Tuesday, December 30, 2008

Is Price the Only Game to Play?

In earlier posts about Black Friday I made the claim that only half of all shoppers are driven purely by price. Some of you might disagree. But look at this study done this past fall.

According to the National Retail Federation's 2008 Holiday Consumer Intentions and Actions Survey, 40 percent of shoppers say that sales or promotions is the largest factor when determining where to shop. Another 12.6 stated that everyday low prices were most important.

One story I read quoting these statistics concluded that price was the most important factor in where people shop. Of course, Winston Churchill once said that, "the only statistics you can trust are the ones you falsified yourself."

Let's look at the numbers more closely...

If 40% said sales and promotions were most important, then 60% did not believe sales and promotions to be most important. Three out of five people were not choosing where to shop based on sales and promotions! Selection, quality, service and location were higher up on those customers' lists.

Remember... Transactional Customers look for sales, Relational Customers look for trust. Aren't quality, service and selection trust factors? Of course they are. And the National Retail Federation has the statistics to prove that there are as many Relational Customers as Transactional Customers.

Just take the 40% wanting sales plus the 12.6% looking for low price and the split is 52.6% Transactional versus 47.4% Relational. In politics that's a landslide. In business that's a virtual split.

Yet, all the big retailers were going after the 52.6%, leaving a huge portion of shoppers not getting their needs met. It's no wonder so many retailers are struggling. Here's a tip. Go after the forgotten 47.4% Meet their needs and watch your business grow.

That's what we do.

-Phil

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