Retail Contrarian

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?

Michelli + Fleener = Shared Wisdom

Dr Joseph Michelli, bestselling author of The Starbucks Experience, recently posted a brief podcast on his site in which he talks about our own Doug Fleener's 50 Ways to Improve the Customer Experience. An insightful and outspoken proponent of the customer experience in his own right, Dr. Michelli offers some flattering words for Doug and Dynamic Experiences Group, and shares 12 of Doug's 50 tips with his listeners. It's definitely worth four minutes of your time.

Making Sales by Stimulating the Senses

When I was a little kid my dad owned and operated several movie theaters.  He'd been in that business for many years, and his office was full of relics from the golden age of Hollywood - though most of them were from the exhibitor's point-of-view.  One of my favorites was a handbook of sorts for successfully running a concession stand.  It was really nothing more than a collection of best practices from theater owners all over the country, collected, typed up onto fifty or so pages, and bound with three brass clasps along the left margin.  I can remember rifling through the pages and learning all about how the way a snack bar was merchandised, presented, and staffed could have a positive effect on the amount of money people would spend.

One of the things that always stuck with me was the recommendation that popcorn be popped while customers were waiting for the movie to begin.  This flew in the face of conventional wisdom that dictated you pop your corn when there were no customers around so you wouldn't be too busy to tend to customers.  However, the smell of freshly popped popcorn and the visual of it bursting out of the popper would send customers into a buying frenzy, enticing even those who already had their Ju-Ju-Bees and Coke into buying a bucket.  And do you know what?  It worked. 

Today, we know for a fact that we can influence buying by stimulating more senses simultaneously.  Show somebody a product, and they might have an interest in it.  Let them touch, hear, smell, and maybe even taste the same product, and the level of interest rises into a level of desire.  This has worked especially well in the food industry with free samples, and it's a staple of the automotive industry where a test drive lets you feel all the aspects of the vehicle, smell the new-car smell, and hear the solid THUNK of the door as you close it. 

So, here's an opportunity for you.  Look around your store.  What are you doing to stimulate more of your customers' senses?  Is your background music conducive to your brand and products?  What does your store smell like?  Can customers touch the products?  Is the lighting effective in showing off merchandise?

You probably won't be able to stimulate all the senses, and depending on what you're selling, you might not want to.  But if you focus on stimulating more of the senses than you are now, you'll find customers' interest levels rising.

Okay, I've got to go get my popcorn.

Revisiting (and Fixing) the Generic Email Address Issue

Mike Buckley over at Tacony Corporation's Mine Your Own Business blog picked up on my recent entry about the glut of businesses using generic email addresses. In the short time since my original post ran, I've received quite a few communications from retailers asking how to go about getting a unique domain and/or email address for their business. Mike actually offers quite a few good points, and I encourage anybody who's interested to check out his blog entry on the subject. Getting a unique email address is really not as difficult (or expensive) as it may seem. One reader even reminded me that local schools and continuing education efforts can be a great resource, as they often provide gratis set-up of domain, website, and email services for individuals and businesses as a real-world experience for their students. All you need to pay for is the domain registration fee.

On a sadly ironic note, in the days since I posted that entry I saw perhaps the most graphic example of this communication faux pas. As prominently displayed in its advertisement in a local newspaper, a new business had gone through the trouble of getting a vanity phone number (you know the type - 555-LEAK for a plumber, 555-BABY for a maternity store, etc.), and they even had the city officially change the name of the street where they're located to that of the business. And their website was www.theirbusinessname.com. But their email address? You guessed it. businessname@aol.com!

What Does Your Email Address Say About You?

My typical Friday morning routine involves breakfast at a great little spot down the road.  The kind of place that only serves breakfast and lunch, where the waitresses call you Hon and know your regular order by heart.  I usually read the weekly newspaper while I eat, but the last time I went there was no weekly paper to be had.  They hadn't published that week due to staff vacation.  Okay, fair enough.

So I found myself reading the paper placemat.  In addition to a few word games to occupy little ones the placemat features a border of advertisements for local businesses.  Usually these ads are just reprints of business cards, and there's nothing wrong with that.

As I looked at the different ads I took note of how many businesses have websites and email addresses. No website?  Okay, that's forgivable for some businesses.  No email?  Again, somewhat allowable, but it's becoming less excusable.  Let your customer contact you in as many was as possible, and in the way they want.  Most businesses wouldn't dream of placing an ad without their phone number in it.

What I found most confounding is the number of businesses who have a website with their own domain name, but their email uses a generic service provider.  For example, a local pet groomer might display www.petgroomer.com in their ad, but their email address is jdoe@verizon.net.  Or jdoe@aol.com.  Or jdoe@hotmail.net.  Some folks would use petgroomer@whatevertheirprovideris.com, and that's a little better.

My questions is: why not use jdoe@petgroomer.com?  Or info@petgroomer.com?  Or anything@petgroomer.com?  I actually saw an ad for a local company that builds websites, and even they were using a generic email address!  This tells me these businesses are either using the free webspace their internet provider includes or they didn't want to spend a few bucks to have somebody set up an email account using their own domain name.  Either way it makes one question how serious these businesses are about making it easy for their customers to reach them.

Retail Academics

Some of the fine folks at the National Association of College Stores recently had the opportunity to hear Doug speak at their Creating Xtreme Customer Experiences Workshop, and they've posted a few of his recently-published comments on their blog (with permission, of course) to share with their members who were not in attendance.  This also serves as a reminder for those who were there and might have missed or forgotten something Doug said.  Ultimately, though, their inclusion of these bits of wisdom reflects what the NACS wants their stores to strive for.  Check out their blog and some of the other valuable insights they're sharing.

How to Get Customers to Spend More: Make 'Em Cry

The Associated Press recently wrote about a multi-university study on how emotions affect the spending habits of consumers. The study essentially confirmed what many human behavior and retail experts had known for a long time: sad customers spend more.

Study participants who watched a sadness-inducing video clip offered to pay nearly four times as much money to buy a water bottle than a group that watched an emotionally neutral clip.

Most folks will agree that a bit of shopping can lift them out of the doldrums, but what this study illustrates is the commonly unknown impact of mood on spending. Interestingly enough, subjects in the study who were exposed to the sad video and offered to pay more for the water bottle were adamant that the video had no bearing on the price they were willing to pay.

“This is a phenomenon that occurs without awareness,” Jennifer Lerner, a Harvard professor who studies emotion and decision making, said in a phone interview. “This is really different from the idea of retail therapy, where people are feeling negative and want to cheer themselves up by shopping. People have no idea this is going on.”

This phenomenon can be looked at two ways. First, retailers can do what advertisers have been doing for years: take advantage of customers' low levels of contentment and appeal to their need to be happy. The other way is to understand how a customer is feeling when they buy, and work to make sure the sale is permanent. One major side effect of misery spending is the realization that purchases don't have a long-term curative effect. This often leads to buyer's remorse and returned products, and if you don't have an effective way to handle those returns, you'll soon find yourself feeling down. And you know what happens then.

Recession Survival Tip #42: Don't Act Like a 5-Year-Old

My oldest son, overhearing some economists on the radio mention the word “recession”, asked me why they sounded so unhappy.  I explained that for most people, a recession wasn’t a good thing, and nobody really liked going through it.   Austin seemed perplexed by this, and asked “Why? Doesn’t everyone get to go outside and play?”  That’s economics to a five-year-old: a recession is when everyone goes out to play, inflation is what happens to balloons, and a depression is what Dad experiences when he thinks about the previous two.  Of course, when your primary source of income comes from birthday money and Tooth Fairy revenue, and your overhead consists of penny candy and Star Wars comic books, and the First Paternal Bank is ready to bail you out at a moment’s notice, it’s easy to be positive about the state of the economy.

Unfortunately most (I would dare say all) retailers are not five-year-olds, and there are real struggles to be faced and serious choices to be made over the next year.  We can choose to smile bravely and ignore the words of the experts, or we can take cautious steps to secure our businesses and the welfare of our employees.  I’m not saying we need to take drastic measures and prepare for the worst case scenario, but we shouldn’t ignore the fact that some customers either currently or eventually might have a hard time deciding to make a mortgage payment, fill their car with gas just to get to work, or pay a credit card bill.  If retailers pretend there is no wolf at the customer’s door, they’ll soon find a whole pack waiting outside their own.  It might seem clever to be optimistic and carry on business as usual, but most problems of this magnitude don’t go away by ignoring them.

The key to surviving this impact is to understand and accept two ideas: 1) this economic downturn will eventually turn around, and 2) the speed of that turnaround can be impacted by how businesses (especially retailers) react.  Some major retailers have announced price drops to help stimulate business.  Others are cutting overhead.  Some independents are giving up altogether.  And some are acting as if nothing is amiss and everything is bright and sunny.  They’re the ones who think a recession means it’s time to go out and play.

Would You Like a Velvet-Lined Heart-Shaped Box for this iPod?

Jeweler Tiffany & Co. recently announced weak comp store growth, due to a 2% decline in its U.S. stores. This news arrives despite a 10% increase in sales at their flagship New York store and 12% growth in international stores. With approximately 160 stores around the world (a third of which are in the U.S.), Tiffany is feeling the economic sting that many other high-ticket companies like American Express are beginning to experience. This indicates that the financial burdens of Americans are being shared across class lines, and aren’t just the worries of lower- to mid-income folks.

Of course, customers will continue to buy jewelry, and with Valentine’s Day fast approaching the need is about to reach its first spike of the year. However, recent positive sales figures from retailers like Best Buy, Toys R Us, and Barnes & Noble indicate that many of the sales over the end of the year were for more practical and less ornamental products. Flat screen HDTV sets, video game consoles, iPods, and GPS devices were among the season’s hottest sellers. While it’s easy to look at Tiffany’s dip in the U.S. as a harbinger of rough economic seas ahead, this is really a prime opportunity for independent and specialty stores to get creative and offer financially cautious customers the chance to think outside of the jewelry box for Valentine’s Day. A string of pearls or a Nintendo Wii? Hmmm…

The Gifts That Keep On Giving... Back to You

The holiday season is fast approaching its inevitable conclusion for another year. Hopefully your sales have been better than last year and your staff has delivered exceptional experiences that will turn your customers into loyal advocates. And hopefully you've had the opportunity to complete your personal yuletide duties. In addition to meeting your responsibilities to your family and friends, you've hopefully remembered to include your peripheral business associates in your holiday cheer. Consider how many individuals impact and support your business without being your direct customer. Of course, you should already include your employees in your year-end thanks. How about the FedEx/UPS/DHL courier who picks-up/delivers to your site every day? The janitorial staff? The postal worker? The bank tellers? How about the staff of neighboring stores? The caffeine king or queen who provides you with your first jolt of bean juice in the morning? If you're on a first-name basis with any of these people, do yourself a favor and include them as recipients when it comes time to hand out small gifts or cards. Heck, even if you're not on a first-name basis (and goodness, you should be) these folks you interact with regularly can become great advocates for you and your business.

What's that you say? You're already paying some of these folks for the privilege of your business? Well, of course you are. But thanking somebody for helping you to run your business is different than paying an invoice. And we're talking a token gift here, not a college endowment. In fact, many companies forbid their employees from accepting gifts above a certain dollar value. A personal note of thanks, a $5 gift card to the coffee hut, or some tchotchke is sufficient.

When you remember those who helped you succeed throughout the year, they'll continue to do so throughout the new year and beyond.