Dealing With Transactional Shoppers
Furniture World Magazine
By Joe Capillo
Part 2: Five actions that will improve your sales performance now.
Sales Management Magic by Joe Capillo
Consumers right now are being very cautious and very demanding. At this writing, 92% of Americans who were working a year ago are still working and earning. What is obvious is that lots of people are holding onto their money as a hedge against an uncertain future.
Here’s the good news about home furnishings consumers: The demand for beautiful, comfortable, homes has not gone away. In fact, the need to provide a pleasant retreat from bad news will become more pressing in the days, weeks, and months ahead. Store traffic is down, but it’s not gone. But, I warn you that the same old ways of dealing with consumers will not work the way they have for decades.
In the January/February issue, two main psychological modalities we all use when shopping were discussed. These are transactional, where price is the prime factor, and relational, where the shopping experience is the prime motivator to purchase. It is safe to say that virtually everyone is in a transactional mode right now. Still, we are all involved with a relational product type. Furniture is fashion. Fashion requires certain skills that are not widely held by most customers. This is the reason for the interior designer profession – people who have skills to create artistically appealing spaces for people to live in.
Not many consumers out of the total number of home furnishings shoppers and buyers, use the services of interior designers, but everyone wants the types of outcomes those experts create. This explains the popularity of shelter magazines, HGTV programs, and on-line room planning tools and sites. The decisions around how to create those beautiful, comfortable home environments are not easily made by consumers, and your ability to provide them with assistance is more important than ever. That’s why retail owners, managers, and sales associates, have to add more value than ever to the things you sell.
This idea of adding value means that if you can help your customers achieve their goals for beautiful rooms and homes – enhancing their quality of life in very troubling times – you may be able to deflect some of your customers’ attention from price, some of the time. Think about it. If you can’t do these things, you are nothing more than a broker of furniture, a vehicle for moving the product from the manufacturing point to the consumer’s home. If that is the case, then you have nothing to add to the product except your ability to lower the price relative to competitors, or to competing choices.
I remember the words of Nathan Ancel, the founder of Ethan Allen from three decades ago when he put forth the best mission statement I’ve ever heard for our industry. Nat said; “Our industry mission has to be to help our customers understand how to use our products to enhance their quality of life – not just how to buy them.”
He saw the true nature of our products and the future of our industry then, and his vision holds true today.
What all this means to you today is this: The future of our kind of retailing lies in managing the customer’s experience from the beginning, which I maintain happens on your website or that of the manufacturers you represent. The experience then continues with the customer’s experience in your store, which you have to think of as an extension of your website – not the other way around. You have to be set up to capture potential customers at your website through innovative registration and connection methods. Then to bring them into your store by direct invitation, and offer value in services that help them with fashion and design issues, and price. Be prepared to deal.
I use the term “deal” because, in some situations, the actual price won’t be as significant as the “deal.” Your customers are now more transactional than ever before. Try offsetting this by being the supplier that offers more help with difficult room design issues. This approach will set you apart from competitors who are just all about product and price. If you don’t take this approach, be prepared to deal with every customer, every time, and to lose many of them at the website level to competitors who have lower pricing there, or who are better at making it seem to be so.
Now is the time to finally integrate those important, valuable, room planning services into a complete, high-service set of website-based tools that draw people to you. If you do not have a room planning tool on your website, you should. If you have a room planning tool on your website, but, like so many retailers, don’t showcase it in your store – you are making a huge mistake. If you have the room planner in your store as an after-thought and are not making it, and the processes around using it, your central selling tool, you are out of touch with the issues that keep a high percentage of consumers from buying. Put simply, they need more help than you’ve ever provided before, and while you could survive for the past two decades without providing extra help, you can’t today.
Average close ratios for multi-category, multi-vendor, full-service furniture stores are not higher than 20%.
Individual sales associates might be higher or lower, but there is ample research to support this view. Close ratios are measured on the number of customer visits – not on the number of discreet customers. If you think about your business in terms of the people who interact directly with consumers – meaning only sales associates – the difference between a true store close ratio of 20% (a sale made on two out of every ten customer visits), and a 30% close ratio, is 50%!
The only difference between the two customers who buy, and that one more customer who doesn’t, is that this third consumer needs more help. That’s it! That’s the difference! And, the definition of “more help” is help dealing with the room. That is, solving simple room design problems every furniture store should be capable of solving. In fact though, most stores are more interested in teaching closing techniques, spewing out more product features, cutting price, offering extended finance terms, and other efforts that do not provide the one, simple thing that one-more-customer really needs: more help.
So, here are some suggestions for actions you should be taking right now to improve your immediate performance. They will also help you prepare for the new retail reality into which will emerge as the economy heals from this deep recessionary funk:
1. Deliver exceptional customer experiences by developing your talent capabilities.
This will be a critical initiative for all retailers as they strive to interact with more consumers on-line and in stores at a new level of customer-centricity. Human talent in one-to-one retailing is your greatest asset to create value for your customers and prospects, and develop long-term relationships targeted at customer retention. Training and point-of-contact coaching will be of paramount importance as independents struggle to survive in a world where businesses once firmly rooted in manufacturing will develop ways to become more involved directly with consumers to protect their product distribution. We will witness the “retailization” of manufacturing companies in the immediate future, and they’ll come at you online. You need to be prepared to tailor services to each customer, and your sales associates are your front-line troops in this effort.
2. Begin a customer retention program immediately.
You can no longer rely on the door opening enough to drive your business ahead. Advertising in this environment can be both expensive and wasteful, but you have an enormous pool of satisfied customers who very likely have needs for things you sell. Go directly to them via email if you can, or direct mail if you have to, and make them special offers to cement your relationship. Consider these people to be your “inner circle” and treat them as such.
3. Get your website up to speed!
Most retailers think of their website as a “nice-to-have” extension of their store. You need to turn that thinking around so your store becomes an extension of your website where a high percentage of consumers see you first. Get them to register on your site! Begin offering “more help” right here. You need to use the tools available to optimize the local effectiveness of your site through tools like Search Engine Optimization (SEO) and SEM. Get ready now to sell online in your market area. La-Z-Boy and Ethan Allen are among the first national companies to embark on this e-commerce course.
4. Develop an e-marketing platform immediately.
Use opt-in email communications as your primary advertising and communications vehicle.
There are a number of companies that can provide you with affordable solutions to the e-marketing dilemma. If you don’t have an internal initiative already going to gather email addresses from every consumer, begin one now. This should be the top priority for every retail marketing and advertising executive in our industry.
5. Take control of the point of contact with your customers.
Think strategically and act tactically to team-up with store sales managers and sales associates to control how customers are treated at every level of your company from sales to delivery. You simply cannot leave this most critical issue in the hands of your employees in the lack of a strategic initiative that spells out your vision and corporate goals. If you don’t know what’s really happening in the interactions between each salesperson and each customer in each store every day, you are not in control of the point of contact in a one-to-one selling environment where the interaction is everything.
Joe Capillo is a 41 year career veteran, experienced in managing and consulting with furniture retail operations. He is also a contributing editor for Furniture World Magazine. He is a contributing editor to FURNITURE WORLD and a frequent speaker at industry functions. See all of Joe’s articles on the furninfo.com website.
Read other articles by Joe Capillo