Turn Competitors into Partners

In Making Money Is Not Illegal, Immoral or Fattening, my coauthor Art Freedman describes how a group of owners of Ace Hardware stores changed from viewing themselves as competing for customers to viewing themselves as partners. Here's a reminder of that story, which you can read in full starting on page 5 of the book:
"There are actually 58 of us, and we work very, very closely together. I'll tell you what brought us together, and I'll tell you when it brought us together. In the 1990's, Home Depot was hammering away at us. They were absolutely killing us, and what brings independent hardware dealers together? Fear. We were scared to death of what was going on. The independents were disappearing, the True Values were disappearing, we had some of our own stores disappearing, and we didn't know what was going to happen.
"So we came together. It was a Friday afternoon. There were eleven of us in that room. We sat around the table, and by the way, most of those eleven people who sat together at that table are still very close, very good friends, even these many years later. We sat together and looked at each other and said, 'What are we going to do?' Then we started marketing together, we started doing all of our advertising together, we started trading information together, and it really was clearly us against them. This is the day we went from being competitors to being partners.
"We've done better than many others. Ace Hardware Corporation has been very good at wholesale and good at helping their retailers at retail, but Ace retailers had been falling off the earth every single day. Our coming together in the Sacramento area worked tremendously for us, and maybe it could work tremendously for you."

Slow Switching by Asking About Prior Choices

Most shoppers are tempted to switch brands and locations from time to time for no reason other than that all people seek variety. If we want to introduce the customer to a new brand in a category, their interest in switching is fine with us.
     However, if the brand the customer has been buying delivers good value for the customer and the best profits for us, we'd prefer to at least delay the brand switching, even if we can't completely eliminate it. And if the drive for variety consists of the customer switching their spending to a store other than ours, we'd like to do our best to stomp out that foolish idea.
     Research findings from Carnegie Mellon University, University of Minnesota, and New York University suggest that we can slow down switching by encouraging variety-seeking customers to think about other alternatives they've already tried.

• If the shopper talks about purchasing a different brand "to break out of my routine," we could ask, "What are some of the other brands you've used in the past, and what convinced you to start using the brand you're using now?"
• If the customer is talking about holding off on a purchase so they can try out a store that opened recently in the area, we could ask, "What are some of the stores you've shopped at before or in addition to shopping here, and what about our store keeps you coming back?"

     This technique is an example of how what we do might make us money for a combination of reasons. The customer's answers to these questions not only provide "virtual variety," but also give us the chance to find out what is important to this individual shopper and then use this information to make our case for the shopper forgetting about switching.

Start Your Shoppers Feeling Yes

A while back, my sister Enid showed up at the doctor's office for a sigmoidoscopy. As Enid checked in, the clerk asked for identification. Enid handed over her health plan card. "I also need a picture ID," said the clerk. "You mean," asked Enid as she produced her driver's license, "there are actually people who try to sneak in here to have a two-and-a-half-foot tube with a video camera and set of clippers run up their rear end?"
     If it weren't for the value of a sigmoidoscopy in heading off colon cancer, we'd find it easy to say no to doing it. Even realizing its value, too many people say no. That's a major league version of the ways in which retail store customers might resist saying yes to purchases that would be of great value to them. They say no because the purchases involve expense, bother, or risk.
     Maybe there's a way to help with this. A way that involves a large body part at the other extreme from the rear end. Consider please what happened when I went in to sign the authorization for my own upcoming screening sigmoidoscopy. Unlike many permission slips I've read, this one was written in three columns on the sheet. As I read from top to bottom to top through the columns, I realized I was slowly nodding my head. That reminded me of findings from an International University Bremen study. 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.
     This works only with shoppers from cultures that associate nodding with agreement. With those shoppers, spiral in on the sale by asking the right questions and nodding your own head to generate feelings of yes.

Consider Publicizing Your Rascal Image

How would you explain the unexpected outcome of that auction held at the Sheraton New York Hotel and Towers in Manhattan November 14? News about the auction was in all the papers. It's the one where items seized from convicted swindler Bernie Madoff and his wife by the United States Marshals Service went on the block. A blue Mets jacket, looking very much the same as many other blue Mets jackets, sold for $14,500. A pair of earrings for which the maximum expected bid was $9,800 actually sold for $70,000.
     There are retailing lessons in the entire Madoff episode. For instance, a St. Louis businessman who successfully bid on bracelets for his granddaughters said his message to go along with the gift will be, "If it's too good to be true, it's not right." Remember that epigram when dealing with your vendors.
     Another set of lessons applies to publicity. Oscar Wilde, the Irish poet and playwright, wrote, "There is only one thing worse than being talked about, and that is not being talked about." My explanation for the unexpectedly high bids on the Madoff items is that 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, publicize how your business tests the limits. Tell people about your rascal retailing image.
     Still, there are limits on our fascination with testing limits. In general, consumers prefer not to think about conducting retail transactions with convicted criminals. One of the items that did not fetch more than was expected in last Saturday's auction was a Rolex watch which got its nickname because it was sold on credit to a British POW during World War II. The nickname was "The Prisoner Watch."

Deal with Compulsive Shopping Disorder

Does your store take measures to help customers who suffer disabilities? How about accommodating wheelchairs and holding special shopping events for people with intellectual impairments? Well, what if the disability consists of a compelling urge to keep on buying products or services in self-destructive ways? That problem is called Compulsive Shopping Disorder.
     People with CSD tell researchers things like, "It's not that I want it, because sometimes I'll just buy it and I'll think, 'Ugh, another sweatshirt.'" and "I couldn't tell you what I bought or where I bought it. It was like I was on automatic." Does it sound like an addiction? You see, people with the disorder often recognize something's terribly wrong with them.
     Compared to your other customers, they are less likely to pay their bills and more likely to return items. Those are a couple of the reasons retailers should care about CSD. In addition, there are mental health professionals who want CSD to be added to the American Psychiatric Association's Diagnostic and Statistical Manual (DSM). If this happens, the legal obligations for retailers might increase. Think about how judges have held bars responsible for keeping patrons from drinking alcohol to excess and how Harrah's casinos post notices reading " Gambling Problem? Call 1-800-522-4700."
     I'd never suggest to a retailer that they refuse to sell an item to a customer because the retailer suspects the person has CSD. But I would suggest that you and your staff refrain from sales pressure on customers who seem to be struggling to keep from buying while they're emotionally upset.
     Have I convinced you to think about ways to handle customers who show signs of CSD? Okay then, let's move on to DSM diagnosis 312.32, Kleptomania, characterized by, "the recurrent failure to resist impulses to steal items…." The poor dears.

Have the Right People in Place

Art Freedman and I were very fortunate to have the foreword to our book, Making Money Is Not Illegal, Immoral or Fattening, written by Murray Armstrong, the president of Ace Hardware International. In what he wrote for the book, Murray brought some lessons he'd learned from others:
"I like the writings of Jack Welch, former chairman and CEO of General Electric, because of his practical, no-nonsense approach to business. He shows us how sticking to the fundamentals is important. He reminds us that one of the top fundamentals is the people. Art Freedman says, 'The older I get, the less I need to know and the more I need to know who does know.' Jack Welch wrote, 'My main job was developing talent. I was a gardener providing water and other nourishment to our top 750 people.' Then Mr. Welch added, 'Of course, I had to pull out some weeds, too.'
"Have the right people in place and see that those people have the right resources to do their jobs. In his best-selling book, Good to Great, organizational researcher Jim Collins wrote about 'getting the right people on the bus.' In retailing, we must have the right people and manage to their strengths.
"This means having enough people. Retailers always want to keep down headcounts because staffing is such a large part of expenses. But you cannot shrink yourself to greatness. In tough times, you need to take a couple of steps backwards, but be sure that over time you always keep still moving forward."
Murray then finishes his foreword with words to reinforce the book's finish and, as it happens, what I might say about this RIMtailing blog: "Allow me to send you on by saying, 'Go to it now and start reading about how to make more money.'"