Retailing is Selling What Part Don’t WE Get?

Retailing is so easy and we try to complicate it. Do you want to make more money, then do this. Sell MORE stuff to MORE people. (I will get more sophisticated and give you the technical way.) Period, that’s it. The answer to all of the problems in retailing is a store’s ability to move/sell more merchandise. Duh! Isn’t that what retailing is all about? In almost every speech I give, I talk about the 4 ways to increase sales and how every business needs to know which path to explore. Here they are:

1. Sell more of what you already sell to your existing customer base.
2. Sell new products to your existing customer base.
3. Sell more of what you currently sell to a new customer base.
4. Sell new products to a new customer base.

There are no right or wrong answers here. But the easiest way to increase your revenues is to just get better at the skill of selling. Let’s face it -- the recession may be over but the recovery is going to be long with its ups and downs. Besides there is too much competition out there, there are fewer customers, the web is getting stronger, and then we have the morons who fight to give it all away. Things have been challenging to say the least.

OK, I AM LISTENTING and it’s time to do something about it!

We just need to focus on the 3 key measurements that most retailers rarely pay much enough attention to. Then we need the tools to improve those components.

1. Conversion rate = This number is the amount of people who enter a store to the amount of transactions that occur. An example of this would be the following. 100 people enter a store and 40 transactions take place.  This would represent a 40% close rate which is very good. This is the most difficult to collect and is generally only tracked during certain test periods.
2. Units per Transaction = This is the average amount of units sold for every sale that occurs. An example of this would be a salesperson makes 3 sales. One customer buys 2 items, the next buys 3 items and the third buys 4. The average units per transaction are 3.
3. Average Transaction Size = This simply means the average dollars sold per transaction. An example would be 3 sales which would include one for $40, one for $50, and the last one for $60. That means your average transaction size is $50.

Now that we know how to measure the information, next is how do we improve sales? Just use my G.R.E.A.T. System for Retail Selling which is from my latest book The Retail Sales Bible. This book has been in our pipeline for a while and has gotten bumped by various projects. Shame on me for allowing this to happen.  I am really aggravated with myself for letting that happen because there is nothing more important than this book in times like this. So now that we have cleared all of the projects from our plate, and we have made this our top priority, it should be off to the publisher in the next 10 days and released by the end of September.

I also want to call your attention to our upcoming webinar on September 22nd called Effective Suggestive Selling which will give you the tools you will need to increase your sales exponentially. Click here for more information.

Let me give you an abbreviated excerpt from the book that explains the G.R.E.A.T. System for Retail Selling. G.R.E.A.T. is an acronym that stands for the different sections of the retail selling process.

G stands for THE GREETING – The greeting either makes or breaks the sale. The key element of the greeting is to determine the path for the rest of the sale. You always want to ask if the customer has been in the store before or if this is their first visit. You are building a bridge to the next stage of the selling process.

R stands for Researching the customer - That means we start to ask the customers as many questions as possible in order for us to make the proper recommendations.

E stands for Experimenting & closing the sale - Experimenting simply means the suggestion process. This is where we use lines, such as “from what you have told me, let me suggest __________”. It is important to note that closing the sale is included in this step because it should be a natural progression and NOT a separate step. (This area in the book covers 12 different ways to close a sale and they are there to match your style.)

A stands for Adding On or the Ad-On - My philosophy is one item and one clerk. We need, NO WE MUST make multiple sales to survive in this difficult market. Many times a simple, “Did you see this?” goes a long way.

T stands for Tethering the customer to the store - That means collecting as much information as possible. The sale is NOT complete until we can capture the customer’s information so that we can bring them into our community.

That is an abbreviated version of something that is approximately 60 pages long. I believe you get the essence of the system. We wanted to make the system an acronym so that it would be easier to remember.

G.R.E.A.T worked perfectly. That’s why we call the Sales Bible the GREAT book of Selling.

We hope it will become your G.R.E.A.T. book real soon.

Rebranding... Is It A Good Idea?

I received an email with two terrific questions that I thought would generate some interesting feedback from all of you. So please share your ideas with this store owner by putting a comment on the blog!

I have two burning questions. I have been in business nine years. I bought an existing store whose owner had run it into the ground and claimed bankruptcy five days later. At the time, I wanted to change the name because I hated it (and still do). However, people around me were saying to keep it as it was established.  DUH it was going out of business... I shoulda, woulda, coulda.

Fast forward nine years. The store is rocking.  It's well branded, is a destination store, etc, etc. I STILL HATE THE NAME! Each time I give it at a trade show or whatever, I am embarrassed of because it does not encompass what we are at all. I have tried adding a jazzy tagline but it still irks the heck out of me. I am wondering about changing the name to coincide with our 10yr anniversary. I have other changes on the way and the building needs a bit of a facelift so we'd do it all at once and do an "unveiling" of sorts.... Have window lettering saying formerly ________.

I can't even imagine the marketing campaign I would have to embark on! However, lame as it may be, most of my customers call the shop Vickie's. I got it at Vickie's ... you need to see Vickie, etc.  Now I KNOW you shouldn't call a shop your name but it would certainly be an easy transition…customers wouldn't be that rattled by it... What do you think?  Is it EVER a good idea to change your name?  How much marketing are we talking here?

Now, if I can be so bold as to ask two questions, my shop started as a consignment shop. Over the nine years, we have become approximately 1/2 new product. There isn't much competition in my town... I'm IT if you want fashionable goods at a reasonable price. My NEW sales have now reached 70% of my total sales. At some point, I would love to switch over to just new as the consignment is labor intensive, etc. That 30% that the consigned is making me is still a good chunk of change though... I have divided into quarters how much more new product I would need to buy to sell that other 30% (working backwards) who knows?  Maybe I'd sell more if it was all new? The consigned goods are taking up ALL of my second floor (1200sq feet) and 1/3 of my main floor which is 1600sq feet so dollar for dollar, it's a no brainer... HELP!

I look forward to your reply.

Let’s break this down into separate discussion/learning points.  The first lesson to be learned, and I wish I had learned it earlier in my career, is that we must do our due diligence when purchasing a business. That means we have to do credit checks, check with key vendors, do focus groups with customers, and have all of the financials professionally examined with copies of the tax returns. The returns should be for the business, if it is a corporation, and the tax returns of the owners, therefore, avoiding some of the problems. 

Changing the name when buying the business certainly seems like it would have been the optimum time. However, do not beat yourself up over that because even the worst of business reputations can still have some value. Let me share a first- hand example of one of my biggest blunders. I bought a 98-year old men’s store that was run down, but to me had so much potential.  Many of my customers shopped both my women’s store and this men’s store. Perhaps I was a bit arrogant because of my retail successes and because my store did seven times the volume than this men’s store did (my store did $2.1 million in sales, the men’s store did $300,000). I changed the name of the men’s store because I didn’t see any real value in it. The bottom line was it did not work and as bad as I thought the reputation was, it still had some brand awareness. 

As for businesses with terrible names, you are not alone. Can you tell me that Abercrombie & Fitch is a great name? Or how about Aeropostale (I cannot pronounce that name and had to go to a mall directory to find how to spell it), Swarovski, Crabtree & Evelyn, and L’Occltane? And then “but with a name like Smuckers it has to be good!”  I never realized that Shakespeare was a retail consultant when he gave the advice “what’s in a name?” 

Again, I had to live with a name that I hated for 25 years.  The name of my store was Ruth’s. Now when you put an apostrophe and an s after Ruth, you almost need to have a hair lisp to pronounce it properly. Plus it is an old biblical name which hadn’t really been used and has fallen out of favor for a couple of generations. Basically, we only knew old people who would use that name. And coupled with the fact that the store was located in a city that had a blue collar and a rough reputation, it made for a difficult image. People would think that we only sold clothes to tough little old ladies. Then when the miniseries Roots was first broadcast, everybody would spell my name wrong. If all of that wasn’t bad enough, I worked with my mother, Ruth, which made me Baby Ruth.  For twenty-five years of my life, I was referred to as a candy bar! 

But with all that, I took a store that did $279,000 worth of business with 900 square feet to a store that produced $2.6 million with 10,000 square feet. Yes, I thought of every which way possible to change the name but am glad I never did.

Next point – whoever said that a store should not be named after an individual?  Sorry, that is bad advice. There are more stores named after people who are highly successful. I will list a few – Kay Jewelers, Jessica McClintock, Johnston & Murphy, Ann Taylor, Auntie Anne’s, Max Studio, Joseph A. Banks, Victoria’s Secret, and Chico’s. One of the points that I have made for years is that regardless of the name of the business, they will still refer to the store as Vicki’s.     

My suggestion to any store owner is to put your name in front of the business’ name. An example would be a store named Timeless Gifts, but you put “Sue Smith’s Timeless Gifts” or just “Sue’s Timeless Gifts”. I believe in your case that would probably be the best way to go. Then slowing eliminate The Timeless Gifts.

The store is going to be called by your name regardless. Go with the flow! 

As for your question in relationship to marketing costs, it could be gigantic and you run the risk of losing customers. What will happen is there will be a rumor that will get started that you went out of business. You can spend a lot of money and only hurt your business rather than help it. PLEASE DON’T DO IT... LOOK WHAT YOU HAVE DONE SO FAR. 

Let’s discuss the issue of consignment. Consignment can be the best part or the worst part of retailing. Let me explain – if you do a consignment agreement whereby you’re splitting 50/50 with the consignee, the return on your efforts can be limited. The way I have seen consignment stores do the best is when the store owner treats the buying process the exact same way as buying regular merchandise. What I mean by that is you have to look at a piece of merchandise as if you were buying it and say “what could I buy this for so that I could sell it at the highest possible mark-up and the fastest rate of sale?” That means you tell the consignee that you will pay $5 for an item while you might put it out for $14.99. There are some people who just want to get rid of stuff and will take anything.  By doing the 50/50 split, you are leaving money on the table and besides it is none of their business what you price it at. 

I realize that this is a major departure for many consignment businesses. To my defense, I will tell you that the 50+ businesses who have taken this recommendation have thanked me all the way to the bank. This past year, one of the award winning businesses in Massachusetts at the RAMAE Awards Program was a store that coined the term “reborn” and created a small birth certificate that she placed on the merchandise. Look at this blog article from December 2009 that talks about the store which is named Izzy’s. 

Last point is the issue of eliminating consignment. This is a personal one, but trust me, if you are working on margins of 4, 5, or 6 times you have to pay the consignee, your feelings toward consignment change dramatically. A few years ago the thought was “let’s separate them”. But because of the popularity and the acceptance of this type of store brought on by the recession and our lingering economic woes, I would be reluctant to totally eliminate it.  Let’s see what the readers have to say. 

Please write in and I invite everyone’s comments. Share with us your opinions. I look forward to reading them.

P.S.  Why is there a bank named the Fifth Third Bank?  It sounds like two losers came together – fifth place and third place but went on to become a major force in banking today. Whatever happened to “we are number one”?      

Customer Service – Isn’t It the Little Things That Matter?

In Charles Dickens’ book A Tale of Two Cities, he starts by saying “These are the best of times, these are the worst of times.”  Within the last week, I experienced the best customer service and the worst customer service I have ever experienced.  They were both pertaining to doctor appointments and scheduling.  The worst customer service experience was about an appointment for a minor surgical procedure.  This doctor was very busy and it was difficult to make an appointment, but I was able to make an appointment 5 weeks later.  Fifteen minutes before I was ready to leave for the scheduled procedure, I received a phone call cancelling this appointment because of an emergency the doctor had.  

I asked when it would be re-scheduled, and I was informed that the doctor was busy for the next 3 weeks.  Then the person informed me that he would have to get back to me.  I did not receive a phone call the next day, but I did call the office and left a message which was never returned.  Then, I called back and I was told that the other doctor in the office could do the procedure two days later, and I did take the appointment.  Why wasn’t I told this before and why did I have to make the call?  The bottom line: I did not receive a feeling of professionalism and consequently cancelled the appointment.

I am sure the doctor would probably have done a great job, but because of an arrogant “I am doing you a favor” attitude, he lost a patient and probably doesn’t even care.  However, if this happens enough times, he will care.  

Now contrast that with another doctor’s office that confirmed an appointment in advance.  When I was there for the procedure, I was taken right on time.  Everything that was going to be done was clearly explained (I had received the same information in advance).  Then I received follow-up calls, not just the day after but also 3 and 5 days after just to be sure everything was OK.  

How does this all apply to us rests in the area that I believe is the root cause of 90% of all customer service issues we face.  That is: controlling expectations.  What did I expect from both of these experiences?  I think basically the same thing: a reminder call, a short wait, a clean office, the procedure done in a professional manner, and a follow-up call.  But that’s not true.  If you read carefully what I wrote and what I was complaining about, you will realize that the part that really annoyed me the most was not so much the change in appointment, but rather the “attitude of the service provider”.  He didn’t make me feel important.

So, is it the services that you offer or is it the way that service is delivered that is more important?  There are two parts to every business transaction.  There is the business part, such as all of the items that are mentioned like reminder calls, clean offices and follow-up calls.  However, it is the human part that creates delighted customers, raving fans, and the coveted word of mouth advertising we all seek.  

I have probably described this wonderful service experience to 15 people of how impressed I am with this talented doctor. He truly cares about his patients because he has created an atmosphere and a way of doing business that makes the customer feel important and special.  How are you making your customers feel important and special?  

I have always been of the belief that service is selling and selling is service.  When you are servicing a customer well, you are truly selling yourself, which is the first step of selling anything.  It is difficult for any of us to buy from someone we don’t like or respect.  The bottom line is as Walt Disney said, “everything speaks”.  The attitude of one person reduced the business revenues and created a negative word of mouth effect. On the other hand, the management of another business increased revenues and created positive word of mouth advertising.

The sad part about this scenario is that they don’t even realize what they are doing and the effects they are having on their business.  The reason for that is it is a slow growing cancer that eventually will kill a business.  What is the solution?  Have a friend shop your store, hire a mystery shopping company, and if nothing else, walk through your store and your procedures the way a customer would.  It might just change the way you do things.  It’s the little things that matter.

Readers’ Response on How to Motivate High Potential Employees

First, let’s thank Eunice for sending in a very interesting scenario that has brought out some really terrific responses.  The thing that is the most amazing is the wide variety of the ways people would handle this situation.  It’s hard to say what’s right and what’s wrong although many people certainly have their opinions.

I think the main issue here is the separation between employer and friend.  Can an employer be a friend?  Some people say no, however, my personal opinion is yes, an employer can be a friend of an employee with one condition.  That condition is that the employee NEVER puts the employer in a compromising situation, the way Tracy put Eunice in.  It works the other way as well.  An employer should never put an employee in a compromising or embarrassing situation.  Basic management says you never reprimand an employee in public.  What is critically important to understand is that the health of the business comes first.  

By Tracy not coming in when she is expected, it hurts the business.  It is not healthy for the business.  The reason why is ownership cannot depend on her, and her co-workers can feel slighted because you have one employee who is on a pedestal and can do anything they want.  Can’t you hear it now ”that’s not fair” and it hurts the morale of the business.  The owner also loses credibility with the other employees because of poor management practices.  Lastly, the customers become the biggest losers because she is never there when they expect her.  

Having said all of that, I still personally would take the loss of such a talented employee as a personal defeat.  I would look at having to fire her as a sign that I did not manage the situation as best as I could.  The following are excerpts from the responses received from this article.  You can read the complete responses on my blog at ricksegel.com/blog. 

• Wow! That has DEPRESSION written all over it! Sounds to me like Tracy needs real help! It makes perfect sense considering all that has happened to her.  Still he fact that she's such a wonderful employee and quite capable day.  I don't think this is a discipline problem. She seriously needs mental help!” -Donna Erwin
• “You need to sit down with her and confront her.  She will probably  refuse at first, but it must be done.  She needs professional help.
  
  Plan on making arrangements to meet with her at least twice a week. You will need to make her feel grounded and loved again before she can move on with her life and enjoy working at your store.  
  
  It’s not usually the responsibility of an employer to make things right but this could be a worthwhile investment.” -Mehdi
• “Encourage Tracy to attend classes and you may even offer to pay something for them.  Working toward a degree will boost her morale.” -Melissa Bailey
• “Have her champion a cause through the store, one that might be close to her situation, such as a cause for single mothers.  Find a charity that is in alignment with her needs. This will give her more of a sense of purpose and may motivate her to have better attendance.” -Phil Wrzesinski  
• “You may not want to fire her, but allowing her to come as she pleases is only enabling Tracy to continue this behavior. You can't be both her friend and her employer, so you will have to choose which one you would rather be. If you choose to be her employer, than perhaps a 30 day review should be set up, with your expectations clearly stated - including letting her go if those expectations are not met. After 30 days you would need to decide - does she stay or does she go. Sounds like tough love, but Tracy is an adult. The choice is hers.” -K. Wooden
• “Regardless of the reasons, this behavior is not appropriate and establishing boundaries and limitations is up to the employer. This is true whether the employee is a top producer or not, and the employer must not use being a good producer as justification for not confronting the problems.  My recommendation is for the employer to work on her ability to be a more effective manager, specifically in understanding what the correct roles are between she and her employees.” -Philip M. Barcellona
• Yes, she may have lost you one $5,000 sale. But weigh it against the unbelievable sales numbers she garners you. If you didn't have her, how many sales would you lose?  
   
  Can you work around her limitations? For example, don't schedule her to open, only schedule appointments with her in the late afternoon, notify customers if she won't be in that day and reschedule them to another day or another salesperson (whatever works).   
   
  I've had my share of unreliable employees -- and fired them. However, in this situation, firing her may cost you more in the long run than working around her shortcomings.” -Karen
• “I have had employees like this in the past... one minute they are your biggest headache and the next they are blowing you away with brilliance! I have 2 suggestions that I have used in the past.
• Give her more responsibility. She understands that what she is doing affects the business and when shown the errors she makes them right; she genuinely feels bad for her actions. By forcing her to be more responsible she might rise to the challenge.  
• Take away all responsibility. If you don't need to rely on her for anything then you will rarely be disappointed.
  
  Separate your personal feeling for her from the needs of the business so you can make rational decisions.” -Jared Habre
• “Sounds like a drinking or drug problem to me.  I don't care how good of a sales person she is, she is being abusive to Eunice and the other employees.  Eunice needs to learn to sell more herself and learn from Tracy as do the other 14 employees.” -Sharla Bush

It was also suggested that Eunice pay for counseling and 30 days off with pay.  I personally think that may be going overboard because that is a sizable investment, but if it worked it would be worth it.  This was a wonderful thought provoking exercise that I would love to repeat.  So, send in your scenarios and let’s see how we can help you.  Eunice, thanks again, and I hope this helped.

Have a great week!

How to Motivate High Potential Employees

I recently received an email from a jewelry store outside of Los Angeles.

The owner posed an interesting question that she suggested would be a wonderful discussion question for my readers. I agreed that it would be a great question and I would get as many opinions as possible. So here goes:

Dear Rick,

I have an employee who has worked for me for 3 years. I own a smaller jewelry store outside of Los Angeles and employ 14 people who all work part-time. The business was originally started by my husband who passed away 9 years ago. I have been running it alone by myself since then. My children have graduated from college and have no interest in entering the business (one is an accountant, the other is an electrical engineer). Tracy, who is in her early 30’s is one of the most talented employees I have ever had. She outsells everyone in the store, including me, all of the other employees love working with her, and customers call to find out when she will be in.

Tracy is also one of the most honest and trustworthy people I know. So, what could be wrong? She really doesn’t want to work, and I don’t know what I have to do to motivate her. Most people are probably thinking by now that she doesn’t need the money. WRONG! She is a single mom with more debt than you can imagine. In her defense, her husband ran up a bunch of credit cards and took off. She has made payment arrangements with most of the credit card companies but she needs to honor her commitments. She has one 12 year old son.

Having said all of that, maybe you can start to share my frustration when I tell you she calls in sick or has an excuse why she cannot come in more than any other employee I have ever had. I can’t depend on her. We tell customers that she is scheduled to work on a specific day. They come in with pieces to have redesigned and/or buy something new, and Tracy is not there. I am particularly frustrated today because one poor couple have now come in three different times and left because she wasn’t there to take care of them. They will not return. I am guessing now, but it was probably a $5,000 lost sale.

Now to make matters worse. When I confronted Tracy, she felt terrible about her actions, and promised that she will make it up to me. And she did. They day I confronted her with this she felt so bad she made four $3,000 sales; one $12,000 sale, and helped two other people to have sales over $2,500 each.

The irony is the fact that the store wasn’t even busy that day. It’s as if she has the ability to just manufacture sales. She also refused to take her normal commission on $5,000 of those sales because of the sale that was lost.

The next day after she had $24,000 in sales, she felt so bad and apologized that it would never happen again. But she didn’t show up for work until 1:00 when she was scheduled to open at 10:00. At least she did call me to open and said she was running a little late. I have offered her more money, bigger bonuses, a flexible schedule, health insurance, and have even looked into help with her child. Rick, I just don’t know what to do. I really would love to sell her the business, and although I have mentioned it a few times, she has never responded to my suggestions. She is a combination of a daughter, sister, friend, colleague and business partner. I could never dream of firing her because I couldn’t do it.

I know she has a very active social life, but we don’t talk about it while sometimes I think I should. It is not as if she has even setting a bad example to the other employees because she openly admits she is wrong. Rick, what should I do? I am at my wit’s end. PLEASE HELP!

Sincerely,
Eunice K.

Eunice, I feel your frustration. I had a similar situation happen to me many years ago. Unfortunately, this employee left the store, but I always wondered what might have been.

Now here’s the challenge.

Write in at rick@ricksegel.com or coment below and share your opinion with any possible suggestions to make Eunice’s life less stressful and to help Tracy reach her full potential. I will leave you with just one idea, and I will be working on ideas all week long. And that would be to sit down with Tracy and draw up an agreement of do’s and don’ts or some type of contract between the two of them. I look forward to your responses and let’s see if we can help Eunice out.

Have a great week.

What’s The Story Behind That Product?

Increase the Perceived Value by Sharing the Why of The Buy

Have you ever gone to a store, looked at a piece of merchandise, and not bought it because you thought it might be an inferior product?  That just happened to me.  I was shopping at a store in the Boston area that is known for everyday bargains.  It is the type of store that people rarely go to for a specific item.  It’s the type of store that you end up buying a bunch of stuff that you never knew you needed.  Their prices are extremely low and their advertising slogan is “don’t you just love a bargain?”

I affectionately refer to this store as an old fashioned five and dime store on steroids.  They sell lots of party products, kitchen items, gift items, books, packaged foods, cosmetics and probably another thousand categories.  It is a chain of 20 plus stores that is not necessarily the neatest and most organized, but no one really expects it to be either.  You get the feeling you are getting a great deal on everything you buy.

One of the reasons for some of the great values that they offer is that many of the time dated products will have closer expiration dates, which is perfectly OK as long as you aware of that.  The majority of the items are not this way.  What I am saying is you are looking for reasons why something might be such a great deal.  That was the case with me.  Let me explain.

Again, remember I went into the store not looking for anything in particular and just killing some time.  I did, however, have a shopping cart which I was filling up with a bunch of useless items I had to buy.  Then I came to the men’s personal item area and picked up a can of shaving cream and noticed a razor from Gillette.  I had never heard of this type of razor; it was a Fusion ProGlide Power Razor that was only $8.99 which seemed cheap enough to make me buy it.  BUT where I had never heard of this razor, I was afraid that it might be a discontinued item that Gillette had experimented with, didn’t work out, and were dumping the balance of the products into this discount store.  That was OK because I go through a lot of razors since I travel so much and I have a tendency of leaving them somewhere.  So, I figured since I probably wouldn’t be able to get the blades for this in the future, I would purchase the 8-pack of blades.  I was a bit surprised that the 8-pack of blades sold for $26.99, but I happened to need a razor so I bought it.  I want you to know I did have buyer’s remorse because I felt I had bought a discontinued product.  The reason why I felt that way is because these razors and blades were thrown into a bin.  Then two things happened to me.

First, I used the razor.  It was the most unbelievable shave I have ever received and with a bald head this is an area I am expert at.  I am still believing and questioning why they would be discontinuing such a great razor.

Then, I went to CVS to pick up a prescription where right there in front of me was this beautiful display on an end cap announcing the newest and greatest razor by Gillette, the Fusion ProGlide Power Razor.  It was selling for $12.99 and the blades were $29.99.  It is not a huge discount, but it is still a substantial discount, especially on a brand new product.  Here is the interesting part.  I happened to ask the cashier, who I believed was some type of manager or assistant, how those new Power Glide Razors were selling?  Her comment was “we keep them in stock”.

I will go as far as saying that CVS is doing a far superior job on selling these products than the store that is known for lower prices.  There is an old expression that says “its worth is what it looks like it’s worth”.  CVS increased the perceived value of the product by featuring it, signing it and supporting it with professionally prepared displays by the vendor.  The discount store didn’t even have a hand written 3 x 5 card saying “new product” or “great buy”.  It got so bad that even though I purchased the item, I actually considered returning it.

Are you doing the same thing in your store?  Are you making it easier for the customer to understand the products you are selling?  I was at an airport shop the other day that sold art by the artist, BRITTO.  The products were posters, framed art, t-shirts and ceramic pieces.  It was OK, however, the value of those products skyrocketed when I saw the artist pictured with various world leaders, including President Clinton and an announcement that he was selected to create a new stamp for the United Nations.  That’s credibility!  That’s the story behind the product.  Share the story and you will increase the value of your products.  Try it, it works!

What Would You Do If Someone Said Negative Things About Your Business... to the WORLD

"Rick, PLEASE HELP!!!" One of my customers was so unhappy that I wouldn’t give her a refund on something she bought 6 months ago. She is destroying me on the internet. I don’t know what to do. Please help me.

"I believe in treating people fairly and honestly but this woman tried to return a $350 serving set that we sell mostly at Christmas time.  I did take it back but I gave her a gift card for $350, plus the tax she paid. She complained that she gets cash back everywhere she goes and she would never come back."

"Then this happened. As she was leaving the store, she noticed we had the exact same serving set in our clearance section. It happened to be marked down to $99. Yes, this woman bought and NOW she demanded the difference back in cash."

"We politely said no and that she would have to spend the balance. Again she opened a mouth and told us she would tell the world what horrible people we are and what a horrible business this was."

"Well, she did."

"She wrote posts on my blog, she sent out tweets, entries on Facebook and any social media networks you can imagine. Rick, what can I do and where do I go?"

Signed by Mary X, a Gift Shop Owner in the Midwest (The store owner wanted to remain anonymous but granted me permission to use this scenario.)

This is becoming a rapidly growing problem. The customer today has power over us like never before. We are almost at their mercy and it kills me to say that. Throw "FAIR" out the window. We are living in a world of FREE, have it your way, totally customized for you, type of world.

In a minute I will share what the experts on negative feedback say.  But I want you to consider two issues.

1. The cost of this negative publicity can be far more expensive than the return. Yes, I know it’s the principle BUT we can win a battle and lose a war. I once was almost involved in a lawsuit that I had a 100% chance of winning. But I chose NOT to sue because the cost of suing was more than the victory would have been.
2. We can be as nice as possible and still have a customer upset with us. So don’t beat yourself up and accept the new reality. Social media such as Twitter, Facebook, blogs and more are great tools to use to connect with customers. The great thing about social media is that you really put yourself out there. But with this openness, problems can occur.

But how do you deal with negative feedback?

• Create A Policy - Before you start having comments available whether it's through a blog or a Twitter conversation, make sure you clearly outline the organization's policy on commenting. I know it sounds excessive, but having some guidelines in place will ensure that you won't be caught off guard.
• Make sure it’s not libel - In the United States and in many countries around the world, truthful statements about another person are safe to publish. However, publishing outright lies with the intent to defame or injure the reputation of others is illegal.
• Don't Lash Out - It's easy to respond quickly when someone makes you mad. The best thing to do however is keep your cool, no matter what the situation. You will come off as the better person for it.
• Respond Publicly - If someone makes a negative comment, respond publicly to let others know how you've handled the situation. Maybe others were wondering the same thing, but didn't want to ask. Being able to handle the situation shows that you (and the organization) are in control.
• Respond Privately - This may seem the opposite to the point above, but let me explain. While some situations require a public response, others do not. If you are being harassed, you may not want the situation to play out over the blog. Also, if a negative situation is going back and forth many times, you should move that to a private conversation as to not interfere with your other posts/comments.
• Respond in a Timely Manner - If you take too long to reply, people may think that silence is your answer. Try to respond as quickly as you can, even if just to say that you will be able to provide an answer/opinion shortly. That way people know that you are involved.
• Be Clear and Concise - Nobody's going to read a response that's many paragraphs long. Keep your answers clear and concise and you will get your point across.

Mary, I hope this helps.

(A special thank you to the pros at Synthesis Communication and The Reputation Hawk for their contributions.)

Readers’ Responses

WOW! I have to be careful what I ask for. I cannot believe the response I got on this challenge. I PROMISE we will do things like this once a month.  The responses came from Australia, New Zealand, The Philippines, The UK, Canada and just about every state in the union except Alaska. (Of course, that’s also the one state I have never spoken in either. I don’t understand it—I like Gov. Palin.)

The response was almost universal which was to give the customer the $7.99 ball marker. It isn’t worth the hassle and look at it as a marketing opportunity. There were 2 questions that kept on coming up. First was how much was the jacket I bought? It was $109.98 so it wasn’t a cheap windbreaker. Second, was why a ball marker was so expensive? It was magnetic and clipped on a hat.

As for the responses, I have listed 15. Instead of picking the winner myself, I brought my family together and we selected the response from Philip Barcellona because it was the only one that suggested sending a note. Congratulations Philip, your book is on the way!

The Winner:

In that moment, I would have realized our error. Firstly, I would have apologized for creating any confusion, and assure the customer what steps would be taken to correct the situation with proper signage. I would politely point out the freebies and then I would make a “gift” of one of the metal tees anyway……again with apologies for any misunderstanding………and emphasizing how much we appreciate our customer and his business. In addition, I would follow-up the incident with a friendly note hoping that no embarrassment was created and if so certainly not our intention, and spelling out the steps that were taken to correct the problem. I would then have a staff meeting to use the event as a teaching tool.
Philip Barcellona, Nyack

I probably would have laughed and said,” well sir the plastic ones are for stealing, the fancy new metal ones we have to charge you for, but aren’t they beautiful? They are only “7.99? ”
Melanie Boudar, Kailu, HI

I would say, “You want to “steal” it? First, let me throw the ball against the wall and if you can catch it after one bounce, you can have it.” And then when they looked at me like I was crazy I would say, “I am just kidding. Of course you can have it for free- we forgot to mark those and you deserve to have one! Enjoy it!” I like to make light of uncomfortable situations!
Rebecca, Louisville

In this instance, we would use humor to put that customer at ease. We would essentially say, “Oops, we made a boo boo. Those SHOULD have a sign on them. But we’ll go one better for you. Here are TWO ball markers (the plastic ones) just for you.” After that customer left the store, the very next thing we would do would be to place those markers WITH a sign in another location and put the plastic ones – front and center on the counter. How many times can you make the same mistake? Ooops!
Angela Veeck, Riverhead, NY

First If I was present and overheard the situation I would confront you the customer and apologize for the mis understanding and offer you a handful of the plastic ones that you have had in the past and a 20% off gift card on any merchandise in the store at your next visit. I would then once you had left talked to all of the employees about what just happened and how it could have easily been avoided and explain the cost involved to redeem the integrity of the store brand by offering the discount. We should not have to offer spur of the moment discounts if all of our actions are appropriate. This affects the bottom line but what more important is if not caught and handled with apologies a lost customer doesn’t just damage it causes critical damage. I would then take the two employees in private and have a simple chat with them and explain how that could have been avoided to reinforce it with them especially. I would also ask them to help out and take the time to go around the store and make notes on what needs to be tagged and tag appropriately so we can limit issues like this in the future. I could have just gave you the ball mark but you may be like me and still feel a little guilty for reaching in and taking something that you thought was promotional even though now it was given to you. That is why I would give you an abundance of the free stuff you have been used to in the past. I then want you back in the store and the reason why I gave you a gift card credit for 20% you next visit. By having a meeting with the staff and actually assigning two people to signage I am wagering when you come back on you next visit you will see improvement which may make you get that warm and fuzzy again and I may never have to offer you 20% off again because you want to do business with us.
Dan Novak, Mt. Prospect

One variable you did not mention was the retail price of the jacket. No matter what, for a regular customer who just made a nice purchase, I would have given the customer the ball marker. At a $7.99 retail the cost is probably $3. or less. For the sake of argument lets say the jacket was $60 retail. A ball marker that cost $3 is a 5% gift to a regular customer. No big deal. The customer would have left happy, and the good will of the gift would bring him back for more purchases.
Sam Wainer, Moab, UT

I would have said to you, “Sir thank you so much for stopping into our store today, as you frequently do when you are in our area. We certainly do appreciate your business, and value you as our customer. Please accept my sincere apology for this misunderstanding on our part at the register. We want you to have the BEST possible shopping experience here, please accept the metal marker on us today, and thank you for bringing our error to our attention. If I can assist you in any way in the future please keep my business card on hand, and contact me at any time. Thank you again Mr. Segel, and I hope the rest of your stay in our area is an enjoyable one!”
Gina Proctor, Hammonton

“Well, you would be stealing if I weren’t giving it to you as a bonus for catching my mistake. I should have had a sign on them that says they are $7.99?
Ellen Roy, North Little Rock

Well first I would shoot both clerks and include the footage in my training video! Just kidding If I was aware of the situation as it was happening, I would walk up and introduce myself. I would then apologize to you for the lack of signage leading to the misunderstanding. At that time I would probably offer the marker for free or some other item in the store. Signage would be made immediately even if only a temporary sign If I were not present at the time but was made aware of the situation, signs would be made immediately. If I had your contact information, from either store records or found within your book, I would call if possible or send some type of apology gift…maybe a gift basket with assorted golf items and yummy goodies, along with a store gift certificate to entice you back in, Of course a sincere apology would be included. I would also have a training session (without shooting) emphasizing customer service and making sure my employees felt empowered enough to make decisions in the best interest of the customer (within reason of course).
Debra Stahmer, Surprise

Hi Rick My grandpa always told me that giving people a deal is most worthwhile when you tell them you’re giving them a deal. In this situation, I think most of your readers are going to say “I would have just given it to you!” (the ball marker, not a verbal bullet) I agree with that – it would have saved your embarrassment. I think we could take it one step further and put a price on the “free” ball markers. Now each cashier gets to make the customer feel like they made a new friend when they are able to say “oh, don’t worry about it – have a couple – I hope they end up close to the hole!” Hopefully you’ll hear a good report from the business that they were able to make good use of your book.
DW Horton, Breslau, Ontario, Canada

This is easy, Rick. First I would have apologized to you, my good customer and explained that those markers were actually 7.99 and the free ones were around here somewhere. Then I would have given you a free one of the plastic ones, and then flipped the expensive one like a coin, handed it to you and said that one is on me for not having them priced correctly. I can assure you I wouldn’t have much money in them anyway but you wouldn’t know that. The bottom line is you would have felt good about doing business here and would have definitely come back. As soon as you motored out of sight I would have moved the free markers back on the counter with a “please take one” sign and I would have put a 7.99 sign on the metal markers. Not having items priced is something that really irritates me.
Charles Villarreal, Dix

Small retail stores need to cherish each and every customer. A custom name engraved ball marker with a hand written letter of apology from the store owner would be the most appropriate thing to resolve the issue and would build a customer for life.
Jeremiah, Las Vegas

I would like to say that this kind of white lie advertising strategy about their promo is not a good example to patronize this retail store. The customer has the right to complain in Dept. of Trade & Industry about this false alarm strategy promo and this dept have an access to condemn their license to operate. They should do a big convincing and attractive signage in a proper place of product promo to see to it, the customer have an awareness to focus this kind of promotional product, even passerby customer not intended to buy have great effect or intention to come back , if this promotional product is still available. About the store staff attitude, they should have a knowledgeable and friendly explanation about the promo, or they must have to attend seminar regarding people handling skills to have a multiple skills in order to influence people from achieving their goals.
Julie, Phillippines

First, we require prices clearly marked on ALL our merchandise. If something, like that ball marker, were NOT correctly marked, then the fault is MINE, not the customer’s. Time to fall on our sword. I try to use humor to alleviate tricky situations. My guess is that I would have said something like “well, I guess I’m going to have to let you steal that one! Certainly isn’t your fault we didn’t get around to marking the basket. Here, take an extra one just for bringing this to our attention!” Our staff is empowered to make decisions on the spot. It says that right in our employee manual. It also says NEVER do or say to make any customer feel bad. When in doubt, err on the side of the customer, and management will ALWAYS back you up. When this type of situation occurs, and it has, the employee sells the merchandise to the customer without comment, and, after the customer leaves, makes the correction and reports what happened. I learned a long time ago that “bad will” spreads twice as fast as good will. That is in our employee manual too! I also remind our staff that everywhere else, other than when they are on duty in our store, they are customers. So, before saying anything, I ask them to put themselves on the other side of the counter and make sure they wouldn’t mind hearing what they are about to say. I think that heads a lot of situations off at the pass! Just my two cents. By the way, we own and operate a fairly large scrapbook and papercrafting store.
Bud Izen, Salem, OR

If I had put a basket of ball markers on the counter without a sign on it and a customer wanted one, I’d have given it to you. I’d have given you a big smile & told you to help yourself. Since you were buying a jacket, a little gift with purchase goes a long, long way. I like to think of those things as a little bit of honey. You’re happy with your jacket & gift, and I’m sure you’ll be back. And I’ve learned a valuable lesson in never putting anything out without a sign on it. Or the cashier could have said: “Oh, you caught us, we put something out without a sign! These markers are brand new, they are suppose to be the hottest thing on the block. Those fancy metal things are suppose to be $7.99 each, but because you caught us, I’ll let you have it for 50% off.” You would probably buy it, because it is a good deal and we are obviously embarrassed for not putting a sign out. Of the two situations though, I’d just go for the first one. In fact, today I ran into the same situation, I was unloading boxes from my car and a customer came over & wanted to know what I had. I told her I had finally found the most gorgeous wreaths, that I had been searching everywhere for something natural and had finally found them. I opened all the boxes & showed her what I had. She was torn between 2 fall wreaths. When her husband finally asked the price, I quoted them a price $5.00 under what I’d of sold them for if they had been in the shop. And I explained that they had caught me in the act. And that they would be marked up higher if they chose to come back, but I was willing to honor what I’d quoted them. They chose to buy the higher priced one, then at the register, I gave them an additional 10% off. They were pretty surprised & asked why? I told them to cover the tax. They loved it and I know they will be back. I manage a produce stand, and we made a good amount on the wreath. I figure I would have had to sell about 35 heads of lettuce for the same amount I made on the wreath. It’s a win-win situation. Thanks for the question. And thanks for all the newsletters you’ve sent me. I’ve kept every one.
Sarah Smith, Salina, CA

Every week I will also be giving a book to the BEST WHAT WOULD YOU SAY OR DO Scenario that will be part of the book we are all going to write together. This week’s winner goes to Penny Bolton from Murfreesboro, TN who sent in a situation that could happen to any of us and it has happened to me. I feel badly for the other entries because they were also terrific and will probably make it into the book. I will keep you in the loop. This is an ongoing challenge and I will be awarding a book every week. So please send in some more scenarios. See the Special Announcement below for more information about what I am looking for and where to send the situations/solutions.

Here’s Penny’s:

You innocently advertised in a local paper that had included in their paper a political humor column with some racist undertones. You were bombarded and hit blindsided by people that emailed you and wrote comments online saying that they were offended by the statements in the column and they were boycotting all advertisers in the paper until they took corrective actions by pulling their ads. The emails and online comments were very mean spirited toward the advertising retailer. The ads rotate and the advertiser had no idea where the ad would appear nor did she have any idea that they would include in the paper a column that was so racist and controversial.

1. Check the loyalty program to see if any of these people writing had actually spent money in the store. I checked and they hadn’t. To not reply or respond at all. Let it all die down like yesterday’s news.

2. If any of the people commenting were actual customers to call them personally and explain that I am certainly not a racist at all and I personally did not know that such a column was going to be in the paper and I do not agree with the comments in the column.

3. To pull my ad for a week or two till the controversial column is forgotten.

4. To request that the editor of the paper write an apology and a statement that the opinions of the columnist is not the opinions of the advertisers.

What Would You Do or Say If This Happened to You?

I was shopping at one of my favorite stores. It’s a small independently owned golf shop that  I always stop in whenever I am in the area. The people are friendly and although their inventory is limited, they always seem to have what I am looking for. I picked out a new jacket (wind breaker) that they were just taking out of the box. (Isn’t it always special when buy something as it just arrives?)  I am at the cash counter and I am in the process of purchasing the jacket when I noticed a small basket of ball markers. This shop always gives away golf tees and ball markers at the counter.

I then said, “I’m going to steal one of these new ball markers.” When I said that it was as if the world stopped turning and the friendly people turned on me. The cashier blurted out, ” Those aren’t free–they are $7.99 each.” The free ones are plastic, these are metal. Then the person that was actually wrapping up my jacket sale said, “Would you like me to put it on your card?” He was a little nicer than the cashier but the attitude had certainly changed. I felt like a criminal.

Understand that this ball marker had the trade mark of the golf shop on it. So I assumed it was a form of advertising as were the other free products they gave away. Talk about feeling embarrassed. Yes, I did buy the $7.99 ball marker.

Then the person who was waiting on me says that happens every day here. Now that’s stupid.  How many other people/customers have they embarrassed? I’m so embarrassed that I am not looking forward to going back to the shop again – although I probably will but just not right away.
Then I put on my “retail guru hat” and asked why there was no sign on the basket? The response was, “We just didn’t get around to it and besides most people know they have to pay for metal magnetic ball markers.” Now that gave me a warm fuzzy. I must be part of the dumb group. Now I don’t want to come back if these two are working. I then tried to explain more about the power of signage and pointed out some other sections of the store where signs could enhance the shopping experience. It was like talking to a brick wall. They really didn’t know who I was or what I did so their response was probably appropriate.

So the next day I dropped off a copy of the brand new Retail Business Kit for Dummies, 2nd Edition that was just released. It has a great chapter on signage. Who knows if they will change.  All I know is this is the type of business that will come to me and ask the question:  Why are my sales off and what do I have to do to get some of my older customers back? They have NO clue that incidents can start to snow ball out of proportion and become a slow spreading cancer.

Here is the challenge: Let’s have a mini contest and hear from you as to how you would have handled the situation. I will publish the best ones and I will give a copy of the Retail Business Kit for Dummies, 2nd Edition to the most creative response.

For review here is the challenge: What would you do or say if you, as a store owner or manager, were confronted with the same set of variables. One rule: You can’t say it wouldn’t happen to me because I would never put any merchandise like that out with out proper signage. Just assume you didn’t for this example.

Enter the contest here

***********************************
SPECIAL ANNOUNCEMENT
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How would you all like to write a book with me? What I would like to do is create an entire series of WHAT WOULD YOU DO OR SAY IF ….

Your job is to come up with the situations and 4 possible solutions. However, if you don’t have any suggestions to solve the problem, we will ask the group for ideas to your problems/challenges. The book will be called RETAILERS: WHAT WOULD YOU DO OR SAY IF a Collection of everyday challenges and answers on how to handle them. Written by the best retailers in the world.

The model is similar to the Chicken Soup for The Soul Series. Don’t miss this opportunity. If you have any questions about exactly what I am looking for, please don’t hesitate to email me at rick@ricksegel.com for more information. It’s time for you to be the consultant and blow your own horn. This is going to be fun!

Participate in the Book here

To Commission or Not to Commission

That’s an interesting question that needs to be revisited.

I have not been the biggest supporter for paying commissions in a retail store setting.  There are a number of reasons that I feel that way:

1. You want a commission system to serve as an incentive to your employees to perform.  Unfortunately, it just doesn’t always work that way.
2. It doesn’t guarantee results especially with part-time employees.  I believe it doesn’t work because many commission programs are rewarding results that would have occurred even without the commission.
3. It can create in-fighting among employees.  (“She is my customer. No she is mine.”) etc. etc. just like little kids.
4. Many commission plans become predictable and expected—a ho-hum. You really want to create excitement..

There is another side to the issue of commissions. Understand, if the employee can earn a livable wage via commissions, then there is no is no question about the effectiveness of commissions. Nordstrom’s is famous for their commission structure because they have allowed their front line sales people to make very lucrative wages. Their employees have even moved to cities where new stores were to open. Yes, they transferred themselves, at their expense because the commissions would be so good in a new area.

So why the discussion about commissions? Because there are some other situations where commissions or incentives do work very well and need to be addressed. I have to give credit to Bev from Coast Highway Traders in Encinitas, California who wrote in explaining how she paid her employees an extra $1.00 for every customer that they can sign up for the store’s data base/mail list. Think about the lifetime value of a customer. It can be worth thousands of dollars over the years. Many times these long term relationships start with a positive shopping experience and a few friendly reminders sent to them in a variety of ways can be the key to developing that long term relationship.

I know what you are thinking–not every person you add to your data base is going to be worth thousands. You are absolutely right! What if only 5%, one in every 20 customers, became good customers? That would mean it cost you $20. That is still a small price to invest to create the consistent long term customer. Bev shared with me that her email list grew in leaps and bounds when she instituted this program. Every week she would give her employees an envelope with cash representing the amount of people the employee signed up.

That incentive doesn’t have to be forever. You can start it or stop it anytime you want. Actually, I think some of the best incentives should be short term or for a specific time period. Do it for a month, a week, or a season.

There are two other ways commission systems work. First, when it is used to move slower selling merchandise. Instead of marking down merchandise, offer an incentive or “Spiff” to your employees for selling it. Sometimes merchandise doesn’t sell because it wasn’t displayed properly or some of your employees didn’t like it.  With an extra commission, it is amazing how employees fall in love with merchandise that they hated the day before. A $5.00 spiff can be much cheaper than reducing the price by 20%

Lastly, there is one other way I love to do commissions or bonuses. That is a group commission/bonus. The way it works is the owner establishes a sales goal for the store to do in a month. If the store hits the goal, a dollar amount is shared by all of the employees.  It is divided by the amount of hours everyone works.  Example would be if the store’s goal of $30,000 for the month is met, then the bonus amount is $1,000. You first determine what the hourly bonus would be. If in the month there are 500 man hours, that would mean the hourly bonus would be an extra $2.00 per hour. If someone worked 40 hours, the extra bonus would be $80.

Some stores will also add expenses into the picture but the simpler the better. I would love to see what you folks are doing in relationship to commissions. Pro or Con. Never or Maybe. Share your experiences and I will report them all next week. Whatever your opinion is, I still like the $1.00 incentive for capturing information about your customers. Have a great week.

Click here to send me your thoughts on this.