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Tuesday, December 1, 2009

Are you good at "showing some love" to your customers? Do it well and reap financial rewards!


Black Friday has come and gone.  Early reports have the National Retail Federation holding firm to its forecast of a 1% decrease in holiday sales this year.  The projected decline comes on the heels of a 4.4% decrease in 2008.  Ouch!  Happily, many independent craft store owners are experiencing solid sales despite the gloomy economy.  Are you among them?  If not, it is time for change.

What is the crafty retailer to do?

Take a look at your business model and fix it, of course!


I recently had an opportunity to speak with Debby Luttrell, owner of Stitchin' Heaven in Quitman, Texas.  Deb had twenty years in the "corporate world" before she became an entrepreneur.  A sales executive with GTE (now Verizon), Debby was part of the team responsible for implementing the procedures which earned the company the prestigious Malcolm Baldrige National Quality Award in 1994.  The Award recognizes companies that offer extreme customer service. Previous winners have included Nordstrom's and the Ritz Carton Hotel Chain.

Clearly, Deb knows a thing or two about delighting her customer base!
Ms. Luttrell opened a 1000 square foot shop in 1996 in tiny Quitman, a town which is home to 2030 residents.  Her store is 80 miles from Dallas, and the nearest sizable town is 60 miles away.  Deb knew that the locals would not drive enough traffic to her shop to sustain it, so a viable internet presence was always a part of her business plan.  She started with two part time employees and 600 bolts of fabric.  She liked to sew, but did not know what a "fat quarter" was and had never put a binding on a quilt.  Fast forward to 2009....Stitchin' Heaven is now a "destination quilt shop" that boasts 7200 square feet and 6000 bolts of fabric.  She employs 18 full time employees, as well as several part timers. Her internet sales are strong and she has a loyal group of customer ambassadors...both online and in her shop.   Deb writes a business column for the American Quilt Retailer, is a featured speaker on business topics at The International Quilt Market, recently launched "Sew Much Travel" to organize quilt friendly vacations, and has a successful consulting business which includes a three day "Boot Camp" for Quilt Shop owners.  WHEW!  But wait...there is more!  You haven't even heard the best part.......the business is PROFITABLE!  Yup, Deb actually pays herself!  [Insert sounds of hootin' and hollerin' here].


Deb practices what she preaches and what she preaches is CUSTOMER ENGAGEMENT.  She notes that although she likes to quilt, business is her passion.  Unlike many craft store owners, Deb concentrates on loving her customers more than loving the products she sells.  BRILLIANT STRATEGY, Deb!  We all know store owners who hang on to inventory they like because they cannot bear to discount it, others who refuse to stock a certain product because it does not appeal to them personally, or even shopkeepers who fail to embrace new trends because "that is not what we do here."  Hmmm.... those folks have expensive hobbies, not businesses!

Deb has some great advice for those of you interested in profitability and here are some snippets from our conversation:
1.  Customers vote on you with their wallets.  If someone comes into your store and leaves without making a purchase,  they have just voted against you.  You need to figure out why there was a disconnect.  Wrong product?  High price point?  Poor Customer Service?

2.  Crafting is an addiction.  There, I said it. Crafting addictions rank right up there with booze, chocolate, and cigarettes. No doubt about it....Addictions are hard to fight.  Need convincing? Listen to a group of women talk about their bead stash, yarn closet, or secret drawer filled with UFOs (unfinished objects)---they will giggle and affect sheepish embarrassment, but it doesn't stop them from coveting the next crafty fix. I have enough Swarovski Crystal in my personal stash to last for several lifetimes.  Yet, I recently saw some Swarovski Crystal Mesh that works beautifully with fiber.   It spoke to me and I haven't been able to think about anything else in days!  It is wicked expensive stuff even for a Swarovski wholesaler, but I am determined to make the acquisition. People will feed their addictions even in lean times.  In fact, crafting provides a satisfying diversion for people who find that a decrease in disposable income means more time at home. Your job is to engage your customer so that she uses her more limited resources to cast her vote for you!


3.  Learn to become an effective leader.  Debby pegged "leadership" as the weakest link for most of the business owners she counsels.  You must have a vision for the growth of your company.  Accept the responsibility of moving the business forward. Buy a copy of The E Myth by Michael Gerber and read it.  Read it again.

4.  Learn to manage your employees.  This is a tough one for many women.  We want to be liked.  We abhor conflict.  We do not want to be perceived as...well.... "bitchy."  We need to get over it!  You have a right to tell your employees how things are going to be done and they have a responsibility to follow the rules.  Do not let your employees hold you hostage.  Who's the boss?  You are!  Thatagirl!


4.  Add "Event Planner" to your Job Description.  Deb reports that her customers are "Event Crazy" and went on to note that if she didn't have events, her balance sheet would look markedly different.  Her events are geared toward both her Brick and Mortar and Online customers.  Deb's event calendar is planned several months ahead in order to allow time for proper marketing and preparation.  An event normally takes four months to morph from  Idea to Reality.   A "sale" is never, ever simply a "sale."  B-O-R-I-N-G.  Instead, Deb hosts an E-V-E-N-T.  A current promotion is "The More, The Merrier Event" where customers receive 20% off all in store and online purchases from Thanksgiving to December 24.  OK, its been done, right?  It gets better!  Every time the customer makes a purchase during this period, the discount increases by a percentage point.  Visit one:  20% off, visit two: 21% off and so on.  The maximum discount is 40%.  The event is successful because it injects some fun and levity into what would ordinarily be nothing more than a percentage off sale.  Here are some other winning ideas a la Ms. Luttrell:


*  Anniversary Event:  Deb celebrated her 13th anniversary in October.  December is the slowest month for many quilt shops so Debby has a sharp eye on inventory control come Fall.  Accordingly, starting in September customers receive one raffle ticket for every $10 they spend.  The tickets are handed out for a six week period.  The Big Event lasts three days.  On Day One customers buy 7 of one item (excluding fabric) and get 6 MORE FREE!  On Day Two the deal includes fabrics...buy 7 yards of fabric and get 6 yards free.  Day Three is Double Ticket Day....there are no discounts on merchandise but sales are brisk, because at 3:00 there is a big drawing where Debby gives away 13 finished quilts that have been used as store samples throughout the year.   This year Deb had 120 people in the store for the drawing.  13 folks were thrilled and the rest were left to dream of the next year's anniversary sale.  Winner or not, everyone left  feeling warm and fuzzy about Stitchin' Heaven!

*Class Ticket:  You can be CLASSY or SASSY....or CLASSY AND SASSY!  The CLASSY TICKET costs $60 and entitles the recipient to attend all classes FOR FREE for a six month period.  The SASSY TICKET entitles the bearer to receive 20% off all purchases for a six month period.  Best Bet:  Be CLASSY and SASSY for only $100!  Classes are taught by staff members who are paid an hourly wage, so the free attendance is not a problem.  This program is a wonderful way to encourage a sense of community!

*VIP  Coupon Program:  Customers pay $25 for a coupon book which contains lots of great store savings opportunities, including a coupon for $25 off a high margin kit.  WIN-WIN!


* Block of the Month Program.  This promotional event is a cash cow, representing a significant bit of business.  Most quilts are made up of a series of separate quilting "blocks".  Each year Deb and her crew decide upon 25 different quilt designs and make up kits for each of the blocks required to make the quilt.  Customers pay $25 to join the club.  This fee covers the cost of the pattern and associated fees.  Each month thereafter the customer pays $24.95 for the materials required to make the quilt block.  Each of the 25 designs generally has 100 people signed up for the program.  You do the math.  OK, I will do the math.  Each quilt generates $24.95 for 12 months ($299.40) plus the initial $25 fee ($324.40 per customer).  One hundred participants per quilt design works out to $32,440.00.  Now multiply that by 25 designs.  It is a nice chunk of change for a program that follows a neat and tidy formula.  Debby has a department within the store devoted to this program.  C'mon...you have to be impressed....I know that I am!  Figure out a way to make a similar concept work for you!

Would you like to have an opportunity to learn more of Debby's tricks of the trade?  Her success is no accident and she is willing to share her knowledge.  Consider a private consultation!  Although sales might be brisk over the holidays, many retailers will experience a serious slowdown come January....the New Year might be the perfect time to consider a tune up!

IN OTHER NEWS:

WE WANT TO KNOW!  HOW WERE YOUR BLACK FRIDAY SALES?

Better than expected?  Worse than you imagined?  Give us the details!  You can be anonymous if you wish, but all who comment will be entered into a drawing for 50 meters of Swarovski Crystal Yarn!


GREAT HOLIDAY TUTORIAL:  Check out one of my new favorite bloggers, Michelle of The Royal Sisters.  Michelle has a sweet little crochet tree tutorial that could be used in a plethora of festive ways:  a holiday banner, a pillow applique, an ornament and more.  Embellish with ribbons and beads for more sparkle.  Michelle has a charming blog and offers an equally good star tutorial, so get out your crochet hook and in the words of my friends from down under, "have a play!"

7 comments:

  1. ...Just wanted to let you know that our "Black Saturday" one day only sale went beautifully! Sales were triple what a great sales day would be! By the way, Friday was a very busy great sales day too even though last year we weren't busy. I ran many promos and used this day to "clearance out" old inventory as well. Trunk shows have been a God-send! It frees up cash flow so I can expand in other areas. It is amazing what many of my vendors (stone and Czech glass vendors) are up for, which makes me think they are hurting a bit. And if they are hurting, what does that mean to us Brick and Mortar places? Is it that the Bead show sales are down? I tend to do business with "wholesale ONLY" vendors. I am not going to put the time and energy into holding inventory that someone can order online themselves. I'm thinking of writing on our big shop blackboard: "the internet won't answer your questions or help you when you get stuck"...The internet is by far our biggest competition. Anyway, I am very happy with how Saturday went for us.

    Thanks for all the Crafty Retailer advice!!!

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  2. I sent out an e-mail a week or so ago listing all the events that are goinig on in the store, including a discount on gift certificates and a contest for our customers. A few days later my main competition sent out an e-mail with the very same offerings -- only offering more of a percentage! Moreover, they are having a customer contest also. We are offering a $25 gift certificate for $20; they are offering a $100 gift certificate for $50! I am SO tired of all the other bead stores around here using our ideas -- and they ALL do it. I wonder why they can't come up with ideas of their own. What bothers me is that it is so blatent!! Is there anything we can do about it?

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  3. Congratulations! All of your hard work and planning clearly paid off! I have noticed more vendors dipping their toes into the trunk show world...slower sales provide an opportunity to consider other revenue streams, which is a WIN-WIN for everyone. Retailers should schedule Trunk Shows as often as possible. It provides another event to talk about, and the financial benefits are obvious, even with a slow show. I once had a customer complain about a show that only generated $600 in sales, and only $240 of that went into her own pocket. My take was slightly different....she had only advertised via newsletter (no expense associated with it) so she had actually generated an extra $240 in pure profit, more equivalent to a $2000 sales day (which would have thrilled her).

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  4. Ouch. Those sort of competitors are a nightmare and can take a lot of the fun out of running a business, particularly when it is a repetitive, ongoing behavior. The consumers benefit in the short run, but ultimately that sort of nonsense could result in stores closing and fewer choices available to the consumer. Tsk Tsk. I would suggest that you take the emotion out of it. There is no benefit to hurt feelings or frustration. It is business, period. You can simply ignore it and have another glass of wine. Alternatively, I might consider an effort to humanize the relationship by dropping in the store and sweetly "calling out" the owner on the boorish behavior. Simply explain that you have noticed the trend, your customers are noticing it, and perhaps it is time to brainstorm a way that you can each work together for the good of the crafty community. A Shop Hop or Progressive Craft Event, perhaps. Note that I would have ice running through my veins and wouldn't trust her, but I would never let it show. I have always adopted the "keep your friends close and your enemies closer" philosophy. If nothing else, such a proactive stance would make me feel less victimized. The whole thing is yucky, but not particularly surprising. Karma will find a way!

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  5. Pat -- Thanks for the encouragement. It's hard sometimes to take the emotion out of it but, you're right -- it's business. I'll give some thought to the "Hop." It really sounds like a great idea - thanks.

    I also wanted to comment on trunk shows. We absolutely love them and so do our customers! I'm with you -- every dollar we take in is money we wouldn't have had. Also, eventhough people come in for the trunk show, they still end up spending money on other things in the store so it's really a win-win situation. Some trunk shows do better for us than others but you have to do them in order to find out which ones work for you.

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  6. I attended Deb Luttrell's Boot Camp in August and it was the best money I have invested in my business. Deb knows more that I'll ever know about the quilting business and is willing to share it all! If you feel like you're spinning your wheels and want to make money from your business, I highly recommend it. It doesn't happen overnight and is a process that takes a lot of work, but I feel like I have so much more direction now for my business. Thanks, Deb!!!

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  7. Patti:
    Congratulations on having the initiative to attend Deb's Boot Camp! It can be nerve wracking to take the time away from the business (and spend the money) to attend such a seminar, but it will help you get focused and move your business forward. Everyone needs a mentor. Thank you for the personal testimonial...Deb has a great fan club!

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