I read an online article this week about Karen Wilson (a Canadian designer) who made a strategic decision to charge a premuim for her products (purses). She believed that in the long run she would not be able compete with foreign-made products and knock-offs so she deliberately priced her pocketbooks at a premium level.
Many retailers would consider this to be a suicidal approach but I respect her decision. She was also clever in HOW she executed her plan. Retailers who sell her products were skeptical about her pricing so she offered area rights and gave each retailer the exclusive right to sell her products within their local trading area.
Her strategy seems to be paying off. She has a growing list of retailers and is currently expanding her product line to keep up with the demand.
Remember, price is not the only influencing factor in a person's buying decision. If you provide true value and can effectively position that value, price becomes less of a factor. However, when everything is equal, price becomes the default factor.
Take a lesson from Karen's approach and think of how you can change your results.
**Read the entire on-line article here.
Friday, July 27, 2007
Sunday, July 15, 2007
5 Types of Shoppers
I came across this article written by Mark Hunter
In the retail industry, it seems as though we are constantly faced with the issue of trying to find new customers. Most of us are obsessed with making sure our advertising displays, and pricing all "scream out" to attract new customers. This focus on pursuing new customers is certainly prudent and necessary, but, at the same time, it can wind up hurting us. Therefore, our focus really should be on the 20% of our clients who currently are our best customers.
This idea of focusing on the best current customers should be seen as an on-going opportunity. To better understand the rationale behind this theory and to face the challenge, we need to break down shoppers into five main types:
Loyal Customers: They represent no more than 20% of our customer base, but make up more than 50% of our sales.
Discount Customers: They shop our stores frequently, but make their decisions based on the size of our markdowns.
Impulse Customers: They do not have buying a particular item at the top of their "To Do" list, but come into the store on a whim. They will purchase what seems good at the time.
Need-Based Customers: They have a specific intention to buy a particular type of item.
Wandering Customers: They have no specific need or desire in mind when they come into the store. Rather, they want a sense of experience and/or community.
If we are serious about growing our business, we need to focus our effort on the Loyal customers, and merchandise our store to leverage the Impulse shoppers. The other three types of customers do represent a segment of our business, but they can also cause us to misdirect our resources if we put too much emphasis on them.
Let me further explain the five types of customers and elaborate on what we should be doing with them.
Loyal Customers: Naturally, we need to be communicating with these customers on a regular basis by telephone, mail, email, etc. These people are the ones who can and should influence our buying and merchandising decisions. Nothing will make a Loyal customer feel better than soliciting their input and showing them how much you value it. In my mind, you can never do enough for them. Many times, the more you do for them, the more they will recommend you to others.
Discount Customers: This category helps ensure your inventory is turning over and, as a result, it is a key contributor to cash flow. This same group, however, can often wind up costing you money because they are more inclined to return product.
Impulse Customers: Clearly, this is the segment of our clientele that we all like to serve. There is nothing more exciting than assisting an Impulse shopper and having them respond favorably to our recommendations. We want to target our displays towards this group because they will provide us with a significant amount of customer insight and knowledge.
Need-Based Customers: People in this category are driven by a specific need. When they enter the store, they will look to see if they can have that need filled quickly. If not, they will leave right away. They buy for a variety of reasons such as a specific occasion, a specific need, or an absolute price point. As difficult as it can be to satisfy these people, they can also become Loyal customers if they are well taken care of. Salespeople may not find them to be a lot of fun to serve, but, in the end, they can often represent your greatest source of long-term growth. It is important to remember that Need-Based customers can easily be lost to Internet sales or a different retailer. To overcome this threat, positive personal interaction is required, usually from one of your top salespeople. If they are treated to a level of service not available from the web or another retail location there is a very strong chance of making them Loyal customers. For this reason, Need-Based customers offer the greatest long-term potential, surpassing even the Impulse segment.
Wandering Customers: For many stores, this is the largest segment in terms of traffic, while, at the same time, they make up the smallest percentage of sales. There is not a whole lot you can do about this group because the number of Wanderers you have is driven more by your store location than anything else. Keep in mind, however, that although they may not represent a large percentage of your immediate sales, they are a real voice for you in the community. Many Wanderers shop merely for the interaction and experience it provides them. Shopping is no different to them than it is for another person to go to the gym on a regular basis. Since they are merely looking for interaction, they are also very likely to communicate to others the experience they had in the store. Therefore, although Wandering customers cannot be ignored, the time spent with them needs to be minimized.
Retail is an art, backed up by science. The science is the information we have from financials to research data (the "backroom stuff"). The art is in how we operate on the floor: our merchandising, our people, and, ultimately, our customers.
For all of us, the competitive pressure has never been greater and it is only going to become more difficult. To be successful, it will require patience and understanding in knowing our customers and the behavior patterns that drive their decision-making process. Using this understanding to help turn Discount, Impulse, Need-Based, and even Wandering Customers into Loyal ones will help grow our business. At the same time, ensuring that our Loyal Customers have a positive experience each time they enter our store will only serve to increase our bottom-line profits.
Cheers!
Kelley
In the retail industry, it seems as though we are constantly faced with the issue of trying to find new customers. Most of us are obsessed with making sure our advertising displays, and pricing all "scream out" to attract new customers. This focus on pursuing new customers is certainly prudent and necessary, but, at the same time, it can wind up hurting us. Therefore, our focus really should be on the 20% of our clients who currently are our best customers.
This idea of focusing on the best current customers should be seen as an on-going opportunity. To better understand the rationale behind this theory and to face the challenge, we need to break down shoppers into five main types:
Loyal Customers: They represent no more than 20% of our customer base, but make up more than 50% of our sales.
Discount Customers: They shop our stores frequently, but make their decisions based on the size of our markdowns.
Impulse Customers: They do not have buying a particular item at the top of their "To Do" list, but come into the store on a whim. They will purchase what seems good at the time.
Need-Based Customers: They have a specific intention to buy a particular type of item.
Wandering Customers: They have no specific need or desire in mind when they come into the store. Rather, they want a sense of experience and/or community.
If we are serious about growing our business, we need to focus our effort on the Loyal customers, and merchandise our store to leverage the Impulse shoppers. The other three types of customers do represent a segment of our business, but they can also cause us to misdirect our resources if we put too much emphasis on them.
Let me further explain the five types of customers and elaborate on what we should be doing with them.
Loyal Customers: Naturally, we need to be communicating with these customers on a regular basis by telephone, mail, email, etc. These people are the ones who can and should influence our buying and merchandising decisions. Nothing will make a Loyal customer feel better than soliciting their input and showing them how much you value it. In my mind, you can never do enough for them. Many times, the more you do for them, the more they will recommend you to others.
Discount Customers: This category helps ensure your inventory is turning over and, as a result, it is a key contributor to cash flow. This same group, however, can often wind up costing you money because they are more inclined to return product.
Impulse Customers: Clearly, this is the segment of our clientele that we all like to serve. There is nothing more exciting than assisting an Impulse shopper and having them respond favorably to our recommendations. We want to target our displays towards this group because they will provide us with a significant amount of customer insight and knowledge.
Need-Based Customers: People in this category are driven by a specific need. When they enter the store, they will look to see if they can have that need filled quickly. If not, they will leave right away. They buy for a variety of reasons such as a specific occasion, a specific need, or an absolute price point. As difficult as it can be to satisfy these people, they can also become Loyal customers if they are well taken care of. Salespeople may not find them to be a lot of fun to serve, but, in the end, they can often represent your greatest source of long-term growth. It is important to remember that Need-Based customers can easily be lost to Internet sales or a different retailer. To overcome this threat, positive personal interaction is required, usually from one of your top salespeople. If they are treated to a level of service not available from the web or another retail location there is a very strong chance of making them Loyal customers. For this reason, Need-Based customers offer the greatest long-term potential, surpassing even the Impulse segment.
Wandering Customers: For many stores, this is the largest segment in terms of traffic, while, at the same time, they make up the smallest percentage of sales. There is not a whole lot you can do about this group because the number of Wanderers you have is driven more by your store location than anything else. Keep in mind, however, that although they may not represent a large percentage of your immediate sales, they are a real voice for you in the community. Many Wanderers shop merely for the interaction and experience it provides them. Shopping is no different to them than it is for another person to go to the gym on a regular basis. Since they are merely looking for interaction, they are also very likely to communicate to others the experience they had in the store. Therefore, although Wandering customers cannot be ignored, the time spent with them needs to be minimized.
Retail is an art, backed up by science. The science is the information we have from financials to research data (the "backroom stuff"). The art is in how we operate on the floor: our merchandising, our people, and, ultimately, our customers.
For all of us, the competitive pressure has never been greater and it is only going to become more difficult. To be successful, it will require patience and understanding in knowing our customers and the behavior patterns that drive their decision-making process. Using this understanding to help turn Discount, Impulse, Need-Based, and even Wandering Customers into Loyal ones will help grow our business. At the same time, ensuring that our Loyal Customers have a positive experience each time they enter our store will only serve to increase our bottom-line profits.
Cheers!
Kelley
Monday, July 09, 2007
What Are YOUR Policies?
I'm always fascinated how many retailers create policies to manage the extreme situations. I ran across this article on-line that focuses on handling returns and how the policies of some retailers are costing them business.
All Michelle Gluckow and her 13-year-old daughter wanted to do was buy a summer's worth of camp clothes in one night at a New Jersey Abercrombie & Fitch.
After she suffered through long lines, blaring music and low lighting, Gluckow says, the cashier refused to sell her all 24 items, because of a policy that capped purchases at 20 to limit reselling. Gluckow, incredulous that she couldn't pay full price for all the clothes she wanted, refused to leave the store until she had all the layered outfits her daughter needed. "In my opinion, the [20-item] policy is ridiculous," says Gluckow, who was buying different colors and items, all in the same size. "They said they were just protecting their other customers, which I thought was ironic."
Ultimately, she says, the manager grudgingly let her split the purchase between two credit cards. Gluckow says the Abercrombie manager told her she could pay cash or with a check for the four items over the 20-item limit, but she refused. Splitting it between two credit cards seemed silly enough.
Gluckow was luckier than Robert Martin, who says he couldn't get Sears to take back a faulty 7-month-old phone -- despite repeated calls and letters -- because accepting it back would violate store policy. Martin, a 30-year Sears credit card holder, says the decision shows why many businesses are losing loyal customers.
Read the full article here. © 2007 USA Today. All rights reserved.© 2007 ECT News Network. All rights reserved.
Sometime last year, I wrote a post about policies and how the wrong policy can hurt your business. While I certainly understand that retailers face more challenges today with respect to people buying an item then returning it a few days or weeks later, it is still a VERY small portion of the buying public who actually does this.
I personally believe that the more liberal your return policies are, the easier you make it do business with you. And this often leads to increased business.
I welcome your comments on this topic.
Cheers!
Kelley
All Michelle Gluckow and her 13-year-old daughter wanted to do was buy a summer's worth of camp clothes in one night at a New Jersey Abercrombie & Fitch.
After she suffered through long lines, blaring music and low lighting, Gluckow says, the cashier refused to sell her all 24 items, because of a policy that capped purchases at 20 to limit reselling. Gluckow, incredulous that she couldn't pay full price for all the clothes she wanted, refused to leave the store until she had all the layered outfits her daughter needed. "In my opinion, the [20-item] policy is ridiculous," says Gluckow, who was buying different colors and items, all in the same size. "They said they were just protecting their other customers, which I thought was ironic."
Ultimately, she says, the manager grudgingly let her split the purchase between two credit cards. Gluckow says the Abercrombie manager told her she could pay cash or with a check for the four items over the 20-item limit, but she refused. Splitting it between two credit cards seemed silly enough.
Gluckow was luckier than Robert Martin, who says he couldn't get Sears to take back a faulty 7-month-old phone -- despite repeated calls and letters -- because accepting it back would violate store policy. Martin, a 30-year Sears credit card holder, says the decision shows why many businesses are losing loyal customers.
Read the full article here. © 2007 USA Today. All rights reserved.© 2007 ECT News Network. All rights reserved.
Sometime last year, I wrote a post about policies and how the wrong policy can hurt your business. While I certainly understand that retailers face more challenges today with respect to people buying an item then returning it a few days or weeks later, it is still a VERY small portion of the buying public who actually does this.
I personally believe that the more liberal your return policies are, the easier you make it do business with you. And this often leads to increased business.
I welcome your comments on this topic.
Cheers!
Kelley
Friday, July 06, 2007
What's Your Conversion?
What's your current conversion? That is, what percentage of people who enter your store actually make a purchase?
If you don't track this critical measurement, I guarantee that you are likely underestimating how many people visit your store in a day/week/month, overestimating your conversion, and missing valuable sales opportunities.
When I worked with one retailer, the staff consistently complained that customer traffic was slow in the early part of the week. After installing traffic counters, the managers realized that it was not nearly as low as they expected.
Before installing the counters they believed their conversion ratio was approximately 20%. However, the data showed their actual conversion was just over 10% which demonstrated a HUGE opportunity to improve their sales.
If you own, or work in, a small store, you may think the investment of traffic counters is an expense you can't afford. My perspective is that you cannot afford NOT to track the numberof people who flow into your store.
Proper analyzing can help you optimize your scheduling--including when your key people should be working. And this can actually save you money by helping you increase your sales during peak times in your store.
Cheers!
If you don't track this critical measurement, I guarantee that you are likely underestimating how many people visit your store in a day/week/month, overestimating your conversion, and missing valuable sales opportunities.
When I worked with one retailer, the staff consistently complained that customer traffic was slow in the early part of the week. After installing traffic counters, the managers realized that it was not nearly as low as they expected.
Before installing the counters they believed their conversion ratio was approximately 20%. However, the data showed their actual conversion was just over 10% which demonstrated a HUGE opportunity to improve their sales.
If you own, or work in, a small store, you may think the investment of traffic counters is an expense you can't afford. My perspective is that you cannot afford NOT to track the numberof people who flow into your store.
Proper analyzing can help you optimize your scheduling--including when your key people should be working. And this can actually save you money by helping you increase your sales during peak times in your store.
Cheers!
Tuesday, July 03, 2007
Old Business-New Approach-Huge Results
I watched the morning news with great interest this morning because the station featured a segment on an old business-dental.
At least 25% of the population experiences major stress when visiting the dentist; usually because of a negative or painful experience sometime in their past.
However, a new approach is being taken by several dental offices.
They are offering a range of additional services, each designed to help the patient relax BEFORE their actual appointment. They call themselves Dental Spas and they offer services such as massage therapy, hot stone massage, manicures, and in some cases, even champagne.
Not surprisingly, the concept is taking off and becoming wildly successful.
Think of how this concept applies to your business and determine what you could do with your "typical" retail store to make it different than your competitors.
Cheers!
At least 25% of the population experiences major stress when visiting the dentist; usually because of a negative or painful experience sometime in their past.
However, a new approach is being taken by several dental offices.
They are offering a range of additional services, each designed to help the patient relax BEFORE their actual appointment. They call themselves Dental Spas and they offer services such as massage therapy, hot stone massage, manicures, and in some cases, even champagne.
Not surprisingly, the concept is taking off and becoming wildly successful.
Think of how this concept applies to your business and determine what you could do with your "typical" retail store to make it different than your competitors.
Cheers!
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