Doing ahead, not just thinking ahead

Quite often, I talk with business owners about thinking ahead.

Something that happened yesterday tells me that I need to change my terminology to “Doing ahead.”

Why the change?

Primarily, I’m concerned that small businesses are thinking ahead, but stopping there.

Thinking ahead discussions often include strategic thoughts of putting yourself out of business by inventing new products and services for your customers that replace your current top seller.

So let’s talk retail for a moment, since they’re an easy example.

Every time you enter a WalMart store (something I try to avoid – I’m just not into the crowds), you’re likely to see something different. Just a little thing here or there that’s different. Sometimes it’s a test to see how something works, other times it’s the result of such tests.

What you never see is exactly the same store, time after time, town after town. Sure, the overall store is quite similar overall but there’s almost always something different. Something being tested. Something being implemented.

This effort isn’t limited to their brick and mortar stores. WalMart and the rest of big retail spend a lot of time looking at how they can improve the performance of their online retail properties. They have lots on their todo list simply by comparing themselves to Amazon.com – which blows away most (if not all) online retailers in end to end performance and customer engagement.

This is the price they pay for ignoring Amazon during their climb to cruising altitude.

What we don’t see is massive shifts designed to make the store or parts of the store irrelevant. It doesn’t mean they aren’t there, but they’re much harder to see in a brick and mortar store. Honestly, I can’t think of the last time I saw a brick and mortar store do something like this but I suspect I just don’t recall it.

Amazon tweaks too

Naturally, Amazon.com is working hard to improve what they already do – testing and tweaking their retail site and their back end (such as the systems that email you about things you might be interested in). You can see evidence of this on a regular basis.

Meanwhile – they’re doing things like what you see in the video above (More video here from 60 Minutes).

This isn’t just about speed, though that is certainly part of it. Keep in mind that this also means that Amazon can deliver without using any of the established shipping systems – all of which have legislative limitations as complex as those currently preventing the use of shipping drones. The only difference is that no one wrote a pile of legislation in the 1920’s to protect the USPS, Fedex or UPS – all of whom are just as likely to have drones in their future.

Parts of this are not just changing the rules but eliminating them wholesale. I would expect this to be implemented in other countries long before it happens in the U.S., due to the legislative challenges here. We’re already well on the way to delivering relief supplies via drone. Why not retail?

Learning while looking ahead

Learn from seeing Amazon look years ahead without a guaranteed payoff, hitting on pain points, looking to shorten the sales cycle (money loves speed), looking to eliminate competitive disadvantages with WMT, looking to improve/control shipping, etc – while ignoring the fact that they can’t put the drones into service and prepare for the day when they can.

They’ll be learning new things about their business and their customers as well.

The challenge for you and for businesses all over the world is not to see another way that Amazon will eat your lunch, or to think you’re safe because you aren’t in retail, aren’t near an Amazon fulfillment center or are in a rural location unlikely to be served by drones.

Your challenge is to think beyond the advances you’ve been working on or considering. Those advances are important, but you also need to be figuring out things that are years off, all while considering what will replace them.

The dangerous thought is to ignore these things because they don’t threaten you now and wont for years.

Why is that so dangerous? Because that’s exactly what many in Amazon’s market did a decade or so ago – and they still haven’t caught up from making that mistake.

The big showrooming lie: “It’s all about price.”

Last time, we talked about how showrooming is impacting the retailer, briefly discussed what causes it and covered how a home store’s effective website selling experience helped me save time by avoiding a trip to a store that couldn’t decide whether it could help me.

All the retailers say it’s about price and the research agrees.

Since everyone’s in agreement, let’s dive in.

What makes people showroom?

Piles of research make it hard to argue that showrooming is about price. A recent Harris poll indicated that 96 percent of showrooming was at least “somewhat about price”, while 82% said price was “very” or “extremely important”.

Ask anyone why they showroom and they will almost always say “price”. What reason do they have to lie? It must be about price.

So how should retailers react? Let’s look at a few real-world reactions.

What Best Buy did

Two years ago, showrooming was hammering Best Buy and their financial performance showed it. While it might not have been the sole cause, it’s tough to argue that it wasn’t a factor – particularly since their stores are reported as “most often showroomed”.

They first took an “us vs. the customer” stance. They blocked out shelf barcodes so customers couldn’t scan them. They required that manufacturers provide Best Buy specific product codes (SKUs). These SKUs appear in package and shelf barcodes. Since they’re unique to Best Buy, consumers couldn’t easily price check an item vs. prices at Amazon.com.

These strategies weren’t particularly effective, nor did they improve customer relations.

Since then, they’ve had success using these strategies:

  • Price matching vs. Amazon.com
  • Improving their website shopping experience
  • Offering more in-store promotions and discounts
  • Improving their on-floor knowledge about new products.

Half of these strategies rely on price. For now, Best Buy has the resources and buying power to price match Amazon and WalMart, but I think you’ll see this backfire in the long term.

Using discounting to make a sale breeds a relationship that’s easily broken. All it takes is someone else’s lower price to “steal” your customer.

I’m not saying price isn’t important, it’s simply a poor long-term relationship builder. The easiest customer to lose is a customer you gained solely by having the lowest price – so that better not be your only edge.

What WalMart did

Rather than fighting the price checking that built them, WalMart leverages having the customer in store – even when there to showroom.

They have an app that produces a list of items that are on sale that day, which is displayed on your phone when you enter the store. The app also lets you scan barcodes and keep track of what you’ve decided to buy.

They embraced their customers’ behavior to their advantage. While people might enter the store to showroom, they’re likely to buy something else they need if they’re made aware of on-sale items while in the store.

So why the “selling by price is bad” conversation for Best Buy and “selling by price is good” for WalMart? Simple. Their business models are much different. Unlike Best Buy, WalMart’s business model is designed around “Lowest price. Always.” and driven by world-class logistics.

The takeaway from WalMart’s showrooming strategy? Taking advantage of customer behavior you can’t change is much easier than fighting it.

What an Aussie retailer did

Earlier this year, a Consumerist story told of an Australian retailer who battled showrooming with a “Just Looking” fee.

Their strategy? Charge everyone who enters the store a five dollar “Just looking” fee and refund it when a purchase is made.

Is this really how you want to make a first impression with a prospect, much less engage a customer? I think not.

Consumers: “It’s about price, but it isn’t.”

So…what’s the big lie?

Remember the 82% of consumers who told Harris Polls that price was “very/extremely important” and the 96% who said it was “somewhat” important?

Despite those big numbers, 70% of the same respondents said that if they had a good shopping experience at an online store, they would be less likely to buy the item elsewhere, even if it was cheaper.

The same goes for local retail.

Showrooming is more complex than just price. A small retailer can address the problem in ways big retail can’t or won’t.

Next time, we’ll drill down on what’s really behind “It’s about price, but it isn’t”.

Are you being showroomed?

Multi-Touch
Creative Commons License photo credit: DaveLawler

If you have a retail store, you’ve almost certainly had people showrooming in your store.

If you haven’t heard the term,”showrooming” can be summarized as “shopping at local stores to check out an item before buying online.”

Showrooming takes different forms and includes:

  • Price checking items on the internet while walking through a store. That bottle of foo-foo shampoo is $28.99 at the local grocery. Maybe it’s cheaper online, so people use the barcode to find a price at Amazon. A showroomer might even order right there in aisle five before they forget.
  • Going to a local store to check out a product you plan to buy online.

Electronics stores and retailers who sell complex, expensive items like cameras are most often showroomed.  Seems harmless until you consider that the local retailer is paying rent, salaries and other expenses to provide you with a free way to make sure that thing you want is really what you want – so you can leave their store and buy it at Amazon or B&H.

Internet-ready smartphones didn’t create showrooming. It’s just easier now. The same thing happened to retailers during the catalog mail order era.

Rather than complaining about it, let’s take a different tack.

One antidote to showrooming: A decent website

Showrooming isn’t just about checking out products and then going home to order them. The good kind happens too – meaning your website shows what you have in stock that’s ready to pick up today or when you can deliver it.

I’m in the process of moving to a new place. One of the unbridled joys of moving is packing your stuff. With the long weekend in front of me, I figured I’d knock out a bunch of packing. Silly me – even though I started the day with 40 boxes, I ran out Saturday evening.

Thus began the battle. U-Haul places are closed because of the long weekend. Most home stores and some box stores carry moving boxes, but it was after six, so that meant I was out of luck locally and would have to drive to town. I don’t “drive to town” for giggles, so I started surfing in hopes that someone had them in stock. If not, then my weekend plans will change (yes, a little of me was hoping I’d come up empty.)

Call it reverse showrooming, but I want to find what I need before I go chasing all over the valley for no reason.

The first box store site shows that their stock is online-order only unless I want to wait a few hours to find out what they *do* have – and then only after placing a “pick up and wait for a call/email/text” order – which felt more like betting on horses.

Some sites make searches like this easy.

For example, Home Depot has a filter on their website that eliminates anything that isn’t in stock at my “home store” (the store that I’ve told the site is closest to me). That works well, since I want immediate gratification – if you can call a shopping trip for boxes “gratification” (doubtful). Anyhow, if I can see what’s in stock, then I don’t have to take a chance at a 36 mile round trip for no reason. Finding up to date store inventory info on their site means they help me avoid wasting time and money – even at full price.

In Home Depot’s case, they also have tabs showing “All products”, “In-Store”, or “Online” – plus the filter I mentioned above.

I drove the 40 minutes and spent the 40 bucks because my local retailer was closed (which is OK) and because Home Depot’s site had enough information to allow me to make a solid decision.

Why do people showroom?

One reason is price, but for many products, the online merchant has done a poor job of selling the item. As a result, the prospect has to invest additional time to find the product and make sure it’s really what they want/need.

Why can’t your store site do that?

TIP: Big corporate stores often use automatically collected product data pulled from manufacturer data feeds (I’ve worked on these systems). Want some evidence? Look at a nationally-sold item at several large retail websites. Is the description identical? Is the picture?

You can do better. Next time, we’ll dig deeper on the causes of showrooming and discuss some solutions.

WalMart: “We don’t care”

Listening to WalMart’s VP of Information Technology and their lead e-commerce exec talk on Fortune Brainstorm Tech this morning, they said “We don’t care whether or not you buy in the store, online, via mobile, etc.”

Where they went one step further: They gave local store managers credit for ALL sales that happen in their store’s ZIP code, not just the sales that occur within the store’s four walls.

Suddenly, WalMart.com isn’t the local store’s enemy. Now the store doesn’t care if they are being showroomed by WalMart.com customers. They only have to care about WalMart’s customer, vs. caring that someone is an in-store customer vs an online customer.

The story here isn’t just a WalMart thing or a strategy to fight showrooming. It’s much bigger than that.

The real lesson is that they eliminated something that absolutely would pit a store manager against the company’s online presence – which ultimately pits the store manager and their staff against their company’s CUSTOMERS. When would that ever be a good thing?

Now it’s your turn.

 

Black. Small Business. Cyber.

Waiting for weekend (TGIF) 244/366
Creative Commons License photo credit: Skley

Black Friday is behind us.

Small Business Saturday is behind us.

Cyber Monday is behind us.

So now what?

While these three events are primarily focused on retail, they expose an underlying weakness that most small businesses need to deal with.

Having a PLAN.

Maybe this seems obvious. It should, but the last small business owner survey I saw indicated that 74% of small businesses didn’t have a marketing plan, even though 89% of those same people felt marketing was their first or second most important task (they’re right).

Obvious or not, more businesses need to take it seriously.

Cheese

Oh, I know. You’ve heard it before. And maybe you’ve tried it before.

Maybe you bought some software that regurgitates a fill-in-the-blanks marketing plan. Those things tend to come out like a slice of generic vegetable oil based “pasteurized process cheese food”. Not so appetizing.

That fill-in-the-blanks plan is probably not something you wanted to use, but if you did, maybe it didn’t work so well. Once one doesn’t work, it’s easy to assume that none will.

A recent survey of small business owners indicated that only 14% of business owners got the results they would like from their marketing plan. If you’re not in that 14%, that might be why you’re in the “marketing plans don’t work” mindset.

You’re half right. Bad fill-in-the-blank ones don’t. While sometimes the good ones don’t work, most of them do.

What’s your strategy?

But no plan at all is a recipe for (at the least) dependency on the price-driven chaos of Black Friday and events like Small Business Saturday and Cyber Monday. If you use Black Friday the wrong way, what impression does this leave about your store? Does it make people want to come back?

There’s nothing wrong with those three days, particularly if you’re smart about how you use them. But they’re only three days.

What’s your strategy for the other 362 days?

Is it low price? If that’s your only strategy and someone else’s prices are lower tomorrow, the stampede moves to their store. “Lowest prices ever” is only a valid marketing plan if you have the capital, clout and systems to profitably sustain it (eg: WalMart).

Waiting

You might have started your business because you love what you do or what you sell, but somewhere in there, most small business owners also wanted more time, more money, more freedom and more control.

So why give it up by not managing your own marketing?

In most communities, November and December see an uptick in retail shopping on Black Friday, but depending on/waiting for that to occur and (per the mythical definition) bring you into the black is below you.

You need a better plan.

Just plan it

I’m not here to sell you a marketing plan. Sure, I could work with you on one, but that isn’t the point. The point is that you need one – a good one, no matter how/where you get it.

Whether you do it yourself or get some help, there are some questions you’ll need to answer.

Questions about your customers, for example. Visualize each type. What are they like? No matter what “store” means to your business, what gets them off the couch and brings them into the store? What results do they want?

For example, you sell animal supplies. Your customers might be large animal owners (ie: horses), ranchers, and people who like feeding migratory birds. Each group requires a different message.

Another question is “How do the needs of those groups change over time?” Are their needs different in October than in March? How should that change your message? That animal supply store knows that winter feed needs are different from summer feed needs and that mature animals eat differently than newborns. Different messages are necessary.

Simple, obvious stuff, but these questions need to be the basis of the plan you put together. There’s a lot of mechanical work to the how and what of delivering your message to just the right people, but you need to have the message and customer parts figured out first or the mechanics mean nothing.

Having a plan isn’t enough

Executing your plan and adjusting it based on your results is just as critical.

It’s a constant effort for those other 362 days, but your freedom is worth it.

Just a few steps away

I recently noticed that Dr. Scholls has made a transformation with their digital custom orthotics machines.

Just a few short months ago, they had their stand-on digital fitting gear in metro areas but not many other places.

Either the plan changed or we’re seeing phase 2…. the Walmart rollout. They now have these machines in many Walmart stores.

So I use their search to see if my local Walmart has a machine and I notice a little detail on the map results: “17 miles or approximately 32342 steps“.

A natural, in-context thing to include on a map from a place that sells foot products.

A little thing, but a sign that they’re paying attention to the little stuff too. Are you?

Is the lack of Wal-Mart actually a tax?

K_Day-09.09.2005_163136
Creative Commons License photo credit: Lordcolus

A lot of thoughts come to mind both ways about Wal-Mart‘s effect on local businesses and consumers.

No shortage of them are provoked by this Forbes op/ed saying that the lack of access to Wal-Mart in NYC is actually a tax, and continues by stating that building a WalMart in NYC is economic stimulus.

For example, the author ignores the local sourcing that WalMart used to do during its “Buy American” phase. He also fails to discuss that when left enough time in a competitive market devoid of Wal-Mart, poorly run local businesses tend to fail anyway.

What do you think?

The force is strong with this Congress

For decades, I have avoided getting involved in politics mostly because it has a way of seriously annoying me.

As I hope you’ve noticed, I’ve also avoided getting politic-y here at Business is Personal – maybe with the exception of discussions regarding the CPSIA.

Despite my best efforts, Congress is working overtime to pull me into their world.

And then this morning, I’m talking to a prospect who asks “Do you get involved in politics much?” Hooboy:)

Never fear, however. BIP is not here to be political. I will avoid it at every possible occasion.

Regulation is necessary

Regulation is necessary and anarchy is a pretty bad alternative. The problem is that Congress seems to be working overtime to destroy small businesses, intentional or otherwise.

Those that deserve it, so be it. Most do not, IMO.

It seems fairly obvious that we can legislate the loss of jobs a whole lot easier and faster than we can create them via legislation.

Almost 30 years ago, the Regulatory Flexibility Act (RFA) was put in place to protect small business from a “substantial impact” from new rules put in place by agencies as a result of new Federal laws.

The name sounds all nice and cuddly, doesn’t it? “Regulatory Flexibility Act” Awwww:)

The law requires an analysis of any new agency rule to make sure that it wont significantly harm a substantial number of small businesses. Agency rules implement the enforcement of legislation passed by Congress and signed into law by the President.

Problem: New rules can avoid the analysis if the enforcing agency’s head “certifies” (by publishing a statement in the Federal Register) that rule won’t adversely affect small businesses.

For example, the CPSC (Consumer Product Safety Commission) recently entered official comments into the Federal Register regarding several important CPSIA issues.

One of the things in that Federal Register entry is the RFA certification statement that says the CPSIA “doesn’t impact small business”. In that link, see page 10479, section G where they make all things right with the small business world by simply saying small businesses (even those “evil mommybloggers” who own businesses<g>) won’t be affected.

My Kingdom for Safe, Modern Food!

A new challenge for some small businesses might be HR875, which has an easy-to-like name: the “Food Safety Modernization Act“.

Not even Mr. Peanut would try to convince you that we don’t have food safety work to do.

Like the CPSIA, this law appears to target large food processing facilities, corporate farms, imported foods and so on. After all, you don’t hear about thousands being poisoned from foods purchased at the local farmer’s market.

Just like the CPSIA doesn’t differentiate between moms who sew outfits for my granddaughter and big Chinese factories that import a few thousand container loads of mass-market clothes per year, the FSMA (HR875) doesn’t differentiate between Tyson, Conagra and the guy who owns 9 chickens so he can sell eggs once a week at the local farmer’s market.

Not even the USDA-certified organic farmer escapes the FSMA’s reach.

All your chickens are belong to us

No, that is not a typo.

Finally, there is the new animal radio ID labeling regulation currently National Animal Identification System that is winding through Congressional committees.

Yes, I regularly remind you to measure everything, so I can see the good coming from this.

Except…

The problem with the NAIS, as with the CPSIA and the FSMA, is in the cost of implementation when you compare a large corporate farm to someone who organically (or not) maintains even one head of livestock or 9 chickens.

The point of all of this? You need your trade association. If you don’t have one, start one. If yours stinks, get involved and make it better.

No, it won’t be easy, though fixing an org is easier than starting one.

Working as a Wal-Mart greeter is easy. Pushing the Staples Easy button is easy. If you wanted easy, you wouldn’t have started / bought a business.

These laws can just as easily impact your employer as they can you as a self-employed person, so you’re going to be subject to some of them one way or another.

Get involved.

Stampedes and shootings: Just another Black Friday

It’s hard to imagine why big national retailers continue to play the fools game, thinking that by discounting their prices 40-50% or more they’ll increase their profit.

Perhaps they think they’ll make it up on volume.

When you cut prices, the first thing that you give up is a piece (or all) of your profit.

Retailers who spent the weekend falling all over themselves catering to an upscale clientele don’t have this problem, especially if they’ve cultivated and groomed the relationship with that clientele all year long.

They didn’t have to go to the home of an employee and explain how a young employee was trampled to death, simply by having the misfortune of being the guy who unlocked the front door to his employer’s store.

When price is the only way you have to differentiate yourself from your competition, you deserve any pain you feel on your financial statement at the end of the quarter.

Is that the only competitive edge that you can find? If so, you aren’t looking hard enough.

Is there a Wal-Mart in Pamplona?

Another “competitive edge” – one that contributed directly to last weekend’s trampling death and injuries at a Long Island WalMart – is the special sale that starts at 0-dark-thirty in the morning and offers limited items at the special pricing. 2010 update about stampede.

Our store is better because we can get our people to the store before yours. Woooo, impressive.

If your competitors’ move their start time to an hour before yours, when does it end? Do you start a Cold War over who can open their doors first? In an ultra-competitive environment, is that really how you want your clientele to choose who their vendor is?

Do you really have to stir up a frenzy over one (or 10, whatever) $299 plasma screen TV to get people into your store? Is that the only edge you have?

Don’t get me wrong. I’ve told you to read Cialdini and will again. We’ve discussed scarcity and will again. However, we’ve also discussed common sense. Hopefully, we don’t have to discuss making sure your staff and clients leave the store alive.

Is it really worth having 300-400 people stampede over your staff and each other as if their survival depends on it? This isn’t the first time it has happened. Human behavior is not a surprise in these circumstances.

Yeah, sure. You can blame a small percentage of morons for this ridiculous behavior, but it isn’t just the customers in that store who were in the wrong. But… big retail, in their typical lazy way – they continue to confuse the customer with the sale as the most valuable part of their business.

All this focus on creating temporary insanity among your prospects for one transaction on one day illustrates the lousy, if not non-existent, relationship that most large US retailers have with the buying public.

That’s where the problems really lie. When you commoditize your marketplace by competing solely on price, you’re one of two things: Wal-Mart or crazy.

Wal-Mart can afford to do these things. Their entire business – and the systems that drive it – is built around that premise. They have the logistics, automation, buying power and mammoth size to make it happen.

If you aren’t Wal-Mart or crazy, you have to do something different and better. I don’t mean to suggest that you can just double your prices, do nothing else and expect all to go right with the world.

You can’t.

Remember, Business is Personal. Build the relationship. Deliver the value. When nothing else matters, they’ll shop on price.

Make other things matter.

[audio:http://www.rescuemarketing.com/podcast/StampedesAndShootingsBlackFriday.mp3]

Buying local: Bigger than the bailout

In today’s guest post, America’s Best Companies made a series of videos that do a great job of illustrating the potential impact of box stores and similar entities on a community’s small businesses.

I think they’re worth sharing, so here they are.

Each of these videos are about 90 seconds long, or thereabouts.

Food for thought, my friends. Where are you spending your money?

Britney’s Lemonade Stand, part 1 (1:26)

Britney’s Lemonade Stand, part 2 (1:37)

Britney’s Lemonade Stand, part 3 (2:06)

Britney’s Lemonade Stand, part 4 (1:45)

Britney’s Lemonade Stand, part 5 (1:43)