Conditioning your customers to spend more at your store.

How to condition your customers to spend more at your store.
By Reed Sawyer

If you own a business, you want to make sure that you are encouraging, even conditioning your customers to want to buy more at your store.  If you want to improve profitability you must do a couple of things.

1)  Establish credibility with the customer.  You want to let them know that every time that they shop at your store, they are, in effect, helping themselves.  Do you have a mission statement posted on your wall?  Do people know what you are doing to help your community?  Do people know about your charitable efforts?  You don't need to have a "Declaration of Principles" as in Citizen Kane, but your customers should feel good about shopping at your store. Don't beat them over the head with your mission statement, but they should be aware of it, and feel comfortable with it.  (Be careful about which groups you support.  You want to have 100% approval of that group, so that no one is offended that you support it, and retaliate by taking their business elsewhere.)

2)  Establish rapport:  A lot of businesses have greeters, that welcome everyone that comes into the store with a "welcome to" greeting.  Other businesses have their cash register people greet customers as they come in the door.  Your job is to make new customers feel welcome.

3)  Great service:  When a customer comes into your store for the first time, they have no idea of what to expect.  If you make it a policy that at least one person will greet them and find out how they can help them (depending on the type of store), and explain the level of service that they can expect, you have just made a covenant with that customer.  Every time that you come in the door, we will give the very best service that we can, and we will strive to keep you satisfied.  If you're not satisfied, talk to the owner/manager, and we will make it right.  Of course, every business tries to do that, so, in order to really mean it, and have your customers believe you, you should have enough staff on the floor to provide excellent service.  Also, as the owner, you should NOT be in the back excessively.  You should be out front, being the inspiration for the employees, and the point person for the customers.  If you say that you want to provide world class customer service, and then do not provide it, you will have lost credibility. If your employees treat customers like they are a nuisance, they will think that you are lying.  

4)  Provide positive reinforcement for their continued support.   One of the best ways to do that is to use punch cards.  A punch card is a card that you give to customers.  Every time that they come in and make a purchase, they get their card punched.  After a certain number of punches, they get a free item.  Why would you do this?  If your cost of the free item is $5.00, and they came into your store 5 times, you are conditioning them, or training them to be a repeat customer.  Your goal is to have repeat customers, not onetime customers.  If you can have repeat customers that continually stop by your store, you have taken the first step to creating customers with a lifetime value.  (Average purchase X number of purchases per month X months per year X number of years of patronage = total revenue generated=lifetime value of a customer.  If you condition someone to spend $50 per week X 50 weeks per year for 10 years, the lifetime value of that customer is $25,000.  If your profit margin is 10%, any amount less than $2500 (your profit) to acquire that customer is a smart move, isn't it?)

5)  Train/condition your customers to spend more on each visit.  If you can give them more value with a larger cup of soft drink, you have increased their dollar purchase per visit, which increases your per head revenue, which radically increases your profit.  Sometimes it is as simple as asking, "would you like the best value drink?"  Once you encourage, and reward the customer to buy bigger, it becomes a habit for them, and you have trained them to buy more at your store.

6)  Remove the risk.  Wal-Mart has a famous "Satisfaction Guaranteed policy",  It begins with "Our goal is to satisfy our customers by exchange, refund, or repair, as outlined in this policy." 

What  that means is that the customer has a total risk reversal.  They can buy anything, and know that, if it doesn't work, or if they are unhappy with it, that they can bring it back.  So...they will buy more.  Wal Mart has taken the fear out of shopping.  When you train your customers to know that they can buy without fear, they will buy more.  

7)  If you have a return policy to increase sales, remember to make it pleasant.  If you have employees that don't understand your return policy, or if you do it grudgingly, or even unpleasantly, your customers will simply say, "I don't need this.  I will shop elsewhere."  If you have a return policy, treat your customers like gold, because they are.

8)  If you have a policy that has a negative effect on the customers, you have to explain the benefit to them, and why it helps them.  Aldi, the fantastic discount grocery chain, has shopping carts available, for a quarter.  However, they have positioned it so that people don't mind paying the quarter by stating that,

" The shopping cart rental system is one of many ALDI efficiencies that enable us to keep our prices so low. New customers may be surprised by the simple, yet innovative, cart rental system, and usually come to appreciate the system’s many benefits. Not only do customers get their deposit back, there are no stray carts taking up space in the parking lot or causing dents to cars. By not having to hire someone to police the shopping carts, we are able to pass the savings on to our customers."

They have turned a negative into a positive, that is consistent with their mission statement.  Once they have trained their customers, they gladly bring a quarter, because they see the benefits.

9)  Reduce attrition, and increase retention, by communicating with your customers, and finding out what they really want.  When someone has a complaint, listen.  Typically, their complaints are about something that can be fixed, rather than wanting to return the merchandise and never visit your store again.  If the problem can be fixed, fix it.

10) Thank your customers for being part of your "family".  Why would you want to thank your customers for their business?  Because most people want to be thanked for their help, and when you tell people, sincerely, how much you appreciate their business, and the steps you are taking to make sure that they are happy, and the things that you are willing to do to keep their business, you are differentiating yourself from those businesses that do NOT do that.  You are creating a Unique Marketing Advantage, and you are making it easy for them to justify coming back to your store.  When you express gratitude, most people will respond in kind by wanting to keep getting that gratitude, by continuing to shop at your business, and will become a lifetime customer.  

Summary:  Adjusting your policies and  the attitudes of your employees can make a huge difference in the way that your customers think of your business.  If you can condition them, with several reward systems, to continue to shop, and spend more, you will greatly increase your profitability, and your overall satisfaction with your business.  Train them well, and they will make you rich.

Customer Appreciation Days, how NOT to do it.
By Reed Sawyer

Are you spending all of your advertising dollars trying to get new customers?

STOP!

The most profitable method of advertising is NOT going after new customers, but to go after existing customers.  One of the best ways to do that, is to have Customer Appreciation Days.

Here's how NOT to do it!
1)  Don't Give out freebies!  Your goal is to train and condition your customers to be spending MORE money at your store, not to expect freebies.  If you have free food and drinks because it is a special occasion, that is an exception, but it's not the goal.  Reward customers for spending MORE money, do not encourage them to expect freebies.

2)  Don't Give them coupons or discounts on big ticket items with small profit margins. Instead, you want to train your customers to come to your store or business and buy on a regular basis.  You do not want to have them only come to your store for big ticket items...when they get a discount.  Instead, give them discounts and coupons on high profit margin items that they will use or consume regularly.  (If they only come to your business to buy one item, they are not very valuable as a customer.  If they are trained and conditioned to come to your store on a regular basis, they are very valuable.)

3)  Don't make it special.  Instead, If you are having a new product, or new service, announce it to your customers with a special email blast  (You do always attempt to get your customers on an email list, and send them special notices and bulletins every month, don't you?)

4)  Don't Attract them with low prices.  Instead, have added value.  If you are going to be selling an item or services that could possibly be used in different ways, or need training to maximize the utility, have seminars or workshops that show the customers how to maximize the utility of that product or services.  If a person spends $5,000 on an embroidery machine, imagine having workshops on how to USE that embroidery machine.  Have meetings for embroidery clubs, there at your shop, or vendor sponsored workshops to show people how to do even more with what they already have.  If you offer a product, can you offer support products for sale at these workshops?  Can you offer software for sale?  Can you offer advanced training?  Can you offer supplementary services for sale to transform a product into something more?

5) Don't  Have them buy only one thing, at a marked down price.  Instead, have them bundle.  If they buy three, they get the fourth for free.  Your goal is to train them and condition them to think of buying more and getting bigger savings, rather than just buying one item.

6)  Don't know your customers.  Instead, try to get to know them, find out what they want, and make them feel that they are part of a community.  Thank them for their business, and mean it.  Tell them that they are part of your business family, and mean it.  Tell them how much you appreciate them, and mean it.  People are very cautious about how they spend their money, and they want to be appreciated.

7) Don't have Customer of the Week, and Customer of the Month days. Instead, make it a part of the shopping experience.  I worked with a company that had a large fishbowl in the front.  Every time that a customer bought something, they were encouraged to put their contact information into the fishbowl.  Once a week we would have a drawing.  The winner would get their picture taken, have the picture placed in a gorgeous frame that was visible at the front of the store, and get a gift.  We incentivized them to be a part of our contact list, and we sent out periodic emails (no more than once a week) telling people who had won the customer of the month, and, oh, by the way, here is a special upcoming promotion that you might be interested in.

8)  Don't have repeat purchase cards.  Instead, have valued customer cards.  Every time that they make a purchase, they get their card punched, and after 10 purchases, they get a free item.  Why would you do that?  You are conditioning and training them to come back time and time again.  If you also get to know them, and give them periodic discounts, that is a huge plus.  You have conditioned them that they get a known reward for coming back, and they get surprise rewards, every now and then, just by coming back.  You are conditioning them to be a great customer.

9)  Don't .Give out Christmas cards at Christmas.  Every business does that.  Instead, choose four other holidays, throughout the year, (other than around Christmas), and send them cards at that time, or invite them for a special, after-hours shopping spree at ridiculously low prices...for that night only.  You might even have free babysitting for an hour.  (Pizza and a couple of teenagers to babysit, while the parents shop, and you have a tv and dvd playing kids movies.  Make it a date night, so the parent can shop, while the adults buy stuff.)  In fact, that might be a great Friday night tradition.  If you make it easy for the adults to shop, they will want to make it part of their weekly routine.  Make it fun, and make it enjoyable.

10) Don't pay attention to your costs.  Instead, know your expenses, and what you can afford to do.  Your goal isn't to have a large profit margin, and no volume, but to have a massive volume, and a respectable profit margin.  The larger your volume, the lower the percentage of revenue that your fixed costs become.  In other words, it becomes cheaper to operate at a higher volume, than at a lower volume.

Summary:  A Customer Appreciation Day can be a great way to build a valuable relationship with your customers, or it can be a complete waste of money.  Make it work for you.