How to sell to someone in the retail environment then? (Read other entries in the series by reading previous posts on this blog.)

It is very easy to SAY one must identify the needs of a customer, but it is rather more difficult to do, because whilst attempting to identify a need, one should simultaneously develop the proposition that would meet that need. (Retailers, who sell fast food, are unlikely to benefit from or be able to respond to customers’ need to be clothed and protected.)

 

We advocate a 3-step process

 

1.     Diagnose the             >>> PAIN

2.      Differentiate the       >>> CLAIM

3.      Demonstrate the      >>> GAIN

Example:

	PAIN	DIFFERENTIATED CLAIM
A wardrobe	Untidy house	Get organised – cheaper Look classy - quicker
A mobile phone	Losing touch	Get Connected – and look good

 

From this example you can see that the need (PAIN) is quite universal and applies to a whole market. The offer/ solution (CLAIM) is equally generic – so it must be differentiated.

I don’t want to belabour the point, but focussing on pain rather than some ‘benefit’ or ‘advantage’ is quite different from the way most people have been taught to sell. In our Sell$mart program we teach sales assistants to hone in on the ‘BUT REASON’. With that we mean for example:

• You want to buy a wedding present for a friend – BUT you don’t want to look stupid by buying the same
• You want to buy a new sofa – BUT it must fit; i.e. must not make the rest of the furniture look old
• You want to buy a new blouse, BUT it must make the bust look slimmer

The reasons which are listed after the ‘BUT’ are examples of Omega factors – those negative ‘pain’ factors which are stronger motivations than simply wanting to look good or save money,.

Demonstrating the GAIN is the subject of another blog on Persuasion (to follow).

Have fun

Dennis

 PS: For something fun - click here.

 

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I wrote on part one (previous blog) about price and my sentiments can be summarised by the statement that price is what you pay and value is what you get. Retailers would do well to focus on the ‘value’ and not on the price. Of course the value is delivered with a product (or service) which meets a need/ solves a problem for a customer.
Communicating the value to a customer (as opposed to the price) starts with an idea – but the idea must be built on (related to) the core product.

Before you can start communicating about your product, you have to understand what your product really is; i.e. what is the customer buying? Let’s consider some examples:
What is the core product?

• You are not selling lipstick, but…sex appeal.
• You are not selling a house, but…home.
• You are not selling a book, but…stories.
• You are not selling an MBA, but…career success.
• You are not selling a drill, but…a hole in the wall

Let’s see how you go: What do you YOU sell if:

• You are not selling a watch, but…
• You are not selling a video, but
• You are not selling a MP3 player, but…
• You are not selling a pair of jeans, but…
• You are not selling a headache tablet, but
• You are not selling a wheelchair, but…

(Feel free to use the comments section below if you want to have a go.  Or if you want to share how you view your own products.)

Once you know what you are selling, you need a creative idea to communicate what that is.

• Always begin with a good idea.
• A bad idea, executed brilliantly is just as ineffective as a good idea executed badly – but at least the good idea has an opportunity to be executed well.
• When generating the idea – don’t worry about the execution.
• Allow the free flow of ideas (brainstorming).
• The best ideas are obvious (if not simple) in hindsight: ‘I wish I‘d thought of that.’

Next time we will look at how customers make the purchase decision.

Have fun
(PS: The ad below for a bookshop has a great creative idea - don't you think?)

Dennis

Retail advertising is the poor cousin of marketing – and for good reason: most of the time it is bereft of good ideas, breaks the most basic tenets of good marketing and to top it all, is executed poorly. At the risk of offending someone important; I will defy any reader to distinguish between Harvey Norman and Domayne advertising (as a 'for instance' – there are many more examples) if you removed the logo from the ad.

 

Retail advertising is mostly about selling the price. That is of course ridiculous. It should be about selling the offer.

 

What is the offer?

Offer = Product + Price.

Retail advertising is about communicating the offer (effectively) to your target market.

 

In order to understand good retail advertising, we need to understand a few basic aspect of (good) marketing:

 

• What role does price play?
• The fundamentals of picking the price to advertise.
• What is the product? (And is not what you think.)
• How does the customer make the purchase decision?
• How do you persuade them that your offer is the best?
• How do you get that message across?
• Who do you get it across to?

 

Over the coming weeks, I will run a series on each of the bullet points above to try and piece it all together at my business blog. Jon (at Simplicity Sells) is probably better positioned to give you an advertising professional’s take on these things, but not being the most qualified at something has never stopped me before, so why start now?

 

As a starting point, let’s quickly look at the role of ‘PRICE’ in advertising. (As in dollars – not me.)

 

Should the emphasis always be on price? When should the emphasis be on price?

 

Not counting specific, strategic clearances at very specific times, the only retailer that should be advertising price… is the price leader. There can only be one, and you should think carefully about whether it is you – or indeed whether you want to be the price leader. (There are a few exceptions: supermarkets and ‘grudge purchases’ for instance) but this piece is about specialty retailers who always resort to price.)

 

I will give you one piece of proof – and it is that bad that I won’t name & shame the retailers. One is a leading jewellery retailer who routinely advertises Gold Earrings for $1. I am yet to see a line queuing up for that particular bargain. A fashion retailer regularly advertises tops for $1.99 (everything must go) and it is not Lowes or Big W. And rarely do I see more customers in that store than the full-price store right next door.

(I can also attest that most  'critical' retailers that I consulkt with are pricing themselves broke.)

 

Cheap prices are the easy way – not necessarily the right way.

From a consumer psychology perspective, pricing ‘at the market’ is all that is required. (People don’t necessarily want the cheapest; they just don’t want to feel ripped off.)

 

Over at Ganador’s blog I continue the series – and the topic is ‘Pick Smart’. (A short one.)

There will be a new post every week, and the next one will look at WHAT customer’s really buy.

 

Have fun

Dennis

 

As a public service announcement – for those who are too afraid to ask, and those who may not be doing so already; a piece of advice that will add to your own productivity:

Subscribe to your favourite blogs (including any or all of these on Inside Retailing) by using a Blog Reader.

I use Google Reader which can be found here. (You need to have a Google Account, which is free and easy to set up.)

Then every time you find a blog you like, just hit the orange RSS button and it automatically takes you to your reader, where you can subscribe with one click.

For instructions, go here.

Every time that blog updates, it comes up as an ‘unread’ post in your reader – just like email.

No more bookmarks, no more remembering to check it out.

Scenario:

A couple wonders into the store and they show an interest in the new top-loader. They show all the buying signals – touching the merchandise, reading the labels. The sales person approaches:

 

The sale:

SP:  'Good morning folks, I see you are looking at the XYZ model, but unfortunately it is so popular, we just sold the last one to another customer. I don’t think we will be getting any more…'

Customer: 'Really? Oh no…'

SP: 'Yes they are very popular because they use so little water – and there is the $150 rebate from Government that goes with it.'

C: 'You sure you don’t have any more – maybe in another branch?'

SP: 'I don’t think so, but I’d be happy to go and have a look out back. If do have one, would you be willing to take it straight away?'

C: 'Yeah sure.'

SP: 'I’ll be right back.'

[SP leaves the showroom temporarily, only to return beaming from ear to ear.]

SP: 'Good news folks, we happen to have one just like that. How would you like to pay for it?'

 

Evaluation:

This sales person knew how to apply the Scarcity Principle in the sales situation. Not only did he induce ‘scarcity’ by claiming it was the last one, he made sure that the customers knew that there is a lot of competition for this ‘scarce’ item. (This is a necessary prerequisite as scarcity in and of itself is not sufficient.)

 

The only problem is of course that he was misleading the customer and if that did not get him (and his employer) in trouble; at the very least it is an example of bad service that is bound to be caught out sooner or later. It is also not a very good way of building customer relations and getting repeat business, because by the time they get home, the couple will suspect (if not know outright) that they have been conned. They might not talk about – for fear of feeling stupid – but they just won’t come back.

 

Like the other 5 principles of selling, this principle (of scarcity) is powerful, but sales people who have developed these skills intuitively and don’t know how to correctly apply it, are dangerous to the health of your business.

 

Proper (retail) sales training is of course the answer: not only to turn the average performers into stars, but to properly channel those ‘good’ (but dangerous) sales people who may have acquired these principles intuitively, instead of having been taught the right way.

Have fun

Dennis

PS: Last week's post was linked to an article about laptop security. Read the 'Secret of Free Advertising' here, or elsewhere on this blog) if you are interested.

 

All industries undergo change, and none more than newspapers. (The Fairfax 'cost-cutting' exercise is a case in point.)

But - where there is flux, there is opportunity. As publishers cut costs, they become ever more dependent on being fed the news rather than finding it. Most retailers don't use PR as well as they could, and often because they don't appreciate how much 'news' the average retail business can generate:

• Every new product launch
• Every spike (up or down) in sales
• Every change in fashion/ style
• Every change in supply/ supplier
  
• Every change in price

Need I go on?

To capitalise on this opportunity, the press release must work well and we recommend that each release contain these basic elements. (There is no need to be different or creative - just provide the info in a manner that journalists are familiar with. It is really about the newsworthiness...)

1. FOR IMMEDIATE RELEASE: These words should appear in the upper left-hand margin, just under your letterhead.
2. Contact Information: List the name, title, and telephone and fax numbers of the company spokesperson. Give a home number since reporters often work on deadlines and may not be available until after hours.
3. Headline: Use a boldface type.
4. Dateline: This should state the city and the date you are mailing your release.
5. Lead Paragraph: The first paragraph needs to grasp the reader's attention and should contain the relevant information to your message such as the five W's (who, what, when, where, why).
6. Text: The main body of your press release where your message should fully develop.
7. Recap: At the lower left hand corner of your last page restate your product's specifications, highlight a product release date.

 A few general tips:

• Make sure the information is newsworthy.
• Start with a brief description of the news, and then distinguish who announced it, and not the other way around.
• Make sure the first 10 words of your release are effective, as they are the most important.
• Avoid excessive use of adjectives and fancy language.
• Deal with the facts.
• Make it as easy as possible for media representatives to do their jobs.
• Publicity and advertising must complement each other.
  
• Unlike most advertising and personal selling, publicity does not include a specific sales message.

 Have fun... and/or browse here for more stuff

Dennis

Promise me your eyes won’t glaze over if I say … multi-channel retailing. Stay with me for a moment. I wrote earlier about channel integration, but I suspect eyes might’ve glazed over because ‘multi-channel’ retail just sounds so much like a buzzword that it does not even bear thinking about. 

But there is a fundamental shift happening in terms of what is possible, and this shift is described by the ‘long tail’. Read the back story here if you will - or just trust me when I say that the Long Tail is creating opportunities for retailers. In fact the opportunities are created for everyone – the question is simply why retailers are not first to take advantage.

The long tail theory posits that there is a business to be had in (very) niche markets – enabled by the internet and such technology. The Long Tail is enabled by the internet but it is not about the internet. Examples of long tail businesses are:

• Provide advice, tool and merchandise for Pre-WWI gun collectors
• Run a fan club for an obscure form of the Blues hear only in the south-western parts of one state in the US
• Sell 18^th century porcelain dolls

I think you get the idea: the long tail redefines what we mean by ‘niche.’

But here is the KILLER: Even if you have a very small, single-site operation (say <$500k p.a.) then you already have a significant advantage over any website operator (start-up) in the same space.

Why couldn’t the…

• Independent fast food joint also run the mobile hot dog stand at the local footy club?
• Local fashion boutique not run a thriving internet business, selling 18^th century belt buckles to a global audience?
• The local jeweller run a direct mail catalogue selling precious stones into the Asian Market?

I could go on, but the point is not to identify every opportunity, but simply to encourage existing business owners to think about the countless niche businesses that already reside within their existing business.

These niches waiting to happen are typically exploitable through another channel – outside the traditional physical retail channel. These opportunities are ‘long tail’ opportunities and can effectively leveraged into entirely new businesses, using the skills, scale and access offered by your existing retail business.

The days of standing behind a counter and waiting for passing trade is long gone. Multi-channel is the new black.

 

 

Lots of doom and gloom around; especially the spectre of inflation. But, at the risk of showing my age, I cut my teeth in a highly inflationary environment, so here are some lessons/strategies from ‘that’ era:

• Being slightly over-stocked isn’t as much of a killer as before. The value of your inventory will rise even as it remains unsold. This is a hedging strategy in its simplest form.
• You can buy in slightly bigger quantities, getting better rates, and so benefit even more from the rise in value of your ‘stockpile’.

(These ‘benefits’ of inflation will of course come back and bite your arse if you overdo it, and if inflation comes down again and you retain such lazy practices in a then very different environment.)

• Inflation is good for the value –operators, as people become more price-conscious. And if value is not your strong suit, it becomes strategically more important to acquire the very useful skill of finding and articulating an alternate value proposition.

• The smart way of dealing with inflationary prices is apply Webers Law: make small increments regularly that remain below the customer’s perceptual threshold. (This is valid for most products, but more especially those that are NOT bought very regularly.)

 From a marketing point of view, the retailer must either:

• Promote a loss leader very judiciously. Pick a product smartly (i.e to which customers are price sensitive) that will get the customers in the door and then add value and upsell. Or, alternatively
• Promote the product/category that has NOT increased in price much heavily to convey the message of being a price leader.

And finally of course, great customer service (if properly understood) remains a very effective differentiator, no matter what is happing to prices.

Hoep that is food for thought...

The 6 Enemies of Happiness here...

Retail checklists galore...

Have fun

Dennis

Category Management has not been adopted by smaller retailers. I suspect that some vendors (and chains) have made this seem more complicated than it should have been. Category Management is as simple as giving an employee ownership of a particular category (amongst other things.) It is actually a really powerful tool to help make sense of the plethora of data retailers are confronted with.

Category management is the process by which we manage our business at the category level to deliver better product, pricing and service to our customers. A category is a group or assortment of merchandise that the customer finds interchangeable; i.e. customers define category structure.  As a rule of thumb:

• No more than 10 departments per store
• No more than 10 categories per department
• No more than 10 subcategories per category

In practice it would look like this for a newsagency:

Store                                     Newsagent

Departments                     Magazines, Newspapers, Gifts, Stationery

Categories                          Women’s Interest, Teenager, Adult

Sub-categories                 Bridal, Gossip Weeklies        

Items                                    Woman’s Day

Consider how categories may be differently defined if you were for instance determining the categories for a Discount Department Store?

Category management means:

• Display at the category level
• Planning at the category level
• Open to Buy at the category level
• Reporting at the category level
• Price analysis at the category level

When open to buy is determined, look at price point history by category. Use this information to buy replacement and new products in the category and avoid “price point proliferation.” The retailer must judge as accurately as possible what the sales potential of any given product is, and buy that amount of merchandise (in bulk) and sell the individual units at a profit.

The first step is therefore to develop a sales plan. Merchandise Management follows these five steps (although each step can obviously be divided into further sub-steps.)

Of your core product categories, what proportion of annual sales goes to each core product category and what proportion of floor space (shelf space) does each require?