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

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

Flatter Shoppers with Care and Caring

Professors Elaine Chan and Jaideep Sengupta at Hong Kong University of Science and Technology decided to measure the power of phony flattery. The Chan/Sengupta findings were startling enough that they’re being described now in many publications and blogs, including an item in Harvard Business Review. Unfortunately, almost all the descriptions I’ve read are misleading for retailers because important details are omitted. I’d like to highlight for you what was really discovered.
     In the study, prospective clothing shoppers were given a flyer advertising a department store. The flyer read, “We’re contacting you because you’re fashionable and stylish,” and then asked the shopper to visit the store.

• It would seem that such obviously insincere flattery would at best amuse a shopper and at worst irritate them. But surprisingly, due to the flattery, shoppers rated the store more highly. But not all the shoppers did. More about that in a minute.
• In a second experiment, participants were offered a discount coupon from the store that gave the flattery or from a store whose flyer offered no flattery. About 80% of shoppers chose the coupon from the phony flattery store. But only under certain conditions.
• In the third experiment, flattered participants were told that the store charged especially high prices and had a restricted range of clothing. Even when confronted with these negatives, participants held onto their positive views. Unless they did a certain thing first.

     Here, then, is the rest of the story:

• In the first experiment, the phony flattery had the clearest effect when participants were told they had only five seconds to respond to each question about how much they liked the store.
• In the second experiment, the 80% figure was from shoppers who chose the coupon three days after reading the phony flattery. For those who chose the coupon right after reading it, the figure was only 54%.
• In the third experiment, the negative information did push the ratings toward the negative if the participants, before receiving the phony flattery, were made to feel good about themselves by writing about a positive trait.

     With customers hungry for self-esteem, phony flattery can facilitate sales. This works best if the customer is distracted from thinking about the flattery having been phony, such as by being rushed or making a selection after some time has passed.
     But for best long-term results, give genuine praise.

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Build Self-Esteem of Your Teen Customers
Respect Customers Who Claim Expertise
Preoccupy Shoppers for Indulgent Choices

Respect Zipf’s Law

Some questions to get you thinking:

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

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

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

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

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Keep Creating Advocates for Your Business
Integrate Multiple Shopping Channels

Expect Shoppers to Expect Nonexistent Discounts

“Opulence. I has it. I like the best…. But I also like savings zee money.” So speaks the Russian rich guy in a DIRECTV video ad. And that brief monologue nicely reflects what you should aim for now with the segment of your target markets suffering recession fatigue. Offer them a sense of luxury, but in a way that they feel they’re getting extraordinary savings.
     Then they may very well want to brag about the savings, even if this means lying. Researchers at University of Alberta, University of Calgary, and University of British Columbia concluded that when people believe they might have been able to wrangle a better deal on a product or service, this conclusion leads to them feeling a threat to their self-esteem and their self-image. They fear not only that others will see them as being suckers, but also that they’ll see themselves that way.
     The researchers found that people are especially likely to lie to coworkers about the good deals they got. Since a natural follow-up question from a coworker is, “Where did you get such a good price?,” you—the retailer—might expect some people to come into your store these days looking for discounts you’re not offering. They were lied to.
     How nice to have them come to your store! So be ready to turn confusion about pricing into conviction to make a purchase from you:

• Have each employee on your sales floor and at the checkout area carry copies of your store’s current ads and discount announcements. If a customer thinks the ad said something different from what it really said, it’s quick and easy for the employee to straighten out the problem. Having the ad itself takes it away from being customer versus store employee. There’s the objective source both of them can look at.
• Offer the shopper an opportunity to purchase merchandise that is actually on sale. The sale should be on what the skeptical shopper will find attractive. If the discount is on merchandise different from what the shopper believes was offered in a bigger sales event, the amount of the discount does not need to be as deep as what they had in mind when they entered your store. They feel they’ve still gotten a good deal.

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Stand Ready to Sell Luxury
Head Off After-Order Regrets
Have Staff Carry Copies of Store Ads
Follow a Big Sales Event with a Smaller One

Spot Values by Asking Shoppers for Reasons

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

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

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

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