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Why JC Penney’s is Struggling

We all know about JC Penney’s decision last year to change their pricing strategy from one of Coupons, Discounts and Sales to one of Everyday Low Prices.  Ron Johnson, the CEO they hired away from Apple, warned everyone it would take some time for the transformation to take hold.

Unfortunately, the train wreck seems to be getting worse as JCP just announced a plummet of 32% in sales! I know that is a number none of us indie’s could probably withstand. Many in the world of retail are wondering if JCP will be able to withstand it.

But before everyone rushes off to blame the pricing strategy and see this as an indictment of the Everyday Low Prices scheme as being unable to work in today’s retail market, there were some other forces at work.

At the end of the day there are five primary drivers of traffic into retail stores.

  • Price
  • Product
  • Convenience
  • Trust
  • Delight

No, they do not all have equal weight. And for every customer, different factors play out in different categories. But you have to be winning in the minds of customers in at least one of those categories if you want to see traffic.

JCP was losing in all five.

Price – Their Everyday Low Prices scheme might have worked… if they had done it. They really didn’t. Their prices seemed to be changing almost as rapidly as they had before, and in ways far more confusing despite the millions they spent in advertising. No one really knew if their prices were low or not.

Product – Some say their offerings were getting worse, not better. Even if their product stayed the same, no one was going to JCP for high-quality goods or exclusive-can’t-find-anything-like-it-anywhere-else merchandise. They had given up that ground years ago.

Convenience – If JCP had any leg to stand on, this could have been it. But they did nothing to beef up or significantly increase the convenience factor. In my own experience, their checkout lines got longer (even with fewer sales – now that’s a real trick).

Trust – this is supposed to be the hallmark of the Everyday Low Prices scheme. You can trust us because we aren’t jacking you around with yo-yo pricing. Except they didn’t do that. They still yo-yo’d their prices. They made things more confusing and less trustworthy. They didn’t re-train their staff to develop trust either. They spent money on advertising their new scheme but doesn’t look like they spent a dime on training the staff.

Delight – Once again, very little done here, before, during or after. When was the last time you were actually delighted in a JCP store? Yeah, I thought so.

The cool thing is that we can all learn a lesson from this. Pick one of those five and own it. Own it with every ounce of your existence. Own it in your category so strongly that when that topic is mentioned, everyone immediately thinks of you.

The cooler thing is that you probably noticed that it wouldn’t be all that hard to own two or three of those criteria. Do that and you won’t suffer the same fate as JCP.

-Phil Wrzesinski
www.PhilsForum.com

PS We’ll talk about all five and how to own them in upcoming posts. Stay tuned.

Can You Afford to Be a Snob?

This was an actual poster put up in a Borders store that was closing.

There were three bullet points in there that bothered me (well, okay, the whole thing bothered me, but that’s another story).

  • We hate when a book becomes popular simply because it was turned into a movie.
  • Nicholas Sparks is not a good writer… If you like him, fine, but facts are facts.
  • Oprah was not the “final say” on what is awesome. We really didn’t care what was on her show or what her latest book club book was. Really.
Really? 
If I was a bookstore and Oprah said a book I sold was awesome, I would be loving it! I’d buy more. Make a fancy display. Sell the heck out of ’em.
If there was a writer that everyone wanted his or her books, as far as I would be concerned, if I had no moral judgment against the actual books, I would love that! I’d buy more. Make a fancy display. Sell the heck out of ’em.
If there was book I was selling that became more popular because it was turned into a movie, I would love that! I’d buy more. Make a fancy display. Sell the heck out of ’em.
After reading this poster, I often wonder if Borders went out of business because of Amazon or because of the attitude of the staff.
When the sun shines, make hay.
-Phil Wrzesinski
PS Some of you may be ready to call me out on this since there are certain toys I won’t sell, one of them being toys that are tied to a movie. My reasoning is that most of those items aren’t toys so much as novelties. If the toy has great play value first, the movie tie-in is wonderful. I have sold a ton of LEGO related to Star Wars, Harry Potter, and now Lord of the Rings/The Hobbit.  First it has to be something I would sell. Then if I get a movie tie-in, an endorsement from Oprah, or the general public falling in love with it – that’s a bonus I’m going to run with, not lament.  See the difference?

Reading List (Short Version)

For some reason, I have found myself recommending the same three books over and over the past couple weeks. So before anyone else asks, here are those three books.

Why We Buy by Paco Underhill – Buy this book if you want to be better at merchandising your store. Buy this book if you want to think about merchandising and traffic patterns and aisle widths and aisle lengths and sight lines in a whole new light. Buy this book if you want to read fascinating case studies about retail successes and failures at merchandising. Buy this book if you have any plans at all to change the layout or design of your store.

Drive by Daniel H. Pink – Buy this book if you want to understand how people are motivated to do their best work. Buy this book if you want to find different ways other than money to reward your staff. Buy this book if you want to find ways to make your trainings stick better. Buy this book if you want your staff to work harder.

Pendulum by Michael R Drew and Roy H Williams – Buy this book if you think the world has changed dramatically over the past ten years. Buy this book if you want to see what the next thirty years will look like. Buy this book if you want to know why your advertising that worked in the past isn’t working today. Buy this book if you want to see how society changes every 40 years from one extreme to another and how to navigate each of these extremes.

It will be the best reading you do all year.

-Phil Wrzesinski
www.PhilsForum.com

PS I purposefully did NOT include links to any of these books.

  1. Print out this list (or keep it on your phone) and walk into your local bookstore (if you still have one). 
  2. Order these books through the local store. 
  3. While you are there, browse the business section for one more book that catches your eye. 
  4. Buy that book, too.  
  5. Then buy one more book, just for fun.  

You are as good as you read.

Bacon and Eggs for Breakfast

This morning for my staff meeting I served my staff bacon and eggs. Brought in an electric frying pan, started up the bacon about 30 minutes before they arrived. Had some coffee, orange juice and bagels ready, too.

Not a bad way to start the day post-Super Bowl. A couple of the more hungover staff truly appreciated it.

I got the idea from Jeff Sexton. He wrote a killer blog breaking down one of my favorite ads from the Super Bowl – the Audi ad where the kid was going alone to the senior prom. If you don’t follow the link to his blog (you should – in fact, if you do all your own advertising, you should be following his blog), the basic premise is that it is storytelling at its finest through a series of rituals. There are twenty “rituals” shown in one minute.

Rituals are powerful. Summer camps know this. Summer camps are full of silly, goofy rituals. And those rituals are what make campers want to return. Rituals make kids feel like insiders because they know what to expect, they know what to do, they feel important and special.

Rituals are comfortable. We love rituals. We have so many rituals in our everyday lives, many of which we aren’t even aware. Your morning routine is a ritual. You do it the same way almost every day. And if something throws you off your ritual it can set you back for part or even all of the day.

In the past I have served my staff crazy breakfasts like ice cream. I did it to make a point that there are no rules on what you can and can’t have for breakfast. It felt uncomfortable. But they got the point. Too often we limit ourselves to the norms and are afraid to break the rules.

This morning I served them bacon and eggs because those are the comfort foods. Just the smell of bacon was a reminder of the ritual of breakfast. It was comfortable and comforting and felt right. Only a handful of staff had ice cream. They all had bacon. They all knew the ritual.

As I type this, the bacon aroma is still wafting through my office door. And the discussions of the rituals we have here at Toy House (free gift-wrapping, the birthday bell, the flag-raising ceremonies, the way we interact with customers) and how we can make them more memorable and consistent, continues to reach my ears.

Your business has rituals that remind your customers of you, that make your customers comfortable, that make your customers feel like insiders. Identify those rituals. Make them more consistent and memorable. You’ll create more loyal customers in the process.

I’m off to go test drive that Audi.

-Phil Wrzesinski
www.PhilsForum.com

PS Which Super Bowl ad made you actually interested in the product?

Measure and Reward

I’ve often used some form of the quote, “What gets measured, gets managed.”  If you don’t measure what you’re doing, you don’t know if it is improving or getting worse.

Last week, I was reminded of a simple change in that statement that raises it to brand new heights.

What gets measured and rewarded, gets improved.

Measuring is only the first step. Rewarding the behavior you seek will lead to you getting more of that behavior. Rewarding the behavior shows your staff what is important to you. Rewards in the workplace are the scorecards by which your staff rate themselves.

Do this. Get a reward.
Do more of this. Get more rewards.

That is simple enough for everyone to understand.

Rewards don’t have to be huge. They don’t even have to be monetary. Praise is a reward. The more public the praise, the bigger the reward. Recognition is a reward. Recognize those who have done well at your next meeting. Honors are a reward. Whenever we had no groups signed up for our Saturday morning flag-raising ceremony, I would honor one staff person by picking that person to raise the flag and telling everyone else why I chose them. The pride they beamed was worth far more than a gift card to a local restaurant or an extra vacation day (although those do make good monetary rewards that are far more memorable than cash).

Measure and reward the behaviors you want improved. You’ll get more of what you want.

-Phil Wrzesinski
www.PhilsForum.com

PS You’ll also get less of what you don’t want. It won’t take long under this kind of system for you to find out who doesn’t want to put in the effort and doesn’t fit in to your system. Although it is never fun to fire anyone, the best way to get the staff you want is to get the right people in the right jobs.

PPS Tim Miles and Roy H Williams both brought this concept of Rewards to light during our Shareworthy Customer Service workshop last week. Yeah, I like to work with really smart people.

Most Missed Posts from 2012

I posted my top ten most viewed posts in 2012.

In all fairness and just for fun, here are the bottom ten – the ten least viewed posts (although I like to think they were just missed.)

Read on if you dare…

10. From the Mouth of Babes – Two great lessons on Customer Service I learned on a field trip with a bus full of fifth graders.

9. Don’t Marry Your Inventory – Some of the best advice ever on how to manage your inventory better and make it work harder for you.

8. Thoughts From a Wedding – Four really simple but important ideas I got from a wedding I attended.

7. Politics and a Plan – How to be prepared for the unexpected and not have to play the blame game.

6. Stay Above the Fray – Why negative advertising is so powerful in politics and so dangerous in retail

5. Make it More Fun – An NRF study said 78% of consumers would shop somewhere else if they thought it was more fun. Here are ways to make your business more fun.

4. Thanks! It Works! – The power of saying “Thank You!” and how those two simple words can make a huge difference for your business.

3. Tell Me a Story – Emotions move the needle far better than data. Stories are powerful. Are you telling yours?

2. Measuring People – Three different ways to “measure” your staff to make sure you are getting the most out of the investment you put into them,

1. What Do They Know? – One simple thing you can do to become more knowledgeable about the products you sell.

-Phil Wrzesinski
www.PhilsForum.com

Asking the Right Question

Seth Godin writes one of my favorite blogs. His post for today was so short and sweet and thought-provoking that I want to share it with you…

Question the question
The best creative solutions don’t come from finding good answers to the questions that are presented.
They come from inventing new questions.
-Seth Godin

Here are my thoughts…

The question most retailers ask is…

How can I get more traffic, more customers, more sales?

Here is a new question worth considering…

How can I create an experience so incredible that people want to come back time and again and bring their friends with them?

Here is another question…

What did I not do to the best of my ability last year?

Here is yet one more question…

How can I make the customer experience not only better, but more consistently better?

I bet if you answer any one of those last three questions, you’ll find the answer to the first question.

Merry Christmas!
-Phil Wrzesinski
www.PhilsForum.com

PS Yes, I ask those questions every year for my business. Yes, I will be giving you the answers at the class Tim Miles and I are teaching at Wizard Academy January 29-30. Yes, you will learn enough to make a huge difference in your business – a double-digit difference if history is any indicator.

The Preferred Way

I hire a lot of new people for the Christmas season. Then I turn much of their training over to the current staff.  Every now and then we run into a problem. One staff person teaches the newbie one way, another teaches them a completely different way to do the same exact thing.

The poor newcomer isn’t sure which way to turn. Do it the way she was taught or the way she was being told to do it at that instant?

In our mid-season evaluation one of my newbies asked me what to do when that situation arises.

My answer surprised her, see if it surprises you. I told her…

Do it the way the other employee is telling you right at that moment – even if it is different than how you have been taught.

The issue here is that too many times we look at policies and procedures as black & white. Do it this one way, every other way is wrong. Yet, many times there are multiple right ways to do something. For instance, you can count back change from a cash sale a number of different ways. One way is better than others, but the others still work.

Do it the way you were just told is the only correct answer because of one thing and one thing only… The customer is standing right in front of you.

If someone who seems to have authority tells a new employee how to do it, you do it that way for the sake of transferring confidence to the customer. It may not be my preferred way, but if I have trained my staff well enough, it is still an acceptable way, which for the moment is good enough. The customer is happy, confident and still trusts us.

I then told her that the next time something like that happens, come tell me which two methods you have been taught. I’ll tell you which is my preferred method and why.

Two benefits from doing this… First, they rarely ever do it any way other than the preferred way after that. Second, when they are unsure of how to do something they can more often fake their way through it, keeping the customer’s confidence in the process, until they find out how to do it better.

-Phil Wrzesinski
www.PhilsForum.com

PS It makes evaluations easier, too. If you lead off with everything they’ve done wrong, it makes them defensive. Instead tell them they did it right, but there is a better way to do it, and you will see them grow faster and stronger in skills and confidence.

Handling Multiple Customers at Once

This is the time of year when the customers outnumber the staff. That is both a good thing and a bad thing. Good because extra traffic means extra sales. Bad because you cannot give each customer the time they need to maximize those extra sales and you often lose a customer while you’re working with another customer.

Years ago I read a tip in a book for how to handle multiple customers at once. I hated the book and have long ago forgotten the title and author, but that one tip has remained with me.

Understand that just like multi-tasking where you actually do not do two things at once, you cannot (or should not) try to sell two people at once -unless they want the same product for the same reasons. So if you have two customers who need help, an easy way to handle that is to ask the first customer permission to greet the second customer.

“Excuse me, but would you mind if I go greet that other customer and let them know that I will help them after we are done here?”

Your first customer will agree, which accomplishes two things. First, they have given you permission to talk to the other customer. Second, they have given implicit acknowledgment that they will stay until you return.

When you get to the second customer, say…

“Hello, thanks for coming in. My name is Phil. I am working with another customer at the moment. As soon as I am done, I will be right over to help you. Is that okay?”

That last question is the kicker. When customer #2 says yes, they have now given you explicit permission to go finish up with customer #1 and also acknowledged that they will stay until you are back. Sometimes, however, they will say no because they have a simple request that only takes a second or they are in a big rush. If that is the case and you believe you should serve them ahead of the first customer, simply ask their permission to go back to customer #1 to explain.

When you ask your customer’s permission, you get them to commit to getting your assistance. Everyone gets helped and everyone leaves the store happy. Win-Win.

Phil Wrzesinski
www.PhilsForum.com

PS Tips like these are easy. Setting up a culture where shareworthy customer service happens every day all the time takes a little bit more work. The payoffs for that work, however, will show up in big ways on your bottom line. Want to learn how to set up the right culture and the right systems for delighting customers enough that they brag about it to others? Come to Austin, Texas in late January.

Measuring People

“What gets measured gets done.” Frances Schagen

This is not a post about Financials. You can read more about financials here.

This is not a post about Inventory or Open-to-Buy. You can read more about those topics here.

Numbers are important. Very. Important. But at the end of the day it is people who create those numbers. If you are measuring your numbers, you also need to be measuring your people. Here are some ways to measure your greatest assets.

Observation

Do you regularly observe your staff? Do you stand back and watch them interact with customers? Without their knowledge that you are watching? One way to do that is rearrange a display within earshot but not directly facing the employee. Get busy with your work. But keep an open ear for the conversations they have with customers. Another way is to grab a clipboard and start counting something.

Seem sneaky? Sure. Here is what makes it worthwhile… When you catch them doing something well and praise them immediately after it happens, two majorly good things happen:

  1. You reinforce that behavior and get it far more often.
  2. You make them more comfortable having you on the floor with them.

Interviews

Have you ever sat down with an employee and interviewed them again? You would be amazed at the different answers they will give you than when you first interviewed them for a job, especially when you ask such questions like, “tell me a time when you went above and beyond the required work just to help a customer out.”

We hire a lot of seasonal staff that I have to train in a short window of time. I make it a point to meet with them from time to time and let them talk. I also make it a point to interview them at the end of the season. The Exit Interview can be a valuable tool because people on the way out the door are often more willing to share the negatives.

Goals

Do you set goals? Number of interactions they should make per hour? Sales goals per day? or even a checklist of daily duties? Goals are great, but often goal-setters forget two very important elements.

After you set a goal you need to come up with tasks to meet that goal. Tasks are simply the activities used to reach the goal. For instance, if my goal is to sell 25 yo-yos by the end of the day, my task is to play with yo-yos all day until I can learn three new tricks, and also to teach at least half of the kids who come through the door how to do one trick on a yo-yo.

At the end of the day you have to be accountable to the goal. Did you reach it? Yes? Good job. No? Why not? What can you do differently next time?

For goals to be successful, you need to assign tasks and evaluate progress.

Measure your people and your numbers will be even more fun to measure.

-Phil Wrzesinski
www.PhilsForum.com

PS You might be asking yourself when will you find time to do all this measuring. Here is sometimes the hardest lesson to learn. The more often you measure, the more time you will have because your employee productivity will skyrocket.

PPS Want to learn new and better ways to measure your people? Join Tim Miles and me at Wizard Academy for our two-day workshop on Shareworthy Customer Service.