Increment Your Profitability Margins

In my experience, retailers pay too little attention to the margins. Yet it’s at the margins where many profitability opportunities reside.

• In pricing, profit margins, not the prices themselves, are what pay the bills. Therefore, monitor those margins and adjust them at regular intervals. Remember to drill down as close as you can to the SKU level rather than set the same margin for all items in a class. Dissect the product class. For some items, you’ll need to set minimal margins in order to keep footsteps coming into the door. Where are the opportunities to compensate for that by raising the margins on other SKUs? For example, setting relatively higher margins on multifunction merchandise actually increases product credibility. 
• In employee selection, look for the ways in which certain candidates have marginal strengths compared to the others. Yes, all employees must meet minimal standards, such as having retailing skills and showing mastery of safety procedures. But if you’ve a number of applicants, the decision making is more likely to be valid if you focus on the margins—the distinctive strengths. 
• In employee coaching, continue to focus on the strengths. The changes most likely to succeed for a retailer are gradual and based on the retailer’s existing strengths. When you’re scheduling employees, when you’re considering employees for special assignments or promotion, when you’re needing to lay off employees, you’ll look at the margins again. What are the distinctive assets and liabilities of each individual? 
• In day-to-day management, notice the exceptions. This tactic is at the heart of Total Quality Management. A retailer doesn’t have the time, mental energies, or other resources to monitor everything at once. You must master the skills of selective neglect. You can get it all done, but almost surely not all at the same time. So set clear expectations of how things should be going and then monitor for the marginal deviations. Those will draw your attention. This doesn’t mean to become preoccupied with the exceptions in ways that immobilize you. Take action assuming what’s true most of the time, not on the expectation of exceptions. Then correct as you progress. 
• In your management strategy, always be seeking the retailer’s edge. What distinguishes your store from the countless alternatives your target consumers have for spending their money and time? 

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

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Drill Down to Do Item-Level Pricing 
Set Healthy Margins on Multi-Solution Products 
Base Your Changes on Your Strengths

Twin the Shopper Subtly to Double Rapport

Researchers at Université de Bretagne-Sud observed customers who were asking for advice about selecting an MP3 player in a retail store. Unbeknownst to the shoppers, some of the salespeople had been given instructions which you might consider to be rather strange: Subtly mimic the shopper. In other cases, the salesperson was not instructed to mimic the shopper.
     What difference did it make? About 79% of the shoppers who were subtly mimicked ended up purchasing an MP3 player. Among those who were not mimicked, about 62% made the buy. In addition, the customers who were mimicked rated the salesperson and the store itself more favorably.
     The researchers explain this “Chameleon Effect” by saying having someone subtly mirror your behavior makes that other person more familiar to you. This relaxes barriers to trust, so you comply with the person’s requests. Such as buying an MP3 player recommended by the subtle mimic.
     A related explanation, offered by another set of research findings, is at the level of brain waves. Studies at Princeton University indicate that one distinctive tool you have in face-to-face selling is the ability to reflect each shopper’s brain activity. The researchers found that when communication between two people is at its best, the brain waves of the two people actually come to have similarities. Along with this, the listener—such as the retail salesperson—begins to anticipate where the speaker—the prospective customer—is going next in their thoughts, and can therefore better influence those thoughts.
     The enhanced understanding of the shopper boosts your powers in guiding the shopper’s purchase decisions. It works best with customers you already know, and there are significant differences among salespeople in the ability to do this sort of mindreading. But the research findings do suggest ways to get better at it.

• Listen carefully not only to the words the shopper is using, but also to their tone of voice. Watch the shopper’s gestures and their facial expressions. Figure out how they all go together so you can get good at reading the brain and mimicking the shopper subtly. 
• Be aware of when you’re in sync. The researchers say you’ll feel visceral signals letting you know you’re now tuned in. 
• You can redirect, but don’t suddenly interrupt, the shopper’s thinking, such as by finishing off their sentences. When you’re reading somebody’s mind, tipping your hand makes it seem weird, and the shopper gets guarded. 

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

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Synch with Your Shopper’s Brain Before Influencing

Prolong Opportunities for Family-Owned Stores

The sentiment transcends languages and cultures. Consider the English-language versions of these maxims:

• “Father merchant, son gentleman, grandson beggar” (Mexico) 
• “Rich father, noble son, poor grandson” (Brazil) 
• “From the stables to the stars and back to the stables” (Italy) 
• “Wealth never survives three generations” (China) 
• “Shirtsleeves to shirtsleeves in three generations” (U.S.) 

     Those were collected by investigators at Boston Consulting Group and Cambridge Advisors to Family Enterprise to flesh out the fact that only about one out of every ten privately-held businesses makes it through to the third generation.
     To persevere as a retail business owned and operated by one family generation after another requires a convergence of the right ingredients. Being in a community too small to interest a large retailer or a chain does help. Owning your own building helps.
     From a psychological perspective, there are additional ingredients. Here is what the research and retailers’ experiences indicate as ways to provide the opportunity for business longevity if you own a family store:

• Cultivate a life outside retailing. If the children grow up seeing their parents’ imprisoned by the business, unable to do what they love doing and not being with family often enough, there’s a very good possibility the children will not want any part of it. 
• Encourage the offspring to explore other careers and to work in other settings. If they return, it’s more likely they’ll bring skills from the outside and they’ll yearn to be working in the family business. 
• But maybe not. They might have returned because they can’t succeed at other work. Some years ago, I asked the adult son of a successful retailer what were the advantages of working in a family business. His answer: “Job security.” The BCG/CAFE investigators suggest you avoid the trap by requiring of family members who do return that they apply for open positions in competition with nonfamily applicants. To implement this, you’ll want to have the hiring process administered by a nonfamily manager. Otherwise, family members not making the cut could cause some clumsy Thanksgiving dinner gatherings for years to come. 
• Expect the family members to adhere to strict financial control systems. In one instance I’m acquainted with, a daughter of the owner had, over a two-year span, embezzled money out of the business to the tune of $750,000. A hit to the bottom line of three-quarter of a million dollars! Her excuse? She was taking her inheritance early. 

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

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Incorporate Family Values into Your Retailing 
Systems, Not Trust, with Family

Prefer Order Getters to Order Takers

Even after Ikea, Albertson’s, and Big Y removed self-checkout lanes, that still left plenty in retail stores of all sizes. I’m talking not only about those kiosks where the customer is left on her own to figure out what to do when the technology fails to cooperate. I’m also talking about cash/wraps where there’s a staff member standing behind the counter, but the amount of interpersonal interaction with the customer is no more than would be expected from a high-technology automaton.
     Customers do enjoy dropping by a store, taking however long they like in selecting items, and then going to a checkout counter. In tight economic times, the customer can come to tolerate barebones self-service with the rationale that they're paying less for their purchases. Retailers might agree with them, viewing barebones customer self-service as an excellent way to cut personnel costs.
     However, your profitability will suffer if you miss opportunities to make substantially bigger sales. Watch out for inadequate staffing levels and staff skills.
     Except for thieves, consumers choose to be acknowledged when they enter a store or a department within a store. Beyond that initial contact, shoppers want staff available to answer questions. Don't confuse the customer tolerating barebones self-service with the customer treasuring barebones self-service. That includes the customer’s time at the cash/wrap. They want it to be quick, but also personable.
     Coach your staff to be order getters, not only order takers. They should do this in a way that recognizes a prevailing truth: Customers like to buy, but do not like to be sold. Staff should have the skills of gently, but decisively, spiraling the customer in toward purchases that will both meet the customer's desires and boost your retailing profits.
     The order getters are skilled at helping customers recognize those desires. Order getters know not to squeeze the customer too hard, since that blocks the free, natural flow of the spiral. At the same time, order getters know not to be so loose that the spiral loses its disciplined shape.
     These same tight economic times which create a desire in customers for lower prices are also creating for employers opportunities to be more selective when hiring staff. Hire candidates who in the job interview show their skills by spiraling you into saying yes.

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

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Hire Staff Who Spiral In to Make Sales

Stress the Impact of Spreading Impressions

Retail staff often fail to recognize that how each of them interacts with the shopper influences how the shopper interprets the interactions with other staff. Let’s say a sales clerk looks up at the approaching shopper and smiles gently. If that event had been preceded by a sincere greeting from the cashier as the shopper entered the store, the shopper is likely to consider the salesperson’s smile to be sincere and welcoming. This is less likely if the shopper had received no more than a cold stare from the cashier when entering the store.
     Regularly emphasize to yourself and your staff the four consumer psychology principles which apply to the spread of staff impressions. Each of you shares the responsibility for creating the sincere welcome:

• Primacy. First impressions set the scene, especially for customers unfamiliar with your store. These first impressions include the sights, sounds, and even smells. Interpersonal interactions with staff also are covered by the primacy principle. Be sure the shopper’s first impression is rosy all round. Unless your shoppers are allergic to roses.
• Recency. When customers are asked by their friends, family, or survey researchers to recall their experiences in your store, the memories most likely to bubble up to the top are about the interactions which occurred toward the last. This is why how you handle the cash/wrap process counts for so much.
• Similarity. Researchers at University of Miami and University of Southern California explored how consumers infer the quality of service expected in settings like hotels. What’s the effect of flawed service at the front desk on the guest’s expectations when they consider using the hotel’s tour arrangements? A major factor was managerial control. If the guest sees the same manager talking to the front desk and the concierge, the guest becomes more likely to conclude that what holds true for one holds true for the other. This is a sensible assumption, to be sure. The similarity principle also holds when it comes to employee dress. If your personnel dress in a distinctive store outfit, the impact of spreading impressions is greater.
• Contiguity. The Miami/USC researchers found that when two staff members work physically close to each other, the consumer generalizes impressions from one to the other more strongly. This also applies to contiguity in time, when the interactions with one staff member come soon after prior interactions with the other staff member.

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

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Enrich Shoppers’ Sense of Community
Check That Your Store Smells Good
Know What Irritates Your Shoppers

Honor Salesmanship

As far back as Homer’s The Odyssey, retailers have been depicted as slimy, well beneath the station of those who manufacture the products: Says Euryalus to Odysseus, “…art thou such a one as comes and goes in a benched ship, a master of sailors that are merchantmen, one with a memory for his freight, or that hath the charge of a cargo homeward bound, and of greedily gotten gains; thou seemest not a man of thy hands.”
     In today’s computer-generated word clouds, “selling” has stronger associations with “tricking” than with “serving.” In the public’s thoughts, the central objective of salesmanship training is how to grab the legs of each passerby, yank them upside down, and shake hard enough to dislodge from pockets and purses every last penny and all available credit cards.
     Those perceptions are not without justification. A great many retailers do forget to keep their skills sharp and do neglect to deliver full value to the shopper. These less-than-honorable merchants probe with questions which put consumers on the defensive, polluting the well for other retailers. They fail to use questions properly in order to clarify shopper needs and desires the shopper may not have recognized.
     Respected retailers stay aware. Business researchers at Harvard University and University of Notre Dame analyzed instances in which retail businesses cheated customers. The researchers concluded that in many cases, the owners/operators did not intend to do wrong. The slippage was unintentional.
     Please stop for a moment now and bring to mind the retailers you respect. Use your talents at getting answers to ask yourself what distinguishes these individuals. Honor them, honor the best in yourself as a retailer, and honor salesmanship.
     Odysseus knew to honor the courage necessary for selling and the ability of merchants to impress others. Homer writes that, in response to Euryalus’ taunt, Odysseus looked fiercely at him and then, “leaped to his feet, and caught up a weight larger than the rest, a huge weight heavier far than those wherewith the Phaeacians contended in casting. With one whirl he sent it from his stout hand, and the stone flew hurtling: and the Phaeacians, of the long oars, those mariners renowned, crouched to earth beneath the rushing of the stone. Beyond all the marks it flew, so lightly it sped from his hand, and Athene in the fashion of a man marked the place, and spake and hailed him….”

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

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Remember to Consider Rhetorical Questions 
Ask Shoppers for Reasons to Buy 
Anticipate Ethics Slippage