Shop Your Business Like a Customer

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Have you ever acted or been in a school play? At first you feel uncomfortable, but when you finally let go and actually become the character, it gets easier and the performance is better. That’s why we hear of so many actors who research their parts for months before they start rehearsals.

Acting like a customer in your own business shouldn’t require much research, after all you have been dealing with customers for years. You have heard all of the complaints, the attitudes, and the whining about price more times than you care to remember. It’s time to use it. Shop your store the way a customer would. Approach the front door the same way. If you have windows, look in them the way a customer would. Are they clean? Do they look professional? What kind of image do they give? What are your expectations about the business before you even enter? Do you expect better merchandise, discounted merchandise, unique or unusual, or the same as everyone else?

Once you cross the threshold what grabs your attention? Is the business clean and organized? Is it busy? Is it easy to find things? Is there merchandise that is being promoted or priced so low that you just have to buy it? Is there something that is so different that you just have to tell all your friends about it? Are there cute whimsical signs that make the shopping experience fun? Are there things that are in need of repair? Are displays fresh and full?

Be critical, be hard on yourself, and start to make a list of the things that bother you. I almost wrote the things that you must correct. But if you say that, you jump out of the character of being your customer.

Then ask yourself “If I were a mystery shopper just coming into the store for the first time, what would I think and what would I write in my report? Would I be complimentary or not?” If you really want to bring this experience to another level, then shop other businesses and see how they compare to each other and to you. They don’t have to be in the same industry as yours. I had dinner tonight at a popular chain restaurant and asked the server what a certain pin he was wearing was for. He was proud to say he got it from a mystery shopper who awarded it to him for providing exceptional service. You would think he had just won Olympic Gold.

The question that always comes up is when should you do this and do you have your employees actually wait on you? First you can do this almost anytime and it should be done at least once a quarter. NO, I don’t recommend having your staff wait on you. That can get a little too silly BUT don’t be afraid to have your staff shop you like a customer to get their feedback. Then compare your findings.

With the eyes of the customer and being in a role playing/acting frame of mind, you will discover things you just never notice. In my seminars I ask people to ask themselves without looking if they have numbers or slashes on their watches. Then I tell them to look at their watches and it amazes everyone when about 35% of the audience starts to laugh because they didn’t know. This is something we look at everyday, 20 to 30 times a day. This is the same premise. It is making you aware of the things that we take for granted and might not notice, like the stain in the ceiling which we have been planning to take care of for the last two years, or where the carpet is worn out, or the unprofessional paper signs that just junk up the business near the cash register.

As I shop stores, I ask myself more times than I care to remember, and I am sure some of you say the same thing, “Do they know what their business looks like?” I really think they have just gotten used to their surroundings and just don’t notice. Try it. It will make you your own retail consultant and discover things that you never even realized.

One more thing before I sign off for this week. I want to thank everyone for the beautiful responses and stories that I received regarding my Uncle Ben. I wish that I could have responded to each of you, but I am sure that you will understand. What a wonderful caring community I have—thank you.

Same Old Values are Still the Best

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I lost one of my best friends at 7:08 on Friday morning July 18th. My Uncle Ben, my godfather died of pneumonia at the young age of 95. I had been his legal guardian for the past 6 years, after his wife died. Uncle Ben was the embodiment of the American Dream that we all can learn from and all need to be reminded of.

My uncle was a Mathematical Savant. He could look at a column of numbers and tell you what they added up to without any hesitation. It was as if he was a magician with numbers. But as bright as he was,  he dropped out of school in the 9th grade to go to work to help support  his family during the depression. When he was 21 years old, his father was killed in an automobile  accident and he and my mother  moved the four  younger brothers and  sisters and mother  to the Boston area.

He eventually got married, worked hard, saved his money and borrowed from all of his relatives and even a little from the bank to be able to buy a food distribution business. Unfortunately, the business failed within 18 months.  He did something that is almost unheard of today. He paid every penny back with interest. It took him 10 years before the last payments were made.  He believed that your name, your integrity and what it meant to other people is who you are. He believed in personal BRANDING although he never called it that.

He later went on to become successful in commercial real estate beyond what he could have ever imagined. He had an unusual way of negotiating–he didn’t. He never would insult or put down what he was buying. Either the deal worked or it didn’t work. But to try to beat someone up just for the sake of winning something was not his style.  Did sellers come back with lower prices? Yes, but he never asked.

Ben believed and taught me something I have lived by. A deal must be good for both parties or it is not good for either party. Life had taught him that nickel and diming could end up hurting the buyer. You get more from a happy seller that one that you just aggravated. He was a hard nosed businessman but always wanted win/win relationships.

He also believed that there has to be one person worrying about paying back debts and it had better not be the lender. If someone ever reneged on a commitment that had made, he would never do business with them again. Yes, it was just that simple but that’s the reputation or brand he developed.  As tempting as other alternatives might have been, he stayed true to his values and believed it was those ideals that made him that successful.

Lastly, he was a strong believer in the importance of charity and service to your community. He never respected anyone who didn’t give back or ignored the importance of charity. Ben was laid to rest today but the world didn’t lose an honorable man because his story will serve as an inspiration and the way to do business for me and the rest of my family for years to come. If you read the definition of the rags to riches story, The American Dream, just think of my Uncle Ben. It was great sharing a life with a man who made a difference.

Let’s Talk About Lying

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I spent an interesting weekend with old friends and neighbors. Not the same friends all weekend, but different groups at different functions. As the weekend was coming to an end, I was thinking what to write this week’s article about. I like to use topics from the week but somehow nothing was jumping out until I had this Eureka moment. There was a common theme that ran right through every group and that was about lying and the effects it had on different people.

One couple was all upset because they had a new hardwood floor installed and after only 4 months the floor was buckling. When my friend called the people who did the work, they said they told them that the floor they selected will sometimes do that, especially in very humid conditions.  They live in Florida—when is it not humid in July? They were never told that; the installer was lying.  When they called the store that sold them the flooring, the store couldn’t be any nicer and came right down to inspect it and contacted the manufacturer immediately. They asked why the installer told them the bit about humidity. That was easy. They didn’t want to be responsible for anything and made up a lie. They liked the installer but because of the lie they no longer believed anything they said.

So here are some questions to think about.

• Have any of you ever lied to customer?
• Is lying bad?
• Are some lies OK and others not?
• Has an employee ever lied to you? Or have you ever lied to an employee?
• Have you ever exaggerated a point to a customer?
• Has a sales rep ever told you that “everyone’s buying it”? We all know that  not everybody is buying it. So is it OK to exaggerate a little in a sales situation or does the sales rep  lose some of their credibility for that exaggeration? These are issues we face everyday.

Many of you have heard the stories from my store about how one of my salespeople who worked in the store for years would constantly lie to people about the size she was giving them. And many times she would rip the size out and tell them it was a size they wanted to hear. Customers loved her but she was a liar. So are white lies OK?

How do you handle it when an employee calls in sick when you know they aren’t sick? Do you just accept it? Many of us do, because if we accuse them we could create an issue that will end up in a bigger mess than the lie. But what happens if it’s a family member? One of my friends was supposed to have a special lunch with her son and fiancé only to get a call from her son telling her how sick he was, how he had to go to sleep, and cancelled the lunch. He was lying and anyone she told the story to knew he was lying but she didn’t want to accept that. When someone confronted her and said he was and she should just accept it, my friend almost attacked her and now wants nothing to do with this long time mutual friend. She was only telling the truth, but it cost a friendship.  The rest of us all lied to her and we agreed that it was too bad he got sick and even  suggested home remedies. So the liars still have a friend but the outspoken person who told the truth lost a friend.

What happens when you are so excited about a new product that just came into the store and you  share it with your employees? Do your employees  lie to you and tell you how great it is  and you find out later they are lying? Can you ever look at the employee the same way again?

Can you ever look at a company or store that lies to you the same way? A major department store that you are all familiar with sent out a sale flyer announcing a big sale with an extra 15% OFF coupon for the holiday weekend. So what did I expect? Marked down merchandise with an extra 15% off. That was not true because the majority of the merchandise in the store was exempt from the extra 15% off and most of the merchandise wasn’t even on sale.  Yes, in the small print it had all of the exemptions but the type face was so small I didn’t read it. Every item I selected was NOT on sale.  When I finally found a piece of luggage to buy and tried to use the coupon, I was told that the markdown was better. Huh? I didn’t get it.  So my impression of the store is terrible and I refuse to ever go back to buy anything from this store.  Why? Because they lied to me. I don’t like when people lie to me. NO ONE does.

I can’t tell you that sometimes it’s OK to lie in certain situations. That is an ethical question for you to answer for yourself. However, there are two points that are common in any situation of ethics.

1. When we see or encounter a company that is not ethical and lies to us we can never look at that company the same way again and we usually stop doing business with them. We want to do business with businesses we trust.
2. We must be ethical in our dealings because we will turn friends, customers, and employee away from us.

So is the little white lie OK? Maybe but it could cost you a customer forever. It’s just something to consider. Now you do some soul searching.

The R Word – Recession – Time to Revisit It

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For the longest time my approach or attitude toward recessions or economic slowdowns was to strengthen your own business and understand that during the worst of times there is always someone doing business. All I ever wanted was to be that business. I still believe that but with the rapid increase in gasoline prices and the stock market officially falling into a bear market (20% drop from the high), it’s time to perhaps readjust our thinking.

First, for all of the newer business owners, Recessions happen regularly. Actually, we have one about every 8 to 9 years. There has never been a decade without one. Having said that, we must also remember that all recessions do come to an end. The normal length of a recession is 1 to 2 years. However considering that housing and fuel are involved, the cornerstone of most economies, plan on this one to stretch to the 1 to 3 year time frame.

All Recessions have a few things in common: Businesses go out of business. I can’t make that sound any better but the trick is to not be one of them. (That’s the purpose for this piece.) Your sales will decline. BUT that doesn’t mean you will make less money. Many businesses make even more money because they cut the fat from their budgets. Credit will tighten up and your vendors will need to collect their receivables more diligently because they are afraid of the business failures and don’t want to be stuck with worthless debt.

That opens the first opportunity: Vendors need and worry about their cash flow, so now is the time you can negotiate much better terms for prompt or early payments. Even if you owe vendor money, don’t be afraid to ask for a discount if you pay an invoice early.

Next opportunity: When business is good people flock to open businesses. Many of these businesses don’t know how to operate during slow downs and these are the businesses that close first. The jerk that loves to advertise that they are the cheapest in the town will not be able to sustain any type of slow down and they will be gone. That means you have a little less competition to worry about.

Kenny Rogers, in his song the Gambler, said that “we have to know when to hold them and when to fold them.” That means cut your losses as early as possible. A great idea during good times might just be a dud during a recession. Another way to put it might be “when the horse is dead, get off it”. Your first loss is the best loss.

It’s time to refocus every employee toward sales and marketing. Making sales and add-on sales are the heart beat of a business during times like these. Everyone is a salesperson, from the high school kids, to the bookkeeper, to the person who vacuums the floor. Everybody is selling. Some times it’s as simple as pointing to a piece of merchandise in front of the customer and saying “did you see this?” It might just add an extra sale a day.

Think about how your customers’ attitudes have changed. They believe that every retail store is hurting because of the economy. Because of that, the “promotable” item is even more important.  Always have some type of special or promotion. This is also a great time to start sending out coupons. They work and more and more businesses are making them part of their marketing plans. Where would Bed, Bath and Beyond be without their coupons? But that’s only one of many. Make the coupon easy to understand and always have an expiration date.

This is also the time to reevaluate every expense you have. Expenses that work in strong times are extravagant during slow times. That also means be careful with your buying as well. Buy from companies that can fill reorders quickly. It is better to have a vendor inventory the extra merchandise than you having it in inventory. Inventory costs money. After all we do 80% of our business with 20% of our inventory. Let’s work to make our inventories more efficient.

Lastly, during normal business conditions we have 3 categories of customers: High End, The Middle Class, and the Economy Buyer.  The High End and the Economy Buyer stay intact but the middle of the road buyer leaves the middle for either The High End or Economy. Obviously, the Economy category increases more but High End Buyers also increase. That customer might not buy as much but feels more comfortable in the higher class. The problem that many businesses get into is trying to attract the Economy Buyer. That is a slippery slope to tackle because the competition is more intense. Many successful specialty retailers have traded up over the years into better merchandise for this very reason.

Be the best at something and customers will follow. Remember the words of my college Economics Professor who told me that when everyone finally accepts that we are in a recession is when the economy has already started to heal.  It might just be almost over but I’m not an economist. All I know is that there is always someone doing business and I want it to be you.

One more thing – again my readers have shared some wonderful ideas! Please visit the survey results to last week’s question about commissions. There are some great tips there to use in your stores. Thanks again to everyone who responded for sharing some strategies. I know you made me say “aha” and I’m sure they will do the same for you.

To Commission or Not to Commission

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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.

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