If we’re honest with ourselves, we know that we go to great expense to energize customers to interact with us every day. Rarely does one decide to browse through websites or visit a physical location without a desired outcome in mind. As the NRF points out in its path to purchase, the decision to purchase is vast and varied. https://nrf.com/resources/consumer-research-and-data/consumer-behavior/consumer-path-purchase. Direct mail, digital marketing, and content in any channel will pique interest in many products which may otherwise have limited views/attention. Illustrating the why behind the what drives the impulse to purchase. Those inspired consumers will take immediate action, looking to place their order to acquire their desired “stuff”. Believing that once the impulsive customer arrives, they will be satisfied with an inefficient and unattractive process is naive. The time, energy and funds spent to direct the customer may end up in the virtual or physical equivalent of a junk yard. The customer simply leaves. It’s equivalent to a hunt for a sales associate, or being on hold with a phone call. Unless the order form is seamless customer experience, you have no sale. Simplify the process. Eliminate steps. Seal the deal with your customer by making it easy to say yes.
The Human Touch
How important is face to face connection in the world of retail these days? Based on recent sales floor experience, it’s clear that we are not yet ready for the Jetson life. Below are the three most common reasons a customer crosses the threshold:
1. Return stations for online purchases. Customers don’t hesitate to order multiple sizes, and or multiple items to try on at home and return everything they decide against to a physical location. Their home is their private fitting room, and the local store is their reject rack. While there is some opportunity to flip this into a physical sale, it is typically a net negative sales transaction. Do the store systems track the source of the returns? If not, four wall performance is diminished by returns from another channel.
2. Hungry for guidance. Customers wander in looking slightly uncomfortable, standing in front of a merchandise presentation with a blank stare. The relief they express when an informed and positive person gets them talking about why they have arrived, is palpable. These interactions turn into a lot of fun. Providing product knowledge and understanding the needs of a customer is key. In these cases, price is not necessarily a primary decision driver.
3. Specific hunt. The shopper has an immediate need for an event or an emergency and doesn’t have time for a delivery. Some shoppers are more than happy to make a less than perfect purchase because no one else in any other store had even approached them.
In the short time during which I have returned to the selling floor, the number of “thank you’s“ and “this was fun” heard from the customers in response to our shared experience has reinforced the prevailing discussion that the physical channel will continue to exist. It’s up to each business to provide the experience worth visiting in every channel. Happy, informed humans do help.
Lies, Damn Lies and Analytics
Easy to get caged in your analytical playpen when you don’t know the why behind the data. Learn to ask the tough questions.
The beauty of a dashboard is that access to statistics and results can be immediate. With the press of a button, google analytics provides a host of information on a websites performance. The daily sales dashboard from the data warehouse has some good stats. The unfortunate result of that is proclamations of success or failure at any given point without comprehension of the why, can drive action which does real damage to an assortment, a marketing campaign, revenue drivers, purchase projections. You name it.
The downfall of a dashboard is that many observing it don’t understand the why behind the current results.
- The average order value to our customer is continuing to increase annually. We’re doing such a good job providing them with the goods and services they demand. What do you mean the customer base is decreasing? We need more customers! Let’s grab them from our competition.
- Traffic to the website is spiking. We’re brilliant! Oh. What do you mean that 500,000 catalogs landed in mailboxes this week? That’s print. Print is dead. It’s all about our website. Look at that increase in conversions! Look at the average order value!
- Look at the revenue we’re driving with that discount coupon! We’re up 30% in revenue! We need to keep up price promotions on the entire site! Our customer base is eating this up! What do you mean we’ve lost 600bps in margin? We’ll make it up in margin dollars! Why are we out of our bestselling products?
- Revenue in category A increased from 10% of the total to 20% of the total for a 100% increase in sales. Genius! Really? Give me the $. Sales and margin. If total revenue increased from $100,000 to $105,000, then category A increased from $10,000 to $21,000 which is 110% increase in sales in the category, driving an overall 5% increase in revenue. Unfortunately, category B and C, which have higher margins than category A dropped in penetration due to downtrending product, or delivery issues, or price increases due to tariff changes, etc. So overall gross margin came in at $32,000 vs. $38,000 LY, leaving less to cover overhead. Where do we cut?
Basic arithmetic and an good understanding of the foundations of a business are all you need to dissect a dashboard. How many times do you hear the why questions being asked? Sure, traffic and page view increases to a site make everyone feel good. More feet through the door are exciting. But if they don’t funnel through with increases in conversions and order values, the story can be misleading and may not end well. Give me facts tied to actual products and categories any time. The right mix combined with more customers will have a happy ending.
Everything Old is New Again
This Smith Corona manual typewriter is a sentimental piece of my history. The best gift ever at the time I received it. Reams of paper were consumed and miles of words were written. My typing skills were honed here. Let’s not forget the White Out and Korrecto-type consumption either.
In our current world of keyboard options, I have been forever grateful to have my typing skills. My fingers fly faster than many. The quick brown fox jumped over the lazy dog. asdfjkl; Thanks to my computer savvy husband who watched in mild horror as I worked with green ledger paper, pencil and calculator to calculate orders, I began using our home Apple computer and Lotus in 1985. Got my first laptop in 1992 for Mother’s Day along with a portable printer. (Everything needed to be on paper.) As time has gone on, my keyboard proficiency has continued to serve me well as I embrace every possible efficiency which new technology continues to provide. Change has not caused me to lose skills, it has allowed me to improve and add to them.
Now expand that thinking to business acumen. Everything learned over time has been continually refined and expanded to allow for more efficient decision making and a humility borne of an understanding that simply because an approach didn’t work once upon a time, it shouldn’t be ruled out in a new environment. No two people approach things in exactly the same way, but clear direction towards a common goal will lead to the best results.
- What about those physical stores emerging from the world of ecommerce only businesses? Are they all warehouses for inventory? No. Some do double duty, but not all. Do they allow a consumer to get a comfort level with physical product before investing? Yes. A purchase is more likely to “stick”.
- Direct mail pieces from Wayfair? Catalogs from Bonobos? Who would have thought.
- The real story is that people want to shop where and when they choose depending on the product, their time and their need to get familiar with products.
All of this goes back to the simple truth that as long as we continue to push for better answers, we will build on instinct and experience using data to confirm and expand on opportunities. Nothing and no one is old as long as we continue to challenge assumptions and apply new learnings.
Can an Algorithm Do This?
Merriam Webster defines algorithm as: a procedure for solving a mathematical problem (as of finding the greatest common divisor) in a finite number of steps that frequently involves repetition of an operation; broadly: a step-by-step procedure for solving a problem or accomplishing some end especially by a computer. ~a search algorithm.
Without the concept, who needs an algorithm.
“A procedure for solving a mathematical problem”. That’s the challenge. What are the elements of the mathematical problem? That’s where instinct comes into play. What price, what cost, is there seasonality, is there a life cycle? On and on and on… Where is the algorithm that determines that a consumer is looking for a chambray 3/4 sleeve tunic if there have been no like items in the assortment? Merchandising instinct and marketing muscle. Once the item is identified and exposed, the algorithm can go to town! It’s a part of sophisticated merchandise planning. Nothing new, simply done with a really long equation fed into a computer rather than a calculator, pencil and ledger paper.
- Hula hoops: http://bit.ly/2oPht0Q
- Pet rocks: http://bit.ly/2oONtCn
- Yoga pants
Started with an idea not an equation. The data will justify the instinct.
Marketing or merchandising? Who gets to choose the focus? This tension has existed for as long as I can remember. Marketers are the story tellers, determining and inspiring the targeted audience to make the purchase. Merchants comb the market place on a constant quest for the “right stuff” and always take into account the why and the who behind the choices. If you don’t know why you’re offering a product, you should not be acquiring it. Sometimes that stuff is exclusively developed with product managers and/or manufacturers to drive demand. In others, the merchandise is inspired by instinct based on glimpses of trends from all types of media. Or simply part of someone’s product line. (My kids thought people read magazines by ripping the pages after experiencing my habits.) Product assortments are based on logic and magic…interpretations of what is on the horizon, has been successful in other forms, or is total shot in the dark based on gut and analysis.
If merchants don’t know why they are purchasing/developing product, don’t have a clear vision of the price and profit guidelines and have no vision of product positioning, they aren’t doing their job. Same goes with marketers. If they aren’t asking the why behind the what in order to tell their story, they are not contributing to business growth in a collaborative partnership. It’s a team effort. Both talents are necessary to grow a profitable customer base. Embrace the blurring and create something great!
Now that you have an earworm, here’s some relief: http://bit.ly/2oQpiDO