Mental Models & The Way We Make Sense of Things

The problem is the way we ‘see things’.

The solution is the way we ‘see things’.

Except we don’t understand how we see things.

The Red Laser App

Retail is getting tougher and tougher.

Shopping is getting easier and easier.

I have become aware of Red Laser some time ago and have tried it out.

It is a little bit scary.

 

 

 

 

I like Red Laser for its ability to also scan QR codes. (Post about that to follow.)

The science of losing customers

Why do dissatisfied customers stay and satisfied customers go?

 

This is a partial cross-post from my Inside Retailing column. But I add a few additional insights that would not be appropriate in that forum: here I can say whatever I like…

Have you ever vowed not to shop a certain store – only to return some time later, hoping no one notices or asks?

Have you ever wondered why satisfied customers really hang around? Or, conversely have you wondered why dissatisfied customers don’t always leave?

Seiders et al conducted research (Journal of Marketing paper, Vol 69, 2005) into customer satisfaction, including a longitudinal study (over a long period of time) and established a few major drivers of customer visitation behaviour.

They distinguished between actual behaviours as well as reported intent. (And yes, customers don’t always do what they say they will do.)

They determined that there were four factors that influenced actual behaviour:

1. Convenience
2. Competition
3. Cash (Household Income)
4. Customer involvement

If you study this list of factors carefully, you will note that there is only one of these factors that are fully in your control on a day to day basis.

Can you spot which one it is?

It is customer involvement, of course; because all the other elements are ‘external factors’ and therefore by definition not controllable. (Initial choice of location is one element of convenience, but it is relatively difficult to change anyway.)

 

This would mean different things in different businesses.

So it stands to reason that we have two simple choices to make:

1. Rely on our luck (a competitor closes down, a bus stop in front of the store) and hope for the best.
2. We can figure out how to create an engaging customer experience.

What will it be for you?

Of course, customers want different degrees of involvement. It is worth noting that none of the following qualify as customer involvement:

• Smiling very brightly,
• Greeting the customers in the friendliest possible way
• Giving the customer a bag for their purchases
• Giving the customer a discount for buying
• Asking the customer to join your loyalty club

Most retailers (and even consultants) think that the answer is better customer service.

It is NOT.

Customer service is a cost of entry. Many retailers who are currently being punished in the perfect storm of global financial hardships, growth in eCommerce and changing consumer habits deserve to be punished.

It is sad. It gives me no pleasure to say it. But really, how long can you expect the customers to hang in there when your service sucks?

Good service won’t win them back.

The game has changed. Forever.

Yuu now have to figure out how you change your business model to deliver a customer experience that will win over customers again.

If you are interested in understanding the difference between customer service and customer experience, you can go to town HERE. (Normally it’s reserved for subscribers only, but this is too important to keep behind the wall.)

 

 

A retail experience: old way vs. new way

This is an extract from our previous newsletter on 3D Retailing.

(Apologies to those who subscribe. If you don’t, drop your email in the box, and I will give you access.)

The OLD way (two-dimensional)

• You arrive a few minutes early, but they have the table ready anyway.
• The waiter acknowledges you, greets you, introduces himself and takes you to your table where they hand you your menu
• The waiter comes around within a few minutes to take orders
• They even suggest a few specials and make a recommendation for the wine
• They place the order at the kitchen and return with water & crockery
• They bring the food out and serve it the proper way.
• Everyone gets the meal they ordered, and it is presented well and it tastes exactly how you expected.
• During the course of the meal there are a few ‘table checks’ and they top up the wine/ water.
• They bring the desert menu, take the order and serve the desert in good time.
• The waiter is alert and you catch their eye easily and you signal for the bill.
• Your credit card is approved and you leave a healthy tip.
• You are greeted when you depart.

The NEW way (three dimensional)

• You arrive at the restaurant and you are greeted by name by the host.
• He accompanies you to the foyer where other guests are mingling.
• The host enquires about your last business trip and compliments your companion on her earrings.
• As the host introduces you to a few other guests, the sommelier brings you a pre-dinner drink (based on knowledge of your preferences. But it is a new flavour, and they share a few titbits about the new process/grape/brand whilst serving you.
• One of the hosts is telling a story to a few people gathered around her, and you join the half-circle to watch the ‘performance’.
• A few minutes later the door to kitchen opens and the host invites everyone in. There are long bench tables arranged around the kitchen island, which is manned by 8 chefs.
• The lighting changes and the head chef introduces the crew. Each of the four long tables will be serving different range of dishes based on your recorded preference. You had indicated ‘seafood’ and your companion take your seat at that table.
• Your seafood chef greets you by name (they had the seating plan indicated on their side of the table, and they have learned something about every customer.)
• He then proceeds to run through the menu planned for the night.
• As they start the preparations, they engage you in conversation, telling you what they are doing giving some tips as they go.
• The courses are placed in front of you by your chef throughout the night.
• When you are ready to leave, you simply get up and excuse yourself.
• The chef comes around and gives you a hug and your companion a kiss on both cheeks.
• They insist you take the half bottle of wine with you as you leave.
• At the door, the doorman opens the door to the waiting taxi.
• At the end of the month, your credit card is charged the usual monthly membership fee.

Whilst you may argue that you would not like the ‘new’ restaurant experience, that is not quite the point. This is just one example aimed at people who do this for the food experience. I am sure you can imagine a few other ‘themes’ or experiential outcomes that would suit your tastes better – and if there us a market for it, some restauranteer will cater for it.

The point of this exercise is to imagine how a ‘traditional’ concept might be transformed in an experience. You may think a restaurant is an easy option, but the same can be done for a travel agent, a hair dresser or a shoe shop – quite easily.

Dreaming up the experience is the easy part.

Translating it into a physical experience (staff, systems, procedures etc.) is the hard part.

And of course doing so at a profit is harder still.

Deals too good to refuse, or not…

We used to say that forests have been decimated on a topic that has received much coverage.

In the digital age, what would the equivalent be? Megabytes massacred?

Whatever that is, it applies to Daily Deals sites (ala Groupon and clones & variations). From a retailer’s perspective, I am sceptical about the value. Butthat may be about to change.

A new site (xferral) was launched recently:. Unlike the others, this one is free for merchants. It seems to act like an aggregator of other deal sites as well, but since I am not a merchant I cannot test it. (From the list of sites they aggregate, this is an extremely competitive space – many I have never heard of.)

I am not sure what their business model is, presumably they will sell data to advertisers and/or retailers. When you visit the site, the browser (I use Firefox) prompts me to ‘share my location’ so it is collecting data. The downside is that it is US only (at this stage).

The problem I have with Daily Deals sites is that retailers use it in the wrong way, and they use if for the wrong product.

It is enticing to tap into a new, low-cost (in some cases) marketing opportunity but it does not always work out as planned.

To use these sites effectively, you have to understand the notion of KVI’s (Known Value Items). You can read more about it here.

Consumers know the value of certain items and they don’t know the value of others. If you want to run a loss-leader program, which these Daily Deals promotions are, then you have to pick a KVI.

Customers have to know that it is special when they see it.

Of course, you must then be ready to deal with it when it works. There is no point in doing the deal and this (low margin/ loss leader) is the ONLY transaction you have with that customer.

The purpose of a promotion like this is that you:

• get the customer to buy more (than the promotion)
• make the customer aware of your existence and they return in the future – to buy more

Deep discounts are also used to clear stock (your buying errors) but you should think carefully about making your ‘duds’ the first touch point hundreds of new customers will experience.

Think twice. Do once.

 

PS This LINK takes you to a site with many FAQs that explains in greater detail how many of these sites work.

A new way of doing business

[Extract from previous newsletter. If you receive that, ignore this.

If you don't receive, why not? Just drop your email in a box...]

It’s a buzz: S-Commerce and you have heard about it, right?

It’s not just eCommerce or internet retailing; it is now about social commerce. (Meaning it’s all happening at the social networks – probably Facebook if you want to be realistic.)

The so-called gurus are mostly talking rubbish, to be straightforward. They claim that:

• Internet shopping is growing at such a rate that traditional retail will be redundant soon
• Customers can always find the lowest price on the net, and they are now trained to look for the lowest price
• There is no way a traditional store can compete
• The market is changing and it is irrevocable
• Traditional media is not effective at reaching new customers.
• Customers do not want to be interrupted, they now want to be treated with respect, and you must be prepared to have a conversation with them.

There is more, but when I have explained these, you will get the point.

Internet shopping is growing at such a rate that traditional retail will be redundant soon

ECommerce makes up about 4% of total retail sales.

The internet is changing the way we are shopping, but not THAT we shop. As long as people still buy stuff, retailers can come up with a strategy to succeed.

Customers can always find the lowest price on the net, and they are now trained to look for the lowest price

Customers have always (and still do) want to get value for money. Nobody has ever wanted to be ripped off. The internet makes it easier, sure, but it does not change the fundamentals. If you have not figured out how to provide value for money, then you should. But it is not new; maybe just a bit more urgent.

There is no way a traditional store can compete

Of course they would say that. They want your money.

The market is changing and it is irrevocable

What’s new? Change is the only constant as the cliche goes.

Traditional media is not effective at reaching new customers.

When was the last time YOU clicked on a Facebook Ad – or even on Google Adwords?

• 99.9% of people who are served an online display ad do not click on it.
• TV viewership is now at its highest point ever

Customers do not want to be interrupted, they now want to be treated with respect, and you must be prepared to have a conversation with them.

Hey, next they will tell us customers are people with real feelings. Whoopeedoo. They mean that the conversation you must have with the customers should happen via whatever channel (read website) they happen to masters of.

SO what to do?
Don’t get me wrong. I am not a Luddite.

I was on Twitter Feb 2009 – 2 years ago, and on Facebook July 2007. (How does that compare with your resident guru?)

As a centre manager in 1999, I argued that we should be planning our retail mix to assume that Sanity won’t be around. (Sanity being a chain of music stores for international readers.)

I launched my first internet start-up in 1997, an online tool allowing brokers to market office space when realestate.com.au was a twinkle in someone’s eye.

I am currently involved in another internet start-up with a friend and colleague who, if you don’t use his services, you should.

I say this so that you will believe what I tell you.

The internet is just technology. We change behaviours to adapt to it. (Just like video technology changes how meetings are held.)

But it does not change the fundamental needs or attributes of humans. It does not change what people value.

The rules of a successful commercial enterprise are not different.

Just like we had to learn to accept EFTPOS at the cash desk, we have to learn about all the new channels and technologies. But the rules are no different, even if the technology is.

We still have to go to where our customers are. You still have to be respectful, you still have to add value, you still have to figure out what the customers want and provide that at a profit.

NO CHANGE.

So there is nothing to fear.

Don’t get left behind as technology is being introduced – make time to experiment and try a few things.

Here are three sites you can try.

• SHOPTAB starting from $10 per month
• STORENVY which is free
• PAYVMENT - apparently the hottest start-up in this space, also free

I am NOT offering my services to help you with this. You don’t need help. You don’t need a guru/consultant.

What you do need is a kick up the arse to just go and do it.

In the meantime, back at the ranch…

You still have to know how to merchandise and how to price and generally run your business.

In the newsletter I include a link to two eBooks. Both are extracted from eBooks that have been sold commercially, so there is actual value. If you subscribe, you will get the link…

But more importantly, by actually doing something with the tips and techniques contained in those books, the value is immeasurable.

We can help of course, if you need it.

Sure we gallivant at conferences, and we have puff pieces written in the media (Article in Newsagent Magazine) and appear in trade magazines. But that does not mean we are not approachable or real. We have customers (actually most become friends) who need us and we need them.

Neither of us is special in any way and if I ever acted that way you have permission to kick my butt. I say this because occasionally someone writes/comments on something and I sense that they don’t feel confident in doing it as if our opinions somehow carry more weight.

Don’t think that; you deserve better.

And if you think you may want to ask about something you may need assistance with, don’t hesitate.

I caught up with another friend the other day – if you sell gifts, and you don’t stock his stuff you are missing out – and he said: I had a look at your website and I have no idea what you do. (That was a wake-up call, I tell you.)

In case you don’t know either:

Ganador helps organisations implement their brands in a retail environment.

We develop strategies, systems and people to perform in a retail environment ad we do that by measuring the performance, designing appropriate strategies and equipping the people to implement those strategies. Typical products are:

• Mystery Shopping
• Retail Audits
• Retail Ready Brand Assessments
• Customer Experience Design
• Knowledge Management
• Internal Communications
• Customer Communications
• Training (online and offline) – our favourite because it empowers YOU

OK, all that shameless self-promotion is out of the way for some time now. (Actually, that was the first time I think?)



Adaptation (Dan the Man)

I am a great fan of Dan Ariely. This is a good talk on a very relevant topic. Enjoy.

 

Neuromarketing for Retailers – Part 4

Pradeep’s book (The Buying Brain, 2010) is a must read. This post is the final extract on some of his findings – and it focuses on the applications of neuroscience in the retail aisle.

 

• The median supermarket (US) is 46,755 feet.
• The average number of items in a supermarket is 46,852.

Think about that – and what it means
I will limit commentary, and just repeat some observations. (A typical male brain approach )

• Avoid sharp corners on gondola ends (end caps) as there is a danger signal that the brain recognises sub-consciously. (Who thought OH&S could actually increase sales?)
• Evaluate EVERY touch point in your store for: findability, ease, simplicity, discovery, pleasure
• Your retail environment should closely resemble the environment in which the product will be consumed. (Remember the Hi Fi lounge?)
• Consumers that experience entertainment get emotional relief and minimises the pain of purchase. (Shoppertainment whatever happened to you?)
• Make things as simple as possible; and colour is key element in achieving this. (Ever got lost in a car park that only had letters?)
• Avoid information overload; the mind shuts down. We are neurologically primed to seek out differences and too much repetition of closely related/ similar merchandise sends the brain on a holiday.
• Focus on faces. (Can you change your shelf-talkers to include someone’s friendly mug?)

 

As you read through this, you will likely think that you have seen examples of all of these somewhere. Some retailers have lucked into those solutions and others arrived by experimentation.

Others will have to ask someone who knows.


Neuromarketing for Retailers – Part 3

Last week we had a short overview of the Boomer and Neuromarketing. This week we look at female brain and what it means to marketers.

We mentioned earlier that the human brain has not changed much in the last 100, 000 years. Coupled to the fact that the worst outcome for the ancient human female was ostracism from the group (it jeopardises survival) – and this still applies today; the context is just different.

 

• Men tend to use either the rational or the emotional filter – whereas women tend to use both. (Women truly can multi-taks better than men.)
• Although women have slightly smaller brains, it contains the same amount of matter – and it contains 11% more neurons in the language centres of the brain.
• Women also remember stressful and negative experiences more than men (no jokes in the comments section   – and this holds grave danger for their propensity to generate negative word-of-mouth.
• In short, women are more verbal, empathetic, nuanced and loyal. What does this mean for your brand.

 

Here is a small case study presented by Pradeep in his book (The Buying Brain, 2010) for the re-design of a website that sold baby care products and other applications.

-    Position visuals on the left and semantics on the right
-    Feature moms using the product
-    Create forum where they can gather and share tips
-    Show mom-and-baby interactions

Next week – the final installment.

Neuromarketing for Retailers – Part 2

Last week we had a short introduction to neuroscience. This week we look at Boomers and what Neuromarketing means in that segment. The reality is that as little as 100 years ago, people did NOT age, they died. We are still learning about the aging process – and expect to have many myths busted in the next decade.

The Boomers (46-64 currently) is such a large segment that they have redefined society, business and certainly marketing in every generation as this demographic bulge moved through. They are also the richest generation – and money speaks loudly.

 

• People don’t suddenly change at 60 – it is a gradual process.
• Memory does NOT get worse as you grow older; it now appears that we lose our ability to suppress distractions, creating an appearance that we become forgetful. (Think through this as marketer; it should change the way you communicate.)
• It is more effective to accentuate the positive – not promote doom & gloom. (The amygdala in older people is only active when they view positive images.)
• With highly repetitive messages, older brains delete the NOT and remember the DO. (‘Remember to drink your supplements’ vs ‘Don’t forget to drink your supplements’.)
• Older people are comfortable with more information and detail
• Older brains commonly suffer from ‘tip-of-the-tongue’ memory loss. (It is common and has nothing to do with mental health.) How does your brand and your tagline fare? The trick is use mnemonic triggers, but your agency can figure that one out.
• Frequent exposure reinforces belief. (Just remember not to run foul of the ‘NOT’ being deleted which is very real as explained above.)

There is much to learn about how this group thinks and remembers – and we ignore it our peril.