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Category: Customer Service

I Served Them Ice Cream

Staff Meeting. 8:30am. Ice cream served.

Ice cream for breakfast?

Some loved it. One employee had two bowls.

Some hated it. Who would eat ice cream for breakfast?

Some were indifferent. “No thanks, I had a bagel.”

Kinda like your business, right? Some love you, some hate you, some are indifferent.

Do you know what causes people to love you – the proverbial ice cream for breakfast that you serve?

Are you willing to serve that ice cream at 8:30am just for those that love it against all conventional thinking? That’s what the best stores do (metaphorically speaking). And their best customers reward them with loyalty and evangelism.

Think about it…

Apple Stores – you can’t have a store without cash registers!
Whole Foods – there’s no long-term market for expensive, organic/natural/gluten-free foods being pushed upon the public through fancy displays
Nordstrom’s – you can’t take everything back no questions asked – people will take advantage of you

Yet, those three stores were ranked #1, #2, #3 in RetailWire’s survey of best customer shopping experiences.

They are all serving ice cream at 8:30am.

As Seth Godin recently pointed out, it’s easier to serve ice cream to those who want it than to change the mind of those who think it’s weird.

What are you scooping out for your best customers?

-Phil

Retail Shrinkage – Where Does it Go?

In doing my research for a presentation on Inventory Management I’m giving at the ASTRA Marketplace next month, I found this interesting little statistic from the National Retail Federation.

Total shrinkage in the retail sector in 2008 was about 1.52% of gross sales. That’s $1.52 out of every $100 that mysteriously disappears.

More interestingly, almost half of that shrinkage (44%) is caused by your own employees, either walking out the back door in their pockets or sliding out the front door through consumer-friendly transactions.

Shoplifting accounts for about 35% of that total and accounting errors make up most of the rest.

I showed this to one of my staff members who was amazed. She couldn’t believe that our employees (her coworkers) would do this. I reassured her that, although they might do some, our shrinkage was only 0.44% of sales the past two years (up from 0.27% in 2007 – sign of the economy?). We’re doing much better than the average retailer.

Here is something to ponder… Wal-Mart has also traditionally done well with a shrinkage rate at only half the national average. How is that possible?

It would seem they would be ripe for theft. Their reputation for how they treat their employees would seem like fertile ground for some “entitlement”. Some of their limited income customers might be tempted to partake in a few five-finger discounts, too. Plus, the limited interaction between customers and staff, the huge, cavernous store with plenty of hiding spaces, and the vast quantity of product seems like a recipe for high shrinkage.

Add it all up and their results seem all the more surprising. But the answer is simple. The power to keep the shoplifters away resides in the blue-vested gray hairs standing inside every door.

What is the one thing shoplifters crave most of all? Anonymity. Not being seen or recognized. Recognition is the buzzkill for all but the serial professional shoplifters. Being seen strikes fear in the heart of the amateurs and down-on-their-luck would-be thieves.

Fortunately, we all can learn from this. The lesson is simple…

Greet your customers. Each and every one of them. Not just with a shout-out as you hide behind the cashwrap, but with a sincere “thanks for stopping by,” the kind of greeting you would give your best friend.

Not only is it a good way to start a conversation that could lead to a sale, but it is the single biggest deterrent to shoplifting.

And now you know why Wal-Mart has all those greeters. It wasn’t to protect them from age-discrimination lawsuits after all.

-Phil

PS I’ve got some ideas about how to stop employee theft, too. Will post them soon.

Employee Handbooks – Do You Have One?

I created quite a stir in ASTRALand last week. Someone posted the question on the listserve about employee handbooks. In my reply I offered to send a copy of our handbook and training checklist to anyone who wanted it. In short order I had 45 requests for copies of our handbook.

Apparently, handbooks are a hot topic in the independent toy world.

Do you have one for your employees?

If you don’t, the good news is that they aren’t as complicated as you think. The hardest part is getting started. Here’s what to do…

Write your manual on your computer.
Do a little at a time.
Update it every time you hire someone new or notice something you missed.
Give everyone a new copy of any section that changes (keeps it relevant).

It doesn’t have to be a complete and polished document on day one. It can be a work in progress.

Here are some of the things you should include:

  • Employment Policies – the basics of employment like Dress Codes, Vacation, Holiday & Sick Pay, Maternity Leave, Jury Duty, Payroll, Safety Policies, Emergency Procedures, Terminations, etc. (Yeah, it seems like a lot, but do it one heading at a time and it won’t take long.)
  • Store Procedures – this is where you list all the services you offer and the how’s & why’s of each service
  • Special Services – If you have certain services that require extra explanation, make a separate section for each, such as Cash Registers, Layaways, etc.
  • Training & Evaluation – Spell out how you will train and evaluate your employees.
  • Forms & Paperwork – If you have special paperwork or forms that need to be filled out, show how to do it properly.

There are many reasons to have a handbook like this.

  • Having written policies protects you when terminating someone for violating a policy
  • The handbook becomes an extra tool for training new employees. Not everyone learns the same way.
  • Putting your policies in writing forces you to evaluate why and how you do them, which helps you make your services better

Once you get it written, have your attorney look it over to make sure you aren’t doing anything blatantly illegal. And make sure you look it over every few months to see if anything has changed.

Employee handbooks are valuable to any business whether you have one or one hundred employees. Dust yours off and see if it has what it needs to be effective for you. And if you don’t have a handbook, send me an email and I’ll send you back what I do. You can use it as a template or reminder of which topics to include.

-Phil

PS I also sprinkle in a full dose of our store philosophies including our Character Diamond, and a section of difficult situations we encounter regularly and how to deal with them.

I’m Hiring Part 3 – Who to Interview?

This is Part 3 in my quest to find the next great employee. (Read Part 1 and Part 2.)

In three weeks I have received 79 applications. I need to get that down to a more manageable number before I start interviews. Here are some of the steps I have taken to weed through the potential applicants to get my list of candidates to interview.

First, to make it on our team you have to get past the front line. When you turn in an application, the sales person accepting the application initials it. If she thinks to herself, “I really hope Phil doesn’t hire this person,” she’ll also mark the application with a simple “N”.

Any application with that “N” is done. Hey, if my staff doesn’t want to work with them, why would I want them on the team?

Second, I scrutinize each application. Any app not completely filled out also goes in the NO pile. Any app with major misspellings or extremely sloppy handwriting also gets yanked. If they do sloppy work there, you can bet they’ll do sloppy work on the job.

Surprisingly, this usually weeds out 60-70% of the applicants (yeah, you’d think people would be more careful, but they often are not). The remaining applicants get a second level of scrutinizing.

At this level I’m looking at availability (our application has a place for them to list what days/hours they can work). Anyone with limited availability that doesn’t fit my needs gets tossed.

I’m also looking at their work history. Not so much for experience, but for the other signs it shows such as…

  • Loyalty – did they work at one place for a long time or bounce around from job to job?
  • Work Environment – do they prefer working in office settings, factory/warehouse or in front of the general public? With kids? With seniors? In a team setting or by themselves? These are more important to me than what they did. I need people comfortable working in front of the general public.
  • Gaps in Employment – what did they do during those gaps? Did they leave on their own accord? Did they leave for another opportunity?
  • Reasons for Leaving – I actually had an applicant who listed for all four previous jobs her reason for leaving as “had problems with the boss”. Sorry, honey, the bosses weren’t the problems.

Finally, I take the pile of potentials left and do a quick background check via the Internet, looking at the free public records available through our District Court and State of Michigan Offender Tracking Information System (OTIS). You’ll be surprised how easy it is to find all kinds of information on your potentials. This time around I eliminated three applicants because of their court records – problems I just didn’t want to bring around here.

The goal of all these steps is to eliminate as many applicants as possible so as not to waste any unnecessary time interviewing applicants you won’t want. Your time is precious, so the interview should be only for people with the greatest potential.

Out of 79 applications, 65 received letters saying…

Thank you for applying to the Toy House. We have received many qualified applicants but have only limited space available to hire new employees and do not have a position available for you at this time.

We will keep your application on file for one year should our needs change in the future.

Once again, thank you for applying and good luck in your employment search.

Fourteen lucky people got scheduled for interviews.

In Part 4 I’ll tell you how the interviews went.

-Phil

Comments, Anyone?

Apparently some of you have tried to leave comments on my blogs but had problems. Oops! That’s not good manners on my part. Sorry.

I think I solved the problem.

Could you please try to leave a comment on this post so that I know if it is working?? (And if you can’t, send me an email.)

Thanks bunches!

Phil

Serving the Customers WHEN They Want to Be Served

My wife and I finished a wonderful meal at Pablos in downtown Fernandina Beach, FL. It was 8:15pm on a Friday night. As we strolled the shops of this quaint downtown on Amelia Island, one thing was noticeably absent.

No, it wasn’t the people.

The sidewalks were teaming with people out for an early evening stroll. There were easily 12-15 groups of revelers in a short three-block expanse, all of us engaged in the same activity… window shopping… because all the stores were closed!

Except for the two ice cream shops (both full of people), the bars and one jewelry store jammed with browsers, all the rest of the shops were closed, dark, not doing business, not making money. Yet, there were people with money to spend all over the place.

Are you open when there are people available or just when you are available?

And I don’t just mean your everyday hours. Do you open for special occasions in your area? Do you open when there are events on your street? Do you open for when the movie or show lets out at the theatre venue next door? Do you open early when there is a parade or morning activity on the street?

I went back this morning to the same area for the farmers market at 9am. Didn’t need much. But as we left the farmers market and strolled the same streets (still packed with people), I looked through many of the same windows of darkened shops not willing to be open when the people were there.

When these shops close for good, it won’t be “because of the economy”. Don’t let your shop think like them. When people are there, be ready to open your doors. That’s one of the first steps to great customer service.

-Phil

Systems Versus Creativity

Interesting dilemma… Are systems for handling situations and creativity mutually exclusive?

Here is the situation.

One of my vendors informed me that we needed to send in photos of defective parts to get replacements. Makes sense. They need to protect their costs by knowing that they are replacing only that which needs to be replaced.

Our first customer to have a problem after this policy began lived over an hour away. They had flaws in the product that, while usable, were not what they had paid for. It was a special order item so we would need to order new parts for them, no matter which ones were damaged. So we asked if they would kindly take some digital photos and email us to save us a 140 minute round trip. They did and the parts were ordered.

The second customer was a mile away and had ordered an in-stock item. When she called with a problem, we asked her to send photos, which upset her. Why should she have to send photos? Why couldn’t we come out there and snap them ourselves? Heck, why couldn’t we bring her a replacement and take the photos when we got back to the store?

Good question.

The solution to the first problem was not necessarily the exact way to handle the second problem.

Our mistake was that we implemented a system of “hows” before answering all the “who, what, where, when” and most importantly “why”.

How do we get a replacement part? By sending photos to the company. Who takes the photos? Anyone. Why did we ask the first customer to take the photos? Because she was over an hour away and we would need to order the replacement no matter what. Why did we ask the second customer to take photos? Because that’s how we did it the first time. Do you see the flaw in this thinking?

Before you implement a new system, make sure you carefully point out why you do things a certain way, and what the ultimate outcome should be. And empower your staff to use their imagination and creativity to come up with solutions that make the customer happy while following the spirit of the system.

-Phil

PS The very next day the second customer had a replacement, we had photos to send, and everyone lived happily ever after.

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

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

Cutting Expenses the Smart Way

This past year I cut expenses at Toy House by 7.8%. And I did it without sacrificing customer service or the reach and frequency of my advertising.

Here’s what I did:

PAYROLL – Yes, I cut payroll. Had to. It is the single largest expense we have. Yet, even with all my cuts, my payroll actually became a larger percentage of expenses than before. And customer service did not diminish.

The two things I did were:

  • Schedule Smarter – By more closely tracking sales I was able to better schedule the staff to make sure I covered the busiest days and times without over scheduling the slow times. I also spent more time matching team members to make sure I had the most efficient crews working when staff was at lower levels. Put your peak staff on at peak times to get peak results for your money.
  • Divert My Own Salary – As the president of the corporation, I pay myself a salary. This year I took a pay cut, offset by a dividend on the company stock I own. This shifted my payroll expense from the Profit/Loss statement to the Business Equity. If your business has a lot of equity, this can be a great way to shore up the P/L for the short term. Talk to your accountant to see if this is right for you.

Net result – 4.8% cut in payroll and related expenses

ADVERTISING – Another big expense that I cut drastically (on paper) was advertising. In actuality, I made some smart changes. Specifically:

  • Cut Yellow Pages – They aren’t worth the money. People don’t use them anywhere near how they used to use them. Even the online Yellow Pages don’t garner much business. I get far more traffic to my website from my vendors’ Store Locator pages than I ever did from yellow pages online.
  • Shifted Radio Stations – I switched one of my stations to a cheaper station with a similar number of listeners. Same reach, greater frequency, fewer dollars.
  • Invested Time into Social Media – Time equals money. I put time and effort into building relationships through Facebook. Doesn’t cost as much money, but does take some effort.

Net result – 20.4% reduction in advertising expenses without changing the reach and frequency (and I am already spending some of those Yellow Page dollars elsewhere for a bigger reach and frequency this year:-)

Other simple cuts included:

  • UTILITIES – Made a 1 degree change in the thermostat that kept heating costs down. Customers didn’t notice, and the staff changed wardrobe accordingly. Saved 0.8%
  • INSURANCE – My insurance rep negotiated a better Worker’s Comp policy saving us 2.1%
  • TRAVEL – Made all the same trips as last year. Just stayed one less day at the trade shows. Saved 18.1%
  • SELLING SUPPLIES– Searched for new supplier of bags and giftwrap to lower expenses. Saved 2.9%
  • FREIGHT – Less sales meant less inventory meant less orders meant less freight expenses. Saved 10.2% (Consider this a benefit of a down economy:-)

Yes, those last few were smaller dollars, but every little bit adds up.

There are many ways to cut expenses without cutting services. You just have to be creative. Look for places where you can spend time instead of money. Follow the three R’s – Reduce, Reuse, Recycle. Measure, measure, measure. You can’t manage what you don’t measure.

That’s what made the difference for us. What will make the difference for you this year?

-Phil