Braintrust Query: Four Ways Smaller Stores Can Create Deeper Customer Connections
By
Doron Levy, president, Captus Business Consulting
Smallness
is a great advantage. A small retailer has the ability to develop stronger
and more loyal customer relationships. The reality is that merchants aren’t
doing enough to create and maintain customer relationships.
Okay,
smaller stores don’t have behavior and shopping habit data in real time at
their disposal. And they don’t have a high tech loyalty program complete
with key ring cards. And maybe they haven’t had time to set up (or afford)
RFID.
That’s
okay. They don’t need it. That stuff just complicates the issue. Smaller
stores can sell more products by appreciating and embracing the customer.
The big guys forgot long ago how to take care of their customer.
Here
are my top four ways retailers can connect to their customer on a deeper
level:
1.
Localize merchandise selections: Take
a detailed look at the selling area. Are there cultural- or community-specific
goods or services that the store should be carrying? If consumables, including
apparel, are being sold, they must be aware of the wants and needs of their
immediate selling area.
2.
Create a culture of service: Monkey
see, monkey do has never been more true than in the retail industry. If small
stores want their team to provide the best possible service to their customer,
they have to see the owner doing the same. (This note goes out to the owner
of the baby supply store that yelled at the pregnant mother in front of my
pregnant wife and my youngest daughter! True story.)
3.
Have a rewards program!: Sure,
they don’t have access to millions of dollars worth of computer applications
but the best rewards program I have ever seen is at a local pizza place
called Toninos. A simple card with 10 spots. You buy 10 slices, get 10 punches
and you get a free slice. Nothing fancy. No mailers. No points redemption.
No tiered promos. Just a simple thank you for doing business with us. Stores
should cconsider some sort of extended value to their most loyal customers.
4.
Stay connected to your customer: Merchants want to maintain communication
with their customers inside and outside the store. The two cheapest ways
to stay connected are through the internet and through the community. Customers
are interested in a store’s web presence. Stores should utilize all the social
networking and communication tools available to stay connected to their customers.
Monthly newsletters, special online promotions, tweeting and Facebook fan
pages provide value. Stores should also look to play a leading role in their
community. They don’t have to give the store away but maintaining a presence
at community events is a great way to connect with their specific customer.
Valuable insight can be gained and localization programs optimized by linking
to community leaders and functions.
Discussion Questions:
How can smaller stores connect with local customers in ways that big
boxes can’t? What do you think of the suggestions mentioned in the
article?
All four points that Doron discusses are great ways for small retailers to engender loyalty. I would take it a step further and suggest that small stores can employ CRM techniques in a cost-efficient way if they pay attention to their customers’ shopping habits and do some relatively simple data analysis. (And a loyalty program, such as Doron suggests, can provide a lot of the data needed.)
For example, by understanding the customer’s RFM behavior (recency, frequency, and monetary value of visits), the small retailer is more likely to make reasoned rather than emotional decisions about how to drive more products into the shopping cart of the store’s best customers.
Local and chain retailers can all benefit from Doron’s advice; this is not just a local phenomenon. Good customer service resonates with consumers no matter where they shop.
In addition to the 4 points mentioned in the article, local stores also have to offer uncommon value to consumers, otherwise value-conscious shoppers will buy the same or similar products from big box stores for lower prices. That value can come from offering a unique selection of goods or special pricing for reaching spending thresholds.
It’s not easy being a small merchant in this economy. Drive down any Main Street and you will see many shuttered shops. The stores that will survive are in a good position to thrive once the economic turnaround reaches their neighborhoods.
This is one of those issues where all of the suggestions are helpful and applicable. I would suggest to even keep it more simple than that. Connect through the kids. Every school has fund raising events for sports, music, theater, etc. Be in the middle of it. Have bagging contests for fun to raise money, have the kids carry groceries to the cars, have car washes, and so forth.
Every weekend should be filled with community events where parents get to bring their kids back and forth and make two shopping trips a day….
Doron’s points are all simple, actionable, and POWERFUL.
In a small business, retailers have the opportunity to LISTEN to their customers. Larger retailers, certainly have a chance to do that as well, but somehow, too many have lost the magic of “Walking around management” that informs, inspires, and connects consumers and associates to the brand that they are building.
It remains a personal world in the restaurants, consumer electronics, apparel, grocery, home improvement, etc, stores that we visit. Conditioning a team of people to ask the simple and important questions of “What projects are you working on?” “Did you see how the local teams did this week?” “Have you tried the new vegetables, cell phones, cosmetic, vitamins, etc, etc?”
Connecting with the customer has been and always will be priority #1 for retailers, small or large.
While not all smaller stores are independently owned and operated, many are. In many ways this places them at a disadvantage. They cannot usually buy for as low a price, afford to carry as much inventory, etc.
The counterbalance is that they should truly be able to know their customer and their needs and wants. This can include all the points made in the article, of which I believe one and two are the most important. Much of their advantage comes from the staff–remember Cheers? Not the world’s fanciest bar but it was a place where they remembered your name.
I used to shop (I moved) in a men’s store where they greeted me by name, where they remembered my sizes, what type of clothes I liked, whether I liked a full or half break on my slacks, etc. When there was a need for a new tie (we all wore suits then–remember?), there was a woman we fondly referred to as the “tie lady” who would quickly pick out a few that not only matched the suit but my tastes as well. They didn’t a have formal loyalty program; they gained it by the way they treated you when you were there.
I have seen similar treatment of customers in small chain store operations where the culture fosters a customer service attitude. In these cases, it starts not with the remote owner, but with the manager. I know from my years as a chain retailer that when we changed a manager, we changed a store. That is why we moved from looking for someone with technical skills to someone who liked working with people. Skills we could teach, attitude we could not.
I think Steven Montgomery must have lived in Minneapolis and shopped in “Nate’s Back Room.” The entire male executive population of General Mills shopped there for clothes, I think, for precisely the reasons Steven enumerated. You knew you were “on the team” when one of the senior guys introduced you to Nate’s.
It appears we all agree that Doron has nailed this one. The strategies he recommends are all powerful weapons for small retailers. Although I do note that all the early poll votes are going to Service and Relationships, indicating that this is much more about the loyalty generated by feeling valued than about personalized product selections.
Perhaps the next question we should ponder is “If we all agree this stuff works–why are so many of those main street shop doors shuttered?” What we may find is that one of those long-term trends impacting retailing we were discussing earlier this week is the “depersonalization” of customer relationships. Maybe Gen Y really does care more that your website recognizes their URL than that you recognize their face. Ugh.
The smart small and large retailers recognize that it all starts with hiring and retention of the right employees.
Small retailers can win in the hiring process because in the major retailers, hiring and retention of staff is an HR problem and an operations pain, and in most cases HR does not give the priority to frontline hiring.
Large or small stores can actually do most of this. Sure, advanced technologies can help (although I know of plenty of big retailers who don’t use what they have). However, the simple, low-tech ideas work best. Any size retailer can send someone to a local park where kids are playing a soccer game and have merchandise to sell on a fold-up table. A single-store, independent bicycle shop can come to a town festival and sell their accessories.
Rewarding employees with merchandise discounts for achieving a specific customer service goal has always worked. I remember when a well-known grocer used to give every employee cash bonuses–yes, even the baggers–based upon their customer service challenges.
This is all based upon the personal commitment of the retailer, regardless of size. If the culture demands customer service, then it will become part of business as usual.
These are all terrific ideas for retailers of all sizes.
I’d add the following:
Differentiate the assortments with small vendors. Buyers for the large retailers typically buy in large quantities for chain-wide distribution. This means they are buying from very large vendors structured to service large retailers. Small retailers have an opportunity to find the smaller, newer vendors who can provide merchandise not found in larger retailers.
Bring back the “Black Book.” Point 4 in the article, “Stay Connected” with the customer is probably the biggest edge the small retailer has over their larger competitors. Take this one step further and keep specific profiles on your core customers’ preferences–labels, silhouettes, colors, etc. When this kind of merchandise arrives, reach out to the customer proactively to let them know you’ve got them. You’ll be amazed at the response.
Shouldn’t every merchant, big or small, try to follow these suggestions? Spend some time at a popular local pub and see how the customers are treated. Perhaps every small merchant should be “CHEERS!”
I see how small shopkeepers in NYC operate. In less than a year from moving into the city after 20-some years in the suburbs, I knew the merchants in my neighborhood better than I ever knew the ones in my suburban town. Perhaps, most importantly, they knew me. They knew my buying habits and preferences. I get waves as I walk down the sidewalks. Could I be anything else but loyal?
As shoppers, we all want to go “where everybody knows your name.” Retailers should always remember that!
As I’ve stated before, a small independent grocer has the advantage of getting to know the customer’s needs. Even though many small stores have little customer loyalty, it is even more important to take care of and cultivate the one-on-one relationship with each customer.
Although frustrations about business are constant, the opportunity to survive and grow are there if a store can build relationships with good regional suppliers, and stay very strong in perishables. We can not win the price perception battle (it’s over), so move on with the homemade goodies from your bakery-deli, the hot “in-bag” prime ribs for the holidays, and top-notch community service.
Even with all of that going for you, success is not guaranteed due to local government mandates, higher rents, and insurance issues. But…stay creative, join your local chamber of commerce, network effectively, and never be afraid to talk about the positives of your business to any group willing to listen. Good luck to all, and always, ALWAYS continue to promote heavily. Never, NEVER cut your advertising budget….
Kudos to Doron. One other tip–keep your employees. Sales associates who know customers, and store managers who greet customers, emphasize a personal touch that no campaign can match. This is the real advantage that small chains have over larger ones.
As noted, some terrific suggestions by Doron Levy as well as some practical advice from other BrainTrust panelists. I would add two more options for a differential advantage for small retailers: First, use the community connection to your advantage. For example, if you are a food retailer, host the local high school marching band one day a week, allowing them to practice in your parking lot with soft drinks and snacks after practice. Another, cross merchandise your offerings with other small retailers that compete with big box stores. For example, cross promote an outdoor grill from the local hardware or garden store with steaks from the local food retailer. Another, promote a local restaurant and chef with an appearance at your bookstore, supermarket, etc. One more; invite local pet groomers, veterinarians, and kennels to set up in your parking lot the first Saturday of the month. The goal of each of these tactics is to reinforce the local/community connection and your involvement in their lives.
Second, use your compact size to be more nimble than the behemoths. Their strength and size is also their weakness, namely, speed of response. For example, on Wednesday, announce a one day/eight hour sale for Friday. Use late breaking news or events as a way to promote your store. For example, as your favorite sports team advances in its pursuit of a championship, decorate your store with team colors, banners, and other paraphernalia. The key is to do something immediately, while the big guys are still trying to figure out what to do.
This is a timely and welcome topic. Large chains today wrestle with segmentation, targeting, and localization of their merchandising and promotions. They use frequent shopper card programs, demand analytics, and shopper insights to tackle these objectives. The intricacy and complexity can be overwhelming, and the implementation challenge is an Achilles heel.
Against that competitive backdrop, local merchants have every reason to leverage the inherent advantages they enjoy merely by being local. Local merchants are closer to and more involved in their communities. They are more sensitive to local preference and taste. They keep local dollars local.
They also have more practical means to compete for shopper loyalty due to the growing prevalence of inexpensive web-based tools, like blogs, social networking and email list services. A new company I’ve been helping in South Florida, ClipFree.com (http://clipfree.com), is in the process of launching a turnkey service that blends a loyalty card, online coupons, and social networking in a platform specifically designed for local merchants.
Digital business services and online tools can help level the playing field. Local businesses who stay connected with their customers reinforce two-way loyalty, and gain share of heart, mind, and wallet.
It is great to see so many comments and thoughts on Doron’s retail convictions. The poll results are telling, with a resounding majority pointing to service and connecting with customers as their top priorities. Within this context, I would stress the importance of a small, independent retailer taking the time to identify their deeply-rooted purpose/mission/values, then bringing them to life with AUTHENTICITY.
At the risk of repeating a point I made in a similar discussion on September 1 (I think), there’s this: PAY VENDORS ON TIME. It’s amazing how this opens them up to discounts and promotions.
All these are great ideas for smaller merchants to consider. That said, small merchants face a larger issue that sometimes flies under the radar but still greatly impacts the shopper experience. Specifically, small merchants need help on an ongoing basis. These guys and gals are often doing it all themselves or with a very limited staff. They’re always on the hunt for assistance, ideas, tools, networking opportunities, etc–basically any help they can get to do their job better, faster, and more efficiently. Someone or some group that can help them fulfill that daily need helps the small merchant keep the doors open.
Wow! Another great topic and a great discussion.
Who would have thought ten years ago that today we would be looking to smaller retailers for answers in an economic downturn?
For a great insight into smaller retailers, I recommend the book: The Mom & Pop Store: How the unsung heroes of the American economy are surviving and thriving by Robert Spector.www.robertspector.com He has example after example of small retailers who are making a go of it by constantly adapting to changing competition, changing customer bases and changing economies.
At its most basic level, the key to retail success is something we all learned from our parents at a tender age: “Listen and do.”
If price was all that mattered, these smaller guys would be extinct. As it is, some are actually thriving.
To be a great retailer, regardless of size, you have to offer value. The great thing about value is that you can define it in so many ways. Service, selection, time savings, quality…you name it.
Are the big box stores offering value? Are they really providing service? Are they offering new and unique items or boring brand extensions? Do 100,000 square foot stores with only two open checkout lanes really save the consumer time? Are the big guys delivering on the promises made in their advertising?
I think the economic model that the big guys have followed for the last 30 years is failing. It’s going to be almost impossible to keep both your shareholders and your customers happy as the effect of the recession, in terms of lower home values and higher unemployment, stifle growth.
It’s time for a new economic model in the retail industry and the smaller guys just might hold the key for how a successful retailer should operate in the future. Stay tuned!
Let’s admit it; just from the buying power of the big chains, the independent local retailer is going to be more expensive. So what do they have to offer in return? Friendliness. Connections. The manager and the staff get to know the customers. Your kid or the neighbor’s kid who cuts your grass works there in the Summer. The staff can give you advice about local conditions and what is the best product for your needs. They participate personally in local events and charity drives, etc.
Small business owners have a unique advantage over big, multi-unit retailers in that they can practice good old-fashioned relationship management if they take the time to do it. Large companies constantly chase after the one-to-one relationship. Yet with their size, this is impossible.
A business owner at a smaller store can actually walk the floor and engage with customers. He or she can help them find what they are looking for and ask them about their day. Phone calls can be made to those who make large purchases to follow up and see how everything is.
Forming this relationship is critical to driving repeat business.
Even more importantly, small business owners can get immediate feedback from their customers. Because they have that one-to-one relationship, they can ask what the customer likes and dislikes about their store. What do they want to see stocked today and in the future and are the sales people meeting their needs? This allows the small business owner to have the information they need to run the business right from the consumer’s mouth.
In a multi-unit retailer, each of these small proprietorship principles gets replaced by a process, a technology, and a professional. Every executive at a large firm loses that personal touch and constantly struggles to maintain a sense of ownership and care for the customer. And as companies grow and succeed further, the ability to marry these processes, technologies, and professionals into an “authentic” experience for a customer becomes ever more challenging. “Ownership” of the customer combined with “authentic” experiences is a very difficult thing to scale and reproduce effectively.
I’d like to see more retailers reward the frequent shoppers more often. It could simply be offering a serious discount as a surprise, just to let them know that they are appreciated. In addition, retailers need to be plugged into the local community. The key is to pierce the local culture and to be relevant in a time of crisis.
I second Richard’s comments, 100%! Smaller retailers have the ability to combine customer insight with personal customer relationships and create barriers to exit for their customers.
By better understanding customer behavior and obtaining insight from customers directly, small retailers can build a relationship that is not based solely on price. Remember, consumers will still demand VALUE — that trend is not going away. But working with customers to develop strategies to help them get more for their money provides a service that larger retailers cannot easily duplicate. In addition, increasing the personalization of emails and direct mail will also support a differentiated relationship. Big companies cannot put hand-written notes on all the direct mail or refer to customers’ families in email.
Stay focused on the relationship — do not panic at the tough economy and be flexible to change your products and services to meet customer needs. That is the key to small business success in this economy and onward.