Combine Flavors for Bonus Effectiveness

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

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

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

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

Exchange Retailing Ideas with Lots of Others

Finland’s Nokia was the world’s mobile phone powerhouse. But a recent Bloomberg Businessweek article describes the company as having been in “steep decline” in recent years. Nokia has many strengths to bounce them back to extraordinary success. They still hold more than 30% of the market for global mobile phone sales. Still, what happened to Nokia can serve us as a cautionary tale.
     Bloomberg Businessweek attributes Nokia’s problems to an isolation that kept the company from challenging their own business assumptions. As a consequence, they failed to keep up with what consumers came to expect in product capabilities and handset design. Nokia had a reputation for hiring from within. It was only earlier this month that Nokia selected, for the first time, a non-Finn as its CEO. Their ideas stayed within. The operating system for their phones is used by no company other than Nokia.
     The lesson for us? Cut through isolation. Exchange ideas with lots of other business people.

• Broaden the range of people to learn from. Yes, you can’t learn from everybody. For one thing, you don’t have the time if you’re operating your business. For another thing, not everyone who catches your attention has lessons that apply to your business. But look for teachers outside your usual channels. As you read my posting now, do you find yourself thinking things like, “How can I learn from what happened to Nokia. They’re a manufacturer, and I’m a retailer,” or “What could I possibly learn from the experiences of a company like Nokia that is so much bigger than my business”? If you’re thinking like that, you’re at risk for isolation.
• How often do you and your staff interact with other businesspeople? The Bloomberg Businessweek article pointed to the physical isolation of Nokia’s headquarters, far distant from other consumer-electronics and Internet-development firms. There might be something to that. Texting, blogs, and videoconferencing can provide important information. But compared to face-to-face interaction, communication from a distance falls short in spreading the passion. Encourage your staff to participate in workshops and professional conferences.
• Every week or two, consciously question your business assumptions to see how they hold up. Decades of social psychology research—such as at University of Colorado, State College of Colorado, and Ohio State University—highlight how having a point of view primes us to ignore contradictory evidence we’d benefit by noticing.

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Visit Other Retailers
Call on Structural Equation Modeling

Incorporate Crowdsourcing When Designing

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

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

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

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

Hitch Your Wagon to the Right Star

P&G is franchising dry cleaners and car washes. There are already three Tide Dry Cleaners stores and nine Mr. Clean Car Wash operations.
     Whether you’d find it profitable to participate depends on a number of business fundamentals. What are the franchise fees? Would this be a product/trademark franchise, like a Toyota dealership in which you’re paying principally for the name? Or is it a business format franchise, like a McDonald’s in which you’re paying for help with site location, quality control, accounting systems, and other aspects of the business?
     From a consumer psychology perspective, there are other considerations. That’s because what P&G is doing is as much a brand extension as a franchise opportunity. Tide Laundry Detergent washes clothes. Dry cleaning is a natural extension, but still an extension. It’s like McDonald’s marketing a line of children’s toys. The Mr. Clean Autodry Car Wash System is already on the market. For those who know about it, the extension to a car wash service is a natural.
     Here are some more questions to ask when deciding whether to brand or co-brand with a well-known name:

• Do your target consumers associate more strongly with Eastern or Western cultures? Research at University of Texas and University of Minnesota indicates that consumers who associate with the holistic thinking of India would be more likely to accept a McDonald’s shaver shop than would consumers who associate with the analytic thinking of the U.S.
• Are there already well-known brands in that business sector? Research at Purdue University, Indiana University, and University of Connecticut suggests that brand extensions are especially likely to succeed in sectors such as dry cleaning and car washes because there aren’t dominant store or operations brands. The research findings also suggest that a Tide Dry Cleaners is more likely to succeed if it opens up its doors with that name than if it changes its name from, let’s say, Don’s Dry Cleaning.
• Is there either brand fit or product fit? Researchers at Indiana University find there are two paths to success. An example of brand fit is a Nike orthopedic supplies store, based on Nike’s athletic persona. An example of product fit is a Nike audio equipment store, based on Nike’s identification with audio equipment for runners.

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

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Compare Unknown Brand Extensions
Prepare for Upcoming Brand Extensions

Monitor Your Vendors’ Websites

When you carry products produced by someone else or supply services under a name licensed to you by someone else, that someone else often maintains a website shoppers can use to locate you. The shopper enters their ZIP code or other locale identifier, or a search engine recognizes where the shopper is. Then the name of your store along with your address and phone number appear.
     This is an excellent way to build referral business. All else being equal, do your purchasing from vendors who provide this for you. However, be aware that the characteristics of the vendor’s website influence how a consumer perceives your business. Research at Stanford University finds that consumers tend to perceive a retail business along five major dimensions:

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

     The personality of the vendor’s website can muddy the image you’re aiming for if the website’s personality differs greatly from that intended image. If the vendor’s website is overly exciting at the expense of predictability, it might even turn away prospective customers.
     For example, the J.D. Power and Associates 2010 Manufacturer Web Site Evaluation Study®—Wave2 ranks the Cadillac and the Scion websites as lowest among the 33 automobile manufacturers they rated, based on responses from more than 10,600 prospective new car shoppers. The best of the sites—Honda’s and Kia’s—were distinguished by an uncluttered appearance and easy-to-understand site navigation tools. The result was speedy retrieval of the information the shopper was seeking.
     Research results from University of Alberta and University of Illinois-Champaign-Urbana suggest that Cadillac would have been wise to have a simpler website design for another reason as well: Absence of clutter subtly signals elegance to shoppers.
     Monitor your vendors’ websites to be sure information is not only correct, but also presented in a way that enhances your store’s marketability. If the site falls short, work with the vendor to resolve the problems and recognize that the site may not be as valuable to your profitability as you’d thought.

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Project Your Store’s Personality
Know the Tradeoffs in Being Sincere
Manage Store Clutter Strategically
Offer Aspirational Shoppers Subtle Signals

Offer a Buffet of Loyalty Program Rewards

Shoppers want to customize. This affects the merchandise they buy. Fortune Magazine reported that fully 40% of Lands’ End shoppers are willing to pay more and tolerate longer delivery times so they can order a blend of precise sizes. It affects gift card purchases. In a National Retail Federation survey, about 20% of respondents said their main reason for not buying gift cards—even though gift cards are exceeded only by cold cash in the ability to customize their use—is because the cards are too impersonal. The appeal of the idea of customizing affects advertising. The viral popularity of the Old Spice Guy campaign shows how people get a kick out of a humorous personalized ad.
     The urge to customize also influences consumers’ preferences in loyalty programs. According to loyalty marketing consultants Colloquy, one reason for the outstanding success of these programs in Canada is that customers can choose among an especially broad range of rewards.
     A recent Marketing Daily posting describes another feature at which the Canadian programs excel—coalitions in which participants can accumulate points from grocery, gasoline, financial services, and other retailers. More than 100 firms give points in the Air Miles Reward Program, the most popular of the Canadian frequent shopper initiatives. With that many partners, the program can offer about 1,200 different rewards.
     Do you want to form a loyalty program coalition with other retailers in order to increase the breadth of rewards you offer? If so, one decision you’ll make is whether to partner with retailers that sell merchandise lines competing with yours. Some points to consider:

• Research on branding says that franchisees and members of retailer cooperatives benefit when a loyalty program carries the name of the franchisor or cooperative, even if consumers can redeem at your store points they accumulated at another outlet. Just be sure that when the person comes into your store to make the redemption, you treat them as a prospect for additional sales.
• At a time when sales revenues at many shopping malls are falling short, a rewards program based on a coalition of mall merchants can draw traffic and give valuable brand identity.
• Developing partnerships around frequent shopper programs could help you screen partners for other profitable endeavors, such as special events and pooled purchasing.

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Tailor Loyalty Programs to Customer Culture
Give Loyalty Program Members Prestige
Offer Frequent Shopper Discounts Beyond Discounts
Help Customers Personalize Gift Cards

Join Customers in Role-Playing

“On the Internet, nobody knows you’re a dog.” This was Peter Steiner’s caption for his July 1993 single-panel New Yorker cartoon showing a canine sitting before the desktop screen, paw on keyboard.
     In December 2000, that panel was reported by the New York Times to be the most frequently reproduced New Yorker cartoon in history. The cartoon was the inspiration for a play titled “Nobody Knows I’m a Dog,” which has been presented in Bulgaria, Germany, Taiwan, and the United Arab Emirates, in addition to at least a dozen North American locations.
     Mr. Steiner was quoted as saying, “I feel a little like the person—whoever it is—who invented the smiley face.” This feeling’s not surprising in view of how the cartoon’s message resonates with so many people.
     What is the message exactly? To retailers, the message might be stated as, “On the Internet, I can role-play the kind of shopper I’d like retailers to see me as being.” For retailers, the hint which follows from this message is for them to play along with the role-playing.
     Researchers at Concordia University explored this theme by analyzing the characteristics consumers specify for their online profiles. The researchers provide evidence that retailers can use these characteristics to successfully market and sell to the real people behind the profiles. The tactic works because the characteristics a person will choose for their Internet persona is almost always an extension of their real personality, not completely divorced from it.
     But wait, there’s more: Although it’s harder to pass yourself as a human when you’re a dog doing in-store shopping instead of ecommerce shopping, in-store shoppers still often have what consumer psychologists refer to as a “fantasy orientation.” Consider the man standing in the middle of the Harley-Davidson dealership with feet apart and hands much too firmly on hips. Consider the woman entering the Sephora store with head tilted upwards enough to look down at the sales help. Each of them is adding to the enjoyment of shopping by playing a role.
     Play along, and you build the potential for the sale.

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Cast Magic Spells for Escape Benefits
Coach Your Staff with Stories
Analyze the Role the Customer Expects

Recognize Opportunities to Learn

Almost 35 years ago, an article titled “Why Cute Commercials Sell” appeared in TV Guide. That was my first published article about consumer psychology. It was based on a small research project I’d done while in graduate school at Stanford University.
     Over succeeding years, I worked in a number of areas of psychology, but always especially enjoyed projects in organizational and consumer psychology and the opportunities to help others learn. Then a few years ago, Art Freedman, whose family owns American River Ace Hardware in Folsom, California, and who is a renowned retailing consultant, invited me to collaborate with him in helping retailers improve their profitability. A major outcome of that collaboration was Making Money Is Not Illegal, Immoral or Fattening, a book I coauthored with Art.
     Today is Art’s 60th birthday. It’s an occasion for me to publicly thank him for all that he has generously taught me about the world of retailing within and outside the U.S. Art’s knowledge of profit margin management is thoroughly instructional. His explosive enthusiasm, unconditional optimism, and ready-fire-aim approach to business have kept me alert.
     Art’s benchmark birthday also provides me an occasion to remind you of the importance of recognizing the learning opportunities all around you as a retailer. You’ve mastered a great deal from formal training, I imagine. But have you made best use of the education and inspiration available to you from people not formally designated as trainers? Your staff? Your customers? Your vendors? Your retailing colleagues? Your retailing competitors? Being taught by their successes and their setbacks. By their strengths and their shortfalls.
     In Making Money Is Not Illegal, Immoral or Fattening, Art and I write, “If you’ve been in retailing for, let’s say, twenty years, do you have twenty years worth of learning or do you have one year of learning repeated twenty times?” Actually, in this case, those are Art’s words. He said it, and I inserted the commas. But the learning links don’t stop there, of course. As you’ll see when you look at page 34 of the book, Art also says he was taught that advice by a very smart Australian named John.
     Which brings me to the last tip for today: Just as you recognize all your opportunities to learn, be sure to also recognize your opportunities and responsibilities to teach others.

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Know Margins on Your Products
Drill Down to Do Item-Level Pricing
Turn Competitors into Partners
Destroy Excuses for Inaction

Redirect Consumer Boycott Anger

Hoards of people are angry at BP PLC over the massive and continuing oil spill in the Gulf of Mexico. With that anger, consumers are boycotting BP. The ways in which the boycotts have taken shape, the reactions to the boycotts, and an understanding of the social psychology of consumer boycotts can all provide useful lessons for you, the retailer.

• Distinguish impromptu from organized boycotts. An article in Canada’s Financial Post about the various protests against BP includes a photo of two women standing at a BP service station. Based on the smiles and the shorts, I’d stay these supposed protestors are much more interested in having their picture taken repeatedly than in raging against the corporate machine. Impromptu boycotts draw attention to your business. The boycott can draw sympathy as well, especially if the protest is prolonged. Turn all this to your advantage. A number of newspaper articles are currently appearing that explain how boycotting a dealer-owned gas station that happens to carry the BP logo hurts the people who own the station, not BP Global at all. Your initial reaction to an impromptu boycott could profitably be, “Let’s use any media attention to show how good a retail business we run.”
• If it is a boycott initiated and maintained by a community action group, determine the group’s boycott objectives before deciding what actions to take. In my experience, community action groups organizing a boycott are usually less interested in doing economic damage to a business than in forcing changes to the behavior of all businesses engaging in the offensive action. If you find this is the objective of an organized boycott of your retail business, publicize any of the ways in which you share common ground with the group. For instance, a service station owner probably shares with Facebook’s Boycott BP group—what is currently the fastest-growing online boycott sponsor—a desire to keep beaches clean. That service station owner might even make common ground with Greenpeace. After all, according to an article in yesterday’s New York Times, Greenpeace is now against a boycott of BP. Greenpeace instead wants us to support what they call another BP—Beyond Petroleum. Well, okay, the retailer and Greenpeace might part company on that point.

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Resolve Customer Complaints Carefully

Head Off Dangers to Your Image

How about closing down your business for a few hours so you and your staff can go spend their money with a direct competitor?
     That’s what the owner of a Durham, North Carolina BBQ restaurant, The Original Q Shack, decided to do last week. Staff from about a dozen other restaurants also came. Their destination was another Durham restaurant, Bullock’s BBQ. The announced reason was to help out a respected colleague who had suffered a business setback: After Bullock’s food came under suspicion of causing salmonella poisoning a few weeks ago, business dropped about 80%.
     Not far behind the announced reason was another motivation: Protect the image of Durham restaurants at a time when people are again getting financially comfortable with eating out. The Bullock’s event was organized by the marketing director of the Durham Convention and Visitors Bureau. He’s a former restaurant operator himself.
     I’ve seen reports of the event in three newspapers and on the websites of two TV stations. People learned that Bullock’s has been in business for well over half a century, is operated by the son of the founder, has never received a food sanitation grade lower than A, and has hosted celebrities like Dolly Parton, Garth Brooks, Kris Kristofferson, and quite recently, U.S. Vice President Joe Biden. The message was clear: Durham dining is good enough for all these people, so it’s good enough for you, your family, and your friends.
     If the misfortunes of a competitor are due to incompetence or evil, distance yourself and show you are a responsible, conscientious retailer. When those misfortunes are due to circumstances outside the control of your competitor, it’s ethically right to help them out. And when it’s a matter of heading off dangers to your retailing image, helping out the competition is also good business.

Show Commitment to the Underserved

A promising path to retailing success is to select an underserved target market and then show commitment to meeting their distinctive needs. In my opinion, there is no better example of that than La Curacao, the California-based chain with a target market of consumers of Latin American heritage. Based on what La Curacao has done, here are some tips for all retailers—regardless of where in the world you are located and what distinguishes your underserved target markets:

• Give help in gaining financial strength. La Curacao offers three credit plans, two of them specifically designed for customers without a strong credit history. It’s reported that 95% of purchases are made with a store credit card, and for 80% of the store credit card holders, the La Curacao card was the first one they ever had.
• Honor the family. Cultures place different amounts of importance on family, but every culture honors family to some degree. La Curacao gives college scholarships to children with Latin American roots, sponsors talent shows featuring young Latin American musicians and dancers, and provides ongoing Latin American-themed live-performance family entertainment in each store. The company spokescharacters are a gregarious family of penguins.
• Partner with others who have ties to the distinctive community. For their college scholarship program, La Curacao partnered with the University of Southern California Mexican-American Alumni Association. For an initiative that brings Latin American bands to the annual Tournament of Roses Parade in Southern California, La Curacao partnered with a local affiliate of the Spanish-language Univision TV network. Although the stores are probably best known for selling home appliances, computers, and furniture, La Curacao also partnered with suppliers of ethnic handcrafts. The company motto is “Un Poco De Su País,” which translates from the Spanish into “A Little Bit of Your Country.”

Enhance Convenience via Teammates

Some Winn-Dixie supermarkets now sell bus passes and debit cards. Plans are to let customers pay their utility bills while shopping.
     If you follow the trend to offer added services like Winn-Dixie is doing, you can enhance convenience for customers. But here are tips from a consumer psychology perspective for succeeding in this type of strategic partnering:

• Choose categories of products and services that your shoppers are likely to expect to see and for which it works best to have another business be the provider. Researchers at George Mason University and Ohio Northern University pointed out how shoppers have clear rituals. So when they go to a grocery store, they’ve come to expect to see movie rentals and, increasingly, to get gasoline. Winn-Dixie delegated the movie rentals to Redbox kiosks and handled the gas sales by giving loyalty card holders a discount on purchases at Shell stations.
• With the product/service categories, team up with brands that are compatible with your target markets and store personality. The Florida Times-Union reports that Blue Cross and Blue Shield of Florida arranged to sell their health insurance cards and medical care discount cards through Winn-Dixie because of a commonality in target markets.
• Keep a local angle, especially if you are teaming up with a large business known to be headquartered in another area. This is even more important if you are yourself a large retailer also known to be headquartered in another area. Last fall, Stop & Shop and Giant Food, both of them parts of Dutch conglomerate Royal Ahold, announced that Starbucks kiosks in a number of stores would be replaced with another coffee supplier, Dunkin' Donuts, whose home is Canton, Massachusetts. That's much closer to the Stop & Shop/Giant stores than Starbucks, which is most strongly associated with Seattle.

Introduce Unknown Products with Charity

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

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?

Consult Mirror Neurons with Vendors

Sometimes when you’re meeting with a vendor’s sales rep, you’ll have an intuitive uncomfortable feeling about the person or situation. These striking judgments almost always occur within the first few moments. Research indicates that if you’ve an abundance of experience dealing with sales reps, the quick judgments like this often pay off. They are good signals of whether you should continue working with the rep or the supplier. Overall, you’re best off dealing with vendors and sales reps you’re comfortable with from the start.
     But your discomfort might be for reasons which have little to do with the capabilities of this sales rep to help you achieve profitability. For instance, maybe it’s only that the clothes the sales rep is wearing seem wrong for the meeting. Or maybe the sales rep looks like an older version of a rival or bully from your high school days.
     How to tell if the discomfort is reason enough to stop dealing with the sales rep? According to some neuropsychologists, there are special cells inside your brain that might prove valuable. Those brain cells are called mirror neurons. Mirror neurons have also been called empathy neurons. Their role is to produce inside us what’s being experienced by the person we’re interacting with. Mirror neurons were first described by researchers at Italy’s University of Parma.
     Identify the negative emotions you began to experience as soon as you started talking with the sales rep. Fear? Insecurity? Impatience? Then do what you can to produce within yourself the kinds of emotions you’d like a sales rep to have: Courage, confidence, and patience, for example.
     If this empowers the sales rep’s mirror neurons to duplicate those desired emotions, you might be on your way to building a profitable partnership. Otherwise, you might want to trust that first intuition.

Lead with Your Retailing Knowledge

Do you make use of opportunities to lead by sharing your retailing knowledge with your staff and to have your staff members share their knowledge with each other? Here’s a reminder from Making Money Is Not Illegal, Immoral or Fattening:
     “You have some very smart people working in your business and other businesses where you know the people. How many of the very smart people who really do understand the business are willing to stand up in front of the group and share the knowledge that they have? Are you willing to do that? There are retailers who say, ‘I learned the hard way, and I’ve been in this business like for a thousand years. The others need to learn the hard way, the same way I did.’ And even though they’ve been in retailing a long, long time, they are still the amateurs. Let’s all be professionals. Let’s teach others what we know. Let’s educate them, and then let’s work with them together.
     “Another angle on this: If you’ve been in retailing for let’s say, twenty years, do you have twenty years worth of learning or do you have one year of learning repeated twenty times? Amateurs absolutely stop learning. They think that because they’ve been at it for twenty years that they’ve a vast amount of experience. When you start talking to them, though, you find out how limited their knowledge is. They really have one year of experience repeated twenty times.
     “Professionals show leadership in ways that energize. Now, I’m all for constructive criticism. What did we do right, what did we do wrong, and what do we need to do to fix it? Let’s go down the road and fix it. It does none of us any good if we fail to get the problems fixed.”

Cultivate a Life Outside Your Business

Why become more profitable? One answer is that having more money gives you the security to spend more time with your family. Here are some thoughts from Making Money Is Not Illegal, Immoral or Fattening about how that cycles back to help your profitability:
     "You must grow your business, and I understand growing your business is not necessarily opening up more stores. It also can mean growing with your people, growing with your categories. You need a succession plan, and that's much easier when you are profitable. What happens when you have no succession plan, and the owner/operator passes away?
     "I was working with a retailer in California, a six million or seven million dollar retailer. I asked the retailer, 'What are you going to do with your business?' What I meant was, what would happen at the point where the owner retired. He replied, 'I don't know.'
     "That's a fairly common answer when I ask that question. I said, 'Do you have any kids?' He said, 'Yes, I have two kids, a daughter who is an Emergency Medical Technician and a son who is an engineer.' 'Why aren't they interested in the business?' 'Well, they watched their mom and me work in the business six to seven days a week year after year, and we never really had a whole lot of money, and we missed a lot of soccer games and meetings, and they just didn't want the same life.'
     "That makes sense. I wouldn't want it either. But it's a problem. When kids coming up through the business don't see the parents' business allowing them to do what they like to do and have enough time for the family, they don't want any part of it. So you want profitability for family reasons, succession planning, and more."

In Ad Group Ads, Feature Your Advantages

Teaming up with other retailers to fund a media campaign can save you money and allow you to diversify marketing dollars. But some researchers at New York University and University of Florida recommend caution. They point out the importance of your store's distinctive advantages being featured in the advertising.

      The researchers looked at what happens with generic ads designed to promote consumption of an entire product category. Examples include the Florida Citrus Board's ads for orange juice and the Midwest Dairy Association's "Ah, the power of cheese" campaign. Generic advertising intends to increase overall demand, but not selectively favor certain members of the advertising group funding the ads.      However, the researchers found that this objective was often not met. When the generic ads for orange juice emphasized nutritional advantages, this helped the Albertson's store brand more than it did the premium Tropicana brand. The effect was the other way around when the generic ads emphasized the value of good flavor.

      An assumption behind ad group advertising is that the value of the featured advantage—such as nutrition or flavor—will grow in the consumer's mind, while the importance of the other advantages will not be disturbed. Talking about nutrition doesn't decrease the value of flavor for the consumer, it's said. But again, the research disproves the assumption. An ad highlighting nutrition will lead to the consumer placing less value on other attributes, such as flavor.

      When it comes to retailer advertising groups in which you participate, restricting the ad messages to characteristics all members have in common might not be realistic. Instead, solve the problem by being sure funds are allocated in a way that allows for a set of advertising messages, not only a single message. Different ads can feature different distinctive advantages of the ad group members' businesses.