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Tuesday, September 22, 2009

Keep Calm and Carry On.....small changes can lead to big retail success.

During World War II t the Ministry of Information commissioned a series of propaganda posters designed to reassure frightened citizens that all necessary measures were being taken to protect the nation. The first poster read: "Your Courage, Your Cheerfulness, Your Resolution will Bring Us Victory" and a million copies were posted throughout the country. Shortly thereafter 600,000 copies of the second poster, which read "Freedom is in Peril" were printed and distributed in a similar fashion. A third poster was printed, but the 2.5 million copies were held in reserve and never released. These posters were intended to be disseminated only in event of extreme crisis, such as an invasion. The poster read simply, "Keep Calm and Carry On."

As my kids would say....."True that." Seriously. If British citizens could be urged to "buck up and get on with it" in the face of eminent peril, small business owners facing a down economy can certainly be urged to do the same! The economy is a challenge. Most of my customers report much lower sales numbers this year. Of course, I have heard of some stores recording banner years, but that is the exception, not the rule. Many of the folks I talk to are complaining about the economy, their sales staff, their inventory turns, and on and on. Clearly, they have identified the problems.

What is the crafty retailer to do?

Focus on the solutions! Once you have identified the problem (bad economy, lackluster customer following, etc.) it is time to stop talking about it and direct your attention to formulating a solution. The bitching and moaning simply make you feel justified in your failure and get in the way of productivity. KEEP CALM AND CARRY ON. Get proactive rather than reactive and do some strategic planning to refine your business. Michael Gerber, author of The E Myth, writes about the three important stages of business development: Innovation, Quantification, and Orchestration. (Note: if you do not have this book, get it!)

Craft store inventory is largely commodity based. That is, Product X is the same in your store as it is from the store down the street or the internet reseller. So what makes you different? The manner in which you sell product X! It is what you do that is inherently you---your branding, your employees, your store ambiance. Is it time for an Innovation? Savvy business owners incorporate innovations as a means to simplify the business process by breaking it down to its critical essentials. A successful business innovation answers the following question: What is getting in the way of my customer receiving what he wants from my business? Innovation asks "what is the best way to do this?"

Oftentimes, it is the smallest and least expensive innovation that can prove to be most effective. For example, look at the way your employees greet your customers. How often have you heard one of them ask "May I help you?" You may even do it yourself [Insert sound of Booing and Hissing here]. I know that when I go into any store - in any city - in any state - it is uniformly the greeting of choice. My response is equally predictable: "No thanks, just looking." The salesperson is then free to go back to texting her boyfriend, pricing product, or ringing up another customer, secure in the knowledge that she has done her job. I am free to think evil thoughts about the incompetency of the staff.

Weird Factoid: a google search for "my local bead store sucks" comes up with over 23,000 hits! I spent some time perusing the posts and many of those complaining focused on the fact that their presence wasn't acknowledged by the sales staff. Substitute the word "yarn" for bead and you get over 16,000 hits!

How much money is the ineffective customer greeting costing your company?

The Innovation: Train your staff to greet customers differently. Mr. Gerber suggests the following: "Hi, have you been in before?" The customer will respond yes/no and your staff will then have the opportunity -- and the responsibility -- to engage on a deeper level. If the answer is "Yes," you can say "Great! It is good to have you back! We have recently created some awesome new customer programs, like (fill in the blank: Bounce Back coupons, Buddy Referral system, etc.) and if the answer is "No" you can say "Great! We are so glad that you stopped in! We have some great customer programs (enthusiastically fill in the blank here).

Cost to you: Nothing. Cost to your employees: The pain of change. Oh, well...they will get over it. Mr. Gerber believes the new greeting will put money in your pocket to the tune of a 10% to 16% sales increase and my own experience ratifies his belief.

The Quantification: You cannot judge the effectiveness of an innovation without the ability to quantify it. In other words....if you cannot measure it then you cannot manage it! How can you determine if changing the store greeting is the reason behind your sudden increase in sales? Quantify it by determining the following:

1. the number of people who came into the store before the innovation was adopted;
2. the number of people who actually made a purchase and the average dollar value of the purchase;
3. the number of people who came into the store after the innovation was adopted; and
4. the number of people who actually made a purchase and the average dollar value of the purchase after the innovation was adopted.

If Retailers took the time normally reserved for frustration and self pity (been there myself!) and spent that time quantifying all of the numbers that relate to their business, they would soon find less to complain about! Most store owners instinctively have a feel for which days of the week are "good sales days" and which are "bad sales days" but they haven't quantified it. Does a particular employee work on the good day? Are afternoons busier than mornings? Did the newsletter go out the day before the best day? Start asking questions and the patterns will reveal will get the information you need to quantify your success. Some questions to get you started:

1. How many customers come into to your store each day?
2. How many in the morning?
3. How many in the afternoon?
4. How many people call your business each day?
5. How many call to ask for pricing information?
6. How many want to purchase a specific product?
7. How many of product X is sold each day? Product Y? Product Z?
8. What time of day did those products sell?
9. What were your sales receipts on each day?

and so on and so on! Remember...if you can't measure it, then you can't manage it! Quantifying your innovations is what enables you to make FACT BASED decisions rather than relying on hunches. In the old days when I approached my partner with some great new business plan she wisely asked if I was "smoking Hopium" know...wanting the plan to succeed so much that I ignored the realities associated with implementation. No more Hopium for me...if it works on paper, then it will work in reality! Keep track of the statistics, follow the advice they provide, and move into Orchestration.

The Orchestration. Ahh...this is where beautiful things happen. Once you innovate a process (new customer greeting) and Quantify the impact of the innovation (Wow! Sales really ARE up...) then it is time to ORCHESTRATE the process by eliminating any discretion at that level of your business. The new greeting is now a rule and it is to be THE greeting used for every customer who walks through the door (unless it is a regular customer who you know and recognize). You have removed chaos and inconsistency while establishing order and routine. Now you don't have to think about it anymore. Keep doing it until it no longer works, and when it no longer works, it is time for a new innovation! Way to go!

Now look at other areas of your business...what other innovations do you need to implement? The economy might be tepid, but it is providing you with an awesome opportunity for growth. Embrace the opportunity for change as a means to achieve success and prepare yourself AND your business for the growth that will come you way. You can do it! Keep Calm and Carry On!

Great Promotion Idea:
I recently read about a retailer who held a remarkably innovative promotional event:

The Retailer ran a month long promotion whereby customers got a fixed percentage of their sales receipts back as a rebate. The catch? The rebate came to them in the form of a check made out to another brick and mortar craft retailer in the community. What a way to build karma points all around! You are happy with the sales, your customer is happy to have "found money" to spend at another craft retailer of her choice, and the other craft retailers owe you one! Happy sigh.

The Crafty Retailer's Current Promotion:
Lots of folks who shop with Access Crystal were able to take advantage of an awesome "Bounce Back" coupon last week. This week Aussie Threads and Fibers wants in on the fun and is offering a $10 off coupon to all new customers who place an order by September 25, 2009. Better yet...all existing customers who place an order by September 25, 2009 will receive a $15 off coupon! YOU MUST REFERENCE COUPON CODE TCR0922! We love our customers!

1 comment:

  1. Ms Riesenburger, Thanks for a delightful review of some of Michael Gerber's key concepts. Like you, I think anyone who owns a business, or wants to own a business, needs to read The E-Myth Revisited.

    You very effectively share the point that owners must take action. Just talking doesn't get us very far.

    Again, thanks for a great post.

    Shallie Bey
    Smarter Small Business Blog