Generate WOM in the Right Places

People look to others for advice before making purchases. That’s why we encourage customers to talk to friends and post online reviews. But a report from marketing consultancy Harbinger gives reason for caution in word-of-mouth campaigns: The ways in which consumers access and use recommendations differ by product category.
     Harbinger specializes in marketing research and communications with women consumers. This study surveyed 2,134 women in Canada and the United States through the Ipsos online panel. I believe that many of the study conclusions would also hold for men in principle. My advice to retailers is to find out from your customers where they’re looking for recommendations and then encourage them to furnish their recommendations in those sorts of places. Verbal encouragement will come from mentioning to the customers reasons important to them for giving specific, balanced information to others.

• The frequencies with which the women read and write reviews differ by product category. With a toy, about 20% will read reviews when shopping and about 10% will write a review after purchase. On the other hand, with an automobile, about 40% will read reviews when shopping, but only about 5% will write a review after purchase. With automobile-related products, your encouragement to women to give reviews will need to be more vigorous.
• For almost all product and services categories, family and friends were the most popular sources for recommendations. But for restaurants, casual acquaintances were the second most popular source, and for financial products, family and friends took second place to expert and professional reviews.
• For almost all product and service categories, the consumers were motivated to give and post recommendations in order to help other people make smart purchases. With automobiles and with entertainment, a distinctive motivator was for the consumer to display her expertise. With the home furnishings and food/beverages categories, a distinctive motivator for sharing was the opportunity to help improve the products.

     With some consumers—such as market mavens—you might choose to go beyond verbal encouragement. Market mavens are a special type of opinion leader who counsel others about the whole shopping experience and recommend specific stores. When you’ve identified a market maven, offer gifts to encourage them to consider your store. A study based at Providence College and University of Connecticut indicates that the confidence with which market mavens issue their recommendations means they can be influential for you.

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Attend to Face-to-Face Word-of-Mouth
Encourage Specifics & Criticism in Word-of-Mouth
Build Buzz with Market Mavens

Fine-Tune Your Social Couponing

“Social couponing” is a promotion tactic in which a substantial discount is offered to consumers who are told the offer is activated only when a certain number of people sign up for it online. Restaurants, educational services, and salons/spas have been the most frequent users of social couponing.
     The logic of social couponing is that, even if the retailer loses money on each coupon transaction, users of the coupon will be working to get loads of their friends to give the retailer a try. The profitability from social couponing depends on convincing the right kinds of coupon users to come back soon and often.
     Rice University researchers report that about 40% of retailers who have used social couponing during the past year say they would not do it again. The major complaints were that coupon users too often failed to buy anything beyond the face value of the coupon on their visit and/or didn’t come back to make a purchase at regular prices.
     Still, this leaves the majority who said their results were positive enough that they might give social couponing a try in the future. Here are shopper psychology tips on fine-tuning social couponing so that you profit:

• Establish reasonable expectations. Social couponing draws bargain hunters. If discount prices are a marketing point for your store, fine. If your criterion of success is that people spend more than the face value of the coupon, make that a condition of the coupon use.
• On the bill you present, state the discounted price, but state the undiscounted price more prominently. There are a few reasons for this: It builds appreciation in the customer for the value they’ve received. It reduces expectations that the service they’ve received is worth less than the price you’ll expect them to pay next time they come. And in a restaurant or spa, it encourages the customer to give a tip based on the undiscounted price. This keeps your staff supportive of the coupon program. In turn, supportive staff make the coupon redeemer’s experience memorable so they’ll want to return and bring along other people.
• Be sure your services to your current customers aren’t compromised by services to the coupon customers. Tell your current customers about the coupon offer and encourage them to enroll online for their next visit. Have sufficient staff, which often means increasing your staffing.

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Keep Discount Conditions Strict Enough
Customize Your Discount Coupons
Give Coupons Early and Proudly
Offer Exclusive Price Discounts Cautiously
Have Unannounced Discounts on Common Purchases

Refine Your Psychographics

When retailers talk about psychographics, they’re referring to personal values and the shopper habits affected by those values. Demographics (age, gender, income level) and psychographics are often two ways of looking at the same thing. For instance, women generally have different personal values and shopping habits than do men. But the psychographic approach gives the retailer more focused hints for making sales.
     Except when the analysis is insufficiently refined, that is. A recent Bloomberg Businessweek article describes how Toyota dealers suffered from this happening: Figuring that Toyota is America’s largest producer of cars, the company—along with a number of influential industry analysts—expected Toyota to swipe sales of large pickup trucks from GM, Ford, and Chrysler as the market for pickups picked up.
     But the psychographics of buyers of large trucks are different from the psychographics of car buyers. A more refined analysis using data from Nielsen Claritas indicated that compared to Toyota large truck prospects, the GM and Ford prospects are more likely to dine at Cracker Barrel restaurants, have dial-up Internet, and use the paper Yellow Pages. The Toyota prospects were more likely to dine at steakhouses, shop online, own golf clubs, and subscribe to Runner's World.
     This sort of focus gives specifics to be used in merchandising, marketing, and selling. Psychographic analysis for the PowerBar sports nutrition line produced a recommendation that the products be displayed alongside personal grooming items. The focus from refinement also protects against you being buried in trivial findings, while staying open to being surprised. A collaboration of researchers at Columbia University, Advertising Age, and the Minneapolis Star-Tribune found that people most interested in buying fishing equipment also enjoy listening to Christian rock music and reading Southern Living.
     Whether contracting with a market research firm to provide you psychographic information or gathering and analyzing your own data, always be angling for further refinement.
     At the same time, recognize there will be individual exceptions to the overall refined findings. A comment posted to the online version of the Bloomberg Businessweek article reads, “I've built several computers, use an htpc to watch the internet on my plasma, use voip instead of telco, never owned a gun, but have several bikes. I own 3 F150's and no toytas [sic].”

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Recalibrate for Shopper Gender Trends
Help Customers Show Off New Products

Combine Flavors for Bonus Effectiveness

“The whole is more powerful than the sum of its parts.” That’s the fundamental motto of an approach to human behavior called “Gestalt psychology.” Allow the research evidence for the motto to inspire you to apply Gestalt psychology to your retailing.

• Reinforce your message through consistency. For example, if you make your living from selling merchandise, you might be considering how you can most fully use services as an additional profit center. If so, keep the product-service identity strong. Consumer psychology research verifies the importance of you projecting a consistent personality across products and services.
• Produce attractive offerings by blending components. If you operate a restaurant, you might be looking over the McCormick & Co. Flavor Forecast for the 2010 holiday season. With the best of the blends, one component brings out the strengths of another. In the cinnamon-bacon blend, for instance, McCormick says the robust cinnamon leads our palate to experience the rounder flavors of the bacon which the smokiness usually overshadow.
• Highlight superiority via contrast. This is the rationale for comparative advertising. It’s also one of the reasons we sprinkle in discounted items among regularly-priced items in our merchandising. The value of the discount is made more apparent to the shopper by the easy comparison with surrounding items that are not discounted.

     In choosing what elements you’ll combine, decide if your primary objective is to reinforce a message through consistency, produce attractive offerings from a blend, or highlight superiority via contrast.
     Gestalt psychology emphasizes the importance of trying things out in the real world, not as an isolated study in a laboratory. The real-world context and individual circumstances can make all the difference. Again, this reflects the Gestalt attention to the whole over the parts. So try out various combinations in your retailing.
     Not every blend will be a winner, of course. While announcing their Flavor Forecast combos last year, McCormick & Co. acknowledged that one of the pairs on the 2007 list may have been creatively inspired, but, if truth be told, failed to inspire many cooks in the world: Wasabi and maple.

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Project Your Store’s Personality
Profit from Product-Service Synergy
Sprinkle In Discounted Items with Regularly Priced Items

Incorporate Crowdsourcing When Designing

“Crowdsourcing” refers to inviting a community of consumers to participate in completing a task for a sponsor. First use of the term is generally credited to technology journalist Jeff Howe, and perhaps the most successful use of crowdsourcing in ecommerce can be credited to T-shirt retailer Threadless. Amateur and professional artists submit T-shirt design ideas via threadless.com, consumers vote preferences there, and the company takes the preferences into account when producing new products.
     A recent Bloomberg Businessweek article describes how Threadless is collaborating with other companies to incorporate crowdsourcing into the design process. Dell features a dozen consumer-generated images, each of which can be etched onto the exterior of a notebook computer for $85. And Brazil’s Alpargatas selected six designs from the more than 600 submitted worldwide to Threadless for use on Havaianas sandals sold online.
     Retailers inviting consumers to submit design ideas isn’t limited to ecommerce. Successful brick-and-mortar stores welcome consumer-generated content for ads, suggestions for store layout, and ways to improve the selling process. But the social networking capabilities of Web 2.0 facilitate the voting process and interactive development of designs. This is what distinguishes crowdsourcing from traditional methods for consumer input.
     Business professionals have issued legal cautions about crowdsourcing. Some of these cautions are about non-disclosure agreements and rights to subsequent use of the designs.
     Here are two tips from a consumer psychology perspective:

• Conduct the project as a contest. If your acceptance of ideas is ongoing, declare winners regularly. Research finds that after a crowdsourcing competition, even the multitudes who didn't win are likely to build a kinship with the business, feeling they’re part of a community. For example, researchers at University of Colorado had amateurs design skins for MP3 players or mobile phones. When the task was presented from the first as competition against professional designers rather than as only an invitation to customize one’s own product, the amateurs were much more likely to feel pride in their participation.
• The contest builds excitement, and that increases the number of ideas you’ll get. Take account of this, but before the kickoff, be reasonably confident you’ll have enough ideas to select a high-quality winner. Research indicates that if you reject all the ideas, members of your target markets—both those who submitted ideas and those who did not submit ideas—will be irritated at you.

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Ask Customers What You Didn’t Have
Ask the Customer for Their Opinions of Items
Ask Customers & Staff for Ideas

Locate Mobile Shoppers in Your Space

It’s said that when William T. Dillard—who founded the Dillard’s department store chain—was asked what were the three most important factors for the success of a retail operation, he answered, “Location. Location. Location.” He’s often credited with originating that phrase.
     Developing technologies are adding a new meaning to the importance of location: Brick-and-mortar retailers should use information about the physical location of their target customers. The GPS capabilities of mobile devices will be allowing you, among other things, to track when a potential shopper is approaching your store and how a visitor is navigating through the aisles.

• Give real and virtual rewards for digitally checking in. Shopkick gives consumers gift certificates for certain numbers of check-ins at the stores of their retail clients. Starbucks grants the title of store mayor to the smartphone owner who has the most check-ins with that store during a 60-day period. These are really technology-augmented frequent shopper programs. Researchers at University of Southern California and University of Pennsylvania find that such programs work better if you give the new user a head start with a couple of extra credits as they begin.
• Involve the consumer beyond just checking in. Campbell Soup Company plans to encourage grocery store shoppers to scan the UPC code on a can in return for the opportunity to compare prices and write reviews. A number of retailers are building game mechanics—such as scavenger hunts—into the apps for shoppers. Researchers at Bournemouth University in the U.K. find that when real store brands meet with online games like this, it’s important to keep the games fresh. So change the rules and the challenges periodically.
• Encourage shoppers to use their mobile devices to keep each other posted about their shopping experiences and to invite others to participate. Don’t limit this to the people at home. How about, “Did someone come shopping with you today, but is in a different part of the store? Get in touch with them using your mobile device, tell them where you are, and get their thoughts on what you’re shopping for.” A repeated finding in consumer behavior research is that when people shop in groups, they buy more than when they shop alone.

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Give Loyalty Program Head Starts
Encourage Group Shopping

Engage Future Customers

A Wall Street Journal article reports that cemeteries across America are holding band concerts, barbeques, and sky-diving exhibitions. The main objective, say the funeral directors interviewed for the article, is to position cemeteries and mortuaries as pleasant places that are able to be of service in the future. “Meet us before you need us.”
     Whether or not your line of retailing is in the funeral industry, here are some consumer psychology tips inspired by what these cemeteries are doing:

• Always be building interest in your business among future customers. The nature of a cemetery is to stay in business for a long time. The people attending the special events might choose to buy burial plots or make cremation arrangements for use years from now. And even the young people attending these special events have parents and grandparents, some of whom might need funeral arrangements in the nearer future. What is the length of time of your retail business’s planning horizon, and what steps will you take to cultivate prospects for all points out to that horizon?
• Hold a continuing series of special events for prospective customers. The cemeteries featured in the WSJ article don’t conduct just one event. For years, Hollywood Forever in Los Angeles has held movie nights in which the film is projected onto the mausoleum walls. Even a single special event gives you the opportunity to educate your target markets about the value you can offer them. But an ongoing series of events increases sales by maintaining in your current and potential customers the habit of regularly coming to your site. How will you allocate your special events budget so that you’ll produce a continuing series of events rather than spend it all on a few events?
• Leave prospects with the right impressions of your business. The challenge for the cemeteries in producing special events is balancing fun and respect, excitement and dignity. Management of Fairmount Cemetery in Denver applies that to acceptable movie titles: “Arsenic and Old Lace” would be okay, they’ve decided. “The Texas Chainsaw Massacre” would not. What criteria will you use in selecting the special events?

     A comment posted to the WSJ article does give some guidance for the cemeteries: “Anything but clowns. The cemetery doesn't need to be any creepier than it already is.”

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

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

Respect Zipf’s Law

Some questions to get you thinking:

• Of all the words written and spoken in American English, which are the three most common? (Hint: I’ve used those three in the preceding sentence. Can you spot them?)
• How much more common is the most common word than the second most common word? (For instance, is the most common word in American English used about twice as often as the second most common word?)
• What’s any of this have to do with boosting retailer profitability?

     Please take a little time to come up with your answers. Then read on for my answers:

• Based on an analysis of a million-word representative compilation by researchers at Brown University, the three most common words, in order, are “the,” “of,” and “and.”
• The most common word does indeed occur about twice as often as the second most common word. That second most common word occurs about 125% as often as the third most common. This sort of frequency distribution occurs with other phenomena, too, such as the sales figures for the top seller in a category compared to sales figures for the second-best seller. It’s called Zipf’s Law after Harvard University linguistics professor George Kingsley Zipf, who described it.
• Why am I telling you about this? Because Zipf’s Law is a reminder that we can boost profitability by looking at how to get the best from current resources before deciding to add on the expenses of new resources. You see, researchers at Santa Fe Institute and Spain’s Universitat Pompeu Fabra say that Zipf’s Law holds for word frequency because we want to be as efficient as possible in our communications. People add words to their language only if the current words can’t do the job adequately. Therefore, the top-ranked words get not just a little more, but rather much more, usage than the ones further down the line.

     Adding new customers is necessary for retailing success. But remember that it’s much less expensive to keep a current customer than to prospect for new customers. Exploring new sales channels might be a good move for you. But take care not to be attracted solely by the novelty at the risk of closing off existing sales channels.

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Keep Creating Advocates for Your Business
Integrate Multiple Shopping Channels

Spot Values by Asking Shoppers for Reasons

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

• Fun
• Excitement
• Sense of accomplishment
• Self-fulfillment
• Security
• Self-respect
• Respect from others
• Warm relationships with others
• Sense of belonging

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

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Sell to Values, Not Just Value
Sell Benefits to Fit Shoppers’ Values
Notice Customers’ Cultural Aspirations

Offer Aspirational Shoppers Subtle Signals

In Retailer’s Edge, I describe The Brick as an example of conspicuous consumption. This old Nokia model, nicknamed The Brick because of it heft and size, was being used by Indonesian businessmen in their efforts to establish an image of substance. My recommendation to retailers: Find out what product characteristics ease consumers’ insecurities and then carry items having those product characteristics. In Indonesia, it was the highly visible heft of The Brick.
     A course-correction update to my recommendation comes from findings scheduled to be published in next December’s Journal of Consumer Research. Researchers at University of Pennsylvania and Southern Methodist University note how consumers of very high-end products often prefer subtle, not obvious, signals in their purchases. Consider sunglasses. The researcher’s tally found that about 20% of sunglasses selling for under $50 included a brand name or logo easily visible to others. That increased to about 85% when the retail price was between $100 and $300, but for sunglasses selling above the $500 mark, the percentage dropped dramatically. It was only about 30%.
     Consumers who sense themselves coming closer to desired membership in a group, but who are insecure about their membership, tend to purchase products that loudly project the signals of membership. But when the consumer already belongs to an exclusive group or is confidently aspiring to belong, they’ll be looking for more subtle cues—what corresponds to the secret handshake that allows members to recognize each other while not tipping off the outsiders. This was a lesson learned some years back by Lacoste, which discovered that their crocodile logo stopped portraying as much status if it was displayed too prominently.
     When appealing to these sorts of aspirational shoppers, carry merchandise with subtle signals. And on the bags and packages they’ll use to carry home their purchases, consider having plenty of empty space to catch the eye of prospective customers. Researchers at University of Alberta and University of Wisconsin-Madison find that white space used this way associates your store brand with refined taste and upscale qualities.

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Notice Customers’ Cultural Aspirations
Stay Ready to Sell Luxury
Use Customer Life Changes to Switch Brands

Reexamine Retail Redlining Temptations

“Retail redlining” occurs when disenfranchised groups of consumers systematically receive lower quality goods and/or are charged higher prices for equivalent merchandise than is true for other groups. Researchers at Howard University and University of Texas-Austin give examples like these:

• Refusing to set up stores in poor neighborhoods whose residents would buy what the store offered
• Maintaining different pricing structures for outlets in areas having certain ethnicities
• Habitually showing African American customers merchandise inferior to what is shown to white customers

     In discussing some of these sorts of practices, researchers at Middlebury College cited a year 2000 quote from U.S. News and World Report: “It’s not that these businesses are saying ‘You, black people, you get out of my [establishment].’ They’re saying, ‘Come on in, but we’re going to rip you off.’”
     As a retailer, you might possess justified business reasons for practices that some would call retail redlining: Doing business in certain areas costs more because of high shoplifting rates. Business insurance is harder to get because no fire stations are nearby. Certain groups of customers habitually ask to see the good merchandise because they can’t afford the excellent merchandise.
     But regularly reexamine any such assumptions to be sure it isn’t subconscious prejudice. Being a retailer, you’re continually bombarded with information, much of it carrying conflicting implications. As abundant amounts of information cascade toward you, you probably could find support for almost any opinion you choose to have. If we want to see reasons for retail redlining, we’ll be able to pick out the data to build our case to ourselves.
     In addition, once we consciously or subconsciously retail redline, our brains start working to selectively interpret new information we receive. The more aware we become of engaging in this controversial practice, the greater our drive to pull out data we can twist around to prove to ourselves we’re making the right decisions.
     So straighten out what’s twisted. In his book The Fortune at the Bottom of the Pyramid, C.K. Prahalad of the University of Michigan pointed out how serving the socioeconomically disadvantaged could build profitability.

• Smaller package sizes can make quality products accessible.
• Delivery services can build sales among those without private transportation.
• Talking signage and gracious sales staff can influence shoppers who have limited literacy.

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Give Low-Income Customers Dignity

Attend to Face-to-Face Word-of-Mouth

Even in these days of raging social networking, word-of-mouth (WOM) about your store is most likely to be passed on via face-to-face conversations. That finding was described in an Online Media Daily article and comes from a study carried out by New Jersey-based WOM consultants Keller Fay in partnership with Yahoo.
     So here are two tactics for improving retailer profitability:

• Encourage customers to shop with you in groups so you can benefit from what you hear them talking about. Hold special events. Carry enough of a range of items to appeal to different family members. Then while they’re shopping, listen to the group members’ chatter. Have sales staff ask customers for specifics about what they like and areas for improvement. Listening in to group shopping can work for the ecommerce retailer by using tools like ShopTogether Crowd.
• Give shoppers materials they can take away with them as conversation starters to share with family and friends. This is especially useful for newly introduced products and items for which the purchaser incurs monetary and/or self-concept risk. With ecommerce customers, make it easy for the purchaser to send on a URL to others to show off what they’ve bought.

     The Keller Fay/Yahoo study concluded that about 76% of WOM conversations occur face-to-face. The Internet does play a role in these conversations, to be sure, and that role is expected to increase as more members of the millennial generation—the first cohort to have grown up with the Internet—become adult consumers. But for now, the role of the Internet is somewhat limited, with only 15% of the analyzed WOM conversations from 18,500 consumers including information the consumer got online.
     The study findings do reinforce the importance to you of cultivating the influence of market mavens. According to consumer researchers at University of Mannheim and University of Texas-Austin, market mavens are a special type of opinion leader. Rather than considering themselves expert advisors on only certain retail products and services, market mavens counsel others about the whole shopping experience and recommend specific stores. Because market mavens generally belong to many social groups, they could be called “Conversation Catalysts.” That’s the name the Keller Fay/Yahoo people coined.

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Encourage Group Shopping
Gather Comments from Your Customers
Encourage Specifics & Criticism in Word-of-Mouth
Satisfy Each Customer’s Self-Concept
Have Post-Sale Product Literature
Build Buzz with Market Mavens

Expand into International Safe Harbors

If you’re thinking of going international—maybe having a physical presence in another country, maybe maintaining only a virtual presence via ecommerce—attend to the current state of mind of that country’s consumers.

• How financially stable do consumers feel? In a recent interview with CNBC, Saks Chairman and CEO Steve Sadove said that, in his experience, there is an almost perfect correlation between sales at Saks and the state of the stock market. A posting on the Consumer Nation blog says that consumer confidence is currently high in Brazil, Russia, India, and China. The acronym BRIC has been a guideline for some time for global investing, so it’s no surprise that those four are promising locations for retailing.
• How deprived of luxuries do consumers feel? A number of observers of the retailing marketplace are pointing out both how sales of luxury items are picking up now and how sales of luxury items are a leading indicator in predicting overall retail sales. Mr. Sadove congratulated luxury retailers on maintaining demand for their products by keeping supplies a bit scarce. The Consumer Nation blog points to the consumers of Kuwait and Dubai as hungry for luxury.
• How nationalistic are the consumers? If the consumers want to give their business only to retailers based in their own country, you might choose to partner with a retailer who is already there. If consumers in that nation don’t want to buy brands associated with certain other countries, that affects what you’ll choose to merchandise. Preferences change over time. Researchers from Canada’s Carleton University and York University explored what happened to Australian consumers’ attitudes toward French brands and retailers. Around the time of the 1995 French nuclear testing in the Pacific, those attitudes nosedived toward the negative. But a decade later, the French and their products had been forgiven. There can be patterns of nationalism. Researchers at University of Michigan and University of Minnesota found consumers in India more receptive to retailing associated with India with detergent, but not with luxury chocolates.

     When deciding where to maintain your retailing footprint, there are business fundamentals to be respected: Shipping costs, the government’s receptivity to private enterprise, expectations of payoffs, and more. But even those fundamentals are influenced by the state of mind of each nation’s consumers.

Click below for more: Feature Country-of-Origin Advantages Tiptoe to International Markets via Ecommerce

Call On Structural Equation Modeling

Many of the research questions intended to give you a retailer’s edge are tough to answer accurately because the factors interact in complex ways. For instance, suppose you want to know what motivates people to recommend your store to others.
     A statistical tool for teasing apart questions like this so they can be answered accurately is called Structural Equation Modeling (SEM). When working with a consultant who is using SEM or if you or your consultant are turning SEM findings into real-world action steps, remember that you know your retailing operations better than your consultant or a researcher does.

• Go into the project with a theory based on your experience as a retailer. The strength of SEM is it can give accurate answers to retailing questions so complex it seems like you’re trying to nail Jell-O to the wall. But SEM works only to confirm theories you already have. For our example, what do you believe to be the different types of people who might recommend your store to others and what motivates each of the different types? When researchers at University of Mannheim in Germany and University of Texas-Austin looked at this question using SEM, they started with the theory that there are two types of people who would recommend a retailer to others. The first type is an opinion leader who comes across as an expert in limited product categories. The second type has been called a market maven. This is the person who recommends stores on the basis of good prices, quality service, or high prestige across product categories. Now, does that theory make sense to you?
• Conclude as you started, by reminding yourself you know your business operations well. The researchers say that opinion leaders are more likely to recommend your store if you give them in-depth information about their specialty product categories, while market mavens are more likely to recommend you if you give them high-variety store visits. When research conclusions don’t make sense to you, start out by asking yourself if you might have misunderstood what the consultant said or you might have been blind to factors the consultant discovered. If you decide you did understand correctly and you weren’t blind, then consider that what the consultant or researcher is telling you could be nonsense.

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Look At Mean, Median, Mode, and Range
Skim the Data to Spot Leading Trends
Use Cluster Analysis on Customer Data
Keep Customers Happy About Data Collection

Tiptoe to International Markets via Ecommerce

Store-based retailers can use ecommerce to introduce themselves into markets beyond their national borders and to gather market research information to shape their next moves. Nordstrom is one among many retailers choosing to do this. Urban Outfitters unveiled anthropologie.eu in order to assess the European interest in that upscale, teen-focused brand.

      Here are some tips from the perspective of business and shopper psychology:

• Prepare yourself and your business colleagues to handle the psychological stress of high uncertainty. Global retailing has been reeling the past few years from the economic freefall, and things seem to have turned even uglier in recent weeks with the debt crises in Greece and then in Hungary. Research findings from University of Pennsylvania indicate that your best approach for tiptoeing into international markets via ecommerce is to focus on the long-term: Enter with an optimistic approach. Gather data objectively. Analyze the results with a critical eye.
• Keep up with developments in ecommerce channels. The devices available for ecommerce are expanding in form and capabilities. Mobile phones have become smart phones. Amazon’s Kindle appears destined to take grocery orders as well as sell book contents. For some time now, Apple Computer CEO Steve Jobs has been predicting that the personal computer—and even the notebook computer—will fade away as viable ecommerce platforms. At The Wall Street Journal’s “D: All Things Digital” conference last week, Microsoft CEO Steve Ballmer responded by saying the new devices will augment, not replace, the personal computer and notebook computer.
• When marketing internationally, use translations strategically. Researchers at University of Michigan and University of Minnesota explored the choice of language in advertising to consumers in India. The researchers found that the home language—Hindi, in this case—worked best when selling necessities, such as detergent. English worked best when selling luxury items, such as gourmet chocolates. Evidence is also accumulating that consumers prefer to have prices set in the local currency which stays stable even in the face of fluctuating exchange rates. This makes pricing more challenging for you—the retailer. But if it leads to increased profitability, isn’t it worth the bother?

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Have Bilingual Staff for Bilingual Shoppers

Facilitate Customer Truth-Telling

Ask customers what they want and then use their answers to develop your offerings. Be sure to facilitate their truth-telling, though.
     Taco Bell asked customers about new items to add to the menu. The replies included suggestions like, “We want you to put on your menu a burrito that’s much healthier than the ones on there now.” So the company gathered together a group of the customers and gave them the tools to design such a burrito. The customers could choose from among ten categories of ingredients, including three preparations of chicken and eleven different sauces.
     The amateur burrito designers settled on a three-cheese rich-tasting high-calorie entrée. Not notably healthy. What happened here? Some consumer psychologists explain the Taco Bell contradiction by saying consumers are unable to tell you what they want. Don’t ask them questions. Instead, watch what they do.
     I agree that limiting yourself to asking is a bad idea and that watching what consumers do is valuable. Still, I believe there is another important lesson: In addition to consumers sometimes being unable to tell you the truth, they sometimes are unwilling to tell you the truth. The Taco Bell customers probably felt better about themselves saying they yearned for healthy entrees, knowing all along that great, rich taste was much more important.
     When you ask people in your target audiences what they’d like you to offer, give them time to think about their answers and give them time to provide you full answers. After a suggestion is offered, ask, “And what else?”
     Then assign more weight to the answers that come later. Unless customers are clearly dissatisfied with you, they’re likely to start out by giving you the answers they think you want to hear. After doing this, they’re more willing to tell you their actual preferences.

Encourage Balanced Customer Reviews

The 2010 Social Shopping Survey, to be released soon by the e-tailing group and PowerReviews, describes the important influence of online reviews when shoppers select retailers. Encourage your customers to post reviews on Internet sites which your target audience of prospective shoppers might use.
     And suggest to people that the reviews they post go beyond glowing praise to point out areas for improvement.
     Encouraging criticism may seem like a strange way to attract new customers. Here’s why it makes sense:

• You want site visitors to trust the positive information in the reviews. When respondents to the 2010 Social Shopping Survey were asked what would lessen trust in online reviews, almost 40% replied that when there was no mention in the reviews of areas for improvement, trust faded.
• Reviews that include both strong positives and a few negatives will develop curiosity in prospective shoppers. The curiosity can lead to the shoppers wanting to check things out for themselves at your store or website. When positives far outweigh negatives, you’ve won a customer. Research at Rutgers University concluded that direct experience with the retailer affects how the negative information is interpreted. Almost 60% of the 2010 Social Shopping Survey respondents said they use customer reviews to compare with other information, such as their own experiences. If after visiting your store, a customer concludes that the criticism was not justified or complaints were exaggerated, there’s a good chance the customer will become an advocate for your store—working to convince others to give you business.
• Retailing thrives on change, so you’ll always be interested in how to make an excellent shopping experience even better. When you ask your customers to post reviews that specify areas for improvement and you then consider the suggestions, you’re building the strength of your business.

Tap into Reasons to Recommend You

Let’s say you’re planning to buy some new furniture for your living room at home. Which is a better predictor of the set you select?

• Your best guess of what your friends and family would think of each set you’re considering.
• Your personal opinion of each set, doing your best to put aside what your friends and family would think.

     If you’re like the people in a Michigan State University study, the better predictor would be your best guess about the opinions of your friends and family. That’s not really surprising. One function of living room furniture is to make visitors and family members comfortable. What others think powerfully influences the purchase decisions we will make.
     That’s true not only for the products and services the shopper selects, but also for the particular stores they shop at. You’d like one of those stores to be yours, so tap into the reasons that your current customers would recommend to their families and friends your store and the items you’d like those others to purchase from you.
     How to do that? Here are some tips, based on findings from a review by a researcher at University of Manchester in the United Kingdom:

• Encourage customers to talk about their preferences with store personnel and on social networking sites. Many consumers share advice mostly because they love to talk.
• Allow customers to show off their expertise when they’re in your store. Many consumers recommend a store and particular products after their self-esteem is raised.
• Give customers warnings they can share with friends. Many consumers become more likely to recommend your store when they feel you’ve rescued them from problems. And some consumers are more likely to recommend products when they can balance praise with warnings of traps to avoid.

Be Creative in Prospecting

Here’s another reminder for Making Money Is Not Illegal, Immoral or Fattening readers. This one is from a section starting on page 94 of the book in which Art Freedman is using his family’s store as an example:
     “Be creative in building that Top-of-Mind Awareness. Do you go over to your competition, not just to walk through the stores regularly, but also to drive through the parking lot? Write down the names and phone numbers of the businesses that are in your competition’s parking lots. Then come back to your store and have your outside sales person, you yourself, or somebody else contact those people to say, ‘Hey, you know what? You’ve got to come down here to our store. We have an excellent trade program. We’re a smaller store. We carry only 28,000 items in the store, but we can get you 100,000 items. Would you be offended if I send you some information in the mail?’
     “Do you know what people say when you ask, ‘Would you be offended if I send you information in the mail?’ They say no, I would not be offended. So you say, ‘Okay, cool, I’ll call you back in a week, after you get it.’ And go beyond doing it in the parking lots of your competitors. Do it in your own parking lot, too, because a lot of those people who are shopping are business-to-business shoppers, but you don’t know that because they don’t yet have an account with you. They have an account or accounts somewhere else. They’re coming into your store to pick up one or two items, and then they’re leaving. Get their business names from their trucks or cars in your parking lot. Look up the phone numbers, get in contact with them, and build those relationships.”

Introduce Unknown Products with Charity

Unknown brands can provide you higher profit margins. But the profit margins become profit dollars only if your customers turn those unknown brands into brands they get in the habit of buying. Among the more effective techniques for convincing customers to start using an unknown brand is to tie their trial to you contributing to a charity. Findings from University of South Florida indicate that pairing charitable contributions with the sale of brands unfamiliar to the customer will boost sales of those unfamiliar brands. The research finds that the boost is not nearly as great when it comes to brands already familiar to the shopper.      When a vendor asks your business to purchase a selection of the unknown brand, negotiate with the vendor to share with you in sponsoring the charitable contributions. After all, building sales is in the interest of both the supplier and you. But you’ll get better results if you publicize the sponsor as being your store. Research at Michigan State University, Illinois Wesleyan University, and University of Texas-Austin suggests that when a store rather than a brand is publicized as the sponsor, consumers are more likely to see the sponsorship as a charitable act rather than only a selling technique.      There’s nothing wrong with doing well by doing good, though. So also consider the charity sponsorship as an opportunity to prospect for new customers. Invite opinion leaders from the charity to visit your store to learn about all that you offer. Get senior citizens involved as volunteers. Researchers find that altruism is especially important to elderly consumers. Seniors like to give their business to retailers who are compassionate, and they like to view themselves as generous. Whenever you organize a charitable activity, offer a variety of ways for your older customers to pitch in to help.