Friday, March 29, 2013

The Squeegee is Broken

I stopped to get gas while on the road today.  The back window of our van gets dirty quickly and the small wiper only creates a partial arc of viewing.

I grabbed the squeegee and went to work. First impressions, I knew I was in trouble.  You know that fabric around the end of the sponge, the meshy thing that is supposed to help scrub the bugs off? It was flailing in the breeze and literally hanging by a thread.  No worries, though. No bugs on the back windshield, only grime.

But then I used the other end, the scraper that is supposed to pull the dirty liquid off and leave a clean, streak-free shine behind. Yet, this poor squeegee was so worn and tired it had seen its better days in the previous decade.

I looked at the clerks hiding behind the plexiglass and thought to myself, "Really? You can't afford a couple new squeegees?"

It made me wonder what else they couldn't afford. Toilet paper in the bathroom? To rotate their food stock? Purel for their employee's dirty hands?

Yeah, major turnoff. I hope I don't have to stop there again.

Sometimes we overlook the smallest details and forget that they can send the biggest messages.

Do you have any broken squeegees to fix?

-Phil Wrzesinski

PS There is a gas station in northern Michigan, in the city of Petosky. I've been there three times while on ski trips with the family. I know they would never have a broken squeegee. Ever.

Wednesday, March 27, 2013

A Full Day of Customer Service Training

In a couple of weeks I'm going to Manistee, MI, a beautiful small town on Lake Michigan with an active Main Street DDA program and some lovely shops.

They've hired me to spend a few days working with them on Customer Service. When I get to town, I'm going to visit a few stores and ask them about their hopes and dreams, ask them about their challenges, ask them how they define Customer Service.

The following day I'm going to present them all of this...

This session will be a workshop where each participant will be led through a process of uncovering the 3-4 Core Values that drive both them and their business.  We will use three different techniques for helping each participant create his or her own Character Diamond.  Depending on time, we will have each person share his/her diamond with the entire class.  We will at least have a few people share so that others can learn from the examples.

Purpose: To create a framework around which every element of Shareworthy Customer Service (SCS) is derived. (thanks, Tim Miles, for the word Shareworthy).

This session will illustrate the different ways in which a business can generate Word of Mouth – including Over-the-Top Design, Over-the-Top Service, and Over-the-Top Generosity, Secrets and Surprise.  Participants will be given a number of examples of each, then asked to come up with one form of Generosity/Design and one method of Sharing Secrets that they can easily incorporate into their business.

Purpose: To show what it takes to get customers to actually Share their experiences.

This session will explore a variety of interactions a customer has with a typical (retail) business and talk through the various levels of Customer Service from Weak to WOW

Purpose: To show what it really means to put the customer first, how to delight her, and how to make the experience memorable and share-worthy

This session will teach the participants how to plan a training program for teaching their staff everything they are learning today.  The seminar will show them the basics for planning meetings and trainings that the staff will look forward to attending, how to make the information stick, how to prep the staff for meetings/trainings, and how to follow-up after the meeting/training is over.

Purpose: It is one thing to learn it yourself.  It is completely different to be able to teach it to others.  Since most participants will have a staff, this session is to show them how to create staff meetings and trainings that will help them teach this to their frontline workers.

This session will be a hands-on workshop where the participants will split into teams and be given different elements of Customer Service around which they will plan a meeting/training (based on the method learned in the previous session)

Purpose: To put into practice what they have learned both on creating a staff training session and on SCS.  To create camaraderie and bonding.  To have fun.

This session will show the participants how the steps a potter uses to create a work of art can be applied to the hiring and training process, turning your staff into a masterpiece.  The session will include creating a non-teachable traits list for a variety of positions in your company, including some interview questions to help draw out those traits.

Purpose: To illustrate the point that all the training in the world won’t help if you don’t have the right people in place.  To show how to consistently find the right people.  To give the participants a blueprint they can follow for hiring and training.

After creating their trainings, each group will share their plan with the rest.  After presentations, the plans will be copied/shared for everyone to use with their own teams.

Purpose: To help each participant have a developed plan for teaching SCS to their staff.  To make sure we have taught our points well.  To give a review of everything discussed throughout the day.

Results:  At the end of the day each participant will have…
  • Created a Character Diamond
  • Learned how to generate Word of Mouth
  • Thought up at least two ways to generate Word of Mouth with their business
  • Learned a new definition and way of looking at Customer Service
  • Learned a method for planning Staff Meetings/Trainings That Everyone Wants to Attend
  • Created a training session for one particular element of SCS
  • Received a complete portfolio of training sessions for all elements of SCS
  • Learned a method for consistently hiring and training the right people to implement higher levels of SCS
Yeah, it is going to be a fun, packed day of learning. And when we're done, Manistee will never be the same.

Would your town be interested in a program like this?

-Phil Wrzesinski

PS If you're anywhere near the west side of northern, lower peninsula Michigan and want to attend, contact Travis Alden. If they have space available, he might just let you in.

Travis Alden
Director, Manistee Main Street
Downtown Development Authority

Tuesday, March 26, 2013

Why Your Ads Go Viral

I just watched an interesting TEDTalk about Why Videos Go Viral from Kevin Allocca, a YouTube Trendwatcher (yes, he watches YouTube videos as a profession).

He explains there are three things that make a video go viral.

  • Tastemakers
  • Participation
  • Unexpectedness

The same three things are true of your advertisements.


If someone of importance takes note of your video - a "tastemaker" whom people follow - then others will take note. In advertising, you have to speak to the people who influence the decision.

McDonald's has made a mint by advertising to the backseat influencers. A clown and funny characters and toys have been so effective at reaching this audience that people concerned about our children's health have pushed to ban the golden arches from putting toys in their Happy Meals.

We have a local bra store that advertises on the local sports talk show. Yes, she advertises bras and lingerie on a radio show heavily skewed towards men.  Her message? "Guy, are you tired of hearing your wife complain about her bra not fitting? Send her to Bras That Fit."

They are speaking to the influencers, the tastemakers.

Your ads should be targeted to the tastemakers, the people who have the influence to send customers your way. Sometimes that is the customer herself, but sometimes it is someone within her circle that has the power to influence her. Let me ask you what would be more effective? A radio ad to a woman about bras, or her husband saying, "Honey, you've been complaining so much about your bras. Why don't you try out that store...?"


What do the Harlem Shake, NYAN Cat, and the Friday Song all have in common? Besides millions of views, they have thousands of knockoffs and spin-offs, and copycats. They have audience participation.

People love to be involved. People love to be included. People love to be loved. In fact, the most seductive word in the English language is a three letter word and it doesn't include an X.  The most seductive word is...


Do your ads speak directly to the customer (or influencer)? Do your ads talk about the customer twice as much as they talk about your company? Do your ads include the customer as an insider, as a participant? Can your customer see herself doing what you want her to do? When you talk more about her than you do yourself; when you paint a picture of her doing what you want her to do, when you include her as part of you, then you are creating participatory ads.


How many times have you watched a video and wished you had those three minutes back? You aren't sharing those videos. There has to be something exciting and unexpected for you to hit the share button.

Let's face it. The expected is so... boring. The expected is so cliche, uninspiring, blah, blah, blah. We are bombarded with thousands of advertising messages a day. We have learned to filter anything that looks or sounds like an ad. We have learned to ignore the mundane. We have learned to pass over the unexciting.

Your ads need to be unexpected, too.

The most effective radio ad I ever ran started with these words... "I couldn't believe it. They were taking customers into the men's bathroom..."

After hearing that, you know everyone wanted to hear more. Can you say something totally unexpected to get their attention? Can you then tie that into one interesting point? Can you surprise and excite and delight people in a way that makes them want to hit the share button?

The same principles that make a video go viral also affect the effectiveness of your advertising. You might not get a few million views, but if you follow Kevin's advice, you can make your advertising budget a heck of a lot more powerful without spending a penny more.

-Phil Wrzesinski

PS Roy H. Williams, aka The Wizard of Ads, calls this the Impact Quotient of your ads. Here is a free download called How Ads Work Part 2 that I wrote to give you examples of how to make your ads more memorable and impactful.

Monday, March 25, 2013

Praying for Customers

I know it was tongue-in-cheek (kinda), but when a fellow store owner asked a group of us on FB what we were doing to attract customers, the first response was "Praying".

This might seem like a religious post. If I offend anyone, so be it. But I found the answer to be not only funny, but also appropriate. Yes, praying can have a place in your business.

Remember what I have said over and over about being true to your Values? If religion and faith are part of your values, praying should be a regular event. Include your staff in a holy huddle. Make sure your policies also reflect your faith. It can be a powerful attractor of customers who share your faith. (See Chick-Fil-A and how they share their faith.)

Here are some prayers you can say.

Pray that your advertising will be effective.
Pray that your staff will have a good day and take care of your customers.
Pray that you will accomplish your to-do list efficiently.
Pray for thanksgiving of the blessings that have allowed you to be in business.
Pray for the blessings of your wonderful staff and all that they do (and have done) for you.
Pray for your wonderful evangelists who tell your story to all their friends.
Pray for your vendors who supply you with the products that solve your customers' problems.
Pray for your government leaders that they have the strength and will to do good for your community.

If faith and religion are part of your Core Values, then you should be Praying for Customers.

-Phil Wrzesinski

PS I say a modified version of the Jabez Prayer every single day...
Oh that you would bless me indeed
And enlarge my territory
That your hand would be with me
And lead me to good

Friday, March 22, 2013

Delight People, and Solve Their Interesting Problems

I'm a big fan of Seth Godin. His blog is one of the first I read every day. (He posts Every. Single. Day. and it is usually something quite thought-provoking.)

I'm stealing this from Seth, via the good Doctor Rick Wilson, who writes it this way.

  1. Delight people
  2. Solve their (interesting) problems

The more interesting the problem, the better.

Reading this, however, I am stunned at the simplicity and beauty of it all. This is the core of giving WOW/Shareworthy Customer Service.


Do the unexpected. Go above and beyond what any customer saw coming. That's how you delight. Surprise them with an extraordinary level of kindness and professionalism. Do things they never thought possible.


Customers choose to visit you for a reason. Most often that reason is to solve a problem. Mistakenly, we too often think they came to buy a product, but the reality is the product is simply their idea of a solution to the problem. When you know the problem, then you - the expert - can offer the best possible solution.

A person in a camera store isn't buying a camera, he is buying a picture, a memory. Don't sell the camera until you know the picture he really wants.

A person in a toy store isn't buying a toy, she's buying a tool or a gift. Don't sell the toy until you know how the tool or gift will be used.

A person in a shoe store isn't buying a shoe, she's buying a lifestyle. Don't sell a shoe until you know what lifestyle she needs.

There is a lot of fun in solving problems. When you look at sales that way, you will find your staff enjoys it far more than just "selling". Teach them how to ask the right questions to find the true problem needing to be solved. Teach them how to look beyond the product into what the customer truly wants and needs. Teach your staff how to connect in meaningful ways to be partners in your customers' solutions.

Do all that and everyone (you included) will be delighted.

-Phil Wrzesinski

PS Sometimes the solution is to send the customer to a competitor. That's okay. Solve their problem anyway. Call the competitor and make sure they have what your customer needs. Have your competitor hold the item. Get directions if necessary. They will remember that and they will talk about you to someone who has a problem you can solve. Remember that every transaction is about one thing... earning the right for another transaction down the road.

Tuesday, March 19, 2013

What is Your Least Favorite Job?

You are an independent business owner. You wear many hats. You do many jobs. It is the nature of the beast. Let me ask you one question...

What is your least favorite job?

What is the one hat that you dread wearing the most? What is that task or duty that you fear, that you would rather put off, that you just wish it would go away?

Let me ask you another question...

What would you do with the time you have left over if you didn't have to do that job?

Everything can be hired out. There is someone capable of doing whatever it is that you don't want to do. For a price, of course. But, there is someone. The only question you really have to answer is whether the time you have left over can be productive enough to afford the person you hire.

Just remember when you calculate the "afford" part you include your lack of stress, your better sleep, and your peace of mind. Sometimes that is worth far more than the salary.

Give up the one job you hate the most and you will find you have more time and energy to do the things you love.

-Phil Wrzesinski

PS Yes, that even includes the hat of hiring and firing. Many successful business owners hire a manager to run the day-to-day operations and they spend their time marketing, buying and paying the bills. Yes, that includes paying the bills. Other business owners want to run the day-to-day operations and hire an office manager or AR/AP person to handle all the invoices and bills. Yes, that includes a tech person, a warehouse/receiving clerk, a gopher, an event coordinator, or a marketing/advertising coordinator. Owning and running a small business is supposed to be fun. Do the fun stuff and hire someone else to do the stuff you hate.

Monday, March 18, 2013

The Five Drivers of Traffic - Delight

I posted that JC Penney was struggling because it was losing in all five of the main drivers of traffic... PriceProductConvenience, Trust and Delight.  Let's look at each one of them separately.


Delight is probably both the easiest and most difficult of all the drivers to own. 

Easy because so few companies even try to own it. Sure, they give it lip-service, but outside of a handful of retailers (Apple? Zappos?) and companies (Disney?), few major chains or national businesses really even try to delight anyone other than the shareholders and owners.

Difficult because the bar of expectation is constantly shifting and changing. What delights the customers of today might seem ordinary tomorrow.

You can increase your Delight Factor a number of ways...

  • Sell things that make people happy. The more whimsy and uniqueness you bring to the table, the higher the delight factor in the customers' minds. The more fun and interesting your product selection, the more you will delight customers.
  • Sell things that solve problems. Customers buy items to solve a problem. Identify the problem and you can delight the customer by solving it.
  • Host Events. Bring in authors, experts, and celebrities. Teach classes. Host parties. Play games. Show movies. Serve food and beverages. 
  • Bend over backwards to help. When you put the customer's needs above your own, you raise the delight factor exponentially. The easiest way to do this is to say "Yes!" every time a customer asks, "Can you...?" and then go figure out how to do it.
  • Exceed expectations. This may seem simple enough, yet once you consistently exceed the expectations of today, you raise the bar for the expectations of tomorrow. Keep raising the bar, though, and you'll continue delighting your customers in new and exciting ways.
  • Do something no one else would even think of doing. How about a downtown toy store offering Valet Parking at Christmas? How about a clothing store offering free dry cleaning for a year? How about a bookstore that gets you a signed copy every time you buy a book from a living author?

The advantages of delighting your customers are numerous.

  • They become more loyal.
  • They bring you more customers like them.
  • They do your advertising for you.
  • They make your job more fun.

You can do Delight. In fact, you need to do Delight! It is the one driver you can consistently do better than any of your competitors. It is the one driver you are expected to do better than the chains and online stores. It is the one driver you can most easily own all to yourself.

-Phil Wrzesinski

PS Want to know which driver (if any) you already own? Check out this free download - How to Measure the Strength of Your Brand. When you do your survey, be sure to use the five drivers as part of your word association. You'll know exactly which of your competitors owns which driver and what you need to work on.

Wednesday, March 13, 2013

Pendulum Made Easier to Understand

I've talked about this new book by Roy H. Williams and Michael R. Drew called Pendulum. It really has been an eye-opener for me to understanding how advertising, marketing and selling has changed over the last couple decades.

The hard part is trying to explain it. The elevator pitch takes too many floors. Although I read the book in one sitting - I was already pumped up about it, having seen the presentation by Roy twice and by Michael once - most people are looking for a simpler, quicker way to understand this swing between a Me and a We generation.

Thanks to the folks at PendulumInAction, here is a simple graphic that explains it quite well.

Click to get complete graphic...

Thanks Leigh Jeffery for putting this together!

-Phil Wrzesinski

PS Warning: Reading and understanding Pendulum can be hazardous to your mental well-being. Often readers are left with a feeling of dizziness, followed by a frustration caused by instantly seeing evidence of this pendulum swing all around you even when you are not looking.

Tuesday, March 12, 2013

The Five Drivers of Traffic - Trust

I posted that JC Penney was struggling because it was losing in all five of the main drivers of traffic... PriceProduct, Convenience, Trust and Delight.  Let's look at each one of them separately.


Trust is earned. You don't get it automatically. Trust is earned one transaction at a time.  Trust is fragile, too. Trust earned over a period of years or even decades can be blown up by one single encounter.

How do you earn Trust? Through consistency and honesty. Do what you say you are going to do time and time and time again. Yes, it is that simple. 

Fast food restaurants are built around the model of consistency. A McDonald's Big Mac tastes the same all over the world so that you know what to expect and get what you expect every single time. Franchises and chain stores in general are designed to offer consistency. Time and time again, the same experience (at least that's what they hope).

More importantly than discussing how to build trust, it might be better to look at how easily you can break that trust.

You can break trust in any of the following ways...

  • Play games with your pricing. Mark it up to mark it down. Hide the real price through some fine print. Change your prices all the time. Dicker and deal on price.
  • Don't deliver. Don't do what you say you will do. Make promises to get the sale that you know you won't keep.
  • Lie. Be dishonest about mistakes you have made or things you have done that you don't want customers to know about.
  • Change your policies. Making up policies that favor the company over the customer on the spot are quick trust slayers.
  • Be rude or apathetic. If you don't treat your customers well, they won't trust that you do anything well.
  • Load up on Fine Print. Sure, there always seems to be fine print. There always is an asterisk, an exception. Of course, the more fine print, the more exceptions, the less trustworthy you become. Just sayin'.

Here are some simple things to help you maintain trust with your customers.

  • Admit your mistakes. We all make them. Be honest and up front when you make a mistake and say, "I'm sorry. We screwed up. What can I do to make it better?"
  • Fulfill your promises. if you promise something, you better move mountains to make it happen. Period.
  • Be Professional and Kind. As my friend Tim Miles says, these are the two cornerstones of Shareworthy Customer Service. Do both and your customers will notice. Your customers will trust you. Your customers will tell others about you.

If you want to drive traffic on the basis of Trust you need to be honest and consistent. You need to do the right thing all the time, regardless of how much it hurts you. In fact, the more pain you are willing to suffer to maintain that trust, the more believable you will be.

-Phil Wrzesinski

PS To grow Trust as an indie retailer you need two key elements; a trustworthy staff and credible marketing. Here are two books to help you do both better...

Read those books, do what they teach. If you don't get far more back than you invested, I'll buy the books from you. Yes, I trust them that much.

Saturday, March 9, 2013

The Five Drivers of Traffic - Convenience

I posted that JC Penney was struggling because it was losing in all five of the main drivers of traffic... Price, Product, Convenience, Trust and Delight.  Let's look at each one of them separately.


Convenience is a tricky subject because there are many different ways to define convenience. 

You could be considered convenient if it is quick and easy to get in and out of your store. Heck, we have a whole category of stores like that called, conveniently  Convenience Stores. Smaller stores located on intersections with front door parking, a handful of commodity products, and rarely ever a line at the register. You can charge a lot more for a product when you have this kind of convenience.

You could be considered convenient if you have such a wide selection of product that it truly is one-stop-shopping. This is the road Wal-Mart and Target Supercenters are taking. Add in the groceries and you can get everything you want under one roof. How convenient!

You could be considered convenient if you offer services that make your customer's job so much easier. Free giftwrapping is such a service. We get many customers the day of the birthday party or baby shower who stop in on their way. They get the gift, get it wrapped, buy a card and off they go to the party. Repair services, installation services, delivery and assembly services are matters of convenience to a customer.

The first and last of those three examples are fairly easy for indie retailers to own. 

We can certainly be quick stops for customers who don't want the hassle of parking in a huge lot, walking half a mile to the front door, navigating a 200,000 square foot store to find a $20 gift, only to now have to wait in line behind someone juggling three kids and two shopping carts in a line staffed by a minimum-wage, poorly-trained, gum-chewing clerk.

We can offer services that make life easier on our customers like those mentioned above.

But I will also argue that we can, in some ways, also own that middle example. Do you have everything to "complete" a sale? For instance, if someone buys a model, do you also sell them the glue and paint and a display case to show off the finished product? If someone buys a pair of shoes do you also have the socks, stockings, inserts, shoe polish, shoe-trees, suede brushes, and waterproofing to complete the sale?

Whatever you sell, you can become the "convenient" store in your customer's mind if she is able to buy everything she needs to complete that purchase. If she has to go to another store to finish the purchase, you lose that driver.

Convenience comes in many forms. Although you may not be the one-stop-shop that a Wal-Mart Supercenter is, you can (and should) still own convenience in many other ways.

-Phil Wrzesinski

PS Completing the Sale is a major component of my staff training. I want my staff thinking about that with every customer. It isn't so much about selling a product as it is about fulfilling a need or solving a problem. When you start thinking like that you will see two things happen. First, your average sales will increase. Second, your customers will be happier. Yes, your customers will spend more and be happier at the same time!

Friday, March 8, 2013

A Worthy Goal

My dear friend Dr. Rick Wilson, DMD posted an incredibly simple thought that many of us forget.

To steal his line... Are we in the business to "get new customers" or "meet someone new and make a difference for them?"

One helps the short-term and costs a lot, one helps the long-term and costs a little. Choose wisely, grasshopper.

-Phil Wrzesinski

PS Yes, I read a lot of stuff outside of my industry. You should, too. There are some amazing lessons when you go looking for them.

Wednesday, March 6, 2013

The Five Drivers of Traffic - Product

I posted that JC Penney was struggling because it was losing in all five of the main drivers of traffic... Price, Product, Convenience, Trust and Delight.  Let's look at each one of them separately.


Products are the stars. Without them, you don't have a business. You have to have products that people want. Products typically fall into three categories:

  • Commodities - the products everyone wants and most stores carry. Products designed for the masses (and usually sold at the masses).
  • Niche - the products that are different, maybe with special features, that appeal to only a small but loyal segment of the market.
  • Custom - the unique, one-of-a-kind products such as hand-crafted artwork, customer-customized products, and items so different you wouldn't expect to sell more than one.

To own the traffic driver of Product, you have to own at least one of those three categories.

This is probably the toughest for an independent to own, because the mass market wants this category big time. They believe this is their category so much that they try to commoditize products that might otherwise seem niche.

The other problem with this category is that price drives more of the purchasing decisions for commodities. The mass advertises the price constantly, which sets the perceived worth in the customer's mind.

But if you own the Commodities (at the right price), you can draw the masses.

This used to be the domain of the independent toy store. Our model was easy. Carry the stuff Toys R Us and Wal-Mart didn't carry and you can compete easily with the mass. The profit margin was better on these toys, and there was plenty of product available that wasn't in the big boxes.

Toys R Us and Target changed that game as they kept buying more and more of the niche products. Now the Internet is trying to take over this category. The Internet is built for the niche market. One website can reach all 500 potential customers for a niche product much more easily than trying to get that product into stores in the 500 markets where those people live.

There are still plenty of niche products out there not carried in the big boxes, but the list of products not sold online gets smaller every year. If you can find niche products that are also MAP protected (see the discussion on Price), then you can still own the Product driver.

Own this category if you want to attract customers who are less price-focused and more solution-oriented.

This is still a wide-open category. The big boxes don't want it. Not a high enough turn-ratio. The Internet is struggling with this category because it is hard to attract people to check out product they don't know they want, and in most cases they prefer to see and touch first before falling in love with it. Individual artists can be successful online, but mainly because they have built a tribe of followers. The independent retailers are also wary because it takes a lot of commitment and cash to get into the world of custom, one-of-a-kind offerings. Do it poorly and you'll go broke.

To own this category, you need a savvy buyer who can guess the wants and desires of the customers before they walk through the door, and can hunt down those products and fill your store with them. If you have a buyer like that, keep her. They are a rare breed.

The fun part of owning a store full of custom products is that the mix is always changing, the delight factor is high, and your most loyal customers will come back often just to see what is new. If you can own this category, you can earn a lot of word-of-mouth, too.

If you want to own Product as a driver of traffic, choose one of those three categories and own it lock, stock and barrel. They each draw a different type of crowd and require a different type of advertising.

Then again, there is some wisdom in not worrying about owning any of the categories of Product but just dabbling in all three. 

  • Carry some Commodities to draw the masses. 
  • Carry some Niche for the people wanting something different (and to make some profit.) 
  • Carry some Custom to keep the store ever changing and unique.

If you can afford the lower profits on the commodities and the lower turn ratios on the customs, you can have a fun mix that has something for everyone. Focus on owning one of the other major drivers of traffic.

-Phil Wrzesinski

PS Some of you might wonder why I spent the first 90% of this post telling you how to own a category, and then end it with a paragraph about why not to own any of them. I do so because I want you to consciously make that choice. I want you to decide what you want to be, and be it by choice, not happenstance. Knowledge is Power (France is Bacon).

Sunday, March 3, 2013

The Five Drivers of Traffic - Price

I posted that JC Penney was struggling because it was losing in all five of the main drivers of traffic... Price, Product, Convenience, Trust and Delight.  Let's look at each one of them separately.


There are two pricing schemes that can work to own Price as a driver of traffic - Sales & Discounts and Everyday Low Pricing.

Sales & Discounts is when you constantly have some type of sale or coupon or promotion going on. The tricky part of this is actually making your sales and discounts be worth something. Before the Internet, the simple perception of a sale or discount was enough to draw traffic. But today's smartphone-savvy shoppers will call you out if all you do is jack up your prices and then offer a discount off that inflated and unrealistic price.

The other downside to Sales & Discounts is that you have to constantly be ramping up the hype machine in your advertising and marketing. Or you have to be sending out coupons and mailers enticing people to stop in.

Everyday Low Pricing is quite different. Instead of the gimmicks, sales and coupons, you simply lower your prices below everyone else and keep them there. It is certainly more trustworthy. It is also easier for customers to check to see if you truly are low price. The hype is gone, but if you do have the best prices, you will get the traffic and sales.

The Internet makes this driver quite difficult for most independents to compete. Pretty much almost everything you sell can be found online, and most often for less.  Unless you only sell items that are strictly protected with Minimum Ad Price (MAP) policies, it is almost impossible to own this driver.

Also remember that you will be competing directly with major chains like Wal-Mart and Target who have three distinct advantages over you.

  • Lower overhead through amazing operating efficiencies
  • Bullying power to get better prices and rebates from vendors
  • Billions of dollars in advertising

Of all the drivers, this one is the least favorable for indie retailers and I wouldn't recommend it as a strategy.

You still have to have prices that are attractive, however. Price may only be one of five factors that drives traffic, but it is still one of the biggest factors in driving actual purchases.

Check out this free download - Pricing for Profit - that will show you how to make your prices attractive in a price-sensitive retail climate.

-Phil Wrzesinski

PS If you do have a price advantage, you have two choices. Shout it to the world, or raise your prices and start pocketing the difference. My dad always said we should never be below our competitors' prices. No one thinks of us as low price, so if we're below them, we're just leaving money on the table.

Friday, March 1, 2013

Why JC Penney's is Struggling

We all know about JC Penney's decision last year to change their pricing strategy from one of Coupons, Discounts and Sales to one of Everyday Low Prices.  Ron Johnson, the CEO they hired away from Apple, warned everyone it would take some time for the transformation to take hold.

Unfortunately, the train wreck seems to be getting worse as JCP just announced a plummet of 32% in sales! I know that is a number none of us indie's could probably withstand. Many in the world of retail are wondering if JCP will be able to withstand it.

But before everyone rushes off to blame the pricing strategy and see this as an indictment of the Everyday Low Prices scheme as being unable to work in today's retail market, there were some other forces at work.

At the end of the day there are five primary drivers of traffic into retail stores.

  • Price
  • Product
  • Convenience
  • Trust
  • Delight

No, they do not all have equal weight. And for every customer, different factors play out in different categories. But you have to be winning in the minds of customers in at least one of those categories if you want to see traffic.

JCP was losing in all five.

Price - Their Everyday Low Prices scheme might have worked... if they had done it. They really didn't. Their prices seemed to be changing almost as rapidly as they had before, and in ways far more confusing despite the millions they spent in advertising. No one really knew if their prices were low or not.

Product - Some say their offerings were getting worse, not better. Even if their product stayed the same, no one was going to JCP for high-quality goods or exclusive-can't-find-anything-like-it-anywhere-else merchandise. They had given up that ground years ago.

Convenience - If JCP had any leg to stand on, this could have been it. But they did nothing to beef up or significantly increase the convenience factor. In my own experience, their checkout lines got longer (even with fewer sales - now that's a real trick).

Trust - this is supposed to be the hallmark of the Everyday Low Prices scheme. You can trust us because we aren't jacking you around with yo-yo pricing. Except they didn't do that. They still yo-yo'd their prices. They made things more confusing and less trustworthy. They didn't re-train their staff to develop trust either. They spent money on advertising their new scheme but doesn't look like they spent a dime on training the staff.

Delight - Once again, very little done here, before, during or after. When was the last time you were actually delighted in a JCP store? Yeah, I thought so.

The cool thing is that we can all learn a lesson from this. Pick one of those five and own it. Own it with every ounce of your existence. Own it in your category so strongly that when that topic is mentioned, everyone immediately thinks of you.

The cooler thing is that you probably noticed that it wouldn't be all that hard to own two or three of those criteria. Do that and you won't suffer the same fate as JCP.

-Phil Wrzesinski

PS We'll talk about all five and how to own them in upcoming posts. Stay tuned.