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Convenience Versus Experience (One More Time)

Yesterday I posted a blog titled “Convenience Versus Experience.” Today in my inbox I get an email from one of the retail news outlets I subscribe. The subject line?

“Convenience vs Experience: What matters most to shoppers?”

It was a white paper on shopping habits. Yes, I had to download it.

Oracle Bronto did a survey of shoppers’ habits by age, income, children in the house, and need, to see how frequently people shop online, in stores, or both. Excluding grocery and convenience stores, the survey covered a lot of ground and revealed some interesting stats. (You can click on the link at the beginning of the paragraph to download the full results yourself. Just beware that Oracle is going to ask for all your info and try to sell you on their Bronto email software.)

One surprising stat was that Millennials were most likely of the age groups to shop often, and they shopped equally in stores and online. Bet you didn’t see that coming.

Another surprising stat was that Boomers were the group most likely to go online when they did go shopping. (They also shopped the least.)

Not surprising was that the more money you made, the more likely you would shop often.

Here is what the survey didn’t tell me …

It didn’t tell me how many times a customer went shopping in stores for Convenience versus Experience. One of the assumptions was that people shop online purely for Convenience and shop in stores purely for Experience. Unfortunately that assumption is false.

I’ll bet you know people who shop online for the experience, or at least to avoid the experience of shopping in stores. I’ll bet you also know people who shop in stores because they want the item today (convenience).

Hardware stores, for instance, were not excluded from the survey. When I go to a hardware store, it is for the convenience of getting the part I need to get the job done now (or at least within the next three trips.)

The one takeaway worthwhile is that people shop a multitude of ways by choice.

The only question you have to answer is if you are giving them enough reasons to choose you.

-Phil Wrzesinski
www.PhilsForum.com

PS Even though their original question of “Convenience vs. Experience?” is flawed, the results of the survey are quite fascinating. It might be worth coughing up your spam-folder-email-address for the download.

Reading Better, First Impressions, and Setting the Mood

One of the fun things about moving is finding your “memory boxes”. One of mine was falling apart so I had to dig through everything and transfer it all to a new box. Yeah, that took a lot longer than it should. (Remember, one of my Core Values is Nostalgia.) One item I found that brought back a flood of memories was a short story I wrote back in 1990 about a spring break trip to Colorado and Utah.

Back in 1990 my favorite author was Pat McManus, a humor writer who wrote columns for Outdoor Life, Field & Stream, and other magazines. Pat also wrote several side-splitting books about camping, hunting, fishing, and growing up in the 1930’s and 1940’s in the great outdoors. Rarely did I go camping without one of his books stashed in my backpack. It was a necessary weight.

Not surprisingly, my writing style for my short story back in 1990 was quite similar to Pat’s humor.

Back in 2005 Roy H. Williams told me that if I wanted to learn to write better, I needed to read better. In my notes from one of Roy’s workshops I had circled a book idea, Poem A Day edited by Retta Bowen, Nick Temple, Nicholas Albery, and Stephanie Wienrich.

Poetry is the language of emotions. Advertising works best when it reaches you on an emotional level. Poetry is looking at ordinary things from unique and surprising perspectives. Advertising is giving your potential customers a new way to look at your business. Poetry uses interesting word combinations to set the mood. Great advertising uses interesting word combinations to get your attention.

Back in 2010 I did a staff training using the opening lines from several great books such as …

“It is a truth universally acknowledged, that a single man in possession of a good fortune, must be in want of a wife.”  Jane Austen – Pride & Prejudice

“There was a boy called Eustace Clarence Scrubb, and he almost deserved it.”  C.S. Lewis – The Voyage of the Dawn Treader

“Far out in the uncharted backwaters of the unfashionable end of the Western Spiral arm of the Galaxy lies a small unregarded yellow sun. Orbiting this at a distance of roughly ninety-eight million miles is an utterly insignificant little blue-green planet whose ape-descended life forms are so amazingly primitive that they still think digital watches are a pretty neat idea.”  Douglas Adams – The Hitchhiker’s Guide to the Galaxy

“Here is Edward Bear, coming downstairs now, bump, bump, bump, on the back of his head, behind Christopher Robin.”  A.A. Milne – Winnie the Pooh

In that same meeting I played the opening music from Aaron Copeland’s Fanfare for Common Man, Beethoven’s Fifth Symphony, and The Who’s Baba O’Reilly.

We talked about how the opening sets the mood for everything else. We talked about the importance of first impressions. We talked about rhythm and feelings. We also talked about all the “openings” a customer has at our store.

It isn’t just the greeting that sets the mood.

We identified the following “first impression” moments:

  • Phone
  • Parking Lot
  • Front Window
  • Front Door
  • Store Atmosphere
  • Appearance of Staff
  • Greeting

Notice how many “first impressions” happen before you even say, “Hello. Thank you for coming in,”? That’s a lot of mood setting and emotion-creating before you even open your mouth.

When you read better, you write better. When you visit better stores and truly look at the moods and emotions they are trying to evoke, you’ll have better ideas for your own store.

Take that list above and go visit your favorite stores. See if you can figure out who is making the best first impressions. Then go back to your store and see if you can figure out what first impression you are giving your customers.

The better your first impression, the easier it is for your staff to make connections and build relationships necessary to compete in today’s retail climate.

-Phil Wrzesinski
www.PhilsForum.com

PS When you visit other stores, take good notes. When you attend workshops and presentations, take good notes. Then revisit your notes often. I don’t just look at those notes for a walk down memory lane. I read my notes from old workshops because there are often more nuggets in there than I could ever possibly remember. Sometimes when you get home from a presentation it isn’t the right time for one of those nuggets. But when you revisit it later, the timing may be perfect.

PPS Yes, in some ways this is a meta-post. Notice how my blogs often start with a story? Stories are powerful tools in advertising because they get your attention, speak to the heart, and are more memorable. In other words, they set the mood and make a good first impression. If you set the wrong mood, you put up obstacles to sales. If you set the right mood, you grease the skids for sales. I was lucky in that Toy House was a downtown business, but with our own parking lot. But you should have seen how I fretted about the cleanliness of that parking lot—especially in the winter.

Here is What Winning Looks Like – Sweetlees Boutique

Sometimes it is easy to talk about the mistakes retailers make and simply caution you to not make those same mistakes. I’d like to share with you a story of an experience that went right. A long-time Toy House customer, my boys’ piano teacher, and dear friend Jen sent this to me. In her words …

“Well, the basic story was this…. you know where it’s going right?

Image result for sweetlees boutique mason miI went to a small locally owned (in Mason, MI) women’s boutique, Sweetlees Boutique. (Because I will tell everyone about how amazing it was, and where to find them—160 E. Ash St, Mason, MI 48854.) The workers were so attentive offering to find you sizing, suggesting things they thought would look good on your body. They were fitting both my mom and I who couldn’t be more different in that department, and they did a fabulous job, asking questions, and pulling pieces for us to look at or try. Amazing experience. Both my mom and I purchased something. It was our first time there and we will definitely go back again.”

Let’s unpack that to see what they did so right.

“The workers were so attentive …”

How many times have you been in a retail establishment where you couldn’t even find an employee, let alone one who seemed remotely interested in helping you? The Wall Street Journal just wrote Monday about the dearth of employees in retail stores. Macy’s has cut 52,000 workers since 2008. Think about that number when you’re looking for someone the next time you visit a department store.

Think even harder about that number when you’re making out the next schedule for your store. Are you making a schedule to minimize payroll or maximize sales? If you think of your staff as your greatest expense, you’ll do the former. If you think of your staff as your greatest asset, you’ll do the latter.

“… suggesting things they thought would look good on your body.”

At one time this was the norm in a women’s clothing store. It was the expectation. Anything less and you would be writing a different review. Today it seems new and different and special.

That’s the one good thing you need to understand. The overall bar for customer service has been lowered so far that just doing the things you’re supposed to do will make you stand out in the crowd.

A properly trained and properly motivated staff can do wonders for the way your store is viewed compared to the competition. While everyone is all worried about high-tech this and omnichannel that, going old-school will win the day more often than not.

“… they did a fabulous job, asking questions, and pulling pieces for us to look at or try.”

Once again, a properly trained staff makes a huge difference. This team knew that by asking questions they could get to know the customer better. Getting to know the customer better allowed them to pull better pieces that more closely matched the customers’ needs.

Every customer that walks through your door is there to solve a problem. The problem might be as simple as killing time. It might be as complex as buying the perfect series of gifts for the hardest person on your list. You don’t know the problem until you ask. (And you won’t get the answer you need if you haven’t first made a connection.) This doesn’t come naturally to everyone. You need to train your staff by showing them how, role-playing it, and practicing it. The stores that do that best are the stores that are winning.

“Both my mom and I purchased something.”

You have a lot of hurdles to overcome to get a sale from a first-time visitor. You have to make her feel comfortable. You have to figure out the problem she is solving. You have to present her with a valid solution. You have to overcome her hesitations and objections. You have to make her want the solution more than she wants her money. All of those are actual steps in a process. One misstep and it’s a no sale.

We call it browsing because many times customers want to go into a new store just to get a feel for the place. No pressure to buy, just a scouting trip to see if they like it. Sometimes you get lucky and they fall in love with a product by accident. That isn’t selling. That’s clerking. Anyone can do that.

If your sales team is waiting for the customer to come up to you, many of them won’t and you’ll have lost out. If your sales team hasn’t made a connection, unless she falls in love with a product by accident, she won’t be back, either. That’s on you.

“… we will definitely go back again.”

That, my friends, is what winning looks like. Bravo to Sweetlees Boutique. Bravo! Thank you, Jen, for sharing that story with us all.

-Phil Wrzesinski
www.PhilsForum.com

PS In the same message, Jen told me about another retail experience that didn’t end so well. I’d rather leave on a high note and save that tale for later. If you have story of someone doing it the right way, please share. Send me an email or find me on LinkedIn.

KB-Toys Making a Comeback(?)

KB-Toys is coming back from the dead. The toy retailer that went bankrupt in 2009 is going to stage a comeback to try to pick up some of the business dropped by the closing of Toys R Us (TRU). According to one article, they will likely have a bunch of pop-ups this fall and more permanent locations by next year.

(picture from edplay magazine)

My expectation is that they won’t pick up as much of the toy industry as they think.

When TRU closed they were still doing billions of dollars in sales. They still had over 100 million customers. They actually showed a profit last year. Unfortunately it wasn’t enough to pay the massive debt they had acquired.

While a lot of uneducated pundits and many comments on several articles about Toys R Us closing want to blame Walmart and Amazon for their demise, those two companies had already taken their sizable bites out of TRU’s hide. People who wanted to shop purely on price or convenience were already going to Walmart and buying toys with their groceries. People who knew exactly what they wanted and didn’t want to leave the house to get it were already shopping on Amazon.

The customers still shopping at Toys R Us (over 100 million times, mind you) were going there for one of two things …

  • The Experience
  • The Selection

As an independent toy store owner who offered events, demos, and a fun, friendly environment for shopping, I can rightfully roll my eyes when someone mentions the “experience” of going to a Toys R Us. In fact, most of your independent toy stores will be able to offer a consistently better “experience” than going to TRU. But the customers going there weren’t comparing it to an indie toy store. They were comparing it to Walmart or Target.

You never heard a young kid pleading, “Please, take me to Walmart, puhleeeeezzzze!”

The Selection crowd was going to Toys R Us to browse the aisles. Amazon, as incredible as it is, isn’t built for browsing. Oh sure, you can search stuff on Amazon. As of last September Amazon was closing in on Google as the primary place people go to search for products. But Amazon searching is not the same as browsing. You still need a starting point.

If you want to walk aisles, touch and feel products, and get inspired, you have to go to a brick & mortar store to do that. Outside of a handful of my friends in the independent, specialty toy industry, no one had a larger selection of toys to browse than TRU. Customers went there because it was a better selection and an easier browse than the cramped, too narrow, too tall, too messy aisles of a typical Walmart or Target store.

When KB-Toys opens their pop-ups this fall they won’t have either The Experience or The Selection to truly catch the ball dropped by TRU. Sure, they will make sales. The pop-up model has been proven to be effective to an extent. Whether it will be enough to jump back into the toy market full fledged, however, time will tell. My guess is it won’t be enough and KB will become a perennial pop-up along the lines of Halloween USA. (At least that is what I would advise them to do if they were to ask me.)

The lesson here for specialty retailers like you is to recognize the different types of customers and why they shop at the different competitors you face.

Walmart is all about price and convenience. The cheaper the better. Amazon is for when you know (roughly) what you want, and you don’t want to go out to get it. Your category killers (JoAnn’s, Michael’s Toys R Us, Cabela’s, Barnes & Noble, PetSmart, et al) are more about Experience and Selection. Of the three, the one who most closely shares your customers is the category killer. Your growth is dependent on how many of those customers you can peel away. You already know you can beat them on Experience. Tomorrow we’ll talk about how you can beat them on Selection, too.

-Phil Wrzesinski
www.PhilsForum.com

PS The toy industry, with the closing of Toys R Us, offers a lot of opportunity for different stores to pick up the slack. There will be a lot of disenfranchised customers. Most everyone in the channel from the big box stores to Amazon to the indie stores stand to gain from their disappearance. The biggest winners will be those who have the most compelling message to the former TRU customers. Knowing why they were still choosing TRU over Walmart and Amazon gives you the heads up on what to say to get them to notice you.

Indie Retailers Best Poised for New Retail Model

A few years ago I went to lunch with a fellow toy store owner. I had wanted to see his store, so we made plans for me to visit and then go get lunch. Since we were in his town, I left it up to him to pick a place for lunch. What he said next I still cannot believe.

“Well, my favorite lunch place is out because I went there yesterday. A couple of our city council members stopped by and took me to lunch to ask me if there was more they could be doing for my business.”

Jaw meet floor.

That kind of respect for a local independent business is a rare bird in the world of government. Instead we see communities falling all over themselves to throw money at Amazon, not realizing that even if they don’t get an Amazon HQ or DC, they are still “giving money” to Amazon as local tax revenues are lost while local independent businesses struggle to survive.

For most indie retailers, even the government is slanted against us. You pretty much have to be a chain store or opening a mega-store for government to throw you any kind of bone.

In spite of all that, local independent retailers are starting to see a surge.

In a recent article discussing the problems plaguing Walmart, the author said, “Selling products to strangers doesn’t cut it anymore. To succeed in retail today you need to start with the customer, not the product.”

The article went on to talk about how several eCommerce sites are expanding into brick & mortar to better serve the customers.

Do you know who is best-suited to take advantage of this it’s-about-the-customers-more-than-the-products era of retail? You guessed it! Local independent retailers.

Believe it or not, it hasn’t been about the products for indie retailers for over a decade. It used to be that if you invented a new product you had to pitch that product to existing vendors or go into manufacturing yourself and pitch it to a handful of indie retailers to get started. Then, after the product gained traction and had sales history, bigger vendors might take interest. Once the bigger vendors got their hands on it, the product could make its way to the masses.

That model is gone. Now if you have an idea, you crowdfund it and launch it online until the big guys swoop in and buy you out.

Local indie retailers have had to build relationships with customers and offer them curated selections of great items they’ve likely never seen before to succeed. Fortunately, that model works. According to the article, that’s the new model of retail. According to me, that’s also the old model of retail.

Fostering relationships with your customers and building loyalty through something other than a frequent purchase discount never goes out of style. 

The simplest way to do that is:

  1. Figure out what she desires, needs, and expects.
  2. Give her more than she desires, needs, and expects.

I call that the Simplest Business Success Formula Ever. This is what the companies in that article are doing.

This is how you compete in today’s retail environment. You can’t control what product fads will be hot. You can’t control what vendors will stab you in the back (pro tip: every year at least one vendor goes back on his word about a product or product line he promised to keep exclusive to the indie channel.) You can’t control what products you will actually get shipped. On top of that, you can’t control what happens to the local, state or national economy. Nor can you control Mother Nature.

But you can control the experience someone has in your store. You can control the type of people you hire and the training they receive to be able to figure out those expectations and exceed them regularly. Do that and you’ll control your destiny as well.

-Phil Wrzesinski
www.PhilsForum.com

PS Your local government would do well to understand the formula, too. If they would create an environment where the needs and expectations of indie retailers were met (and exceeded), they would see tax revenues begin to rise. Indie retailers typically have more staff and a higher payroll per sale than the chains. Indie retailers typically use less land and less local services (police/fire etc.) than the big chains. They also create character, draw outside traffic, and give local communities their charm. Yet, in the last twenty-five years, that opening story is the only time I have heard firsthand about a government trying to exceed the expectations of their most profitable “customers”.

Earning Trust One Holiday at a Time

I walked into a large chain furniture store. There was a line of salespeople waiting to pounce on anyone walking through the door. It reminded me of the scene in L.A. Story where Steve Martin’s character was waiting in line to use an ATM while another line of muggers waited to mug everyone after they got their money. It was almost that comical.

I wasn’t there to buy anything, just to gather information. (I’m the guy. Of course I don’t get to make final purchasing decisions on furniture. If they had been trained on personas, they might have suspected that in the first place.)

The sales lady was pleasant and helpful, finding all the information I needed. She was also trying all the closing techniques you read in all those books on sales. She definitely was trained in the Always Be Closing mindset. When it looked like I really wasn’t going to buy, she played the trump card.

“Do you know, our No-Payments-for-6-Months sale ends today?“

I thanked her for her time and kept browsing. Then, as the playbook would dictate, her manager came over to try to close the sale she couldn’t close. It wasn’t happening. He left me with this …

“Do you know, our No-Payments-for-6-Months sale ends tomorrow?“

For more ways to earn your customer’s trust, buy this book!

This is why customers don’t trust us. They know we are all about the sale. We’ll say anything to get that sale.

Thanksgiving is one of those opportunities we used to earn back some trust by showing we cared about more than just the sale. We posted every year on social media that we were choosing to stay closed on Thanksgiving and open at our regular time Black Friday morning. We did it so that my staff could enjoy the holiday and/or go shopping for Black Friday deals themselves. We’d have coffee ready when the shoppers visited at our normal hours.

This willingness to forego opportunities for sales paid off long term because it strengthened our reputation of caring more about people than money. Lose the battle to win the war.

Plus, that post went viral almost every single year.

Twice our local newspaper wrote about it. The radio and television news people talked about it several times.

Trust is fragile, yet it is a critical element for winning customers’ hearts and minds (and eventually their pocketbooks). When you sacrifice sales for the purpose of serving your staff, your customers, and/or your community, you build that trust up. When you say or do anything just to get the sale, you lose that trust. Your choice.

-Phil Wrzesinski
www.PhilsForum.com

PS If you are in a mall, you have no control over your hours. If you are in a strip mall or shopping center where there is a big draw that brings in a lot of traffic, it behooves you to be open for all those customers the other store is attracting. That’s smart customer service. But if you are a stand-alone or in an area where no one else is drawing traffic, you can choose to not be open early. It won’t cost you as much in sales as you think, but it will win you a ton in trust.

PPS If you cannot control your hours, there are other things you can do and state publicly such as pay your staff overtime, grant them extra comp time, have food for them while they are working, serve coffee for staff and customers, and donate to charity. Show the public what you truly value. Those that share your values will find you.

What is Worse Than That? The Lower Bar of Customer Service

This morning my bladder woke me up about twenty minutes before my alarm was supposed to go off. (TMI?) I am not a morning person so I was not pleased.

When something like this happens, you only have a few options. Tell your bladder you’ll get up when the alarm goes off and hope you don’t wet the bed. Get up and go, then try to get another fifteen minutes of sleep before the alarm sounds. Get up and start the day twenty minutes earlier than planned. (Or in my case, try to go back to sleep and instead write a blog post in your head.)

Can you think of anything worse for a non-morning person than having their bladder (or their dog or someone honking the horn) wake them up twenty minutes before they planned to get up?

How about going through the checkout with a cart full of groceries, have everything bagged and back in your cart, and then be told the cash register is frozen and you’ll have to go to the next register, and scan it all over again because they haven’t updated their hardware or software since Y2K, and then when you get to the other register the scanner isn’t working there either so you have to cart everything one more time and try a third register?

How about going to the big department store where you have been buying the same turtleneck for the past twenty-three years, getting to the department and finding the place trashed, having to sift through tons of shirts tossed everywhere until you finally find one in your size, going up to the checkout to find there are only two cashiers in a store of 150,000 square feet, and after waiting twenty minutes in line you learn that the shirts are an extra 30% off today only (if you can find another one in that mess in your size by yourself and are willing to wait another 30 minutes to checkout)?

How about reading an ad in Sunday’s paper, seeing an item you have been wanting for a while, and it is now on sale at a price you can afford, heading to the store that afternoon only to find your store never had any in stock in the first place?

How about walking into a store about 20 minutes before closing time and being told by the greeter (and I use that term loosely), “We’re closing soon so if you have a big purchase that is going to be a hassle you need to do it right away,”?

How about holding an item in your hand that is the right size, wanting a second one, and being told by a sales clerk too lazy to look something up, “They don’t make it in that size,”?

How about trying on a shirt, asking for a new size, and when the clerk comes back with the new size, asking if they have any more styles in that size and being told, “I don’t know,” before the clerk walks away never to return?

How about ordering a food item at a fast food restaurant and being told that it is cheaper to get a bunch of other items you don’t want with that item, so that you end up wasting food just to save money?

These are just a handful of situations that cropped up for me in the past few days. I asked the audience at the MAEDA presentation if any of them gave poor customer service, just treated their customers like crap. Not one person raised their hands. Then I asked them if anyone had received poor customer service in the past two weeks. Most every hand went up.

I tell you this to point out what is happening in terms of customer service and how that will affect you and your business.

The good news is that poor customer service is so rampant that it lowers the bar of expectation and makes the service you are striving to give look amazingly good.

The bad news is that as the bar of expectation gets lowered, so does the tolerance of the general public for getting worse and worse service. If you get complacent in the service you offer, you let the other guys win. You let them set the bar. Your slightly better service will seem outdated and expensive.

If you ramp up your service to such an amazingly high level that you surprise and delight customers at every turn, then you reset the bar in your favor and expose your competitors for the non-caring companies that they are.

The minimum would be to …

  • Make sure you have ample supply of anything you advertise on sale.
  • Make sure you have proper signage on the displays of items on sale explaining the deal.
  • Make sure you keep your merchandise neat and tidy and sorted and easy to find.
  • Make sure your hardware and software is up to date and functioning properly everywhere.
  • Make sure you have enough staff to make the shopping experience fun and easy.
  • Make sure your staff are trained to never say, “No.”

If you do the minimum, you’ll get the minimum. The maximum, however, has exponential returns.

-Phil Wrzesinski
www.PhilsForum.com

PS Yes, all of those experiences happened in major chain stores, but not all big box discounters. A couple happened in a store that has had a few rounds of closures. A couple happened in stores that should know better. I would like to say that I had some surprise and delight moments, too. Unfortunately, the only surprise was that they didn’t suck as much as I expected. Not exactly reassuring.

PPS Yeah, that’s how my brain works at 5:41am.

Robots Replacing Workers

I’ve been following the minimum wage hike debate for years. As a store owner, minimum wage had a direct impact on our bottom line. I never wanted to pay minimum wage to my team because I never expected minimum work. Yet, in retail, there are only so many dollars to go around. Add more to the payroll and you have to subtract from somewhere else, or grow your business enough to cover the added expense.

One of the arguments often used by those opposed to minimum wage hikes is that it would lead to more automation. I can envision that reality in big corporate chains for two reasons. The first is that many retail corporations don’t do anything to train their employees to maximum effectiveness. The second is that these same corporations also don’t value their employees or expect anything out of them. (Does anyone see the vicious downward cycle in this thought process?)

Robot scanning shelves in a Walmart pharmacy
Picture from Walmart’s blog

The reality of automation is coming to a Walmart near you. Walmart is testing robots in select stores in Arkansas, California, and Pennsylvania to help scan and stock shelves.

Jeremy King, chief technology officer for Walmart U.S. and e-commerce, said that the robots were 50% more productive than their human counterparts but would not replace workers or impact worker headcount.

Are you buying that? Do you really think Walmart is going to invest in robots that are 50% more productive and still pay all the displaced workers at the same time?

Automation is coming to the big stores and it will have a huge effect on their bottom line. First, they get a tax break for investing in capital infrastructure. Second, they get to replace less-efficient employees with robots who have no restrictions on hours worked, overtime, vacation pay, healthcare, etc. That’s a win-win for them.

It can also be a win for you. The more they automate, the more you differentiate. Automation is designed to give a consistent, expected, reliable outcome. It isn’t designed to surprise and delight. (Then again, neither is an untrained team, like what the big corporations are using now.)

Our payroll at Toy House was not only a higher percentage than any of our competitors, it was higher than most independent toy stores. Why?

Amazing customer service from a well-trained staff is the best, most effective form of advertising and marketing you could ever conceive.

What’s more powerful? Me telling you on the radio to shop at Toy House or your best friend telling you why she likes shopping at Toy House? What’s more persuasive? Me on a billboard on your drive home or your co-worker saying you should visit Toy House?

You don’t have the resources to invest in robots like Walmart does. But you do have the resources to invest in training for your staff. You do have the resources to pay your staff more (and expect more out of them in return). You do have the resources to make your customers’ experiences so wonderful they have to tell their friends. Call it your advertising budget if you want. But put your money into your staff. That’s where your ROI will be highest.

Investing in your team will always beat automation and minimum wage hikes. Always.

-Phil Wrzesinski
www.PhilsForum.com

PS Not sure how to raise the bar on your customer service to the point that people talk? Here are two free resources from my website:

Use those as a starting point for crafting your own training program.

If you need more, I can suggest a few good people to come in and work with you and your staff, including one guy who used to run a pretty cool toy store with a huge payroll.

Other Uses for Market Share Knowledge

The first time I was truly introduced to the idea of calculating my market share was from Roy H. William’s second book Secret Formulas of the Wizard of Ads. It was 2003 and I was trying to learn all I could about marketing and advertising. My math was rudimentary. I didn’t adjust for local economy or youth population. Simply raw numbers. I came up with our market share at about 12%.

At first I was a little disappointed. Roy teaches that the gold standard for any business is 30% market share. That’s a big number. Despite its dominance, even Walmart only has 25% of the grocery market. The optimist in me, however, said 12% was a good starting point and now I had a goal to shoot for. I had just read an article (which 14 years later I cannot find—go figure) that said only 9% of the general public was inclined to shop at local indie stores in the first place. I was already 3 points above that number.

I never did reach 30%, but I did have some other revelations about my Market Share number.

Image result for upward trend free clipartFirst, after going back and adjusting my market size for economy and youth population, our 12% was really closer to 16%. It stayed in that neighborhood until a Walmart Supercenter opened in 2005. We dropped into the 14-15% neighborhood and stayed there until Amazon became a serious player in the toy industry around 2010-2011. We stayed around 12.5% for the next several years until we closed. Even though you can beat a big guy head-to-head, the more big guys in town, the more businesses taking a piece out of the same pie.

Second, that original 12% number got me thinking. A full eighty-eight percent of the market were NOT currently shopping with me. That’s almost 9 out of 10 people. When you look at it that way, it changes your perspective on a lot of things.

In terms of marketing and advertising I realized I didn’t need to reach the entire market to grow my business. If I could just convince 1 more person out of 20 people to shop with me I would have growth beyond my wildest dreams. I really only needed to convince about 2 more people out of 100 to shop with me to have double digit growth. If you only are trying to sway two people out of a hundred you might say something totally different than if you’re trying to sway fifty out of a hundred. With two you can say something direct and personal to a small audience that gets right to the heart of the matter. Trying to reach fifty, you say something generic and non-offensive hoping other forces will come into play to swing them to your side.

In terms of product selection I realized I didn’t have to be all things to all people. I could pick and choose the products I wanted based on my beliefs in the products and how they benefited my customers. Not only does that help with the buying decisions, it helped us stay true to our core values in terms of what we sold and why.

Speaking of Core Values, we didn’t have to be someone we were not.

Meg Cabot said it best when she said, “You’re not a hundred dollar bill. Not everyone is going to like you.” We didn’t have to be liked by everyone. Sixteen percent is a pretty low approval rating. Yet it was higher than any other single store in our market.

Knowledge is power (France is bacon). Knowing your market share might be the piece of knowledge that finally liberates the way you think about your place in the market and the risks you can now safely take with your business.

-Phil Wrzesinski
www.PhilsForum.com

PS Let me first admit that 16% is actually pretty high for an indie retailer. Many of you might do the math and find yourself in the 3-5% range, especially if you have other indie retailers fighting for the 9% that skews shop local. But before I pat myself on the back, you should know that in the early 1980’s we were at that mythical 30% gold standard and then some. Of course that was before Jackson got Walmart, Target, Toys R Us, Sam’s Club, a second Meijer, a new KMart, and a whole slew of other big chains in town (without a population growth to match), and well before Al Gore invented the Internet. We were the large store that was here first. That’s what gave us much of our edge. But even if you do find yourself in the 3-5% range, if the market is big enough, you can do a lot of business with only 3-5% of your market. Plus, when you only have to convince 1 more person out of 100 to get 33% growth, advertising becomes a whole lot more fun.

PPS It used to upset me that about half my friends were not regular shoppers at my store. My parents saw about that same percentage from their friends. Then it dawned on me … Fifty percent of my friends versus twelve percent of the general population. I was ahead of the game. I slept much better that night.

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
www.PhilsForum.com

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.