Sunday, April 29, 2012

The Goldilocks Effect

That porridge was too hot.  That porridge was too cold.  But this porridge is just right.

And so goes the fairy tale we all know as Goldilocks.

And so goes the dilemma all retailers face.  How do we have a "just right" product for all the Goldilocks who walk through our doors?  Do we go deep? Or do we go wide?  Do we stick to the tried and true or do we jump on the cutting edge?

The answer depends on the type of Goldilocks who enter your door.

Are you a tourist town with plenty of one-time visitors?  Stock it wide and shallow.  Cover a whole bunch of ground with a wide variety of product, but not deep on anything.  That way you can appeal to the wide variety of tastes.  Plus, you'll generate word-of-mouth as people marvel at your amazing selection.

Are you selling a commodity that brings people back in the store time and time again?  Then go deep on the top two or three selling items in each category.  Make sure you always have the best sellers in stock.  Never run out.  You'll win the reliability game and make it up in volume.

Are you selling uniqueness to the same base of people?  Rotate your stock.  Keep bringing in the new and exciting.  Move things around regularly.  Go for the seasonal, the fads (that you like), and the out-on-the-edge products.  People will come back time and again to see what is new.

Are you selling quality?  Stock a good, better, best option so you have something for those who want Mercedes on a Mercedes budget and those who want Mercedes on a VW budget.  The dress sellers know that if you want to sell a $500 dress you better show an $800 dress.  But always show the filet mignon first.

There are a lot of Goldilocks out there.  The key is knowing which Goldilocks are coming through your door.  Figure that out and your products will always be "just right".

-Phil Wrzesinski
www.PhilsForum.com

PS  Yes, it does make sense to try to cater to only one set of Goldilocks.  You cannot be everything to everyone.  Even Wal-Mart knows who to leave out.

PPS  No matter how you stock it, you still need your inventory to make you money.  For some great tips and two critical formulas you need to be calculating, download my FREE eBook - Inventory Management.


Friday, April 27, 2012

An Expensive But Effective Form of Advertising

I was doing my presentation Customer Service: From Weak to WOW! yesterday, talking about how to deal with unhappy customers.  Someone brought up the question...

"But what if there is a problem with the product and the manufacturer won't back you up?"

I answered that I have taken a loss on products a number of times to make the customer happy. The only difference is that I did not look at it as a loss of money.  I looked at it as an opportunity to be her hero.  I looked at is an opportunity to be helpful, to make her smile, to turn her from unhappy into evangelical.

Do you know how much it costs to turn one customer from unhappy into evangelical?

Better to ask, how much more will it cost if you don't?

The losses from that transaction are not losses. They are advertising expenses.  Think of it that way and you will never hesitate in doing the right thing.

-Phil Wrzesinski
www.PhilsForum.com

PS Yes, I have then dropped a vendor for refusing to back me up.  But that is a whole different story.

Wednesday, April 25, 2012

That Kind of Customer

Don't you just hate the customer who walks in, looks around, and then asks, "What kind of deal can you make me?"  No deal, no special, they aren't buying.  Not only that, they are walking out grumbling as though you missed the boat. Everyone else has a special. Why not you?

Let me ask you this...

Would you rather have a customer who comes in once a month and spends $50 on regular priced merchandise or a customer who comes in twice a year to buy $315 worth of merchandise for $300?

We hate that second customer, don't we?  Can't stand seeing them walk through the door.

Yet we are all guilty of being that kind of customer.

I'm attending a conference and trade show for the juvenile products industry this week.  In a couple days I will walk the trade show floor asking every vendor what kind of incentive they will give me to place an order.  5% off?  Free freight?  Extended dating?  All of the above? Go big or go home.

And the vendors look at me the same way I look at my customers who do that.

Here is the funny thing...  Unless the deal is really big, writing two orders a year is the surest way to put you in the poor house. It's bad for cash flow.  It's bad for product mix.  It's bad for flexibility for your store.  When you place orders that big, you tie up a lot of money, a lot of showroom, and a lot of warehouse space under the hope you can sell it.

But what if you don't?

Your store will actually have more cash, more flexibility, and more profit if you made six or more smaller orders at full price than two big ones at minimal discounts.  First, you would have more flexibility to always be in stock if one item starts selling fast.  Second, you would have less dogs to markdown when an item dies on the vine.  Third, you would have the cash in hand to pay for the order before the terms came due.

And finally, you would become the kind of customer your vendor wants to do business with.

Be that kind of customer.  It will improve your relationships with your vendors and bottom line.

-Phil Wrzesinski
www.PhilsForum.com

PS  But still ask for those discounts when you do go to the trade shows.  Just don't stretch your order to get them. More often than not you'll lose all the discounts by buying stuff you don't want or can't sell. Better yet, ask for smaller minimums so you can make more small purchases throughout the year instead of just waiting for the next trade show.  For more on how to manage your cash flow and inventory download my FREE eBook Inventory Management

Friday, April 20, 2012

How Good are Your Sales Reps?

Maybe I am biased.  My sales reps are for the most part pretty good.  Maybe it is because I am a big account in this territory.  Maybe it is because we just have good reps in our area.  Maybe I am just lucky.  But I get frustrated when I hear other retailers complaining about their reps.

Sure, there are some bad reps in my industry, probably in your industry, too.  But I believe they are only bad because you have not trained them well.

What?

Yes, it is your job to train your sales reps to do exactly what you want them to do.  Do you want them to straighten the department?  Do an inventory for you?  Make suggestions of best sellers?  Steer you away from duds?  Communicate quickly and efficiently?  Accurately place orders and follow up on them?  Handle problems with shipments, problems with defects, problems with billing errors?

Let me ask you.  Do you...

Explain in detail your expectations of your reps?  Reply to every one of their emails even if just to say, "Thanks, I got it."?  Show them how you want inventory or merchandising to be done?  Explain your product philosophy in detail so that they know what products will and won't pass your scrutiny?  Keep them informed of how their products are (or are not) selling?  Give them details of what you expect once an order is placed (confirmation of order? confirmation of shipping?)?  Keep them in the loop when there are problems by cc'ing them all emails to the company?  Make sure they get commissions on your show order when they stop in but you would rather drop off the order at the booth to get the special?

I work with rep groups, independent reps, and in-house reps.  For the most part I know our reps well.  We talk about family and life sometimes more than we talk about business.  And even though they may get paid by the vendors, I consider them to be employees of my store.  And since I am responsible for training my sales staff to do their job the way I want it done, I am also responsible for training my sales reps to do their job the way I want it done.

If you are not getting the kind of sales representation you want, you have every right responsibility to train your reps to do it the right way, your way.  After all, you are the customer.

-Phil Wrzesinski
www.PhilsForum.com

PS  I challenge you to re-read this blog, only replace "sales reps" with your sales staff and consider "you" to be your customers.  Food for thought...  Are you doing things the way your customers want it done?

Tuesday, April 17, 2012

Back it Up

I'm writing this from my laptop - not because I am traveling but because this morning when I arrived at work my desktop computer would not start.

Yeah, the desktop was old.  Was running Windows XP.  Was running Microsoft Office 2003.  I think it died of old age. This time I will finally replace it.  I'm just hoping they can recover the hard drive.  Not because I failed to back it up. I do that regularly.  Just because I don't want to go through the hassle of reloading all the programs.

But it got me thinking... What changes have I made since the last backup? (Saturday)

The only major one is the schedule for the staff I finished yesterday.  If I have to, it won't take long to recreate from a hard copy.  Plus, I tweaked a couple of my presentations - and I can tweak them again easily enough.

What changes have you made since the last time you backed up your computer?  How much work will it be to recreate those changes if your computer dies mysteriously?

Back it up.

-Phil Wrzesinski
www.PhilsForum.com

PS The worst thing about the computer dying is that I usually become a basket case waiting to get my computer back.  Thank God for laptops and wi-fi.  Maybe I can finally clean up my office today, too.

Saturday, April 14, 2012

What Do You Sell?

I don't think I know any toy store owners who didn't like the movie Mr. Magorium's Wonder Emporium starring Dustin Hoffman and Natalie Portman.  It immediately made my top 5 list of all-time favorite movies.

For me, the beauty was in the name of his store which described what he sold with ultimate clarity.  Mr. Magorium did not sell toys.  He sold Wonder.  Pure and simple, unadultered Wonder.

I'm pretty sure that after a couple hundred years in business, Mr. Magorium knew a thing or two about branding, too.

I am not in the business of selling toys.  I sell Nostalgia, Education, Assistance and Smiles.
I am not in the business of selling baby products.  I sell Nostalgia, Education, Assistance and Smiles.

And when I recognize that, it makes it easier for me to choose what products to fill the store.  Does the product fulfill my goal of selling Nostalgia, Education, Assistance and Smiles?  If so, on the shelf it will go.

The easiest way to keep from being boxed into a corner is to change your thinking from what products you sell to what ideals you sell.  Products are fickle and have limited shelf life.  But ideals and values are lasting and unchanging.  More importantly, ideals and values attract customers who share those ideals and values, customers who will become loyal followers and evangelists for your business because you speak to their heart.

That is the true essence of branding and the true brilliance behind Mr. Magorium's WONDER Emporium.

He sells Wonder.  What do you sell?

-Phil Wrzesinski
www.PhilsForum.com

PS  For more about branding and core values, download my FREE eBook Understanding Your Brand and the accompanying Worksheets.  It may be the most worthwhile exercise you do for your business.

Friday, April 13, 2012

Be Proud of Your Pricing

How much?


Well... before I tell you that, let me tell you all that you get.

We've all had that moment.  The customer wants to get to the bottom line before you've had a chance to talk up the product.  You hesitate because you are afraid the customer will balk at the price.  You know it is higher than the competitors, but with good reasons.  You think, if only you could get those reasons out first...

But if you think that way, you are thinking wrong.  

Roy H. Williams taught this to me first.  Jeff Sexton wrote a great blog using Roy's explanation.  Here is my take.

If someone asks you the price, be proud of your price.  Take a deep breath and answer with... the price.  Yes, tell them price right up front.  The first word out of your mouth should be a number.

Then immediately tell them all they will get for that price.

How much?

$259.99 and that includes the the cup holders and the security bar so that you have options for your older child to be able to climb in and out on her own.  It also includes these self-leveling wheels that are rubber so that it will be quieter while you walk, allowing your baby to sleep better and you not to be so annoyed at the clacking racket the plastic wheels make.  It also has this simple one-hand folding technique so that if you have a toddler in one arm you can still fold it and slide it into the trunk with your other arm.  It also includes...

Do you see how the price appears to go down the more benefits you list after saying the price?  When you start with the price and then list the benefits (all the stuff following the words "so that"), the customer thinks wow, what a bargain.  Reverse the order - tell the benefits first - and with every benefit you list the customer expects the price to go up.

Same price, same benefits, different perceptions.  Say the price first, then make it go down perceptually by listing all the benefits immediately after.  Plus, when you say the price first, you are showing that you have pride in the price, which instills confidence in your customer.  And that is always a good thing.

-Phil Wrzesinski
www.PhilsForum.com

PS  For more on how perception affects pricing, check out my eBook Pricing for Profit (free download).

Wednesday, April 11, 2012

Wonder Branding Reinvented

There is a blog in my blog roll that you regulars may have noticed did not have an update for the last several months - until two days ago.

Michele Miller took a break to reinvent herself - something I think all businesses need to do from time to time to make sure they are fresh and current and relevant.  Her blog - Wonder Branding - just went through a complete overhaul.  Her new look and her new direction are an expansion from just looking at the trends of marketing to women to helping all manner of Main Street businesses market themselves better to everyone.

She has teamed up with Tom Wanek (another blogger I follow who wrote one of my favorite books - Currencies That Buy Credibility) to re-launch the blog and their business.  I think you will like what you read and see.


(I would normally post a link directly in this post, but I want to encourage you to check out the blog roll on the right.  These are the blogs I read regularly.  You should, too.  Wonder Branding is the last one on the list, but certainly not the least.  Check it out.)

-Phil Wrzesinski
www.PhilsForum.com

PS  I follow these blogs for three reasons.  First, they are well-written.  I always appreciate clearly written thoughts and ideas, and hope I accomplish the same here.  Second, they have timely and useful advice that I know I can use, and you can, too.  Third, I trust them.  These writers are walking the walk and have the experience and expertise behind them to say what they say.  I don't always agree, only because I have my own headstrong ways.  But I always read.  Who are you following that I should consider adding to this list?

Friday, April 6, 2012

Are People Really That Easily Fooled?

This question comes up every time I give my talk about Pricing for Profit.

It always revolves around the concept of using 99 cents at the end of the price.  Marking things $19.99 instead of $20.00.  Most everyone sitting in the presentation automatically assumes that everyone knows both are virtually the same price.  People are not that easily fooled.

So next time I give this presentation I am going to ask them "What is the price of gas?"

Then I will show them this picture...



Yes, we are that easily fooled.  You thought $3.95 just like I did.

Don't fight it.  Use it.  The smart retailers already are (and, no, JC Penney is not one of them).

-Phil Wrzesinski
www.PhilsForum.com

PS  Apparently pricing is a hot topic for retailers.  Bob Phibbs and Rick Segal, two of the top retail consultants around are also talking about price.  They both are telling you why.  I'm telling you how.

Tuesday, April 3, 2012

Plan for the Crowd

We went out to eat last Friday at one of our regular eateries while on vacation.  Things had changed.  The spot where we usually sat was now occupied by two empty pool tables.  Other seating areas had been replaced with over-stuffed chairs. The capacity sign from the county said 139 people but we only counted chairs for 65 and not very many tables. Even though the place was only half full, they barely had enough tables of the right height and shape to put two together for the six of us.  They almost sent us away at 5:45pm. The pre-wedding party that arrived moments later had no choice but to sit out on the patio with the bugs.

We went out to eat on a Monday night at a small, off-the-beaten-path dive known for oysters and fried seafood.  We were a group of eight. Figured we would be largest group in the restaurant.  We tied for third largest (fourth if you count the baby in the car seat).  The waitress was running ragged.  Two of our party did not get served until well after the rest of us had decided to eat before our food went cold.  The food was great but the poor servers and cooks were struggling to keep up with the crowds, even though the two larger groups were from reservations.

Both of these restaurants left me wondering what might have been.  Although I have frequented these places multiple times in my years visiting this area, I am sure many of the patrons were there for the first, and possibly last, time.  Those same people are telling their friends,
"Don't go there, they don't have any dinner seating.  I think it is more of a bar place."
"Don't go there. The food is okay, but the service sucks."

Yet the solutions are simple.  The first place needed more tables that could handle groups of six (not an uncommon number at a beach resort).  There was plenty of room for more tables and chairs.  The second place just needed to call in another server.  The two large groups were reservations.  They knew they had a crowd coming.

Sure, both of those things might cost some money up front.  But remember, your business tomorrow is directly related to how well you serve customers today.  Plan for success by making sure you are ready for the crowds and you will never send customers away unsatisfied.  Think of the message you send your customers when you can handle the really busy moments.  They will walk away thinking, "Gee, they handled the crowd well.  The store must have expected to be that busy."  

That is a pretty good message to send out into the world.

-Phil Wrzesinski
www.PhilsForum.com

PS Crowds are your moments to shine.  You have the most potential people available to give you word of mouth advertising.  What would you like them to say?