RM Online - Top 10 tips for success in retailing

Behavioral psychologists say that if a new idea is not put into practice within the first three days, it will likely be lost. So pick an idea and get started. The formula for improvement is simple: start now. Latch onto at least one idea from these 10 tips for success and act on it immediately.

1. Business cards

The least expensive, most valuable form of advertising is word of mouth. But let's begin with the second-least expensive and next-most valuable form of advertising: business cards.

Have you heard of the concept of the "six degrees of separation"? This theory says that every person on this planet is only six people away from knowing each other. Say, for example, my fiancee Diane went to college with an accountant who does the books for a company whose plant manager is your future father-in-law's old Navy buddy.

Mass distribution of your business cards will help close this loop. It will save you from the regret you'll feel when you visit your favorite restaurant and find out that your favorite waitperson just bought or rented from one of your competitors, un-aware that you were in that business.

How many people in your circle of friends, family and acquaintances do know what you do? How many of them have several of your business cards, so they can recommend you to a friend? What might be the potential impact on your business if everyone you knew referred just one customer to your store? A thousand business cards can be purchased from a local print shop for as little as $10. Have cards printed for all of your employees, too. You'll see their performance increase, because of pride and recognition. And they'll hand out cards everywhere.

There's a car dealer who throws handfuls of cards like confetti at football games every time the University of Wisconsin scores a touchdown. The cards invite Badger fans to stop in for a discount and special service.

2. Daily flasher signs

Hundreds of potential customers pass your shop every day, but your outdoor signage has just become a part of the landscape. Its brilliant colors, attractive graphics, catchy slogans, prominent national brand name logos and bold phone number are lost in the passing blur.

Grab their attention with a flasher sign - one of those signs with attachable letters or programmable message lights. Many rental stores stock them; if you don't have one of your own already, rent one and try it.

Change your message daily. Remember, consumers don't know how often you change your sign. If they drive by several days in a row and see the same old message, you're back in the blur. A new message every day will catch and maintain their attention.

Try posting the daily weather forecast. One way to compete with mass merchandisers is to advertise your personal service and experience. Or advertise your seminar. "My seminar?" you say? Yes, your seminar.

3. Seminars

You are an expert on your specialty. Many times a day, you or someone on your staff explains to a customer how to operate a product safely. There is great demand for consumer education and information about what you know. You can promote your business and increase revenues simply by taking your one-on-one presentation and developing it for an audience. Start by advertising a free safety workshop or a product demonstration in your store on your daily flasher sign and see who comes.

Call the newspaper to put an announcement in the local news. A reporter might even show up and do a story. And it's one more contact that could prove valuable someday.

Now you're just one small step from taking your show on the road. Send letters offering a free seminar to the enthusiast clubs and community organizations in your area. These groups are always looking for speakers. Who would turn down a captive audience?

4. Free lunch

Everyone eats. Take advantage of mealtimes as opportunities to meet with customers and employees. Donuts and coffee are an inexpensive investment to get someone's undivided attention for a few minutes.

One equipment dealer offers contractors a free spaghetti dinner one night each year. A complete spaghetti dinner with garlic bread and a Coke costs less than $3.50 a person. Guess where all the tradesmen buy their products in that neck of the woods.

5. Thank you

The most pleasing sound to the human ear is your own name. The next best is "thank you." A satisfied customer will tell two to five people about a positive experience. A dissatisfied one will tell 20 to 30. Take an opportunity not only to build a relationship with your customers by calling them by name, but also to thank them and ask if they are satisfied. If they're not, take corrective action immediately. Word travels fast.

Try calling your customers and saying: "Hi there. I just wanted to call and say hello, and thank you for your patronage and ask if everything is going well." How long did that take? Ten seconds?

"Customers are always friends," says Dan Miller of Dan's Service Center, a Draw-Tite dealer in Elkhart, Ind. "Enemies won't buy from you. If they come in a stranger and you treat them fairly, with respect and integrity, you're going to make a friend."

So call up a friend and grow your business.

6. Customer satisfaction surveys

Survey your customers. Thank them first and call them by name, and then ask them to rate their satisfaction after their last dealings with your company, on a scale of one to 10. Record their answers on your copy of the invoice. If they respond with a lower than satisfactory rating, ask them how you might be of additional assistance and what you can do to make them happy. Total the scores and note the average.

You might notice that when Sal works the counter, the average customer satisfaction score is eight and when Mike takes a turn it drops to five. As a manager, you now have a tool to help improve your business. In a review with Mike, you tell him of his poor score and ask what you might do to help him do a better job. Mike reveals that he likes counter sales, but doesn't know that much about one of your top-selling product lines. When people ask him about it, he gets frustrated, and shows it. You spend an hour going over these products with Mike and next week, his scores rise to nine. Worth an hour? You bet it is.

Try asking your customers for a satisfaction rating and recording it for two weeks. I guarantee you'll see improvement. Why? Because you and your employees will know someone's keeping score.

What is measured will be acted upon. Recognition is the key to continued improvement, because what is rewarded will be repeated.

7. Customer batting average

How much do you have invested in a customer who walks through the door? Actually, this is very easy to determine. Just pull out your income statement and look at the total at the bottom of the expense column. That's the one that includes such things as cost of goods, advertising, electricity and gas, insurance, interest, rent or mortgage, office supplies, repairs and maintenance, telephone and training, etc.

Now divide your total expenses by the number of customers for the period of the report. This tells you the average investment you have in each customer who comes in.

If your goal for your business is to make a 30 percent gross profit, then your revenue goal for each customer is equal to the average expense per customer plus 30 percent.

This is a simplified approach - many factors play a role in determining gross profit - but in general, it gives you a customer-by-customer goal to shoot for. Individuals - not just statistics.

Now that you know what you have invested in the customer, it's time to make good on the investment. Post your revenues-per-customer goal behind the counter and watch your performance grow.

Customer batting averages can also be used as a comparative measurement tool for management, very much like the previous example of customer surveys. Simply record your revenues for each customer, total all revenues and divide by the number of customers.

One of the problems we find with most management tools is that they are too abstract, summarize too many activities or cover too long a period of time. The customer batting average can be applied to a customer-by-customer, hour-by-hour, employee-by-employee or day-by-day analysis of your business performance.

When you analyze Sal's customer batting average, you find that his average sale per customer is $125. Remember, his customer satisfaction survey score was eight out of a possible 10. Mike's customer batting average, on the other hand, is $252. But his customer survey score was only five out of 10. When you sit down with Sal and Mike, you discover that Sal is great at making customers comfortable, but Mike is a great closer.

Having the customer satisfaction survey and customer batting average information at your fingertips will help you manage your business even better. You'll know who's best at what, and you'll have the data to prove it.

8. Danger signal test

In their book, Up Against The Wal-Marts, How Your Business Can Prosper in the Shadow of the Retail Giants, Rental Management columnist Don Taylor and Jeanne Smalling Archer offer the "Danger Signal Test." It is a quick and useful method for determining your potential for success. Pick up a copy of that book and see for yourself; you'll be glad you did.

9. Kaizen

Kaizen is a Japanese term that means "continuous improvement involving everyone." Up Against The Wal-Marts has a list of 273 powerful suggestions for improving your business, including customer satisfaction, employees, banking, technology, pricing, financial statements, use of resources and, perhaps most important, yourself. There's plenty to pick from, for kaizen purposes.

Another book that can inspire you is Tom Peters' The Pursuit of Wow. Peters cites research on commercial customers lost by 14 major manufacturing and service companies. These organizations may be larger than yours but similar in terms of their daily exchanges with customers.

The research showed that 15 percent of these lost customers found a better product. Another 15 percent found a cheaper product. But a staggering 70 percent found better service.

Of those who found better service, half received better delivery, warranty settlements and other tangible improvements. The other half were simply treated better elsewhere.

So 35 percent of those customers who switched were lost because of intangibles like warm greetings and friendly service.

Don't let today's success be tomorrow's disappointment. If you're not continually improving your operations, you can bet that your competitors are.

And even if they are not, the standards of your customers are constantly rising in response to great performers like Southwest Airlines, Airborne Express, Sony and Intel, and technological advances like electronic banking, the fax machine and now the World Wide Web.

10. Ready, Fire, Aim!

The concept of ready, fire, aim in store management is based on two beliefs:

First, that most small- to medium-sized business do not have the time, expertise or resources to develop a foolproof marketing program before implementing even its initial steps. This is what's called ready, aim, aim, aim, aim.

The second belief is that managers have an intimate knowledge of their business, its operation, competitors, customers and products. When considering a list of improvements for your business, your knowledge will resonate with an idea. Your gut reaction will tell you whether this idea or some form of it will work for you.

So a good idea can be quickly transferred into your business. Ready and fire are almost simultaneous. Results are immediately observed, measured and considered. Your aim is adjusted, and the idea fired again. This process continues until you fully hit the mark.

Ready?

The rest is up to you.