Before we go any further, I’d like to go on the record and say, “It was the egg, we all can agree, the egg came first.” Regrettably, today’s topic will not be as easy to figure out. Regularly I am told by small to medium size business owners that they cannot afford to invest in Staff, Technology, Marketing, etc. because the traffic isn’t there. I could not empathize more when my clients tell me this. All too often as business owners, we must make critical choices for the future success of our stores. Sometimes it is easier to simply postpone making any decision at all. Unfortunately, that is usually the most expensive option as now the decision is made for us and our business is typically no better for it. To quote a well-known retail strategist “Struggling Business Owners will spend time to save money, whereas successful Business Owners will spend money to save time.”-Allan Dib. You can always make more money in a day, but you can never create more time. In an industry where 80% of our annual revenue could potentially come from 20% of the year, leverage becomes even more critical. Today’s discussion will focus less on if you should utilize marketing and technology but more on how and when.
I’m not sure if I’ve ever shared this with you but I love data. There is a certain honesty to it that gives me endless amounts of peace. If you think about the importance of data in our daily lives it would take you years just to catalog it all. To that point, there is never a time where you should not be trying to collect data. Collect it, catalog it, and store it away for when you need it. I assure your data can be your greatest asset. Companies like Walmart pay billions of dollars for it, while as consumers we give it away to companies like Facebook and Amazon for absolutely nothing.
**This article is written for Retailers in North America, European Retailers, must adhere to much stricter data collection policies per the GDPR. If you would like to learn more about the GDPR you can find that here.
What to Collect: You should strive to learn addresses, likes, dislikes, birthdays, shopping habits, payment preferences, contact preferences, and much more. If your customers are happy to give it, you should be happy to ask for it. You should also attempt to do the same for your products. Example- Rosa Multiflora: Climbing, Erosion Control, East Asian, Thorny, Multi Stemmed, Perennial, Control Advised, etc.
When to Collect It: Besides the obvious response of “always”, it is important to keep speed and convenience in mind. We have seen a lot of success with self-service loyalty kiosks. There are 3rd party companies that can help you collect the data via texting. You can also implement a company website or email blast with a loyalty sign up a landing page, and tailor your receipts to include sign up for our loyalty program to earn 500 free loyalty points.
As for your inventory, you can make it a competition or game for your staff. Focus on completing one category or department at a time. Where there is a will, there is away. I’m not saying it will be easy, but I am saying it will be rewarding.
Have you ever wondered why people don’t use chopsticks or forks to eat Egg Drop Soup? Most likely you haven’t because it’s impossible to get it all, as most of it will fall out. That is exactly why technology is so important. While a person with a cash register can easily ring up sales, that same person would find it almost impossible to ring sales, track inventory, track customers, track invoices, deliveries, purchasing habits, item profile fields, open rates, click through’s, tax free holidays, substitute items, drawer balances, credit card totals, etc. Oh, and if somehow, they could, they are almost a genius. I say almost because if they are smart enough to do all of that, why weren’t they smart enough to realize there are other things you can do with your time, that have a much higher return. Either way, it will cost you the same amount so you might as well invest in the system that will provide the highest return. This is commonly referred to as the opportunity cost.
the loss of potential gain from other alternatives when one alternative is chosen.
“idle cash balances represent an opportunity cost in terms of lost interest”
What: Which Technologies you use will vary based on your business. A strong POS or ERP Solution is recommended if you have inventory and other moving parts. A website is recommended as I fully believe that in 5 years most shoppers will almost require one to stay loyal. You might also consider the following: An email marketing engine like Customer Connect or Mail Chimp. A Loyalty Engine which is usually part of a better POS. Self Service Kiosks, customer feedback programs, etc. There are oodles of options for oodles of needs, so if you would like to discuss it more, feel free to contact me. This is quite literally what I do for a living and I can help you do it for absolutely nothing.
When: In a perfect world, the day after you signed your lease for the location, but other than that try not to make any giant changes right before the season starts. Give yourself a month or two to acclimate to the new system and you should do fine. Also, Counterpoint can do all of the above (shameless plug.)
By now it should all be coming together for you. You get the technology to collect, store, and report on the data, and you get the data for Tadaa Marketing. You’ll use it for all your business decisions, but I haven’t eaten lunch yet, so ones like staffing, vendors, store hours, promotions, etc. will have to come another day. So what about marketing? Every successful company regardless of size does some marketing. Larger companies like Lowes & Home Depot may focus more on branding due to their existing name recognition while smaller ones like us can’t afford that yet. So instead of spending billions on branding, we are going to spend an itty-bitty bit on targeted marketing. If you’ve been following along so far you already know that we have collected some information. Let’s use this cartoon to help us.
This is Bob, we already know that Bob lives close by so he will be more receptive to promotions, we also know that Bob just bought a rose bush from us AND likes trellises and fencing. Now let’s pretend my vendor had an “everything must go sale” on Japanese Roses. I could now easily create a simple campaign that could offer 20% off with a digital coupon if Bob came in and bought 2 or more Japanese Roses before his birthday. By the way, people love happy birthday emails.
Similarly, if your POS recognizes that bone meal and tomato plants are often bought together than you could easily have a stand of High Margin Bone Meal next to the tomato plants. This brings me to my final segment….
Oddly enough at the end of the day Revenue will typically be the most important data point. Revenue keeps the lights on, pays the staff, and allows you to no longer “hope things picks up soon.” Unfortunately, thousands of business owners fail to ever see the day when a business does pick up. My father always said there are only a couple of ways you can grow a business.
- You can cut costs by decreasing wages, letting people go, or spending/ working more efficiently. (not enough time to discuss internal theft but this goes under spending efficiently)
- You can Increase Revenue by increasing prices, or the number of times you sold that product.
I realize that there isn’t a “Golden Gun” in this industry but I also know some things work more than others. At the end of the day, I will always choose to spend and work more efficiently to increase the number of times I can sell a product that’s the price that is driven by the market. So work smarter not harder to invest your money into technology so you can collect and utilize more data to segment and target your marketing thus increasing your foot traffic to increase the quantity sold.
Mark Nelms is a Business Development Manager for Soft Intelligence. He has conducted over 400 interviews with retailers from almost every vertical and size. In prior roles, he’s assisted clients like Cumberland Packaging Corporation (Sweet N’ Low), The New England Patriots, and NCR (National Cash Register.)