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Author: Phil Wrzesinski

The Price is Right

A recent survey done by The NPD Group states that 85% of customers say that Price will be an extremely important or important factor in where they decide to shop in the future.

I would agree.  In fact, I am surprised it is not higher because almost every single buying decision ultimately ends up being about price.

But before you go around slashing prices, you ought to look at how price influences each purchase.

It starts with what I call the Value Equation.

Does the actual price on the product match the perceived worth of the product?  If it does, the item has Value and you buy it.  That is the decision you and I and just about everyone else makes before we decide to buy an item.  Every single time.  Sometimes that decision takes milliseconds, sometimes it takes days or even weeks.  That is how the buying process works.

You look at an item, decide how much it is worth to you, and then look at the actual price.  If that price is much higher, you are not buying.  If that price is much lower, you wonder what is wrong with it.  Maybe it does not do what you thought? Maybe it is cheaper quality than you thought?  Until you feel comfortable with the reason why it is much less expensive than you expected, you are not yet buying.

The key to successfully pricing your merchandise is to make sure the actual price matches the price the customer has in her mind.  Often you might find you are pricing things too low.

Pricing is important.  So is merchandising (it raises the perceived worth).  So is having the right products.  So is taking care of the customer.

Digging deeper into the statistics from The NPD Group, you will find that…
15% of the population did not list Price as “extremely important” or even simply “important”.
56% said Customer Service was extremely important/important.
60% said Convenience of Location was extremely important/important.
60% said Ease of Shopping was extremely important/important.

Get the price right and the do all that other stuff and the sales and profits will come.

-Phil Wrzesinski
www.PhilsForum.com

PS To learn more about how Perception plays a role in Pricing, download my FREE eBook Pricing for Profit.  You will be surprised at how many pricing mistakes you have made that are costing you real money.

Cultivating Ideas

One of my staff came up to me… “Phil, I have an idea…”

Great!  Run with it!

Don’t you want to hear it, first?

No.  I trust you.  Just tell me when you’re ready to launch.

I could have taken a number of different approaches to this.

I could have…
Patiently listened to the idea, giving my input, tweaking it to my tastes, and telling the employee what to do.  But that would take ownership of the idea away from her.  It would now be our idea and everything would need my approval, input and effort.

If I have not done my job hiring the right people and training them fully about our Character Diamond and how everything must fit, then I might need this approach.

I could have said…  
Do you have it written down?  Get it all on paper first.  Write down everything including costs to the business, benefits expected, time frame to complete, how it fits into the Character Diamond of the store, etc. then bring me the finished idea.  Some of my staff would do that.  Some might lose interest.  Doesn’t sound nearly as fun as actually doing the idea.

I could have said… 
Not right now, I’m busy… (I have enough to do… you have another job to do… I didn’t hire you to have ideas… we’re tight on cash… we don’t need any new ideas right now… make up your own excuse here).  And I would never have to worry about her having an idea again.

But what I really said was… 
I am confident that I have trained you well enough for you to know what I want for the business.  I trust that you are capable of doing great things for the business.  I want to empower you to keep coming up with ideas for the business.  I want you to take ownership of your ideas, thus taking ownership of their results.  

If you want your staff to have ideas, first hire idea people.  Then let them run with their ideas.

-Phil Wrzesinski
www.PhilsForum.com

PS  The hardest part is not putting your own stamp on the idea.  When I let my staff run with an idea, I save all my tweaking for the end and only as suggestions.  The second hardest part is that my wife comes up with some great ideas and she doesn’t work at the store so I have to relay her ideas to the staff by planting seeds so they might take ownership.  The third hardest part is the ideas I have on my own.  I have a lot of them and those are the ideas about which I am the most impatient. Fortunately the staff often takes ownership of those, too.  Especially when I allow them to make their own tweaks and alterations.

Shareworthy Customer Service by Tim Miles

I wrote an eBook called Customer Service: From Weak to WOW!.  You’ve probably downloaded it already (it is free).

Tim Miles wrote one too.  His eBook – Shareworthy Customer Service – is definitely shareworthy.  I have read through it twice and I’m working on a third time.  I am going to use it in my next staff training (and a few more trainings after that).

Yeah, it is that good.  

Go check it out.

-Phil Wrzesinski
www.PhilsForum.com

PS  Tim and I think a lot alike.  If you have to choose between spending money on advertising or on raising the bar of your customer service, raise the bar every single time.  If you have enough money to do both, do the customer service first.

Monthly Chores

Today I…

  • Balanced the store’s checkbook
  • Ran Sales Reports by department
  • Measured GMROI by department
  • Ran current Balance Sheet
  • Ran Profit & Loss for the month and year-to-date
  • Sat down with my buyers to make sure we were on track
  • Monitored Cash Flow*

I’m not bragging.  I’m not even saying I liked doing any of those things.

I am more Big Picture than I am Data & Details.  But it takes Data & Details to draw the Big Picture.  So I spend a few hours on the first of each month drawing the Big Picture with all of that Data & Detail.

Keeps the Big Picture clear in my head.

You, too?

-Phil Wrzesinski
www.PhilsForum.com

*I actually do this daily, not monthly.


PS  The hyperlinks above take you to a couple really cool documents that help you understand those calculations.  Most people won’t bother to click on those links.  But then again, you are not most people.

The Goldilocks Effect

That porridge was too hot.  That porridge was too cold.  But this porridge is just right.

And so goes the fairy tale we all know as Goldilocks.

And so goes the dilemma all retailers face.  How do we have a “just right” product for all the Goldilocks who walk through our doors?  Do we go deep? Or do we go wide?  Do we stick to the tried and true or do we jump on the cutting edge?

The answer depends on the type of Goldilocks who enter your door.

Are you a tourist town with plenty of one-time visitors?  Stock it wide and shallow.  Cover a whole bunch of ground with a wide variety of product, but not deep on anything.  That way you can appeal to the wide variety of tastes.  Plus, you’ll generate word-of-mouth as people marvel at your amazing selection.

Are you selling a commodity that brings people back in the store time and time again?  Then go deep on the top two or three selling items in each category.  Make sure you always have the best sellers in stock.  Never run out.  You’ll win the reliability game and make it up in volume.

Are you selling uniqueness to the same base of people?  Rotate your stock.  Keep bringing in the new and exciting.  Move things around regularly.  Go for the seasonal, the fads (that you like), and the out-on-the-edge products.  People will come back time and again to see what is new.

Are you selling quality?  Stock a good, better, best option so you have something for those who want Mercedes on a Mercedes budget and those who want Mercedes on a VW budget.  The dress sellers know that if you want to sell a $500 dress you better show an $800 dress.  But always show the filet mignon first.

There are a lot of Goldilocks out there.  The key is knowing which Goldilocks are coming through your door.  Figure that out and your products will always be “just right”.

-Phil Wrzesinski
www.PhilsForum.com

PS  Yes, it does make sense to try to cater to only one set of Goldilocks.  You cannot be everything to everyone.  Even Wal-Mart knows who to leave out.

PPS  No matter how you stock it, you still need your inventory to make you money.  For some great tips and two critical formulas you need to be calculating, download my FREE eBook – Inventory Management.

An Expensive But Effective Form of Advertising

I was doing my presentation Customer Service: From Weak to WOW! yesterday, talking about how to deal with unhappy customers.  Someone brought up the question…

“But what if there is a problem with the product and the manufacturer won’t back you up?”

I answered that I have taken a loss on products a number of times to make the customer happy. The only difference is that I did not look at it as a loss of money.  I looked at it as an opportunity to be her hero.  I looked at is an opportunity to be helpful, to make her smile, to turn her from unhappy into evangelical.

Do you know how much it costs to turn one customer from unhappy into evangelical?

Better to ask, how much more will it cost if you don’t?

The losses from that transaction are not losses. They are advertising expenses.  Think of it that way and you will never hesitate in doing the right thing.

-Phil Wrzesinski
www.PhilsForum.com

PS Yes, I have then dropped a vendor for refusing to back me up.  But that is a whole different story.

That Kind of Customer

Don’t you just hate the customer who walks in, looks around, and then asks, “What kind of deal can you make me?”  No deal, no special, they aren’t buying.  Not only that, they are walking out grumbling as though you missed the boat. Everyone else has a special. Why not you?

Let me ask you this…

Would you rather have a customer who comes in once a month and spends $50 on regular priced merchandise or a customer who comes in twice a year to buy $315 worth of merchandise for $300?

We hate that second customer, don’t we?  Can’t stand seeing them walk through the door.

Yet we are all guilty of being that kind of customer.

I’m attending a conference and trade show for the juvenile products industry this week.  In a couple days I will walk the trade show floor asking every vendor what kind of incentive they will give me to place an order.  5% off?  Free freight?  Extended dating?  All of the above? Go big or go home.

And the vendors look at me the same way I look at my customers who do that.

Here is the funny thing…  Unless the deal is really big, writing two orders a year is the surest way to put you in the poor house. It’s bad for cash flow.  It’s bad for product mix.  It’s bad for flexibility for your store.  When you place orders that big, you tie up a lot of money, a lot of showroom, and a lot of warehouse space under the hope you can sell it.

But what if you don’t?

Your store will actually have more cash, more flexibility, and more profit if you made six or more smaller orders at full price than two big ones at minimal discounts.  First, you would have more flexibility to always be in stock if one item starts selling fast.  Second, you would have less dogs to markdown when an item dies on the vine.  Third, you would have the cash in hand to pay for the order before the terms came due.

And finally, you would become the kind of customer your vendor wants to do business with.

Be that kind of customer.  It will improve your relationships with your vendors and bottom line.

-Phil Wrzesinski
www.PhilsForum.com

PS  But still ask for those discounts when you do go to the trade shows.  Just don’t stretch your order to get them. More often than not you’ll lose all the discounts by buying stuff you don’t want or can’t sell. Better yet, ask for smaller minimums so you can make more small purchases throughout the year instead of just waiting for the next trade show.  For more on how to manage your cash flow and inventory download my FREE eBook Inventory Management

How Good are Your Sales Reps?

Maybe I am biased.  My sales reps are for the most part pretty good.  Maybe it is because I am a big account in this territory.  Maybe it is because we just have good reps in our area.  Maybe I am just lucky.  But I get frustrated when I hear other retailers complaining about their reps.

Sure, there are some bad reps in my industry, probably in your industry, too.  But I believe they are only bad because you have not trained them well.

What?

Yes, it is your job to train your sales reps to do exactly what you want them to do.  Do you want them to straighten the department?  Do an inventory for you?  Make suggestions of best sellers?  Steer you away from duds?  Communicate quickly and efficiently?  Accurately place orders and follow up on them?  Handle problems with shipments, problems with defects, problems with billing errors?

Let me ask you.  Do you…

Explain in detail your expectations of your reps?  Reply to every one of their emails even if just to say, “Thanks, I got it.”?  Show them how you want inventory or merchandising to be done?  Explain your product philosophy in detail so that they know what products will and won’t pass your scrutiny?  Keep them informed of how their products are (or are not) selling?  Give them details of what you expect once an order is placed (confirmation of order? confirmation of shipping?)?  Keep them in the loop when there are problems by cc’ing them all emails to the company?  Make sure they get commissions on your show order when they stop in but you would rather drop off the order at the booth to get the special?

I work with rep groups, independent reps, and in-house reps.  For the most part I know our reps well.  We talk about family and life sometimes more than we talk about business.  And even though they may get paid by the vendors, I consider them to be employees of my store.  And since I am responsible for training my sales staff to do their job the way I want it done, I am also responsible for training my sales reps to do their job the way I want it done.

If you are not getting the kind of sales representation you want, you have every right responsibility to train your reps to do it the right way, your way.  After all, you are the customer.

-Phil Wrzesinski
www.PhilsForum.com

PS  I challenge you to re-read this blog, only replace “sales reps” with your sales staff and consider “you” to be your customers.  Food for thought…  Are you doing things the way your customers want it done?

Back it Up

I’m writing this from my laptop – not because I am traveling but because this morning when I arrived at work my desktop computer would not start.

Yeah, the desktop was old.  Was running Windows XP.  Was running Microsoft Office 2003.  I think it died of old age. This time I will finally replace it.  I’m just hoping they can recover the hard drive.  Not because I failed to back it up. I do that regularly.  Just because I don’t want to go through the hassle of reloading all the programs.

But it got me thinking… What changes have I made since the last backup? (Saturday)

The only major one is the schedule for the staff I finished yesterday.  If I have to, it won’t take long to recreate from a hard copy.  Plus, I tweaked a couple of my presentations – and I can tweak them again easily enough.

What changes have you made since the last time you backed up your computer?  How much work will it be to recreate those changes if your computer dies mysteriously?

Back it up.

-Phil Wrzesinski
www.PhilsForum.com

PS The worst thing about the computer dying is that I usually become a basket case waiting to get my computer back.  Thank God for laptops and wi-fi.  Maybe I can finally clean up my office today, too.

What Do You Sell?

I don’t think I know any toy store owners who didn’t like the movie Mr. Magorium’s Wonder Emporium starring Dustin Hoffman and Natalie Portman.  It immediately made my top 5 list of all-time favorite movies.

For me, the beauty was in the name of his store which described what he sold with ultimate clarity.  Mr. Magorium did not sell toys.  He sold Wonder.  Pure and simple, unadultered Wonder.

I’m pretty sure that after a couple hundred years in business, Mr. Magorium knew a thing or two about branding, too.

I am not in the business of selling toys.  I sell Nostalgia, Education, Assistance and Smiles.
I am not in the business of selling baby products.  I sell Nostalgia, Education, Assistance and Smiles.

And when I recognize that, it makes it easier for me to choose what products to fill the store.  Does the product fulfill my goal of selling Nostalgia, Education, Assistance and Smiles?  If so, on the shelf it will go.

The easiest way to keep from being boxed into a corner is to change your thinking from what products you sell to what ideals you sell.  Products are fickle and have limited shelf life.  But ideals and values are lasting and unchanging.  More importantly, ideals and values attract customers who share those ideals and values, customers who will become loyal followers and evangelists for your business because you speak to their heart.

That is the true essence of branding and the true brilliance behind Mr. Magorium’s WONDER Emporium.

He sells Wonder.  What do you sell?

-Phil Wrzesinski
www.PhilsForum.com

PS  For more about branding and core values, download my FREE eBook Understanding Your Brand and the accompanying Worksheets.  It may be the most worthwhile exercise you do for your business.