Retail, in the eyes of the everyday customer

Most retailers offer shipping specials above a minimum order amount.  Not GivingGallery.com:

Many retailers look at their online channel as just another mode to complete a sale.  But that’s a low yield strategy.  Smart retailers use their online channels to do things that are either extremely expensive or impossible offline.  And the smartest ones execute ideas that are brilliant AND inexpensive.

Ever since discovering eyebuydirect.com through getelastic.com I’ve considered their Wall of Frame a brilliant example of how an online store can be used to do something entirely new.  The best way to convince a customer to buy from you online is to demonstrate how it benefits THEM.  Everyone talks about price advantages and better service blah blah but Wall of Frame is something tangible, something the customer can compare with how they shop offline and see a clear benefit.

What impresses even more is discovering a competitor who sees Wall of Frame, realizes they cannot compete on execution but manages to find a cost effective workaround that seems to work just as well.

That retailer would be Debby Burk Optical.  They’ve created something new with the help of Skype.  If a customer has a Skype account they can make a frame selection and have a Debby Burk associate wear and demo it through Skype video conferencing.  The idea is not fool proof: everyone does not have Skype and just because a frame looks good on a model does not mean it will work for the customer.  Someone who has seen Wall of Frame will remain unimpressed but Debby Burk is making an intelligent bet most of their customers have no idea what Wall of Frame is.  For them seeing Skype is a quantum leap.  Best of all, adding Skype did not require additional development costs.

A year from now if Debby Burk sees Skype interactions increase conversions 10% they can take supplemental income and reinvest it to build their own Wall of Frame.

Yesterday I enjoyed a great hamburger at Patty Burger, but I’m not sure it’s make-10-trips-for-a-free-one great:

Patty Burger punch card

The idea of a punch card is to build loyalty.  The business is placing a carrot of a free burger for any customer willing to make 10 trips.  A new customer who makes 10 trips should be counted as a convert, so the strategy is great.  The problem I have is that 10 is too big a commitment.  I think make-five-trips-for-a-free-one would have the same financial impact while encouraging higher participation.  As a company new to the Chicago market early customer participation could be the difference between huge buzz and no buzz.

For years I’ve been going to the same barber shop and getting my hair cut by the same person, Dana.  Their service has never been complaint worthy but I’ve always found them a little expensive.  The accountant looking over my transaction history has no way to knowing I am dissatisfied, all he sees are monthly transactions of $25 through a card ending in 6849.

But then, one day, I didn’t go.  On my morning walk I discovered another shop (a few blocks away) with a neon light advertising a $16 cut.  When I walked in I definitely noticed a different vibe; it was a first-come-first-serve model and people were walking in and out pretty quick.  Their staff of six was bigger than the other place that had two people.  I was also used to a little bit of chit chat and the customary question, “So how’s your wife doing?”  After the cut I walked to the counter and paid.  When I tried to add a tip the owner said “ah, no need for tip”.  At first I felt guilty but then realized tips were not part of this new place’s business model.  In effect, the new place works out to be 46% cheaper.  The question is, what is Dana thinking?

I bet she’s not worried.  Here’s way, she probably surveyed the new place and said “nothing to worry about here.  They are cheaper but their shop looks horrible with gaudy designs.  They run the place like a factory and don’t assign stylists to customers.  Factoring in for our nice clean shop, superior products and personalized service anyone should understand why our price is a real bargain.”  Dana is right, all the added elements to her business certainly justify why she charges $30 but Dana would do herself a huge favor is she had a few steepness nights.  I don’t know the owner’s name (let’s call him Steve) of the new place but he’s a brilliant man.  He has managed to slash his price without eliminating a single item that I care about.  I don’t care about having the same barber cut my hair, I don’t care the store does high volume as long as I don’t have to wait and I certainly don’t care about chit chat.  Dana and Steve are price engineering from two entirely different perspectives.  Dana is looking at her price and then justifying it and Steve is reading external market needs to determine pricing.  In downtown Chicago most office people come down for a quick trim so they can go back and continue work.  And Steve gets that.

Engineering price-points based on ever changing customer dynamics is a key strategy for a retailer.  Only if you base your price-point on what’s going on at the customer’s end can you get a reading of trends.  Dana’s rent, two person cost of operation and shampoos are fixed numbers and since they determine pricing she will never know when a tectonic shift takes place, until it’s too late.

If a retailer can figure out a way to reduce price without diluting the customer experience they must either tweak their pricing or add to the customer experience.

For me, generating the first time sale trumps all metrics.  Therefore I would expect First-Time Buyer Free Shipping to be a popular strategy.  Unfortunately, I’ve never found a retailer that offers this.  Now, let me qualify, I typically spend 7-10 seconds on a store (this is what most first time visitors do, thus the title of my blog) so if free shipping is buried chances are I wouldn’t find it.  Backroad Hobbies Primitive Decor is an exception.

Jake is a huge fan of KuKuRuZa gourmet popcorn.  He discovered the site 3 years ago and started off by ordering their Variety Pack.  He enjoyed Caramel & Cheese Mix so much he bought it five times, thrice gifting it to friends and family.  Jake’s life time spend on KuKuRuZa.com is a very impressive $197.00 and we know Jake is not a bargain hunter because his purchase habits are not localized around special price promotions.  All in all, Jake is an ideal customer.

He has often visited the Butter & Sea Salt page and lingered long enough for us to know that the flavor catches his attention.  Unfortunately, Jake has never purchased it.  A 1 gallon bag of Butter & Sea Salt retails for $8.95.

The enterprising manager at KuKuRuZa sees that Jake has not bought in the last two months and executes a complimentary order of the 1 gallon Butter & Sea Salt bag accompanied with a handwritten note that reads “Jake, I am the manager at KuKuRuZa.  I wanted to thank you for being a loyal customer by sharing this complimentary bag of our delicious Butter & Sea Salt.  Regards – Robert.“

This is a hypothetical case study but imagine the impact it would have on Jake.  Sure we spent $8.95 plus shipping on a bag of popcorn but that’s pittance compared to how much Jake has spent with us.  This small investment could trigger word-of-mouth and Jake is bound to share his KuKuRuZa story when he speaks with friends.

Nybgshop.org has a nifty strategy to grow their registration list.  They call it “Member Price”:

Get Elastic posted a fantastic example of how Office Max uses the checkout process to expand their email list.  You can read the whole article here.

Related Articles: Tell Me What I’m Getting Into, Making The Most Of “Out Of Stock”.

It sucks when an interested customer stumbles on your site only to discover that the item they were just about to buy is out to stock.

This morning I was reading the hugely popular Outblush blog where they profiled Karacoma Sofa.  After reading the article I visited conranusa.com and realized the product was “Temporarily out of stock”.

I wish the message would have said “Temporarily out of stock — drop your email address and be the first to be notified upon availability”.

This would be a win win for the retailer, either they would get a future sale or walk away with the consolation price of my contact information.

Back in the day radios had two dials, one which moved quickly between channels and another which was used to fine tune a channel.

For years I have been hearing about the magic of testing and how retailers like organize.com are seeing improvements in conversion rates by simply changing Buy Now to Add to Cart.  These amazing stories emphasize the power of the fine tune dial.  There has been so much buzz about testing that retail CEO’s who’ve picked up the gossip in magazines and conferences believe that by simply changing their site’s head banner from blue to orange will somehow make more people convert.  Look, I am a huge fan of testing, testing is critically important but sometimes you have to look at the main dial before fiddling with the fine tune.

As a small retailer you have to resist the temptation of playing with the fine tune dial till you’ve crisply articulated your unique value proposition and defined core strategy.