clara University found this to be the case after surveying about 2,500 consumers. What the researchers concluded is too often missing from the financial advisor’s analysis of a prospective investor’s risk tolerance could be missing from your analyses. Yet in many retailing endeavors, the shopper’s risk tolerance influences how you can best deliver value to the consumer and market your offerings.
     Here’s my adaptation of the SCU researchers’ suggestions to all retailing:
  • Before assessing risk tolerance, know the type of risks the purchase probably has and the importance in minimizing risk for this type of purchase. The purchase of a financial product involves monetary risk about which a consumer is likely to be highly concerned. Buying groceries at a familiar store involves maybe physical risk because of food safety and maybe social risk for status-oriented goods, with the consumer usually not highly concerned about either. 
  • Find out the consumer’s objectives. People have a variety of objectives for spending their money and time. In general, the sooner merchandise or services are to be used, the lower the risk tolerance. However, the SCU researchers say an investor’s risk tolerance for a retirement account to be used in the distant future might be very low. 
  • What is this consumer’s perception of prior success with this type of purchase for this type of objective? The SCU researchers say that investors who had success with dot-com stocks in 1999 or gold more recently may very well have an unrealistically high risk tolerance fueled by exuberance. The opposite would hold for consumers who held international stocks in their portfolio during 2008. 
  • Assess the consumer’s degree of confidence and propensity for regret. As you inquire about prior experiences, does your shopper psychologically beat himself about the head and body about mistakes and missed opportunities? If so, take whatever the shopper says is their degree of risk tolerance and push it a little lower. This way, the recommendation you make to the shopper based on risk tolerance will be better welcomed. If you sense overconfidence, also correct for this by lowering your estimate of the true risk tolerance. 
For your profitability: Sell Well: What Really Moves Your Shoppers

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Reduce Unwanted Risks for Your Shoppers 
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Monday, August 20, 2012

Have Shoppers Share Word-of-Mouth with You

We think of word-of-mouth (WOM) reviews as occurring among family and friends, but it also could include a trusted salesperson telling a shopper about the salesperson’s experiences. Or the other way around, with the shopper sharing with the salesperson the shopper’s reviews.
     Research findings indicate this last alternative can have special value for the retailer. The researchers from New York University, Northwestern University, SDA Bocconi School of Management, and Luiss University were struck by inconsistent findings about WOM. Many studies concluded that consumers are more willing to share negative than positive experiences, but other studies came out with opposite findings.
     The researchers’ analysis:
  • When customers are talking about their own experiences, they want to impress others as wise shoppers, so they emphasize the positive. They may reflect on how they negotiated through the negatives. The overall agenda is to brag on the upside. 
  • On the other hand, when customers are asked to talk about experiences they’ve heard others have had, they become more interested in gossiping. They’ll share the negatives. This is, again, from a desire to look like wise shoppers. In this situation, it’s with the objective of looking wiser than others. 
     Other research indicates that if we can have the shopper talk about those positive experiences before leaving the store, the upbeat feelings will linger. Putting all this together, my suggestion is to have sales staff ask customers, after a purchase, to share reviews of the product, brand, and store.
     Here are implementation ideas:
  • It works best when the salesperson is genuinely interested in hearing and remembering what the shopper has to say. The information can be passed on to other store staff. However, the evidence is that this WOM information, obtained immediately post-purchase, is likely to have a positive bias to it. Keep this in mind when deciding how to use the information. 
  • It’s fine when there are negatives along with the positives. In fact, encourage shoppers to give mixed WOM reviews to others. Based on research from the Free University of Berlin, one important key in establishing trust is that the WOM communication include at least some criticisms or concerns about what is being recommended. If everything’s coming up bright lights and lollipops, it seems phony. 
  • To preserve the positive, give shoppers materials they can take away with them as conversation starters to share with family and friends. 
For your profitability: Sell Well: What Really Moves Your Shoppers

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Sunday, August 19, 2012

Censor Silly Sales Sayings

“Poke your customers in the eye, and your products they will buy.”
     Make sense?
     Oh, it doesn’t?
     Okay, well that one was too easy. How about this one? “In life you need either inspiration or desperation.”
     In a recent Twitter tweet addressed to business people, that epigram was attributed to motivational speaker Tony Robbins. (Actually, it was attributed to “Tony Robins,” but I’m figuring tweeting diverted the poster’s thoughts toward birds.)
     The pithy epigram sounds appealing, but as advice, it’s not worth the time it takes to read it. Most experienced business professionals would spot that, and management science would back them up. Inspiration is great, but you’ll be more profitable without desperation.
     Or how about this one, attributed to business author Stephen R. Covey in a tweet? “The key is not to prioritize what's on your schedule, but to schedule your priorities.”
     That's wisdom?
     Why does the internet fairly overflow with these useless sayings, and why do they sneak through our nonsense filter, even if momentarily?
     It has to do with what media scientists call “drumbeats.” Rhythmic elements build credibility in the brain. Psychologists at Lafayette College found that rhythmically rhyming claims are more likely to be perceived as true than those that do not have this attribute.
     Any Southern Baptist minister and most campaigning politicians could have told the scientists the value of rhyming jingles. The rhythm soothes our defenses, and the repetition of sounds lends the sort of familiarity we associate with truth.
     There’s also another dynamic at work: The rhythm energizes us, and energy, even if expended in inefficient ways, can give us the perception of success.
     However, the whole thing might turn ugly. Watch new swimmers. They’re able to get around with a mix and succession of quite random movements. As long as you have enough body fat, it will work. Until there’s a big wave or a riptide. Then all the random movement makes things worse. Tony Robbins’ advice notwithstanding, the last thing you’ll want is desperation. It could be deadly. You need skilled movements.
     Refining high quality advice into a pithy mnemonic is a great skill. Admire it. In fact, valid epigrams inspire us to achieve greater profitability. There is always a place for rhythmic doses of reality. I’ll finish with this one from Despair, Inc.: “Quitters never win. Winners never quit. But those who never win and never quit are idiots.”

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Drum Up Interest with Drumbeats

Saturday, August 18, 2012

Increment Your Profitability Margins

In my experience, retailers pay too little attention to the margins. Yet it’s at the margins where many profitability opportunities reside.
  • In pricing, profit margins, not the prices themselves, are what pay the bills. Therefore, monitor those margins and adjust them at regular intervals. Remember to drill down as close as you can to the SKU level rather than set the same margin for all items in a class. Dissect the product class. For some items, you’ll need to set minimal margins in order to keep footsteps coming into the door. Where are the opportunities to compensate for that by raising the margins on other SKUs? For example, setting relatively higher margins on multifunction merchandise actually increases product credibility. 
  • In employee selection, look for the ways in which certain candidates have marginal strengths compared to the others. Yes, all employees must meet minimal standards, such as having retailing skills and showing mastery of safety procedures. But if you’ve a number of applicants, the decision making is more likely to be valid if you focus on the margins—the distinctive strengths. 
  • In employee coaching, continue to focus on the strengths. The changes most likely to succeed for a retailer are gradual and based on the retailer’s existing strengths. When you’re scheduling employees, when you’re considering employees for special assignments or promotion, when you’re needing to lay off employees, you’ll look at the margins again. What are the distinctive assets and liabilities of each individual? 
  • In day-to-day management, notice the exceptions. This tactic is at the heart of Total Quality Management. A retailer doesn’t have the time, mental energies, or other resources to monitor everything at once. You must master the skills of selective neglect. You can get it all done, but almost surely not all at the same time. So set clear expectations of how things should be going and then monitor for the marginal deviations. Those will draw your attention. This doesn’t mean to become preoccupied with the exceptions in ways that immobilize you. Take action assuming what’s true most of the time, not on the expectation of exceptions. Then correct as you progress. 
  • In your management strategy, always be seeking the retailer’s edge. What distinguishes your store from the countless alternatives your target consumers have for spending their money and time? 
For your profitability: Sell Well: What Really Moves Your Shoppers

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Friday, August 17, 2012

Twin the Shopper Subtly to Double Rapport

Researchers at Université de Bretagne-Sud observed customers who were asking for advice about selecting an MP3 player in a retail store. Unbeknownst to the shoppers, some of the salespeople had been given instructions which you might consider to be rather strange: Subtly mimic the shopper. In other cases, the salesperson was not instructed to mimic the shopper.
     What difference did it make? About 79% of the shoppers who were subtly mimicked ended up purchasing an MP3 player. Among those who were not mimicked, about 62% made the buy. In addition, the customers who were mimicked rated the salesperson and the store itself more favorably.
     The researchers explain this “Chameleon Effect” by saying having someone subtly mirror your behavior makes that other person more familiar to you. This relaxes barriers to trust, so you comply with the person’s requests. Such as buying an MP3 player recommended by the subtle mimic.
     A related explanation, offered by another set of research findings, is at the level of brain waves. Studies at Princeton University indicate that one distinctive tool you have in face-to-face selling is the ability to reflect each shopper’s brain activity. The researchers found that when communication between two people is at its best, the brain waves of the two people actually come to have similarities. Along with this, the listener—such as the retail salesperson—begins to anticipate where the speaker—the prospective customer—is going next in their thoughts, and can therefore better influence those thoughts.
     The enhanced understanding of the shopper boosts your powers in guiding the shopper’s purchase decisions. It works best with customers you already know, and there are significant differences among salespeople in the ability to do this sort of mindreading. But the research findings do suggest ways to get better at it.
  • Listen carefully not only to the words the shopper is using, but also to their tone of voice. Watch the shopper’s gestures and their facial expressions. Figure out how they all go together so you can get good at reading the brain and mimicking the shopper subtly. 
  • Be aware of when you’re in sync. The researchers say you’ll feel visceral signals letting you know you’re now tuned in. 
  • You can redirect, but don’t suddenly interrupt, the shopper’s thinking, such as by finishing off their sentences. When you’re reading somebody’s mind, tipping your hand makes it seem weird, and the shopper gets guarded. 
For your profitability: Sell Well: What Really Moves Your Shoppers

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Synch with Your Shopper’s Brain Before Influencing

Thursday, August 16, 2012

Prolong Opportunities for Family-Owned Stores

The sentiment transcends languages and cultures. Consider the English-language versions of these maxims:
  • “Father merchant, son gentleman, grandson beggar” (Mexico) 
  • “Rich father, noble son, poor grandson” (Brazil) 
  • “From the stables to the stars and back to the stables” (Italy) 
  • “Wealth never survives three generations” (China) 
  • “Shirtsleeves to shirtsleeves in three generations” (U.S.) 
     Those were collected by investigators at Boston Consulting Group and Cambridge Advisors to Family Enterprise to flesh out the fact that only about one out of every ten privately-held businesses makes it through to the third generation.
     To persevere as a retail business owned and operated by one family generation after another requires a convergence of the right ingredients. Being in a community too small to interest a large retailer or a chain does help. Owning your own building helps.
     From a psychological perspective, there are additional ingredients. Here is what the research and retailers’ experiences indicate as ways to provide the opportunity for business longevity if you own a family store:
  • Cultivate a life outside retailing. If the children grow up seeing their parents’ imprisoned by the business, unable to do what they love doing and not being with family often enough, there’s a very good possibility the children will not want any part of it. 
  • Encourage the offspring to explore other careers and to work in other settings. If they return, it’s more likely they’ll bring skills from the outside and they’ll yearn to be working in the family business. 
  • But maybe not. They might have returned because they can’t succeed at other work. Some years ago, I asked the adult son of a successful retailer what were the advantages of working in a family business. His answer: “Job security.” The BCG/CAFE investigators suggest you avoid the trap by requiring family members who return to apply for open positions in competition with nonfamily applicants. To implement this, you’ll want to have the hiring process administered by a nonfamily manager. Otherwise, family members not making the cut could cause some clumsy Thanksgiving dinner gatherings for years to come. 
  • Expect the family members to adhere to strict financial control systems. In one instance I’m acquainted with, a daughter of the owner had, over a two-year span, embezzled money out of the business to the tune of $750,000. A hit to the bottom line of three-quarter of a million dollars! Her excuse? She was taking her inheritance early. 
For your profitability: Sell Well: What Really Moves Your Shoppers

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Wednesday, August 15, 2012

Prefer Order Getters to Order Takers

Even after Ikea, Albertson’s, and Big Y removed self-checkout lanes, that still left plenty in retail stores of all sizes. I’m talking not only about those kiosks where the customer is left on her own to figure out what to do when the technology fails to cooperate. I’m also talking about cash/wraps where there’s a staff member standing behind the counter, but the amount of interpersonal interaction with the customer is no more than would be expected from a high-technology automaton.
     Customers do enjoy dropping by a store, taking however long they like in selecting items, and then going to a checkout counter. In tight economic times, the customer can come to tolerate barebones self-service with the rationale that they're paying less for their purchases. Retailers might agree with them, viewing barebones customer self-service as an excellent way to cut personnel costs.
     However, your profitability will suffer if you miss opportunities to make substantially bigger sales. Watch out for inadequate staffing levels and staff skills.
     Except for thieves, consumers choose to be acknowledged when they enter a store or a department within a store. Beyond that initial contact, shoppers want staff available to answer questions. Don't confuse the customer tolerating barebones self-service with the customer treasuring barebones self-service. That includes the customer’s time at the cash/wrap. They want it to be quick, but also personable.
     Coach your staff to be order getters, not only order takers. They should do this in a way that recognizes a prevailing truth: Customers like to buy, but do not like to be sold. Staff should have the skills of gently, but decisively, spiraling the customer in toward purchases that will both meet the customer's desires and boost your retailing profits.
     The order getters are skilled at helping customers recognize those desires. Order getters know not to squeeze the customer too hard, since that blocks the free, natural flow of the spiral. At the same time, order getters know not to be so loose that the spiral loses its disciplined shape.
     These same tight economic times which create a desire in customers for lower prices are also creating for employers opportunities to be more selective when hiring staff. Hire candidates who in the job interview show their skills by spiraling you into saying yes.

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

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Hire Staff Who Spiral In to Make Sales

Tuesday, August 14, 2012

Stress the Impact of Spreading Impressions

Retail staff often fail to recognize that how each of them interacts with the shopper influences how the shopper interprets the interactions with other staff. Let’s say a sales clerk looks up at the approaching shopper and smiles gently. If that event had been preceded by a sincere greeting from the cashier as the shopper entered the store, the shopper is likely to consider the salesperson’s smile to be sincere and welcoming. This is less likely if the shopper had received no more than a cold stare from the cashier when entering the store.
     Regularly emphasize to yourself and your staff the four consumer psychology principles which apply to the spread of staff impressions. Each of you shares the responsibility for creating the sincere welcome:
  • Primacy. First impressions set the scene, especially for customers unfamiliar with your store. These first impressions include the sights, sounds, and even smells. Interpersonal interactions with staff also are covered by the primacy principle. Be sure the shopper’s first impression is rosy all round. Unless your shoppers are allergic to roses.
  • Recency. When customers are asked by their friends, family, or survey researchers to recall their experiences in your store, the memories most likely to bubble up to the top are about the interactions which occurred toward the last. This is why how you handle the cash/wrap process counts for so much.
  • Similarity. Researchers at University of Miami and University of Southern California explored how consumers infer the quality of service expected in settings like hotels. What’s the effect of flawed service at the front desk on the guest’s expectations when they consider using the hotel’s tour arrangements? A major factor was managerial control. If the guest sees the same manager talking to the front desk and the concierge, the guest becomes more likely to conclude that what holds true for one holds true for the other. This is a sensible assumption, to be sure. The similarity principle also holds when it comes to employee dress. If your personnel dress in a distinctive store outfit, the impact of spreading impressions is greater.
  • Contiguity. The Miami/USC researchers found that when two staff members work physically close to each other, the consumer generalizes impressions from one to the other more strongly. This also applies to contiguity in time, when the interactions with one staff member come soon after prior interactions with the other staff member.
For your profitability: Sell Well: What Really Moves Your Shoppers

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Monday, August 13, 2012

Honor Salesmanship

As far back as Homer’s The Odyssey, retailers have been depicted as slimy, well beneath the station of those who manufacture the products: Says Euryalus to Odysseus, “…art thou such a one as comes and goes in a benched ship, a master of sailors that are merchantmen, one with a memory for his freight, or that hath the charge of a cargo homeward bound, and of greedily gotten gains; thou seemest not a man of thy hands.”
     In today’s computer-generated word clouds, “selling” has stronger associations with “tricking” than with “serving.” In the public’s thoughts, the central objective of salesmanship training is how to grab the legs of each passerby, yank them upside down, and shake hard enough to dislodge from pockets and purses every last penny and all available credit cards.
     Those perceptions are not without justification. A great many retailers do forget to keep their skills sharp and do neglect to deliver full value to the shopper. These less-than-honorable merchants probe with questions which put consumers on the defensive, polluting the well for other retailers. They fail to use questions properly in order to clarify shopper needs and desires the shopper may not have recognized.
     Respected retailers stay aware. Business researchers at Harvard University and University of Notre Dame analyzed instances in which retail businesses cheated customers. The researchers concluded that in many cases, the owners/operators did not intend to do wrong. The slippage was unintentional.
     Please stop for a moment now and bring to mind the retailers you respect. Use your talents at getting answers to ask yourself what distinguishes these individuals. Honor them, honor the best in yourself as a retailer, and honor salesmanship.
     Odysseus knew to honor the courage necessary for selling and the ability of merchants to impress others. Homer writes that, in response to Euryalus’ taunt, Odysseus looked fiercely at him and then, “leaped to his feet, and caught up a weight larger than the rest, a huge weight heavier far than those wherewith the Phaeacians contended in casting. With one whirl he sent it from his stout hand, and the stone flew hurtling: and the Phaeacians, of the long oars, those mariners renowned, crouched to earth beneath the rushing of the stone. Beyond all the marks it flew, so lightly it sped from his hand, and Athene in the fashion of a man marked the place, and spake and hailed him….”

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

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Sunday, August 12, 2012

Pack It In if You Act Like Packard

A Fast Company posting recounted the deadly consequences of a single flawed branding decision by the long-gone Packard Motor Company. As philosopher George Santayana said “Those who cannot remember the past are condemned to repeat it.” So listen up, retailers.
     Prior to the 1929 stock market crash, the Packard motorcar was viewed in the U.S. as a highly luxurious automobile. For the first few years after the crash, Packard stayed true to the brand image, using a strong cash position and the cost benefits of a single production line. By the mid-1930’s, though, Packard chose to introduce low-priced “Junior” lines. The brand image suffered greatly. By the late 1950’s, Packard had packed it in.
     In my hometown of Vacaville, a renowned retail restaurant suffered a parallel branding failure. The Nut Tree restaurant was famed for its high-quality, luxury-priced California cuisine. Queen Elizabeth II and Ronald Reagan were among the many celebrity diners. People would fly into the Nut Tree airport and take the little train as a shuttle to the dining room. As I traversed the world providing shopper psychology training and consulting, I could pretty much count on somebody saying at some point, “Oh, you’re from Vacaville. I had a wonderful meal at the Nut Tree years ago, the kids rode on the railroad, and we bought toys I’d never seen being sold anywhere else before.”
     Then after the death of the family patriarch, highly publicized squabbles among the adult children resulted in wild vacillations between luxury cuisine and bargain meals being served at the Nut Tree. The brand identity was muddled, and with more restaurant chains having moved into Vacaville, the end came in 1996. Now the site carrying on the Nut Tree name is a fine retail development and the Nut Tree restaurant cookbook is sold at the Vacaville Museum.
     You may need to assume multiple personalities in your selling. To project proper brand images, maintain clearly delineated parts of the store. The new merchandise here and the resale merchandise there. The relaxed fashions for senior citizens in an area with a different color scheme, aisle width, and perhaps a different fragrance than where the teen fashions are sold.
     Instill in the minds of consumers characteristics of your business that are associated with the name, logo, tag lines, and even celebrity endorsers of your store. Do your branding competently and the images will be indelible.

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

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Saturday, August 11, 2012

Flow Consumers Into Good Financial Habits

You’d like your target consumers to be in good financial as well as physical health. Let them live long and prosper. And spend their years and money shopping with you. Let them go with the flow.
     Or more precisely, the flow state. Psychologists talk of a “flow state” in which a person who makes a consumer decision then becomes more likely to make another similar decision and then another.
     Researchers at Northwestern University analyzed flow states in people facing an uncomfortably common problem in our economic downturn: Getting out of debt. They found that a good predictor of the consumer’s success was the number of credit accounts closed toward the start of the debt elimination program. The dollar balance of the credit accounts closed at the start was not a good predictor of success. It was the momentum of closing accounts which made a difference.
     The same principle works when the consumers are out of debt and fit to spend. This is 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 all those “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 that those who turned down the light bulb offer.
     In your selling, start out with such an appealing request that the shopper is very likely to say yes, and then use this yes as a base for presenting a series of larger requests. Consumer psychologists have repeatedly found that getting a yes to a simple request makes the person much more likely to agree to a bigger request if benefits follow that yes to the simple one.
     Don’t exploit purchase momentum, but do use it.

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

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Friday, August 10, 2012

Turn Out-of-Stocks to Your Advantage

What are the effects on your shoppers when you run out of an item shoppers expected to purchase from your store? How might you turn those effects to your advantage?
     Here are a few tips, using research findings from Indiana University-Bloomington, University of British Columbia, and Northwestern University:
  • Consumers who have repeatedly purchased a small set of items from you will desire some of those items even more strongly when they discover other items in the set are out-of-stock (OOS). The more general finding is that loyal customers who encounter an OOS become more likely to come to your store promptly when sales on high-demand items are announced. Coach your store staff to sincerely empathize with the shopper and give helpful guidance, such as telling the shopper when the next shipments are due. 
  • For consumers who purchase a particular item at regular intervals, encountering an OOS repeatedly will lead the consumer to change item preferences. When an item is OOS in your store, use signage to suggest an alternative which you do currently have in stock. 
  • Shoppers’ price sensitivity increases when they encounter out-of-stock items. They dislike the feeling they are being required to buy a substitute for meeting their needs. To lessen the negative feelings, offer alternatives at a range of price points. 
     Researchers at American University in Washington, D.C. and University of Arizona suggest you be ready for a shopper to veer off to a wholly different choice after learning an item the shopper has carefully chosen is OOS.
     Say a shopper comes into your store and looks at expensive ink pens. The shopper narrows the choices to two, both of which have an extra-fine felt tip. The only difference between the two is the ink color, which the shopper decides is not that important.
     Then when the shopper asks for the pen with the blue ink, he’s told it is temporarily OOS. He’s asked if he’d like to place an order, and he’ll be notified when the pen arrives. He declines. The salesperson—knowing the value of selling substitutability—offers the shopper the extra-fine felt tip pen with the black ink.
     But, like a majority of the participants in the American University/Arizona study, the shopper goes off in a different direction, such as purchasing a fancy ballpoint pen with blue ink. Because of the OOS, the blue ink color becomes more important than the felt tip.

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

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Thursday, August 9, 2012

Face Your Fate About Service Delays

Consumers who associate with Asian cultures react to service delays differently than do those associating with a typical American culture, according to a set of studies at Chinese University of Hong Kong and Lingnan University.
     The researchers use as an example the delay of an airline flight. Asian consumers are substantially more likely than their Western-culture counterparts to accept the delay without upset. On the other hand, the Asian consumers are much more sensitive to airline personnel showing evidence of disrespect when explaining the reason for the delay. They consider losing face as within the control of the service provider, but accept fate as a reasonable explanation for taking longer.
     In the Hong Kong studies, Western consumers were relatively tolerant of staff rudeness in settings that included a movie theatre, a computer repair service, and even a restaurant. Asian consumers became irritated at minor signs of rudeness, but accepted nonsocial retailer failures relatively graciously. This effect was strongest when the retailer offered brands with names like Lucky Star which imply fate-based initiatives.
     Research findings from Dartmouth College and Columbia University explored this as a matter of karma. Karma—which is strongly associated with India—is a belief system centered around long-term consequences. As we look forward in our lives, the decisions we make now affect what happens to us in the future. Good actions will produce good results at some point. Turning to look behind, we’ll see that what is going on with us now is the result of our past. The thoughts we’ve had, the words we’ve said, the actions we’ve taken, the deeds we’ve instructed others to take on our account or while under our control.
     This is true for everyone, since even the youngest child possesses a past, having lived a succession of existences. Universally, pleasant experiences will happen for us now because of good we’ve done in this or a former life. My unpleasant experiences are the consequences of my bad thoughts, words, and deeds in the past.
     Consumers who believe in karma are more patient in resolving complaints about retailers than are consumers who don’t believe in karma. People who believe in karma also are more persistent than those who don’t. If they attribute bad customer service to their own past bad actions, they don’t lower their expectations for respectful customer service. Recognize the importance of patience and persistence in building their repeat business.

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

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Wednesday, August 8, 2012

Fit Contributions to Contrarian Consumers

You want the various aspects of your store operations to be consistent. This strengthens your brand image, resulting in consumers remembering you better. However, research findings at North Carolina State University and University of South Carolina indicate that this general rule doesn’t hold true when it comes to cause-related marketing.
     In cause-related marketing, a retailer addresses social responsibilities by making charitable contributions. For instance, you announce to your target markets that you’ll donate a certain amount of money for purchases from your store. The effect on sales can be impressive. As long as you don’t do it too often, your promise of a charitable contribution of $1 for each item purchased at the regular price will produce a higher average percentage gain in sales than offering a discount of $1 off the regular item price.
     But what charity to choose? The answer is that you’ll do best to include charities which don’t fit the personality of the store operations. The reason is that this gives the consumers more of a sense of personal participation in helping the cause. They feel noble, and a sense of nobility increases purchase intentions.
     Prior findings from University of Minnesota, University of South Carolina, and University of Georgia support this idea. Those researchers used one of the most basic personality dimensions in consumer psychology: promotion-focused versus prevention-focused.
     Prevention-focused shoppers put top priority on products and services which help them avoid losing what they have now. Promotion-focused shoppers put top priority on products and services which help them gain more than they have now.
     Shoppers in luxury stores are more likely to be promotion- than prevention-focused, while it’s the other way around for shoppers for necessities. This influences the merchandise they’ll buy in expected ways. But when it comes to the charitable activities, it’s different: Shoppers interested in self-enhancement in their purchases are more comfortable when their purchases sponsor charities supporting traditional causes, such as basics and conservation.
     If luxury stores do include a symphony orchestra or art exhibit among their partners, they might do well to also highlight continuing association with a charity providing food, shelter, and education to disadvantaged populations.
     On the other hand, stores selling commodities should include among their charity partners causes which promote self-enhancement. The effect here is not as strong, though. More important is that the money be for causes in the local communities so results are easily seen.

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

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Tuesday, August 7, 2012

Mail Large for Ad Response Rates

When using direct mail, the larger the mailing piece, the better the response rate.
     About 1.12% of consumer receiving a postcard respond, while the rates are 1.28% for a letter-sized ad and 1.44% for an oversized mail piece. When the mailing list includes only past customers, the rates are about 2.47% for postcards, 3.40% for letter-sized ads, and 3.95% for oversized mail pieces.
     The consumer psychology explanation for the differences is that a larger size implies higher importance. This is particularly true for consumers who view themselves as less powerful. In studies on a related topic, researchers at HEC-Paris and Northwestern University offered a set of study participants a choice of different-sized bagel slices. Those participants who felt powerless chose bigger slices.
     Larger mailing pieces do cost more than smaller ones, both for production and for postage. Balance that fact against the improved response rate. And any marketing campaign using direct mail will cost more for production and postage than a campaign using e-mail. However, because the response rates to e-mail ads are so low—about .03% for a general list and .12% for a past-customers list—the cost per order or sales lead is slightly more for e-mail than for direct mail campaigns.
     Other considerations when deciding on your mix of direct mail and e-mail marketing:
  • Multichannel and multi-impression marketing work better than campaigns using a single-channel one-shot. The highest response rate—about 13%—is with telephone marketing to past customers. Furthermore, only 6% of actions following an online display ad occur right after a click. Consumers generally require time and repetition before popping up as prospects. 
  • Over the years, there has been an increase in e-mail response rates and a decrease in direct mail response rates. So the marketing mix returning the best return on investment (ROI) this year might not be the best one a few years from now. 
  • Although larger size advertising mailing pieces for unfamiliar products get higher response rates, smaller size sample packages of unfamiliar products get more consumer trial. Researchers at Technical University of Lisbon and at Tilburg University in the Netherlands found that people who were hesitant about eating a food product were more likely to overcome their hesitations when presented with small packages than when presented the equivalent amount in a large package. 
For your profitability: Sell Well: What Really Moves Your Shoppers

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Monday, August 6, 2012

Cannibalize Store Sales Strategically

When you introduce a new product line in your store, you hope to increase total sales. If profits from the new line do no more than equal profits from the existing lines, that hope hasn’t been fulfilled. Worse yet is if revenues from one segment eat up revenues from other segments.
     What are the best ways to turn cannibalization to your advantage?
     Researchers at University of Virginia tracked results when a specialty apparel retailer installed a store-within-a-store (SWAS) boutique which featured a new label. Here’s what they found, along with suggestions based on this and other research:
  • Installation of the SWAS improved three metrics for the overall store—the percentage of shoppers converted into purchasers, the dollar amount of the average customer transaction in the store, and growth in sales. It appears that a SWAS is a good idea. 
  • Sales from the boutique did cannibalize sales from other parts of the store. The implication for you is to prepare for adjustments in inventory management when introducing the SWAS. 
  • When consumers feel there’s a natural fit between the SWAS item lines and the other item lines, this increases customer spending on both sets. One explanation is the added excitement from introducing the new product lines. There are other ways to add to your store the sort of excitement which will draw shopper interest. The SWAS is only one alternative. But it does appear the SWAS way has a lasting influence. If you choose this alternative for building profits, expect more in sales climbs of the existing lines than in sales climbs of the added lines. To refresh the excitement periodically, you might decide to use the SWAS space for different lines over time. When retailers have a part of the store set aside for seasonal items, they are using a variant of this technique. 
  • If the consumer perceives a very high fit between the two sets of product lines, sales on the SWAS lines will drop while sales on the older lines will increase. The reason here seems to be that shoppers conclude they’re getting equivalent products with the two lines, and they prefer the older lines. Perhaps this is because the older lines are a time-tested alternative and/or the price of the older lines is lower. In your store, it would make the most sense to introduce a SWAS only if there is some distinction from the existing lines. 
For your profitability: Sell Well: What Really Moves Your Shoppers

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