Thursday, October 29, 2015

Leave Well Enough Alone if Well Enough

After I paid off my smart phone under my Verizon contract, my monthly bill didn’t go down. I called Verizon about it, and as soon as I responded to the prompt by punching in my phone number, an enthusiastic recorded voice told me I qualified for a phone upgrade. But I wanted a fee reduction, not a phone upgrade.
     Pressing another key brought me to a customer service rep who, after hearing my request, said my bill amount would be reduced and I’d be given a credit for the past overcharge. He added, “Wait, I think I can find you another way to save if we change your monthly data transmission allocation!” “Yes, I can! Your bill will go down another $10 a month.”
     I thanked the customer service rep profusely. I was thrilled. Until I started thinking about it some more. What if I hadn’t called? I’d have continued to pay too much.
     All this reminded me of a consumer behavior study based at Columbia University, University of Pennsylvania, and Universidad Austral. In collaboration with a wireless communications retailer, the researchers compiled a list of thousands of the retailer’s customers who could lower their monthly fee by changing their monthly plan. Some of these customers were contacted with news of this opportunity. The others were not.
     Of those contacted, about 10% cancelled their service within three months. Of those not contacted, about 6% had cancelled. It appeared that being told they could have been saving money led to subscriber disquiet.
     Still, there’s an important distinction between my Verizon experience and the experiences of the subscribers in the Columbia/Pennsylvania study: I initiated the contact with the retailer. It may have been the contact by the retailer which precipitated the customer dissatisfaction. Once your customers conclude that you’re a competent services provider, they usually prefer not to keep shopping around. The services provider is pleased to have the customer keep coming back, and the consumer is pleased to feel comfortable having a services provider to keep coming back to. But being reminded that there are price or outcome differences among services providers disturbs the inertia.
     This is different than with product sales, where a surprise special generally boosts customer loyalty, according to University of Arizona, Arizona State University, and University of Pennsylvania researchers. When you’re doing well enough for the services customer, it can be best to leave well enough alone.

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

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Exude Conceptual Fluency in Services Retailing
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Suggest Ways Shoppers Can Save Money

Monday, October 26, 2015

Get A Head, Except for Ladies’ Clothing

Who would’ve thought that in Alice’s Adventures in Wonderland, Lewis Carroll slyly implanted a priceless gem of advice for retailers of ladies’ clothing? And this was way back in 1865! It’s right there when the Queen of Hearts says, “Off with her head.”
     It now seems clear to me that Mr. Carroll was presaging a Stockholm School of Economics research finding: Female shoppers give higher ratings to fashion items on models whose heads aren’t shown. So in your ads and on your mannequins, leave off what’s above the neck. But only if the shoppers are women and the model depicts a woman. In all other gender combinations of shopper and model, the Stockholm researchers found no reason to cut off their heads.
     The explanation for this from a body of research on body image is that female clothes shoppers are quick to compare themselves to others. If they see an especially attractive woman wearing a particular outfit, they tend to think to themselves, “That dress wouldn’t look as good on me.” Models in ads and mannequins in stores generally have pretty faces, so that can depress purchase intentions.
     Researchers at Arizona State University, University of British Columbia, and University of Alberta found that when a woman who is unsure about her appearance tries on a dress and then sees a pretty saleswoman wearing the same dress, that shopper loses interest in buying it. Importantly, this doesn’t happen if the salesperson is just carrying the dress, not wearing it, or if the shopper sees the saleswoman only before or after trying on the dress herself.
     However, as you might expect, it did happen if the woman, while wearing the dress herself, sees the same dress being worn by another shopper who is especially attractive. The researchers suggest retailers provide full-length mirrors in private dressing rooms so that a shopper isn’t required to step out into the store to use a publicly shared mirror.
     Jealousy of the attractive could become hostility. Researchers at University of Saskatchewan and Santa Clara University explored the success of a grotesque Dolce & Gabbana ad portraying one woman skewering another in the neck. The sharp reader of Alice’s Adventures would have already known all about such things, though.
     Now I’m thinking there must be other gems of retailing advice in the story. Such as the idea that items claiming to shrink female shoppers would sell well.

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

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Thursday, October 22, 2015

Overachieve as the Underdog

A small to midsize retail business may aim to garner attention by describing itself as an underdog, operating in the shadows of or in an unbalanced contention with larger retailers. However, unless handled well, that strategy could have undesirable results. While consumers root for the underdog, those same consumers like to associate with winners. Therefore, to get the best from portraying yourself as an underdog retailer, project your commitment to winning. Show perseverance in meeting the shopper’s needs.
     Researchers at Xi'An JiaoTong University and National Hsinchu University of Education presented one group of study participants with a story of a brand which already established itself as having endurance and another group of participants with a story of a new, emerging brand. In the story, half of each group were told explicitly how the brand was an underdog. For the other half of each group, the underdog position was only hinted at. Afterwards, the degree of brand preference was assessed among the members of the groups.
     The results showed how an underdog portrayal raises brand preference best when the portrayal is explicit and the brand has already shown it has lasting power.
     Notice that the two institutions sponsoring the research are both in an Asian culture. Other research suggests that the influence of underdog portrayals is even stronger in Western cultures. Researchers at Harvard University, Simmons College, and Boston College found that when a choice of chocolate bar brands was offered to the study participants, the brand positioned as the underdog was selected about 70% of the time. Overall, the effect was there for all the participant groups. Still, the effect was stronger among the American study participants than among those from Singapore. The power of the come-from-behind fits well with the distinctively American stories of successful immigrants and of second chances met with passionate determination.
     Once you become the Big Dog winning retailer instead of the overachieving underdog, take care in your comparative advertising. You could advertise with a negative frame or a positive frame. The negative frame is of the form “The other store is bad, and our store is good.” The positive frame is of the form “The other store is good, and our store is even better.”
     I recommend always accentuating the positive in comparatives. Negatively framed comparatives draw more counterarguments from shoppers. Again, people will support the underdog.

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

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Monday, October 19, 2015

Beat Around the Bushwhack

In a Journal of Consumer Psychology article titled “Does It Pay to Beat Around the Bush? The Case of the Obfuscating Salesperson,” consumer researchers from Boston University, Temple University, and University of Missouri explored the effects of giving unclear answers to shoppers’ questions. The study’s conclusion was that muddled replies rarely help and could hurt.
     Most consumers expect some obfuscation from people trying to sell something. But that doesn’t mean consumers always attribute obfuscation to dishonesty. The salesperson could be struggling to give a useful answer to a difficult question or address an area in which the salesperson has limited expertise. The group of Boston/Temple/Missouri researchers found that when a sales prospect was expecting dishonesty, a muddled answer reduced purchase intentions much more than would an honest “I don’t know.” However, for those instances where the prospect trusted the intentions of the salesperson, a muddled answer produced no difference in purchase intentions from an "I don't know."
     So is there ever a place for obfuscation in retail selling? Should a salesperson ever babble for a while rather than just admit a lack of knowledge? Yes, says other research.
  • A fuzzy answer could begin a collaborative dialogue between the shopper and the retailer which culminates in a useful answer to the question. The shopper might know the answer, but needs to talk it out with the salesperson in order to realize that. 
  • The babbling can give the shopper time to develop other questions the salesperson is able to answer clearly, whereas the “I don’t know” could close the opportunity for the sale rather than close the sale. If you do say, “I don’t know,” be sure to add, “I’ll find out an answer, and here’s when I’ll get back to you.” 
  • Shoppers who consider themselves experts in a product category often will ask questions when shopping for items in that category mostly to show off to the salesperson or to people shopping with them. They are notoriously complacent about taking into account the information they’re given in replies. 
  • Unclear information about a topic of interest to the shopper can cause the shopper to process other information more sharply, resulting in better purchase decisions. 
     In beating around the bush, never psychologically bushwhack the shopper—assaulting their vulnerabilities. Know how what you’re doing benefits both the consumer and you. When you give an unclear answer, have clear objectives.

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

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Thursday, October 15, 2015

Assess for Employee Integrity Honestly

Two fellows apply for the same job opening at a local store. After interviewing each of them, the owner tells her bookkeeper that both applicants seem equally qualified. The bookkeeper replies, “Whoever you hire is going to be taking payments and making change. To help you decide, why not call them both back in and give them a little math test?”
     A few days later, the owner thanks the bookkeeper for the idea, saying the results let her make the decision without any doubt. “Did one of them get many more items right?,” the bookkeeper asks. “No, actually, each of them missed only one item.” “Hmm, then how did you choose?” “Well, on that one item, Sam wrote, ‘Don’t know,’ and Chuck wrote, ‘Me neither.’”
     The two fellows may have colluded in answering the items, but even then, it appears Sam was the leader and therefore the better candidate. However, a more likely possibility is that the little math test functioned as an ad hoc integrity assessment.
     Professionally-designed integrity tests do help predict the probability of employee dishonesty. Researchers at Manhattan College find that inventories which assess conscientiousness and agreeableness are especially useful. High scores on these two are associated with lower rates of workplace theft, absenteeism, tardiness, and uncooperativeness.
     Still, be aware of limitations in assessments of honesty. The personality tests aren’t perfect. Also, situational factors enter into employee decisions to steal. Severe economic deprivation, seeing other staff steal, and getting ready to leave store employment are among these factors. Researchers at Penn State Erie, Mercyhurst College, Benedictine University, and Wm. Wrigley Jr. Company found that fast food employees in their sample said they’d be more likely to steal if leaving employment in two weeks than in two years.
     And, honestly, many lies from employees you’ve already hired are harmless self-defenses. It doesn’t serve your interests to pressure the person into admitting the falsehood. Gather what information you can about the problem, clarify your expectations about future actions, and move on. Let the lie just lie there. People will frequently change without ever admitting to others that they were wrong.
     As part of clarifying your expectations, say, “Please be an honest person when talking with me about what happened.” Research at University of California-San Diego, London Business School, and Stanford University indicates this self-identity phrasing works better than, “Please be honest when talking with me about what happened.”

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

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Monday, October 12, 2015

Tickle with Uncertainty

“How much effort are you willing to exert for a bag of Godiva chocolates? Oh, before deciding how hard you’ll work, you want to know how many chocolates are in the bag? Well, it’s either two or four.”
     Now here’s the amazing thing: Study participants given instructions like the above worked noticeably harder than did those told that the bag was guaranteed to contain four chocolates. The researchers, from University of Chicago, explain this by pointing out how the tickle of uncertainty stimulates consumers. They had parallel results when offering one group a guaranteed reward of two dollars and the other group only a guarantee that it would be either one or two dollars.
     Consumers are, by and large, an optimistic lot. If you advertise “Up to 45% off regular prices,” they’ll think the item they’re seeking will be one of those tagged for the full discount. But the Godiva chocolate setup went beyond this. Decreasing the probability of getting the top payoff paradoxically increased the purchase motivation.
     The researchers attribute the effect to what’s called “savoring.” That’s the fun which comes from anticipation of discovering the contents as we unwrap the gift or plan for the rock concert two weeks hence. People say they’d prefer not to wait, but that’s not how they end up behaving. Consumer behavior researchers at University of Miami and Greece’s ALBA Graduate Business School say a retailer’s use of a gift as a promotion will benefit from uncertainty if love’s involved. When the product considered for purchase is for pleasure, not knowing which of a set of possible gifts will end up being the bonus tends to increase purchase likelihood.
     In times of high turmoil or when the retail transaction already involves risk, don’t add lots of extra uncertainty about the payoff. People going to the dentist or an auto repair shop prefer to know the parameters of the pain. But in these circumstances, a touch of uncertainty can still be helpful for making the sale. In an article wonderfully titled "Believe Me, I Have No Idea What I'm Talking About," researchers from Stanford University reported that expert restaurant reviewers are more influential when saying they're less than completely certain about their conclusions.
     To help the shopper become more comfortable asking you questions and expressing concerns, avoid coming across as absolutely certain in the recommendations you're making.

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

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Thursday, October 8, 2015

Irritate Me Rather Than Ignore Me

Why would people become more likely to repeat a consumer behavior that had earlier been acknowledged with a mildly annoying sound or mildly unpleasant sight? Because it is better to be acknowledged than ignored.
     The researchers at University of Chicago, University of Florida, and University of Wisconsin-Madison who documented this effect even found that after a while, what had been annoying or unpleasant was actually rated by the consumers as pretty nice. The pleasure of acknowledgement came to trump the irritation.
     And talking about “trump” brings to mind a related phenomenon with The Donald. When presidential nomination contender Carly Fiorina was told Donald Trump considered her ugly, she replied, “[J]ust maybe I am getting under his skin a little bit because I am climbing in the polls.” She’d been acknowledged. It’s in the tradition of Simon Cowell insulting a previously unknown singer during “American Idol,” and comedian Don Rickles producing big grins from audience members by calling them hockey pucks.
     I’m most certainly not recommending you go out of your way to irritate your shoppers. But I do recommend you go out of your way to acknowledge them and their actions, even at the risk of mildly irritating them.
     A while back, I conducted a two-day “Profitability Tactics for Small Retailers” seminar with a set of business advisors from the Los Angeles Regional Small Business Development Center Network. The objective of the seminar was to equip the business advisors so they would help their retailer clients implement profitability tactics I preach.
     During the evening between the two days of intensive training, a pair of the business advisors from out of town supplemented their retailing knowledge by shopping at an IKEA store. At the cash/wrap, the two shoppers experienced an unsettled feeling. There was no sound accompanying the completion of the purchase. No sound of a cash register, although the sound from a cash register is not something most people would seek out in other circumstances. No acknowledgement from the cashier, who had promptly moved on to the next customer, although these two shoppers weren’t really interested in a prolonged post-purchase dialogue with the cashier. It was the absence of acknowledgement which struck them sufficiently to bring it up with me the next day.
     Imprint memories in shoppers’ brains as they enter your store and then again through each step of the purchase process. Acknowledge the shoppers and their actions.

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

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Monday, October 5, 2015

Hang In There for Impulse Buying on Budget

Shoppers on a tight budget who make an unplanned purchase will immediately become less likely to make another unplanned purchase. That finding in studies at University of Notre Dame, University of Pittsburgh, and Market Rise Consulting isn’t at all surprising. But the researchers hung in there and did find something retailers might not expect: After a while, the resistance fades. The tight-budget shopper who made an impulse purchase earlier becomes more likely to make another one than does the tight-budget shopper who hadn’t already made an impulse purchase.
     So, in the spirit of those researchers, you should hang in there, too. Encourage shoppers to make an unplanned purchase early in their store visit, create a store experience which tempts shoppers to stay for a while, and then, later, encourage another unplanned purchase.
     Be sure those unplanned purchases will benefit the shopper. But realize that researchers at University of Pittsburgh and Baylor University say most shoppers make plans to make impulse purchases. The study was conducted at several Texas grocery stores. Before starting their shopping, participants were asked to estimate how much they planned to spend. For more than 75% of the shoppers, the amount they thought they’d spend altogether was more than the amount they estimated to be the cost of items they planned to buy. These shoppers had prepared themselves to come across both needs they’d forgotten to include on their shopping list and items they wouldn’t realize they wanted until the items were in front of them or in their hands. Some of the study participants even explicitly said they intended to make impulse purchases.
     Then the researchers found even more evidence that shoppers carefully plan to do the unplanned: Shoppers were quite accurate in predicting how much they’d end up spending. The average overall difference between predicted spending and actual spending was 47¢.
     Most of your customers intend to spend a certain amount of money on impulse items. Accommodate them by stocking the right sorts of items in the right places and offering the items in ways that carry an impression of service, not trickery.
     Also, to maintain impulse sale revenues, stock package designs and use signage which stimulate quick thinking. Bright colors. Animation. Uniform sizes and prices. Easy access to the items. Waiting times long enough for shoppers to grab items, but not so long as to encourage prolonged deliberation.

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

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Thursday, October 1, 2015

Long for Simplicity in Short-Term Promos

Announce that the sales promotion is available for only a short time and shoppers’ ears will perk up. But if you tell those same shoppers that what’s being promoted requires a long-term commitment, they’ll hesitate taking advantage of it.
     Bundle components together as a package, and shoppers often appreciate you doing the matchup for them. But unless those components each carry a similar retail price, there’s a good chance those shoppers will estimate the value of the package to be substantially less than the total of the retail prices individually.
     Now what happens if you combine these methods intended to build sales? Researchers at Deakin University in Australia offered consumers a three-item bundle, but the consumers were told the offer was available for only a limited time. With some of the consumers, getting the offer required signing a two-year contract, while with the others it did not.
     The result was that the consumers considered the three-item package to be a good deal, but not as much when a two-year commitment was required. The research findings indicate that the consumers would have been more attracted to purchase if a contract wasn’t required or if the offer was for a single item rather than for a package. With so many moving parts in the offer, the shoppers perceived more risk.
     Maintain simplicity in offers you make to consumers when the offer requires a quick decision.
     Also stay aware that your regular customers who choose to avoid the risk, and so decline the offer, may have regrets afterwards. The regret might reveal itself in a way which leads the customers to dislike the retailer and criticize the merchandise. Maybe it’s because people blame the retailer for what was their own fault. Maybe it’s because people want to avoid reminders of the opportunity they missed.
     Studies at University of Miami and University of Kentucky uncovered two ways that a retailer could shortcut the consumer irritation about missing out on a big sale:
  • Use what the researchers call “steadily decreasing discounting.” Before returning the item to its pre-promotion regular price, offer one or more additional discounts on the same merchandise, each discount at a progressively lower percentage than the deep discount. 
  • Offer customers another opportunity to purchase merchandise on sale. If this follow-up is on merchandise different from what was offered before, the amount of the discount does not need to be nearly as deep. 
For your profitability: Sell Well: What Really Moves Your Shoppers

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