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Taking a Deep Breath of Perspective

We all meet interesting people from time to time. For one year I had a person enter my life that gave me a world’s worth of perspective. At the time he was the store manager of one of the big-box discounters in town. While our sons shared activities together, he shared amazing information not only about his store, but about all the big-box discounters in town. It was eye-opening to say the least.

If you have only recently found this blog, you should know that I am a big believer in calculating and understanding your overall market size for your category and knowing your share of that market. The easiest way to find the size of your market is to find national numbers for your industry, divide by the US population and multiply that result times your market population.

For instance, if you are in a $20 billion industry, divide that by 323 million people in the USA to get $62/person. If your market is 150,000 people, then multiply $62 x 150,000 to get a market size of $9.3 million. You can adjust that number up or down based on your local economy (your average household income versus the national average). You can also adjust for other factors like geography (more boats are likely to be sold in Michigan or Florida than Nebraska), or demographics (your percentage of children compared to the national average if your category is marketed primarily to children). It gives you a rough estimate, that if you calculate the same way year after year shows you exactly where you stand in your market.

I’ve been doing this in the Jackson market for decades and measuring our share over the years.

My big-box friend handed me numbers of what the big-box stores were doing in toy sales in our market. Adding them up, the math fit what I already knew about the size of the market in Jackson. The part that made my heart flutter was knowing that I was doing more in my single store than any one of those big guys.

 

Is it a Vase or Two Faces?

Here’s the perspective part … 

All of these stores do way more volume overall than I do because they also sell grocery, clothing, hardware, electronics, and household goods among other stuff. All of these stores have way more traffic on a daily, weekly, monthly basis than I could ever imagine. All of these stores run weekly sales and discounts with huge flyers in every Sunday’s paper to go with their national TV campaigns and other advertising efforts. All of these stores focus on the hottest TV-advertised toys every year, adding the vendors’ marketing efforts to their own. All of these stores get full-blown media coverage, too.

Think about that last one for a second. This holiday season you are going to hear stories about Amazon, Walmart, and Target. All. The. Time. You are going to hear about their sales. You are going to hear about their overall volume. You are going to hear about their strategies to draw more traffic (more discounting—you read it hear first!) Your customers are going to hear all that, too.

Yet locally, without the discounting, without the hot items for your industry, without the national TV campaign and Sunday flyers and vendors marketing for you, without all the grocery-driven traffic, without all the media hype, you’re going to stand toe-to-toe with these big giants and still do amazing numbers in your category, maybe even equal or better than they do individually.

When people tell you it is all about price, and that discounting is the only way to get sales, go ahead and nod your head in agreement until those uninformed people walk away. Then remember that a guy in a small, depressed, blue-collar city in Michigan with all the inherent disadvantages was able to beat all the big guys through better service, better staff, product knowledge, smarter marketing, and higher prices.

You will, too!

-Phil Wrzesinski
www.PhilsForum.com

PS Calculating Market Size and Market Share can be incredibly helpful, even if your business is growing. If your market is getting bigger, but your share is decreasing, then even though you are growing, you are still losing out to competitors. Something needs to be fixed. It can also help you understand why sales are decreasing and when to get out of the market. We saw our market shrink to a size that wouldn’t sustain us in our current model. Our options were to shrink to fit the market, move to a different market, or close. We chose the latter so that I could spend my time helping a bigger market … you!

PPS That store manager left Jackson the year after we met to run a larger store in another part of the country, but not before leaving me with a wealth of knowledge and a perspective for which I am eternally grateful.

Lessons From Toys R Us

By now you have all heard about Toys R Us (TRU) filing bankruptcy. I have been personally tagged several times on Facebook linking to articles about the bankruptcy (a couple former staff members have even hinted I should reopen Toy House now.)

Here are some things you need to know.

Image result for sad face giraffeFirst, this is a Chapter 11 Bankruptcy which is a reorganization type of bankruptcy. The giraffe isn’t going away. They aren’t closing all their stores and liquidating. That’s a Chapter 7 Bankruptcy. Toys R Us is banking on being able to restructure (and relieve themselves from) their debt so that they have the operating funds to continue competing in the toy and baby retail industries.

Second, David Brandon, the former Athletic Director at my beloved University of Michigan, is not the cause of their demise. (Many UM fans who hated Brandon for his poor job hiring football coaches want to scapegoat him for this, too. It’s easy, but wrong.) They were in trouble long before he got there.

Third, this is not a happy day for the toy industry. Even though Walmart surpassed Toys R Us in toy sales in 1998, TRU still does a tremendous amount of business and sells a tremendous amount of toys. There are many vendors in position to take huge losses in this ordeal. While the big guys like Mattel and Hasbro can likely afford it, many mid-tier and smaller vendors would be gone without TRU. That doesn’t help the rest of the industry.

Toys R Us is also important for new toy launches. The big-box discounters want tried and true. Without a large store willing to take chances on new products, there won’t be as many new and innovative products from existing companies.

A lot of people have opinions why Toys R Us is where they are today. Many want to blame Amazon. Still others want to blame the economy. I’ve read articles bashing their expensive new headquarters building, their lack of leadership, and the leveraged buyout by Bain, KKR, and Vornado.

One article wanted to blame TRU for spending too much on their stores and not enough on their website. Considering that TRU reported $912 million in e-commerce and $11.54 billion in total sales, that puts their online sales at almost 8%. (For comparison, Walmart only does about 3% of their total sales online, but that is skewed by grocery.) While 8% is impressive, it doesn’t justify taking money from the part of your business that generates 92% of your revenue and giving it to the part that only generates 8%. 

My opinion is that they didn’t spend the money on their stores the right way.

The real demise for Toys R Us started in 1998. That is the year Walmart surpassed them in total toy sales by dollar (McDonald’s Happy Meal beats them both in units sold.) 

Toys R Us chose at that time to take on the beast to reclaim their crown as king. They didn’t stand a chance. Walmart had more stores, deeper pockets, a larger advertising budget, better operational efficiency, and no need to make money on a category they saw as a commodity traffic-driver.

Seth Godin said it best. “The problem with racing to the bottom is that you might win. Worse, you might finish second.” Toys R Us finished second and we all lost because of it.

Toys R Us allowed Walmart to dictate to the world that toys are commodities, not the valuable educational tools every specialty toy store owner and every educator in America knows them to be. Toys R Us allowed Walmart to dictate that price was the only reason to buy toys. Once Toys R Us decided to compete on Walmart’s terms, they were done.

Hindsight being 20/20, the best move TRU could have taken back in 1998 was to reestablish their position as the “toy leader” and put their emphasis on the value of toys as educational tools, on the value of toys for promoting growth and development, and on the importance of choosing quality toys for your children.

If toys were thought of that way today, Toys R Us would have diminished the commodity role of the big box discounters and strengthened the toy industry as a whole, while firmly establishing themselves as the clear “toy experts” instead of a warehouse full of only toys competing with warehouses full of toys, hardware, clothing, housewares, and grocery. It would have been a win-win for them and the industry as a whole. They weren’t going to beat Walmart at Walmart’s game and likely never would catch Walmart in total sales (Walmart now has over five times as many stores.) But had they played to their own competitive advantage they would still be the king perceptually and the industry would be better off for it.

That is the lesson. Play to your competitive advantage. Play on your terms, not someone else’s. 

Right now the conventional wisdom is that Toys R Us owns too much real estate. Their stores are too big and costly. They need to close them down and sell off the real estate and focus online. I wonder how different the tune would be if back in 1998 they decided to make their stores more friendly and welcoming, filled with toy demos and play areas. What if they turned their stores into educational meccas offering classes on parenting, programs for preschoolers, and events that drew traffic? (According to this article, that is a little of what they are trying to do.) Instead they turned their stores into brightly lit warehouses with minimal staff and an entrance that makes you feel like a common thief just walking through the door.

Real estate is only an asset or liability depending how you use it.

There is still a chance for Toys R Us to turn the ship around. But they need to sail into different waters. I know a little about sailing. If you know David Brandon, tell him to look me up.

-Phil Wrzesinski
www.PhilsForum.com

PS It may sound like I’m suggesting Toys R Us be more like an independent specialty toy retailer. Umm … Yes! They have a far better chance being successful in that playground than in the big-box-treat-everything-like-a-commodity-warehouse playground they’ve been playing in. They had it right in their Time Square store and oh so wrong in the 865 other locations.

Visualization Makes the Sale

Today I signed the papers to list my house for sale. I did this a little over a year ago, had the house listed for a year without a single offer. I took it off the market at the end of July, put in a lot of work on little things like painting more rooms, upgrading some appliances, landscaping, etc. I also took some time to stage the rooms better, take new photos, and write a new description. We’re doing things differently this time. Today it goes back on the market. I’ll keep you posted on what happens.

Ask any real estate agent the true key to getting a house sold and they will tell you it is getting the buyer to visualize already being in the home. The agent asks you questions like …

  • “How will you lay out your furniture in the family room?”
  • “Which bedrooms will your kids want?”
  • “What do you see yourself doing in this space?”

While facts and data are important in the buying process, visualization is what seals the deal.

I can tell you that the house has 4 spacious bedroom, 2.5 bathrooms, a downstairs office, first-floor laundry, and a three-car attached garage. You’ll analyze that data and process that information. But as long as you are in analytical mode, you’re not in buying mode. You’re gathering data and will continue to gather data.

I have to get you beyond the facts and get you to see yourself doing the behavior I want.

  • “The beauty of this southern-facing driveway is that on light snow days you will be sleeping in while your neighbors are out shoveling because you know it will melt quickly once the sun comes out out in the afternoon.”
  • “With bedrooms this large, when you say, ‘Go to your room!’ your kids will think it is a positive, not a punishment.”
  • “This no outlet road is exactly a quarter mile long. Two loops and you and your dog will have your mile in without any annoying traffic.”

The same is true in all retail. You have to get customers beyond the facts of the item you’re trying to sell and get them to visualize using it.

  • “The battery life of this drill is three times longer. Have you ever been working on a project and run out of battery at the worst possible time? Remember that frustration? Won’t happen with this unit.”
  • “You’ll love this feature of your stroller. You know how annoying the wheels squeak after you’ve used it for a while? These wheels pop off so easily it will only take you seconds to clean them and hit the road running smoothly and quietly again.”
  • “Think of the best picture you ever took with your phone. Now imagine that same picture with twice the clarity and detail. You won’t have to recolor it digitally, either, since this camera picks up twice the color, too. You’ll have more ‘favorite photos’ than you have wall space to hang them all.”

Or simply …

  • “How do you plan to use this?”

Facts have a place. But facts don’t close the sale as quickly and efficiently as visualization. Get your customers to see themselves using the product and you’ll close the sale more often.

-Phil Wrzesinski
www.PhilsForum.com

PS Here is the new “ad copy” for the listing of the house (1000 character limit). The listing already has the facts so I go lighter on those. The ad-copy adds visualization to why those facts are important.

There is a lot to love about this house. The first thing you’ll fall in love with is the space. Plenty of room for big gatherings and a perfect layout for when you want some time to yourself.

You’ll love your mornings in the sun-filled kitchen, your views from the office, and your sunsets streaming through the trees.

You’ll love the neighborhood—quiet and secure, yet only half a mile from grocery and restaurants.

You’ll love the size of the bedrooms and closet space big enough for everything you own, organized and easy to find.

The huge full basement, first-floor laundry, and easy-entry 3-car attached garage are just icing on the cake. And the sun-drenched southern driveway is like chocolate sprinkles on top!

With a new roof and fairly new appliances, this house has everything you need. The kitchen is dated—but completely functional—and will serve you well until you decide to build the kitchen of your dreams and turn this house into the home you’ve always wanted.

Take a tour today!

PPS Notice how I used the one downside in the copy? The one complaint we received over and over from the first listing was that the kitchen is dated. Sure it is. But it is fully functional with solid cherry cabinets, fairly new appliances, and high quality drawers. I let you know up front that you’ll want to change the kitchen soon so that you’ll walk in knowing that in advance. Now, instead of a negative, it is an expectation and gets you thinking of how you will remake the kitchen of your dreams. Visualization.

What to Do the First Time It Happens

Every July for our Summer Fun Sale we would mark down thousands of old, slow-selling, discontinued merchandise to ridiculously low prices to move out that merchandise, generate some cash, and get ready for the upcoming holiday season. With close to a million dollars in inventory, the process was quite tedious and time consuming. Every single sale price had to be manually entered into our Point-Of-Sale system.

Sometimes we missed one (or three).

The staff was instructed to carefully watch prices as they scanned items at checkout to make sure they were coming up at the sale price, and to make changes immediately whenever a mistake was found. If it didn’t ring up right the first time, it was quickly corrected and the customer sent on her happy way.

Image result for bad retail sale signsYet every single one of us can recall a time in our own lives as customers when something didn’t ring up right and you didn’t go on your happy way.

You get to the register expecting a certain price and it rings up higher. You say something to the cashier. His first response is to tell you that he doesn’t know about the sale or that he can only go by what the computer tells him. His second response is to look you straight in the eye and tell you he doesn’t trust you by phoning for someone else to go check the display. His third response is to tell you that “they” didn’t put the right signs on the display and that the item you had didn’t qualify for that discount/coupon/special deal. Yes, blame it on the faceless “they.” His fourth response is to get a manager who goes through the first three responses all over again before deciding to either give you the discount the signs says you should get or hide behind corporate speak to not give you the discount.

Either way you walk out of the store feeling like a loser.

Do you want your customers walking out of the store feeling like a loser? Of course not. Chicken dinners for everyone!!

Here’s how you do it when you have a pricing mistake.

“Oh my gosh! I am so sorry. Let me go verify what the price is supposed to be.” 

Say all that. Apologize. Go check the price (the above is a safe statement that doesn’t accuse them of lying). Then, regardless of the outcome, give that person the price they expected with another round of apologies for the confusion.

It doesn’t matter if someone did the signage wrong and that item is not supposed to be on sale. It doesn’t matter if the customer was confused because the signage wasn’t clear enough. It doesn’t matter if the customer interpreted the sign to mean something you didn’t intend it to mean. The first time a customer perceives something different than what you intended, you give them what they thought they were going to get. Then you go fix the signs and displays and prices so that there won’t be any more confusion.

Always give the first customer the benefit of the doubt. It doesn’t cost you that much in the long run because you keep the customer happy. Plus, you learn quickly how others might perceive your sales or signs, and you fix the problem before anyone else gets upset.

“I’m really sorry about this. Those weren’t supposed to be included in the 25% off sale, but that’s our fault for not putting the signs up correctly. I’ll give you the 25% off on this item. Will that be okay?”

You’re going to make mistakes. Own up to them. Pay for them. Make the customer happy. Then go correct the mistake. That’s the key to winning customers’ hearts.

-Phil Wrzesinski
www.PhilsForum.com

PS Even when the customer interpreted the sign wrong, you should still take some of the blame. Make sure your signs, sales, specials are bullet-proof by making them as clear and detailed as possible so that there is little chance of confusion.

PPS Every now and then you get the customer trying to cheat the system. They find an error like improper signage and load up their cart with everything on the shelf. That’s the exception to the above rule. You just better hope it was honest confusion about the sign, otherwise they might have a leg to stand on.

PPPS When you pay for your mistakes, not only do you make the customers happy, you build a level of trust. Your customers will be more likely to take you at your word when you take financial responsibility for your errors.

Busting a Scheduling Myth

There is a scheduling myth I have heard for many years, and although on the surface it seems to make sense, I don’t think it is in the best long-term interest of your store. The myth is that you should schedule your best sales people for your peak hours and your worst sales people for your off hours. Let me tell you where the flaw is in this thinking.

In November 1991 I moved to San Diego, CA. I immediately got two jobs there.  One was teaching Outdoor Education for the Orange County School District at Camp Edwards near Big Bear Lake. The other was selling sporting goods for Cal Stores – a ten-store chain of sporting goods and apparel stores in San Diego County (since bought out by Big 5 Sporting Goods).

Image result for big 5 sporting goodsI spent Monday morning through Friday morning in the mountains above San Bernardino teaching kids about geology and ecology. I spent Saturday and Sunday selling tennis rackets and weight sets.

At Cal Stores we were paid on commission. Each week they would post the top selling people across the chain in sales per hour. I was usually #2 for the entire chain, right behind the guy who sold all the ski packages. I wasn’t #2 because of my selling skills, but because I had the two best shifts—Saturday and Sunday. I didn’t have any mundane Mondays to drag my average down.

In the above myth, I would always get the peak times and best shifts because my numbers were top notch. And I would hold onto those shifts because those shifts would keep my numbers higher than the Tuesday and Wednesday slackers. It would self-perpetuate. I would stay on top and feel no need to improve. Plus it would drag down the morale of everyone not getting the prime times.

Do you see the flaw now?

Smart managers understand the importance of having top levels of sales and service at peak times, but they also look for ways to raise the level of all the staff so that everyone can perform at peak and off-peak. They look for ways to pair top sales people with learners to help both become better (the former by teaching, the latter by being with the former). They split up the hours, knowing that sometimes you need the busy hours for the learners to hone their skills, and sometimes you need the slower hours to know if your top sales people are truly good or just lucky.

Smart managers realize that raising the bar for everyone helps the business far more in the long run than just maximizing the peak hours. They realize that a properly trained staff maximizes sales at all hours (and there are some big sales you can do during the perceived off-hours.)

Smart managers realize when everyone performs at a high level they have more flexibility for scheduling around vacations and special requests for time off. They have more staff available for special events. They have more trust that the staff will perform no matter the situation.

If you have a few top performing sales people and a few that need some work, don’t just throw all the prime rib at the top people and leave the scraps for everyone else. Give them all a taste of the good stuff and teach them all how to rock your customers’ worlds every day of the week.

That’s what the smart managers do.

-Phil Wrzesinski
www.PhilsForum.com

PS I wasn’t a great salesperson back then. I was just lucky with my shifts. Fortunately I was (and still am) a competitive guy who is always looking for ways to improve. Not every salesperson thinks that way. Smart managers find ways to help everyone improve and raise the overall bar for the store.

PPS No, not everyone will perform at the same level. Your goal, however, is to help each person on your team get to the next level no matter where he or she is right now.

A New Twist to Back-to-School Shopping

Back-to-School shopping has become a huge event with big deals and sales to lure in all those parents and children to buy new clothes, school supplies, and anything else they might want (I once saw a “Back-to-School Sale” sign on an end-cap filled with wine!)

No matter what kind of retail you’re in, you can capitalize on the BTS craze, too—but to a different crowd. You need to get a hold of your teachers.

When we closed Toy House last December we started pulling all the old display racks, spinners, free-standing shelving units, etc. and put them out for sale. It was amazing to see how fast they got snatched up. It was also somewhat surprising to see that almost all of them ended up in a classroom.

I had teachers buying them. I had teachers sending in their spouses to buy them. I had teachers texting teachers about them. I had teachers coming in asking if I had any more of what their fellow teachers had bought.

You have old racks and displays cluttering your limited warehouse space. Don’t throw them out. Take some pictures and send out an email. Have a BTS Fixtures Sale just for your teachers. Not only do you get rid of clutter and make some money, you also make a classroom teacher happy by helping her organize her cluttered classroom. Plus, by getting rid of the old fixtures, you make your store look fresh and new. It’s a win-win-win!

FYI—teachers are setting up their classrooms right now. You need to jump on this idea right away.

-Phil Wrzesinski
www.PhilsForum.com

PS Don’t think for one second that you don’t have teachers as customers. Don’t think for one nanosecond that your regular customers don’t know a whole bunch of teachers. They’ll spread the word fast enough if you let them know soon enough.

PPS We had most of our fixtures priced between $25-$50. Thirty dollars seemed to be the sweet spot. Since you likely got most of those fixtures for free, think of it as found money. And don’t ever think, “no customer would buy that piece of junk.” One person’s junk is another person’s treasure. We sold a lot of racks I never expected to sell.

An Article Every Retailer Must Read

If you are a retailer, you need to read this article about Amazon’s new brick & mortar store in Chicago. It will be one of the scariest and most eye-opening articles you read this year. Go ahead. I will wait.

Image result for amazon brick and mortar store

Amazon, who is already cleaning our clocks online, is doing in their stores what some of us have only dreamed of doing and others haven’t even thought of doing. Amazon is bypassing the biggest headache most retailers face – getting your staff up to speed on product knowledge. How? By using signs.

Every single book in their store has a sign with reviews, ratings, and answers to the basic questions your customers would ask. Plus they have signs recommending similar titles, signs giving you data and information to help you make a purchase.

Rick Segal, famed retail consultant and speaker, once told me that signs increase sales of a product by 47%. He didn’t back that up with any proof, but it wasn’t a hard number to grasp. Just think about who would prefer a sign over a salesperson…

…every man and half the women.

Men like signs. We like signs because we speak vertically. Did what I say make you think higher of me or lower of me? Given the choice, most men would rather read a sign and figure things out on their own than ask questions and admit that they don’t know something. (Ladies, now you know why we don’t like to stop and ask for directions – just give us a map.)

Introverts like signs. Introverts aren’t shy. They just like their interactions with others to be meaningful and useful. Signs give them information to formulate the right questions before they have to interact with the salespeople.

Amazon is winning that game in their brick & mortar store.

You can, too.

No, you don’t have the data that Amazon has to create the kind of signage they create. But you can create signs that explain benefits. You can create signs that compare and contrast. You can create signs that answer frequently asked questions. You can create signs that show testimonials and staff picks (and why the staff picked them).

Online is where customers go when they know exactly what they want. Brick & Mortar is for people who want to browse or have someone help them find something when they aren’t sure what they need. Signs help you take care of those customers when your sales people are busy. Signs help you take care of customers when your customers would rather not interact with your salespeople. Signs help you take care of customers when your salespeople aren’t fully trained on product knowledge. Signs sell.

Get a computer and printer up front. Create a template. Start printing. Signs can even be hand-written if the penmanship is good. (Turn this project over to your staff and it will even help them with their product knowledge.)

-Phil Wrzesinski
www.PhilsForum.com

PS If you did the math, you are thinking right now that 75% of the population prefers signs over salespeople, so why have any salespeople at all? First, understand that not everyone goes shopping. Since extroverts gain energy from being around people, they are more likely to be in-store shoppers than introverts. And there are multiple theories explaining why women tend to shop more than men. Therefore, it is highly likely that your store has more extroverted women in shopping right now than their percentage of the population would dictate. Second, relationships matter. Some customers don’t know the right questions to ask and need the guidance. Some customers have questions your signs couldn’t anticipate. Some customers don’t want items of mass appeal. Your salespeople are critical. So are your signs. Amazon got that second part right. Very right. You can, too.

PPS Your sales staff likes signs, too. Signs give your team confidence because they don’t have to remember facts. They can’t focus more on feelings, the relational side of sales.

Anticipating Your Customers’ Needs

I had the slot right after lunch. A lot of speakers hate that slot. People are tired after lunch, or they got an email that morning that required them to spend their lunch hour putting out a fire, or they have so much swirling around their brains from the morning sessions they can’t stay focused. You know what I mean. Siesta time.

The host took the microphone to introduce me, and as she had for the morning speakers, started with her obligatory blah blah blah, turn-off-your-phones, surveys-are-on-the-table, housekeeping announcement.

I could see heads already starting to nod off.

I switched on my microphone, put up my first slide of me in a super hero costume and said,

“Thank you, Margaret. Yes, I am Phil Wrzesinski and I am going to be your Super Hero today. First, since I know you just finished lunch, I am passing out dessert. Chocolates. Dark chocolates to be exact. The healthy kind. Full of antioxidants to get you going. Second, I have some housekeeping of my own. Go ahead and turn your phones back on. If I can’t keep your attention for the next hour, then frankly, I am not doing my job. And today I feel up to it. You’re going to learn some things today that you’ll want to share. Please do. Finally, go ahead and grab those surveys. Under the section about handouts go ahead and mark that a 5. I have complete notes of this workshop available for everyone right after I’m done. You might as well mark that first question a 5, too. We’re going to have fun. You ready?”

Do you see what I was doing? I was anticipating my audience’s needs before I even got on stage. I knew they would be a little groggy. I knew they needed something to pick them up. The chocolates served multiple purposes. It got them engaged right off the bat. They were opening packages, opening candies, passing them from table to table, doing something active. It woke them up, both from the small sugar fix and more importantly from the here-is-something-you-don’t-see-every-day-maybe-I-better-pay-attention opening of my talk.

The bravado in my speech was to transfer confidence to them that what I had to say was worthwhile. It also was a bet. I just bet them I could keep their attention enough to keep them off their phones. They were paying closer attention just to see if I could make good on that bet.

I knew the crowd would be restless, sluggish and unfocused. I anticipated that. Then I took steps specifically to help them change their mood to the mood I needed to sell my product. You can’t sell the unwilling. You also can’t sell the unprepared-to-buy. You have to get them in the right mood first. It doesn’t matter if you’re selling toys, pet supplies, floor tiling or ideas. If you don’t anticipate your customers’ needs and take care of those needs, you cannot build the relationship necessary to make the sale.

Here is a simple exercise for you and your staff to do. Answer the question, “What does my customer need the moment she walks through the door to get in the right mood for shopping?”

If it is cold and snowy, she made need a place to take off her coat and boots. If you are off the beaten path and you get customers from a long drive, she may need to use the bathroom. If you are downtown or in a mall where she has been shopping other stores, she may need a place to put her packages. If it is early morning, she may need a shot of caffeine. (Heck, that could work late in the afternoon, too.) Solve that need and your customers will be ready to buy what you’re selling.

-Phil Wrzesinski
www.PhilsForum.com

PS Getting my audience to fill out the survey in advance, while bribing them with dark chocolates, not only got me a higher score on the survey, but more importantly gave them more time after the talk to come up to me to do the real buying. I was speaking to group of downtown development directors. None of them were there looking for speakers, but out of the 60 groups represented I got a dozen opportunities to speak because I made them more open to buy.

PPS Sure your product has to be good.  At the end of the day it is always about the product. But no matter how good your product, if you don’t get people in the mood to buy, they won’t be buyers.

Happy Valentines Day (or Harnessing the Power of the Heart)

People don’t buy products. They buy feelings. You aren’t selling toys or pet supplies or carpeting. You’re selling joy, contentment, pride, satisfaction. You’re selling the way someone feels after she makes the purchase. You’re selling the heart. For you, every day is Valentine’s Day.

How would your business change if instead of selling products, you decided to sell joy? Pure, unfiltered, even-the-toes-are-tingling joy. How do you sell joy? How do you service joy? How do you show off joy? Sure changes what you say to the customer, doesn’t it?

“You’ll find joy because…”
“This will bring you joy when…”
“The joy is in…”

Maybe you sell nostalgia. Here is an ad I wrote for the 2006 Christmas season (one of our best ever)…

Christmas Eve, nineteen sixty-five. He didn’t know if he would make it. Nine months of active duty, he missed his family. And he was an uncle now. His sister had a baby girl, a precious little child for which a stuffed animal from an airport gift shop just wouldn’t do. As his dad picked him up in the family sedan, he asked, “We got time to stop by the Toy House?” “Of course, son. Welcome home.” Merry Christmas from the Toy House in downtown Jackson where Christmas magic happens.

The big box stores sell commodities. That’s the race to the bottom. You sell emotions. That’s the race to the top. The key is to know which emotions you are selling. Get that right and you’ll own the hearts of all your customers all year long without having to buy them chocolates or flowers.

-Phil Wrzesinski
www.PhilsForum.com

PS We sold Nostalgia, Fun, Education, and Help. Wanna know what you should be selling? Read the article Understanding Your Brand and then download the Branding Worksheets. Email me if you get stuck.

You Don’t Make it Up in Volume

(Warning: this post contains math. Proceed with caution.)

“We lose a dollar on each one we sell, but we make it up in volume.”

Yeah, we all know that isn’t right, but there is a mistaken belief that if you lower your prices, you can easily make up the lower margins through higher volume.

Warehouse Melissa and Doug 2

Let me show you why that doesn’t necessarily work.

First, we have to make an assumption together. Your business has fixed costs that do not change as your sales change (utilities, rent, etc), and your business has variable costs that go up as you do more volume (credit card fees, payroll, freight, advertising, etc).

Agreed? Good.

DOING THE MATH

Here is some simple math…

You have an item you purchase for $10 and sell for $20. Let’s say you sold 24 of this item last year. That gives you a gross profit of $240 (24 units x $10 in profit per unit = $240 gross profit).

But you have the grand idea to lower the price 10% to $18, figuring you’ll make it up in volume.

 

To get the same $240 in gross profit, you now need to sell 30 units (30 x $8 = $240). That’s a 25% increase in units sold. With more units sold, however, your variable costs will go up. Maybe it is advertising because you had to spend more to get the word out about your lower price. Maybe it is extra sales people needed to help boost sales. Maybe it is more credit card transaction fees.

Realistically, just selling 25% more units won’t even break even because of the rise in variable costs. You’ll probably need closer to 30% more in units sold to cover your 10% discount.

Do you think 10% Off is enough to sell that many more units?

GOING LOWER

Okay, maybe 10% isn’t enough to move the needle. Let’s go 20% Off and sell them for $16!

Here’s the math…

40 units x $6 = $240.  Yes, you now need to sell 67% more units just to get the same gross profit! More than likely, as your variable costs go up, you’ll probably need to sell about 70-75% more units to truly break even.

How about 30% Off?

60 units x $4 = $240. If you go to 30% Off, you better be able to sell 250-300% more units to make it up in volume.

That is a lot of extra traffic you’re going to need to draw, and a lot of staff you’re going to need to handle those sales.

GOING HIGHER

When you do the math, making it up in volume isn’t the answer. But ask yourself this question…

If I raise my prices a little, how many sales might I lose?

A 10% price increase could handle a 17% drop in units sold and make you the same amount of gross profit.

See? Those math classes in high school can pay off!

-Phil Wrzesinski
www.PhilsForum.com

PS Yes, you can raise your prices. With the way insurance premiums, taxes, utilities and other expenses keep rising, you have to find ways to make more money just to stay in business. But just a straight increase across the board isn’t the strategy. Download my FREE eBook Pricing for Profit in the Free Resources section to see smart ways to raise your prices (that won’t cost you a single unit sold).