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Author: Phil Wrzesinski

Turning Your Customers Into Fans

I’ve just posted a new Freebie on my website based on the presentation I gave in January at the IDEX Show.

It’s called Turning Your Customers Into Fans.

If you want to grow your business, you can use traditional marketing and advertising. But everyone knows that Word-of-Mouth is the strongest form of persuasion. And you’ll get far more WOM if your customers aren’t just customers, but are stark raving fans, evangelists for you.

Knowing how to turn them into fans, and how to empower that evangelism is now available for you free of charge. Check it out.

Cheers!

-Phil

The Local Parenting Magazine – Is it Right For You?

My wife and I started a local monthly magazine for parents in Jackson, so I knew exactly what was going on when a colleague of mine asked my opinion about advertising in the magazines like this in his area.

In his city there are multiple magazines distributed through OB/GYN offices and other locations where parents might go. They are printed once or twice per year with a focus on editorial content aimed at their target audience of parents & families.

He had been running full page ads in each under the belief that (in his words) “if we consider ourselves to be the best and we have the most stores, how do we not have the biggest ad in the best location in the book?”

But, as those of you who have been in this situation know, these ads can be expensive. Here are the three specific questions he asked:

  1. Should I continue to be in these publications?
  2. What size ads should I do? My latest opinion is not to do full page ads. I feel like stores that have full page ads seem like they don’t need the business because they can afford full page ads. Is that crazy logic?
  3. Should my ads be more branding or should they call for a direct response. Should I feature a product, talk about our unique qualities, or do an ad that talks more about the customer.

Here is my response…

Local parent/family magazines are a lot like yellow pages. They are a print resource that someone might use to find information. The first question is what information are they using it to learn? And the second question is whether or not they are looking at the ads for that information, too.

Our magazine was printed monthly, picked up by parents and brought into the home. The most important element was the community calendar of kid-friendly activities for the month. The advertisers that did the best were those that advertised events and activities.

So to answer the question of what type of ads should you run, the answer is run the kind of ads that people reading these magazines want to see. If the magazine is all about pregnancy issues, run ads about comfort straps or maternity clothes. If the magazine is all about parenting topics, run ads about educational toys. In print ads, the most important element is what is relevant to the customer. You and your business are not relevant, but the products you offer or the events you’re holding are relevant. Because of the lack of frequency, events (unless they are continual like “every second Tuesday”) won’t work in these publications, but products will. Advertise a product that is most relevant to the readers of the magazine (whether or not it is most relevant to you – the goal is to get them to read the ad first).

And yes, running two smaller ads is better than a full page. Roy Williams found that full page ads are often skipped because there is nothing relevant on that page. Half page ads actually get seen more. Since one half page ad beats one full page ad, two half page ads about two relevant products would be exponentially better than running full page ads.

But the bigger question is should you be spending this money at all? Magazines are great at reaching niche markets, but the two killers are expense and lack of frequency. The pitch that magazine sales people give you (I know, I was one) is that you “have” to be in that book to be legitimate. As you said yourself…if we consider ourselves to be the best and we have the most stores, how do we not have the biggest ad in the best location in the book?

But is that advertising or bragging? Yellow pages have made a mint off us using this same approach…”you have to be in our book or no one will see you”.

If I were you, I would look at the dollars you spend there and decide if you think it is the absolute best way to spend your ad money. If the answer is yes, make some killer ads about relevant products and proceed forward. If not, decide where best to put your ad dollars and drop the magazines without looking back. Yeah, they’ll hound you to get back in, using lots of guilt in the process, but you can’t be everything to everybody. You have to look at it cold and calculating. You have limited ad $$. You have to use that $$ in the way that makes most sense for you and your business.

Another thought… Just because your competitors do something is not the reason you should do it. Sometimes it is better to do something completely different that they aren’t doing than to try to match them step for step.

If you have ever watched a sailboat race the tactics become quite obvious. The lead boat always matches the trailing boat’s moves to cover their position. But the trailing boat knows it needs to do something no one else is doing if it wants to overtake the lead boat. Are you the lead boat or the trailer?

That’s what I told my fellow retailer. And now I’ve told you. Do you agree?

-Phil

Make Your Emails More Effective

Here are two tips from a recent Jackson Retail Success Academy class for making your quick emails to colleagues and customers more effective and better received.

  1. Make your Subject Lines more descriptive.
  2. Make only One Point per email.

How often do you scroll back through old emails looking for that one message about that one certain meeting only to see six emails all with the same single word subject line “meeting”? Wouldn’t it be easier if the subject line instead said something like…

“Meeting Wednesday, March 3rd 11am about Payroll”

Not only do you get more information across to the recipient before they even open the email, they also have the ability to find that specific email easier amid all the other clutter in their inbox or folders.

Making one point per email should seem automatic, but I know I’m guilty of trying to cram too much into each message I send. And I’m also guilty of not reading past the first point and often missing multiple points in messages I receive. How often do you think the recipients of your emails do the same?

Since there is no extra charge for sending multiple emails, send one for every point you wish to make. Write a clear, detailed subject line and put only one point into each email. The other benefit of doing this is that if both points require a reply, but one point can be quickly answered while the other takes time, two separate emails give the recipient the ability to reply to both in the proper amount of time each requires.

Not only will your recipients thank you, they’ll understand you better and respond more timely and thoroughly.

-Phil

Winning Gold for Your Business, Olympics Style

While watching the Olympics with my wife I came to a startling realization. In the three hours of an NBC telecast there is probably only about 45 minutes of actual sports taking place. The rest is background stories, analysis, and commercials.

Since my wife and I tape it on the DVR, we quickly forward through the commercials (note to you TV advertisers, there is still a way to get my attention even as I fast forward.)

But while I want to get right to the action, my wife loves all the backstories on the different athletes. She eats that stuff like chocolate. Being the dutiful husband, I watch along with her.

The other night we saw a story about the Chinese Freestyle Skiing Aerial Team and their American coach. After the story, I found I was almost rooting for them to do well. The Chinese team? Yeah. The story gave them character and personality, and helped me relate to them.

Time and again, after hearing unique and compelling stories, I found myself rooting for whichever athlete was featured.

There is a business application here. TELL YOUR UNIQUE AND COMPELLING STORY. Tell the world who you are and why you’re here. Let the outside world into your inner thoughts and feelings. Show them the human element behind your corporate business, the faces of the people behind the name on the sign. Give people your backstory, your reason for entering the competition, and they’ll root for you, too.

Here’s an easy way to do it:

  • Get a Flip Camera or some other inexpensive way to shoot videos.
  • Set up a YouTube account (they’re free).
  • Shoot video tours of the store.
  • Shoot short video interviews of the staff (2-3 minutes).
  • Tell as much personal stuff as you’re willing to share.
  • Talk unscripted about why you opened your store or what makes it so much fun to you.
  • Post the unscripted/unedited videos to YouTube and Facebook and your website.
  • Play the videos on a loop in your store.

Do this and you’ll make connections with customers that will turn them into fans rooting for your success. They’ll be cheering you on to get the gold (in many cases, their gold:-).

-Phil

PS Two reminders on videos…

Make them short (2-3 minutes tops) so they load quickly. Nothing worse than waiting 20 minutes for a ten-minute video to load. For some, that will be deterrent enough to never watch.

Make them unscripted and unedited. This way they show off the real you, not some phony poser that everyone will see right through. The real you is good enough if you have the confidence to be that person openly. The real you is who we want to root for, not some corporate image of you.

I’m Sharing My Biggest Secrets

But not right here… (at least not yet:-)

Thursday, Feb. 25 from 8:30am to 11:30am I am doing a 3-hour workshop with the Greater Jackson Chamber of Commerce to share the biggest secret behind the incredible success of Toy House and Baby Too.

(Success? Besides growing and remaining profitable while in a shrinking industry and shrinking population, Toy House and Baby Too was recently named one of The 25 Best Independent Stores in America in the book Retail Superstars by George Whalin.)

The class is:

“Accelerated Branding: Taking Your Advertising and Your Business to a New Level”.

All the best stuff I learned from two incredible people; Roy H. Williams, aka The Wizard of Ads and David Freeman, the best screenwriting master you’ve never heard of.

In three short hours you will learn more about how advertising works (and doesn’t work) than most marketing professionals. And you’ll be able to harness that knowledge to accelerate your business no matter what the economy is doing.

I’m going to show you how to make your advertising work better (without spending a penny more) so that you attract more customers, get them to spend more, make them more loyal, and empower them to bring you even more business.

The cool thing is that there are no gimmicks, no radical changing of the way you currently run your business, no unethical or impractical practices. I’m just going to show you how to unlock the potential that already exists in your business and teach you how to harness that energy so that it works for you.

It will be a hands-on workshop in which you’ll create a simple blueprint that will guide all of your advertising (and business) decisions along with a number of examples how to put your plan into action.

  • It will be fun. (Hey, I play with toys for a living – If I’m doing a workshop, it’s gotta be fun)
  • It will be eye-opening (The downside is that you won’t ever look at advertisements the same after this class.)
  • It will be well worth your time (3 hours? $25? I’m kinda surprised the Chamber is giving away this program so cheaply – I paid many thousands for this same info and charge many hundreds to give it out individually as a consultant.)

Contact Mary at the Chamber (517) 782-8221 to enroll. But be warned. There is pre-class and post-class homework (not to mention in-class work, too). If you’re not willing to do the work, don’t bother calling. We’ll give your seat to someone who wants to grow their business leaps and bounds.

See you Thursday!

-Phil

PS If you’re one of my out-of-town followers, you’re welcome, too. The price is $40 for non-Chamber, non-Midtown, non-Jackson Local First members. That, and a little travel will be some of the best money you spend all year. If it isn’t, I’ll pay you back the $40 fee and take you to the best lunch you’ve ever had right after the class.

Ads That Moved My Needle

There weren’t many.

Last night had to be the worst round of Super Bowl ads I’ve ever seen. There was only one ad all night that I replayed for my wife to see. It was Google’s story of a trip to Paris.

It had an interesting storyline that spoke to the heart. It gave you new information about what Google Search can do. How many of you knew you could check your flight information in Google Search? It had elements of surprise. How many of you were eagerly anticipating what was being assembled? And most of all, it didn’t insult your intelligence.

The other ad that made me think was the Flowers in a Box ad from TeleFlora.com.

It was a direct contrast of them versus ProFlowers.com which is heavily advertised on ESPN Radio, which kinda gave it a CBS versus ESPN feel.

That’s the short list of ads that moved my needle. As for the others…

Doritos? I may never eat one of my favorite snacks again for fear that I’ll become one of those weirdos in their spots.

Bud Light? Has anyone on the planet ever known a real person react that way to a Bud Light? Basically, their ads all said the same thing. “Our ads don’t even come close to matching your experience with our product, which means we’re a bunch of liars, and you’ll never guess what else we lied about.”

Budweiser? What was that longhorn ad about? Cross-breeding?

Vizio? Better than most, but I’m not into all those Apps, and was almost about to tune out those robotic arms – couldn’t quite see what they were doing.

GoDaddy.com? What are you? A porn site? Only one of their ads actually said what they did. The rest were just come-ons to get you to their site (where Danica keeps her clothes on).

Sketchers? Just exactly how does your shoe shape me up better than the others? Tell me how and I might listen.

And the two back-to-back “guys in their underwear” ads was too creepy to even give mention to the lame companies who ran them (and the network to air them one after the other).

Overall, I think Hyundai had some decent ads. They definitely told their story differently than Dodge. I think every woman who saw that Dodge ad decided never again to give Chrysler the time of day. Hyundai chose to give us concrete facts without offending our sensibilities – a concept lost on most other commercials.

And finally, although the eTrade ads were cute the first time around, they are getting tired and predictable and once again reinforced my desire to never do a business with a bunch of spoiled, arrogant babies.

So what moved your needle? Did any ad speak to you in a persuasive way? I’d love to hear your comments.

-Phil

The Oscars of Advertising

To the general public, tonight’s Super Bowl broadcast is the Oscars of Advertising. Like you, I get as much enjoyment out of those multi-million dollar blips on the screen as I do the actual game.

And Monday morning, I’ll be talking about my favorite ads at the water cooler, too. But my criteria might be a little different from everyone else.

What I’m looking for is ads that have the power to move the needle. Entertainment? Yeah, it gets my interest. Humor? Yeah, I like to laugh. But the real power in an ad is not how entertaining, funny or heart-warming, but how persuasive it is. Does it move me closer to the product or company? At the end of the day, if the ad doesn’t bring you more business, it doesn’t matter what the critics think. Your ads have to persuade people to remember you, use you, believe in you. Anything else is just fluff.

As every year, the beer ads are the heavy favorites, and although entertaining, there has only been one beer ad that ever moved my needle… (See it here)

It isn’t very funny or heart-warming, so-so on the entertaining side, but they make one powerfully compelling point at the end (which they back up with the kind of hard evidence that would make Tom Wanek happy) that sent me running to the local grocer. It’s now my favorite light beer.

I’m curious to know which ads you saw during the Super Bowl that had the power to move your needle. What ads drew you closer to the company or product? I’d be willing to wager that your list and my list will be different from most of the critics’ lists.

Let the game begin!

I’ll post my thoughts later in the week.

-Phil

Profits versus Cash Flow – Which Will You Choose?

Sometimes in retail you are faced with a difficult choice. In a tough economy, one of those choices is Profit vs. Cash Flow.

Sometimes you have to give away your profit to get more dollars streaming through the till. Sometimes you have to give up chasing dollars just to protect your profit margins.

The question is when do you choose Profit or when do you choose Cash Flow?

The answer is when you know exactly where your business stands, where you want to go, and what you need to do to get there.

For instance…

My goal for this past year was to show a profit. The bank gets a little nervous when you don’t show a profit, and to guarantee a renewal of my line of credit in these tough lending times, I knew that showing a profit would give the bank confidence in my stability and ability to succeed.

Last November I made a conscious choice to go after profit instead of cash flow. I chose not to run a direct mail coupon incentive that I had used in previous years. The trade-off was dramatic. Sales were down for November because I gave no incentive to shop early. Profit margin was way up, though, because I didn’t give away the house.

But as I looked at the lost sales in November, the question begged… Did I lose those customers for November or lose them for good? The answer came quickly in that first week of December… I only lost them for November. At the end of the two months my sales were where I expected going into the season, down only slightly. But my profit was up for the same period compared to last year. Had I run the coupon, I would have increased sales (cash flow) but decreased profit.

Because I knew my goals and knew what I needed to do to achieve them, I was able to be successful. Because I knew how my choices would affect my cash flow and profit, I was able to choose the right approach.

So what is the right approach in your business? It depends on your short and long term goals. Do you need to improve cash flow to fund a new project? Or do you need to show a strong financial statement to your investors? Do you need to improve cash flow to pay off your vendors or do you need to grow your profit to pay off yourself?

When times are good, you can do both at the same time. But when times are tight, you sometimes have to choose. Choose wisely, my friends, by knowing your goals and the means by which you will achieve them.

-Phil

PS The choice was made easier because our cash flow had been strong up to that point. What I lost in cash flow was allowable because I had built up cash flow from the previous year (at the expense of profit) Sometimes it is a seesaw between the two.

Two Ways to Increase Profit Margins (Without Bullying Anyone)

There are two simple ways to increase your profit margin. The first is to increase your prices. The second is to have fewer discounts and sales. (There is a third method to higher profit margin – lowering the cost of the goods, but that involves the vendor, which doesn’t qualify as simple)

Did you know you could increase prices on some items and actually sell more at the same time?

Quick, without thinking too hard, tell me how much you would pay for a toilet plunger. Five bucks? Ten? What if it had a Vermont Pine handle and was made in the USA? Fifteen?

What if your only toilet was clogged and your wife was pregnant? Twenty Dollars?

Our perception of the cost of many items changes based on our needs and our belief in the product.

By the way, I just bought one the other day for $1.99 – well below what I would have gladly paid for one. (No, my wife is not pregnant.)

Too many retailers make the mistake of pricing items based on their cost. We dutifully take the cost of the item and use some factor or calculation to determine a retail price.

What we miss in this calculation is the human element of the equation. When a customer walks through the door she immediately starts making mental calculations on the Perceived Worth (PW) of each item she sees. If it’s something she doesn’t need, the PW is zero. But if it’s something she needs, she assigns a dollar value to it. Then she checks the price tag. If the price and her PW match, it’s pretty much a guaranteed sale.

But if they don’t match, a second evaluation takes place.

If the price is higher than her PW, she’s not buying.

If the price is lower than her PW she’s going to ask, “What’s wrong with this?” Until she answers that question to her satisfaction, she’s also not buying.

This mental calculation is going on in your store every single day and costing you sales and profits because of it.

Here are two tips for pricing your products that use this knowledge to your advantage.

First, when a new item arrives, before you price it, take it around to your staff and ask them how much they think it is worth. You may be surprised to find that the PW of an item is often higher than the price you were going to mark it.

Second, think about prices the same way a customer thinks about prices – in rounded off numbers. No woman ever looks at a dress and thinks, “Wow this looks like an $87 dollar dress!” It’s always numbers that end in zero or five. It’s a fifty dollar, seventy-five dollar or hundred dollar dress. So don’t price something $97.99 when perceptually it’s a hundred dollar item. You’re just giving away two bucks. The same is true with smaller amounts. $28.99 and $29.99 are the exact same price to a customer – both are a thirty dollar item. But to you, that extra dollar is your profit. You’d be better off standing at the front door handing out one dollar bills than giving them away blindly on a poorly priced item.

If you want even more tips on how to increase your pricing while actually making your merchandise look more affordable, download this free eBook Pricing for Profit.

The second thing eroding your profit margin is sales & discounts.

You keep hearing that everyone is looking for a bargain. The data backs this up. Kinda. A National Retail Federation survey showed that 40% of shoppers were looking for sales & discounts to determine where they shop. Another 12% were looking for everyday low prices. By my math, that only comes to 52%. The other 48% were using some other non-price-related criteria for determining where to shop.

You don’t have to discount to get traffic. But you have to give customers what they want. And according to NRF, 48% want a great selection, great service, and a great experience. And those customers are willing to pay for it.

If you keep offering discounts, coupons and sales every time you turn around you’re doing two things to your business.

  1. You train your customers to wait for a sale
  2. You train your customers that regular price is too high

If that’s what you want, good luck. But if you want to increase your profit margin, you have to wean your customers off the sales, coupons and discounts and start offering them over-the-top customer service.

We gave up our one and only coupon this year. We lost a little bit of sales in November (when the coupon normally ran) and made some of it up in December. Best of all, we had a higher profit margin for the two months, which more than made up for the lower sales.

Bottom line? Our bottom line improved. We increased our profit margin another point. And that has made all the difference.

-Phil

Inventory Controls That Work

Open-to-Buy is great for businesses with vendors who ship quickly and can pinpoint delivery with consistent terms. It works great for businesses whose monthly/weekly/daily sales are predictable. It is a super system for companies who can give the system full-time attention.

In other words, for the Independent Retailer, Open-to-Buy sucks!

I’ve looked at a half-dozen OTB methods, none that I could ever get to apply to my business. Too many vendors with different terms, different minimums, different seasonal needs, different availabilities. If I tried to run LEGO on an OTB, we’d be OOB (out of business). I sell it all in December, but if I don’t order it to arrive in August, LEGO will be sold out and I’ll get nothing.

Instead of an OTB, we followed these three simple principles this past year that gave us the results we wanted.

Don’t be out-of-stock of the Must-Haves. We define Must-Haves as any product that we sell more than 36 pieces a year. You probably already know intuitively what products you sell on a regular basis that you always have to have in stock. Make sure you have enough of those items at all times. (Note: You can define your must-haves by whatever criteria you want. Just make sure you always have them.) This way, although the rest of your stock might be low, the customer always thinks your stock position is strong. The fewer times you have to say, “No, I’m sorry, we’re out-of-stock,” the better.

Don’t out-buy your Dating Terms. If the vendor gives you 30 days to pay the invoice, don’t buy more than a 60-day supply (assuming keystone or higher mark-up). Sure, sometimes this doesn’t work (see the LEGO example above). Sometimes the minimum order is more than a 60-day supply. Fill your shelves with that first order, but don’t re-order until you can order within the terms. And whenever possible try to get longer terms from your vendor.

Two ways to extend your terms:

  • Ask your vendor – especially if you are ordering new stuff. If you have a strong credit rating or excellent payment history ask for an extra 30 days. Remind them that it will help you to buy/try more. Then be absolutely sure to pay that bill on time.
  • Pay with a Credit Card the day the invoice is due. This give you an extra 20-30 days depending on your credit card agreement. (Make sure you pay that bill on time, too – fees and interest will kill any deals/savings you get.)

Minimum orders are Okay – Don’t buy what you Don’t Want. You don’t always have to increase your order just to get whatever special is available. Discounts, Free Freight and Extended Dating are nice, but not always necessary. Sometimes you find yourself buying stuff you don’t want or need just to qualify for the discount. After paying interest on the money you borrowed to pay the invoice, plus taking a markdown on the products you didn’t want and couldn’t sell, you’ll find that the special wasn’t so special after all.

The best specials your vendors can offer you are:

  • Extended Dating – Net 60 or Net 90 do more for your cash flow than anything else. Always select this option first if given the choice.
  • Free Freight – Depending on where they ship from, this can be as much as a 15% discount – great for the bottom line profit.
  • Deep Discounting – 5% is no incentive. 10% isn’t much either. To be considered Deep you need a 15% or better discount. Don’t ever over-buy your dating terms for less than 15% off (the equivalent of Free Freight). Even then, only buy what you know you will sell.

Dating does the most for your Cash Flow. Discounts & Free Freight really only help the Profit/Loss. Go after the special that meets your needs.

There will always be times when you have to over-buy. But choose them carefully. Do it for your Must-Haves. Do it when the dating terms are favorable. But if you ever find yourself thinking, “I’m not sure I really want to buy that,” then don’t!

We decreased our average inventory by over 10% this past year (while only losing 4% in top line sales). This caused us to have a higher Gross Margin Return on Investment (we made more money on the money we spent) and better Cash Flow. Follow those three principles and you’ll see an improvement in your business, too!

-Phil