Retail Contrarian

Creating Success - Creating Customers

The other day I was having coffee with a few friends when the discussion turned to success.  One of my friends said, "I'm a blessed guy. I have a great family and I've achieved the success I wanted to achieve. Another friend said, "That's great but I think I've spent too much of life chasing success."  It's what my third friend said that really stood out. He said, "That's a lot better than waiting around for success to find you."

That comment stayed with me all day.  I have met a lot of very successful retailers who created their success.  I've met many others who seemed to be waiting for success to find them.

You can just as easily replace the word success for customers. I have met a lot of very successful retailers who created their customers.  I've met many others who seemed to be waiting for customers to find them.

So let me ask, are you creating your success by creating your customers?

No Pressure = More Sales Satisfaction

J.D. Power and Associates recently released their 2008 Wireless Retail Sales Satisfaction Study.  Taking a look at it is worth your while whatever you sell.

The customer satisfaction study is based on four factors.  In order of importance, they are:

sales staff (51%)
store display (17%)
store facility (16%)
price/promotion (16%)

I'm not surprised the sales staff is three times more important than displays and store facility but it does make one wonder if companies invest their time and resources in that same proportion.

The study finds that while scores have declined in all four factors that drive overall satisfaction, the most notable decreases occur in store display and price/promotion. Customers are particularly dissatisfied with the rebates offered on phones and accessories and with the availability of product and service information.

The key word for all retailers is SIMPLE.  Make it simple for your customers to understand your offer. Make it simple for your customers to decide what to buy.  Make it simple for your customers to purchase the product. And finally, make it simple for your customers to get their promotional prices, rebates, etc.

The one other thing that stands out in this study is that retail satisfaction is 15 percent lower among customers who report they were pressured during the sales process. The average overall satisfaction rating among customers who report experiencing no sales pressure is 721 compared with an average of only 610 among those who say they were pressured.

A challenge is defining precisely what customers consider pressure and what employees see as pressure. While an employee may make a sale, if they pressure the customer too much during the process they may lose future purchases. But failing to be sales focused can lead to even worse experiences for customers and lost opportunity for the retailer.

Here are some ways for retailers to maximize their customer opportunities without causing customers to feel too pressured.

1. Smile and welcome your customers when they come into your store. Shoppers feel pressured when they are pounced on by salespeople and given too much help when they first walk in the door. A warm welcome and a genuine smile go a long way toward making your customer feel comfortable.

2. Don't suggest any products until you have a good understanding of your customer's needs and wants. While this sounds very basic, some retail associates never ask a shopper anything beyond "May I help you."  Selling a product without knowing anything about your customer results in either the customer feeling overly pressured or a sale for your competitor.

3. Always tell your customer the reason you are showing a product or suggesting a service. Obviously it's important that customers not be shown something they don't need but just as important is telling them why the product you are showing does meet their needs. Customers feel pressured when they are told or asked to buy something for which they don't see a need. Always refer back to what you learned when discovering their needs and wants.

4. Stop showing products when the customer is ready to go. I know a lot of people believe you should try to overcome the first resistance but how often do you really sell customers additional products when they are ready to leave? And even if you do, at what cost to the customer satisfaction of other buyers?

If our number one goal is to deliver a great experience to our customer and our second goal is to match them up with products that meets their needs and wants, the only way they'll feel pressure is because the bags they are carrying out the door are so loaded down.

So let me ask, are you maximizing every customer opportunity without making your customers feel pressured?

Note: Here is the press release from J.D. Powers.

Hey Buddy - Would You Quit for $1,000?

Many companies pay a hiring bonus to new hires but it seems that one company is actually paying new hires a bonus to quit. That’s right, a bonus for a new hire who quits. 

Fast Company co-founder Bill Taylor writes at Harvard Business Online that internet shoe retailer Zappos is so focused on hiring and keeping employees who are committed to the company’s strategy and obsession with great customer service that they actually offer new hires a $1,000 bonus to leave.

Why? Here’s an excerpt from the article Why Zappos Pays New Employees to Quit—And You Should Too:

Because if you’re willing to take the company up on the offer, you obviously don’t have the sense of commitment they are looking for. It’s hard to describe the level of energy in the Zappos culture—which means, by definition, it’s not for everybody. Zappos wants to learn if there’s a bad fit between what makes the organization tick and what makes individual employees tick—and it’s willing to pay to learn sooner rather than later. (About ten percent of new call-center employees take the money and run.)

Think about how much money this small bonus saves them!  An employee who isn’t really committed to a job but continues to work in the position is unlikely to deliver exceptional customer service. This will cost the company sales and, even worse, cost them customers.  Since an un-committed employee is unlikely to stay in the position long-term the company will still have to incur the cost of replacing and training a replacement.

And a company that pays someone to leave early is far less likely to incur the cost of losing sales and customers.  Sounds like a smart investment.  Remember, we’re not talking about employees who couldn’t make it past their initial 90-days.  Zappos is using the bonus to identify and remove those employees who are able to do the job but aren’t committed to it.

I think this is brilliant.  It sounds like something other retailers might want to explore.

So would this work in retail or would too many people try to get hired just to get the bonus to leave? Things that make you go “hmmm.”

Thanks to Glenn F. for sharing this article with me.

Two Ears and a Sale

A friend of mine loves to say, "God gave you two ears and one mouth, which means you should be listening twice as much as you talk."  That's great advice in our personal relationships as well as at work.

Some retail associates make the mistake of giving customers way too much information while learning nothing from the customer. Last month I was in an electronics store standing in front of a flat screen television. An employee came up and gave me a good three to five minute dissertation on the features of the television.  At the end he said, "So what do you think?"  To which I replied, "Thanks, but I was looking at the stand."  I did want to suggest that he ought to focus less on features and more on benefits but decided I would bite my tongue and carry on with my day.  What's funny is that this is the second time in the same store that exact thing has happened to me this year.

Customers will tell us what we need to know in order to create a sale when we take the time to listen.

And listening is more than just hearing.  I know I'm sometimes guilty of talking with people but not really listening to what they're saying.  Waiting for someone to stop talking so I can say what I'm about to say is a sign that I'm not really listening to the other person; I'm just waiting for them to stop talking.  Whenever you ask your customer a question listen intently to their answer.

Years ago I worked with a man who drove us all crazy because whenever you'd have a conversation with him there would always be these really odd moments of silence after you finished talking and when started speaking. I figured the guy was just a slow thinker. Over time I learned that he was just a great listener. He didn't decide what to say until he took in what you said.  Not surprisingly, he was one of the top one or two salespeople in the store every single month.

Customers will tell us what we need to know in order to create a sale when we take the time to really listen.

I always find it funny when companies feel they have to teach active listening skills. Do we really need to teach people how to nod their heads, rub their chins and say, "Hmm, interesting" to communicate to another person we are listening?  Instead, shouldn't we be teaching people the benefits of active listening?

And that benefit is quite clear - Customers will tell us what we need to know in order to create a sale when we listen more and talk less.

So let me ask, are you really listening to your customer?

Note to managers and owners - This same advice applies to working with employees.  Employees will tell us what we need to know to help them develop when we take the time to really listen.

The Cardinal Rule: Don't Make Excuses

A friend of mine recently told me that his wife was just laid off from a company she'd worked at for over ten years.  He was more upset about how they laid her off than the actual layoff.  When his wife's manager sat her down to tell her she was being laid off he brought up a mistake she had made more than two years ago.  Two years!  So instead of just being straight up and saying that business was down and someone needed to go they alluded to this long-ago mistake as one of the main reasons.

How bogus.  Someone needs to call the manager and his superiors and tell them the cardinal rule of management - DON'T MAKE EXCUSES.  State the facts and stand behind them.  If you have to hide behind an excuse then you're failing as a manger.

Similarly, not long ago I was in a chain store and when I questioned something the manager blamed the corporate office.  She failed the cardinal rule of management - DON'T MAKE EXCUSES.  Either state the policy as if you support it or get it changed. The only thing that upsets customers more than a policy they don't like is when the company (i.e. the employees) enforces it but doesn't stand behind it.

Delighting a Disappointed Customer

I have written previously that one way to turn a negative customer experience into a positive one is to ease the customer's inconvenience.  To do that an employee needs to assess what inconvenience the problem is causing and what action can be taken to relieve it.

Sometimes a problem a customer has with either the store or a product results in disappointment more than an actual inconvenience.  One of the differences between an average staff and a GREAT one is the ability to pick up on a customer's disappointment and then take action that will turn disappointment into delight.

Some customers complain when they're disappointed but most don't.  They may make a comment but not a complaint.  Retailers who are focused on delighting a disappointed customer will hear those comments and can then take action to delight them, resulting in the customer being more loyal and an advocate. There's probably no better customer advocate than a disappointed customer who has been delighted.

As an example, my wife recently ordered something online since she couldn't find it locally.  When placing the order she was informed that the product was not in stock but would likely ship in four or five days.  Since she really wanted it she went ahead and finalized the order.  She was disappointed she had to wait but it wasn't a major inconvenience.  Two days later she received an email that the product was now in stock and they were "upgrading" her order to a faster shipping option at no additional charge. She was delighted!  For a small additional expense this company has turned my wife into a loyal customer and advocate.

Here are some other opportunities that may enable you to delight a disappointed customer. Say a customer casually mentions that he was disappointed with something he bought from you on a previous visit.  A lot of retail employees won't even notice that the customer is voicing his disappointment since he's not really complaining.  GREAT employees will catch it and do what they can to delight the customer.  If the product wasn't purchased a long time ago they might offer to take it back or at least contact the manufacturer for them. 

But what if it was bought three, five, or more years ago or wasn't even purchased from that retailer?  That's still a great opportunity to delight the customer.  Maybe the customer could be offered 10-20% off on a replacement, or if the product is broken the retailer can offer to ship it in for repair.  There's always an opportunity to delight a disappointed customer.

Another common occurrence is when a customer tells you in conversation that she missed a sale or is disappointed that a particular product is out of stock.  If you're not authorized to give her the sale price you could take her name and contact information and contact her when the product goes back on sale or is once again in stock.  Believe me, your call will result in a delighted customer.  There's always an opportunity to delight a disappointed customer.

If a customer has to leave the store because of her children you could offer to call her and take an order over the phone or schedule an appointment before the store opens.  Or if a customer expresses his disappointment but wants a refund you could give him a discount on his next purchase. There's always an opportunity to delight a disappointed customer.

Coming up with the right action to take is the easy part. The challenging part is to actually hear disappointment that may be implied rather than clearly stated.  I guarantee that if you listen for it, you'll hear it, and if you take action, your customer will reward you with future sales and additional customers.  Sounds like a win-win to me!

Remember, there's always an opportunity to delight a disappointed customer. Are you hearing and delighting yours?

People or Process?

A while back I was asked how a retailer with commissioned salespeople could refine his ups system.  It seemed this guy's staff was struggling with the definition of an up, how they determined who got which up, etc.

I responded that the whole ups process drives me nuts since it seem to result in employees fighting over customers. Hence his email. I told him about the time I was running a Sharper Image and two salespeople got in a fight over a very small sale. One guy got so mad he dumped his soda on the other guy's head. What blew my mind was that the commission they were fighting over was less than the cost of the soda!

I recommend that he get all his salespeople together and have them write the rules themselves. I told him that I knew of one retailer who not only did that but then took it a step further and defined what the "penalty" was for not playing by the rules.

He thanked me for my input, told me that he would try what I suggested, and promised to get back to me. About a month later I got an email from him. It read, "Thanks for your previous advice. The person who was the root of the problems quit so the problem was solved all by itself!"

So the problem wasn't the up system, the problem was a person. This to me is a great reminder of why we can rarely solve people problems with a new process. I'm guessing that the owner just didn't want to confront the problem employee so he tried to address the entire process. Really, how hard is an ups process?  Sometimes we just have to confront a problem employee and tell them to quit causing problems. Doing this can save an incredible amount of time and frequently solve the problem.

Get In the Zone

To most retailers, zoning a store means assigning an associate to a particular area.

To retailers who want to deliver memorable and effective customer experiences it means to focus on certain customer activities in different areas of the store.

Here are the three zones for everyone on the team:

Zone #1: The No-Engage Decompression Zone. The decompression zone is the area a customer enters immediately after walking into your store.  The size of the zone depends on the store's overall size and layout. For some retailers the decompression zone might be only three feet wide while in other stores it could ten or twenty feet wide. Whatever its size, we should avoid engaging customers here. Customers need this time and space to acclimate themselves to their new surroundings.

A big mistake many retailers make is greeting and engaging customers while they are in the decompression zone. Watch how customers react when they are engaged too soon after they enter a store. They seem almost surprised to be greeted and are much faster to say they are just looking. They are also much more likely to see the staff as pushy and overbearing compared to stores that let the customers get through the decompression zone before engaging them.  I strongly encourage you to identify the decompression zone in your store.

Zone #2: The Welcome/Greet Zone. This is obviously the area right after the decompression zone and this is where customers should be welcomed.  By keeping the welcome to this area you prevent customers from being over-greeted. When customers are over-greeted the store staff appears insincere and pushy.  Customers by and large find being over-greeted to be extremely annoying; I've left stores because of it.  Once customers leave the Welcome/Greet Zone you should only greet or welcome them if you are positive that no other employee has done so.

You might also consider "banning" closed-ended questions and certain phrases in this zone including, "How may I help you?" and "Do you have any questions?"

Zone #3: The No Shadow One-to-One Zone.  After the Welcome/Greet Zone is zone three, which is most of the store.  It's in this area that experiences are delivered and sales are made. Or not.  As we saw last week, being too overbearing in this area can actually upset customers. That's why zone three is a No Shadow Zone.

The goal in this area is to engage the customer in a one-on-one conversation.  Not a sales pitch per se but a conversation to get to know your customer and develop a relationship with him/her.

If your customer clearly wants to be left alone then by all means do so.  And this doesn't mean just stopping talking but also giving him/her the appropriate physical space to enjoy your store.  No shadowing!  I'm sure that if your customer has a question or wants to buy something he'll find you.

The no-shadow rule of course does not apply to people you suspect might have less than honest intentions. If you believe a customer is interested in your products but not so interested in paying for them then of course you want to show them so much attention they get annoyed and move on to another store.

Owners/managers of stores that aren't already sectioned into zones may well want to review this three zone system.  You'll find that such an approach goes a long way to ensuring that every customer has a great experience and has the opportunity to share their money with you.

Putting Economic Stimulus in Check

My hometown newspaper likes to pose a Question of the Week column, wherein six or seven citizens are accosted outside a local business and asked their opinion of current events. This past week the question was "What will you do with your economic stimulus check?" Responses ranged from "new tires for my truck" to "fill my [heating] oil tank" and "pay my mortgage". Nobody said "buy a new TV", "go on vacation", or even "pick up that new Mudcrutch CD". Practicality seems to be winning out over leisure. And though practicality still stimulates the economy, businesses that rely on discretionary spending might not feel as stimulated as they had hoped.

As the checks begin rolling in, retailers are jumping at the chance to take advantage of the windfall by encouraging their customers to come in to the store and turn their checks into merchandise. Walmart will cash checks for free. Sears will give a 10% bonus to customers who cash their check at the store and spend it all there. A regional supermarket chain is giving customers a 10% bonus on every $300 gift card bought with a stimulus check. This exchange of stimulus checks for the ubiquitous gift card reminded me of a conversation I had with a friend during the holidays.

When talk of sending checks out once again began to surface at the end of last year, my friend suggested that instead of doling out checks (and direct-deposit lump sums) which could be used for less stimulating purchases like heating oil, tires, and housing, the government should stimulate the economy with gift cards. Send each potential recipient a letter that either directs them to a website or includes a form for them to complete and mail back, indicating their choice of gift cards from dozens of businesses, in varying denominations up to the total amount of their refund. This would all but force much of the population to get out of the house and use their new-found cash to buy goods and services, as opposed to using it for less stimulating essentials like paying the mortgage, lightening their debt, or keeping the lights on for another month. Of course, the option to receive the cash in check form would be among the options, but what fun would that be? Who wants to face the responsibility of having to decide where the money should be spent, when there are so many options for where the money could be spent?

Customers Rock Thinks 50 Ways Rocks

For those of you who haven't had the chance to check out Becky Carroll's Customers Rock blog it's well worth a few minutes out of your day. Recently, Becky quoted from Doug's "50 Ways" list within a framework of focusing on the customer experience. While it's not specifically a retail site, Customers Rock is a great place to find ideas and insights on delighting customers and creating a positive experience. Check it out!