RetailSmart

Entries from January 2008

Instant Loyalty club for $0.00

28 January 2008 · 2 Comments

Most retailers toy with the idea of starting a loyalty/membership club at some stage. Some start the process; some even keep going for a while. FlyBuys seems to have been around forever, even though the program reminds me a bit of the dog that chased the bus… and caught it. FlyBuys has been hugely successful in generating unprecedented consumer data, but if Coles’ current travails (2006-8) are anything to go by, they have definitely failed to leverage such a rich resource. (Thety must be complimented on integrating it into their POS procedures though: ‘Do you have Fly Buys’ has become the equivalent of ‘do you want to have fries with that’ – long abandoned by Maccas.

A loyalty club is a concept that very quickly deteriorates from being a good idea to “it seemed such a good idea at the time.”There are two reasons for this:

1. The culture of instant gratification seems to be growing stronger, mitigating, nay, nullifying the idea of loyalty that is earned over time. This is a major challenge for all retailers and marketers to overcome – and there is no sign of it ever really changing if current trends are indicative.

2. The cost of doing/running such a program quickly escalates, especially in terms of time, to the point where the returns do not justify the investment. Unless someone in the organisation is truly passionate, and is charged with the responsibility and given the freedom to pursue such an initiative vigorously – with the support of senior management – it becomes a chore and that is reflected in the quality of the offer.

Whether such a scheme is a good idea for YOUR business or not, is for you to decide. The good news is that the job of creating such a club/program is now a very simple exercise; thanks to Web 2.0.

If you are reading this on my blog, you probably know what Web 2.0 means but for the record a simple analogy: The internet is now commonly seen to be in the second stage of its evolution; the 1st stage having been one that was dominated by static content that was pushed out to the internet surfing community. The 2nd stage is one whereby the community (of internet surfers) actually create the content in a dynamic way. I use radio as the analogy. The ordinary music station is the Stage 1 model – where ‘someone’ is pushing out content. The Stage 2 model is Talkback Radio – where the listeners (community) actually create the content – and in a way make or break the station. The station owners still have a role to play, but it must govern with a soft touch. Web 2.0 is like talkback: users create the content and build the community. Examples are EBay, Wikipedia, Facebook, MySpace etc.

Web 2.0 provides several, easy to use platforms that make a perfect, FREE platform to run a Special Interest Group. One of the easiest is Facebook. Using this platform, you simply sign-up; it is free and you don’t need to download or configure anything. Then you create a ‘group’ – a few easy clicks and you can then invite your customers to join – however you do that. On Facebook you now have access to over 14,000 ‘widgets’ that allow you to:

  • run quizzes,
  • remember birthdays,
  • upload photos,
  • run classifieds,
  • advertise events,
  • forums (fora?)
  • games,

and pretty much anything else you could think of.

It has no printing costs and it is instantaneous. It does not need special planning, technology or anything else really.

A second alternative, at the other end of the scale is to embrace Second Life. It will cost you an arm and a leg, but you can create and own the worldwide market for your product category. If world domination is your thing – check it out.

BUT BECAUSE it is Web 2.0, but there is one very important caveat:

Many, many (most) corporates don’t ‘get’ Web 2.0. By that I don’t mean the technology of the opportunity; but I mean as philosophy. You may start the club (say Paddy Pallin wants to start one around outdoor adventure, or Uncle Pete’s Toys start one around a Model Cars) but you don’t “own” the club. As the administrator you can technically shut down the ‘club’, but there may be a fearsome backlash. You don’t control the conversations, and you don’t control the connections. You will be empowering your community of customers and you will be a catalyst for their conversations and their activities – and you will earn their loyalty in an unprecedented way. The reality is that such loyalty (in today’s world) is such a precarious thing that you must really think long hard before you embrace it.

This is the world where the customer/community are in charge, and they like the power that comes with it.

I strongly recommend going down this path, if you pass the test and really get what you are getting into, go for it.

facebook.jpg

 

 

Categories: Customer Service · General · Marketing · Strategy

Succes countdown

28 January 2008 · Leave a Comment

This list was gleaned from a Kevin Hogan article. Whilst seeming tangential to our retail focus, it serves us well to remember that ‘retail’ is full of people – all chasing some success in life – and these ’steps’ are a timely reminder.

Although somewhat repetitive, and although no earth-shattering revelation; still a handy list to contemplate. The fact that it IS restating most things you already know, should be a warning sign that maybe you are not following through?

23. Realize your Potential

22. Don’t Look Back

21. Dare to Dream

20. Don’t Give Up

19. Have an Unstoppable Attitude

18. Stop the Complaining

17. Focus on Something you Like…or Love…

16. Change your Circumstances

15. Have a Plan

14. Accept Responsibility

13. No Ethical Shortcuts

12. Have Courage

11. Be Excited to Learn

10. Share your Achievements

9. Seek Input

8. Beware Toxic Poisoning

7. Be a Good Listener

6. Birds of a Feather

5. Little Red Engine…

4. Be Proactive

3. Stay Motivated

2. Cut Yourself Some Slack.

1. Be “Obsessional”

Categories: General · People

The digit is mightier than…

25 January 2008 · Leave a Comment

… well almost everything.

For conversations are the seeds of all change.

Last year there was a blogger collaborative that created The Age of Conversation. 100 Bloggers worked under the leadership (such a quaint word for the blogosphere, heh?) of Gavin and Drew to create the book. The story of the book is a story in itself. And it is about the art of the story – in some way or another – and an interesting one too. Published on Lulu, in itself in interesting story about the power of the web.

And this year there is another story to be told, and you can be part of it.

  • You will (again) work for free.
  • All proceeds will go to charity (Variety, the Children’s Charity again – see link to the Aussie branch)
  • And so become part of history in the making.
  • It promises to be good fun and it is a good thing.

If you would like to participate, go here. From there you can see more about the project and/or vote on the topic to be selected even if you don’t participate.

Go on, be brave – live dangerously…

Categories: General · Marketing

The gurus answer THE QUESTION

20 January 2008 · Leave a Comment

Management gurus (real or self-proclaimed) always tread on dangerous territory when they come up with THE ANSWER – particularly the answer to why some companies are more successful than others. I personally think Tom Peters actually gets closest, because his answer is the simplest: Implementation.

In Built to Last Collins and Porras found that long lasting companies are distinguished by:

  • BHAG – Big Hairy Audacious Goals stimulate progress
  • Cult-like culture
  • Experimentation
  • Home-grown management
  • Good enough never is

Like so much of management and business, this is so much common sense:

Goals: Know where you want to go. Does this really need mentioning, never mind elaboration?

Culture: It exists anyway. It obviously helps if you mix in some passion. Any self-help guru on the internet will tell you that you must follow your passion if you want to be successful, so this is really nothing new either?

Experimentation + Good enough never is: Try things. Keep trying. Innovate if you can. Obviously! With ongoing implementation, you will find things don’t always go to plan, and constant tweaking is required. That is what managers do (successful or otherwise) and still don’t know why some get it right more often.

Home-grown management: It helps if the players are familiar with the rules. Woopeee Do.

In summary: Know what you want to do, know how to do it. Keep trying passionately until you succeed. A pretty good philosophy for life and for business – and it is free of charge. Thank me later.

 

The book is a few years old now, so this is not a review. And Collins at least applies some discipline and rigour to his research, so it is not a rant against him/them.

It is just a warning to the general reader and student of business. Common sense cloaked as research – as practiced by many, many, many ‘gurus’ should be questioned and carefully considered before accepting it. Being published is no guarantee of veracity or value. And the matter is compounded dramatically  on the web.

Buyer Beware.

Categories: Management · Strategy

Learning from alcoholics

20 January 2008 · Leave a Comment

At one level retailing is a very simple business, and in other ways it is complex. Either way, retailing is a tough business: it is a science and it is art. Sometimes the number of things to do can be overwhelming. By this I mean the operational workload, as well as the range of strategic variables that I business owner/manager can tweak to make the business better. (Perversely of course, that also means there are so many things that can go wrong too!)

Poor customer service is one of those challenges that most retailers attempt to address – usually a few times because everyone knows intuitively it is important. Just to validate that intuition, consider this extract from an article by Tom Ryan based on 2007 research by the Verde Group in the US.

Customers receiving an especially positive experience are likely to tell seven other people on average about the experience while those receiving a negative experience told 1.5 people.

But it also showed that such experiences are fairly rare – only 51 percent of women admitted to having a “WOW” experience in their entire shopping history, and only 39 percent of men did.

In summary: Good customer service (a WOW Experience) is so rare, and has such exponential impact on the business, it remains the holy grail of retailing.

You may also deduce from these observations that few retailers are succeeding at delivering WOW service.

Where to start?

If its longevity is any indication of its efficacy, one successful behaviour change program in the world is the 12-step program of Alcoholics Anonymous. Learning from alcoholics seems contrarian but it makes a lot of sense. The first step in the program is an ADMISSION. Alcoholics must admit their addiction before progressing to the next step.

Business people generally and retailers specifically may want to consider this approach because:

  • Admitting inadequacy precedes innovation
  • Admitting failure precedes remediation
  • You can only find solutions to problems you have recognised and identified.

Accepting that things are not as good as they could be is a prerequisite to improving things. Unless you admit and accept the diagnosis and actually emotionally embrace its consequences, your response will lack authenticity.

  • It isn’t fun to admit you are wrong.
  • Mistakes have many parents (and success only one)
  • It sucks to think that your business stinks at customer service.

It is easier to blame customers, the environment, the government, the staff or the socio-economic climate. It is easy to assign blame or look for excuses. It is also easy to proclaim a few rules and announce that to the staff. It is easy to proclaim the importance of good customer service at a staff meeting. But implementing WOW customer service is not easy and all this comes to naught, unless you as owner/manager/ responsible person accept that the service is poor and that you are responsible, nothing will change.

“My name is Joe/John/Julie/Jane – and I am responsible for the poor customer service in my store.”

After the admission, the action steps to remedy it can be tackled. The difference this time will be an emotional engagement wit h the problem and a willingness to DO WHATEVER IT TAKES to get rid of that problem.

  • It is clever psychology and it works.
  • Because it works it is a good idea.
  • If it is a good idea, it is worth trying.

So altogether now:

“ My name is …”

Categories: Customer Service · People

The cold shoulder

16 January 2008 · Leave a Comment

Cold-calling is probably the least favourite activity of most sales people – an unpleasant chore to get through. The same can be said of approaching customers in a retail store; it is not a favourite activity of sales staff, hence the customer complaints about being ignored or sales people being ‘rude’ and talking amongst themselves. They are just human – trying to avoid an unpleasant task. Customers have conditioned them to the view that they don’t want to be approached because 9 times out of 10 they respond with a ‘no thanks’ to an offer of assistance.

But if you could master the lessons from cold calling you will find many applications to customer approaches on the sales floor. Let’s consider the basic rules of cold-call mastery:

Attitude: If you start with the attitude that that a cold call is an interrupt someone and try and sell something to a prospect (suspect) you will have difficultly getting started. And rightly so.  You are not meant to interrupt someone in order to sell something to them; people know that instinctively and they know how they feel when they are on the receiving end. The right attitude is to put yourself in the ‘frame’ of being in a position to help someone, and that you are going to do just that. After all, your product or service does fulfil a need, doesn’t it?

The cold call is an opportunity for you to potentially help a client/ customer – so there is no need to be apologetic about the ‘interruption’.

The sales assistant must adopt a similar attitude. Don’t offer assistance – that is simply getting off on the wrong foot. (More about that in another blog some other time.) Be positive in your approach. The customer has already identified a need by wondering into your store.  Be positive and engage with the customer.

 
The pitch: Your pitch on the phone is not about selling your product as ‘quickly’ as you can before the customer can put the phone down. Your pitch is about securing the opportunity to help your prospect. You simply need to briefly explain the type of needs that you can solve (without selling your solution) and ask the client for an opportunity to consider their needs very carefully in a face-to-face interaction. The retail sales assistant does not start the conversation by selling, but by identifying a need. No comment about the suitability for a product is needed! (In fact, it is silly to make a ‘casual’ comment that the dress the customer is holding up would suit them nicely. Experienced customers would easily turn that into an opportunity to rebuff the sales assistant by claiming the purchase is not for them but someone else. The sales assistant’s credibility is immediately in tatters.)

Instead, engage with the customer by establishing instant rapport, and start to assess the need/want that brought them into the store. That is the first job – not selling product.

The process: Until you have mastered the art of cold calling/ approaching customers, it will still be experienced as a chore, and it therefore requires some discipline to commit to doing a certain amount of cold calling. If you eat a frog for breakfast, the day couldn’t possibly get any worse – or so they sayJ. From our perspective, it is good to get the cold-calling out of the way and over with as soon as possible. (That is until you learn to love it.) Making the calls before 9am is a good idea because:

Decision-makers are usually in the office before then anyway,

But the gatekeepers are not.

Your chances of getting through to the person you want to speak with is dramatically increased. Once you learn to love cold calling, stay disciplined. You could speak to more than 1500 potential customers a year if you make one phone call per hour for each working day.  Each call only takes 20 seconds – any longer and you are making the mistake of trying to sell.

In the retail environment, if every sales assistant approaches one additional customer per hour – and converts 10% of those into the average sale… boy oh boy… how good would that be!

Categories: Customer Service · Selling & Persuasion

Retail Training ‘Joke’

13 January 2008 · Leave a Comment

The retail training joke (1)

I follow the fortunes of retailers in the business journals, the web, the news out and about town, also through physically observation. Some come and some go; that is the nature of the beast. As an ex-retailer, it breaks my heart to see small independent retailers close their doors; I can just imagine the shattered dreams and inflated mortgages that invariably go with business failure.

But there is another, harsh reality at work here: those that fail often deserve to fail. I am in the business of retail training (and consultancy) and it is absolutely scary how little some operators know about their business specifically and retailing in general. And when you find someone who knows at least the basics, enough to survive for a while at least, then fail to pass on the basic knowledge to their teams.

Consider just two simple examples:

·         You would think that a specialty retailer would apply some thinking (because science is too much to hope for) to how much space they allocate to different products. The sad fact is that (outside of the major supermarkets/chains) – INTUITION is the main decision making mechanism. Gut feel has its place, but not here…)

·         If the sales team has a sales target, it is a meaningless exercise because nobody OWNS the targets and they (rightly) claim that they don’t really influence it or that it is unrealistic. I have asked many, many people in a range of industries if they know (or use) the average sale to measure performance or set targets. Not ONE does. In fact I’d say more than half the stores don’t even share gross sales (turnover) figures with their staff.

If retailers don’t know how much space to allocate to a product line and their staff don’t know how much to aim for when they are selling, what chance do they really have of succeeding?

 

(more…)

Categories: General · Management · People · Retail Operations

Lifetime Value

13 January 2008 · Leave a Comment

Much has been said (maybe too much) about the importance of ‘customer service’ in the retail environment. It has now become more than a cliché – in fact some retailers actively zone out when those two words are mentioned.

I have blogged elsewhere on retail$mart about the importance of managing the customer experience. There are literally 100s of organisations (Ganador is no exception) who offer Customer Service Training (CST). [I wonder if any of these companies make money from CST? We certainly don’t and we decline the opportunity to offer CST more than we actually accept it. CST only works if it is part of an integrated effort to change systems, structure, culture etc – but more about that some other time.]

Quick Quiz #1:

How much your average customer worth to your business?

Don’t skip over the question; consider it for a moment and put a $ value to your customer.

$500? $5,000? $50,000? $500,000?

Superior customer service increases the Lifetime Value of every customer. The debate about whether the customer is ‘always right’ is simply irrelevant. The whole point about customer service is that, because you appreciate the LTV of your customer, you are willing to make short term ‘sacrifices’ in the effort to retain a customer.

Customer Service is the essence of retailing; check out this story and this one (Scroll down to Retail Experiences1 – which is the shoe-shopping story) to see what I mean.

Quick Quiz #2:

How would you rate your level of Customer Service – say in percentage terms? 70% 80% 100%?

Now ask yourself how your average customer would rate your service – and be honest.

Is there a gap? If there is, that should be the #1 resolution for the New Year.

Customer Service is not an add-on initiative; it is not a ‘strategy’ or a project. It is what retailers do. Period! It is not about smiles, it is not about tolerating rude customers or solving customer complaints. It is something altogether different, and that is the challenge that a retailer faces: to create and deliver profitable customer experiences. It is not even about buying or merchandising or pricing. It is about how buying or merchandising or pricing COULD create a positive customer experience…

(And senior managers forget that they may have gone through a few ‘customer service improvement projects’ and are throughly sick of it and they ‘know’ it does not work; but forget that the frontline people are in all likelihood quite different from the frontline people of 1,2 or 3 years ago. Just because you are tired of it, does not mean it is irrelevant.)

Categories: Customer Service · Management · Marketing

How to negotiate

13 January 2008 · 1 Comment

Traditional wisdom states that you should always wait for the other party to make the first offer/ move. The thinking is that they may come up with a starting offer that is better than you would have hoped for and from there on you can only improve.

Retailers ask vendors for quotes and negotiate from there – that is the usual way.

We have been teaching negotiation skills differently and now the latest research (by Stanford Graduate School of Business Professor Margaret Neale, quoted in Supply Chain Research) supports this view.

 Her advice is: “Rather than waiting for a price quote from a potential vendor and then negotiating off of that price point, it may make sense to begin with a very low ball, perhaps unrealistic price point that changes the dynamics about where the ultimate price will go.”

We teach negotiation accordingly: A cornerstone principle of the psychology of persuasion is that of ‘FRAMING’. (Those of you who attended the recent breakfast seminar hosted by Cumberland Newspapers will have heard me talk about this.) Framing is all about ‘perspective’ and by taking the lead in the negotiation process; you are able to ‘frame’ your price expectancy and force the other party to adjust their view of what is acceptable. Of course, as Prof Neale observes: “The trick is to pick a point that gives you this advantage without being so ridiculous from the vendor’s viewpoint that they decide the business isn’t worth pursuing.”

If you ask for a quote, you effectively ask the other party to dictate terms. With a bit knowledge of the underlying psychological principles, you could turn this conventional wisdom on it head.

Categories: General · Management · Productivity · Retail Operations

How to compete on price – and not lose your shirt

13 January 2008 · Leave a Comment

You could do worse than follow Wal-Mart, right?

Contrary to popular belief, Wal-Mart does not just simply follow an EDLP strategy; they also apply some marketing smarts. They carefully segment the market as follows:

Brand Aspirationals – People with low incomes who are fixated on brand names;

Price-Sensitive Affluents – Wealthier shoppers who love deals; and,

Value-Price Shoppers – Those with like low prices who can’t afford much more.

So Wal-Mart now understands why people shop in their stores (not simply how they shop) and they have created super brand teams (Food, Entertainment, Apparel, Home Goods and Pharmacy) to manage their brand assortment.

The fact is, people will buy premium brands (with higher margins) in an EDLP environment simply because you can sell the idea that your price offer for the better brand is still the best deal around. Low price does not (have to) mean cheap and nasty. Low price does not have to mean the lowest price on anything.

Wal-Mart does not say, but they are using a very old psychological principle used to persuade people (the principle of contrast) by mixing premium brands with cheap brands and house brands. (But I don’t mind letting you in on the secret.)

Categories: General · Management · Marketing · Productivity · Retail Operations