Posts Tagged ‘Retail Best Practices’

Flora Delaney Featured in June Entrepreneur Magazine

Saturday, June 20th, 2015
Image credit: Jan Vašek | StockSnap.io

Image credit: Jan Vašek | StockSnap.io

When writer Michael Bellicove wanted to help his readers understand whether a high tech loyalty system is right for their business, he turned to Flora Delaney. His article helped Entrepreneur magazine readers learn how to be successful and what foundational pieces need to be in place before investing in expensive loyalty programs.

When your business needs levelheaded advice, contact Delaney Consulting. We create clarity.

How Small Businesses Can Listen to Customers

Monday, May 18th, 2015

listeningThere is a wonderful quote that “the plural of anecdote is not data.” Too often retailer and other small business owners get snared into believing that a story or two that rises from the hundreds of customer encounters every day is a full and accurate reflection of customer feedback about their stores or business.

Net Promoter Scores (see our earlier post: Net Promoter – the Most Common Retail Listening Tool) prevent that but they are just the beginning to really understand the Voice of the Customer. To objectively understand how you are perceived in the marketplace, find out:

  • What do your best customers love about you?
  • What most frustrates your unsatisfied (past) customers?
  • How do your customers think about you differently than your competition?

For most managers, the only way to uncover these emotionally charged questions is to hire an objective third party to uncover the answers. Focus groups and intercept surveys are the most robust methods – but also expensive. At Delaney Consulting, we administer online surveys and other methods for uncovering honest customer feedback. Because it is human nature to overreact to negatives and under-react to positives, an outside firm like ours can help a management staff accurately gauge the appropriate responses that are required to elicit the kind of customer support everyone wants. Use caution when relying on internal communication to accurately judge customer feedback. Rarely is accurate data unearthed solely through employee feedback of “what customers are saying.”

Next Post: Using Social Media to Listen to Customers

Net Promoter – the Most Common Small Business Feedback Tool

Thursday, May 14th, 2015

CHCKLSTOne of the most common retail tools for collecting customer feedback is a “net promoter score.” The concept of net promoter is simple. Customers are asked whether they would recommend the store (or service) to friends and family on a scale of 0-10 . A score of 9-10 is a promoter. A score of 7-8 is neutral. A 6 score or below is a detractor. Subtract the detractor percentage from the promoter percentage and you have a “net” number: the Net Promoter Score.

Promoters are customers who are enthusiastic about your store or brand and will keep buying from you. These are loyal customers who drive growth over time through their positive “word of mouth” marketing to their network. Neutral customers are currently satisfied but constantly at risk to switch stores or brands. Detractors are unhappy customers who can damage sales and give your store or brand a bad reputation throughout their network.

A net promoter score is useful for doing more than capturing your customer’s feedback at one point in time. It is especially useful when comparing scores over time or across locations. Savvy retailers look at their net promoter scores during peak hours and non-peak hours to understand the possible degradation in customer service during busy hours. They compare net promoter scores by floor manager to understand which ones direct and lead staff in providing excellent customer service and which do not. Most large retailers, restaurant chains and service providers use net promoter scores.

Customers are incented to provide a net promoter score by either going to a website or a toll-free phone number for a “less than one minute” survey. In return for participating in the scoring, customers can usually win a gift card or a discount on a future purchase. Customers are typically notified of the survey through register receipt messaging or from store associates directly. There are dozens of Net Promoter providers that can be found online – many integrate seamlessly with the most popular POS platforms.

The Benefits of a Simple Yearly Promotional Calendar

Thursday, May 7th, 2015

CalendarIt is a surprising fact that most retailers and small businesses do not have an annual promotional calendar. There’s a vague sense that they may have a number of promotional offers available to customers through a previous email campaign or a bounce back coupon printed on a receipt, but very few take the time to create a twelve-month promotional plan. A well thought out and executed promotional plan has many benefits:

  • It creates a limited time offer for customers to give them a call to action. (That’s marketing speak for make a purchase.)
  • It can be the foundation of arrangements with vendors to secure better deals or terms.
  • It creates excitement in your store.
  • It provides fuel to your social media and advertising.
  • It can drive specific customer behavior that leads to larger transactions and more loyalty.

A twelve-month promotional plan is as simple as a spreadsheet with months across the top and your marketing and sales actions along the left. If this is your first foray into creating limited-time promotions, consider creating six promotions that are two months each. For each month, create a promotion that is meant to drive a specific outcome. Typical goals would include acquiring new B2B customers, acquiring new B2C customers, (See our post “The Most Basic 2-Tiered Marketing Plan for Businesses”) increasing the number of transactions, rewarding high-value customers with preferred deals, building a stronger community network or donating to charity. Some promotions may accomplish more than one goal, but typically a promotion is meant to drive one primary customer behavior.

We regularly work with businesses who begin believing that a promotional plan will be inflexible and difficult to maintain. Truth is, it provides enormous benefits to every part of the organization and can save marketing money over the year. Contact us today and let us show you how.

Consider including some promotional “safeguards” in your annual plan. These can be last-minute optional offers that you can use if needed to reach your sales goals. Examples include one day flash sale offers that you can activate the last week of the month if sales are slow. Email blasts and social media “fan only” offers can be activated in one day. Other ideas include secondary and tertiary offers targeted at a very specific segment.

An annual calendar can be a foundation to begin negotiations with key vendors. Find out what they would be willing to do to support a specific promotion. Find market niches that your vendors want to penetrate and ask for price rebates or other offers to help you target the same niche. If a vendor has a goal of increasing sales of a new product line or brand and find out what they would be willing to do (underwrite a direct mail brochure, pay for an in-store display, split the cost of a newspaper ad) to help you create a promotion featuring those cartridges.

A promotion calendar can help you strategically think about your business and how to achieve your goals. Setting up a calendar makes it easier to involve other people to help you achieve your goals. A calendar can help you track and learn what are effective and ineffective marketing investments. A calendar can help you stay focused and give your daily activity purpose.

Remember: There’s activity and there’s productivity. Don’t confuse the two.

Why Category Definition is Critical

Tuesday, August 5th, 2014

Screen Shot 2014-03-06 at 2.31.25 PMFor retailers who follow a structured category management review, the first step is defining the category. The idea of defining a category each year may seem obvious – even redundant year after year.  But the truth is that customers’ tastes and habits change. A review of trends and changing customer behavior can catch newly emerging opportunities so that retailers and vendors can capitalize on new understandings.  For example, a retailer who habitually reviewed away from home beverage consumption as carbonated beverages versus bottled water could overlook the trend for aseptic packaged milk product consumption and water flavor additives.

The implications can transform a retail store depending on whether its management defines their category as DVD Movies or At-Home Entertainment.  In one situation, they are locked into optimizing the DVD category alone.  In the second, they can evaluate Gaming, Cable Television, Satellite Television, even bar ware!  Defining a category is all about drawing boundaries in the same way your customer does.  So, a customer will ask their family “Which DVD should we watch tonight?” less frequently than they will say “What shall we do tonight?”  Consider the differences in these category definitions: Glues and Paints versus Crafting Supplies, Water Fountains versus Water Features, Party Invitations versus Party Supplies. What should come to mind are the changes in product selection and merchandising in the store that will better anticipate customer needs for these categories.

Category definition needs to be grounded in customer insights that are gained from several sources: affinity purchases uncovered through data mining market basket transactions, primary customer observational research and self-reported customer behavior.  Frankly, affinity analyses can be misleading if retailers do not carry a wide enough breadth of product to be a full solution.  For example, if a limited assortment grocer did an affinity analysis on birthday cakes, it may discover that the customers also purchased ice cream, paper plates and candles.  It could, however, overlook that customers purchased the remainder of their needs (wrapping paper, cards, balloons and invitations) elsewhere.  Primary customer observational research is expensive and time consuming.  Self-reported customer behavior is notoriously inaccurate.

For most retailers, the most cost effective way to discover unbiased customer insights is to review the customer research of their top vendors along with customer research from emerging niche vendors. Niche vendors are usually the first to recognize and exploit new customer patterns. Established vendors less routinely recognize changes in behavior. Their focus on current product lines and customer segments can create blind spots.  Take, for example, the difference between established home cleaning mega-vendors and environmentally-focused cleaning vendors like Mrs. Myers and Seventh Generation in recognizing the growing demand for less chemically-intensive home cleaning products.

For retailers trying to glimpse the future and create a compelling selection that will meet the needs of future customer demand, actively sussing out customer and shopper trends through every resource available is an ongoing endeavor.

Category Management Planning

Friday, March 14th, 2014

candy rackMost forward-thinking retailers use some form of category management to evaluate assortments, make sales and promotion plans and execute those plans to achieve sales. This cycle usually occurs once a year – but it can be more or less frequent depending on the category’s volatility. The category plan reviews past plans and research, vendor input into future customer trends and forecasts, supply chain and financial input to verify true costs and concerns and incorporating the best investment tactics for the retailer to meet its stated financial and customer objectives. Most retailers have a framework or template for these category plans that help the top merchandising executives make trade offs and decisions about future business investments.  Nearly every category manager can find an unexploited niche that could yield some level of sales growth. But a unified category management process helps focus the organization on the top priorities.

Taken in its entirety, the process is called a Category Review.  In the review the category is defined, its role within the company or store is defined, its sales and potential is assessed and a specific budgetary goal is set. With the goal in mind, discreet tactics around adding or reducing products, changing prices, changing promotions or changing merchandising are developed to meet the goal. The costs associated with the changes are approved and the organization implements the plan. From a top down approach, it is a proven process for capturing and sharing the best information about how to succeed in the category to remain competitive.

How to Manage Obsolete Inventory

Friday, February 28th, 2014

question-markFor most retailers, poor buying decisions lead to poor cash flow. Obsolete inventory ties up cash. It requires close monitoring to maintain the appropriate level of stock. Spend time to review aging inventory and make adjustments to prices to sell slow-moving products and free up the cash to purchase more attractive merchandise. When possible automate reporting so that store and shelf inventory older than 60 or 90 days are flagged in your reports so that you can take abatement steps.

For all merchants, taking unplanned markdowns is difficult.  Build a small expense budget each month called “unplanned markdowns.”  Then, when stagnant inventory seizes your cash flow, use a planned markdown strategy on the most troubled products to induce customer sales. The markdown can be offset by the “unplanned markdown” expense line and not have as devastating effect on operations because the markdowns were already built into the budget.  Consider setting aside a specific percent of sales each month that is reasonable to cover unplanned markdowns. Begin with 1-2% and adjust as you gain more insight into this troubling issue. Over time you may need to set a fluctuating percentage as inventory from back to school, end of year and holidays may need to be aggressively marked down. Tracking and managing an unplanned markdown budget should also start to reveal patterns about your buying habits and your customer’s purchasing habits. Typical patterns to look for include  a local affinity for particular colors (Be smart about purchasing items in the local school colors in paper and other supplies.)

Savvy merchants create a markdown plan for stagnant inventory.  Product that is non-seasonal and simply is not selling may go on a 25%/50%/75% markdown plan where the price changes automatically every 30 days until all of the product is eliminated in 90 days.  Seasonal products typically need a more aggressive markdown plan that may be a 50%/75% markdown completed within 45 days.   Selecting a specific back end cap or other store location for the marked down goods also creates a good merchandising practice.  First, it removes poor sellers from the most valuable sales locations in the store. Second, it creates a destination for your bargain-minded shoppers who will regularly shop the discount areas. These bargain hunters can actually accelerate the cash flow and give your store a reputation for having great prices.

5 Things Smart Retailers Do to Manage Accounts Payable

Tuesday, February 25th, 2014

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  1. .While it may be good for your credit history, it is a bad cash flow practice to pay every bill when it arrives. Set your timing to pay bills as they come due.
  2. If available, use online banking bill payment schedules to manage payables to the exact due date.
  3. Ask for discounts from vendors for early payment and ask for longer payable terms when taking on new products or lines from current vendors.
  4. After a history of consistent payment, ask for longer payables terms.
  5. When you are willing to pay in cash, always ask for a cash discount.

The Basis of Open To Buy for Retailers

Tuesday, February 11th, 2014

balance-weight-scale1Use a budget of expected expenses (use monthly averages for payroll, rent, utilities, supplies, etc.) combined with planned sales and purchases to create a monthly cash flow budget. Manage your store to that budget by making adjustments to purchases, pricing and payroll based on weekly sale rates. Give yourself visibility to early warnings about cash flow difficulties and take steps to abate them.  If you must, consider talking to your banker about unique situations where cash flow shortages are expected (especially prior to holiday or other seasonal inventory build ups.)  Ask for a line of credit – the interest on short-term loans will be cheaper than bank overdrafts and late payment penalties.

Balancing Purchases with Cost of Goods Sold (COGS) each month is critical.  The most simplistic early warning indicator for cash flow health is making sure that inventory purchased does not exceed Cost of Goods Sold for any given month.  Naturally, there are a couple specific times of year when inventories build up in anticipation of seasonal sales. But generally keeping an eye on inventory purchase levels is a smart gauge to measure cash flow. This, at its most basic level is the basis for an “Open to Buy” budget. Striking a balance between capital tied up in inventory and cash freed from that inventory in sales is critical to keeping any retail enterprise afloat.

8 Things Smart Retailers Do to Control Accounts Receivables

Tuesday, February 4th, 2014

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  1. To keep receivables as liquid as possible, encourage cash, credit and debit card transactions whenever possible.
  2. Keep business accounts on a short payables schedule and monitor accounts receivables to keep customers on schedule.
  3. Offer longer terms (60 days+) only when you are given a broad concession such as an annual contract or other significant commitment.
  4. Invoice all business customers promptly at the close of every business cycle.
  5. Make deposits the same day as cheques are received.
  6. Charge interest and penalties for late payments and offer discounts for early payment in your standard business account terms.
  7. Do not offer payment terms to customers without both a background check and a probationary period for timely payments.
  8. Aggressively collect payables every business cycle