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Why, Why, Why, Why, Why – A Simple 3×5 Question We All Need to Answer

You know me. I like to learn. When a friend of mine offered me the chance to sign up for her new six-week online tutorial for launching a new business, I jumped at the chance.

Frances Schagen has helped over a thousand businesses get started. That’s an impressive number. You might remember her name because I quote her at the beginning of the Free eBook Reading Your Financial Statements.

“What gets measured gets done.” -Frances Schagen

Frances was instrumental in proofing and helping me get the math and concepts right in that eBook and also a bigger financial statements book I wrote for the toy industry. She is a smart lady and I’m lucky to get to learn from her.

You can join Frances’ club, too!

Her new project is “Six Stages to Building Your Effortless Business.” Earlier today she had an online chat with those of us in the current class. She also gave us homework.

With her permission, I am going to do my homework throughout the class live on this blog. 

Not only will you get to see how I am building my business, you’ll get ideas that will help you with your own business.

THE OWNER’S STORY

The first stage is The Owner’s Story. The first worksheet and homework for me to do is the 3×5 Whys Project. I have three questions I need to answer. For each question, however, I need to answer five “whys.” The purpose of this sheet is to really dig deep to uncover my story, why I want to start this business, why I want to go into this field, and what I hope to accomplish. Here are my answers:

Why are you starting a business? Why have you chosen this way to make your living?

Why #1 – I have chosen this way to make a living because of my Core Values of Having Fun, Helping Others, and Education. I find writing and speaking to be incredibly fun, helpful and educational.

Why #2 – I am starting a business because I like being my own boss, calling my own shots, being responsible and accountable for my own mistakes, and choosing my own schedule. As a single parent, it gives me flexibility to be the parent I want to be, too.

Why #3 – I have chosen this way to make a living because I like travel and meeting new people.

Why #4 – I am starting a business because I need to make money. I have one child in college and another starting college next year. I have living expenses and not enough retirement money saved up.

Why #5 – I have chosen this way to make a living because I see a decent income potential. While I don’t ever expect to be one of those high-profile speakers who gets tens of thousands of dollars every time he steps on stage, if I can find two or three opportunities to speak or lead a workshop each month I can make a decent living. I also believe I can do this type of job long past the typical retirement age, which not only gives me more income potential, but also keeps me active and fulfills my own needs for a long time.

Why have you chosen this field? Why are you doing this work?

Why #1 – I have chosen writing a blog and books, and doing workshops and presentations for small business owners because it is the topic I know best and have the most personal experience.

Why #2 – I have chosen this field because I know how little true help there is out there for indie retailers. I have belonged to several retail owner groups over the years and have heard the questions. We all bring some expertise to the arena, but running a retail business requires you to wear so many different hats that it is impossible to know everything. Too much of our learning as business owners is done on the fly, often the hard way through trial & error and learning from our mistakes.

Why #3 – I am doing this work because I believe I have a talent in both the writing and the presenting. I have been told several times that my super power is the ability to break down seemingly complex ideas into understandable thoughts.

Why #4 – I am doing this work because it satisfies me. I take more pride in hearing how something I said or wrote made a difference for your business than I do in just hearing, “Nice job,” or “You did good out there.” My favorite testimonial to date came from a guy at SuperZoo a few years ago who said, “You’ve saved my business AND my marriage!”

Why #5 – I have chosen this field because I have been on the other side of the equation, asking the questions small business owners ask, searching for the resources and answers. I know a lot of the answers from making the mistakes and learning from them. I also know where to go to find more answers because I have done those searches. I want to be that resource for others.

What global problem do you want to solve? (however you define that) What change do you want to make?

Why #1 – I want to help small businesses, primarily indie retailers and entrepreneurs, to find their success.

Why #2 – I recognize that the field is slanted toward big businesses with deep pockets and strong lobbies, but I believe there are plenty of ways for small businesses to compete and thrive. The tools are available, but sometimes we need people to show us how to use those tools. I want to be that person.

Why #3 – I want to encourage shopping local. I have seen enough studies to know a strong local retail presence will further strengthen the local economy. But I also believe local businesses need to be better than they have been if they want to keep the local dollars in town.

Why #4 – I believe small business owners care more than large corporate CEO’s. CEO’s focus solely on the shareholder. Small business owners don’t have shareholders, so they care more deeply about their employees, their customers, their community, and even the environment. If I can help small business owners develop, grow, and find success, I can bring caring back to this world.

Why #5 – I believe in generosity. When we give more of ourselves, we encourage others to give. Whether they pay it forward or pay it back. I want to live in a world where generosity is the default, not an outlier. It starts with me. That’s why I have this blog and the Free Resources page. That’s why I answer every question emailed to me.

 

Whew! That was a little harder than I thought. Coming up with five answers to each of those questions was not as easy as I originally thought. But I can see the importance of this exercise. In our online chat today, Frances helped us try to clarify what we want to do and why we want to do it. Some of those answers above have helped me realize what I really want to do.

I would encourage you to answer these same questions for you and your business. Often we get into business because of one reason, but once we get there and have to juggle all the day-to-day problems and wear the many hats, we forget why we’re here in the first place. That’s when business is no longer fun and you’re merely in the game for survival. As you can see from the above answers, I don’t want that for you.

-Phil Wrzesinski
www.PhilsForum.com

PS You can still get in on this class if you want. We only just started today. The real meat begins next week. Contact Frances if you want to play along.

PPS Now you also know a little more about what drives me to do what I do. The ultimate goal for me would be to have two or three paid events each month where I am presenting or leading a workshop, leaving the rest of my time to write and mentor other business owners. If you know of any organizations such as your Chamber of Commerce, DDA, Main Street, Shop Local, or trade association looking for a professional speaker, please let me know. I’d love to do a live event in your town or at your next event.

What Value are You Selling?

Sell “Play Value”

That’s the first line of the business plan my grandfather wrote back in 1949 when he founded Toy House. I found his spiral notebook with the plan while looking for something else in the archives of the store. Page two outlined the possible names for the store including Toy House and House of Toys.

Having written a few business plans over the years, what fascinates me is the simplicity of what he started out to do. He didn’t say he was going to open a retail shop. He didn’t even say he was going to sell toys. He was going to sell something of value—“Play Value.”

In an interview I did with my grandfather a couple years before he passed away I asked him what he thought was the reason for the long success of Toy House. We were about to celebrate our 60th year in business. He said, “I think its because we didn’t set out to be just a toy store. We wanted it to be a store of value. I’ve always sold on the value.”

In a 2005 survey I sanctioned about toy shopping in Jackson, the survey respondents were asked to name the first store that popped into mind when certain words were read. We were mentioned most for words like Friendly and Helpful. Walmart owned Affordable and Cheap. Kmart owned Dark and Dirty. Toys R Us owned Cluttered and Confusing.

The most surprising result from that survey was that we also owned the word Value.

While my competitors were advertising low price, I was talking about Play Value. While my competitors were offering discounts, I was teaching customers how to calculate the True Cost of a Toy (Cost per Hour of Play).

Value.

Products come and go. Nothing is exclusive anymore. You’ll never make it in retail if your only calling card is exclusivity of product. You need to be clear on what you are really selling.

Your competitors are going to advertise the heck out of brands and discounts. If you want to stand in stark contrast to them, advertise the Value your customers are buying.

For instance …

  • A shoe store customer is really buying health, comfort, or safety
  • A clothing store customer is really buying self-esteem, success, or comfort
  • A jewelry store customer is really buying love, romance, or gratitude
  • A candy store customer is really buying happiness, comfort, or indulgence
  • A gift shop customer is really buying nostalgia, relationships, or contentment
  • A sporting goods store customer is really buying health, happiness, or even time

What Value are your customers buying?

Does your staff know this? Do you talk about it daily, weekly, monthly? Do you do things to reinforce this ideal?

Do your customers know this? Are you making sure your social media posts, email newsletters, and other advertisements all portray this message?

Here are some radio ads I ran back in 2016 …

Happy Dance
Last year, a professor said the toys that are most open-ended and creative are the toys kids play with the longest. My grandfather was saying that back in the 50’s. Another professor last year said that a toy should be 10% toy and 90% child. My grandfather was saying that back in the 50’s, too. When the professors confirm something you’ve already known, there is only one thing to do… A happy dance. Toy House and Baby Too in downtown Jackson. Come join us in our happy dance.

Real Play Value
Remember that toy your child saw on TV that he begged and pleaded and wore you down until you bought it? Only to find he never played with it again? Quit making that mistake. Anyone can make a toy look good for 30-seconds. Do your child a favor, don’t cave. Get toys with real play value. Your kids will be playing, laughing, and growing. They won’t even turn on the TV. Go to Toy House in downtown Jackson, the largest selection of toys in America. We’ll make you smile, while your kids play

Play is Important
Everyone is talking about education and how to fix it. The answer is easy – Play. Google Play. You’ll get thousands of studies why kids who play more do better in school. Don’t wait for the politicians to figure this out. They don’t win votes stumping for recess. For the greater good of this country and your child, you need interactive, open-ended, creative play. The same kind we’ve been advocating for sixty-seven years. Toy House in downtown Jackson, because Play is actually quite important.

While Target was trying to cram as many brand logos into one TV spot as possible, we were talking about making a difference. Value.

When you make it clear what Value you are selling, you’ll find plenty of customers who want to buy those Values.

-Phil Wrzesinski
www.PhilsForum.com

PS Does selling Value really work? When we closed shop in 2016, our Market Share was at 16%—far larger than the typical indie toy store, the largest in our market, and the same it had been for several years even as Amazon was growing. It was only the shrinking local market that helped us decide to hang it up.

PPS This “value” is only slightly different than your Core Values. I know the terms can be confusing because of similarity. Think of your Core Values as being the driver behind what you do. Think of the Value you Sell as being the Benefit your customers buy.

What’s In Your Training Packet?

There used to be a locally-owned office supply store in downtown Jackson. I bought a lot of stuff from them over the years. They had a storefront but most of their business was done by phone from their catalog. I’d call in an order today and it would be delivered to the store tomorrow. I loved going in their store even though the selection in stock was only a tiny fraction of their available merchandise.

One thing they always had in stock was three-ring binders. I bought several of them every fall to put together my Team Member Handbooks for the new hires. I spent the better part of a day prepping these books for my new employees (until I finally learned how to delegate this task).

Here is what went into this binder …

THE WRITTEN HANDBOOK

The written handbook was the basis of the binder and consisted of five sections:

  1. Policies
  2. Store Procedures
  3. Layaway
  4. Evaluation Process
  5. Addendum

Policies included all of the policies of employment including dress code, terms of employment, employment status (full-time, part-time, etc), vacation and holiday pay, sick leave, tornado warnings, and anything else related to them being an employee.

Store Procedures included all of our major services like free gift-wrapping, delivery, assembly, UPS shipping, etc. It gave explanations of how to offer and perform these services, including guidelines for each one.

Layaway was such a large and detailed service that it garnered its own chapter in the book.

Evaluation Process talked about the criteria by which an employee would be evaluated. (Note: this one should be screened by an attorney familiar with HR laws.)

Addendum was a color copy of the major forms we used with detailed instruction how to fill them out. I also included our delivery map and delivery service guidelines here.

You’ll notice there wasn’t a section for Cash Register. The instruction book that came with our cash registers was thicker than the 1-inch binders I used for the Team Member Handbook and would have been too costly (and pointless) to reproduce for the Handbook so we left it out and kept it as a separate book.

The purpose of all this information was to make sure everything was spelled out not just for the employee’s sake, but for our sake as well. It helped make sure we treated everyone fairly and equally within the guidelines of the law.

I am a huge fan of having such a handbook for your employees. It helps clear up confusion and solve disputes—as long as you follow what is written in your handbook. I had an attendee in one presentation tell me his attorney friend makes a living suing businesses because of their handbooks. Those lawsuits are almost always when a company doesn’t follow its own rules. I advised this guy to hire his attorney friend to review his handbook. That would ensure the handbook was crafted within the laws and that his buddy could never be the one to sue him.

I’ll give you the same advice …

Have a lawyer familiar with HR Laws review your Handbook before you publish it.

 

THE BROCHURES

We had seven different brochures that we handed to customers over the years. With each new hire I made sure there was a copy of all of the current brochures in the back pocket of the binder. As I sat down with new hires the first day, I would show them each brochure and tell them since customers were reading these it was important that they knew what each brochure said.

(Here is a link to three of those brochures from the Toy House website.)

 

THE eBOOKS

In the back pocket, along with the Brochures, I printed out three eBooks that customers could also download for free from our website titled:

These fully explained our philosophy on toys, including why we sold what we sold. These documents, more than anything else, helped teach our staff how to find the best solutions for our customers time and time again.

If you have a different philosophy than your competitors for why you sell what you sell, you need to have a vehicle for sharing that with your customers. It might turn some people off, but for everyone else it creates a higher level of trust and loyalty. Just make sure your new hires know this philosophy right away, too.

I also included an article I wrote about why I believe in Santa. I wanted my new hires to better understand me and our store’s official position on the jolly old elf.

 

THE PAPERWORK

The front pocket contained the paperwork including:

  • IRS W-4 Form
  • Schedule
  • Parking Lot Map with assigned parking spot
  • A key to the employee entry door
  • Employee Training Checklist
  • Employee Handbook Reading Slip

The first four are fairly self-explanatory.

The Training Checklist was a worksheet with all of the areas of necessary training the seasonal employee needed to complete. Each section had a blank line in front of it. As one of my regulars taught the new person a skill, the veteran would initial the line next to that skill. That way, if the new person didn’t have a skill down to my satisfaction, I could go back to the employee who trained him or her to see how to improve the training. (Page 3 of this pdf is a copy of an older version of that Training Checklist)

The Employee Handbook Reading Slip was a half-page piece of paper with the following paragraph …

I acknowledge that I have read the Toy House Team Member Handbook and understand its provisions.  I understand and acknowledge that my employment at Toy House, Inc. is indefinite and for no specified length of time.  I understand and acknowledge that my employment can be terminated at-will by myself or by Toy House, Inc. for any or no reason, with or without previous notice. 

I know that this handbook is not a contract of employment and that its provisions are subject to change.  I will ask questions about any issues or areas I do not understand.

Name___________________ Signature____________________________ Date_____________

 

I paid my employees an extra hour of pay for reading their Team Member Handbook and signing this piece of paper. Yes, I quizzed them on its contents. I even played a little game. In each section of the Written Handbook I hid little symbols like this ⊗. If they found all of them and included the section and page numbers on the signed piece of paper, I gave them an extra half-hour of pay. (Hey, it was a toy store. Of course we played games. And this game ensured that, if nothing else, they looked at every page in the book!)

Anyone in education knows that people have different preferred styles of learning. Some learn better by reading. Some learn better by seeing. Some learn better by doing. I made sure my new hires got all three.

The Holiday Season is your time to shine. Make sure your new hires are up to that task. Give them the tools they need. Your Training Packet is an important tool in that toolbox.

-Phil Wrzesinski
www.PhilsForum.com

PS If you would like a word doc copy of the first two sections of my written handbook, shoot me an email. As I said before, however, before you use it for yourself (with modifications, of course) please have an attorney look it over. Times change. Different states have different rules. Different cities have different rules, too. Most importantly, don’t publish any rules you don’t intend to follow.

Reviews: Good, Bad, Necessary Evil?

I remember the first presentation I saw about the power of online reviews. The speaker instructed us how to use our smartphones to take quick testimonials right on the sales floor whenever we had a happy customers. I looked at my notes from the presentation and read …

“Get them to post their reviews before they even checkout. That’s when they are happiest.”

I also remember around the same time reading about Yelp and the problems with reviews there. Yelp was accused of suppressing good reviews and only showing an equal mix of both good and bad reviews. Yelp’s argument was that most good reviews were false anyway and that the people reading the reviews needed to see both the good and the bad.

I had never even looked at Yelp because I thought it was only for restaurants and west coast businesses. I immediately checked out our listing. To my surprise (and delight), there were no negative reviews posted, mainly because we didn’t have any negative reviews.

Then I got the extortion letter from Yelp. If I signed up for advertising with them I could control (somewhat) my negative reviews. I remember thinking three things at that time.

First, I didn’t have any negative reviews to control on Yelp.

Second, I didn’t see the return on investment for running ads on Yelp, partly because I didn’t and still don’t see much return on investment for any brick & mortar running online ads, and partly because I didn’t see Yelp as a big deal for indie retail.

Third, anyone that was already looking me up or finding me on Yelp was either going to visit me because I was an indie toy store or not visit me because I was an indie toy store. The reviews were a minor part of the decision process. More importantly, anyone who didn’t know me, then found me on Yelp, and was debating whether to visit was basing their decision on every single interaction they had ever had with an indie toy store.

The reviews were just the reinforcement of their already-established bias.

That’s the reality of how we read reviews. We first have an established bias based on our own beliefs and previous experiences. We look at reviews to reinforce those beliefs. We’ll justify away negative reviews for places we expect to love, and discount the reviewer’s opinion when it is at odds with what we expect.

In the back of our mind, we’ll also wonder how many of these reviews—good and bad—are simply made up.

About the only time we’ll heed the reviews is when they are heavily slanted to the negative. When everyone is saying something bad, we’ll decide the business is an outlier and shun them.

(Note: I talked about how to deal with negative reviews here.)

Does this mean you should ignore reviews for your business? Absolutely not! You should always be checking your reviews. If they slant negative then you have a problem you need to address with how you run your business. Even one bad review might be enough to warrant a change in policy to make the experience better for your customers.

If they slant positive, great! Keep up the good work!

Only if you don’t have any reviews (because you’re a new business or have only recently claimed your online profile) should you actually go after getting them. If you’re running your business correctly, the good reviews will take care of themselves.

Because of confirmation bias, though, you don’t have to lose sleep over your reviews. Just keep an eye on them from time to time and make sure you run your business so well that the positive organic reviews outweigh the negative ones.

At the end of the day the most important “review” is the one-to-one where your current customers talk about you to their friends.

-Phil Wrzesinski
www.PhilsForum.com

PS Of all the reviews online, pay most attention to your Google reviews. These are the ones that most people will see because A) Google is the top search engine. B) Google Maps is the top Map App.

PPS If you are a restaurant, reviews are much more critical than if you’re a retailer. How you respond to each review goes a long way to how people will view your restaurant. Read this about negative reviews.

Two Forks in the Road for Sears

In 1988 Walmart opened their first Supercenter in Washington, Missouri. The Supercenter concept heralded Walmart’s entry into the highly-competitive, low-profit, huge cash flow, repeat-traffic driver grocery business.

Two years later Walmart surpassed Sears in total sales to become the largest retailer in America.

By 2004 Walmart was capturing one out of every four dollars spent on groceries and remains the biggest player in the grocery industry.

Walmart ad in Vogue Magazine

In May 2005 Walmart did something completely unexpected. They ran a full-page ad of their new fashion launch in Vogue Magazine. Yes, Walmart and Vogue. No, it wasn’t a designer pajama line to wear when you visited a Walmart. Walmart wanted to do to fashion what it had done with grocery.

There was only one problem. Fashion isn’t a commodity like groceries. One year later Walmart reported declining sales for the first time (at a time when most retailers and the economy were booming). By 2007 they scrapped their foray into fashion and went back to what they did best—sell mass-produced items at cheap prices. When the economy tanked in 2008, Walmart found itself back on top with sales growth and cash flow.

I tell you this story in our discussion of the lessons from Sears filing bankruptcy (part 1 and part 2) because it illustrates what can happen when a company tries to diversify the right way and the wrong way. Walmart’s model is built on selling cheap goods cheaper than anyone else.

Their foray into groceries made sense. Fashion, not so much. When Walmart began selling groceries it vaulted them to the top of the retail mountain. When they got away from what they did best, it caused them to falter.

Sears made the same mistake in the 1980’s and never recovered.

Sears made its living in the same style as Walmart—selling lower-priced items. One difference, however, was that Sears sold “value” more than price. The well-trained staff* would talk you out of the most and least-expensive versions of their appliances by showing you the “value” you got from buying something in-between with a lot of bells and whistles.

Sears also made its living by having stores near urban centers, but also a catalog to serve the less-represented rural areas.

This recipe put them on top of the world.

COMPETITION

While Sears had made a living selling to rural markets through their catalog, Walmart was quickly encroaching their territory with actual stores. Walmart went after the rural markets that didn’t have the retail glut of the urban locations, the same rural markets where the Sears catalog was most popular.

Walmart also used its growing power with vendors to bully them into better pricing to undercut the competition and define the sales in terms of “price”, not “value.”

Whether through hubris or ignorance, Sears ignored this threat and instead focused on diversifying their portfolio.

CORE VALUES

Back in 1930 Sears had launched Allstate Insurance, a value-based insurance company. The success of that led Sears to get into three other industries in the 1980’s—financial planning (Dean Witter), real estate (Coldwell Banker), and credit (Discover Card). 

Like Walmart and grocery, Sears and insurance was a fit. Insurance is a product people have to buy but want to buy it affordably (value). Like Walmart and fashion, financial planning and real estate were not a good fit for Sears because they aren’t sold the same way. Sears was sinking valuable time and resources into ventures that weren’t consistent with their Core Values or their primary business model.

Sears divested themselves of those entities in the 1990’s but by then the damage was done.

Walmart and Kmart surpassed Sears in sales in 1990. Walmart had redefined the lower-priced goods market, begun the serious race to the bottom, and infiltrated the rural neighborhoods where the Sears Catalog had been the lifesaver for so many families.

MAIL-ORDER BUSINESS

In 1993 Sears discontinued the catalog. The catalog business had shifted dramatically in the 1980’s because of the fanatical growth of retail stores in America. Why order it from a catalog when you can pop into a nearby store and get it today? The glut of retail, the cost of shipping, and the 7-10 business days shipping time was enough to kill the commodity catalog shopping that was the Sears catalog.

The only catalogs making it were for specialized companies selling specialized goods not found in stores (LL Bean, Eddie Bauer, REI, Signals, Orvis, etc.).

Then along came Amazon.

In 1994 Amazon launched their site. While there were a small handful of people who recognized the power of the Internet and what it could become (my buddy, Hans, actually pitched Borders Bookstore on the idea of selling online before Amazon launched and was laughed out of the room), I’ll forgive Sears for not seeing the potential.

Kinda …

Sears already had the mail-order business infrastructure set up. Sears already had the cataloging of hundreds of thousands of items done. Sears already had enough stores around the country at that time to set up a BOPIS system that even Amazon can’t yet match. Sears was part of a joint venture with IBM called Prodigy, so it was even involved in the Internet in its infancy!

This isn’t to say that Amazon wouldn’t have eventually cleaned their clock through better data, better customer-centric focus, and better operations, but just imagine if instead of trying to diversify, Sears was instead looking at new ways to do what they already did, only better and with the full use of the newest and latest technologies?

The lesson in all of this is simple.

First, understand fully and clearly who you are and what you do.

Second, don’t let anyone else do it better than you.

Sears let Walmart and Amazon do Sears better than Sears while Sears was busy trying to be someone else. Because of their size, it is a slow, painful death, but the choices that led to the bankruptcy were made in the 1980’s and 1990’s when Sears chose the wrong forks in the road and stayed on those paths too long.

-Phil Wrzesinski
www.PhilsForum.com

PS *I don’t know when it happened, probably in the 1980’s, but at some point Sears got away from their “well-trained staff.” Whether it was a cut in money for training programs, a shift in management away from training as a whole, a cut in payroll, or simply a belief that sales-training didn’t matter (a common thought in the 1980’s when everyone was selling at a high clip), Sears lost this competitive edge it held over the competition, especially Walmart.

PPS I did this exercise a couple times with my staff, but it was a question I asked of myself several times a year. “If I was going to open a store to compete with Toy House, what would I do?” When you ask and answer this question, you find the weaknesses in your model that can be exploited. You find where your competitive advantage is thinnest. Not only does this question help you find where competition could hurt you and shore those areas up before the competition strikes, it helps you constantly explore options for doing what you do better.

Lessons From Sears – Retail is Always Changing

“Phil, you know this store is going to put you out of business, right?”

My grandfather heard that first in 1962 when Shoppers Fair, a discount department store chain, opened in Jackson. We heard it when Westwood Mall opened in the 1970’s with a Circus World store (eventually becoming a KB Toys). We heard it in the 1980’s when Meijer opened their second store on the east end of town and Kmart opened a new store on the west end of town. We heard it in 1990 when Target came to town. We heard it in 1993 when Toys R Us opened.

Shoppers Fair Jackson, MI 1962

Shoppers Fair closed in 1974. KB Toys is gone. Kmart left when we did. Toys R Us left only a year after us. Montgomery Ward left Westwood Mall a couple decades ago. Younker’s is leaving Westwood Mall as I type.

Retail changes.

Jackson used to have a Woolworth store, a Field’s department store, a Jacobson’s department store, and an A&P grocery store—all defunct retailers now.

Retailers come and go. The retail landscape changes. Stores open and close.

We can look at Sears filing bankruptcy as just the natural evolution of retail. They had a good run, but now it is over.

In fact, I’ll go out on a limb right now and predict the eventual demise of Walmart. It might be fifty or one hundred years from now, but history shows us no retailer lasts forever.

The only problem with simply dismissing Sears as an eventuality is that Sears was once on top of the world, both figuratively as the largest retailer in America as recently as 1989, and literally when they opened their tower in Chicago in 1973. Their fall is far more educational to the independent retail world than Toys R Us and their debt problems caused by venture capitalists.

As a student of retail, I see two turning points for Sears starting their downward slide that incorporated the other five “lessons” I listed yesterday. One was in 1993 when they discontinued their catalog. We’ll talk about the other one tomorrow.

-Phil Wrzesinski
www.PhilsForum.com

PS There are several reasons why an independent retailer closes shop including retirement, illness, death, boredom, new opportunities, local market collapse, and competition. The big boys close for one reason and one reason only—Cash Flow. It is the decisions that lead to cash flow problems that I find most interesting.

RIP Sears

There is a group on Facebook for people who grew up in Jackson, MI. The posts are mostly, “Who remembers …?” so that former Jacksonians can reminisce about days long past. A recent post was about Toy House. A couple hundred people waxed nostalgic about visiting the original store in the 50’s and 60’s.

Several people mentioned the Catalog Sale, something my grandfather started early on.

The Catalog Sale was a two-weekend sale, once in October, once in November, where people brought in their catalogs and we matched the catalog price on any toy we had in stock. Our goal was to keep the sales in town.

The Sears Catalog

The most common catalog was the Sears Christmas Wishbook.

We ended the Catalog Sale in the early 1980’s when it turned out our prices were usually sharper than the catalogs at that time. The event was no longer a draw. By 1993 even Sears had stopped producing their catalog.

Times change. Retail shifts. Today Sears has filed bankruptcy.

Sears was Amazon before Amazon with their mail-order catalog business that allowed you to buy almost anything you could imagine from the comfort of your own home.

Sears was Walmart before Walmart when they dominated the retail landscape in the 1940’s and 50’s by offering a wide variety of merchandise at low prices. By 1969 Sears was the largest retailer in America with a larger market share of categories like home appliances than any retailer has ever had since. Four years later they completed construction on the tallest building in the world.

Sears also was a pioneer in retail, with legendary sales training, teaching their sales staff how to upsell and not sell from their own pocketbook. They were taught how to sell on features and benefits. They had their own credit card (which eventually became the Discover Card). They had their own insurance agency (which became AllState). 

Today they filed bankruptcy.

The easy blame is going to be Amazon and Walmart. Amazon out-Searsed Sears in the mail-order business. Walmart out-Searsed Sears in the commodity goods business.

Yet when was the last time you truly thought of Sears as a convenience-based place to buy goods? They dropped their catalog back in 1992, two years before Amazon launched.

And with well-known economy brands like Kenmore, Craftsman, and Diehard, tons of cash, and superior vendor relationships, Sears was well-positioned to destroy Walmart in the race to the bottom. Yet they dropped faster than a greased baton at the blind relays. 

So what happened?

The answer is quite simple. Sears got away from their competitive advantages and Core Values. Convenience and Commodity Brands were only two of them. The one I believe they truly missed was their sales training.

When was the last time you were blown away by the customer service at Sears?

Toys R Us got away from their Core Values in 1992 when Walmart surpassed them in total toy sales. Sears did the same thing over the years as they gave up the advantages that brought them to the table.

There are several (contradictory?) lessons in all of this.

  • Retail is always changing.
  • New competitors will try to beat you at your own game.
  • Stick to what you do best.
  • Don’t give up your advantages.
  • Adapt or die.
  • Stay true to your Values.

We’ll explore these concepts over the next few days and try to learn from their mistakes.

-Phil Wrzesinski
www.PhilsForum.com

PS It is never a good day when a legacy retailer such as Sears files bankruptcy. If we don’t learn from their mistakes, though, then we’re likely to make the same ones ourselves. As I’ve always said, Retail is not Rocket Science. Rocket Science is actually math for which you can solve all the variables. Retail has variables and equations that never fully resolve. The lessons, though, are fascinating.

Three Stats to Tell You All You Need to Know

I went to a presentation last night. As you know, I am all about continual learning. Education is one of my Core Values. This presentation was at TechTown Detroit, a small business incubator that helps launch tech and retail businesses. Mary Aviles of Connect 4 Insight put on the presentation. Mary is also the Director of Strategic Development for Tech Town.

The presentation was “Designing the Customer Experience.” (I’m sure you can guess why that piqued my interest.) The goal was to give these start-up and pop-up retailers some ideas to help them be ready for the holidays.

Mary gave out three stats I want to share here. (Note: I was not able to get the source from her on these stats but I know she did her research.)

STAT #1

24% of all Amazon Sales are from customers who went to a brick & mortar store first.

What does this mean? Nearly one-fourth of all of Amazon’s business is from customers who were disappointed by their in-store experience. Nearly one-fourth came from customers who chose to go to a store first but didn’t get their needs or expectations met.

In other words, customers are choosing brick & mortar, but our lack of selection or lack of service or super high price is driving them online.

STAT #2

40% of customers change their minds in the store because of the in-store experience. 

What does this mean? The in-store experience affects a large number of sales both to the good and to the bad (some of those 40% are more inclined to buy, some are less).

In other words, almost half of your customers are going to make their final buying decision based not on the product or the price but on your ability to offer them a quality shopping experience (or not).

STAT #3

80% of customers report that they would be willing to pay up to 25% more for an item because of a quality experience in the store.

What does this mean? Experience actually outweighs price. Four out of five customers say experience combined with the desire to own the item right away can get them to pull the trigger, even if the price is a little higher than online.

In other words, you can win over a lot of customers with your in-store experience, even if your prices are a little higher than the Internet.

The bottom line to all of these stats is this …

The in-store experience you are providing has more of an effect on your sales than pretty much everything else you do.

If it isn’t your number one focus, you might want to change your gaze.

The good news is that you still have time to schedule The Ultimate Selling Workshop for your team prior to this holiday season. Mary has the stats to convince you why you need to improve the customer’s experience. I have the nuts and bolts of exactly how to do that. Call me.

-Phil Wrzesinski
www.PhilsForum.com

PS You have four days to lock in the special fall savings offer of only $2,000 for The Ultimate Selling Workshop. At 12:01am October 1st the price goes up to $3,500 (or more depending on time and travel). It is still a steal at the regular price. We already did the math. I’m offering the incentive price to get you to book now so you can have your best holiday season ever.

PPS If you are a retailer in Detroit or considering starting a retail business in Detroit, TechTown has amazing resources and programs, and a dedicated, smart, caring staff. You should check them out.

How Fast Do You Solve Her Problem?

You call a number. You get a recording, a menu of options. You listen to all the options before pressing two. Another menu. This time you press one. Now a recording offers you yet a third menu. You select three and a recorded voice comes on to say, “Please hold while I try that extension.”

Twenty minutes of horrible music and a voice interrupting every so often to say, “Please stay on the line and the next available representative will help you,” you finally get a live person on the other end of the phone. You explain your problem patiently only to hear …

“Hold on while I transfer you to someone who can help you.”

Aaaarrrrrrgggggghhhhhhhhh!!!!

Another fifteen minutes or so later you get someone equally unhelpful. You’re ready to hang up except you now have over forty minutes invested in this call. Your frustration levels are through the roof. Your anxiety is peaking. You’re about to rip someone’s head off if you don’t eventually get satisfaction.

We’ve all had that experience. Many of us have experienced it more times than we care to count.

Then we walk into a retailer with what we believe to be a simple problem, find a clerk to help us, explain our problem, and hear …

“Hold on while I find someone who can help you.”

We immediately go back to the frustrations and anxiety of all the other times this has happened to us.

Sure, you’re not a phone tree with endless menus and unhelpful people. Sure, you solve the problem with the second person she sees. Sure, your customer doesn’t have to wait thirty minutes like she did on the phone with that other company.

None of that matters. You still caused your customer to feel all those negative emotions first.

This is why the best stores empower the first person who greets a customer to be able to solve all of her problems and take care of all of her needs.

The customer walking through your door with a problem is already worked up. She brings with her the baggage of every forty-minute phone tree fiasco. She brings with her all the frustrations and anxieties of all the interactions with untrained, useless “salespeople.” She’s loaded for bear and ready for a fight.

Then you spring the, “Hold on while I find someone,” phrase on her.

When she explodes on you, it isn’t really you. You’re just the straw on the camel’s back. But those feelings she has are now associated with you whether you like it or not.

It doesn’t have to be that way. You can empower your front line staff to solve her problem by teaching them this simple three-statement approach:

  1. “I’m so sorry you have this problem …”
  2. “Let me see if I have this straight …” (explain the problem back to her as your heard it and ask for clarification)
  3. “What would you like us to do?”

Always apologize. Notice that the apology doesn’t necessarily imply guilt or fault. The apology simply acknowledges that she has a problem and sets her at ease.

Then repeat back her problem to show that you were listening. Sometimes just being heard is all a customer really needs. It also gives you a chance for clarification to understand the problem better and time to think about how you would want to solve the problem.

The last phrase is the kicker. Great Customer Service is when you meet a customer’s expectations. The best way to know what she expects is to ask. And since an unhappy customer is your worst enemy because of the negative reviews and bad word-of-mouth, it is vital you know exactly what she wants.

Once she tells you what she wants, the best thing to do is give her that … and a little more.

More often than not, when you first put the customer at ease and show her you are listening to her problem, by the time you ask her what she wants she will ask for less than you were likely prepared to give. Even if she does ask for a lot, instruct your staff to give it to her. It is worth it in the long run because of how it makes your customer feel.

“People will forget what you said. People will forget what you did. But people will never forget how you made them feel.” -Maya Angelou

Empower and train all of your staff to handle all of the problems immediately and you will control how your customers feels. Speed does matter. (Plus, if your staff are handling all the problems, you’ll have fewer interruptions throughout the day to get your work done. Win-win!)

-Phil Wrzesinski
www.PhilsForum.com

PS Every now and then a customer will make an outrageous request. It is still worth it to meet that request the first time. If she becomes a repeat problem then you have the right to adjust what you do for her. But since these requests will be so few and far between, they won’t cost you nearly as much as you think. Plus, since you’ll be better managing the way customers feel about you, you’ll have more happy customers than ever before. Instead of worrying about the cost, think of it as an “advertising” expense where you are buying positive word-of-mouth (or at the very least buying the lack of bad word-of-mouth), and the fact you just made a customer’s day. Those are two benefits that will help any business.

Give Them a Title

There are two series of books that have influenced my business life directly. One is a series of five books I first read as a child and have re-read several times since, until the books are barely holding together. I have read them twice to my own sons and am now reading the first book to a friend’s son. The second is a trilogy that came to me as a gift and I have talked about in this blog quite often.

This blog is about that first series of books. (You can follow the link in the previous paragraph to read about the trilogy.)

The Chronicles of Prydain Book #1

I don’t think Lloyd Alexander was thinking about business lessons in 1964 when he wrote The Book of Three, the first in his five-book children’s series The Chronicles of Prydain. Having read the entire series more times than I have fingers, however, I keep finding lessons on every page.

The opening chapter of the first book introduces us to the lead character, Taran of Caer Dallben. We don’t know much about him other than he helps tend a garden and take care of an oracular pig, but he wants to be a big hero. He wants a title to go with his name, so Coll, his mentor, gives him one … Taran, Assistant Pig Keeper.

For the first three books, he is known as Taran, Assistant Pig Keeper. (In book #4 he becomes Taran Wanderer. This book was the light bulb idea that sparked my book Hiring and the Potter’s Wheel: Turning Your Staff Into a Work of Art.) Although he desired to be a warrior of noble blood, mostly what he wanted was to be something, anything, to simply have a title and purpose.

Your staff have that desire, too. They HATE wearing a name badge that says “Trainee” because they know it means customers don’t trust them or treat them with respect. They want a title, preferably one that sounds important, that gives them some respect.

I see this as a creative opportunity.

While not everyone can be a store or department manager, you can make them managers of specific things like:

  • Manager of Smiles
  • Manager of Problem Solving
  • Manager of Question Answering
  • Manager of Greetings and Salutations
  • Manager of Product Knowledge
  • Manager of Finding Lost Products
  • Manager of Sunshine
  • Manager of Giving Customers an Experience They Will Never Forget That They Will Have to Tell All Their Friends About and Drag those Friends to the Store on Their Next Visit

Okay, maybe that last one won’t fit on a name tag, but you get the idea.

The point is that a title gives an air of respect. A title like the ones above also gives a fresh air of cheer, sets a customer at ease, and lets the customer know this person is (hopefully) trained to help. Most importantly, the title gives your employee a sense of importance, a purpose, and even a goal to aspire to.

One other benefit is that when you make a big deal out of giving your employee a title, especially when it is something cool and fun and even personal with layers of meaning, it shows that person that you care.

The more you care for your staff, the more they will take care of your customers.

Yeah, I got all that from a children’s book.

“Take inspiration from wherever you find it, no matter how ridiculous.” -Roy H. Williams, aka The Wizard of Ads (yeah, that other series of books)

Decorate your staff by giving them fun, meaningful titles and watch how they grow into those roles.

-Phil Wrzesinski
www.PhilsForum.com

PS The more personal and fun you make the title, the more benefits you will see. Your employees will work harder and your customers will be quicker to trust them with just this simple little act. It is the little things that make a difference.

PPS Get rid of your assistant managers (the titles, not the people). Make everyone a manager of something, even if it is simply a “Shift Manager.” The word “Manager” says authority. “Assistant” says “not yet good enough.” Make them all good enough to solve the customer’s problem and take care of her every need, and give them the title to declare it.