Saturday, August 31, 2013

Influence the Compromise Choice Process

When faced with a good-better-best choice presented in that order, the typical shopper traditionally favored the middle alternative. Knowing about this compromise effect allowed a retailer to shape shopper behavior by the order of choices presented to the consumer. You’d put in the middle the alternative you thought would be best for satisfying the shopper’s needs and your profitability objectives.
     What strengthens or weakens the compromise effect?
  • Some of the causes seem odd until you analyze the reason. Researchers at Brigham Young University found that shoppers who feel physically off-balance are less likely to choose the compromise alternative than are shoppers who feel themselves to be in physical equilibrium. People subconsciously associate feelings of balance with attitudes of parity, in which price, performance, and other characteristics are traded off. 
  • There are causes which are related to the economic downturn of these past years. At a time deep into the Great Recession, researchers at Otto-von-Guericke-University and Karlsruhe Institute of Technology in Germany found the compromise effect to be strong among quality-seeking consumers, but weak and insignificant among the price-conscious segment. 
  • There are situational causes. Research findings from University of Hong Kong and National University of Singapore indicate that when a customer appears to be in an upbeat mood, he’s more likely to select either the first or the last alternative you propose than to select a middle alternative. On the other hand, when shoppers are worried, but determined to make the purchase rather than defer the decision, they seek the compromise alternative and will look for it as the middle alternative. Not the highest priced or lowest priced, but the middle priced. Not the highest quality or lowest quality, but the medium quality. 
  • Some causes are permanent enough in the shopper for you to either accept them or maybe work around them. Studies at Stanford University and University of Florida-Gainesville isolated a familial component. Given the choice among the $10, $20, and $30 sizes, some people will select the $20. If the choice is presented as among $20, $30, and $40, they will tend to choose the $30. And if one family member does this, there’s an increased possibility the close relatives also will. 
  • Presentation order matters. According to researchers from Hong Kong University of Science and Technology, people flooded with information become willing to buy a higher-priced alternative if the alternatives are presented in order from most expensive to least expensive. 
Click below for more: 
Compromise Effects with Shopper Segments 
Guide Choice by Sequence of Presentation 
Attend to Genetic Influences in Selling

Friday, August 30, 2013

Compare with Prototype & Copycat Brands

In “partially comparative pricing,” you announce price comparisons with other stores for some, but not all, of your products. Researchers at Florida International University, State University of New York-Fredonia, and University of Louisville have called the practice “a double-edged sword.” Partially comparative pricing leaves most consumers with the impression that pricing on all items which belong to the same categories will also be priced competitively. That’s good. However, the consumers are also often left with the impression that you’ll be making up for the discounts by charging more for items in the other categories. That’s bad.
     The good part of this is best when the comparisons you feature are for prototype brands. A prototype brand on your store shelves or racks carries the name and label design best known by consumers in your target markets in that product or service category. For peanut butter, the prototype might be Skippy. Prototype electronics brands include Apple and Samsung. From the geographical angle, the prototype brand of laundry detergent might be Tide in Milwaukee, All Free in San Francisco, and Ala in Buenos Aries. For beer, it would be Budweiser in America and Heineken in the Netherlands.
     Ease the bad part of partially comparative pricing by advertising favorable price comparisons on prototype brands across the range of product categories your store carries.
     There’s reason to believe you also can achieve the good and ease the bad by substituting “copycat brands” for prototype brands as long as you show illustrations of the copycat brands in the ad. A copycat brand aims to imitate the appearance of the prototype brand.
     Copycat brands can sell well. However, researchers at University of Cologne and Tilburg University find that the type of copycat you carry should be based on the proximity of the prototype brand. The researchers distinguished among low, moderate, and high similarity copycats, depending on how much the package design and brand name resembled the prototype’s.
     If you don’t carry the prototype brand in your store, have high similarity copycats. If you stock the prototype brand adjacent to the copycat, carry moderate similarity copycats so customers don’t conclude you’re trying to mislead them.
     From a shopper psychology perspective, the second strategy is better:
  • By stocking both the prototype and copycat, you offer variety. And variety attracts shoppers. 
  • When the copycat is physically close to the prototype, the shopper’s mind attributes positive characteristics of the prototype to the copycat. 
Click below for more: 
Orient Shoppers to Appreciate Discounts 
Copycat Based on Leader Brand Proximity 
Compare Unknown Brands to Best-Known Brands

Thursday, August 29, 2013

Deduct Debtors By Using Automatic Deductions

Collecting on delinquent accounts helps achieve full profitability. But collections can be emotionally difficult for the small to midsize retailer, who often has developed warm relationships with patrons. To ease the difficulty, gain customer acceptance for automatic deductions as a payment alternative.
     A recent Bloomberg Businessweek “Smart Answers” posting began with a help request from owners of a private preschool where many parents hadn’t kept up with payments. The experts’ suggestions included setting up a line of credit at a bank to cushion fluctuations in accounts receivable, requiring advance deposits, and offering an incentive for authorizing monthly debits from the client’s bank account or monthly charges to the client’s credit card.
     As the posting says, because of the regular use of automatic deductions, there is increasing acceptance among both retailers and consumers. I’ll add three consumer psychology tips for maximizing consumer acceptance:
  • Provide for the shopper payment alternatives to the automatic deductions. Consumers are more likely to agree when they sense they have a choice. Making a substantial advance deposit could be one alternative. Short-term contracts could be another. 
  • Have the customers feel like part of a community. This stimulates a mindset of supporting the enterprise. The enrollment procedures and any participant materials should clearly refer to the customer as a “member.” Have staff regularly thank the customer for being a member. If the member has signed up for a limited-time enrollment, the feeling of companionship becomes especially important as the renewal date approaches. When the members feel part of a network, they’re less likely to drop out of participation and their financial obligations. 
  • Assign one billing contact. In a preschool, a health club, or similar retailing, the warm relationship with the customer builds business. It’s also useful for the circumstances in which a delinquent customer might want to come back in the future when she’s financially able. If one staff member handles the contracts and invoices, it’s easier for the other staff to maintain the warmth in the face of sour debts. 
     A business caution regarding that last one: Even though you centralize the billing contact, be sure the contracts, invoices, payments, and collection activity are audited by others. Check that everyone’s adhering to strict financial control systems. In one instance I know about, the owner’s daughter embezzled money out of the business to the tune of $750,000.
     Real bumpy family reunions from that point on, I’d think.

Click below for more: 
React When Faced with Reactance 
Kick Out Customers Using a Welcome 
Prolong Opportunities for Family-Owned Stores

Wednesday, August 28, 2013

Add On the Value of Coupons As Ads

Last week, in Austin, Texas released results from a survey it sponsored of retail discount coupon use among consumers in eleven countries. The survey itself was conducted by Ipsos Public Affairs.
     Among the findings:
  • Over half of the U.S. respondents said they value brands more which offer coupons. This 53% agreement rate was the highest across the countries surveyed. Canada did come in at 52%, and Great Britain at 50%. 
  • Overall, Americans were also the most likely to say they take pride in using coupons because the use shows savvy shopping skills. This appears to be especially true among American women. brags they’re “the largest digital coupon website in the United States,” and digital coupons—downloadable to an online device—are more powerful than the traditional free-standing insert (FSI) coupons. About 34% of coupons delivered via free-standing insert attract new purchasers, while about 46% of digital coupons accomplish this. About 68% of FSI coupons result in a larger sale total, while this occurs with about 77% of digital coupons.
     Whether or not you issue digital coupons, recognize that both digital and FSI coupons which are never redeemed serve a function for a retailer. They advertise the positioning of the store as offering pricing benefits for shoppers.
     Researchers at University of Virginia found that consumers who received, but didn’t redeem, coupons spent more in the stores issuing the coupons than did consumers not receiving coupons. Because the large majority of people who receive coupons don’t redeem them, the sales lift caused by a coupon campaign comes mostly from the non-redeemers. There are many more of them, even if each spends only a little more.
     Another little secret about retail discount coupons is that asking the consumer to work a bit to use the coupon will add to its value. The right level of work depends on the amount of discount you’re offering, the scarcity of the advertised item, the customer’s enjoyment of games, and more.
  • Digital discount coupons call for an effort which is both straightforward and noticeable. The consumer needs to either print out the coupon or bring a mobile device to the store to show the screen. 
  • With FSI, the consumer needs to extract the coupon from the insert and take it to the store. Not as much of an effort as with the digital, and that might account for some of the difference in effectiveness. 
Click below for more: 
Engage Customers Via Digital Coupons 
Clip Mistaken Notions About Coupon Users

Tuesday, August 27, 2013

Fake Out Those Shopping for Fakes

Prospects for purchasing counterfeit alternatives to merchandise you sell are sometimes fully aware they’re seeking fakes, and sometimes they’re not at all aware of it.
     Researchers at St. John Fisher College, Southern Illinois University, and University of Wisconsin–Whitewater analyzed the motivations of participants in online communities of counterfeit consumption (OCCC). Here are my suggestions for appealing to those motivations in ways which will result in the consumer buying the real deal from you.
  • Interest in obtaining value for money. Show the shopper how prices for counterfeits might, in reality, not be dramatically better than what you can offer. So-called discounts claimed on 8,000 rogue sites monitored by brand protection firm MarkMonitor were often in the range of 25% to 50%—not too far beyond what a shopper might obtain during your special promotion sales. 
  • Pride in being able to find fakes which are indistinguishable from the genuine version. Know your merchandise well enough to describe the hidden features or easily overlooked benefits lacking in the counterfeit version. 
  • Trust in the seller. OCCC members might have felt cheated, unappreciated, or exploited by merchants in the past. Their attraction to counterfeit products could be a conscious or subconscious way of paying back legitimate retailers for these insults. Getting to know the shoppers outside the store setting and treating them with obvious fairness regardless of the setting can help counteract the attraction to the counterfeit. 
     Then there are the shoppers who don’t know an item being considered is not genuine. Because counterfeit goods are usually of inferior quality, you’ll be doing a service by helping those shoppers question whether they’re being fooled. Acknowledge the compelling appeal of counterfeits which seem genuine, then present the advantages of buying the real deal.
     The MarkMonitor study analyzed almost five million online shopping inquiries from more than 300,000 consumers in France, Germany, Italy, Spain, Switzerland, the UK, and the U.S. The researchers found that shoppers are likely to end up on a site selling counterfeit goods if the shoppers include in their search query words such as fake, knockoff, or replica, but also if the search terms include words like cheap, clearance, discount, outlet, or wholesale. Of those guided to a site featuring fakes, roughly four times as many had been searching for a bargain than for knockoffs. That indicates that many people considering whether to purchase counterfeit goods don’t realize the goods aren’t legitimate.

Click below for more: 
Genuflect to Counterfeit’s Accidental Appeal 
Embrace Shopper Expertise 
Show Complainers Respect, Concern, & Empathy

Monday, August 26, 2013

De-Stress from the Distress of Perfectionism

On “Late Show With David Letterman,” actor Peter O’Toole revealed how the dry cleaner shop he uses inspired his choice of an epitaph. A leather jacket he sent to the cleaners came back with a note attached: “It distresses us to return work which is not perfect.”
     “I’m having that on my tombstone,” Mr. O’Toole announced.
     Perfection may be a noble aim for a retailer, but it also may expedite use of tombstones. One for the business and one for the businessperson.
     Keep your eye on many important tasks at once. But allow some tasks to be in your peripheral vision. The central focus should be on tactics and measures that, if they fall too far short, substantially impact your profitability.
     The successful retailer engages in skillful selective neglect. You can do it all. The problem is you can’t do it all at the same time. There are many ways to improve your profitability as a retailer. You almost certainly don’t have the resources to implement them all simultaneously. And more, it turns out, is not always better.
  • Researchers at University of Mannheim in Germany and University of Texas-Austin found that customers who are adequately satisfied are willing to pay higher prices than are customers who are barely satisfied. But the researchers also found that developing customer willingness to pay even higher prices generally requires ensuring those customers are consistently very highly satisfied. The costs of doing this might make it unprofitable. If so, why not be satisfied with adequate customer satisfaction? 
  • Researchers at Duke University and University of California-Berkeley find that advertising a warranty has no effect on consumer perceptions of retailer and product quality unless both retailer reputation and manufacturer reputation are in other ways flawlessly positive. So until you’re confident that your shoppers absolutely revere your reputation, why advertise warranties? 
     Psychologist/economist Herbert Simon coined the term “satisficing” to refer to his finding that successful people accept less-than-perfect alternatives in order for them to be able to move on to the next tasks to be accomplished. Swarthmore College researchers determined that satisficers have higher life satisfaction, happiness, optimism, and self-esteem than do people who hold out for perfection.
     In a 1911 story, “Gertrude the Governess,” Canadian humorist Stephen Leacock, wrote, “Lord Ronald said nothing; he flung himself from the room, flung himself upon his horse, and rode madly off in all directions.”
     Don’t be a Lord Ronald.

Click below for more: 
Focus for the Holidays 
Perfect Your Salesmanship for Perfectionists

Sunday, August 25, 2013

Flex Your Understanding of Time Perceptions

Waiting for your special order of lingerie to arrive will seem longer than waiting for your special order of cashews. That is, unless you’re one of those very rare people who finds cashews to be highly sexy.
     Researchers at University of Southern California and University of Pennsylvania explain this by saying sexual cues lengthen the subjective time interval until a reward is delivered. Moreover, the effect generalizes. In one study, a group of men were shown illustrations from a Victoria’s Secret catalog. Later, the men were asked to consider receiving an Amazon gift certificate that same day or receiving the certificate three months hence. Each man was asked individually to say how much higher the value would need to be on the delayed-delivery certificate for the man to choose that one.
     Before being asked for a value estimate, another group of men were exposed to scenes of nature instead of women.
     The Victoria’s Secret group showed more impatience: They set higher dollar amount expectations as their compensation for waiting.
     It turns out that if your shopper has just been shopping for lingerie, he’s more likely to be impatient for delivery of his cashews—or whatever it is you sell—in a different store.
     These same researchers plus one from Duke University found that spatial distance can also distort perceptions of time. Study participants were asked to imagine going to a post office the same day and then going to a bookstore in three months. Some of the participants were told the two locations were close-by. The rest were told the trip between the two was long.
     Those who had been told the distance was long reported the subjective time interval of the three months to be longer. Similarly, people who imagined moving far away upon retirement estimated the time until retirement to feel longer than did people who imagined not moving far away.
     Recognize that your perception of delay time might be different than your customer’s. The customer might be thinking, “You don’t appreciate the bother this delay causes me.” Allow her or him sufficient time to briefly tell you about the bother, and then show you understand and appreciate the specifics of what the customer said. You could start with, “I understand what a nuisance it causes for you to have to put your project on hold because of the late delivery. How can I make things right?”

Click below for more: 
Face Your Fate About Service Delays 
Ease Customer Anger at Delivery Delays 
Clock Customer Actions to Fit Time Metaphors

Saturday, August 24, 2013

Wriggle Along with the Wrinkles of Aspiration

Aspirational groups are those to which your shoppers want to belong, and dissociative groups are those from which they’d like to distance themselves. Research verifies that people are attracted toward products marketed as appealing to an aspirational group and people tend to avoid items they consider to be frequently used by dissociative groups.
     The implication for retailers is to devote more store space to aspirational items than to dissociative group items, remembering that what is dissociative for some can be aspirational for others.
     Studies at University of Pennsylvania and Southern Methodist University added a wrinkle to this: If the consumer already belongs to an exclusive group or is confidently aspiring to belong, he’ll be looking for more subtle cues—what corresponds to the secret handshake which allows members to recognize each other while not tipping off the outsiders. This was a lesson learned by Lacoste when discovering that their crocodile logo stopped portraying as much status if it was displayed too prominently.
     Now studies at University of British Columbia, University of Alberta, and Hong Kong University of Science and Technology add yet another wrinkle: If shoppers are told negative information about a group they treasure belonging to, their attraction to products associated with that group might actually increase. The aspirational group does not necessarily become a dissociative group. Threats to group reputation can activate group loyalty.
     Envy also wriggles in: Research findings from Tilburg University in the Netherlands indicate that when a shopper for a product envies someone who owns that product, they’re willing to spend more money on the purchase.
     In some cases, it’s more money on the product owned by the envied person. In other cases, it’s more money on a competing product. Understanding how this works gives you one more tool to redirect shoppers toward products that best serve both their needs and your profitability.
     When shoppers believe the other person earned the right to advantages of owning the product, those shoppers are willing to pay a premium for owning the product themselves. The extra money represents 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 has isn’t so great, after all. People with this malicious envy were also willing to spend more money, but on a competing product. They dissociated themselves.

Click below for more: 
Redirect with Evil Envy 
Position the Logo Like a Handshake 
Breed Family Pride to Motivate Choice 
Reveal the Folly of Shopper/Product Rivalries

Friday, August 23, 2013

Take a Swat at SWOT

The fundamental formula for retailing success is to identify the shopper’s needs and then fulfill them. Author Robert Spector talks about how, in medieval London, the shopkeeper would stand in front calling out to passersby, “What lack ye?”
     Business researchers at the Corporate Executive Board (CEB) claim that the rules for needs assessment have changed since then, most dramatically in business-to-business (B2B) selling. With easy access to information and sophisticated analysis tools, business buyers often have decided on their needs well before starting to contact suppliers. They issue a Request for Proposal containing detailed specifications. The challenge for the retailer who wants to sell to other businesses is to move beyond asking about unfulfilled needs. Discern needs which are unrecognized by the potential customer or client.
     This means shoving aside some assumptions in techniques like SWOT, which was designed a half century ago to assess the internal strengths and weaknesses of a client and then the opportunities available to and threats facing the client because of external factors. The SWOT framework is sound. In particular, it considers the externalities usually overlooked in other needs assessment techniques.
     The Achilles’ heel kicks in if assuming potential customers or clients are able to assess those externalities as accurately as a skilled sales representative can. The internet and Big Data mindsets can bestow undeserved confidence.
     The SWOT analysis must now become increasingly sophisticated. Compared with past usage of the technique, SWOT requires more creative preparation before meetings with those in the business who influence the purchase; courage in proposing disruptive ideas to a potential customer who may very well firmly believe that all has been settled; and perseverance in making the sale when you know there are unrecognized needs.
     The CEB researchers recommend that you work with three types of people within each business to which you want to make a large sale:
  • Go-Getters. These purchase influencers look for innovative ways to improve the organization. Be aware they’re more interested in talking about their company than yours. 
  • Teachers. They like to tell others their insights, so can become champions of change. However, they’re often weak in appreciating how purchase decisions are made in their own organization. 
  • Skeptics. They challenge you to consider all aspects of what you’re proposing. Skeptics are willing to be convinced. In this way, they differ from Blockers, another category identified and named by the CEB researchers. Sidestep the Blockers. 
Click below for more: 
Recognize a Need, Then Fill It 
Complete the Collection for Shoppers 
Stay Aware of B2B Distinctions 
Learn the Relationship B2B Customers Want 
Yo-Yo with Yin-Yang Cues

Thursday, August 22, 2013

Keep Your Distance If Customers Expect It

When the waitress at my local Outback restaurant kneeled down next to the table and said, “Hello, my name is Gretchen. I’ll be serving you tonight,” I did not reply, “I’m honored to meet you. My name is Bruce, and allow me to introduce you to my wife Irene.”
     Equally odd would have been the server saying, “Hello, my name is Mrs. Fredrickson. I’ll be serving you tonight.”
     Why would that have been odd? Because I, like other restaurant patrons, envision the waitress or waiter as fulfilling a role which is subservient to mine. The notion behind leaving a tip is that the diner is judging the wait staff. When those role expectations of a superior judging a subordinate are violated, the consumer often becomes uncomfortable.
     Researchers at University of North Carolina and Western Carolina University explored what happens to customer tipping when the server draws a smiley face on the check before giving it to the diner. Other research had found that writing a brief thank you leads to higher average tips.
     However, in this study, those patrons receiving a bill with a smiley face left a smaller tip percentage than did the patrons getting their bill sans decoration. The smiley face implied a level of informal familiarity which violated role expectations.
     The dampening effect of the happy face—or a brief thank you note—was more when the customer judged the wait staff as not meeting expectations. Satisfied diners getting their checks with the happy face or a note ended up leaving lower tips. Dissatisfied diners getting the decorated checks left lower tips still, on average. The inadequate service combined with the effort to seem like an equal with the diner aggravated the dissonance for the customer.
     Maintain a respectful social distance from the customer when that’s what the customer expects. If you know the customer well in settings outside the retail setting, familiarity like happy faces makes sense. If you know the customer well from business inside your store, calling the customer by first name makes sense. Otherwise, err on the side of the more formal, and if the customer gives you permission, ease up.
     The “first name rule” may not hold when expectations are for the consumer to be subservient to you. The other rule still does: If you’re a brain surgeon, please refrain from drawing smiley faces or writing “Thanks” next to the incision.

Click below for more: 
Name Your Customers

Wednesday, August 21, 2013

Enlarge Influence with Contagion

“Please use this high-end putter to attempt ten shots on this artificial green. Here’s the putter.” That’s the setup used by research scientists at Max Planck Institute for Biological Cybernetics. For half the number of participants, selected at random, when each was handed the putter, he was also told something like, “Oh, by the way, this putter I’m handing you was used in the past by Professional Golfers’ Association player Ben Curtis.” Mr. Curtis has won the PGA Tour four times. His total career winnings exceed $13 million.
     Compared to the study participants not given the additional information, those who were led to believe they were using the golf club previously held by Mr. Curtis sank a third more of the putts into the hole, on average. There’s also reason to believe they found the task to be easier: When all the study participants were asked to draw a picture of the hole before attempting the shots, Curtis-primed golfers produced drawings 9% larger.
     Contagious magic refers to the belief—commonly encountered in consumers and usually subconscious—that two objects which touch will exert an influence on each other. That’s what was going on in this study, with the contagious magic endowing confidence.
     A study at Arizona State University and New Zealand’s University of Auckland used musicians in place of duffers, guitars in place of putters, and supposed replicas in place of supposed actual possessions. Why is it, the researchers asked, that a purchaser of a guitar would find that having a respected rock star sign the guitar caused the guitar to produce better music? This was especially true when the guitar was a replica of the instrument used by the rock star autographing it. The answer: Contagious magic!
     Contagious magic operates not only to enhance the attractiveness of the merchandise you sell, but also in the other direction. As an example, suppose you sell toys in your store. Today you saw a news story saying a dangerous defect has been found in some toys from this manufacturer.
     None of the toy product lines you're selling has been found to contain defective items. What can you do to improve sales?
     Space out the boxes. University of Utah research findings suggest that when a product is feared to have a defect, putting the boxes further apart leads shoppers to think the one they purchase is less likely to have the defect.

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

Click below for more: 
Catch the Power of Contagion 
Resist Contaminating with Residue Sensitivity 
Match the Product to the Customer's Skill Level

Tuesday, August 20, 2013

Risk Not in Misreading Risk Tolerance

Nation’s Restaurant News says consumers’ concerns about food safety are increasing. From a consumer psychology perspective, this increase could be seen as another manifestation of shoppers, on average, having become more risk averse over the past few years. London-based Trajectory Partnership blames it on the economic downturns and predicts it will last for a long time.
     But that’s the case on average. Some shoppers these days have a high risk tolerance, and for many shoppers, the risk tolerance depends on the consumption situation. Target motivations include:
  • Endowment Effect. Researchers at Baruch College analyzed food safety situations where, for instance, if people saw cheese with some mold on it being offered at a buffet, they’d pass on the cheese altogether, but if those same people had that same cheese in their refrigerator, they’d say, “Hey, what’s a little mold?” After we’ve acquired a product and worked through any initial regrets, we tend to overvalue the product. That’s the endowment effect. 
  • Educational Effect. The organizers of a Brooklyn Kitchen bug-eating event in Manhattan touted the benefits of learning about cultures in which eating bugs is common. 
  • Roller Coaster Effect. Consumers go on the most treacherous roller coasters not only for the stimulating physical sensations, but also for the sense of pride achieved in prevailing over fears. 
  • Breakthrough Effect. Some consumers are more interested in breaking taboos than in breaking through fears. These individuals yearn to push the limits. 
     Whatever you’re selling, stay aware of what you might be overlooking when analyzing a shopper’s risk tolerance.
     A universal 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. However, Santa Clara University researchers asked, “What if the client’s answers are inaccurate? Not intentionally inaccurate, but instead wrong because they’re incomplete?”
     Know the type of risks the item has. 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.
     Also assess the consumer’s 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 her degree of risk tolerance and push it a little lower.

Click below for more: 
Promote Sales from Product Recalls 
Dip Your Toe Into Extreme Experiences 
Dissect the Shopper’s Risk Tolerance

Monday, August 19, 2013

Aim Away from Shame

It’s better to make consumers feel guilty than ashamed. What’s the difference? Well, for distinction in definition:
  • With guilt, the consumers acknowledge they’ve done something wrong or failed to do something right 
  • With shame, the added element is that the consumers believe that others hold them responsible 
     For distinction in consumer reactions, researchers at RTI International in San Francisco, George Washington University, and University of Pennsylvania, induced study participants to experience either guilt or shame at failing to be tested for sexually transmitted diseases. Compared to those induced to feel guilty, these potential consumers of health services induced to feel ashamed were more likely to express anger. They were irritated at what they perceived as efforts to manipulate them. Shame backfired.
     So let’s say you’re a local retailer. You’ve operated your business in the community for a long time. Almost all your employees live in the local area. They spend most of their paychecks and you spend most of your business profits locally rather than sending the money off to some distant corporate headquarters.
     Next, let’s say a Big Box has opened a few towns away. Being a wise retailer, you take a trip to the Big Box to look over this new supersize competition. And as you’re walking through the store, you see right there in the main aisle one of your longtime customers pushing a shopping cart filled with the sorts of items you sell in your store.
     Along with you recognizing him, he sees you and immediately takes on this embarrassed, sheepish appearance. Eyes looking down and shifting side to side. Shoulders slumped forward. A forced smile. He says hello.
     Your move. Do you assume that, like you, your customer is giving the Big Box a look-see. You say, “What do you think of this new store? I came over to check it out, too.” Or do you opt for shame? “How could you ever want to spend your money here at this Big Box when you should be spending your money and your time with a local retailer?”
     Adults in individually oriented cultures, like the U.S., UK, and Australia are especially likely to bristle at efforts to arouse shame. “Aim to shame me about shopping at Walmart, and I won’t stop shopping at Walmart. I’ll stop shopping with you, because I don’t like spending my money with people who try to make me feel bad.”

Click below for more: 
Prefer Obligation to Shame 
Fix the Problem, Not the Blame

Sunday, August 18, 2013

Prevail Using Customer Need Knowledge

Small to midsize retailers can find themselves competing with large retailers for the shopper’s dollars. A powerful tool in that competition is your knowledge of individual customers’ needs and preferences.
     A Yesmail survey project, conducted in conjunction with business benchmarking analysts Gleanster, concluded that there were the following particular weaknesses in the Customer Need Knowledge (CNK) among larger retailers:
  • The mix of channels the individual customer prefers to use to get information about items and to make purchases: Store visits? Store website? Social media? Telephone? Catalogs and circulars? Other? 
  • Composition and characteristics of the customer’s household. Number of people? Gender, age, and shopping preferences of each member? 
  • Interests of the shopper herself or himself. 
     Researchers at Germany’s University of Mannheim and University of Bochum explored the relationships of:
  • Customer need knowledge (CNK), defined as the extent to which a frontline employee in a store—the one who serves customers face-to-face—accurately and promptly identifies each customer’s needs and desires 
  • Customers’ satisfaction with their experiences with the frontline employee 
  • Customer judgments of value in what they purchased from the frontline employee 
     The researchers found that when the CNK of employees in a store is higher, customers tend to be more satisfied and to say they’ve gotten better value from their purchases. Employee with high CNK pay close attention to each customer they’re with and are visibly concerned with the problems of that customer.
     This isn’t surprising. Still, it’s nice to have experimental validation. The researchers did go beyond this to suggest two ways to increase the CNK of your store’s employees:
  • Manage employee turnover. A top facilitator of CNK was the customer having dealt with the employee over a period of time. Longer-term employees get more opportunity to learn what a store’s target markets are like and will like. 
  • Identify and correct for the ways in which your target markets are different from your sales staff. CNK is less when there’s a large age discrepancy between the salesperson and that salesperson’s typical customers. This argues for hiring employees who are similar in age and other characteristics to your typical customers. You’ll want to be sure those employees also can learn retailing skills and that you obey antidiscrimination employment law. 
     A cautionary note: The Yesmail survey depended on self-report by the large retailers. They think they recognize their CNK weaknesses. Do you recognize yours?

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

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Pay Close Attention to Each Customer’s Needs 
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Saturday, August 17, 2013

Fall Over Yourself to Be In-Stock

A few months ago, I conducted a “Retail Profitability Tactics” project for merchants in Mariposa, California, helping to prepare them for their prime shopping season. I’m not referring to November through January. In Mariposa, the prime shopping season is happening right now, from June through September.
     Mariposa is a city of about 2,200 full-time residents in a county of about 18,000. Each year, many more people use Mariposa for lodging, meals, and/or supplies on their way to Yosemite National Park than live in Mariposa. Understandably, the community of merchants has largely designed themselves to serve the needs of outsiders rather than the locals.
     The downside of this is missed selling opportunities. The Executive Director of the Mariposa County Chamber of Commerce spoke of the problem from personal experience. Regarding the merchants, she told me, “I can’t buy pillow cases or silverware in Mariposa. They carry fancy lap throws, but they don’t carry blankets.” A member of the Mariposa County Board of Supervisors added, “55% of the welfare benefits received by our citizens are spent outside the county.”
     Eliminating those missed selling opportunities became a prime objective of my training and consulting in Mariposa.
     However, for most of the communities of merchants I work with, the problem is the obverse: Insufficient ability to attract shoppers from outside the immediate area. Researchers at Babson College, Dartmouth College, and University of Miami found that an often-overlooked component in that ability is the retailer assuring the prospective shopper the items sought are in stock at the store.
     A more common tactic is to offer deep discounts, with the logic that people are willing to travel far for a bargain. It’s a tactic which is less dangerous for a Big Box than for a small to midsize retail business, though. The Babson/Dartmouth/Miami researchers propose that you instead offer an in-stock guarantee, since it can command a price premium.
     In honoring such a guarantee, be aware that customers often say a store is out-of-stock (OOS) when the retailer thinks the store is in-stock. A survey conducted a few years ago by the IHL Group, based in Franklin, Tennessee, identified the top three reasons:
  • The shelf is empty because the items are still in receiving or storage 
  • The merchandise is in the sales area, but not easily seen 
  • The customer wants an item with characteristics, such as a specific pattern or smaller package, you’re not tracking 
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Friday, August 16, 2013

Charge for Entertaining Possibilities Shoppers

The distinction between Mission Shoppers and Possibilities Shoppers has not died, according to researchers at University of Vienna and University of Freiburg. When you watch shoppers entering your store—or track their browsing patterns on your website—do you notice how some of them are clearly on a mission? They go right for a particular item and, if the value is right, they want to buy the item as soon as possible. Other shoppers love to look through the possibilities. Even if they've a specific item in mind, they enjoy digesting the alternatives.
     Are men more likely to be Mission Shoppers and women more likely to be Possibilities Shoppers? Yes, at least when it relates to clothes, according to some Stanford University researchers. In general, men shop for clothes out of necessity, and when they do enter the store, it's with a targeted purpose in mind. On the other hand, women are more likely to circulate around so they can socialize, analyze, and discover what's new.
     Ecommerce turned Possibilities Shoppers into Mission Shoppers. Because consumers are now accustomed to learning all about the products, the alternatives, and the prices before entering the store, many more of them bullet in with a target in mind, and then leave without even as much as a ricochet toward impulse items.
     Still, although there are fewer Possibilities Shoppers, plenty of them still populate bricks-and-mortar stores. Compared to Mission Shoppers, the Possibilities Shoppers end up with larger purchase totals, even if not making those purchases as promptly, when the salesperson activates the proper mindset. The Vienna/Freiburg researchers say that this mindset is one of deliberation. The retailer should encourage the Possibilities Shopper to think about the experience of making the purchase, not only the purchase outcome itself.
     Activating this mindset causes the Possibilities Shopper to become willing both to buy more items and to pay a higher price for each item. These consumers can find shopping to be entertaining and are willing to spend for the entertainment.
     Be grateful for your Mission Shoppers. They're spending money with you, and they don't waste your time. But also move Mission Shoppers toward being Possibilities Shoppers. Do your store/website displays and merchandise arrangements encourage browsing and upgrading? Are your store aisles wide enough for customers to stand in front of the merchandise without getting in the way of other shoppers? Are your bricks-and-mortar staff creating entertaining encounters?

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Thursday, August 15, 2013

Support Consumer Collectives for the Poor

If your target markets include economically disadvantaged shoppers, recognize the advantages of selling to consumer collectives—groups of shoppers who have joined together to make purchases. And if consumer collectives aren’t currently available to the poorer people in your service areas, support the formation of this variety of group buying.
     University of Nebraska-Lincoln and City University of Hong Kong researchers analyzed consumer collectives at multiple sites over a two-year span. They found that the main payoffs for retailers were reductions in selling costs and increased store awareness. For the customers, the main payoffs were improved bargaining clout in the short term, feelings of empowerment and dignity in the longer term, and enhanced understanding of how to get the best from purchased merchandise and services.
     Those payoffs also showed up in a different set of studies which were headquartered at Cornell University. Those studies make reference to a groundbreaking concept in economics—retailers profiting by selling large numbers of items to consumers with limited resources at prices those consumers can afford. Implementation of this “Bottom of the Pyramid” (BoP) approach led to a 2006 Nobel Peace Prize for Bangladeshi banker Muhammad Yunus.
     For BoP retailing to work, you must sell substantial quantities. Products specially selected to meet the needs of the particular group can do that. Better yet, the Cornell researchers say, are bundles such as, perhaps, a body care kit containing small size packages of soap, shampoo, and toothpaste or a disease prevention kit that includes pest control, pet care, and household cleaning items.
     Even then, a barrier to full realization of the benefits of BoP retailing has been inadequate knowledge among the consumers about how to use the items. That’s where the consumer collectives come in, confirming what the Nebraska/Hong Kong researchers found: Small peer groups of consumers of limited resources can be taught and then coach each other about not only how to select, purchase, and dispose of items, but also how to make best of the items.
     Yet another strand of research, this at University of Strathclyde in Glasgow, yields another tip for helping members of BoP consumer collectives build dignity: Carry healthy merchandise for children. It’s hard for low income consumers to deny their kids’ requests. Among the items you carry should be ones that parents can feel good about buying and that the children will appreciate, even if the items aren't the children's favorites.

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

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Give Low Income Customers Dignity 
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Wednesday, August 14, 2013

Drill Down to Dissect Trends

In retailing, look at the trends and select where to drill down for details. You want to decide what products to purchase for your store, what services to develop, how to advertise and publicize, what to prune out of your merchandising mix. All these require attention to where the marketplace is going, not only how things are now
     At the same time, you must attend to what the numbers are now. What do the numbers standing on their own say?
     An example of how attention to trends is deficient comes in a Harris Poll report released late last month. From an analysis of the trends, the report predicts consumers will be saving on small purchases so they can spend on major items. If this prediction is correct, you’ll want to adjust your merchandising and marketing.
     The evidence for the prediction comes from comparing current responses to those from seven months ago.
  • More consumers are cutting back on dry cleaning, cable service, telephone service, and bottled water. 
  • In spite of the economy easing, consumers aren’t showing increased interest in small purchases like hair styling and magazine/newspaper subscriptions. 
  • However, the trend is upward for plans to take a long vacation, move residences, and start a business. The Harris Poll report considers all these to be major expense items. 
     The survey methodology appears to be sound. A representative sample of 2,210 adults were included. And I have no reason to doubt the quality of the data analysis. This is, after all, a project of the respected Harris Interactive Inc.
     But I don’t agree with the interpretation of the data in the report. There was too much attention to trends and too little to the percentages standing on their own.
     For instance, in the latest survey, about 35% of respondents said they’re likely to take a vacation away from home lasting longer than a week. This compares with 29% from the prior survey. I agree 35% is higher than 29%. Still, the remaining 65% in the current survey said they’re not likely to take that vacation. While only 18% said they’re very likely to do it, 45% said they’re not at all likely to.
     The configurations are similar for the other purchase intention categories. I see no evidence that a critical mass of major expenditure plans has been reached. I wouldn’t change my merchandising or marketing plans based on these Harris Poll results.

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Tuesday, August 13, 2013

Respond to Praise Thoughtfully

If you’re Domino’s Pizza, how would you reply if a customer posts on your Facebook page, “Best Pizza Ever!... Keep up the good work guys!”? Might you post, “So sorry about that! Please share some additional information with us… so we can have this addressed.”?
     Yep, that’s what Domino’s did.
     The Consumerist blog blames it on a system algorithm so accustomed to receiving grumbles about the product that it couldn’t figure out how to handle a compliment. Whether or not that’s true, the little episode reminds us of the importance of handling praise thoughtfully.
     I admit it’s not always easy to accomplish. Whenever one of my “Retail Profitability Tactics” participants comes up after a workshop and says something like, “That was really great!,” I’ve an unfailing urge to ask, “Could you please tell me exactly what I did well so I can be sure to keep doing it?” However, I don’t say that, since it would come across as me fishing for a compliment.
     I’ve found it works to ask, “How might I do even better?” That often gets the consumer of my services to tell me specifics. And if asking this question produces on the workshop participant’s face the appearance of a deer caught in the headlights, it serves to signal me that the compliment was given to make me feel good rather than for something I’d specifically done.
     I recommend you ask that same question when a customer gives you praise. But there are two steps I left out in telling you what I do and recommending what you do. Before asking for suggestions on how to do better:
  • First, stop for a moment and absorb the praise. Enjoy the gift. 
  • Next, say thank you. 
     Acknowledging the gratitude of the consumer with your own gratitude is not only courteous. It’s also a business builder. Researchers at University of Washington, Southern Illinois University-Carbondale, San Jose State University, and University of Cincinnati found that when customers are aware of their gratitude to a retailer, they become more likely to purchase items from that retailer. Studies at Università Commerciale Luigi Bocconi concluded that the greater the extent to which customers volunteered they felt grateful to the retailer for helping to solve a problem or satisfy a need, the more likely the customers were to praise the retailer to others and to say they intended to shop with that retailer again.

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Monday, August 12, 2013

Use Synesthesia to Reinforce Store Image

Synesthesia is the cross-sensory phenomenon where certain sounds produce in the shopper’s brain perceptions of colors, each sound bringing forth a particular hue. Or how the sounds of music can arouse sensations of taste.
     Synesthesia can be used to reinforce the image you’d like your store to project. In university laboratories and retail field settings, researchers at Freie Universität Berlin and Technische Universität Berlin exposed consumers to different feelings of surface hardness or to different temperatures. The results of the studies indicate that greater amounts of hardness make consumers somewhat more likely to think of a retail business as rugged. Higher temperatures—as long as they’re not too high to be pleasant—make consumers more likely to think of a retail business as having a warm personality.
     Sophisticated brain mapping technologies allow for an explanation of synesthesia in terms of adjacent and overlapping anatomical pathways. Other explanations concern the associations among tastes, smells, textures, sights, and sounds which we’ve learned over our lifetimes as consumers. Taste can be stimulated by verbal descriptions, not just by the sensory experiences themselves. Consumer researchers also refer to this as “affective ventriloquism.” And the more of these senses that are pleasantly stimulated, the more likely the shopper’s movement toward the sale.
     The quality of background music in a restaurant influences gustatory experiences when eating and thereby, the image the diner carries away as the restaurant image. Specifically, research from Oxford University finds:
  • Sweet tastes and sour tastes are accentuated by higher-pitched music 
  • Bitter, smoky, and woody tastes come through better with lower-pitched music 
  • Piano or woodwind strengthens fruity flavors 
     Referring to multiple senses might add to affective ventriloquism. University of Michigan researchers presented one of two chewing gum ads to consumers. The first version read “Stimulate your senses.” The other ad mentioned only taste, reading “Long-lasting flavor.” All the study participants then sampled the gum.
     Those people reading the multiple-sensory version before the sampling gave higher ratings to the flavor of the gum. The researchers repeated the multiple-sensory versus taste-only advertising/sampling with potato chips and with popcorn. The results were fundamentally the same.
     Use descriptions that appeal to the full range of sensations in your ads, promotional materials, signage, and packaging text or menu text. Then provide in-store sensory experiences to reinforce your business’s image. You’ll gain an edge at the time the consumer samples your store and the items you sell.

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

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Sunday, August 11, 2013

Trade On Trader Joe’s Staff Advantages

It all began as a brotherly quarrel between retailers about selling cigarettes in their stores. Theo Albrecht thought it would be a highly profitable idea. Karl Albrecht was concerned that carrying cigarettes would cause high losses from theft. The disagreement became sufficiently disagreeable for the two to decide to go their separate ways when it came to opening up new stores. Theo went for Continental Europe, while Karl took the UK, Australia, and the U.S.
     You might recognize Albrecht as the name behind the highly successful Aldi chain. As it turned out, in 1979, Theo also became the name behind the much smaller California grocery chain Trader Joe’s. The brother who’d favored selling cigarettes grew a business customers associate with health.
     Now a survey of 6,600 consumers by Market Force Information finds that customers also associate Trader Joe’s with cleanliness, courtesy, accurate pricing, and fast checkout. Of the grocery stores assessed, it was at the top for “atmosphere.”
     A major reason is how retailers like Trader Joe’s treasure their talented staff. Pay for instance. At Trader Joe’s, full-time employees start at $40,000 or more per year. Sales per labor hour are more than 40% above that at an average grocery store, where starting salaries are about half as much.
     Benefits for instance. Another grocery chain, WinCo Foods, contributes 20% of an employee’s total yearly pay into a pension plan, according to an Idaho Statesman article. There are product clerks and cashiers who have retirement accounts in excess of $1,000,000. Full medical benefits are available to employees who average at least 24 hours per week. WinCo—a name suggested by the employees as a short version of Winning Company—is growing and popular.
     Researchers at Massachusetts Institute of Technology bemoan the profitability opportunities retailers miss when they shortchange staff on income, employee benefits, availability of full-time hours, predictable work schedules, in-service training, and opportunities for promotion. Among the retailers they studied, for every $1 bump up in payroll, monthly sales rose between $4 and $28.
     The MIT researchers spotted a particular danger with retailers who set expenditures for employees as a percentage of sales. When sales drop, staff are paid less and there are fewer work hours for the next time period. The rear-view-mirror fallacy is that the retailer is assuming sales won’t increase in the months ahead if there are staff working who are dedicated to the store’s profitability.

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Treasure Your Talented Employees

Saturday, August 10, 2013

Balance Online Text & Graphics Strategically

What should be the balance between text and graphics in your email ads? Researchers at Emory University, Indiana University, and University of British Columbia say the answer depends on what you want the consumer to do and whether it’s a new or previous customer.
  • If you’re aiming for the email to link to an online purchase, include more text than pictures. This is true with both prospective and previous customers. 
  • If you want to open a correspondence in which you’ll encourage a new customer to visit your bricks-and-mortar store, use more pictures than text in the email ad. 
  • To open that correspondence with a previous customer, the text-heavy and the picture-heavy emails did equally well. 
     The data for the study were responses to email ads from a fashion retailer which sells clothing and accessories for special events. Your results might vary if you retail other types of merchandise.
     With website ads, it is the informative text shoppers will focus on, and viewers want to easily read and interact with that text to get more information. Easy interaction means making it unambiguous what can be clicked and what the click will give you, for instance.
     Eye tracking research found that about 52% of viewers looked at an ad containing solely text. When the text was superimposed on a graphic or image, the viewership percentage dropped to 35%, and with animation, viewership was only 29%.
     In the studies, the average time spent looking at a web ad was about one-third of a second. Other researchers find this is enough time for the ad to have a subconscious effect on shoppers. When consumer psychologists talk about priming a shopper, we’re usually referring to planting an idea in such a way that the customer doesn’t recognize it’s being done. Research finds that delivering the prompt below the level of awareness makes the prompt more influential over a shopper’s behavior. When a shopper is aware of the priming, he’s more likely to feel manipulated and fight back. Subconscious primes result in fewer counterarguments.
     All this is enough for building intentions to visit your store or purchase what you offer, with the consumer to act on those intentions in the future. But if you want more immediate results, you’ll want to get the website visitor involved beyond a fraction of a second. The right picture accompanied by the right text can prolong the consumer’s attention.

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Friday, August 9, 2013

Effect Advantages of Network Effects

Carry top-quality products in your store only if there’s a profitability advantage. The advantage could come because shoppers pay a higher profit margin to you for those items. Or it could come, even if shoppers don’t buy the top-quality items, because their presence attracts shoppers.
     For certain categories of products, shoppers’ willingness to pay more for higher quality depends on the stage of the product life cycle. During those stages when quality counts for less, your profitability’s likely to be better when you aim for and advertise about other purchase benefits. You can then pay suppliers for merchandise which is of adequate, but not superior, quality and split the cost savings with the consumer.
     With product categories which derive benefits from communications among users—such as video games, sporting equipment, and hobby collectibles—one purchase motivation is what consumer psychologists call the “network effects.”
  • Being able to use or exchange the product with others 
  • The ability to learn from others about features and usage of the product 
  • The availability of ancillary items—such as instructional aids and methods of customizing—because of the size of the market 
  • Interest in forming specialized user groups, again more likely because of the number of overall users. 
     Researchers at Bradley University and University of Oklahoma find that with these sorts of items, network effects become more important than product quality during what are called the Growth and the Maturity stages of the product life cycle.
     Marketing researchers describe a total of four stages in a product’s life cycle:
  • Introduction. When the product category first appears in the marketplace, the high quality of the offering in your store will be a distinctive advantage. Go for quality. 
  • Growth. As the new category is accepted by consumers, profits for the first supplier increase when sales blossom. Competitors appear, giving you the opportunity to consider alternatives which are not of superior quality, but are of lower cost. 
  • Maturity. Over the course of this stage, sales of the product category will slow and variations of the basic models proliferate. Knockoffs of inferior quality appear. Avoid these versions while continuing to describe the network effect benefits of what you do stock. 
  • Decline. The product category dies. Not every category goes through the decline—or any of the other three stages, for that matter. And those that do might emerge in the future with nostalgia as well as network effect appeal. 
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Thursday, August 8, 2013

Look Out for Ugly Shoppers!

It might be difficult for you and your staff to look directly at someone is who physically quite unattractive. But when serving an ugly shopper, check yourself as to whether you’re doing a proper job of carefully looking after the sales potential.
     A good body of consumer behavior research confirms that good bodies draw special attention in the store. The physically attractive get served more quickly than those of average appearance, and they are more likely to have special requests honored. Whereas onlookers may stigmatize customers using small-denomination discount coupons, those who are highly attractive don’t get stigmatized, according to research at University of Alberta and University of Manitoba.
     Consumers who have a minor imperfection in appearance, such as mismatched ear lengths, often develop enhanced leadership skills. Those are the customers who will negotiate well, make good decisions, and, if served properly, recommend your store to others.
     But being physically unattractive brings worse than neutral or lackadaisical attention to the shopper. Research findings from Michigan State University and University of Notre Dame indicate that these shoppers will be the targets of rudeness and exploitation. The cause-and-effect are not clear. It’s possible, for example, that a long history of being shunned or ridiculed has generated from physical ugliness an interpersonal ugliness which brings out the worst in salespeople. Also please keep in mind that the study conclusions refer to tendencies, not what’s true in every case.
     Still, the contribution of the research is in reminding us of the strength and the subconscious quality of the tendency. The best response? I’ll name it “The Phantom of the Opera Method.” In the Andrew Lloyd Weber production, when Christine Daaé looks through and beyond her repulsion at the appearance of Phantom, she expresses tenderness.
     I wouldn’t advise that you or your sales staff hug any shopper you don’t know well, regardless of the shopper’s degree of physical appeal. However, a virtual hug could work fine.
  • Shake hands, bump fists, place a hand on the arm—whatever is culturally and socially appropriate 
  • Reach out toward customers with palms facing upward, or whatever else in the customer’s culture projects a welcoming attitude 
  • Maintain the style of culturally appropriate eye contact to stay psychologically in touch 
     Moving through and beyond the subconscious impulse to look away empowers us to honor the value of each individual who enters our stores. That’s surely helpful for a good living.

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

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Wednesday, August 7, 2013

Sow Trade-Ins with Social Responsibility

Encouraging trade-ins is a fine way to build your sales. Adding a socially responsible angle enhances temptation in the shopper.
     The Boeing Company is going at it big scale if you consider the very large economy size of the item. Bloomberg Businessweek says Boeing is buying up old 747 models from major airlines in order to create demand for the new 747-8. The social responsibility benefit: Superior fuel economy.
     A few years ago, The Home Depot ran a campaign inviting customers to bring in old power drills, broken or not, to get 15% off on a cordless lithium-ion power drill, advertised as better for the environment. Later, they invited people to bring in their old Christmas lights for a discount on an energy-efficient LED set. Around the same time, Toys”R”Us urged consumers to trade in old cribs, car seats, and other baby items for a 20% credit toward items which had been stocked since past product recalls.
     If you use this type of tactic:
  • Decide how you will dispose of the trade-ins. During the 2009 U.S. “Cash for Clunkers” promotion, auto dealers were compensated by the federal government for scrapping the vehicles. Boeing plans to sell the old 747’s to smaller airlines. But what would you do with a bunch of old broken drills? 
  • Tell shoppers how even a single trade-in makes a difference. So in advertising, store signage, and personal selling, say things like how many extra hours of HDTV watching customers get with the energy they’ll save using the new Christmas lights. 
  • If you’re featuring the trade-in program as a promotion instead of an ongoing business practice, set a time limit and give it a distinctive name. The “Power Drill Trade In, Trade Up,” “Eco Options Christmas Light Trade In,” and “Toys“R”Us Great Trade-In” were each given a two-week to four-week span. The time limit and the distinctive name protect against long-term consumer devaluation of product types purchased with the discount. Time limits also stimulate participation. 
  • The general consumer psychology rule for trade-ins of items where depreciation is slow is to pay amply for the trade-in contingent on the shopper paying a relatively high price for the replacement item. However, when selling based on social responsibility, you need not pay as dearly for the trade-in. 
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Tuesday, August 6, 2013

Vote for Selective Understanding & Recall

The term “retail politics” refers to a candidate for office soliciting support person-by-person. Historically, the currency of retail politicians has been shaking hands and kissing babies. Traditionally, the rule for success is telling each potential voter what he or she wants to hear.
     Like retail merchandising—which sells prods to buy tangible items—retail politics—which sells prods to campaign and vote in certain ways—should also include mass media communications. With these methods, it’s more challenging for the politician to have each message recipient come away with what best satisfies. Still, it’s easier than you might think. Voters show selective perception of what best fits their preexisting beliefs.
     Evidence for this comes from Fairleigh Dickinson University study results which have been featured under headlines like the Rolling Stone’s “Watching Fox News Actually Makes You Stupid.” The claim in these reports is that people who watch only the conservatively-oriented Fox News end up less well-informed than people who don’t regularly watch news.
      That claim is supported by the research findings, but this isn’t the complete story. First, the methodology has limitations. The degree of knowledge of news was measured by five questions on international issues—such as “To the best of your knowledge, have the opposition groups protesting in Egypt been successful in removing Hosni Mubarak?”—and five on domestic issues—such as, “It took a long time to get the final results of the Iowa caucuses for Republican candidates. In the end, who was declared the winner?” Ten questions, ranging from easier to harder, is better than five, but it’s still a limited sample on which to say how stupid somebody is.
     Moving on, how about viewers of just the liberal-leaning MSNBC? They were a bit better than the “no-newsies” on domestic questions, but also a bit worse than the no-newsies on international questions. Now let’s drill down further: On both the international and domestic items, self-identified liberals watching Fox scored much lower on the same set of questions than did self-identified conservatives watching Fox. Conservatives watching MSNBC scored much lower than did liberals watching MSNBC.
     People who were exposing themselves to a point of view very different from their own were expending mental energy screening out what they didn’t agree with. This process got in the way of them understanding and remembering accurate information.
     Recognize how your shoppers for ideas and items will select what’s consistent with their preexisting beliefs.

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Monday, August 5, 2013

Mire Customers as Calamity Prevention

University of Florida and University of Pennsylvania researchers assigned study participants to select among airline flights. One group were led to believe the decision was a quite important one. The other group were told the decision was relatively unimportant. And some of the members of each group were given the information about the flights in a way that was hard to read, while the remainder were given easy-to-read information.
     The hard-to-read text used a small font and little contrast between the text and the background. The easy-to-read text used a larger font and clear contrast.
     Findings from the Florida/Pennsylvania studies:
  • Those required to use the hard-to-read text spent more time deliberating and therefore made more careful decisions. Perhaps the only thing surprising about this finding is how many of the participants given the small font in low contrast were willing to even continue doing the task! 
  • Among the participants told at the start that the task was relatively unimportant, those given the hard-to-read text came away judging the selection of flight to have been more important than did those given the easy-to-read text. Perhaps, having labored over the text led the consumers to justify it all by deciding the task was quite important after all. 
  • Those who considered the task more important spent more time deliberating before making the decision. In fact, they even sought more options in an effort to maximize the quality of the decision. 
     Do you see the spiral here? In introducing the perceptual speed bump, the researchers got people to spend more time on the task, which led to them considering it more important, which led to them spending more time on the task, and so on.
     Except the researchers didn’t refer to a speed bump. They talked about the study participants having become stuck in quicksand. A trivial decision could be made into an unnecessarily complicated one.
     This quicksand effect is not something we’d want to use with shoppers very often. Actually, we’re unable to use it very often. The study participants stuck around because they’d signed on to complete the professors’ assignment. Most consumers would give up, or least complain.
     Still, there are times we’d like to mire a decision maker, slowing them down so they must carefully evaluate the alternatives and the consequences. We don’t want them arrested interminably in the quicksand. Therefore, remember to pull them out at the right time.

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Sunday, August 4, 2013

Integrate College Kids with Young Adults

Bloomberg Businessweek reports that retailers such as Target and Pottery Barn are turning toward college students for back-to-school (BTS) selling this year. The retailers are reasoning that BTS purchases for elementary through high school students are usually done once and it’s over, but those college students who move out from home keep shopping. They buy to decorate their new quarters and then continue to decorate, it’s thought. For BTS purchases overall, about 40% of shoppers intend to get all of it done in a single tour of the stores.
     From a consumer psychology perspective, it does make sense to consider college attendees separate from the younger students. However, with one important exception I’ll bring up in a moment, I don’t see college students as a significantly different psychographic than other young adults. In deciding how to sell to the college consumers, integrate what you already know about those in this age cohort who aren’t enrolled.
     The “2013 Back-to-College Survey” sponsored by the National Retail Federation and conducted by Prosper Insights & Analytics finds that almost 50% of college students will be commuting to campus while living at home. This parallels what is true for young adults who aren’t pursuing higher education and indicates that, like them, the consumer values of the student’s family will hold sway.
     Those students do locate into a dorm, apartment, or Greek-letter house will buy furniture, just like other young adults will do when moving away from home. The NRF survey says that outside the category of furnishings for student residences, the BTS averages spent by college students are predicted to be less than last year. The state of the U.S. economy has impacted purchases, with about 38% saying they’re looking for discounts more often than in the past and about 32% saying they’ll buy more store brand and generic products. Again, this is similar to what other young adults are predicted to do.
     The important exception to college students being like all other young adults? It’s their interest in “brand ambassadors.” In a Barnes & Noble college marketing report, about 68% of the respondents expressed interest in being an on-campus representative to introduce other students to retail purchase possibilities. About 50% of students said they’d welcome help from brand ambassadors while settling into college.
     If college students are among your BTS targets, consider how you might employ on-campus “store ambassadors” to build business.

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