Tell Questioners Now When You’ll Answer

Should you give each of your customers a good reason to come to you with a complaint? You see, shopper psychology research finds that when a customer comes to you with a complaint and you decisively resolve the complaint, the customer’s loyalty to you gets greater than it was before the complaint.
     Beyond the first complaint, though, loyalty starts to fall apart. Fortunately, you don’t need to cause complaints in order to gain a distinctive advantage. Accomplish it by encouraging other inquiries from customers and then responding promptly. However, researchers at lead management supplier InsideSales.com, Harvard University, and Korea’s Sungkyunkwan University are saying that retailers fail to respond quickly enough to inquiries. They looked at internet contacts that could turn into leads for B2C (business-to-consumer) and B2B (business-to-business) sales. Let’s start there and then see how it applies to in-store contacts.
     The researchers reported results from an audit of 2,241 U.S. companies. About 35% of the companies responded to inquiries, on average, within one hour, but more than 45% took more than 24 hours to reply. The average response time to online inquiries was 42 hours. That’s understandable when you consider the likely reasons behind the finding:

• Availability of internet inquiries at any time, but lack of knowledgeable staff around the clock and calendar
• The time consumed in referring the inquiry to the right person in the business to reply
• Allowance of time for the consumer to look over materials they’ve already received and for the retailer to prepare a knowledgeable reply

     It’s understandable, but the effect is a striking loss of potential for profitability. U.S. firms that responded to inquiries within one hour were about sixty times as likely to move clearly toward a sale than those waiting 24 hours or longer.
     Respond to internet inquiries with immediate internet acknowledgements that include an estimate of when you’ll be back with a substantive answer. Make it as soon as possible. Then keep to the commitment.
     With in-store inquiries, use the same guidelines. If you don’t know, say you’ll find out and tell the customer now when you’ll get back to them. Encourage the person to shop for their other needs. Arrange to meet the customer at another part of the store. If it will take you more time than their shopping trip, ask how you can get in touch with them by phone or e-mail.

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

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Segment Your Data for Profitable Conclusions

A Bloomberg Businessweek article this week takes note of how managers are increasingly slicing and dicing data in order to identify opportunities for improving profitability. For instance, instead of looking at consumer survey results for all respondents together, you might pull out the results for all respondents who report a household income greater than $100,000 and say they are grandmothers interested in giving your product to a girl under the age of 5.
     To do such segmentation, you’ll need to think out in advance what criteria you might be using. If you didn’t ask respondents for household income, grandparent status, or age and gender of intended gift recipients, you won’t be able to segment the results for the example I used.
     A tag line from consulting firm dunnhumbyUSA is, “Average customers don’t exist. Success lies in knowing individuals.” Based on that advice in the past, grocery retailer Kroger, probably the best known dunnhumbyUSA client, segments the data gathered from Kroger frequent shopper programs in order to customize promotions and rewards.
     The tag line serves well to remind us to personalize our interactions with customers and avoid preconceived stereotypes. Still, for most retailers, it’s helpful to place customers into groups rather than require ourselves to think of each shopper as wholly unique. Consumer Generated Ads (CGAs) are great, but few retailers currently would aim for having a separate media ad for each potential customer. And staff training about servicing customers is possible only if we place people into groups so we can talk about them.
     The division probably best supported by consumer psychology research is into promotion-focused—consisting of shoppers looking to enhance their current situation—and prevention-focused—consisting of shopper wanting to avoid losses. Another popular grouping is into Mission Shoppers—who burst into your aisles looking for a specific item or for advice on solving a specific problem—and Possibilities Shoppers—who stroll the store considering what they might buy now or maybe during a future visit.
     Whatever categories you use should reflect genuine differences important in you improving your profitability. How to determine that? A statistical technique called “cluster analysis” and its cousin, named “discriminant analysis,” can accomplish this when used by experts working in collaboration with you. Applied to a matrix of customer response measures—such as item selection, point-of-sale data, and questionnaire answers—cluster analysis and discriminant analysis can help you identify the best groupings.

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Speak Languages of Mexican-American Consumers

The consumer behavior researchers from Texas State University-San Marcos and Practica Group, LLC say Isabel, a Mexican-American grandmother, illustrates their message to retailers: In her kitchen working under a picture by American artist Norman Rockwell portraying the American holiday of Thanksgiving, Isabel cooked scratch tortillas on her earthenware griddle. Wearing her apron glorifying the state of Texas, Isabel told the researchers she considered it very important that her children know how to competently speak Spanish. When the researchers asked why, Isabel answered that this skill would enhance their employment opportunities in America.
     Isabel is an example of how most Mexican-Americans straddle two cultures in their consumer behavior. They aspire to assimilate into American society, but that assimilation is slowed because Mexican-Americans often stay in Mexican-American neighborhoods. Marketing experts at Heinrich Hispanidad speculate that, for the foreseeable future, Spanish is likely to be preferred over English among Mexican-American consumers.
     Almost two-thirds of Hispanics in the U.S. are Mexican-American. Researchers at Baruch College and University of Wisconsin-Milwaukee studied what happened to bilingual Hispanic women as they switched between speaking English and speaking Spanish in American settings, like stores. The women felt more assertive when speaking Spanish than when speaking English. And when these women read Spanish text, as might be used in ads or on signage, the women were more likely to think of acting independently and taking educated risks. An assertive willingness to take educated risks is the sort of thing that can lead to larger purchases and therefore more profitability for you.
     So arrange to have Spanish available for your Mexican-American shoppers. However, also speak the language of aspirations to be an American:

• Emphasize direct mailings in your marketing mix. While other consumers often consider direct marketing pieces to be no more than junk mail, research finds that Mexican-American consumers often welcome these marketing mailings as a tool for becoming better-informed Americans.
• Along with a selection of Mexican brands for functional products—such as for cooking Mexican cuisine—feature prestige American brands, especially for indulgence products—such as fashions and accessories. Researchers at University of Texas-Pan American and University of South Florida found that, when compared to other American consumers, Mexican-Americans exhibit more favorable quality evaluations and purchase intentions toward Mexican brands. But research also finds that compared to other consumers, Mexican-Americans are more likely to maintain loyalty to American brands that satisfy their needs.

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Keep Your Eye on Merchandising to the Right

During a retailing seminar I conducted a while back funded by the U.S. Small Business Administration, the Northwest Area Foundation, and the Iowa State Legislature, I gave a quick bit of advice which led to questions from participants afterwards: I was discussing product adjacencies—how to arrange products on the store shelves—in the situation where you’re featuring a deeply discounted item. I said that immediately to the right of the deeply discounted item, you should have products priced for a healthy profit margin that are natural accompaniments to the deeply discounted item.
     It’s the peanut-butter-and-jelly principle of product adjacencies: When you’ve assigned the peanut butter a bargain price to draw footsteps into your store, then shelve the popular jelly flavors—priced for your profitability—just to the right of the peanut butter.
     Why to the right? It’s only an overall tendency, of course. If the shopping cart is to the left or if the small child the shopper is carefully attending to has now walked in back of the shopper, it might very well be that the shopper’s eyes will dart to the left or to the rear. But when aiming for the retailer’s edge in profitability, it’s the small tendencies we’ll leverage for big profits.
     Still, why to the right? Because that’s where the shopper’s eyes tend to go the instant after they recognize that they’ve gotten a really good deal on a purchase. Our eyes move rightward when the left hemisphere of the brain gets active. It’s that left hemisphere which specializes in doing the math and telling the whole brain, “Hey, we saved some real money here!” and gets more likely to ask, “Are we ready to splurge?”
     The fact that the left and right hemispheres of the brain process information differently can also be used to introduce featured products as a shopper enters your store. Have a display of one package of each of the featured products to the left of the shopper as they come on in. Have signs with brand names in large letters and very brief statements about product benefits on the right side of the customer who is entering.
     Product shapes and brand name fonts influence purchasing when they come in from the left side of the eyeballs. The brand names themselves and very brief product benefit claims are most effective when caught subconsciously from the right side of the eyeballs.

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

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Change Up How You Do Business

In the New Yorker cartoon, the devil himself is standing behind the host station at the entrance to Hell, preparing to write on a clipboard as he asks the new arrival, “And lastly, for all eternity, French, blue cheese, or ranch?”
     How hellish it would be to endure the same routine forever. We all like variety. People buy more jelly beans when they’re offered an assortment of colors. This is true even if all the different-colored jelly beans taste exactly the same. After reviewing fifty experiments involving more than 5,000 people, researchers at University of Basel in Switzerland, University of Mannheim in Germany, and Indiana University in the U.S. concluded that the more choices for the shopper and for the retailer, the better.
     However, although retailers like variety, many are too slow to initiate the changes in habits that variety makes possible. Are you one of those retailers? Do you feel as if you’re already being forced to accommodate enough changes without introducing more. Do you adhere to outdated habits because you find it hard to squeeze out the time just to sit and think, let alone strategically plan for change and then initiate the changes?
      Well, when handled correctly, our anxiety can make us more open to change. Here are some tips on doing it right:

• Researchers at University of Minnesota, Emory University, and George Mason University suggest that you determine where you want to end up, and if this ending point is quite different from where you are now, then introduce at least one intermediate step. If you currently sell paint and you want to end up adding draperies, consider introducing wallpaper first. If you plan to phase out your entire stock of draperies, reduce the product assortment for a while before eliminating the product category completely.
• It’s the changes we see as monumental which freeze us up. Research at UCLA, University of Cincinnati, and Miami University indicates that you can make an extreme change seem like a moderate change by stopping to notice ways in which the new is similar to the old.
• Pace the change to fit your culture. Research indicates that people who identify with individualistic cultures (U.S., Canada, Australia) welcome more rapid changes than do consumers who identify with collectivist cultures (Turkey, Greece, China).

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

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Tamp Down Fear Points If Selling to Suppliers

My thanks to the RIMtailing blog readers who participated in my “Profitable Pricing Tactics for Small Retailers” webinar last week.
     During the webinar, I was asked about setting a higher price for a product or service that relieves fear for purchasers. Here’s a more complete answer than I gave at the time:
     Never overlook the value of a good scare. However, raise the fear because you’ve a product or service to offer that will substantially reduce the worry. Unless the customers come to believe that you’ve a remedy, many will ignore the risk in order to make the fear go away.
     Other customers won’t ignore the risk. They’ll stay afraid and become quite irritated with you for getting the fear started. Either way, you’ve lost a sale. Raise enough fear of a real danger to win the customer’s attention, but only to the degree that you’ve a guaranteed way to substantially reduce the risk. Don’t oversell.
     This point took a different tack because of the specifics of the question from my webinar participant. The participant wants to decide on pricing for a monitoring device which will reduce the possibility of residential damage, and therefore reduce the homeowner’s fear. The participant plans to sell the device to insurance agents and insurance companies, who would then, in turn, sell to the homeowners.
     Here, the fear appeal should take two channels:

• The people doing your selling will benefit by you providing them marketing materials and sales scripts that dramatize the true dangers and show how what you have available can ease the worry. As long as you’re proposing the remedy, the degree of fear arousal can be relatively high. With the damage prevention device, you might talk of the average dollar cost and the emotional costs to a family when their home is severely damaged.
• Those people doing your selling also will be motivated by fear you arouse in them. But tamp down the degree of fear you aim to arouse in your sales reps. Otherwise, their emotions will blind them to how to best craft fear appeals to their customers. The insurance agents could be reminded that unless they succeed in selling this sort of device to the homeowner, the insurance company underwriter might not approve the policy, thereby depriving the agent of their sales commission.

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