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Wednesday
Sep082010

Reciprocity

DateWednesday, September 8, 2010 at 12:00PM

Retail is a tough gig. And that is compounded by the fact that so many people who work in retail do it 'by accident' and not by design.

Truth be told: retail is one of the most exciting jobs you can imagine. It requires creativity, financial acument, people skills and lots more. It is always changing and you are at the forefront of consunmer trends.

IF ONLY retailers and their staff made it their business to know and understand their businesses.

When visiting a centre where I was running a retail selling workshop, I arrived early and went for a wander. I bought an iced-tea at the donut shop, and observed a particular interaction which is, unfortunately, probably not rare.

Customer: A caramel shake please.

Owner: Just a regular size? (Holding the cup aloft.)

He should have attended the training. But that is another story for another day.

In the sales training we cover the Principle of Reciprocity. That is; how to induce it during the sales process in order to effect a sale. Reciprocity is one of six such psychological hot buttons that every retail professional should know.

In this scenario, you would use it as follows:

  • Make the bigger milkshake.
  • If the customer (belatedly) expresses a wish for the smaller size, let them pay for the small one and have the big one ‘on the house’.
  • Tell them what you are doing: apologise and make the offer. Event if they protest, insist. (The same applies to wrong orders.)

Give away your mistakes!

This induces reciprocity: the customer now feels obligated to return your kindness. And there is only one way they know how – and that is by returning for another serve.

Of course ‘giving’ a customer great service is the best gift and again they reciprocate with return visits.

Can you think fo a few other (specific) ways that you can induce reciprocity?



AuthorDennisPrice | CommentPost a Comment |
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Saturday
Sep042010

On achievement and personal success

DateSaturday, September 4, 2010 at 10:04AM

This is a multi-billion industry.

Millions of books and hundreds of millions of websites.

I have read on this topic extensively.

I have thought about it.

And here is my summary:

  1. Have an idea/mission/goal
  2. Break that down into actionable activities
  3. Do it
  4. Repeat.

That’s it.

You can continue to spend money and time on it and continue to follow as many gurus as you like. They may come up with more memorable one-liners. The timing of their message may be better; i.e. you may be more ready to hear their message later rather than now.

You may believe them more because they tell you they are richer and they have done it.

But they can’t teach you anything else.

There is a big difference between knowing something and doing something. If you know what you have to do and you don’t do it, you don’t really know. You have heard it, read it and understand it. But you don’t really know.

There is nothing more to know than these simple steps. And nobody can sell you a secret recipe or an action plan because there are no secrets.

Self-help gurus sell you the ‘illusion of action’ when you buy into their 12-step program. But that particular action is not going to take you towards your goal.

Only your own actions, directed towards your own goal will.

And that is entirely up to you.

Knowing it is not really knowing it- until you actually do it.

So what are you going to do about that?
Now?

Click ‘back’? Surf some more? Read another blog? Think about it?

Yeah. Good luck anyway.

AuthorDennisPrice | Comment1 Comment |
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Wednesday
Sep012010

Brutal truths about HR

DateWednesday, September 1, 2010 at 5:52PM

The following home truths are somewhat brutal. They are aimed at people joining an organisation in a managerial capacity with aspirations to get to the top.

Whilst some HR people will take offence, the good ones won’t. They have a role to play in the business – and a valuable one at that. Just not in the way that some of them think and would like to have you think.

When you join a company

Just sign the paper work. Don’t ask questions don’t try and make connections. Don’t talk about your career path with anyone. They have no power and little influence – it is your line manager’s call.

While you are working

Never approach for help, counselling or advice. You will be seen as weak by the rest of the business. And the only real assistance thy can give you as just more advice and counselling. They can’t make your problem with the boss go away. (They already know your boss is a jerk, but they can’t do anything about that unless his/her boss wants to anyway.)

When you leave a company

They are watching you and your internet traffic. Don’t even think about leaking something or taking something. If you do, good riddance and you deserve to be slapped with whatever they can slap you with.

I they make counter-offer, DO NOT accept the offer. The company has a long memory and will always wonder when you’re going to threaten to quit again.

Decline the exit interview. They don’t really care; they don’t really do anything with the data and they know you won’t be stupid enough to burn any bridges.

Conclusion

HR can be very useful to an organisation by managing training, payroll, recruitment etc. But like Marketing and Finance, HR is a STAFF department and not a LINE department. They are experts in their domain and can shape the careers of the people in their respective departments only.

The first principle is always to identify the decision maker in anything and they are expert ADVISERS not decision makers. If you have an issue (any issue not just a people/performance one), identify the real decision maker and go to them. Don’t assume that is HR even if they tell you they are or can solve that particular problem.

This does not diminish their role, because there can only be one decision maker and that is the person responsible. If you can’t figure out who that is, you probably deserve the advice you will get from whomever you ask.

And finally, do NOT assume that the decision maker is the person that the organisational structure or job description depicts as the decision maker. This is the real skill of getting ahead.

 

AuthorDennisPrice | CommentPost a Comment | Reference1 Reference |
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Sunday
Aug292010

The perfect retail employee

DateSunday, August 29, 2010 at 5:31PM

The ideal staff member: works hard, for free
 

Here is some research that brings some really bad news. But I will also give you some good news. (The research has been conducted by him! research and consulting.)

  • Three categories (lotteries, magazines and newspapers) are in 76% of shopping baskets.
  • Average visit frequency is 1.6 (with the lottery shopper at 1.9 times, the real figure is worse) and this is well below the other convenience channels
  • Average items purchased = 1.75 with almost 60% buying one item only.
  • 81% of shoppers were not aware of any promotional messages

Is this employee not your favourite employee too? Meet the silent salesman that works (maybe) at every newsagent for free: Mr Merchandise.

In some newsagencies, Mr Merchandise sits around all day. Are you putting him to work in your business?

Here is one simple strategy that you can use to put Mr Merchandise to work: Cross Merchandise.

That is; put associated and related products together. There are 3 types of cross merchandising that you may apply.

1. Inter-category: Associated product with some of your core products.

Example: Ribbons with gift bags

2. Intra-category: Related products paired within a category, usually slower sellers or new sellers with your hot items.

Example: The belts with the dresses

3. Trade partners: Introducing an item that is NOT usually carried with one of your core sellers.

Example: Accessories from the local Jeweller with your Bag.


Of course you know all that, right? But with thousands of possible combinations, do you exploit them all - consistently? Probably not.

The list is too long for me to generate one here, so here is better idea: Make a template for your staff to generate ideas of products that can be paired together as cross merchandising opportunities.

 
In this image you can see how I used a matrix to pair products. It would be impossible to list the thousands of SKUs, but identify the key categories as follows:

 

 

List the core products that sell well week in and week out. Then identify the range of products that:

  • you want to promote
  • have high margins but don't sell well
  • are new
  • don't sell well and are 'last chance'
  • special offers (buy-in or tie-in stock including consignment)

Mix them up and list them along the X and the Y axes on your template. Evaluate every cell.

TIP: Do several of them and allocate one to every staff member and ask them for their ideas and views. You may just be surprised.) 

 

AuthorDennisPrice | CommentPost a Comment |
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Wednesday
Aug252010

Price vs Point of Difference: The numbers are in

DateWednesday, August 25, 2010 at 9:00AM

If sales are slow, how do you respond?

The favoured ‘marketing’ tactic of all retailers is discounting; and that includes top-end brands. I can say this without fear of contradiction.

Consultants often suggest that this is a short-term ‘strategy’ that does not address the underlying issue, yet retail operators persist.

I found some good research that addresses this question quite definitively. Unlike many studies, this was not a ‘survey of opinion’, but rather based on a modified Du Pont analysis, including all the fancy statistical safeguards on a large sample of retail businesses. (The only question mark may be whether the American market place is comparable to the Australian one, but I will leave that for you to decide.)

Conventional wisdom is that companies can devise successful competitive strategies around either profit margin or asset turnover. That is; you are either a high margin/low volume business or high volume/low margin business.

Cost leadership strategy attempts to achieve organisational goals by delivering a product or service comparable to competitors' at a lower cost to the customer.

A differentiation strategy, attempts to deliver to consumers some characteristic of product or service that will command a premium price.

In this research, a modified Du Pont model of financial ratio analysis was used to evaluate a large sample of retailers using a metric termed RONOA – return on Net Operating Assets.

The results were interesting to say the least.

Differentiation strategy

The RONOA ranged from 13.5% to about 58 % with a mean of about 29 %.

Cost leadership strategy

The RONOA ranged from -46 % to about 24 % with a mean of about 7 %.

What to make of this?

The results of this study suggest that retail firms that pursue a differentiation strategy outperform those retail firms that use a cost leadership strategy. By a long shot.

In fact, the best performing cost leader is still worse off than the ‘average’ differentiator.

But that does not mean that you can’t pursue a low-cost. You COULD be the one with a 24% return. Just recently JB Hi Fi announced their stellar results.

But the key point is that, when it comes to trying to be a cost leader, is that there can only be one leader (winner). And unless you are going to be that leader, it seems like a race to the bottom.

The better alternative (less risky and more rewarding) is to develop your point of difference. I have written previously about developing your proposition. (With extensive supporting templates – search for ‘mojo’ on this website.)

Sure it is harder than knee-jerk discounting. And it may take longer to get right. But eventually you will be the king of the hill, even if you have to build your own hill.



AuthorDennisPrice | CommentPost a Comment |
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Wednesday
Aug182010

Dan Ariely: Are we in control of our own decisions?

DateWednesday, August 18, 2010 at 12:00PM

Dan Ariely's book - Predictably Irrational is a great read.

This give you a flavour for some of the ideas.

And some shameless self-promotion: Our SellsSmart training for Retailers is built on the psychological principles popularised here. Browse around and check us out.

 

AuthorDennisPrice | CommentPost a Comment |
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Saturday
Aug142010

Daniel Kahneman: The riddle of experience vs. memory

DateSaturday, August 14, 2010 at 1:33PM

This video demonstrates why Kahneman is seen as the most influential living psychologist. (He is considered the inventor of Behavioural Economics.)

There is not much one can add to his observations. But there is a lot to think about. 

Look forward to your comments if you are brave enough to share - particularly how this might apply to experiential retailing for instance.

[15 min + Q&A of 5 min: BUT A MUST WATCH.]

 

 

 

AuthorDennisPrice | CommentPost a Comment |
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Friday
Aug132010

Singing your own praises

DateFriday, August 13, 2010 at 3:32PM

When we all sing the happy birthday song ‘for he is a jolly good fellow’ – we all sing.

If that sounds like I’m stating the bleeding obvious, then it is because I am.

The point is that there is tremendous peer pressure to conform and irrespective of your feelings, you will likely sing along. You are expected to. Everybody knows it and it would be socially awkward not to. But this is how we learn bad habits.

Have a look at the next ad that you see.

It strikes me that, with few exceptions, they all sing the same tunes: the equivalent of ‘for we are a jolly good fellow’.

The thing is: the readers expect you to say that. You are surely not going to advertise and say you are hopeless and often miss deadlines and your services are unimaginative, right?

The issue you must deal with is that they simply don’t care about you. They also hardly know you; which is the point about advertising. Readers/ potential customers expect you to promote yourself and your virtues.

Should you advertise?

Absolutely!

How do you do that then?

The process is not a secret or particularly difficult either.

There are three simple principles that should be followed – and I am not talking about technical or creative elements here.

The short version is simply this:

Rule 1:

Know your proposition. Read this post for a full explanation – and some links to a 20p eBook that you can use as working document to develop your proposition.

Rule 2:

Tell the (potential) customer what you will do for them and don’t sing your own praises. Every customer has some pain that you can take away – otherwise you don’t have a business.

  • Being a jolly good fellow is cost-of-entry.
  • Don’t say the bleeding obvious: singing your own praises is a waste of money.
  • Solve the customers’ problem instead and let them sing your praises.

Rule 3:

You must become credible in the eyes of your target customers. Your message above, even if it addresses a real customer need, will only be believed if the source is credible. And since you don’t know them (yet) you can only do that in

You achieve credibility in two ways:

  • You can prove that you are credible by quoting referrals or demonstrating your credibility. (I.e. it is not what YOU say, but what others say or what you can DO that will make you credible.)
  • You become credible by consistently advertising. (I know it shouldn’t work like that, but the psychology is pretty simple and well proven.) Sheer repetition makes you credible.

 

 

AuthorDennisPrice | CommentPost a Comment | Reference1 Reference |
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Wednesday
Aug112010

The Masterchef Performance Equation

DateWednesday, August 11, 2010 at 12:00PM

Business is simple. The process is clear and hasn’t changed for a long time – if ever.

But business is hard too. Or maybe we are just stupid - it seems that we have to keep learning the same lessons over and over.

 

 

Where we seem to go wrong is our focus on the outcome or the output. I like using the analogy of a cake. If you can imagine that producing a cake is the same process as producing any other outcome. By the same token, if that particular piece of cake tastes like s*#t, then you know you can’t fix it.

But if you produce an acceptable ‘outcome’ in your business (e.g. poor profits that also taste like s….) then managers obsess about the profit.

How often have you heard a CEO proclaim that they have some major issues/challenges such as low profits or small market shares?

Compare this to the Oracle of Omaha… Warren Buffett.

Mary Buffett (wife) spoke to Forbes.com about Warren Buffett's and was asked:

What's the most important lesson you've learned from Warren Buffett? 

Mary Buffett answered: “Patience and discipline. And doing something you love. So many people--and Warren has said this--are doing it for the money. That's really not the right reason. If you're doing something you love, you're more likely to put your all into it, and that generally equates to making money.”

He is not the first to say it. I am not the first to say it. Neither of us are the only ones to say it. YOU may have even said. And even believed it.

But the question is: Have you acted on it?

You see, Warren Buffett identified the processes (patience/discipline/doing your love) as the key; not the output (money).

Managers are fond of claiming how ‘results-orientated’ they are. It makes me shudder. Whilst I believe you should measure the results, systematically so, the focus then needs to move on to the processes.

When we discuss mystery shopping services with clients, they often focus excessively on the ‘results’ and how the results can be used to incentivise or punish employees. And often they don’t want to put the time into designing the customer experience (the ingredients) and skilling the people to be able to deliver that experience.

Others get excited about the process, initially, but when it comes to the doing bit, they run out steam.

Measuring your customer service, you market share, or your brand awareness is of very limited value unless you go back and bake a different cake. Which is not much fun if you have to do it over and over an over.

But if you believe Warren Buffett, that is the only way. And since you are going to do it over and over and over; best to make sure you like, really like, it a lot.

 

 

 

AuthorDennisPrice | Comment2 Comments |
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Wednesday
Aug042010

I hope you have a dirty mind?

DateWednesday, August 4, 2010 at 12:00PM

I have this mental image that people who have been brainwashed have these pristine, unblemished and lily-white brains. And the contrarians and thinkers and entrepreneurs out there have dirty minds; brain-UNwashed, so to speak.

Since my job involves shopper marketing strategies for the retail supply chain, we keep an eye on the latest developments. I came across a white paper (graphic below) that distinguishes between the various trip types.

 

I applied the filter question (last week’s post) and ask myself: So What?

Whilst I can think of a few things you could do to improve productivity/ performance using the insights of this table; I doubt whether any of those would actually pay its way in effort and cost.

What must a supermarket manager do differently to accommodate the ‘Dill-In shopper’ spending $50 and the Pantry Stocking customer spending between $30 and $80? (For instance.)

My guess is that, because we are able to measure and research in increasing details (bar codes have a lot to answer for), we tend to do it.

But like the dog that chases the passing bus – and catches it – we are a bit befuddled with what comes afterwards.

Managers generally (marketers specifically) are often seduced by numbers – and more importantly, by habits. Do you recognise any of these scenarios in your organisation?

  • Someone slaves over a weekly report that hardly anybody reads because someone asked for it sometime ago, and it never stopped.
  • A meeting that happens regularly, way beyond its use-by-date.
  • You measure KPIs but you don’t really know why and you never see anyone use them.
  • You know your demographics of the target market, but other than simply knowing it, it has no practical value as far as you can see.
  • A research report is commissioned, and out of the 30 page report (not counting the appendices) and a 90-slide presentation; you walk away with two sound-bites about ‘the market’ that somehow then becomes cast in stone.
  • Someone once read somewhere that 90% of customers make impulse purchases and everyone believes that despite the fact that nobody has seen or even knows whether that it is true.
  • Some once said that only 7% of meaning is conveyed by the actual words and 93% by your body language – and you still believe that.
  • You read somewhere that prices should have 9c endings because people will buy more and you still believe that.

A dirty mind is NOT seduced by thin-sliced statistics. A dirty mind will be sceptical and insist on seeing the proof.  (The last 3 statistics quoted above are all spurious and have been misconstrued to the point of becoming urban legends over time.)

Just because it looks impressive, does not mean that is.

Just because it sounds plausible, does not mean that it is.



Dennis
Ganador: Frontline business development programs for the retail supply chain.

 

PS: If you help me gather some info by taking a very short survey (4 questions, 4 clicks) I will report back here on a pretty important topic. The survey is HERE. Your assistance will be greatly appreciated. (Australian based respondents only please, because it is unique/ relevant to Australia only.) Some time in the future I will share the findings here.

AuthorDennisPrice | Comment2 Comments |
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