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“Everything Cheaper Somewhere Else”

I used to hate anonymous commenting on news articles and blog posts. It is so easy to hide behind a pseudonym and take unsubstantiated potshots at people and businesses, spread rumors, and even spread downright lies.

As a retailer, I took every negative comment and review of my business personally. Some of them hurt, especially when they weren’t true. The misunderstandings were one thing but the outright lies were the worst. They cut to the bone.

I remember one day in the infancy of online news when a fellow downtown business owner alerted me to comments posted on an online news story that attacked both my store and me personally. He warned me not to read them. I didn’t heed his warnings.

One person had taken it upon him or herself to just rip the business up one side and down the other, calling us, among other things, price-gougers who were just out to destroy the little people in town. This person claimed that he or she could find everything we sold in our store cheaper online.

I took offense to the first part. The person posting the comment had no idea what I paid myself or my staff or our profit margin or what we gave to charity or what causes we supported. I am a forgiving person, though. I will forgive them their ignorance.

The second part, however, was pretty much true. Not only could that person show you the items cheaper, I probably could, too. After all, I had Internet access. I could also show you sites and stores where just about everything we sold was more expensive than our prices. That exists, too.

In fact, if prices weren’t fluid across different channels, Retail would look a whole lot different and be a lot less fun. Everyone would pretty much do the same thing and charge the same for it. Yawn.

Image result for valueRetail is a game, and the game can be boiled down to this … Find the Value you can give the customer that will make it worthwhile for them to pay the price you wish to charge.

At the ballpark they charge you more for a single beer than you would pay for a twelve-pack at the store. You buy it because you want to drink a beer during the game. There is enough Value in enjoying that beer while watching the game that makes you pay the price. (Don’t want to pay their outrageous prices? You can eat before you go to the ballpark. Most people can handle 3-4 hours between eating. You can also drink water for free. They have to provide it to you.)

People call them price-gougers all the time. It doesn’t stop them from raising their prices and making money. They offer you the Value of being at the game and watching the action in person.

The real question you need to ask yourself as a retailer is … What Value are you adding to the equation and will that Value be enough to get people to pay your prices?

You can add Value in several ways. You can:

  • Offer services other stores don’t have (i.e. layaway, free gift-wrapping, assembly, delivery)
  • Curate the selection to help customers get only the best solutions
  • Align your business with a social cause
  • Offer follow-up services (such as the free 30-day riding tuneup that we used to offer with every bike we sold)
  • Build relationships to the point that the customer feels as much ownership in your store as you do.

Any one of those is a way to “play” the Retail Game. Play more than a few of them and you’ll never worry about how someone can find “everything cheaper somewhere else.”

Were we the lowest priced game in town? Nope. Never tried to win that race to the bottom. But in a 2007 survey of Jackson County residents about stores that sell toys in Jackson, we were rated as having the highest “Value” ahead of Walmart, Target, Toys R Us, Kmart, and Meijer (all whom love to advertise their “lowest prices”.)

What Value are you adding to the equation?

-Phil Wrzesinski

PS I have a good friend also named Phil who also ran a toy and baby store in the other Jackson (MS) who never liked MAP (Minimum Advertised Pricing) because it made everyone price their goods at the same price. He said true merchants have no problem with the undercutting of prices on the Internet because they know how to offer Value and make sales at higher margins. As much as you hate to admit it, he’s right. MAP only protects you at the margin the vendor thinks you should make, not the margin you deserve for all the value you offer.

PPS As for anonymous negative comments online, if they are an attack on your character or the character of your business, ignore them completely. Your actions speak louder than your words. Use your actions to prove that person wrong. If the comments are simply something misunderstood, you can respond for clarification, but only if you can substantiate your claims without putting down the person who made the comment. More often than not, however, it is best to ignore anonymous comments, period. I’ll talk about how to respond to Reviews in a future post.

PPPS A few of those ways to play involve the skills and training you give to your front line staff. As I pointed out before, that is probably the easiest way to add the kind of Value your competitors are not adding to their equations.

Direct Mail – Do the Math

I like numbers. I like math. I even like algebra when numbers start fraternizing with letters. (I draw the line at calculus, though. I don’t understand why numbers have to go all lumberjack on me.)

It is a good thing because there is a lot of math in Retail. Some of my favorite math, however, was not the pre-made formulas like calculating inventory turns or cash-to-current ratios. It was the math used to figure out if something was working or not.

One of those occasions was trying to figure out the results of a Direct Mail campaign we used to do at Toy House. For several years I sent out postcards around Halloween for $20 off purchases of $100 or more redeemable by the end of November. I used to send out that type of coupon five times a year, but realized I was training customers to wait for the next coupon. When a customer called me to ask when the next coupon was coming so that she could buy a new car seat, I knew I was heading in the wrong direction.

The front of our 2014 Postcard

We weaned our customers down to just the one postcard in November. Now I wanted to know how well it was working and whether it was worth the money.

I kept track of the number of coupons redeemed and the amount spent per coupon. I knew what I spent to produce and mail the postcards. Now I just had to do the math to see if the campaign was worthwhile.

Here is the math from the last Direct Mail campaign in 2014 …


  • We produced 14,000 postcards @ .23 each = $3,220
  • We mailed 13,500 postcards to our mailing list @ .34 each = $4,590
  • We had 687 post cards redeemed (5.1%) x $20 discount each = $13,740

Total cost of promotion: $21,550


  • Average ticket (before $20 redeemed) was $117 = $80,379
  • Profit Margin was 48.7%
  • Gross Profit on coupon sale transactions: $39,144

Net Proceeds from campaign (after deducting costs): $17,594

The total sales of $80,379 represented about 29% of our sales for the month, so it was a significant portion of our business. The real question of the day, however, was how much of those sales did we get because of the coupon and how much was simply us just giving money away on sales we would have already had?

The better question was … “Do I have somewhere else I could spend $21,550 that will generate more than $39,144 in gross profit?”

The mailing was sent to our own in-house customer base of people already familiar with us, so it wasn’t like we were reaching new people. If all of those same people came in and spent only the average for non-coupon sales of $48 we would have been only slightly worse off (687 x $48 = $32,976, which equals $16,059 in net proceeds).

Once I did the math I knew that anything less than 5% return on my direct mail wasn’t worth the time and effort. We weren’t getting the return we needed. Plus, we were advertising for the short-term instead of the long-term. On top of that, we were training customers to wait for the next coupon.

That is the issue with Direct Mail.

On the plus side, you get to tailor a message specifically to the people on your mailing list, and you can do the math to see exactly how much money you made. The downside, however, is that it takes a fairly high response rate to make it worth your while. Unfortunately, response rates rarely get as high as what we were getting each November. (That 5.1% was our lowest. We had a high of 9.6% in 2007!)

We were getting those numbers, though, because we were sending the coupon to our own fan base during the peak shopping time of the year for toys. We never came close to those numbers with the coupons we used to send out at other times of the year.

According to this post on expected response, if you are using an outside mailing list, meaning people who don’t yet know you, your response is likely going to be between 1-2%

If I only had 1.5% response (202 of the 13,500 redeemed), my numbers would look like this:

  • Total cost = $11,850
  • Total sales = $23,634
  • Gross Profit = $11,510
  • Net Proceeds = -($340)-

With numbers like that, the math is pretty easy to understand.

Does Direct Mail have a spot in the world of advertising? Can it be effective? There is one more equation worth doing. What is the lifetime value of a customer? If finding new customers is difficult, but once you find them, they become a gold mine, then yes, Direct Mail can work.

You just have to do the math.

-Phil Wrzesinski

PS What I found interesting was how our response rate went down over the years. Some might attribute that to the numbing of the deal. Our deal never changed so it became less appealing to some customers. Some might attribute the declining response to the aging out of our customer base. While we did cull our list for bad addresses, we didn’t track ages of the kids and grandkids of the people we sent the postcards. As birth-rates declined, our list became top-heavy with older customers. During the same time that our response was declining, however, our market share didn’t change. I think in many respects, since we were more hyper-focused on our Relational Customers, our list shifted more in that direction. Most importantly, since we were doing the math, we could see the diminishing returns and looked for better ways to spend our money.

PPS We used to mail out a complete newsletter with our coupon. The newsletter went out bulk mail rate to keep costs down. Unfortunately with bulk mail it doesn’t always get delivered in a timely fashion. When I switched to postcards I also switched to first class mail to make sure our postcards got out in time for customers to redeem. We still, however, had several customers who never got theirs or got it too late. That’s why we had a few extras printed above and beyond the mailing list.

PPPS Check out my take on other media including Television, Radio, Billboards, Newsprint, Magazines, Email, Social Media, and Websites

Taking a Deep Breath of Perspective

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

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

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

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

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


Is it a Vase or Two Faces?

Here’s the perspective part … 

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

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

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

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

You will, too!

-Phil Wrzesinski

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

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

What to Do the First Time It Happens

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

Sometimes we missed one (or three).

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

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

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

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

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

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

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

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

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

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

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

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

-Phil Wrzesinski

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

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

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

My Big Fat Email Subject Line Mistake

Your subject line is the most important part of your email. Period.

Get it right and your email is a success. Get it wrong and nothing else matters. I learned that the hard way yesterday.

We’re doing a big promotion on Election Day. Something new. The subject line in my email read…

“Election Day ONLY – 20% Off all Gift Certificate Sales! See inside for details…”

The first two people I talked to about the promotion asked the same question. “Do we get 20% off the purchase of a gift certificate or 20% off purchases made with a gift certificate?”

I went back and read the content of the email. It clearly states that you get 20% off the purchase of a gift certificate. How did they get so confused? Then I read the subject line again. I saw the error of my ways. It wasn’t as clear and concise as it should have been. I left room for interpretation.


First, before you send an email, understand that many people will only ever read the subject line. They get so much email that they scan subject lines and hit the delete button. Therefore your subject line has to get your point across clearly and quickly with no room for doubt. Clever and cutesie subject lines leave too much room for interpretation. There should be no doubt about the purpose of your email. There should be only one interpretation of your subject line.

The best way to make sure your subject line is tight and to the point is to ask for help. Ask someone outside of your bottle to read your subject line and tell you what it means to them. Try to ferret out all the possible meanings. Then rewrite it to eliminate any confusion or misinterpretation.

Second, if you can’t make your point in the subject line, perhaps because it is too nuanced or complicated, then make sure your subject line has enough enticement to make people want to open the email. According to MailChimp, the average open rate for email from retailers is about 22%. In other words, 8 out of 10 people likely won’t open your email. You have to give them a reason.

Make it clear. Make it concise. Make it work for the 8 out of 10 that don’t open emails. Make it legitimate and not sounding too spammy. Make your subject line get people to want to open your email.

-Phil Wrzesinski

PS In case you’re wondering why I am doing a promotion like this for the store, here are the reasons…

  1. I get a huge influx of cash right when I need it most to help stock up for Christmas.
  2. Customers who redeem gift certificates often spend much more that what the gift certificate was worth.
  3. I get my customers to commit to shopping with me now before some shiny bauble from someone else catches their eye later.
  4. I get to promote Election Day as an important day.
  5. My Transactional Customers get a great deal!
  6. About 10% of all gift certificates go un-redeemed, so I’m really only giving away a small bit of margin.

You Don’t Make it Up in Volume

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

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

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

Warehouse Melissa and Doug 2

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

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

Agreed? Good.


Here is some simple math…

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

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


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

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

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


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

Here’s the math…

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

How about 30% Off?

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

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


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

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

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

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

-Phil Wrzesinski

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


Dumb Logic – Don’t Fall for It

At a recent presentation I was told that more money is being spent on mobile advertising than on PC advertising. No source was given so I cannot verify the truth of that statement. Then again, it doesn’t matter.

The presenter was using that info to tell an audience of small businesses that since the big boys are spending on mobile, we should, too. “They know what they’re doing.”

Yeah, right. (See “New Coke”, see “Creepy Burger King Guy”, see whatever company that had all the monkeys, see pretty much 75% of all Super Bowl commercials…)

Creepy Burger King Guy

If your advertising salesperson or consultant or agency ever tells you to do something because all the major giant retailers are doing it, you need to fire them immediately.


First, you don’t have the budget of those big boys. They spend money like no tomorrow hoping something will catch fire. They spend money in every medium out there. They are not discriminate in their spending. They chase every new opportunity like it is a Leprechaun with a pot of gold. They throw time and effort and resources at each one (and still get a lot of it wrong). You don’t have the same resources.

Second, what works for them isn’t necessarily the right thing for you and vice versa. Take the Mobile App for one. One of the most popular things to do with mobile is send your customers a coupon. We’ve already discussed the dangers of coupons. Even more bewildering to me is the coupon that gets sent after they have entered your store. Really? If they’ve already entered your store, you don’t need more marketing. You won. A coupon at that moment is simply you paying someone else to give away more of your margin. Once the customer is in the store, you wow them with your well-trained sales team.


Don’t take your cue from major chain retailers. Take your cue from your best customers. Chances are they aren’t in your store because of coupons and discounts and deals and silly ads that made them laugh. They are in your store because of the relationship you’ve fostered. They are in your store because of the fun they have when they visit. They are in your store because you make them feel like they belong.

You still need to do marketing. You just have to do it the right way for you. This will help…

  • Go to the Free Resources page on my website.
  • Start at the  top of the column titled “Improve Your Marketing”.
  • Download each PDF (they’re FREE).
  • Read them.
  • Write down your questions.
  • Email me your questions.

I’ll help you either through this blog or directly by email to get your marketing on track in a way that will work for you.

-Phil Wrzesinski

PS You don’t see a cost attached to my offer up above. There isn’t one. That isn’t to say that we won’t enter some kind of consulting agreement down the road (if you really need that kind of hand-holding). But answering your questions and helping you get on the right track is always free.

PPS Why FREE? Why do I give away so much stuff? Simple. I want you to succeed. Period. I don’t want barriers between you and your success.  I am not doing this for my own gain. I’m doing it for yours. Is there some hidden ulterior motive? Yes. I like to do presentations for groups of retailers. I charge money for those. The more you use and share my stuff, the more likely your organization will want to hire me to speak. But most importantly, for anyone to hire me, first you have to succeed.

Changing Your Thinking on Coupons

I’m not a fan of coupons. There. I said it.

If you’ve downloaded my free eBook Main Street Marketing on a Shoestring Budget, you know I prefer giving away gift certificates with no strings attached – instead of coupons – to attract new customers.

I also fear that using coupons too much trains your customers to wait for the next coupon before they shop.

Lastly, I believe coupons are more geared toward the Transactional Customer than the Relational Customer (the latter whom should be your primary target in your advertising and marketing).

With all that said, coupons done right can be a valuable part of your tool box.

Retail Toolbox


As I told you yesterday, the real key for coupons is to make them Rare and Special. Rare so that people jump on the deal when it happens and aren’t trained to wait for the next one to make their next purchase. Special so that the customer isn’t anticipating the next coupon and is more likely to act on the current one.

Rare and Special will increase your ROI because they will get more people to act on the current coupon. Your other big issue is delivery. How do you get those coupons into the right hands?

  • Newspaper Inserts – this is the preferred method of the big bog stores because they have the economy of scale for printing and delivering to get the best rates, and they don’t care who gets their coupons
  • Direct Mail – you can buy a list (and hope it is okay) or build your own. One takes money and has little return. One takes time but has a better return.
  • Postal Zip Codes – you can target zip codes instead of direct addresses for a little less per piece than direct mail
  • Email – easily the cheapest, easiest to share, but also most easily duplicated

Let’s look at that last one a little more closely…


If your goal is to limit the coupon to “one per customer”, email can be tricky because it is easy for a customer to print out multiple copies and use them herself or give them to her friends. That’s the big question I always get about sending coupons via email. “But how will I track if a customer uses more than one?”

I always ask back, “Does it matter if a customer uses more than one?”

Your goal for any coupon should be to Drive Traffic and Increase Sales. That is what coupons do best. Where is the harm if a customer shares your coupon with others? Where is the harm if the customer makes multiple trips using multiple coupons? Don’t both of those Drive Traffic and Increase Sales?

If your goal is to Increase Profits, then a coupon isn’t your friend in the first place. Coupons won’t help your profit margin (I’ll show you the math later why “lower your price and make it up in volume” doesn’t really work), but they can increase your traffic and cash flow and give your sales staff the chance to increase average ticket sizes and items per transaction.


If you send out a coupon via email, you have to consider two things…

  1. It will be shared
  2. It will be printed/used multiple times

If your goal is to Drive Traffic and Increase Sales, sharing and printing multiple copies are both GOOD things. In fact you want to encourage that.

Encourage your email list peeps to share the coupon with as many people as they can. It increases your reach to people who might not yet know you and it gets your fans to promote your business for you. In fact, take it a step further and encourage social media sharing, too. Your goal should be to get the coupon to as many people as possible as cheaply as possible. That’s how to get the best ROI.

Encourage your email list peeps to use the coupon early and often, too. Every trip they make means another chance to deepen your relationship with them and turn them into fans. (If you sell a commodity item like food that people are buying weekly, simply put a tighter time limit on the coupon to keep the coupon Rare and Special). The reality is that you won’t get that many multiple trips. Unless your offer is incredibly compelling and you’re giving away half the store, the likelihood that a customer is going to shop your store twice in one week is fairly low to begin with.

Email is the cheapest way to deliver coupons. It also is one of the most powerful ways to get your fan base to help you reach more and more people. You just have to change your thinking from one of scarcity (“limit one per…”) to generosity (“use it early and often and share it with the world…”).

-Phil Wrzesinski

PS My final tip is to keep the coupon as simple as possible with as few rules and exceptions as possible. The easier it is to use, the happier your customers will be.

Coupons Aren’t Bad (When They are Rare and Special)

Back in the 90’s we started a direct mail newsletter for Toy House. We sent out a mailing every other month.

Conventional Wisdom at the time said we needed to include a coupon with each mailing to help us “track the effectiveness” of the mailing. So we included a $20 off a $100 purchase coupon in each mailing.


Two things happened…

First, we never really were able to “track the effectiveness” of the newsletter, only the effectiveness of the coupon (which grew considerably in November, but waned in other months). It was hard to say whether the other articles were even read, let alone acted upon. In theory, we were told the coupon would mean that people would at least read the newsletter without throwing it away (although today I’m not sure if that was the case).

Second, we were training customers to save their big purchases until another coupon arrived. I would be showing a customer a new car seat and the first question was always, “When does your next coupon come out?”

Bed Bath and Beyond just announced that their coupon program was backfiring and causing them to lose profit as people just waited for the next coupon before they shopped. We learned that from sending out six a year. They send out one or more a week.


We decided over a decade ago that sending out multiple coupons wasn’t the answer. We shifted the direct mail newsletter to email newsletters (no coupon) and shifted the coupon to a postcard mailed only in November. Our response to that direct mail piece doubled the ROI of any previous mailings because it was Rare and Special.


Even with that shift to a once-a-year coupon, we have seen our annual mailing become less and less effective over the years. Although it is Rare, it is no longer Special. It is a foregone conclusion.

Until this year.

We’ll be doing a different type of coupon this year for two reasons.

  • First, we need to make it Special again.
  • Second, we want to shift away from the expenses of direct mail, so it will be an email coupon.

We have already begun marketing to our customers the importance of being signed up to get our emails. We have already begun prepping them that something new is going to happen this year. We have already begun the buzz and excitement as our customers are wondering what will happen.

You can use coupons in your marketing tool box. Just remember that to be most effective, they have to be both Rare and Special.

-Phil Wrzesinski

PS I’ll tell you how we are going to manage an email coupon in an upcoming post. Make sure you and your fellow store owners have signed up to get this blog in your inbox.

The Need to Keep Raising the Bar

Bed Bath and Beyond just announced that their coupon strategy is backfiring and that their profits are hurting because everyone is waiting for the coupon to do their shopping.

Umm… yeah. When you send the coupon out every week and never enforce the exclusions or expiration date, you pretty much send out the message that everything in the store is always 20% off. Anyone paying full price in that store is either lazy or an idiot.

What used to be special is now considered the norm.

BBB faces a dilemma. They either have to drop the coupon program and wean customers off the 20% discount (a daunting and dangerous task), or raise the bar on the coupon program to make it special again.

They said in the article, “Bed Bath and Beyond says it plans to draw in more customers through marketing.”

Okay, but how? A bigger, deeper coupon every so often? (further eroding profits) or something else?


If you are doing something special for your customers, eventually it goes from special to expected and the marketing pull from it will taper off. If it is a discount, that discount will have to grow over time to remain equally effective.

If you consistently go above and beyond your customers’ expectations, eventually they will come to expect it, meaning you’ll have to raise the bar even farther.

As you choose your marketing strategy, remember that the special things you do today will become the norm tomorrow. Make sure you have room to raise the bar when the effects start tapering off.

-Phil Wrzesinski

PS Surprise and Delight are the best tools for attracting new customers because you’ll never run out of new and fun and inexpensive ways to surprise and delight your customers. Check out these two Free Resources to get some ideas of things you can do to raise the bar and attract more customers – Generating Word of Mouth and Customer Service: From Weak to WOW!. I doubt either of these will be strategies employed by BBB (although they should).