Survey Consumers Person-to-Person

Garbage In, Garbage Out. This motto of the early computer age can be applied to consumer attitude surveys. The survey questionnaire, when used well, is an invaluable tool for identifying consumer sentiments as guides to retailer action. Using it well means constructing the questionnaire with care and analyzing the answers properly. A Harvard Business Review article pointed out that the steps between questionnaire construction and data analysis also must be done well. Those middle steps include sample selection and administration of the questionnaire.
     Here are the problems:

• Telephone surveys are yielding low and unrepresentative response rates in this age of cell phones and caller ID.
• People who volunteer to take online surveys tend to be more educated than the general consumer population and are less likely to be middle-aged.
• When consumers take surveys online, they answer carelessly. A Market Strategies International research project to evaluate this issue found that about 15% of consumer respondents said they owned a Segway Personal Transporter, a rate many times higher than what sales figures indicate is true.

     Address these problems and get the best from consumer surveys by forming a person-to-person relationship with your respondents:

• Have one of your staff trained in survey methodology or have a survey consultant personally invite each consumer to participate. The invitation, like the survey itself, should be in the language most comfortable for the consumer.
• Before finalizing construction of the questionnaire, conduct one or more focus groups with a small group of consumers to explore the best ways to phrase items and motivate participation.
• During survey administration, tell each respondent the name of a person to contact with questions.
• After data analysis, conduct a focus group to check that your interpretation of the results makes sense.

     Since GIGO was first coined by George Fuechsel, an IBM 305 RAMAC instructor, to refer to Garbage In, Garbage Out, the acronym has morphed. It’s come to mean Garbage In, Gospel Out, referring to the excessive respect we have for analyses just because they’re performed by computers. When you combine computerized analysis with survey administration, retailers can be misled into accepting as gospel what is actually garbage. Retailers then take the wrong action steps.
     Be sure to select consumer samples and administer surveys in accord with professional standards. This adds to the cost. But flawed surveys are worse than worthless.

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

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Use Consumer Attitude Survey Findings

Purge Expired Products

When someone buys a product from your store, you’d like them to experience that product at its best. If the product is perishable, you’ll be concerned with expiration dates.

• Laws may require you to purge expired products from your shelves. Last week, Walmart agreed to pay the State of New Jersey $775,000, part of that to settle charges that it sold infant formula and non-prescription drugs beyond their marked expiration dates. Such sales are forbidden by federal law. Some state laws forbid sale of certain food items after their expiration dates. The publicity that could follow charges of violating national, state, or local laws would leave your target audiences with a bad taste regarding your business.
• Your customers who take home a product with a date on it can easily be confused as to what the date indicates. “Expiration date” means the last date a food should be eaten or used. But you customers might also encounter “sell by,” “best if used by,” “guaranteed fresh until,” the often cryptically-formatted “pack date,” and the “born on” seen on beer bottles. Confusion can irritate customers. Prepare your staff to answer questions about what these expiration and freshness dates mean.
• Encourage purchasers to return for exchange any unused product that goes beyond its expiration date, even if purchased months ago. Researchers at Baruch College find that after someone acquires a product and works through any initial regrets, they tend to hesitate discarding the product after an expiration date. As a result, they’ll use an inferior product, becoming less likely to purchase that sort of item and brand from you in the future.
• As I said, you’d like your customers to experience perishable products at their best. For some customers, “at their best” means they intentionally wait a while until the price goes down substantially. I’ll call this the Day Old Bread Effect. although it’s by no means limited to food items. The Syms stores’ discounting policy is an example. Stamped on the back of each price ticket on women’s dresses is the date the item was placed on the sales floor, and stamped on the front is a series of dollar amounts in descending order. Every ten selling days, the price moves to the next lower amount on the ticket.

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Promote Sales from Product Recalls
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Shrink Your Shrinkage

After a notable rise in 2009, shrinkage appears to be decreasing this year. According to a Global Retail Theft Barometer report, shrinkage among U.S. retailers is down 7% overall from one year ago. The corresponding decrease is 6% overall among retailers in all 42 countries surveyed. Among these were Australia, China, India, Japan, Russia, and the countries of Europe.
     A limitation of the study is that it surveyed only the largest retailers in each country. Small to midsize retailers might have somewhat different patterns of shopper theft, employee theft, and administrative errors—the three components of retail shrinkage.
     Although shrinkage was down overall, it was up over last year for about one out of three retailers. The reason is found in another statistic: Overall, retailers raised their spending on loss prevention programs and physical security about 10% from last year. Those retailers who funded employee training, store audits, and increased protection of theft-prone merchandise saw shrinkage rates drop. Those retailers who didn’t spend the money generally saw rates go up.
     Consider the proven physical security measures you can take to cut shrinkage: Set up mirrors to increase visibility. Post signs sayings that you prosecute all shoplifting, and then do it. Keep high-value items in locked cabinets. Alternate the direction of hangers on clothing near doors.
     But balance shoplifting reduction with providing a welcoming atmosphere. You probably don’t want to have uniformed guards patrolling your aisles. Reduce dependence on physical security measures by using psychology:

• Some customers and employees steal for the thrill. Be vigilant in store areas that generate excitement because of loud rhythmic music, bright colors, and/or fast movement. Merchandise classes associated with the forbidden are especially likely to be stolen: Tobacco products and underwear are among the most frequently shoplifted items.
• Some people steal because affection and attention are missing in their lives. There’s evidence that when you treat all customers with respect, concern, and empathy, people prone to thievery are less likely to steal from you, even when the opportunity is there.
• Some shoplift to show off to friends. Doing it on a dare is most likely among teenagers. Without hassling the teens or prejudging, you’ll want to be alert when a group of teenagers enter the store together. Being alert includes greeting them so they know you know they’re there.

     To shrink your shrinkage, think like a shrink.

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Use Shopper Psychology to Curb Shoplifting
Fight Employee Theft with Expectations
Psych Out Employee Theft

Craft Fear Appeals

In certain circumstances, we can make a sale more likely by arousing in the customer a sense of fear—fear about the consequences of not making the purchase or buying into the course of action we’re proposing. But unless the fear appeal is crafted well, it could end up doing damage to your business.
     Here are some tips on crafting fear appeals:

• Research at Universidad Pùblica de Navarra in Pamplona, Spain concludes that for certain shoppers in the world, fear sells, but for others, it’s a turnoff. How to tell which is which? Monitor the extent to which your shoppers use fear words themselves.
• Raise enough fear of a real danger to win the customer’s attention and motivate action, but only to the degree that you’ve a guaranteed way to substantially reduce the risk. Don’t oversell. Researchers at Auburn University find that if the fear becomes too intense or if they don’t see a way out, shoppers become defensive and start thinking about why they don’t need the item you’re wanting to sell them. Or if they do end up making the purchase, chances are they’ll associate negative feelings with your store, making it less likely they’ll come back again.
• Pair the fear with regret (“I can understand why you’re sorry you didn’t make a purchase like this before the accident”), guilt (“I’m sure you want to do all you can to protect your family”), and/or challenge (“I realize the price is high”). Research at Tulane University and Salisbury University regarding health behaviors like using sunscreen and eating high fiber foods concluded that regret, guilt, and challenge increase the rate at which the consumer buys into compliance.
• Don’t hesitate to use legitimate fear appeals with older consumers. Seniors respond better to fear-laden sales messages than to purely rational sales messages, especially if the fear appeal is combined with appeals to positive emotions, like comfort, contentment, and relief. This is what’s suggested by research at University of Pennsylvania, UCLA, and University of California-Irvine. Emotional appeals also help elderly shoppers remember details about sources of sales messages more accurately. All emotions—positive and negative—arouse interest among older consumers, and as people age, they get better at turning the negative into the positive (comfort from achieving control over fear).

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

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Scare Customers into Buying
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Offer Exclusive Price Discounts Cautiously

When you tell a customer they’re receiving a price discount, they’ll build good will toward your store. If you add that the discount isn’t available to every other customer, the good will might be even greater. Or your announcement might make the customer uncomfortable. Shopper psychology research finds that exclusive price discounts operate in strange ways:

• Be consistent and be ready to explain the reason for the discount. Otherwise, the customer might get angry, thinking that your store pricing is highly arbitrary or even discriminatory. In year 2000, Amazon implemented a pricing policy in which some shoppers were offered a discount of 30% on a set of DVDs, while others were offered a discount of 40%. When customers discovered in online chat rooms what was going on, they had challenging questions for Amazon.
• Research findings from Baruch College, University of California-Berkeley, and San Francisco State University indicate that the sort of reasons acceptable to Western and Asian consumers differ. With consumers having a Western mindset, it’s best if the reason is demographic (“We give a 10% discount to senior citizens”) or marketing-determined (“We give a 10% discount to first-time purchasers”). For consumers having an Asian mindset, it’s best if the person concludes they earned the good fortune (“You are lucky enough to have selected an item for which we’re giving an extra 10% discount today”). When the reward appeared to be unearned, the East Asian recipients in the studies often felt it produced a menacing imbalance.
• Researchers at University of Louisville and Iowa State University found that there was one group for whom the offer of exclusive price discounts was especially likely to produce an abundance of gratitude toward the store: Men who had done business with the store before.
• These same researchers found that exclusive discounts are most effective in the long-term when the shopper concludes that they were not pressured into making the purchase, but rather view themselves as acting in an independent way.

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Sell Second Opinions

Bloomberg Businessweek recently reported on ExpertConsensus, LLC, a New York-based services business that reviews medical advice. A patient diagnosed with lung cancer, for instance, could contract with ExpertConsensus to convene a panel of top specialists to critique and possibly suggest augmentations in the treatment plan developed by the patient’s physician.
     ExpertConsensus is an example of the current interest in second opinions. With the overwhelming abundance of information available to consumers, you might find a lucrative market in helping people filter through it all.
     There are considerations of business law and ethics in providing second opinions. There are also considerations from a consumer psychology perspective:

• Recognize that giving second opinions is nothing new or unusual in product and services retailing. Consumers shop around and ask for free quotes. They’re collecting second, third, and fourth opinions. What’s different here is charging for the advice. According to the Bloomberg Businessweek article, the starting fee for ExpertConsensus is around $20,000. Your fee will probably be substantially less than that, but you’ll need to tell people what value you’re adding. Distinctive expertise? Speedy analysis? Guaranteed no-fee follow-up if the consumer wants additional advice about the same issue? In fact, the true value-added from almost all second opinions is the consumer’s peace of mind that they’ve made a great decision. But research indicates people will want quantifiable benefits claims in order to justify spending money for the peace of mind.
• An important part of the value-added promised by ExpertConsensus is group decision making. This also is not a truly unusual service in an Internet era. Consider online product and service rating sites in which groups of people interactively shape up recommendations. The “risky shift” isn’t new either. First described by researchers at Massachusetts Institute of Technology, the risky shift refers to how groups of people will make more extreme recommendations than if those people were giving advice individually. A shift in the risky direction is a particular temptation when people are paying the group for advice. Imagine a cancer patient putting out $20,000 and being told, “You know, we really have nothing at all to add to what your hometown physician already recommended to you.” So in this situation protect your client and your business by making your value-added addition something like, “Based on the very latest information, here’s why we concur with the opinion you’ve been given.”

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Reduce Unwanted Risks for Your Shoppers

Assign Blame Accurately for Damage You Do

Do you have in place a plan for responding to media inquiries if a product you sell or something your store does turns out to cause serious damage?
     The recall last month of hundreds of millions of eggs affected grocery stores, restaurants, and other sorts of retailers. The impetus for the recall was evidence eggs from certain sources had been contaminated with salmonella.
     One response from industry spokespersons was to say that people who had been poisoned had failed to cook their eggs thoroughly enough. Krista Eberle of the United Egg Producers’ Egg Safety Center was quoted as going on to say, “It may sound harsh, and I don’t mean to sound that way. But all the responsibility cannot be placed on the farmer. Somewhere along the line consumers have to be responsible for what they put in their bodies.”
     In my opinion, although Ms. Eberle was correct, what she said did come across as harsh. Understandably, this led to criticisms of the industry for trying to avoid blame. But research at University of Florida indicates that when a retailer makes a major error, the public, after initial shock, becomes open to the idea that a number of parties might share responsibility. The key is for the retailer’s spokespersons, at the start, to explain credibly what happened, what’s been learned, and what’s being done differently now.
     Accomplishing this requires you not only to maintain ongoing training of possible crisis response spokespersons, but also maintain a crisis communication network within the organization. When full information is available, spokespersons can frame the message in ways that protect the interests of your business.
     Here are the types of explanations that research indicates are most likely to lead to the public accepting that responsibility for damage is shared:

• “There were circumstances we’d come across only very rarely, if at all, before. Now we’ve built in ways to spot those circumstances promptly.”
• “Here is the information we’d been given, and as you can see, it was misleading. Now we’ve developed ways to get more accurate information.”
• “Here are the legal requirements, regulations, or policies that required us to handle the situation as we did. Now we’re telling those who set these rules what happened and suggesting changes.”

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Beware Flawed Predictions from Animations

“Keep your eye on the ball” is advice often given to baseball batters to prevent them from getting ahead of themselves. Those same words might be good advice for people watching the game at home, and for the same reason. Researchers at Northwestern University and University of Minnesota point out how when people see a baseball hit with great force, they often have a momentary feeling of certainty the ball will go out of the park. Maybe a misleading feeling of certainty.
     Advancing computer technologies combined with increasingly sophisticated consumer expectations have led retailers of all sorts to use an abundance of animation in demonstrating the benefits of products and services on websites and in personal selling. The Northwestern/Minnesota researchers urge people to show special caution with these animations. It’s too easy for your shoppers to be misled when mentally projecting what will happen next.
     People readily project ahead from animations which show trajectories, such as animated charts of weight loss or completion of construction. We’re all overloaded with information, so we welcome tools that help us get to the point. Also, many consumers place extra trust in a computer-generated animation largely because the animation is using a more sophisticated technology than still pictures. “What’s newer must be better,” they say.
     And because animations are more lifelike than text descriptions or still pictures, consumers remember with enhanced certainty any mistaken conclusions. A few days later, what was actually false is recalled as true.
     Putting this all together, you protect your business and your consumers by being aware of the dangers of flawed predictions from animated demonstrations.

• Give disclaimers within the animation. Phrasing in the spirit of “Past performance is no guarantee of future results” is good. But it’s not enough. Animate the disclaimer by showing a flashing question mark at the end of the animated trajectory. Or show a variety of possible directions the trend might go.
• For items where a misinterpretation might lead to a lawsuit, regulatory inquiry, or loss of good will from an essential customer, present still images along with the animation. When the Northwestern/Minnesota researchers replaced the animation with still images the study participants could flip through at their own pace, mistaken predictions faded away.
• Be careful to interpret correctly when shown animations by a vendor. The researchers specifically warn businesspeople to watch out when interpreting animated sales projections.

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Provide Group Support with Customer Discomfort

How much indignity would your customers endure in order to save money? Let’s say you run an airline. Would your customers continue to give you business if you feature bargain fares along with the following?

• To get the lowest fare, passengers must stand during the flight, holding onto a subway-style rail with no seat belt. Whenever there’s turbulence, the people are told, “Grab on tight.”
• If a passenger’s bag is too big to stow in the passenger compartment, the passenger must load the bag into the cargo hold themselves.
• Each passenger must plan ahead for using the toilet because there’s only one for all the passengers and the passenger will need cash or a credit card to get in.

     According to a Bloomberg Businessweek profile article, these were money-saving ideas spouted by Michael O’Leary, the CEO of Dublin-based Ryanair. Not that you should take the ideas too seriously. Mr. O’Leary is quite clear about his intentions to gain publicity for his bargain-fare airline by being outrageous.
     But do take seriously the idea of customers’ willingness to endure discomfort. As testimony to this, the profile article says that in spite of passengers describing the flights as hellish, Ryanair was the first European airline to carry more than seven million passengers during a single month.
     Some observers think short-hop European tourists tolerate such discomforts more readily then would American long-haul business travelers. I believe there’s something else as well: Customers are more willing to be uncomfortable when they are with a group that’s experiencing the same sort of discomfort.
     This “misery loves company” effect has been noted by social psychologists at Vanderbilt University. When we’re in stressful circumstances, being with others suffering the same fate provides support that boosts our tolerance. People can complain to each other and commiserate. They find comfort in forming even short-term social bonds.
     In this case, it’s a Ryanair support group. Wow! Mr. O’Leary could be earning extra money for the company by having crews sell “I Survived Ryanair” T-shirts during flights.
     In your retailing, keep the unintended, but inevitable discomforts as brief as possible. But during those inevitable discomforts, protect the image of your good will by encouraging customers to discuss the experience with other customers and with staff who are around at the same time.

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

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Ease the Guilt for Adult Unhealthy Eaters

Talking about the origins of a fast food success store, Wallace Fowler, who owns sixty KFC franchises, told Bloomberg Businessweek, “Kentucky Fried Chicken hit the streets with eleven herbs and spices, pressure-cooked, and by and large, the general public doesn’t give a damn how many calories are in it.” The stimulus for his statement was efforts by KFC Corporation to reach health-conscious consumers by emphasizing grilled chicken over the fried chicken recipe.
     My advice to you, retailer, is that if your adult customers choose to take the unhealthy route, ease the guilt for them. Feel no need to go beyond fully informing them and obeying the law. When Giant Foods, reportedly inspired by President John. F. Kennedy’s “Consumer Bill of Rights,” formulated their own list of rights decades ago, it included “Right to choose. Consumers who want to purchase possibly harmful or hazardous products (such as food with additives) can do so.”
      My advice is different regarding child consumers. There, choices need to be restricted and to the degree that the retailer can arouse guilt in a child for making unhealthy choices, it could help parents and guardians shape the child’s long-term eating preferences. This is an important issue where retailers can fulfill a social responsibility. The U.S. National Center for Chronic Disease Prevention and Health Promotion says that over the past thirty years, obesity rates among preteens has tripled and among adolescents has nearly quadrupled.
     But when it comes to adults, the customer likes to be in control, so there are better health motivators than retailer-induced guilt.

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Choose Between Percentages & Frequencies

Is it better to say “73% of our 70 products currently meet all applicable ANSI safety standards” or “51 of our 70 products currently meet all applicable ANSI safety standards”?

• A classic finding in consumer research is that percentages are easier than raw frequencies for a person to understand and remember. Therefore, if ease of comprehension is important, present the percentage format. This would be especially true if your statement has lots of elements to understand and remember aside from the frequency itself. The ANSI safety standards example has enough gobbledygook to meet that criterion.
• If you’re asking prospects to average a set of frequencies, use percentages when your prospects have low motivation to understand the results, but present raw frequencies if the prospects aim to be highly confident of the results. Researchers at Bentley University in Massachusetts, University of Kansas, and Columbia University concluded that people who are clearly interested in the results will work harder to analyze the data when they’re presented raw frequencies than when presented percentages to average. The averages will be more accurate, and the people will be more confident of the calculations. So it’s best to say, “51 out of the 70 case mountings and 13 out of the 18 leveling devices meet your specifications,” and expect the prospect to calculate the percentages.
• If you’re asking prospects to calculate a percentage of a percentage, do the work for them and present the outcome. For instance, say: “73% of our 70 products currently meet all applicable ANSI safety standards, and of those 73%, you’ll find that 80% meet the parameters you’ve stated in your proposal. So this means that 41 out of our total set of 70, or between 58% and 59% meet both the ANSI safety standards and your parameters.” Research at University of Miami and University of Minnesota suggests that most consumers come up with erroneous frequency conclusions when calculating percentages of percentages.
• Unless absolute precision is required, ease the cognitive load for all parties by rounding off percentages once you’ve come up with the final result. “About 60%....” is easier for the prospect to work with in their head than “Between 58% and 59%.”

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Eyeball Shoppers So They Behave Themselves

It’s said that Sam Walton introduced the idea of using elderly men and women as store greeters because they’d be approachable by customers looking for help, but that Mr. Walton was most firmly convinced to keep the greeters because shoplifting dropped so dramatically. “Nobody would steal from their grandmother,” he’s been quoted as saying.
     That story might be more apocryphal than accurate. However, it’s true that two museums in Moscow and two in St. Petersburg sit a Russian grandmother by each of the museum’s most treasured artworks, the seated babushka silently underlining the message “Do not touch.”
     What about your store’s “do not” messages? “Do not steal.” “Do not try to take the item off the shelf by yourself.” “Do not smoke here.”
     You could post some signs and then hire a grandmother to sit by each one. Or you could put a picture of a pair of eyes on each of the signs. University of Newcastle researchers alternated between a picture of flowers and a picture of eyeballs on a sign instructing people not to cheat by failing to put money for their beverages into an “honesty box.” When the eyes were displayed, people paid nearly three times as much per ounce for their drinks than when the flowers were displayed.
     Don’t like my idea of using a printed pair of eyes? Okay, I’m flexible. How about putting a mirror by the sign? Let people look at their own eyeballs. A classic study of trick-or-treaters involved instructing each child not to take more than one candy after the adult left the area. When a mirror was placed in back of the candy container, the University of Montana, University of Illinois-Urbana/Champaign, and Purdue University researchers found that the children were more likely to respect the instruction than when no mirror was there.
     But this was true only if the adult had asked the child their name and repeated the name before leaving the room. The name, the mirror, the pair of eyes, the grandma's gaze. All these build personal accountability in most of us, so use them for your “do not” messages. Keep the messages gentle enough not to offend, though. Making them fit in with the surroundings can help.
     At the Russian art museums, many of the babushkas are dressed or selected to resemble the artwork they’re guarding.

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Maintain Purchase Momentum in Customers

Consumer psychologists talk of a “flow state” in which a customer who makes a purchase becomes more likely to make another purchase and then another. Consider what happened in a study conducted by researchers at Yale University, Duke University, and Carnegie Mellon University:
     Some study participants were invited to buy a CD that had been previously judged as appealing to people like the participants. The rest of the participants were invited, instead, to buy a light bulb. Yes, the butt of so many “how many does it take” jokes.” A lowly light bulb. As you might expect, a higher percentage of the CD group than the light bulb group decided to make the purchase.
     Next, all participants—regardless of what they’d been offered before and whether they made a purchase—were invited to buy a keychain. Shopping momentum evidenced itself. A higher percentage from the CD group than from the light bulb group decided to buy the keychain, and those in the light bulb group who did make the purchase were more likely to buy the key chain than those who turned down the light bulb offer.
     Don’t exploit purchase momentum—such as in children or people with a compulsive buying disorder. But allow customers to both build your profitability and build their enjoyment from shopping with you by maintaining purchase momentum.

• Start your shoppers saying yes. Begin with purchases the shopper is most likely to agree to. Even nodding yes builds momentum. University of Amsterdam researchers found that people who were induced to nod their heads up and down would then think more positively about purchase alternatives than those who had not done the pre-evaluation nodding.
• Give customers a head start. Researchers at University of Southern California and University of Pennsylvania set up an experimental loyalty card program at a car wash: Each customer could receive a free car wash after paying for eight. However, some customers were give a head start of two washes and had to get a total of ten. Those given the head start were much more likely to purchase the eight additional washes and to come to the car wash more frequently.

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Sweeten Scarcity with Ample Warning

A most fundamental law of economics is supply and demand. When a product or service desired by consumers is in short supply, you can get a higher price. But there’s sometimes a price you pay for charging higher prices.
     Suppose major flooding hits your area, resulting in a shortage of flashlight batteries on your shelves. If you raise prices on your remaining stock, you might make out like a bandit in the short run, but be thought of as a crook in the longer term. Customers who pay more for a scarce item may end up developing ill will toward the retailer.
     Researchers at Stanford University came up with a surprising twist to all this, plus a suggestion for retailers to dissolve the ill will: Some participants in a study were given a gift, while the rest were denied the gift. Each participant was then asked how much they’d be willing to pay for the gift if purchasing it at a store. The average price was about 45% higher among those denied the gift than among those having gotten it. No surprise so far. The sort of denial experienced with scarcity raised the perceived value.
     Next, those participants denied the gift earlier were given the gift. Now every participant had the gift, and each of them was asked if they’d like to trade the gift for another item, which the researchers had determined was of about equal value. Of those who got the gift at first, about 40% said they’d trade. Among those denied the gift at first, about 80% said they’d trade. Denial led to dislike.
     In a follow-up study, the researchers promised some participants they could get Guess sunglasses if supplies lasted. Later, they were told the stock had run out. Those denied the Guess sunglasses ended up rating Guess watches lower and Calvin Klein watches higher than the other study participants, who hadn’t expected to win Guess sunglasses. The dislike spread to other products carrying the same brand name.
     There were a few more twists in the Stanford findings. Putting it all together, the researchers suggest that retailers can financially profit from pricing scarce items higher, but for longer-term good will toward the store, the retailer should give ample notice to customers. Warn customers about any shortages. Tell them how long you expect the shortages to last. Suggest alternatives they could purchase until the shortages ease.

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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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Inform Consumers, But Don’t Intrude

Retailers can achieve a distinctive edge by providing advice to consumers when asked. When the consumer doesn’t ask and the retailer provides the advice anyway, the consumer might see that as intrusive. So my advice to retailers is not to give advice to shoppers unless asked. Inform without intruding.
     I do make an exception from that general rule when it comes to safety issues. Warn your customer if you believe they are about to make a clearly dangerous purchase decision. Retailer’s Edge readers might recall my true-life failure-to-warn story on pages 57-58 as an example.
     That story concerned a chain saw. Okay, does the same exception apply when it comes to personal safety issues from eating an unhealthy diet? Last week, an article in the Wall Street Journal described a trend for supermarkets to highlight health ratings of items. Kroger, Price Chopper, and Meijer stores are using the NuVal scale, which is maintained and licensed by a joint venture of a nonprofit community hospital and a retailing cooperative. Each food item rated has a number from 1 to 100 inside a double-hexagon emblem on the shelf tag next to the price. The higher the score, the better the claimed nutritional value.
     From your perspective as a professional retailer, what do you think of providing this additional information? Well, then, let’s move it up a notch: Safeway, Giant Eagle, and ShopRite are testing systems in which loyalty-card data is used to suggest healthier alternatives to shoppers via coupons, for instance. Does that cross the line into intrusiveness?
     From a shopper psychology perspective, here are a few suggestions about advice systems:

• A scale ranging from 1 to 100 risks conveying a misleading precision. Is there really that much difference between a rating of 35 and 38? A one-star to five-star rating system might be more accurate and meaningful for the shopper.
• Make it easy for the shopper to ignore the advice if they want to. If your shoppers are using the ratings as a primary purchase aid, sure, put the ratings in a double-hexagon emblem on the price tag. Otherwise, put the ratings in a brochure in-store or on an easily accessible web page.
• Give advice before the purchase. After the purchase, give reassurance that the shopper has made a good decision.

Click below for more:
Protect Customers From Dangerous Decisions
Reduce Unwanted Risks for Your Shoppers
Acknowledge Customers’ Willful Ignorance
Have Post-Sale Product Literature

Reward the Purchase with a Pleasing Sound

Sounds from the shopping experience can burn themselves into the brains of consumers. Since some of the last sounds the shopper hears before leaving the store are those associated with making the purchase, those sounds are especially important. We want the customer to come back soon and often, so we want them to take away pleasing memories.
     A New York Times article titled “A Sound Approach to Marketing” started with an example of painful—not pleasant—memories and with the source being a prison—not a store. The metallic thump when the cell door closed, the jangling of the jailor’s keys, the unrelenting continuous kathump of the ceiling fan. The paroled felons interviewed for the article became agitated as they recalled those sounds.
     There’s a world of difference between being in prison and being in a shopping mall. The opportunity to move around freely, for instance. But wait, how about at the point where your customer is getting set to pay for the purchase at the cash/wrap or is waiting while the screen on the mobile device reads, “Your transaction is being processed”? I admit it’s not as bad as being in lockdown, but the customer is still feeling a sense of entrapment.
     Reward the purchaser with sound effects they’ll find pleasant. This protects the good will you’ve built to that point.

• Give sounds of confirmation as the transaction progresses. A brief series of tones tells the customer that completion of the sale is getting closer. On the other hand, silence breeds annoying uncertainty.
• Keep it gentle. Loud cutting-edge music tells customers your store is trendy. Fast-paced music speeds up the shopper. But with sound effects when the customer is anxious to leave, the loud and the fast can irritate even people who crave excitement.
• Make it distinctive. Brand marketing consultant Martin Lindstrom has shown the advantages of signature sensory sensations—visuals and fragrances associated with a particular store name. The same principle holds for sounds. Make the brief transaction confirmation melody echo a little bit of the music that plays in your radio ad, for instance.
• Top it off with the most pleasing sound of all. Say “thank you,” dear.

Click below for more:
Use Sound Effects to Sell
Use Music to Motivate, Not Disrupt
Play and Sell Store Theme Music

Compulsive Buying Disorder. Okay, Laugh

Bloggers Unite has called for bloggers to do postings today about empowering the disabled. To honor that, I’ll now describe the heartbreak of compulsive buying.

     Yes, I hear you asking, “Are you really putting compulsive buying in the same category as blindness or being wheelchair-bound?” I can even imagine somebody asking, “Hey, since I’m a retailer interested in making sales, how do I find me a bunch of people with this problem?” And after the giggles pass, a legitimate question is, “Why should I, as a retailer, be concerned about compulsive buying?”
     First a definition: Compulsive buying is a compelling urge to keep on buying products or services in self-destructive ways. Many mental health professionals have been referring to it as Compulsive Shopping Disorder. However, the latest research indicates a more accurate name is Compulsive Buying Disorder, since the person’s tension is released when they make a purchase, not when they shop. Shopping is the foreplay.
     And now to your questions:

• Is it serious? Based on research at University of Minnesota and University of Wisconsin, this disorder clearly meets the Americans with Disabilities criterion of interfering with activities of daily living. This is not impulse buying. Compulsive buyers frequently don’t use the items they purchase. It’s not pathological hoarding. Pathological hoarders can’t bring themselves to discard what they have, even if their welfare or the health of their family is at risk. Compulsive buyers can’t bring themselves to stop making needless purchases, even if they can’t afford to feed their families.
• How to find these folks? Watch for people who struggle to keep from buying when they’re emotionally upset. I'd never suggest that you refuse to sell an item to a customer because you suspect the person is a compulsive buyer. But I would suggest that you and your staff refrain from sales pressure on customers who seem to be struggling to keep from buying when appearing to be emotionally upset. Researchers at University of Richmond and University of Illinois-Urbana-Champaign estimate that 9% of adults suffer some form of compulsive buying disorder. Researchers say it’s serious in about 2% of adults.
• Why should you care? Well, among other things, compulsive buyers are less likely than other customers to pay their bills and more likely to return items. Help empower these consumers to fight their addiction. Recognize compulsive buying as a disorder. No kidding.

Click below for more:
Deal with Compulsive Shopping Disorder

Turn Product Training into a Profit Center

All sorts of retailers can turn a profit by training customers. Think about computer stores that charge people for lessons on how to get the best from the devices they’ve purchased. But the opportunities aren’t limited to high-tech items. Specialty food retailers are charging for cooking lessons, and mountain bike retailers for skill-building clinics.
     Even if you don’t charge a fee, training customers can help your bottom line. People often buy more features in a product than they know how to use, and they then become more likely to return the product when they’re unable to master the features. Or they'll rate down not only the product, but also the store, in word-of-mouth and fingers-to-keyboard reviews. Frequent product returns and negative reviews can reduce your profitability.
     When it comes to the value-added of training, you could end up making money overall, even if you lose money on doing the training.
     Here are a few research-based tips on getting the best from product training:

• Set reasonable expectations regarding the ease of learning. If the nature of the product or the nature of your trainees leads you to think the process will be tough, warn the people. If there are multiple skills to learn, teach one at a time before asking the learner to combine them. Researchers at University of South Carolina and University of Colorado-Boulder find that when consumers have reasonable expectations, their evaluations of the products are more accurate. On the other hand, if the learning process is much more difficult than they’d anticipated, they rate the product quality more negatively, generally not realizing why they’re doing this.
• Involve a variety of the learners’ senses and capabilities. Tell them in words, give it to them in writing, demonstrate it to them, have them move their muscles to demonstrate it to you or others. A broad range of research over the years confirms that this helps people acquire skills more easily and use the skills in more situations.
• Accommodate different learning styles with different sorts of training. An important example of this comes from research at State University of New York-Buffalo and Indiana University: With the people who learn best by following instructions, give brief lessons with some spacing between. With the people who learn best by actual experience, give longer lessons and/or lessons that come closer together.

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

Click below for more:
Give a Vocabulary for Richer Shopping
Teach Sensory Terms to Avoid Misleading
Have Suppliers Train Staff and Shoppers
Distribute Worksheets for Child Consumers

Offer Superstitious Shoppers Good Luck Charms

When Apple Inc. brought their latest iPhone to market recently, should they have called it the iPhone 5, even though the prior version was the iPhone 3?
     According to a Los Angeles Times article, guidelines in Chinese culture say skipping from 3 directly to 5 might have avoided a bunch of misfortune, principally frustrated purchasers who couldn’t get a connection to the Internet. After all, the Canon PowerShot G series goes from G3 to G5, and there’s no Nokia cell phone series beginning with 4. Hong Kong hotels often don’t have a fourth floor. Many Asian retailers avoid phone numbers that include a 4.
     In some Chinese dialects, the word for 4 is pronounced almost identically to the Chinese word for death. In what Western consumers might call superstition and certain Chinese, Korean, and Japanese consumers would call good judgment, using 4 requires special caution.
     But if 4 is so unlucky, how did four-leaf clovers get such a great reputation in other parts of the world? And if we stay with China, take note that 4 is considered lucky—not unlucky—by some residents of the Chiu Chow area, who speak a different dialect.
     Acknowledge the power of shopper superstitions, even if you don’t accommodate every one of them. Superstitions are most likely to influence consumers at times of uncertainty and when there is information overload. Because we’re living in times of worldwide economic uncertainty and because today’s shoppers are exposed to monumental amounts of advertising and advice, we’d expect to see more of what resembles shopper superstitions.
     Use this fact to improve your profitability. First off, distinguish two flavors of being superstitious. Researchers at University of Texas-Pan American, Ohio University, and China’s Chongqing Technology and Business University differentiate between consumers who do things like carry good luck charms and others who believe in the power of fate or karma regardless of what lucky charms they're packing.
     Research at Dartmouth College and Columbia University suggests that for those who respect karma, you show extra perseverance in resolving any customer service complaints. Research at St. Louis University and Oklahoma University suggests that the other type of superstitious consumer will become a fan of your store if you pair positive shopping experiences with a memory aid, such as small items carrying your store logo.

Click below for more:
Tailor Loyalty Programs to Customer Culture
Let Shoppers Go Through Their Rituals
Use Consumer Karma to Build Repeat Business
Keep Creating Advocates for Your Business