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Different Campaigns for Different Customers

I learned this from Roy H. Williams, aka The Wizard of Ads…

I use radio as my primary source of branding advertising trying to attract the Relational Customer.  But I also use radio for my one and only Transactional Customer event – our Summer Fun Sale.  Both campaigns are on the same medium but trying to reach completely different people.  Sound crazy?  Not really.

Both types of customers listen to the same radio stations.  But they listen to different types of ads.

So each campaign has its very own signature, style, and scheduling.

The Relational campaign is me telling stories in a relaxed voice, carrying on a conversation with people who share my values and the emotions I am selling.  The campaign runs continuously year-round.  The ads change every month, but the message doesn’t.  It is all about having fun, helping others, education and nostalgia, told through stories and scenarios painted for the listening audience.

The Transactional campaign is rushed.  I speak faster.  I speak more excitedly.  I speak louder.  I speak with urgency.  I shout out facts.  Date.  Time.  Place.  What’s the deal.  The whole tone and tenor is different.  In fact, some of my regular customers ask me what I was “on” when I recorded it.  The Transactional customers don’t notice.  They just show up for the sale.

I also stack the sale ads.  They start running three days before the event and run once an hour right into the first couple hours of the event.  The repetition adds to the urgency and fires up the Transactional customer.

Do you have a signature and style to your advertising campaign or is it just whatever the latest ad salesperson sold you?  One way grows your business.  The other way just grows theirs.

-Phil Wrzesinski
www.PhilsForum.com

PS   I use radio.  You might prefer another method.  All mediums have a way they work, and many ways they don’t.  Unfortunately, your ad salesperson usually doesn’t know (or care) how his own medium works best.  Do your research.  There are 93 posts on this blog about Advertising and half of the blogs I follow are about advertising.  That ought to be enough to get you started. If you need more, hire me (I do more than just seminars).

JC Penney Revisited

I wrote recently about JC Penney’s new pricing policy and my wife’s experience there.

I hoped they won’t muck it up, knowing if they do, no one else will follow their lead away from hyped up sale, sale, sale to a more realistic method of pricing.
Unfortunately…
My wife went in looking for a new pair of pants. Found some she liked. They were marked $20.00. There were a couple other colors of the exact same pant there, but one was marked $25.00. No sale signs, no discounts, no markings on the tags to let you believe they were anything other than the price marked.
She took one up to the register. It rang up at some incredibly low price, like $10.00. She immediately ran back and grabbed two more colors. One of them also rang up at $10.00, the other at $15.
She had no idea what to expect, whether to complain, whether to walk away happy or just confuzzled. She wondered later how many people had walked away from those pants because they thought the pants were $20.00.
We just got the JC Penney catalog explaining their new pricing policy. Now I am confuzzled. Nothing in the catalog made sense and nothing matched the experience in the store.
A simple lesson here. If you want to go after the Relational Customer, the one looking for an expert she can trust, you have to price your store in way that instills confidence and trust. You do that by clearly marking your actual prices on everything. Do not leave anything to guesswork or wonder.
If you want to maximize your sales, do not let your customer walk away because she thought something was too expensive. Put the actual price on the product. Period.
Unless you want to be like JC Penney…
-Phil Wrzesinski
www.PhilsForum.com
PS Would you like to learn how to price for maximum sales and profits? Download my free eBook Pricing for Profit. Pricing is all about perception, something I hope JC Penney learns soon.

Is JC Penney Making a Mistake?

JC Penney announced a brand new pricing strategy. They are getting away from the over-inflated regular prices with everything on some kind of a sale all the time including scattershot coupons and deals.

They have already implemented it in my local JCP.

And my wife is not happy.

She went shopping there recently and was more confused by their pricing than ever. More importantly, she walked out without making a purchase. She asked me about it at lunch today, and I told that while I am a huge fan of not using sales and gimmicks (the old JCP model), I think they have a hard road ahead for three reasons.

THEY TRAINED THEIR CUSTOMERS

The first problem is that JCP trained their customers to expect a sale, to expect a discount, to wait for the coupon. For the next few months there will be some pain as customers try to adjust to this new program.

My wife was looking at a sweater. The new price tag said $25.00. It used to be priced at $50 in the old scheme. Then with a 40% off in-store sale and a 15% off coupon, it sold for $25.50. But without those “sales”, my wife ended up putting it back. It did not feel like a bargain any more.

You cannot get rid of that sale mentality overnight. We all know stories of customers who buy things on “sale” at other stores even when the “sale” price is higher than our price.

PRICING HAS PERCEPTION

I have been saying this all along. The numbers you use in your price give off a perception to the customer. JCP has changed all their prices to end in .00 instead of .99 as most retailers use.

The only problem is that .00 looks like “full price” while .99 looks like a discounted price. My wife, a full blood Transactional Shopper, mentioned this first. The price just looked too high. She even went so far as to say that she would have given it a second look at $25.99 instead of $25.00. So JCP, by their new pricing strategy is making everything look perceptually more expensive.

(For a full explanation of the way prices are perceived, download my free eBook Pricing for Profit.)

CAN THEY RELATE TO THEIR CUSTOMER?

Let’s face reality. JCP, Kohl’s, Macy’s, Elder Beerman, and all the other department stores like them are relatively interchangeable. They all carry similar goods at similar prices. And they all go after that Transactional Customer, the one who shops solely on price.

But with this shift, JCP is hoping to get away from that price-shopping mentality. Does this mean they are now going to go after the Relational Customer, the customer looking for an expert she can trust? I don’t believe they have the staff and the training to accomplish that. They certainly are not going to compete with Nordstrom’s any time soon.

So while they alienate their Transactional Customers in the short term, they are going to have to find new ways to attract those customers (who have been their base for so many years) back to the store with some really sharp pricing on those every-day-low-prices. JCP is right that not everyone is duped by the mark-it-up-to-mark-it-down policy so many department stores use. But not everyone is good at math, either.

We’ll see if JCP has the guts to stick it out. Personally, I’m hoping they do. (But please change those prices back to .99)

-Phil Wrzesinski
www.PhilsForum.com

PS If you have not yet seen my Pricing for Profit presentation, I am doing a revised version at the ASTRA Marketplace in Baltimore this coming June. According to those who have seen it, it might be the single most profitable hour you might ever spend.

Do You Want Fries With That?

McDonald’s gave us the best punchline for the upsell.

“Do you want fries with that?”

But that one little phrase made them a lot of money because it increased the average ticket, the average dollars per transaction.

It makes intuitive sense that if every customer spends just a little bit more your store will be more profitable. That is why you want to track your Average Ticket.

In the last post we counted the number of transactions you had for the year. Simply divide your gross sales by this number and you have the Average Ticket. Now compare that number to last year’s number. Did it go up or go down?

Simple knowledge of the world tells you that it should go up just to keep pace with inflation. Your prices went up a little so even if you sold the same amount of items to the same amount of people, that number should go up.

But what if it went down?

There are three big reasons why your average ticket might go down.

  1. You do not have the right merchandise.

  2. Your staff is not selling the merchandise you have.

  3. Your customers are in a hurry to leave.

Let’s explore those.


THE RIGHT MERCHANDISE

If you do not have the merchandise customers want to buy, then they are not going to buy from you. That is simple enough. But one easily fixed mistake some retailers make is not having the necessary accessories to complete each sale.

This is something I preach to my staff constantly. Make sure that a customer making a purchase has everything she needs to use that product the moment she gets home. Is it an electronic toy that needs batteries? How about a model that needs paints… and glue… and paintbrushes… and thinner… and a display case?

If you do not sell all those accessories then you are leaving money on the table by not having the right merchandise.

YOUR STAFF IS NOT SELLING

At least the McDonald’s clerks are offering more products with their fries statement. Are your sales staff doing the same? There are plenty of less offensive ways to do that. The first is to do what we just discussed – complete the sale. Make sure the customer does not have to make a separate trip to get everything she needs because if she does, it won’t be to your store (and neither will the next trip she makes to shop).

You also want to keep asking the customer if there is more you can do. Keep asking until the customer says no. Here are some simple questions any sales person should be comfortable using:

  • Who else is on your list today? (thanks, Bob)

  • Is there anything else I can show you?

  • What else can I do for you today?

If you are not asking, you are not selling. Anyone can point a customer to the product for which they asked. The better sales people lead them to the product, asking questions as they walk. The best sales people then offer two or three best options to fit the needs of the customer. And then those sales people show them matching, coordinating and accessory products. And then they ask for more.

It costs way too much to acquire a customer to let them walk out without being given every opportunity to buy. They will let you know when they are done shopping. Always let the customer end the shopping, never you.

YOUR CUSTOMERS JUST WANT TO LEAVE

It is a simple axiom of retail. The more time a customer spends in the store, the more money she will spend, too. So you need to encourage your customers to stay longer. You do that by making them feel more comfortable. Offer to take her coat. Offer her a beverage. Engage her in conversation. Get her to talk about herself. if she has kids with her, make sure their needs are met.

The right music, the right lighting, the right temperature are also important. If it is too cold your customers will not stay. Sure, you might save a penny or two in heating costs, but you’ll lose all those pennies in customers who did not stay. Likewise, too hot makes customers just as anxious to leave. They may not even know why they want to leave. But they will leave. If you made a change in your thermostat to save some money and your Average Ticket went down, you might want to change it back.

Odors are also powerful drivers. Heavily perfumed areas can be as much a turnoff as bad odors. Don’t mask the bad smells with perfumes, find the source and eliminate those odors. If you must use a scent, food scents are better than florals. They tend to be more comforting.

The layout of your store also affects the length of stay. Walk in your front door and see what captures your attention. Where does your eye go? Is there anything to attract a customer deeper into the store? The deeper they go the longer they stay.

Also look at your traffic patterns. Are the aisles wide enough to handle the flow? Do the aisles make sense? Is it obvious where to go? Confused people will not shop long. Do not confuse your customers.

Number of Transactions is something over which you only have partial control. Average Ticket is completely up to you. Whether it is going up, down or staying flat is a quick indicator of how well you are performing in the store. Raise the performance and you’ll be punching a higher ticket.

-Phil Wrzesinski
http://www.philsforum.com/

PS For more on merchandising, download my free eBook Merchandising Made Easy. To raise the bar of Customer Service so high your customers are singing your praises to everyone they know, download my free eBook Customer Service: From Weak to WOW! The books are free, but the information in them is priceless. (Why would I give away such information for free? I want you to succeed. When one independent retailer improves, we all improve.)

How Many Customers Does it Take to Change a Retailer?

Two numbers every retailer should track are Number of Transactions and Average $ per Transaction. (Yes, if you know the first number then you can calculate the second).

Number of transactions is simply how many times you rang up someone on your register. Did that number go up or down? If it went up, life is probably pretty good. You can skip the rest of this post and wait for the next one talking about the Average Ticket.

If it went down, read on…

There are two reasons for your number of transactions to go down:

  1. You didn’t get enough traffic through the doors

  2. You didn’t convert that traffic into purchases


YOU DIDN’T GET ENOUGH TRAFFIC

There are a number of reasons why you might not have as many people coming through the door. Here are the most obvious ones…

The market shrank. The population in your area decreased or at least the population that shops your category decreased. We have seen a decline in births in county for four straight years. Since we sell baby products it is not surprising that the number of transactions has declined. Fewer babies being born means fewer people buying cribs.

You can get population information from your local government. They track things like foreclosures, house sales, rental property availability, unemployment claims and taxes to determine what is happening with the local population.

In a similar vein, did your market dramatically change? Was there road construction outside your door? Was there a major shopping center constructed somewhere else (even if they didn’t have a competing store)? Was there a fundamental shift in traffic patterns? all of these could have an effect on the amount of traffic coming through your doors.

The competition increased. Did a new competitor come to town? Did a current competitor step up their game? Although I often tell retailers to focus more on what you can do than on what your competitors are doing, you still have to watch them. In 2010 Toys R Us opened a pop-up temporary store in our market. It only took a small piece of the pie, but in our shrinking market every crumb counts.

Your advertising did not work. Did you cut back on your marketing efforts? Did you change your message? Did you forget to change your message? If you cut back or made major changes to your message you may have caused the drop in traffic. (Not sure what your message should be? Download this free eBook “Understanding Your Brand”)

YOU DIDN’T CONVERT TRAFFIC INTO TRANSACTIONS

Two main reasons why this happens:

You didn’t have the right products. When there is a hot product in your market and you don’t have it, you’ll get plenty of lookers, but no buyers. Nothing cures more retail ills than having the product everyone wants. Did you have a bunch of calls or requests for a particular item? I know one store that has a daily worksheet that all the staff fill out including what requests were made to which they had to say NO. From that worksheet she often finds new products and categories to carry. Her rationale? Customers come in thinking she should have it. Why disagree with the customer?

Your sales staff wasn’t up to par. How much did you commit to training? How much did you work with the staff on what great customer service looks like? How much did you leave to a manager to do? Does the manager care at the same level as you care? Not only does a poorly trained sales staff cost you in conversions, it costs you in average ticket (which we’ll explore in the next post), and it costs you in repeat business (traffic coming through the door).

More than likely, if your transactions are down it is a combination of many of these factors. The two you can control the most are your Advertising and your Sales Staff Training. Get working on those right away. In fact, even if you had a good year, you can still raise the bar in both of those categories.

And that will make it a Happy New Year for your business.

-Phil Wrzesinski
www.PhilsForum.com

PS One other thing that could happen… Your POS could change the way it tracks transactions. Our new release of our POS software did just that. Took us two months to figure out why our number of transactions spiked all of the sudden. Got that figured out so now we’re comparing apples to apples again.

Statistics Falsified for Your Benefit

I love December!

The statistical anomalies are so much fun.

Most businesses look at their sales in comparison to last year. And most businesses compare Thursdays to Thursdays, Fridays to Fridays, etc. This comparison works great right up until December 1st.

As you know, you only get 24 days in December prior to Christmas. Those 24 days are extremely important. So you might be tempted to compare December 1st to December 1st for this month to see how you are doing instead of Thursday to Thursday.

Just to show you how misleading those numbers might be…

If I compare day to day for Thursday 12/1 and Friday 12/2 to the correlating Thursday & Friday from last year (12/2/10 and 12/3/10), my sales are down 21%.

But if I compare those same days this year to 12/1 and 12/2 from last year, we are up 11%.

Being an optimist, I’m going with up. Two days down, twenty-two to go.

Keep smiling and keep making memories. Those are the numbers that really count.

-Phil Wrzesinski
www.PhilsForum.com

PS No, there really isn’t a lesson in this post, unless you want to take away from it that the most important thing is to keep a positive spin on everything this time of year. There will be time to evaluate how you really did when the season is over.

Are You Google?

Yes you are! (or at least you should be)

Google is a search engine that helps you sort billions of pages of information into the most relevant answers to your question.

Just like a smart salesperson.

Customers now have more information than ever before. They have spec sheets, reviews, pricing, and a whole lot more. In fact, they are overloaded with information, some of which is not as helpful as it could be.

The smart salesperson works like Google to sort that information so that the customer hears only the most relevant and important information needed to make a decision.

Here is how it works.

The smart salesperson starts by developing a relationship with the customer, getting to know her. Then the smart salesperson begins asking questions to find out not just what the customer wants, but why she wants it. The “why” is the search box, the question that sorts the information. From there, the smart salesperson uses his or her product knowledge to find the most relevant reasons why a certain product solves her needs.

To find the why, the smart salesperson pays close attention to the underlying problem needing to be solved.

“I need a new curtain for my son’s bedroom. The sunlight in the morning is waking him up too soon.” (I need something to make a room completely dark.)

“I need a new TV for the man cave before the playoffs begin.” (I need a TV that shows off sporting events superbly.)

“I am looking for a gift for my seven-year old nephew that lives in California.” (I need something for a young boy I rarely see because he lives so far away that I can ship easily.)

When you understand the why behind the purchase you are better equipped to answer that why with the product and benefits of that product that are most relevant.

Google is only as good as the info you type into the search box. The salesperson is only as good as his or her ability to find out the why behind the purchase. The smart salesperson, therefore, actively seeks out the why.

-Phil Wrzesinski

www.PhilsForum.com

PS To learn more about the power of WHY check out this TED Talk video by Simon Sinek

Don’t Marry Your Inventory

Marry your spouse. Develop a long-lasting relationship built on love, trust, fun, and shared interests.

But don’t ever marry your inventory.

Your inventory shouldn’t be around for long. It is simply an affair designed to bring you some short-term enjoyment (profit). If it overstays its welcome, you both suffer.

Oh, sure, when you first get your inventory it is exciting and new. There is an infatuation. And people tell you how great your inventory looks with you.

But if it stays around, it starts to look old and tired, and so do you. Be heartless. Kick it to the curb and get something newer and younger and fresher.

(Note: this is the only situation for which I’ll give you this advice, so use it for what it’s worth:-)

-Phil Wrzesinski
www.PhilsForum.com

PS Yeah, a lot on Inventory Management this week. That’s what happens when I’m divorcing my inventory in our Summer Fun Sale.

Get Rid of Your Dogs

What if you bought this shiny new crib for your store. It measures 62″ wide and 35″ deep. It takes up 15 square feet of your store.

What if six months after you bought it, you still hadn’t sold it?

One calculation some stores use to see how healthy their sales are is Sales per Square Foot. Take your total annual sales and divide it by square footage of selling space to find out your Sales per Square Foot.

Now you know how much business you should be doing for those 15 square feet.

But if you haven’t sold a single crib, where are you? You’re in the hole. You’re out whatever it cost to bring that crib in. You are in negative numbers.

Not only have you not made any money, you’ve lost money on that space.

And chances are, since no one wanted that crib in the last six months, just taking 10% off the price isn’t going to move it any faster.

The best move is to mark it at cost and sell it quickly. Get it out of there. Get back to zero for your 15 square feet. Then you have six more months to try something else in that space that will make you money.

Hey, we all make bad buying decisions, dogs that just won’t hunt. That’s part of the retail game. But a worse decision is not getting rid of the dogs soon enough.

Make sense?

-Phil Wrzesinski
www.PhilsForum.com

PS If you want to know more about managing your inventory including the two formulas every retailer should know and track, download my FREE eBook on Inventory Management.

PPS Follow this link for my post on the best way to make your dogs bark.

PPPS Check with your industry to see if there are standards for what your Sales per Square Foot should be. But understand that every store is different. The bigger your store, the more of your space might be used for extra cash registers or wide aisles for shopping carts, thus lowering your numbers.

The Price is Right (Where it is)

I don’t recall any time in the past 18 years where price has been such a driving issue for retail. Is it the economy? Is it the Internet? Is it the smart-phone barcode apps?

For whatever reason, all most retailers seem to be thinking about is where to set the price. How low do you go?

The easy answer is to set the price at what the customer perceives the product to be worth. Figure out what the average person would expect to pay and charge that amount. You’ll sell tons!

What about profit, you ask?

Well, for that, you’ll probably need to raise your prices.

But how?

Simple… Raise the Perceived Worth of the item in the mind of the customers. You do that three ways:

  1. Merchandise the product more effectively. Give it a special place on the shelf. Put a table cloth under it and a spotlight over it. Build a display that tells a story about the product. All of these things make the product appear more valuable to a customer.

  2. Make a sign for it. Put on the sign the story behind the product, the benefits of buying/using that product. Signs sell.

  3. Teach your staff everything on the sign and then some. Make sure they know what problems the product will solve so they can match customer to the product.

Quit worrying about price and instead focus on raising the customers’ perceptions and expectations. You’ll sell more and make more at the same time. Oh yeah, and you’ll have more fun doing it!

Happy Easter!
-Phil

PS For more on Pricing for Profit, download the FREE eBook.