Deliver Friendliness If Outcomes Are Uncertain

Smart retailers sell both products and services. Diversification is a cushion against business failure, and comprehensive product-service solutions are a selling point for shoppers.
     Retailing your services is different from retailing products, though. One difference is in how the customer decides on their degree of satisfaction, and therefore their willingness to pay more and their interest in coming back to you again. A set of consumer behavior researchers who looked into this came away with a set of suggestions for you:

• Services customers respond differently to what can be called outcome and process factors. Outcome factors include the ease of scheduling the service, the degree to which the service addresses the problem the customer defined, and the reliability of the result. On the other hand, process factors include the attentiveness and friendliness of the staff.
• With services, there is more uncertainty about the outcome of what is purchased than with products. The customer may be relatively unsure about how well the service addressed the real problem and how reliable the result will turn out to be. If the car starts making that strange noise again, the purchaser might figure the auto repair service outcome wasn’t good. Or they could figure that the service provider delivered what was least expensive for the customer given what was known at the time and it’s now time to return to see what else should be done. In these circumstances, the customer places an especially high importance on the process factors—the attentiveness and friendliness of the retailer’s staff at the time of purchase. In fact, research at The Chinese University of Hong Kong and China’s Nankai University indicates that as long as adequate service is provided, you should pay more attention to ensuring process quality than work to improve outcome quality.
• Note that the research was based in China. How do those conclusions and suggestions hold up in other parts of the world for consumers who don’t identify with an Asian culture? They hold up, but not as strongly, it turns out. A different team of researchers at The Chinese University of Hong Kong and Lingnan University in Hong Kong found that consumers in North America place less importance on the process than do their Asian counterparts. Your customers who identify with an Asian culture will tend to forgive flawed service outcomes if they have been shown courtesy and attentiveness.

Click below for more:
Define Customer Service for Your People
Tailor Loyalty Programs to Customer Culture

Arouse Lovers by Flaunting Haters

Around ten years ago, Chrysler Group—the company selling the Dodge Ram truck—paid for a marketing campaign which included hate mail about Dodge Ram drivers. Why? Well, the objective was to stimulate protestations of love for the truck.
     Reverse psychology is a risky strategy. Still, there are circumstances and ways in which you can boost profits by using hate messages to arouse love messages. At the same time, this Dodge Ram campaign was based on a succession of lies, so it also provides lessons about what not to do.
     First, the campaign’s designers set up a website on which was posted a video of a drag race won by a Dodge Ram. There was no mention of the name, only images of the distinctive grill design. The website also included invitations to set up drag races. The impression from looking at the site was that it was designed by and intended for fans of the Dodge Ram. In fact, though, it had been set up by the guerrilla marketing team.
     Next, the team starting sending letters to newspaper editors bemoaning the increase in drag racing and blaming Dodge Ram drivers for it. The letters carried the names of individuals, but had been written by the team.
     What this produced was a bold image for the Dodge Ram along with genuine, spontaneous statements of praise for the truck and its owners.
     Now consider a more honest, more recent way to go about it: Think Miracle Whip. A bland-looking spread that adds flavor and texture, but is never the lead contributor to an entrée’s appeal. So let’s add some drama with a controversy. A current Miracle Whip marketing campaign urges consumers to take a stand, posting either their love (“…not fancy-dancy elite….”) or hate (“…spreadable disappointment….”) on YouTube and Facebook.
     Track what’s being said about you on the Internet. Then judge if there are ways to profitably arouse those who love your store by flaunting extreme comments from those who say they hate you.
     A caution, though: Research at Case Western Reserve University points out that customers with complaints range from those who just want to have an “I’m sorry” up to activists who plan to go to the media or to government agencies. When one of your customers complains, assess the agenda. The Miracle Whip campaign works because the complaints are playful. Not even an “I’m sorry” is expected.

Click below for more:
Track Internet Gossip About You
Resolve Customer Complaints Carefully

Design Business Logos For Fan Enthusiasm

Tonight is the Academy Awards broadcast. Get ready to slouch on the couch and predict the winners. Just keep in mind that we’re all retailing professionals here. So don’t waste all your attention on those trivial categories for the Oscar, such as Best Picture, Best Sound Mixing, and Best Adapted Screenplay. Save some crystal ball gazing for the most important one of all. I’m talking about you judging tonight’s entry in the category of Best Adapted Retail Logo. Will it be a winner or a loser?
     JC Penny Company, which has been the exclusive retail sponsor of the Academy Awards broadcast for a decade, is using the advertising occasion to unveil their new store logo. The new design, like the former one, uses red lettering and a Helvetica font. A major change is that “jcp” appears in lowercase and in a solid-colored square.
     That box triggers a memory of the ill-fated logo change by Gap last fall. It also introduced a square box to complement the Helvetica font. In the following days, plenty of critics said the Gap logo looked like something from a Microsoft clipart library. Not at all stylish
     Keeping your store’s image up-to-date is essential, and your business logo is one clear projection of your store’s image. Still, changing your store logo is a delicate matter.

• Welcome ideas from a range of stakeholders. JC Penny invited ideas not only from design agencies, but also from the company’s employees, the art school at University of Cincinnati, and the Rhode Island School of Design. About 200 ideas were submitted.
• Use marketing research. Find out how consumers are likely to react to the changes. Based on what you learn, you might decide to unroll the introduction rather than do it all at once and everywhere. When Sun-Maid Growers of California decided to update their Sun-Maid Raisin girl logo, they used the new version in ads, but kept the older logo on product boxes.
• Listen to your fans. Tropicana Pure Premium orange juice changed logos to the new and then back again. The old one was a straw sticking into an orange. The new one was a glass of orange juice. It wasn’t that the majority of shoppers liked the old image better. It was that Tropicana soon discovered the most vehement objections were coming from their most faithful customers. You never want to offend your fans.

Click below for more:
Analyze Errors Accurately
Keep Your Store’s Dress Codes in Fashion

Rationalize Your Inventory by Pooling

“SKU rationalization” refers to a retailer regularly reviewing the inventory mix to rationally decide which items—referred to as Stock-Keeping Units—to add, which to retain, and which to eliminate. The impetus for the development of SKU rationalization methodologies was the growing body of research evidence that each consumer tends to use an infinitesimal fraction of the numerous items available. For instance, a recent article in The Wall Street Journal points out that although almost everybody uses just one brand and type of toothpaste, there are currently more than 350 toothpaste varieties available in the marketplace. Retailers can reduce inventory ordering and storage costs by stocking fewer different SKUs.
     But will those retailers still sell as much? From a shopper psychology perspective, the three biggest challenges with SKU rationalization are:

• Consumers have fortress brands. These are the ones which win deep allegiance from the consumer by becoming highly integrated into daily rituals, even quite mundane routines. Brushing my teeth doesn't feel right unless the taste of the paste and the look and feel of the tube are familiar. One source told the WSJ reporter of fears that if the retailer who supplies a faithful customer’s toothpaste deletes the fortress brand, there’s a measurable possibility the consumer will go elsewhere to look for it, and while there, buy the rest of the items on their shopping list.
• Consumers want customization. Over the past years, shopper desires have been drifting from the general to the specific, from the one-size-fits-all to the specialty and the personalized. If a retailer offers only a limited selection, the shopper will strike out to find the trendy shop.
• Consumers want choice availability, even when they will select the identical option repeatedly. People overestimate the extent to which they’ll get tired of the same types of cereals and sunglasses. They think they’ll want to make a change when, in fact, they’ll end up sticking with a favorite.

     Research findings from University of Navarra in Spain and UCLA indicate that one way to lessen these problems is to do SKU rationalization by pooling product images. In advertising and signage, use different marketing messages for the same product. This works best when combined with personalizing the face-to-face selling. Maintain pleasant eye contact in ways that are culturally appropriate, call customers by name when possible, and ask customers questions that include the word “you.”

Click below for more:
Switch Brand Selection with Shopper Anxiety
Update Your Niche Whenever Necessary
See Through Consumers’ Boredom Fears
Personalize the Selling Message
Pitch the Synergy of Multifunction Items

Number Costs and Benefits for Desired Effects

The way in which you state numbers to a shopper influences their purchase decisions. When deciding which measuring stick to use for the numbers, consider what fits your business ethics and how to best highlight selling points.

• Larger numbers can make a benefit sound better. Researchers at Ghent University in Belgium and Tilburg University in the Netherlands asked consumers to compare the advantages of a seven-year warranty and a nine-year warranty. To one group, the duration was stated as seven years compared to nine years. To another group, the identical duration was stated as 84 months compared to 108 months. Those consumers presented the months figures saw the difference between the warranties as larger than did the consumers hearing the comparison in years.
• When resources are stated as larger numbers, consumers are more willing to take risks in their expenditures. Researchers at INSEAD-France, INSEAD-Singapore, and University of Toronto found that international travelers were willing to gamble almost twice as much when the currency in which they placed their bets produced face values that were 100 times as much. This might occur when the bets—or merchandise prices—are stated in Japanese yen as compared to U.S. dollars. In a retail store, it could occur when frequent buyer points are awarded in units of 100 instead of single units.
• Statements in unexpected units increase the consumer’s interest in understanding reasons to make the purchase and distract the consumer from thinking of reasons not to buy. Researchers at University of Cincinnati, University of Indiana, and University of Twente told study participants that a candy bar would cost 100 cents, membership in a student interest group would cost 300 cents, and a tuition increase of 7500 cents was slated. The participants given this information, rather than the amounts in more conventional dollar figures, became increasingly anxious to make a purchase decision and increasingly certain of any positive judgments of the product, activity, or cost.
• Prices presented more slowly sound lower. Researchers at HEC Paris and University of Pennsylvania found that a price stated as “one forty-eight twenty nine” sounds higher than the same amount stated as “one hundred forty eight dollars and twenty nine cents.”

     But an important point to note is that after consumers are educated about these cognitive distortions from the measuring stick, the effects fade substantially.

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

Click below for more:
Have Discounted Prices End in $1.99 or $2.99
Give Shoppers a Comparison Point
Present Warranties as Insurance, Not Assurance

Give the 3/50 Project a 360

The 3/50 Project has as its tag lines “Pick 3. Spend 50. Save your local economy” and “Saving the brick and mortars our nation is built on.” The mission is to convince consumers to each select three independently owned businesses they would miss having available if the businesses disappeared, and then spend a total of at least $50 each month at those businesses.
     The project has more than 8,500 participants from more than 100 cities and has gained media attention from CNN, Oprah, Consumer Reports, and on and on.
     However, I’m not aware of any research verifying that the 3/50 Project has improved the sustainable profitability of those participants. I would not be surprised if it had little lasting effect. That’s because the premise stops at loyalty to the retailer rather than pushing for turning shoppers into advocates. When you’ve people shopping with you because of fears you’ll close the doors, obligations to be nice to neighbors, or guilt about the shoppers going to nationally-based retailers, those shoppers can turn away from you on a dime, and there go your dollars.
     Keep your focus on building store advocacy, not just customer loyalty. Store advocacy means how often and how strongly your customers praise you to other potential shoppers with specifics. Beyond “I love to shop there,” to “I get an excellent price on top-quality herring,” “Almost everyone there listens to my questions and gives me useful answers,” and maybe most important of all, “I don’t go out of my way to recommend stores to people, but I feel real good about recommending this one to you.”
     Current customers may enjoy shopping with you, but with the exception of your family and close friends, unless you work consistently and vigorously to maintain that habit, current customers are not highly resistant to giving their business to somebody else.
     The term “customer relationship marketing” is excellent shorthand for reminding us retailing professionals of the importance of every interaction between the shopper, on the one hand, and on the other hand, the staff members, the signage, the reward programs, the cleanliness of the parking lot, and more.
     The 3/50 Project encourages consumers to shop at retailers about whom they’d say, “I really like that store, so I should take the time to go there.” But give the principles behind 3/50 a full-range 360-degree look. Don’t depend on shoppers’ fears, obligations, or guilt.

Click below for more:
Build Store Advocacy Beyond Customer Loyalty