A recent study in the US concluded that it is 70% easier to get additional sales from existing customers than to get new customers to buy for the same value. In these tough trading conditions with customers becoming increasingly despondent, it’s reassuring to know that good old-fashioned selling can still bring results.
I worked for a major retailer several years ago that had as its main sales driver ‘selling that extra item to every customer’. This wasn’t intended as a hard sell. The retailer, a household name in South Africa, wanted to create an exciting shopping environment on the sales floor. It wanted to encourage its ‘merchants’ to interact with customers in a unique way, so that they would buy an extra product each time they shopped and keep coming back time and time again. The so-called ‘tips’ and ‘techniques’ the merchants used proved the difference between success, staying ahead of the competition, and survival.
Consider for a moment the impact of ‘selling that extra item to every customer’. The example below illustrates the potential. Assume that the average price of an item sold in a shop equals R15 and that the average number of customers in the same shop per month is approximately 2 500. It follows that the net result of selling one extra item to every customer would result in extra turnover of R37 500 per month OR a welcoming R450 000 per annum.
But can this kind of sales growth really be achieved? We think so and here’s how.
What do customers really want when they go shopping?
There are some clear reasons why customers shop at some businesses and not others. Usually it’s because they want value for money. They want to know that for every R1 spent on a product and / or service they are getting the most for their money. As small business owners your goal is to provide customers with a range of prices without necessarily going ‘head-to-head’ with the big majors.
Customers also like choice. Some large supermarkets carry product ranges in excess of 40 000. That doesn’t mean small independents should stock a large range. It does mean asking customers exactly what they want and then giving that to them.
Customers love new things; they love innovation, but if you can’t give them ‘newness’ all the time, then make sure you move what you have around, presenting it in a new light. Constant change is the key.
Nowadays customers want ‘convenience’ most of all. Everyone has heard the retail saying “there are three main things in retail success – location, location, and location.” If customers had their way they’d want your business right outside their front door. But other factors are also important, such as easy access to your business and hassle free shopping. Customers want your business open as late as possible and don’t keep them waiting in queues, in car-parks and at check-outs, and especially don’t disappoint them with empty shelves when they’ve taken the trouble to come to you in the first place.
Service and selling are contact sports
The first thing to remember is that customer service and selling are contact sports and if you don’t want to spend the time interacting with customers get out, NOW. For those who accept the challenge the rewards can be hugely satisfying.
‘Upselling’ to customers should really be a soft sell. The extra sales come through hearing the voice of your customer, knowing the business you’re in and your competitor’s business, by applying some basic shopkeeping & merchandising principles combined with some good old-fashioned selling. None of which is out of reach of small entrepreneurs that have the heart to try something new and “go the extra mile” for customers.
Entrepreneurs and small business owners can learn a lot from the giants. Deregulation in the health care sector for example has meant that independent Pharmacies found themselves competing head-on with some of the larger retail chains. Both New Clicks and PnP have their own Pharmacies in-store and the Dis-Chem Chain offers an impressive ‘one-stop-shop’. Pharmacists specifically trained to dispense medicines and sales people walking the aisles to assist and sell to customers. In response the ‘front-shop’ of the traditional pharmacy has taken on a new life and is a hive of opportunity.
Shopkeeping principles are not well understood by small business owners.
Shopkeeping principles are often not understood by small independents leading to a host of purchasing, pricing and promotion problems – the proliferation of product ranges, over and under stocks, a lack of ‘newness’ and innovation and poor merchandising disciplines.
As we’ve said already customers are demanding more and more convenience. In fact, the convenience format is the fastest growing format in the retail industry worldwide. One has only to look at the growth of garage shops in South Africa. Woolworths’ ‘Foodstops’ into Engen Convenience Centres, PnP ‘Express’ Stores into BP Service Stations are just two examples of this phenomenon in South Africa.
Furthermore independent business owners tend not to leverage their strengths. Unique strengths such as personalized service, narrow targeted ranges, assisted shopping and home deliveries.
There is only one boss: the customer
Service and selling need to exceed customers’ expectations. In the words of the late Sam Walton (the legendary businessman and entrepreneur, founder of the Wal*Mart Chain of Stores in the US), “There is only one boss: the customer. And he can fire everybody in the company, from the chairman on down, simply by spending his money somewhere else.”
It all starts with a vision and selling strategy that helps to align the whole business, especially line managers with frontline staff. Then targeted strategies to address amongst other things the following‘, ‘Developing a True Customer Focus’, ‘Responding to the Market-Place, ‘Optimising the use of Selling Space’ (if you have a physical premises) and ‘Developing Measures & Tools’.
In the next few articles we will cover some of the more important strategies in detail, but what follows is a brief summary of what to expect.
Hearing the voice of your customer is the starting point
The first subject we’ll cover is ‘Developing a True Customer Focus’. One of the more common reasons businesses fail is that entrepreneurs grow complaisant over the years. They stop walking on their sales floor and talking to customers. We’ll cover topics such as identifying your customer, managing customer ‘moments-of-truth’, understanding your value-proposition, engaging with and keeping loyal customers, hiring the ‘right’ sales people and product knowledge training.
The second subject ‘Responding to the Market-Place’ will cover topics such as learning from your competition, identifying trends & benchmarking best practices, knowing your strengths / weaknesses, identifying your unique offering, planning your marketing and promotional effort (including specific promotion strategies).
The third subject ‘Optimising the use of Selling Space’ will covers topics such as the location of physical premises, street & window displays, shop layouts, ‘sweating’ merchandising space (merchandising gondolas, front-ends, shelves, dump-bins, check-outs) and the use of in-store signage and ticketing.
The final subject ‘Developing Measures & Tools’ will cover specific measurement principles / measures and a variety of tools for gathering, analyzing and presenting sales information. A key principle here is ensuring measures are tangible for staff.
Next time you go shopping at your favourite shop ask the owner / manager where their office is located. If it is ‘in the back’ you have a vital clue to their customer service approach. Make sure yours is on or close to the sales floor (preferably the tills) and that your overall approach to customer service is ‘management by walking about’.