Friday, December 30, 2011

Do You Want Fries With That?

McDonald's gave us the best punchline for the upsell.

"Do you want fries with that?"

But that one little phrase made them a lot of money because it increased the average ticket, the average dollars per transaction.

It makes intuitive sense that if every customer spends just a little bit more your store will be more profitable. That is why you want to track your Average Ticket.

In the last post we counted the number of transactions you had for the year. Simply divide your gross sales by this number and you have the Average Ticket. Now compare that number to last year's number. Did it go up or go down?

Simple knowledge of the world tells you that it should go up just to keep pace with inflation. Your prices went up a little so even if you sold the same amount of items to the same amount of people, that number should go up.

But what if it went down?

There are three big reasons why your average ticket might go down.


  1. You do not have the right merchandise.

  2. Your staff is not selling the merchandise you have.

  3. Your customers are in a hurry to leave.
Let's explore those.


THE RIGHT MERCHANDISE

If you do not have the merchandise customers want to buy, then they are not going to buy from you. That is simple enough. But one easily fixed mistake some retailers make is not having the necessary accessories to complete each sale.

This is something I preach to my staff constantly. Make sure that a customer making a purchase has everything she needs to use that product the moment she gets home. Is it an electronic toy that needs batteries? How about a model that needs paints... and glue... and paintbrushes... and thinner... and a display case?

If you do not sell all those accessories then you are leaving money on the table by not having the right merchandise.


YOUR STAFF IS NOT SELLING

At least the McDonald's clerks are offering more products with their fries statement. Are your sales staff doing the same? There are plenty of less offensive ways to do that. The first is to do what we just discussed - complete the sale. Make sure the customer does not have to make a separate trip to get everything she needs because if she does, it won't be to your store (and neither will the next trip she makes to shop).

You also want to keep asking the customer if there is more you can do. Keep asking until the customer says no. Here are some simple questions any sales person should be comfortable using:


  • Who else is on your list today? (thanks, Bob)

  • Is there anything else I can show you?

  • What else can I do for you today?
If you are not asking, you are not selling. Anyone can point a customer to the product for which they asked. The better sales people lead them to the product, asking questions as they walk. The best sales people then offer two or three best options to fit the needs of the customer. And then those sales people show them matching, coordinating and accessory products. And then they ask for more.

It costs way too much to acquire a customer to let them walk out without being given every opportunity to buy. They will let you know when they are done shopping. Always let the customer end the shopping, never you.


YOUR CUSTOMERS JUST WANT TO LEAVE

It is a simple axiom of retail. The more time a customer spends in the store, the more money she will spend, too. So you need to encourage your customers to stay longer. You do that by making them feel more comfortable. Offer to take her coat. Offer her a beverage. Engage her in conversation. Get her to talk about herself. if she has kids with her, make sure their needs are met.

The right music, the right lighting, the right temperature are also important. If it is too cold your customers will not stay. Sure, you might save a penny or two in heating costs, but you'll lose all those pennies in customers who did not stay. Likewise, too hot makes customers just as anxious to leave. They may not even know why they want to leave. But they will leave. If you made a change in your thermostat to save some money and your Average Ticket went down, you might want to change it back.

Odors are also powerful drivers. Heavily perfumed areas can be as much a turnoff as bad odors. Don't mask the bad smells with perfumes, find the source and eliminate those odors. If you must use a scent, food scents are better than florals. They tend to be more comforting.

The layout of your store also affects the length of stay. Walk in your front door and see what captures your attention. Where does your eye go? Is there anything to attract a customer deeper into the store? The deeper they go the longer they stay.

Also look at your traffic patterns. Are the aisles wide enough to handle the flow? Do the aisles make sense? Is it obvious where to go? Confused people will not shop long. Do not confuse your customers.


Number of Transactions is something over which you only have partial control. Average Ticket is completely up to you. Whether it is going up, down or staying flat is a quick indicator of how well you are performing in the store. Raise the performance and you'll be punching a higher ticket.

-Phil Wrzesinski
http://www.philsforum.com/

PS For more on merchandising, download my free eBook Merchandising Made Easy. To raise the bar of Customer Service so high your customers are singing your praises to everyone they know, download my free eBook Customer Service: From Weak to WOW! The books are free, but the information in them is priceless. (Why would I give away such information for free? I want you to succeed. When one independent retailer improves, we all improve.)

Thursday, December 29, 2011

How Many Customers Does it Take to Change a Retailer?

Two numbers every retailer should track are Number of Transactions and Average $ per Transaction. (Yes, if you know the first number then you can calculate the second).

Number of transactions is simply how many times you rang up someone on your register. Did that number go up or down? If it went up, life is probably pretty good. You can skip the rest of this post and wait for the next one talking about the Average Ticket.

If it went down, read on...

There are two reasons for your number of transactions to go down:


  1. You didn't get enough traffic through the doors

  2. You didn't convert that traffic into purchases

YOU DIDN'T GET ENOUGH TRAFFIC

There are a number of reasons why you might not have as many people coming through the door. Here are the most obvious ones...

The market shrank. The population in your area decreased or at least the population that shops your category decreased. We have seen a decline in births in county for four straight years. Since we sell baby products it is not surprising that the number of transactions has declined. Fewer babies being born means fewer people buying cribs.

You can get population information from your local government. They track things like foreclosures, house sales, rental property availability, unemployment claims and taxes to determine what is happening with the local population.

In a similar vein, did your market dramatically change? Was there road construction outside your door? Was there a major shopping center constructed somewhere else (even if they didn't have a competing store)? Was there a fundamental shift in traffic patterns? all of these could have an effect on the amount of traffic coming through your doors.

The competition increased. Did a new competitor come to town? Did a current competitor step up their game? Although I often tell retailers to focus more on what you can do than on what your competitors are doing, you still have to watch them. In 2010 Toys R Us opened a pop-up temporary store in our market. It only took a small piece of the pie, but in our shrinking market every crumb counts.

Your advertising did not work. Did you cut back on your marketing efforts? Did you change your message? Did you forget to change your message? If you cut back or made major changes to your message you may have caused the drop in traffic. (Not sure what your message should be? Download this free eBook "Understanding Your Brand")


YOU DIDN'T CONVERT TRAFFIC INTO TRANSACTIONS

Two main reasons why this happens:

You didn't have the right products. When there is a hot product in your market and you don't have it, you'll get plenty of lookers, but no buyers. Nothing cures more retail ills than having the product everyone wants. Did you have a bunch of calls or requests for a particular item? I know one store that has a daily worksheet that all the staff fill out including what requests were made to which they had to say NO. From that worksheet she often finds new products and categories to carry. Her rationale? Customers come in thinking she should have it. Why disagree with the customer?

Your sales staff wasn't up to par. How much did you commit to training? How much did you work with the staff on what great customer service looks like? How much did you leave to a manager to do? Does the manager care at the same level as you care? Not only does a poorly trained sales staff cost you in conversions, it costs you in average ticket (which we'll explore in the next post), and it costs you in repeat business (traffic coming through the door).

More than likely, if your transactions are down it is a combination of many of these factors. The two you can control the most are your Advertising and your Sales Staff Training. Get working on those right away. In fact, even if you had a good year, you can still raise the bar in both of those categories.

And that will make it a Happy New Year for your business.

-Phil Wrzesinski
www.PhilsForum.com

PS One other thing that could happen... Your POS could change the way it tracks transactions. Our new release of our POS software did just that. Took us two months to figure out why our number of transactions spiked all of the sudden. Got that figured out so now we're comparing apples to apples again.

Tuesday, December 20, 2011

You ARE Making a Difference

Sometimes it is good to take your eye off the big picture for a moment and focus on those little things you do that are so wonderful.

This is a good time of year to do that.

The customer in front of you is one of those moments. She is stressed. The holidays can do that to a person. She has a million things on her mind. Give her your full attention. Let her know you understand, you care and you can help.

Solve her problem.

And be thankful for that moment to make her life just a little easier and a little less stressful.

Her family will be thankful, too. They may not know to thank YOU for that. But they will be thankful nonetheless. And you will know it. And that is all that counts. Enjoy all those little moments. There will be time to look at the big picture soon enough.

Merry Christmas my friends! Thanks for all you do.

-Phil Wrzesinski
www.PhilsForum.com

PS Here is a video of a song I wrote when my first son was born called The Greatest Gift

Thursday, December 15, 2011

Be the "Hot" in Your Category

Seth Godin pointed out something the toy industry has known for a few years...

There is no singular HOT toy to drive in the traffic.

Hasn't really been one since the first Tickle Me Elmo back in 1997. Oh, sure, there have been some hard-to-find items, a few crazes here and there, but nothing like the way people went bonkers over that furry red guy that vibrated and laughed. They stood in long lines, got into fist-fights, paid hundreds, even thousands, of dollars to get one.

Those days are over. And that is good news for you.

The traffic still craves direction and guidance. The traffic still wants to know where to go and what to buy. The traffic is still looking for something Hot.

So instead of the Hot item, be the Hot store.

You do this by being innovative.

Are you in a downtown location with limited parking? Offer free valet service. Are you in a winter weather environment? Offer coat check and coffee or hot cocoa. Are you in a category that requires special knowledge? Offer classes and tutorials. Do you get a lot of out-of-town traffic? Offer local maps to interesting sites, fabulous restaurants and other great shops in your area.

Rotate your merchandise regularly. Make fun and surprising displays that get people to talk about you and want to see what you are doing.

You do this by being iconic.

You know that every woman in the room pays extra attention to the package wrapped in the turquoise blue. Tiffany owns that color. What can you own?

You do this by being fun.

Smiling and saying hello makes people happy. Genuinely having fun gets those happy people to talk about you. You could play guessing games. You could have quick polls and sign-in books. You could run contests. You could have giveaways. Just make sure you hire fun people.

Regardless of what the media tries to promote, there is no hot toy anymore. Only hot stores. Be one of them.

-Phil Wrzesinski
www.PhilsForum.com

PS It is no longer about Customer Service. It is all about Customer Experience. The better the experience, the more people will want to have that experience.

Wednesday, December 14, 2011

Be Good for Goodness Sake

(Yes, Christmas music has taken over my brain...)

Just a quick reminder that during this busy season it is easy to dismiss problem customers. It is easy to not give your full attention to a needy customer. It is easy to blow off that demanding customer.

You are already plenty busy enough. What difference does it make if you do not give everyone a great experience? Your numbers are good.

This year.

But you are also planting the seed for next year.

Retailers are farmers. We plant seeds, water and fertilize all year long so we can reap the harvest at Christmas. But unlike the real farmers who plant in the spring and harvest in the fall, we plant during the harvest.

We plant the seeds for next year in how we treat the customers this year. Treat them well and they will become perennials. Treat them poorly and your harvest next year will suffer (and you won't know why).

This is your busiest time of year, the time when you see the most people. Do whatever you have to do to make sure every single one of them gets the best possible treatment. Next year's harvest is counting on it.

-Phil Wrzesinski
www.PhilsForum.com

PS If you want some good ideas on how to fertilize that crop, download the FREE eBook Customer Service: From Weak to WOW! The one card you can consistently play and always trump your competition is the Customer Experience card.

Sunday, December 11, 2011

Someone Is Lying to Me

My favorite gas station just changed all their pumps to Pre-Pay.

The clerk told me it was a corporate decision. She had no choice in the matter. She also told me that she had been getting flak all day long for it. She did not like it. Neither did the customers.

But somebody at the home office thinks that pissing off customers and upsetting the employees is a necessary way to do business.

The part I really do not understand is that every time the general public complains about price-fixing in gasoline, we are told by these gas stations that they do not make any money on the gas, only the soda and snacks they sell inside the store.

Yet, they just gave me an excuse to not have to set foot in the store again. I just swipe my card at the pump, get my gas, and go. Probably will be good for my diet. Probably will not be good for their bottom line.

So either they are having a rash of drive-aways or they really are making money on the gas. I think we would have heard about the former. Somebody is lying to me.

But it begs the question we all should ask about our business. Where do we make the money? And are we setting up barriers to our customers that keep them from giving us that money?

I think that second question is the driving force behind this corporate decision.

-Phil Wrzesinski
www.PhilsForum.com

PS Yes, you should put your best, most profitable merchandise in the best location in the store. Start there and build everything else around that focal point. That is the number one rule to merchandising. For more rules and thoughts on merchandising, download my FREE eBook Merchandising Made Easy.

Tuesday, December 6, 2011

Two Ways to Look at the Amazon Deal

Amazon announced it is offering up to a $5 incentive for someone to walk out of a brick & mortar retailer this Saturday and shop online.

Facebook and blogs are lighting up on this topic.

Retailers are obviously outraged by Amazon's blatant attempt to use their stores as free showrooms.

Before you get your panties in a bind, however, here are two different ways to look at this...


IT DOESN'T REALLY MATTER

Statistics show that about 35% of the US population uses a smart phone. And only a quarter of those people use it for primary browsing purposes.

So now we are down to only 8.75% of the population are likely to use their mobile phone for this purpose. Now figure out how many of those have that Amazon price check app. Let's be generous and say that 80% of those people have the app. Now we are down to 7% of the population.

It has been shown before that only about half the population are price shoppers, which gets us down to 3.5%. Then figure out your share of the market. 5%? 10%?

Assuming you are rocking it in your market and have 10% market share, then you can expect about 0.35% of your customers to be using such an app.

But wait, you say. Many of your customers are early adopters. They make up a higher percentage of the smart phone owners. Yes, but at the same time, a larger percentage of your customers are not price shoppers. So it is a wash.

Bottom line? Do the math and you will see that about 1 out of every 225 customers in your store this Saturday will take advantage of this offer.


KILL 'EM WITH KINDNESS

And when that customer does pull out her phone and zap an item, you get a unique opportunity. You get the chance to show her how wonderful and helpful your store is.

As long as you approach it the right way.

She is zapping for information. Not just price but also product specs and reviews. You can win her over by also being a knowledgeable font of information.

Help her understand if the item is right for her needs by asking important questions like, "What are you hoping this item will do for you? What problem are you trying to solve?"

Embrace the information she finds online. Ask her to share what she reads. Quite often you will find that the information is either faulty or useless. Then you have the opportunity to engage with her and steer her straight.

It is all about winning the customer's trust. You do that by being friendly, honest and open. You do that by acknowledging the downside to a product. You do that by showing the upside, too, the benefits of shopping with you and keeping your purchases local. You do that by understanding the customer is a person with needs and fears just like you. Find out what is her fear and you know how to build her trust.

Heck, you don't need to wait for them to use a smart phone app before you do all that.

Just saying...

-Phil Wrzesinski
www.PhilsForum.com

PS If you feel the need, you can always play the Amazon-doesn't-care-about-the-local-community card. Just ask your customers how much Amazon contributed to the fire and police departments in your town. But the best approach is to not worry at all. Just do what you do so well that your customers want to support you.

Saturday, December 3, 2011

Statistics Falsified for Your Benefit

I love December!

The statistical anomalies are so much fun.

Most businesses look at their sales in comparison to last year. And most businesses compare Thursdays to Thursdays, Fridays to Fridays, etc. This comparison works great right up until December 1st.

As you know, you only get 24 days in December prior to Christmas. Those 24 days are extremely important. So you might be tempted to compare December 1st to December 1st for this month to see how you are doing instead of Thursday to Thursday.

Just to show you how misleading those numbers might be...

If I compare day to day for Thursday 12/1 and Friday 12/2 to the correlating Thursday & Friday from last year (12/2/10 and 12/3/10), my sales are down 21%.

But if I compare those same days this year to 12/1 and 12/2 from last year, we are up 11%.

Being an optimist, I'm going with up. Two days down, twenty-two to go.

Keep smiling and keep making memories. Those are the numbers that really count.

-Phil Wrzesinski
www.PhilsForum.com

PS No, there really isn't a lesson in this post, unless you want to take away from it that the most important thing is to keep a positive spin on everything this time of year. There will be time to evaluate how you really did when the season is over.

Friday, December 2, 2011

Should You Still be Ordering?

My dad always said...

"There are 24 days in December before Christmas EVERY year. Make the most of those days because they are the days that count the most."

With that said, you only have a couple days left to check your inventory to make sure you have what you need to make the most of those days.

To borrow another cliche, strike while the iron is hot.

As much as you might be needed on the sales floor this weekend, take some time to check your inventory for fast movers and hot products. Make a list of the top ten items you are seeing fly off the shelf. Prioritize that list and start emailing/calling your reps right away. Get those hot movers on order and back on your shelves as soon as possible.

Don't worry about making great terms, worry about getting the products that will make your customers smile. That is your goal this time of year.

Should you still be ordering? Yes! Get the hot stuff in now. Don't worry about the rest.

-Phil Wrzesinski
www.PhilsForum.com

PS The goal all year long should be to make your customers smile, but this time of year, with the increase in customers, it becomes twice as critical. Make your customers smile now and you will smile in January.