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Customer Relationships - Part 2

Furniture World Magazine


Build the perception that your store provides exceptional value.

Editor’s Note: In the February/ March issue of FURNITURE WORLD (posted to the Marketing Management Index on furninfo.com), David Middlebrook looked at ways store management can build good customer relationships. This article examines a number of important strategies retail managers can embrace to enhance the perception customers have regarding the overall quality of your store.

The appearance of your store, the layout of the display floor and product displays are key determinants of how customers perceive the quality of your business.

Furthermore, store layout and your product mix affects the amount of effort customers must expend to make their buying decisions. Saving time and effort are, as was discussed in part 1, of tremendous value to most customers.

Regardless of the specific market niche you inhabit, there are generalized principles that can be followed to increase perceived quality. Interior and exterior store appearance increases value by increasing the perception of quality. Does your store look appealing? Does it reflect the style of your preferred customers? Does your store look interesting and inviting? Read the article on store lighting in this issue that gives systematic instructions on how to perform a store (appearance) survey.

Efficient store layout saves effort, affects quality perception, and can reduce your overall cost of operations.

The layout shouldn't be a maze. It should be easy to navigate and draw your customers in. Many progressive retailers find that mother/child ‘corners’ where mom can rest and kids can play create a more relaxed shopping environment. Serve coffee, soft drinks and juice there. Put in massage chairs or lounge chairs. Make it a comfortable and inviting spot. If customers feel comfortable, they will extend the time spent shopping. They will be much more likely to buy.

Many of today’s consumers are disheartened by narrow (and dull) product displays at local retail stores. This perception encourages them to broaden their search to wider geographic areas and the internet. If your customer can find what they want easily, they will save a great amount of time and effort.

You do not need to exceed recommended inventory standards to maximize exposure for your product lines. Use backlit displays to show additional items and configurations. Visual impression and product texture are important to consumers. They are your largest single competitive advantage over Internet and catalogue providers.

Shop your competition and other stores like yours outside of your own market area for ideas. Whenever you have a new idea, consider whether the idea is consistent with your store's "value proposition" and specifically, how the idea increases value.

There's no question that the quality of training, friendliness and the professionalism of all staff members contributes to all value measures.

  • Appearance: Your personal appearance and that of the store make an instant
  • Greetings: Show your attitude (routine vs. exuberant). Wal-Mart is a great example of success in this area.
  • Salespersons’ Attitudes: Reflect what the consumer should expect from the store. If your employees don’t like working in your store, why would customers enjoy shopping there? Does the staff impart product knowledge that is useful to the consumer when asked questions, or do they respond with an answer meant to show off their own superior knowledge.
  • Courtesy: In the store and after the visit, a thank you note goes a long way even if the consumer didn’t buy.
  • Track the Customer and Their Order: Calling is a good touch after a thank you note (See “Too Chicken To Ask For Referrals” in this issue). Every employee needs to be thinking two steps ahead to anticipate the next question, and to prevent the next problem.

THE 1-5-15 & 30 DAY PLAN
Try using the 1-5-15 & 30 day plan for customer follow-up contact.

  • Day one, send a Thank you note
  • Five days after the store visit make a phone call and check with the customer to be sure that everything went as you promised
  • Fifteen days after the store visit send a small gift. This is an excellent time to again tell the customer how important they are to you and the store
  • Thirty days after the store visit recheck the customer’s satisfaction level by phone. Let there be no doubt in the customers mind that you care about them.

Caring happy sales people attract and keep happy customers. One of management's primary jobs is to attract and keep happy sales people.

It all comes down to people, people, people. Personal contact is your best tool whether it is in the store, in the home, on the phone, or in written correspondence. If you are like the average home furnishings retailer, 15-20% of your satisfied customers will leave your customer base each year and 10-30% of your employees will quit. It is very difficult to build a long-term relationship with customers, based on value, if your staff turns over every three years and you have a new set of customers every five years. Often, they BOTH leave for the same reason; they don’t feel like part of the family.

Customers and employees that don’t see the value in their relationship with you are more likely to leave to find more security. They are certainly prime candidates for a competitor's sale ads and that is the first step toward leaving your store.

Every employee needs to express concern for customer needs at all times. All prospects, not just buyers, need to feel like VIPs or they will not become buyers except out of necessity. One negative experience with any of your employees can send even a loyal customer to shop a competitor who has an appealing ad or lower price.

It is your people who cause shoppers to become buyers in your store. If they do not have a good attitude, they encourage prospects and customers to look elsewhere… for stores with better-perceived quality.

Employees have a wide range of effects on value:

  • They recruit and refer other employees.
  • They bring in referral customers.
  • They are essential to existing customer retention.
  • The longer they stay, the more efficient they are in performing their job assignments.
  • The longer they stay, the lower the need for introductory training. This training budget can be reallocated to more advanced training which leads to higher employee retention and productivity.

How will you get repeat sales from customers, if there is no one in the store they know? Relationships develop over time.

One common belief is that building relationships costs time and money but does not increase sales, profits or returns. Wrong! Bain and Co. research estimates the following: A 5% increase in customer retention over the customer life cycle increases the present value of profits...75% in the credit card business... 81% in the car business... 90% in the insurance business.

Some industries (like insurance or credit cards) don’t make money on customers for several years. In most furniture stores, it costs approximately $35.00 to bring someone in the door and $100.00 to make a sale. If you keep that person a customer until their next purchase, it may only cost you 34 cents to bring them back. It’s much more cost effective and profitable to keep customers than try to attract new ones.

Happy customers are your best advertising, your most loyal defenders, and usually spend $50k over a lifetime. With referrals and children, one good customer might be responsible for $500,000 in sales potential during their lifetime. See Cathy Finney’s article on asking for customer referrals in this issue. Good relationships build value, which builds customer loyalty and profits.

Your promotional plan should reinforce customer relationships with your store and your employees. This advertising solidifies your presence in the community, contributes to the perception of quality and attracts the new specific-need buyer. Relationship perceptions about your store and staff keep customers coming back. When you have developed a relationship, you can send multiple directed letters talking about the whole house. Your salespeople can become a part of the family’s plans for their home… not just a salesperson in a store where they bought a sofa. Make customers and prospects feel special. Send proactive sale invitations or invite them to a wine and cheese night to view your new lines. With direct mail, 10 personal communications will only cost $3.40. Can you afford not to use direct mail?

That new buyer or potential customer has to feel just as important as your best customer does before they see you as a friend.

It is only natural to try a little harder to please your best customers and your friends. Moreover, if your customers feel like friends, they will want to reciprocate. You can share their excitement about a new purchase. Together you can talk about the future of their room – not just the chair they bought. Making the experience you want a friend to have, available to all of your customers, is one of the best ways to make your operation more efficient. Processes will change in advance of problems and prevent them. This, in turn, will create value and lower your cost of operations.

Next Issue : Improving your customer relationships impacts customers, advertising and operations. Increase sales, profits and return on investment by having better customer relationships.

David Middlebrook of AAAA Development LLC, developers of UpFront™ software, customer relationship management software designed specifically for furniture retailers, speaks and writes extensively on customer relationship management and related topics. For more information about the topics in this article contact FURNITURE WORLD Magazine at editor@furninfo.com.