Hear the Language of Your Shoppers

In AAMCO’s “We Hear You” commercials, people describe their car problems to the AAMCO technician by imitating the noise the car is making. The notion is that this retailer can diagnose your needs, whatever language you’re using.
     A few years ago, I was praising the owner of a San Francisco hardware store located in a neighborhood with many Spanish-speaking residents. “You put a lot of attention into ensuring that your sales staff are fluent in both English and Spanish,” I said. He nodded and then replied with a smile. “I also want them to be fluent in sign language.”
     “Oh, do you have lots of deaf customers?”
     He pointed his two index fingers directly at me, the fingers about three inches apart. Then he began to rotate each finger in an up-and-down circle. “No, not a lot of deaf customers. But we do have a regular stream coming in and telling us things like, ‘I need a replacement part for my ceiling fan. It’s about this long and turns around like this.’ To work in a hardware store, you must understand sign language.”
     Often, those accompanying a shopper on the trip can serve as translators, or at least encourage the shopper to state needs and wants in a range of ways. This is one of the many reasons to tempt customers to shop with you in groups. You’ll benefit from what you hear them talking about. Snoop on the chatter.
     At the same time, keep in mind that you might misinterpret a group’s messages to each other. Researchers at University of Illinois-Urbana-Champaign had thirty students with a music education major and thirty students with a physical education major read a longer version of the following story:

They couldn’t decide exactly what to play. Jerry eventually took a stand and set things up. Karen’s recorder filled the room with soft and pleasant music. Finally, Mike said, “Let’s hear the score.” They listened carefully and commented on their performance. 

     The music education students tended to believe the story described a rehearsal session of a woodwind ensemble. On the other hand, the P.E. students were more likely to say this was a description of playing card games.
     At the end of the latest AAMCO “We Hear You” spot, the guy punctuating his description of car troubles with strange sounds then explains to the puzzled technician that he was just clearing his throat.

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Recommend Items that Look Like Purchases 
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Demand Accountability in Contributions

Asked by journalist Matthew Bishop if he’d someday like to be on a SpaceX ship to Mars, the founder of SpaceX, a 40 year-old Elon Musk, replied, “I’d like to go to Mars. Absolutely. I think it would be great to be born on Earth and die on Mars. Just, hopefully, not at the point of impact.”
     Mr. Musk wants to have a lifetime impact, however, through philanthropy. Mr. Bishop’s interview of Mr. Musk occurred at a Giving Pledge meeting which also included Warren Buffett, Bill and Melinda Gates, Ted Turner, Steve and Jean Case, and Pierre Omidyar. Mr. Buffett reported there that 81 people had so far signed the Giving Pledge, promising to donate at least half their wealth.
     With conditions. According to an article about the meeting in The Economist, those conditions are that there be accountability for how the money is used. A hot topic at the gathering was something Mr. Case called “impact investing,” to refer to philanthropy which does good while making profits. A more general theme was to emphasize the difference a donation truly makes over how much is donated. A more specific theme was the value of private-public partnerships in making a difference.
     I expect that few small to midsize retailers are in a financial position to be invited to the next Giving Pledge confab and asked to learn about contributing half their wealth. Still, I also expect you will be in a position to contribute to your community and beyond. So please think about impact investing. How can your contributions make the most profitable difference? How will you know what difference they’ve made and how profitable that difference is?
      Demand accountability from the programs to which you make contributions. Ask, “In what ways is it working, and how well is it working in each of those ways?” The answers to these questions are more fruitful than the answer to, “Is it working?” That question is too simplistic. The answers to the more complex questions give you an understanding of the “why,” not just the “what.” This allows for the perpetuation and improvement of programs. The spirit of impact investing is sustainability. By making a positive difference in easily identifiable ways, funded programs can persevere.
     All this is more likely when your contributions are to specific programs as proposed by the nonprofits rather than to organizations for use however they choose.

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

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Donate In Ways that Encourage Others to Donate 
Evaluate Buyer Psychology Tactics

Craft Powerful Stories

Want to convince me to purchase an appliance maintenance contract from you? Tell me true stories.
     A set of researchers at Ohio State University wanted to compare the effectiveness of narratives and statistics in influencing consumers' opinions. In one study, they asked participants to estimate how likely it is that a refrigerator they might purchase would break down at some point. Before stating the estimate, each participant was told they'd be given information to help them with the task. For one group, the information consisted of stories told by consumers about the times they'd had to deal with a refrigerator breaking down. Participants in the other group were given actual statistics about the frequency of appliance breakdowns.
     Frequency estimates from the group who were told just the stories averaged about one-third higher than did the estimates from the group given just the statistics. The stories of trouble led the consumers to exaggerate the actual frequency of trouble. As a general rule, narratives are more influential—and more memorable—than numbers.
     What makes a story most powerful? Researchers at National Tsing Hua University, National Central University, and Wistron Corporation, all headquartered in Taiwan, isolated four characteristics:

• Authenticity. Make the story believable. Keep the important details the same each time you tell the story. Reports of outrageous outcomes in bizarre circumstances aren’t influential. 
• Conciseness. Keep it short. Make the point of each story crystal clear. 
• Reversal. Use contrast in your story. Good versus evil. Natural versus artificial. 
• Humor. This heads off mental counterarguments. The shopper is too busy chuckling to challenge the points of your story. 

     The relative importance of these four characteristics depends on the type of product or service you’re selling. The researchers distinguished “search goods” from“experience goods.”

• Search goods have features, the value of which can be relatively easily assessed before purchase. A refrigerator is a search good. Conciseness and humor add power to stories about search goods more than to stories about experience goods. 
• The value of an experience good’s features is more difficult for the shopper to assess until it’s been purchased and used. A maintenance contract for a refrigerator is an experience good. Authenticity and reversal are especially important in stories about experience goods. 

     Consumers do like to be shown product specifications. Give shoppers those specifications, then lock in evidence of advantages using great stories.

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

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Wean Consumers Off Coupons by Force Feeding

Consumer behavior research gives valuable insight when interventions fall short. We can then decide what to do next. An example is the failure of J.C. Penny Co. to meet its goals under the leadership of Ron Johnson.

• Same-store sales dropped 19% from the corresponding quarter in the prior year
• Weekday store traffic was down 9%, and weekend store traffic down 12% 
• Internet sales dropped 28% 

     Among the changes championed by Mr. Johnson: A switch away from coupons. Instead, J.C. Penny moved to an Everyday Low Price (EDLP) strategy. This made sense when looking at the fact that less than 1% of J.C. Penny’s revenues were coming from items purchased at full price.
     However, the cold-turkey withdrawal didn’t make sense when considering the psychology of the coupon shopper. The relevant research concept is “pricing tactics persuasion knowledge” (PTPK). This refers to the understanding a consumer has about how retailers use pricing tactics to influence the consumer to buy. 
     Researchers at Georgia State University and University of Leeds found that consumers who are prone to use coupons have low PTPK. Overall, these shoppers don’t appreciate that EDLPs could result in savings equal to or greater than that obtained with coupons. They enjoy the excitement of using a coupon for a discount as much as, or maybe more than, saving the money.
     The Georgia/Leeds researchers also analyzed consumers who are low on coupon proneness and high on value consciousness. These consumers had good PTPK. They were much better skilled in figuring out what pricing tactic the retailer was using to tempt purchasing. These shoppers also appreciated why the retailer was using the tactic and could calibrate what difference it really made. And those with the good PTPK were confident in their assessments, meaning they could avoid defensiveness when it was advisable to change their opinions. The coupon users stayed locked into their addiction.
     If you choose to move away from issuing coupons to promote sales, recognize that there will be consumers who are high on PTPK, and will therefore pick up on the other ways you’re delivering value to them. For your shoppers who are high on coupon proneness rather than PTPK, you’d need to assertively and continually pump into them evidence of that value.

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

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Clip Mistaken Notions About Coupon Users
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Promote Promotional Pricing over EDLP 
Watch Ron Johnson

Turn Comparisons Right Side Up

Suppose you have two items on sale: An item you usually sell for $95.99 is now discounted to $75.99, and you’re discounting a $35.99 item to $15.99. In each case, the savings to the buyer is $20. However, the percentage discount on the $95.99 item is about 21%, while on the $35.99 item, it’s closer to a whopping 56%!
     Whether you present the price comparisons in a horizontal or vertical format affects whether the shopper is more likely to think of the absolute value of the discount—the $20—or of the percentage discount. According to researchers at Clark University, a horizontal arrangement, like the top example in this posting, nudges the consumer to think about the $20 off for both Items A and B. This would make the two items seem equally attractive from the perspective of added value because of the sale price.

     Now rotate the table so it looks like the second example in this posting, and the consumer’s mind will turn toward considering the percentage of the discount, and away from the absolute dollar amount. People are generally poor in calculating percentages, but almost all will be skilled enough to realize that the sale on the $35.99 item is a better deal.
     The orientation of information in the shopping environment makes a difference in the shopper’s mental orientation. For instance, immediately to the right of a deeply discounted item, have products priced for a healthy profit margin that are natural accompaniments to the deeply discounted item.
     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. Not up and down. 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?”
     And our brains perceive horizontal size along a different scale than vertical size. This can be seen most dramatically in young children. Swiss psychologist Jean Piaget would pour liquid from a short, squat glass cup into a tall, thin drinking glass. The preschoolers watching would insist that the quantity of liquid was now greater than it had been before.
     To best serve yourself and your shoppers, turn comparisons the right way.

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Keep Your Eye on Merchandising to the Right
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Fill In Blanks Positively With Consumers

Who is most likely to vote against Mitt Romney due to negative portrayals of Mr. Romney’s Mormon faith? Someone who…

• Has a Mormon family member or close friend 
• Has only a Mormon co-worker or neighbor 
• Doesn’t know any Mormons 

     In a recently published study, researchers at University of Notre Dame, University of Akron, and Brigham Young University conclude it’s the second group. The first group—those who have close, long-term contact with someone who is Mormon—are informed by their personal experiences. They won’t be significantly affected by sales pitches against the faith.
     The third group can be influenced by the negative portrayals, but they are also open to being influenced by positive portrayals of the religion. They are the most persuadable in either direction.
     The second group, who have only passing contact, respond to the negative, but are largely impervious to positive counterarguments about Mormonism. The researchers attribute this to what they call the perceived “social insularity” of Mormons. The voters in the second group fill in the blanks with the negatives because they view the insularity as justification for suspicions.
     For retailers, one point of all this: Shoppers will fill in the blanks in their impressions of your store and your products using whatever information they can quickly process, so be sure you have positive information available.
     An additional point: Be abundantly clear about your interest in answering any questions the shopper wants to ask. Counteract any perceptions of insularity.
     A few other research-based points to fine-tune my advice:

• Offering to answer questions doesn’t mean the questions will come. A repeated finding in consumer behavior research is that people who know lots about a product category or know only a little about it usually ask fewer questions than the shoppers who know a moderate amount. People with little knowledge say they couldn't think of questions to ask. And those with lots of knowledge? One reason they limit their inquiries is that they fear looking like less than experts. 
• When asking the shopper to imagine product or service usage, having them fill in the blanks helps make the sale. Give the shopper the minimum amount of technical information necessary to set up the imagining. Then be ready to provide more details if the shopper asks. The power of imagining is greater when a person fills in their own blanks. Again, be sure accurate positive information is easily available. 

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