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How Much Market Share Should You Have?

I showed you how to calculate your Market Share. Hopefully you did that. It’s a real eye-opener when you see how much (or little) of your market you actually own.

Your first thought was to wish it was higher. But how high is realistic? It depends on a few factors, some of which you have no control.

The Factors
Competition is your biggest factor. How many other stores are in your industry? How well do they do their job? How much crossover of product is there? How well do you do your job? How much marketing do they do? How much marketing do you do?

In my market of roughly 160,000 people we have a Toys R Us (plus the new pop-up TRU Express store), Wal-Mart, Target, 2 K-Marts, and 2 Meijer’s. At Christmas time we also have to deal with the toy departments at Sears, Kohl’s and JC Penney. That’s a lot of competition for a shrinking piece of pie.

Fortunately for us, while they all spend enormous amounts on advertising, almost all of it goes towards the Transactional Customer. And most of our product selection cannot be found in their stores. Customer Service? Ours is much better (or at least it better be:-).

Not a Level Playing Field
But as an independent store most of us have an uphill battle in the market share game.

First, only about 9% of the population (heard this multiple times but still looking for source for this stat) are pre-positioned to shop at an independent retail store.

Second, most independents are far below the big chains in name recognition. Not surprising considering the huge ad dollars these chains can spend.

Third, independent stores are perceived as having higher prices and lower selections. Whether true or not, this perception is the reality in the public’s mind.

Therefore, a typical independent store is likely to have only 4-6% share of the market. If you are above that, you’re doing things right. If you are above 10% then you are really on the right track because you have convinced people not predetermined to shop local to still shop with you. And if you are over 15%, you rock!

Roy H. Williams likes to point out that 30% is the gold standard for any one business in any one market. If you have 30% of the market, you own that market. Just don’t expect to grow much more. Even Wal-Mart only has 10% of the retail market, and is lucky to top 20% in any category. Sure, some Wal-Marts have that mythical 30% in certain markets, but mainly because they are the only game in town.

Where to Go From Here
But as an independent retailer, if you have 15%, it will take some nifty circumstances to grow much higher. And the higher you go, the tougher the battle. Once you have reached a high point in your market in one category, the only way to grow is add a new category.

That is what I am doing right now – researching new categories for my store. Although we will still go after higher market share in the current categories, our market potential is shrinking. So adding new categories gives me the best opportunity to grow our business.

And how will I pick which categories to enter? You guessed it – by calculating the Market Potential and seeing if 5% of that market is worth my time and resources. I am currently evaluating Teacher Supplies, Crafts, Juvenile Furniture and others to see which has the most potential, the fewest competitors, the best opportunity to jump in and take a piece of the pie.

Without knowing how to calculate Market Potential, this exercise is futile. But armed with that knowledge, I know we’ll pick the best way to be successful.

Make sense?

-Phil

Free or Priceless?

I’m going out on a limb with my next two Freebies – How Ads Work Part 1 and Part 2.

Pablo Picasso is credited with saying, “Good artists borrow, great artists steal.”

Much of the information in these two eBooks is stuff I stole from Roy H. Williams, aka The Wizard of Ads, especially the mind-blowing Advertising Performance Equation (APE) in Part 2. It will totally transform the way you look at advertising. (I hope he doesn’t mind.)

Part 1 guides you through some of the same discussions I’ve done here – showing you HOW the different mediums work – now all condensed in one single document. Most sales reps in advertising know how to sell their products, just not how to use them. This guide will help you understand the strengths and weaknesses of each medium so you’ll know more than your reps. Plus, as a bonus, I dispel some of the most common myths of advertising and share with you the Wizard’s definition of Transactional and Relational Customers – probably the single greatest business concept I learned at Wizard Academy.

Part 2 includes the APE, plus a bunch of ad examples that have a strong impact. Although the ads are copyrighted, the techniques they use are simple enough for you to steal for your own use.

Best of all, both eBooks are completely FREE! You are encouraged not only to download them, but to share them. Send them to all your friends in the industry. Copy them to your Shop Local campaigns. Distribute them to anyone you know who needs help in advertising. Believe me, we all benefit when advertising improves.

You know why most ads don’t work? Because most people don’t know how ads work. These eBooks are your starting point to making your ads work for you.

-Phil

PS Use these two in conjunction with Understanding Your Brand and you will be light years ahead of your competition in understanding advertising and making it work for you. Think of it as a Master’s Degree without the time or expense (or the outdated info most colleges still teach).

The Easy Way to Solve a Tough Problem

Finding solutions to tough problems is not as hard as you think, especially when you understand Business Problem Topology.

Roy H. Williams first taught me the concept of Business Problem Topology through his trilogy of “Wizard of Ads” books.

Then he taught it to me again during a visit to Wizard Academy in May 2005.

And when I applied it to a problem I had, it worked!

Business Problem Topology is when you take a problem you are having and look where a problem with similar characteristics may have already been solved. Solomon tells us that there is nothing new under the sun. Therefore, any problem you have is nothing new. Someone once had a problem like it.

I had a problem. Mine was hiring good people. In the toy business we hire a large number of temporary workers for the Christmas season. They need to be trained and ready to go in short order.

For years I struggled with this problem – until I applied Business Problem Topology. My problem? Trying to create a finished product that was strong, useful and beautiful – a work of art – in a small window of time. I needed a process that consistently turned out a beautiful, useful finished product. So I asked myself… What art is consistently strong, useful and beautiful?

Pottery.

So I began exploring how to craft pottery. And there lay the answer. The steps a potter takes to create a work of art to last centuries are the same steps a business owner can take to hire and train a staff that is a work of art. (I already showed you the first step here.)

Now I have a book that shows you how to apply all of the steps of a potter to your hiring and training.

The book is titled, “Hiring & the Potter’s Wheel: Turning Your Staff Into a Work of Art”. You can buy it online at my website. (or at Toy House for you local readers)

It is an easy read. The nine steps I outline are told in a story about a young HR person named Mary hired by a start-up company that is experiencing growing pains. As Mary learns, so will you. And if you apply these same techniques in your business, you’ll see a huge change in the quality and skills of the people you hire and train. I know. I use it every day. It’s my dirty little secret for having awesome customer service. And I’m sharing it with you.

-Phil

The Local Parenting Magazine – Is it Right For You?

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

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

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

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

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

Here is my response…

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

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

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

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

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

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

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

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

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

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

-Phil

I’m Sharing My Biggest Secrets

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

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

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

The class is:

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

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

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

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

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

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

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

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

See you Thursday!

-Phil

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

Being a Successful Retailer

If you’ve been following this blog regularly, you probably know everything I’m going to say here. Some of it is in my Bio, and some is on my new website www.PhilsForum.com.

For those who are just starting to follow, I’d like to give you a little background about who I am and what I want to accomplish with this blog.

I am a retailer. I run a toy store so I know a lot about seasonal business. I also sell baby products so I know a lot about working on deadlines (nine months might seem like a long time, but it sneaks up on a lot of couples).

And most people consider my business to be quite successful. We were named by George Whalin as one of the 25 Best Independent Stores in America. So we must be doing something right.

In a couple weeks I’m going to tell the city of Jackson how to be successful in a market with 15% unemployment, a shrinking blue-collar workforce, and a struggling government & economy.

I can sum it up in two words – Keep Learning.

When I realized that our advertising wasn’t working, I took classes, read books and studied until I fully understood branding and how ads work. I give a lot of credit to Roy H. Williams, aka The Wizard of Ads for what I learned.

When I realized that I was lousy at hiring, I evaluated the problem until I understood where I went wrong and developed a system to improve the quality of people I was bringing in. (I’m publishing a book about it later this fall.)

When I took over 50% of the buying responsibilities for the largest selection of toys under one roof, I studied open-to-buy systems and adapted them to fit our situation and needs.

As an Independent Retailer, there are always fires to put out, always challenges to face, always new obstacles to overcome. I believe the successful businesses are the ones who are always learning, always expanding their knowledge & understanding of four key areas:

  • Customer Service
  • Inventory Control/Merchandising
  • Financials
  • Advertising/Marketing

I have found that the more I study, the more prepared I am to meet the new challenges and turn them into opportunities. As my high school swim coach used to always say, Luck is when Preparation meets Opportunity.

How do I do it? I devour business books. I am reading Trust Agents by Chris Brogan & Julien Smith right now. It will be the 12th non-fiction book I’ve read this year. One of my favorite books was Seth Godin’s Tribes. It’s no wonder that I follow both Seth’s and Chris’s blogs.

Which brings me to the goal of this blog… I want to share with you what I’ve been learning so that we all can be successful.

Your feedback is welcome. The more you comment and tell me what’s on your mind, the more I can tweak this to give you what you need. If there are topics you’d like to see addressed, let me know. If there ideas you want to share, by all means share them.

We’re in this together. At least that’s my way of thinking.

Your thoughts?

-Phil

Doing it the Right Way

My wife hit her goal today. In the fall of 2007 she set a goal – lose 50 pounds… the right way.

Yep, eat right, exercise more.

No fad diets, no magic fat-burning pills, no surgeries, meal deals or other gimmicks. Just eat right and exercise more.

Yes, she enlisted help. She signed up for Measure-up Monday through Allegiance Health to give her someone to which she would be accountable. She also signed up for exercise classes, figuring that if she paid money she’d be more apt to attend.

And it worked! It took her eighteen months, but she has dropped 50 pounds, 7 dress sizes, and a load of unhealthy self-esteem.

Best of all, because of the changes in lifestyle, she’s going to keep that weight off for good.

So what does this have to do with your business?

Just like losing weight, there is no miracle cure to make your business profitable. You have to change your habits. You have to…

Eat right and exercise more.

Eat right means control your inventory. You need to bring in the right products in the right amounts. You need to calculate and closely follow your Open-to-Buy. You need to manage your cash flow. It might mean making a wholesale change to how you run your business. It did for my wife. She reads labels more carefully, understands nutrition much better, and makes smarter choices based on new information. Oh, she still has dessert every night, just not as much and not as often. She changed her eating habits. Can you change your buying habits? Of course you can.

When your business eats right, you’ll find your business is leaner and more agile, able to make changes to meet the needs of the marketplace faster.

Exercise more means get out and work. Retail is not for the lazy. As Roy H. Williams said, “If making a profit were easy, everyone would be doing it.” It takes work. It takes paying attention to the details of your customer service. It takes following your finances closely and knowing what each number is and what affects them. It takes doing your due diligence in the hiring and training of your staff to make sure they represent you as well as possible. It takes scrutinizing your marketing to make sure it portrays the message you want it to portray.

In short, it takes effort. The good news is that the work becomes habit forming. After a few months of working out at least 5 times per week, my wife now feels horrible if she doesn’t work out. And the same will be true for your business. The more you work at it, the easier the work becomes.

One of the biggest drawbacks to losing weight is simply getting started. The same is true of the pile in your inbox. But if you make small changes daily to pay just a little more attention to the details, to focus just a little more sharply, your inbox will be less daunting and easier to manage.

If you want lasting profitability, you have to make changes to your business lifestyle. There are no shortcuts. You have to eat right and exercise more. And if you do, it will work!

Just ask my wife.

-Phil

Deep Versus Wide

In just about everything you do, you have a choice. Go Deep or go Wide.

In business that could mean a number of things…

  • Stock a few things Deeply or stock a Wide assortment.
  • Try to create Deep relationships with a few special customers or shallow relationships with as Wide a group as possible.
  • Advertise Deeply in one media or spread yourself thinly across a Wide variety of venues.

Obviously, the best choice is to do both. But it is rare that any independent business has the resources to go Deep and Wide at the same time.

So with limited resources which is better? Deep or Wide?

This is the question that came up last Monday at the Jackson Retail Success Academy. One of our panelists was asked about advertising and what he felt was most effective. He said mixing up the media, doing a little in a lot of areas worked best for him. At which point every head turned towards me.

Two weeks earlier I instructed the same group of students to go Deep with their advertising, not to mix it up too much. Pick one media, I told them, and do it to the best of your budget and ability.

Every eye was now staring at me to see what I had to say.

And here’s what I said…

Nothing.

First, I did not want to discount what a fellow local business person whom I respect had just said. Second, I already had my say on the matter. Third, it wasn’t the time or place since we were supposed to be talking Inventory Management at the time. And finally, none of the students in that group had the kind of advertising budget this retailer had.

But the question still begged to be answered. Is mixing up the media a viable option or is it better to focus on one media done right?

Okay, I cheated. I phrased the question with a serious slant. I used the words, “done right”.

You see, the key to successful advertising is not how much you do or where you do it so much as how well you do it. Do you have a powerful message? Do you craft that message to speak directly to the heart of your audience? Do you pound that message over and over and over until the customers are thinking of nothing else other than you?

When I talk about Deep in advertising, I’m talking connection. How deeply do you connect with your audience? How well do you move their who-gives-a-crap meter? If you can do that in more than one media, good for you. Some businesses don’t have the money. Most don’t know how to craft the right message.

Your customers are your business relationships. The deeper the relationship, the more business you’ll do. And that starts with a deep and long lasting connection through your ads. If you’re dabbling in a little radio here, a little TV there, with a little newsprint on the side, how can you make any lasting impressions? How can you stay with it long enough to move the meter?

With all due respect to my fellow retailer, mixed media is rarely the answer. While he runs a successful business, Roy Williams, who taught me about going Deep, has turned other businesses in his category into rock stars (for those who know, pun intended).

Would you like to learn to go Deep? Join me for an hour on Wednesday, May 20th at 7:30am. I’ll be holding court at Jackson Coffee Company upstairs in their conference room doing a presentation that will change the way you advertise for good (or better).

-Phil

More on Word of Mouth

It’s pretty much a universally accepted truth. Word-of-Mouth is the best form of advertising. And most people add… “and best of all, it’s free!”

Really?

If you remember from an earlier post, Roy Williams said that word-of-mouth (WOM) comes from 3 things:

  • Over-the-top Design
  • Over-the-top Performance
  • Over-the-top Generosity

These all cost money. You either spent money on the design, on the hiring & training a superior staff, or on the stuff you gave away.

One thing that surprised me was that Roy didn’t mention the WOM you can get from Over-the-top Advertising. Last August I ran a radio ad that said:

I couldn’t believe it. they were taking customers into the men’s bathroom. Yes, my staff was taking men and women young and old into our men’s bathroom. And they were coming out laughing and giggling. Oh yeah, and buying, too. I guess when you have a product this cool you just have to show it of whenever and wherever you can. The men’s bathroom… gotta love it. Toy House in downtown Jackson. We’re here to make you smile. (Listen to the ad)

The ad aired for one month and hasn’t been on the airwaves since. But when it first came out the response was incredible. One local DJ discussed it on the air with the local newspaper rep, wondering just what the product might be. Everywhere I went someone asked what was in the men’s bathroom. People even came up to my wife asking about the ad. And earlier today – seven months after the ad was off the air – we had a customer ask about what was in the men’s bathroom. She said she and her family had discussed it over Christmas speculating on what the product might be. She was wrong, but delighted, because she liked what it was well enough to buy one.

Yes, you can create WOM with your ads. Here’s another example I just love.

One of the sponsors of Greg O’Conner’s “The Nooner” sports talk show is a store called Bras That Fit. Yes, a store that sells bras to women is a sponsor of a daily sports talk show primarily listened to by men. Some old-school marketers are rolling in their graves. Those who lived (and died) by the mantra that you have to reach the right people must think this store owner is out of her mind. You can’t sell bras on a men’s sports talk show. Or can you?

Her message is quite simple…

“Hey guys, are you tired of hearing your wife complain about her bra? Send her to Bras That Fit…”

So let me ask you a question. Which would be more effective, a woman hearing a radio ad or a woman complaining about her bra, to which her husband replies, “Hey, why don’t you go to this store I heard about on Greenwood?”

Reaching the Right People is just one of the myths I’m going to bust at an upcoming workshop on How Ads Work. Part 1 takes place Wednesday, April 15th at 7:30am at Jackson Coffee Co., with Part 2 on May 20th. Best of all, it’s absolutely free!

And while you’re there, I’ll teach you how to design ads that get people talking about your business. Think of this as my Over-the-top Generosity to the business community. Spread the word and I’ll see you there.

-Phil

What Are They Talking About?

When people talk about your business what are they saying? Do you know? More importantly, are people even talking about your business?

Have you given them something to talk about?

Roy H. Williams, aka Wizard of Ads, mentioned three ways at a recent conference to help you get WOM (word-of-mouth) from your customers.

First, you could choose to be over-the-top excellent in Design. Your store layout, merchandising, decorating, facade and mood could be so unique and outstanding that people talk about it for days and weeks afterward. Have you ever seen the Ferris Wheel at the Times Square Toys R Us? That’s over-the-top Design. Does your business have a cool and unique characteristic? Do you flaunt it? I saw a program on the Travel Channel of the 20 coolest public bathrooms. It was totally intriguing. My grandfather always had the idea of building a carousel on the front of the store with half the ride inside, half outside. Kids could get on the carousel and enter the store that way. Imagine what kind of WOM that would generate (and yes, I’m still considering it).

Second, you could choose to have over-the-top excellent Performance by your staff. I’m not talking about “excellent customer service”. Everyone says they have that. And, frankly, customers aren’t impressed by people who are just friendly & knowledgeable. They expect that. In fact, the only WOM you get from excellent customer service is when you don’t supply it. And that’s WOM you could do without.

What I’m talking about is a performance so rare that it’s exciting, extraordinary and unique. Customer service that is so over-the-top it becomes an experience. And it has to be an every day, all the time experience. If you’ve ever been to Pike’s Place Fish Market you know what I’m talking about – and what customers are talking about. The throwing of fish, the yelling, laughing, playing, the customer involvement. What can you do every day to make your customer’s experience more memorable?

The third, and most intriguing way Roy described was Generosity. What are you giving your customers to make them talk about you? A jeweler who replaces watch batteries for free, a restaurant who gives out free desserts to dinner guests, a hotel that has free curling irons, cell phone chargers, or web connections. Those are just some examples of generosity. But here’s the clincher. To get WOM from your generosity you have to do it, but not advertise it.

Imagine you go out to eat and see a sumptuous dessert menu on the table. You know you want one, but aren’t sure if you want to fork over the dough for an extra you don’t need. But then your waiter says, “How about a dessert tonight? It’s on me.” How could you resist? And won’t you be talking about that meal to your friends? Pretty soon, you’ll be saying, “Hey, let’s go to so-and-so’s. The last three times I was there the waiter gave us a free dessert.”

For the cost of some flour and sugar, a restaurant that does this could buy a lot of WOM, and a lot of loyalty. (And that flour & sugar could probably already be fixed into the cost of the meal.)

Word of Mouth is the best form of advertising – always has been, always will be. But you have to give someone something to talk about. Start looking at your Design, Performance and Generosity and see if you can find something worth a conversation. Then maximize it to the extreme and watch the talk begin.

-Phil