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

Design Dress Codes Deliberately

Desmond Morris, whose career work is central to the field of evolutionary psychology, wrote, “It is impossible to wear clothes without transmitting social signals. Every costume tells a story, often a very subtle one, about its wearer. Even those people who insist that they despise attention to clothing, and dress as casually as possible, are making quite specific comments on their social roles and their attitudes towards the culture in which they live.”
     …and their attitudes towards the culture in which they work.
     Employee dress standards are part of the service we offer customers. But dress standards are tricky for retailers. On an employee survey some years ago at the now-defunct department-store chain Mervyn’s, about 90% of respondents couldn’t describe the differences among formal business attire, business casual, and just plain casual.
     Take a leadership role in deliberatively designing dress codes for your stores, offices, warehouses, and outside sales teams. Think through the functions that dress serves for you and incorporate those in the standards. In that way, you can best answer questions about the standards.

• Functional. Whatever the employee is wearing, they probably can put on coveralls to unload boxes or put on gloves and kneepads to clean up spills. But rugged, well-fitting shoes might be essential for workplace safety, even if the shoes look clunky.
• Show off the merchandise. This applies to more than clothing stores. Customers will give greater credibility to the merchandise in a medical supply store when the staff wear white jackets and greater interest in cooking utensils when demonstrated by somebody wearing a chef’s toque.
• Reinforce the business’s code of behavior. For a time, the British Broadcasting Corporation was getting static for allowing female newsreaders to show lots of leg and the men to wear turned-up jeans. Older audience members recalled that when Lord Reith was in charge, even the newsreaders on radio had to wear dinner suits. The objective was to give the newsreading the proper gravitas. What’s the personality you want to project with your dress code? High or low gravitas? It’s how the clothing style makes the wearer feel. It’s also the nature of the clothing styles the employees see as they look around at each other.

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

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Train Staff About Dress Standards
Keep Your Store's Dress Codes in Fashion
Spring Your Colors
Woo Item Experts

Inform Your Staff Where Sales Dollars Go

In a Bloomberg Businessweek opinion piece, McGill University’s Jody Heymann recommended opening up the financial books to your staff. There is abundant research evidence that when employees feel a sense of ownership in a business, they find their jobs to be more rewarding. They’ll work harder and more creatively.
     My impression is that many first-line retail employees would prefer not to spend their time regularly tracking the fortunes of the business. But Prof. Heymann might be getting at something more fundamental: Those first-line employees often are woefully inaccurate in estimating where a retailer’s product sales dollars go.
     See if I’m right. Ask some of your employees this question: “For every $100 our store makes in sales, how much of that is profit after expenses?”
     My colleague, hardware/home improvement retailer Art Freedman, says that the answers he gets are in the range of $30 to $50. These employees think that for every $100 sale, the business gets to keep $30 to $50 in final profit. Many employees fail to realize that the real margins are much thinner than that.
     To start, they forget what’s usually the largest cost—inventory replenishment. When you sell an item, you’ll be buying more in order to replace the item on the shelf. Art says that in his business, inventory replenishment consumes about $50 of the $100 sale. And money needs to go for salaries, rent, marketing, and the rest. If you think the numbers alone will bore your staff, use charts or tell it in the form of a story.
     You might not want to take Prof. Heymann’s advice to keep the bookkeeping open to all employees all the time. You might not want to implement her other advice—profit sharing. Still, occasional business literacy lessons for your staff could be quite helpful. Tell your staff where the sales dollars go. It will build their trust, motivate their job performance, and allow them to appreciate how even small mistakes, if made repeatedly, could drive you out of business, eliminating the jobs for them and their coworkers.

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

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Ask Customers & Staff for Ideas
Coach Your Staff with Stories

Staff Your Store for Customer Need Knowledge

Researchers at Germany’s University of Mannheim and University of Bochum explored the relationships of:

• Customer need knowledge (CNK), which the researchers defined as the extent to which a frontline employee in a store—the one who serves customers face-to-face—accurately and promptly identifies each customer’s needs and desires
• Customer satisfaction with their experience with the frontline employee
• Customer judgments of value in what they purchased from the frontline employee

     Based on their statistical analyses of information gathered from customers, employees, and store managers, the researchers found that when the CNK of employees in a store is higher, customers tend to be more satisfied and to say they’ve gotten better value from their purchases. An employee with high CNK pays close attention to each customer they’re with and is concerned with the problems of that customer.
     All this is not particularly surprising. Still, it’s nice to have experimental validation of what we suspected to be true. The research findings do go beyond this to suggest two ways to increase the CNK of your store’s employees:

• Manage employee turnover. Retailing has higher employee turnover than most other types of business. Some turnover in any organization is good. By bringing in new ideas, turnover heads off inbreeding and stagnation. Turnover can disrupt CNK, though. In the research findings, one of the top two facilitators of CNK was the customer having dealt with the employee over a period of time. Longer-term employees get more opportunity to learn what a store’s target markets are like and will like.
• Recognize and correct for the ways in which your target markets are different from your sales staff. The research found that CNK is less when there’s a large age discrepancy between the salesperson and that salesperson’s typical customers. This argues for hiring employees who are similar in age and other characteristics to your typical customers. You’ll want to be sure those employees also can learn retailing skills and that you obey antidiscrimination employment law. Working at it from the other direction, use the characteristics of your talented employees to help you attract customers like them. This expands the scope of your typical customers.

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

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Announce Commonalities with Shoppers
Build Profits by Training to Serve

Define Customer Service for Your People

“How do you suggest I measure how good the customer service is in our store these days?”
     Please ask that question of a few of your front-line staff—sales staff, cashiers, customer service representatives, and others who have the most direct contact with your shoppers.
     Make notes on what you hear. After that, please squeeze out a little more time so you can ask the same question of some repeat customers. How do they measure the quality of your customer service? Add to your notes.
     And the next step is to ask yourself that same question. How do you define “customer service”?
     Research at University of New South Wales indicates that you’re likely to hear one or more of three sorts of definitions:

• Giving customers what they ask for in a minimum of time and with a maximum of courtesy.
• Solving a problem with or for the customer so that a bond between the customer and the store is formed or strengthened, making it more likely the customer will want to return soon and often to the store.
• Selling products and services.

     Either of the first two definitions sounds fine, although the means to accomplish each could vary between the two. You’ll probably find that shoppers would be satisfied with either of those first two definitions.
     The third definition seems to confuse ends with means. Employees who define customer service as meeting sales quotas might have low trust in store management. Or it could be that store management gives no more than lip service to delivering what shoppers consider to be good customer service.
     The New South Wales researchers say that when customer service quality falls short of the boss’s expectations, the boss shouldn’t start by blaming the front-line employees. The cause of the shortfall could very well be unclear expectations.
     Define customer service for your staff so clearly that no confusion remains about what you expect. One method is to give staff samples of what they can say. Explain that they aren’t required to use the exact words, but rather should adapt the phrasing to fit their style.

• “What may I help you find today?”
• “I understand your complaints. What might I do to make things right?”
• “Thank you for shopping here today.”
• …and so on.

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

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Use Closed-Ended Questions Selectively
Resolve Customer Complaints Carefully
Say Thank You, Dear
Be Clear What You Mean By Going Green

Correct for Corruption from Candor

Let’s say a vendor is trying to convince you to double the size of your order. They’ll be telling you why it’s in your best interest to have more of the merchandise on hand. You might trust them about that. But with you being a retailer, you’ll also be aware of the seller’s motivation that is shared by you and your vendor: In this transaction, the more money you spend with the vendor, the more money they make. Since you’re a smart retailer, you’ll aim to correct for that bias as you decide whether to double up on your order.
     However, sometimes a vendor’s bias is not so obvious. This time, the vendor says to you, “I recommend you try out a different brand. The cost to you will be the same as for what you’ve been carrying in the past, but my figures indicate you’ll sell more units more quickly.”
     What the vendor isn’t telling you is that they’ll earn a substantially higher commission from selling you the new line rather than the old line. The vendor has a conflict of interest.
     This might be okay. If you’ll sell more units more quickly, both you and your vendor profit. So you ask the vendor two questions: “Is your sales commission higher for this new product line?” and “How many units do you estimate I’ll sell in the first three months after I change over?”
     And then, according to findings from research at Yale University and Carnegie Mellon University, something might happen that is not okay: If the vendor says, “I’ll be honest with you. I’m recommending the changeover because my commission will be higher,” the vendor’s estimate of unit sales is likely to be much more inflated than if they don’t admit to their conflict of interest.
     In a transaction between a buyer and a seller, when the seller feels they’re being honest with the buyer about one aspect of the transaction, they’ll tend to give themselves permission to be dishonest with the buyer about other aspects of the transaction.
     Take care to make a correction in your thinking for the corruption that comes from a seller’s candor. The Yale/Carnegie Mellon researchers found that not only did the disclosure of conflict of interest lead to exaggerated estimates, but also that the buyers failed to sufficiently discount the exaggeration.

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Check Your Optimism When Dealing with Vendors
Consult Mirror Neurons with Vendors

Take Individual Responsibility for Customers

In his 2009 book, The Mom and Pop Store, Robert Spector quotes Bill Kodilla, who was among the most prized employees in the butcher shop owned by Robert’s dad: “You never waited on somebody else’s regular customer…. I would never work on your father’s customer or Sid’s customer.”
     I don’t support the idea of refusing to serve a shopper or making them hang around for a long time to be served. But Bill’s approach is a nice reminder of the research-backed advice to honor relationships between a salesperson and a customer.

• Coach employees to use “I” instead of “we” when addressing customer questions and problems. “How can I make this right?” instead of “How can the store make this right?”
• Post photos of staff along with their names. You might choose to use just first names or names in the format “Ms. Jones.”
• Encourage employees to thank customers by name, using a credit card imprint, completed special order form, or bank check for information about the name.
• Provide business cards for employees to hand out to customers.

     All this is a quite different approach than that taken by Citibank when sending out customer service letters to credit card customers. A Wall Street Journal piece titled “Mystery Writer: Does Citibank's S. Larson Really Exist?” points out how for years all those letters have been signed in the neat hand of S. Larson, but with no more about S. Larson’s identity or role at Citibank.
     In my opinion, it’s okay that there’s no first name. I’ve consulted with retailers in the hospitality sector and in complaint resolution who find employees are concerned about security risks in revealing the employee’s full name. But with S. Larson, you can’t even get her on the phone when you call.
     The WSJ article was whimsical. Still, at least some recipients of letters from S. Larson seem far from amused by the lack of person-to-person communication. Here’s my adaptation of a comment posted on the WSJ article: “If you’re a disgruntled Citibank customer, you surely won’t get satisfaction by telephoning and asking for S. Larson. If you want to know why this is, consider that S. Larson’s supervisor is Mrs. Helen Louise Waite. Yes, if you expect Citibank to solve a credit card problem for you, go to Helen Waite.”

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Use Your Employees’ Favorite Words
Use Psychology for Shopper Crowd Management
Announce Commonalities with Shoppers

Boast About Underdog Determination

Decades ago, Avis Rent A Car System unveiled a series of ads that the trade journal Advertising Age later called one of the top ten campaigns of the 20th century. The theme of the ads: “We’re number 2 in rent a cars behind Hertz, so we try harder.”
     More recently, researchers at Harvard University, Simmons College, and Boston College found that the underdog’s appeal to consumers endures. Among other things, when a choice of chocolate bar brands was offered to the study participants, the brand positioned as the underdog was selected about 70% of the time.
     The researchers say the power of the come-from-behind fits well with the distinctively American stories of successful immigrants and of second chances met with passionate determination. Supporting this argument, it’s true that the study participants in the U.S. were more influenced than were those in Singapore by the underdog positioning. But even those in Singapore were affected. After all, every consumer in the world has felt they’re behind the leader in something at one time or another, so every consumer cheers for others in that position.
     Your retail store portrays a brand image that is as important to your success as the candy bar brand image is to the candy bar manufacturer. In your advertising, your coaching of employees, and your staff’s personal selling with customers, boast about having the determination of an underdog who is intent on being the best. For instance, share with employees and customers any stories of humble beginnings of your retail business and demonstrate the respect for customers and fellow employees that is associated with humility.
     However, do all this with care. At the same time that people root for the underdog, employees and consumers also like to associate with winners. The Avis campaign was profitable because the fundamental message was, “We’re not settling for being number 2. We’re striving to be number 1, and if we are number 1, we’ll be so accustomed to striving that we won’t be pulling back at all on our passionate determination to serving you.”

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

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Brag About Your Retailing Humility
Show Respect in Front of Customers

Handle Employee Dishonesty Consistently

Your employees should know what you define as dishonesty and what to expect if they are found to have acted in a dishonest manner. This has become more important because of compelling evidence that a substantial percentage of young people who are entering the retailing workforce are accustomed to cheating.
     A New York Times article described how University of Central Florida—America’s third-largest campus as measured by student enrollment—initiated a broad range of methods to curb dishonesty. The article reported that about 60% of college undergraduates admitted to cheating on assignments or exams.

• Decide on the degree of honesty you want your store to project. Does this sound to you like a strange suggestion, retailer? Well, the fact is that some customers prefer to deal with salespeople who are what I call Rascals. The Rascal exploits other people. Especially in individualistic cultures like the U.S., consumers are fascinated with famous rascals. When the retail personality you aim for includes “exciting” and your target markets include people from individualistic cultures, you might decide to have your salespeople project an image of testing the limits and squeezing around authority. Petty cheating is tolerated.
• Once you’ve decided on the degree of honesty you want your store to project, be as sure as you can that employees know your expectations. This in itself is a bit tricky, since retail owner/operators who tolerate or even encourage Rascal behavior may be unlikely to say that out loud. You can communicate your expectations through your behavior, though. Do you fudge the truth when talking to employees and then laugh it off? Are you obvious about using store equipment and supplies for non-business purposes? And then there’s another layer of possible confusion: You might have different expectations of strict honesty for different types of employees. Maybe it’s fine for a salesperson to tell customers, “I’m 100% sure this product is ideally suited for you,” even if they aren’t 100% sure, but you don’t want your bookkeeper to say, “I’m sure our cashiers were 100% accurate yesterday,” when your bookkeeper really isn’t so sure.
• Because of these sources of confusion, also communicate your expectations via consequences. Have consistent consequences for any unacceptable dishonesty. Minimize the surprises. Provide your staff opportunities to discover what is okay and what’s not.

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

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Analyze the Role the Customer Expects
Consider Publicizing Your Rascal Image
Fight Employee Theft with Expectations

Recruit Staff from Your Shoppers

As the economy picks up, will you be ready to replace employees who accept jobs elsewhere or go back to school? Now is the time to start building your list of candidates. If you wait until there’s an immediate need for new faces, you’re likely to have to settle for lower quality than you should have on the selling floor, at the cash registers, and in the back office.
     When retailers run low on suitable candidates, they’ll often ask current employees to recommend their family and friends. That can work out well. For instance, there are family-run businesses in which obligations to family keep everyone in line. But if you depend on employees’ families and friends as your recruitment pool, there’s the potential for problems. If you hire a family member of a highly competent employee, your less competent employees are likely to ask why their son, mother, or cousin wasn’t hired. If one family member needs to be disciplined or fired, what happens to the job performance of their relatives and old high school buddies still working for you?
     On the other hand, people who shop frequently in your store can turn out to be excellent employees. They know the store well, and your staff have had an opportunity to interact with them. Your frequent shoppers are also members of your store’s community who will praise your store and defend it against criticism.
     Being a frequent shopper is by no means enough to qualify as an excellent hire. But here is an excellent source for people you’ll screen. Do you have at least one sign in your store that reads something like, “We’re a great place to shop, aren’t we? We’re also a great place to work. Please ask for a job application if you’d like to learn more.”

Give Staff Specific Feedback

Do your staff know what you expect of them? If you answer, “Of course they do,” I’ve some follow-up questions for you: Do you watch your employees in action so you personally see that expectations are being fully met? When you see expectations being met well, do you praise the employee with specific feedback, such as, “Jean, thanks for reminding the customer that we can special order many items the customer doesn’t find on our shelves”?
     Specific feedback is much better than something like, “Good comeback when the customer said they couldn’t find the product, Jean.” With specific feedback, the employee recognizes what to do again or do better. With general feedback, the employee may have no idea what you’re praising or criticizing, but might not take the time or have the courage to ask what you meant. When they sense that you’re praising them, asking for details feels like fishing for a compliment. With criticism, the employee might fear making things worse by asking for more details.
     New employees are at special risk of missing what the supervisor expects. That’s not surprising. But it did surprise me when I first recognized how often supervisors and managers with excellent technical skills fail to clearly express expectations to the team members they oversee.
     Here’s why it happens: Some of those supervisors/managers were selected for promotion because they excelled on job tasks. It seemed to come naturally to them. But the downside of being a natural is that it’s too easy to forget how challenging the job can be for others.
     Use staff meetings, huddles at the start of each workday, and other opportunities to clearly say what you specifically expect of your employees. Don’t assume that one discussion of expectations is enough for forever. The human brain doesn’t work that way.

Psych Out Employee Theft

If an employees steals from you, you have a snake in the grass. That term is defined by The Free Dictionary as “a deceitful or treacherous person.”
     Fewer of those thieves would have committed their crimes if they’d had doubts they would get away with it. So psych out the tempted. “Psych out” is defined by The Free Dictionary as “The act or an instance of undermining someone's confidence by psychological means.”
     One tactic is to keep merchandise itself from becoming snakes in the grass. I am referring to any items which are so easy to steal, it’s almost as if they walk off by themselves. My coining was inspired by a current posting on a National Retail Federation blog. This posting reported an interview with Kelly Gorman, Vice President of Loss Prevention for pet specialty retailer PETCO. According to the posting, Ms. Gorman comments how loss prevention people are accustomed to scolding store employees, “It didn’t just get up and walk away,” but when it comes to PETCO merchandise, maybe it did, in fact, get up and walk away. Or slither away.

• Keep the storage areas in your store unlocked only to the degree necessary. Require an employee who is thinking of stealing to acknowledge that the thievery will involve a series of dishonest steps.
• In staff training, periodically give evidence of how employee theft damages the organization. Do not discuss the topic at every training session, though. Research suggests the frequency makes thievery seem to your employees almost routinely expected.
• Inform employees you’ll be conducting surprise audits.

     As a rule, retailing staff consider it wrong to steal from their employer. Conscientiously maintain an atmosphere where it is difficult for employees to rationalize theft by saying, “It was asking to be stolen.”

Profit from Product-Service Synergy

Geek Squad is Best Buy’s killer app. So wrote retailing writer Jackie Crosby of the Minneapolis Star Tribune newspaper. She’s describing the consumer electronics installation and repair service. Over the 7½ years that Geek Squad has been a part of Best Buy, annual revenue has grown from about $3 million to about $1.25 billion.
     But in a February 2008 San Francisco presentation, Geek Squad founder Robert Stephens warned that for a retail store operator, services by themselves aren’t sufficiently profitable. If your principal commodity is services, link up with a product. Spas and salons stock potions recommended by staff. Truck rental centers sell merchandise to people who are moving to a new home.
     From the other side, if you make your living from retailing products, consider how you can most fully use services as a profit center. Keep the product-service synergy and identity strong, though. Consumer psychology research verifies the importance of you projecting a consistent personality across products and services.
     For example, Geek Squad “agents” wear their white button-down shirts, black pants, and clip-on ties whether the agent is male or female. For making house calls, many of them drive a distinctive-looking “Geekmobile.” When Best Buy introduced the Magnolia Home Theatre line and mobile phones, they followed by folding the installers into the Geek Squad brand.
     Because of Best Buy’s store size and the technical expertise required, it works well to have a Geek Squad separate from sales staff. But for a smaller non-technical operation, keep in mind the perishability of services. If a day goes by that a service staff member’s help isn’t called for, you can’t store those hours for another day. You might be better off not following the Geek Squad model, instead having services staff who can also provide other functions, such as selling products.

Weigh Flat-Fee Pricing

Many types of retailers charge customers a flat fee per month for unlimited use of services. Here are some consumer psychology factors to consider in deciding if and how flat-fee pricing for services can work well for your business:

• A variety of surveys find that people hesitate committing to a flat-fee plan unless they believe they can quit at any time, even if there’s a penalty for midterm cancellation. The reality to keep in mind, though, is that because of mental inertia and the comfort of not having to worry about piecemeal purchases, people are unlikely to cancel a flat-fee arrangement until the next renewal date.
• Research at University of Pennsylvania and University of Southern California suggests that people agreeing to a flat-fee arrangement are more likely to build commitment to the retailer and recommend the retailer to others if the customers are referred to as “members of the plan” rather than as “subscribers to the plan.”
• Do you have the capacity to provide for the maximum quantities and the ranges in demands that customers will request? According to researchers at University of Southern California, most consumers overestimate how much of the service they will use in the future when first purchasing a flat-fee agreement. Take this into account when doing your planning for how many customers you can accept and how many service providers you’ll require.
• Research at Harvard University and University of Toronto finds that, as a general rule, usage is highest in the initial weeks after agreement to the plan, and usage fades over the following periods of time. Because the customer’s rate of use tends to be lowest right before renewal time, it is especially important that you—the retailer—present advantages of renewal and encourage use as the renewal date approaches.

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

Manage Staff Performance with Respect

This coming April 15-16, I’ll present “Performance Management” under sponsorship of University of Nevada-Reno. I encourage you to participate.
     One skill we build in performance management training is showing respect, concern, and empathy toward each employee when conducting the performance appraisal interview. That keeps staff motivated to build the profitability of your business.
     Here are a few of the tips to keep in mind:

• Privacy. The ongoing feedback and coaching you give to staff can be done on the store floor. You wouldn’t do it in front of customers. Still, there are circumstances where it’s helpful to have other employees overhear the coaching of a single employee. Better yet is coaching a group of staff at one time. But when it comes to the performance appraisal interview, meet in a private setting with expectations of confidentiality. This doesn’t mean meeting in a closed-off location, though. Because you might be dealing with strong emotions, be sure both you and the employee have clear access to an exit.
• Calm, concerned demeanor. Use a normal voice volume, pitch, and pace. Again, because there might be strong emotions, you’ll want to listen to yourself as you talk and stay aware of your posture and gestures. It can be difficult to tell an employee about areas in which they need to make improvements in order to meet expected standards.
• Accurate accounts of cause and effect. Give examples of situations in which you saw the employee perform. Say what you saw and heard the employee do or fail to do. It is important to then explain what the consequences were for the success of your store. New staff often don’t know this. Long-term staff too often forget it. And the rest of your staff will benefit from being reminded.

Keep a Store-Within-A-Store Compatible

Recently, there’s been extra interest in the idea of a retailer leasing out space within their store to another retailer or to a manufacturer for a store within the main store. The set of business models has been around for a long time. Usually the SWAS operator establishes their own rules for merchandising, pricing, staffing, training, and servicing. This is the case with Starbucks and Peet’s operations set up within supermarkets. Often the SWAS sells only one brand. This is the case with Sephora stores within J.C. Penny stores and Jil Sander within some Macy’s.
     Perhaps the extra interest in SWAS now is because of the economic downturn. Maybe you’re finding that with inventory and staff reductions, there is extra space in your store and a need for niche merchandising. In addition, store-based retailers are recognizing the extra excitement and shopper convenience a SWAS can bring.
     An upcoming article in the Journal of Marketing Research by professors at Carnegie Mellon University and University of Pennsylvania proposes some hypotheses about how SWAS concepts work best: Invite in manufacturer partners for product categories where consumers identify strongly with brands and where competition among retailers in selling favored brands is high.
     Also, it’s important to have SWAS tenants who reinforce, or at least won’t disrupt, the personality you want your overall operation to portray:

• Sincere or witty: In what ways is the retailer honest? Wholesome? Cheerful? Teasing?
• Exciting or predictable: To what degree is the retailer daring? Spirited? Imaginative? Trendy? Responsible? Dependable? Persistent?
• Expert or inquisitive: In what ways is the retailer knowledgeable? Successful? Calm? Confident? Secure? Imaginative? Curious?
• Sophisticated or approachable: To what degree is the retailer formal? Assertive? Ambitious? Casual? Sociable?
• Rugged or luxurious: In what ways is the retailer gruff? Challenging? Cooperative? Trusting? Considerate? Indulgent?

Train Staff to Implement Your Standards

As Art Freedman and I say in Making Money Is Not Illegal, Immoral or Fattening, successful retailers set clear standards for their store and their staff. Then we go on to say that setting standards is not enough. Here’s a reminder from Chapter 4:
“You must implement the standard. This means training staff, coaching staff, starting from the top down. A lot of people don’t understand how to introduce a standard and make it stick in their business. We’re all human beings, so think about how human beings learn. What we just hear, we often forget. What we see, we’re more likely to remember. What we do, we understand. But only what we can teach others, can we master.
“If you say, ‘Well, I told my staff what the standards are,’ we’d come back with, ‘Did you also give it to them in writing so they could go over it again later? Did you demonstrate to them how it’s done, and then did you observe them doing it and give them constructive criticism? When they were ready, did you have them teach the standard to others? And throughout it all, did you encourage them to ask you questions about anything they didn’t understand, and did you invite them to suggest improvements on the standards for you to consider? Did you look them in the eye and ask, ‘Can you do that?’
“Don’t assume that one-time training is enough. Give refresher training, including asking each employee to recommit to the standard. Maybe you think employees will object to all this, but the truth is that most employees are more comfortable at work when they know what’s expected of them. Even for those employees who don’t like the standards, the training, and the refresher training, doing this is a good business decision.”

Build Profits by Training to Serve

A press release this week from the Conference Board is headlined “U.S. Job Satisfaction at Lowest Level in Two Decades.” That conclusion was based on about 2,900 answers to a survey of U.S. households.
     Surveys conducted by Gallup and University of Chicago have not shown such drops in job satisfaction. Still, the Conference Board findings can serve as a warning to retailers. Here’s why you might care:

• Researchers and business consultants have given evidence that higher employee satisfaction produces higher customer satisfaction and higher customer satisfaction produces higher retailer profitability. If dissatisfaction is brewing among your staff, that could end up damaging your bottom line.
• The Conference Board says that the highest levels of dissatisfaction are among younger employees. Compared to other sectors, retailing has more younger employees. Not surprisingly, then, job dissatisfaction rates have been higher among retail employees than among employees in general.
• With the job market being so tight, people were grateful for having work, even if the workload increased and job benefits decreased. As time has passed, however, and early signs of economic improvement appear, it could be that the gratitude is turning to impressions of servitude, with retail employees feeling trapped in their jobs. Some employee turnover is always good for a retailing business, but excessive turnover could create problems for you.

     But decades of research on job satisfaction also suggests what measures you can take to build and maintain high satisfaction in the type of employees you’d like to keep. Among the top techniques is to train and coach your people to be of service to others. The Conference Board is only one of many organizations reporting that the employees who are most satisfied are those who view themselves as experts and have ample opportunities to be of service to customers.

Know It's Okay to Fire an Employee

Here's another Art Freedman nugget from Making Money Is Not Illegal, Immoral or Fattening:
     "Amateurs make emotional decisions. Professionals make decisions based on what's best for the business. One part of that: Suppose you're moving your store a quarter mile down the road. How many of your employees are you going to keep in your new location? If you say anything less than 100%, then I've got a follow-up question: Why do you have them on the payroll now?
"You know, it is okay to fire an employee. I love to use Sherry (not her real name) as an example. I kept Sherry for years past the date that she should have been gone. I understand the challenges here. I've gone through those challenges as well in getting employees who will do what needs to be done, but sometimes we just hold on to them too long. Sherry ran the tool department for a long time, but she was never going to advance anywhere in our business at all. I kept her and kept trying to work with her. One day Eric, my son, came to work, and he said, 'I'm going to go down there and fire Sherry today.' Hey, why didn't he do that three years earlier?
     "When Eric told me what he was doing, it took a load off my mind. I was so emotionally attached that I just couldn't come to the decision. I felt like I had so much going on in running the business that I could not come to the decision to let her go. But we must make business decisions. We must make decisions based on what benefits the business, not just what feels comfortable to do. We must be able to make tough decisions. That's another sign of being a professional."

Make Your Sales Staff Celebrity Endorsers

Are you thinking I'll talk about Tiger Woods? No, you've already had plenty of chances to consider how his bad behavior shows the risks in using celebrity endorsers. So I'll talk about Best Buy instead. That electronics retailing giant is rolling out a pilot test, first publicly discussed last June, for in-store kiosks that let customers trade in video games for store credit. Experts say Best Buy wants to grab entertainment software market share from GameStop, which with more than 6,000 stores located in more than 15 countries, calls itself the world's largest video game retailer.
     What's this have to do with making your sales staff celebrity endorsers? You see, one of the advantages enjoyed by GameStop is that their employees are gaming enthusiasts. Among other things, GameStop has rental programs to allow their staff to master the games. Serious gamers come to store employees to learn the tips, traps, and tricks. When a GameStop staff member praises a game, the endorsement is coming with expertise worthy of celebrity.

• What opportunities do you provide your sales staff to thoroughly learn about each of the products and services they're selling?
• To what degree do you take the recommendations of your staff—those who handle sales and those who handle returns—as to what products should be pruned out of your merchandise mix because the staff feel uncomfortable endorsing them?
• How do you make your expert staff members into celebrities, such as by featuring their photos in ads or even announcing their birthdays over the store speaker system?

     Kudos to Best Buy for courage in taking on GameStop. Researchers at University of Texas and University of Southern California say consumers are attracted to products whose celebrity endorsers have shown courage. Maybe that does bring us back to Tiger Woods.