The retail landing zone

The landing zone (or ‘decompression zone’) is that area immediately inside the entrance of the store. Its size may vary from several square meters in department stores, to something much smaller (almost non-existent) for some specialty stores.

Once you have grabbed customers’ attention and they decide to enter the store, they must undergo a physical and psychological transformation. Watch carefully and you will see how they slow down, fold away the umbrella, pat their pockets, settle the child, adapt to the lighting etc.

People need physical room to ‘decompress’ and this area should not be cluttered.

It feels counter-intuitive to leave some of your (potentially) must productive space empty but one should view it as an investment in space required for customers to mentally and psychologically transition from passerby to browser. This transition is necessary in most stores before you can convert browsers into buyers.

If you are going to break the landing zone rule, then break it properly (create something with WOW) in order to ‘punch’ the customer between the eyes, but do it infrequently in order to retain the ‘surprise’ element.

Consumer behaviour stats only mean something if...

.. IF YOU DO SOMETHING ABOUT IT

Here are a few facts to consider.

1. People spend 2.3 seconds on in-store brand decisions.

2. Just over 90% of shoppers make unplanned purchases.

3. Gen Y shoppers are also more likely to make impulse purchases at end caps. 

4. About 62% of shoppers say they responded to merchandising displays.

5. About 93% of Baby Boomers, say they prefer product messages rather than price-point messages while shopping. 

6. Only about 25% off customers walk past halfway in the typical specialty store.

7. Sales can increase by1.3% when dwell time increases by 1%.

8. You get on average a 10% sales increase with a store design with a left entry and clockwise track.

If I asked you to answer a quiz based on the above, would you pass? Most wouldn’t because it is easy to skim over the list. 

The point is this: When you consider these facts, ask yourself the question: SO WHAT? 

And then change something based on your answer. Don’t let the facts just slide you by and move on to the next thing because you are busy.

Research and experience is only useful to the extent that it changes what you do.

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Grunt and Grind: Retail is a sprint race

Life is a 100m dash after all

Dear Dennis: I seem to do be working my butt off but all to no avail. I just don’t seem to be getting the promotion or rewards that my efforts seem to justify. I have a small business and it seems my growth has plateaued and I just can’t seem to kickstart it.

Grumpy

Dear Grumpy,

Forrest Gump was wrong: life is not like a box of chocolates. Life is like a 100 sprint. Let me explain.

If you are a professional sprinter, your success comes down to two distinct and separate aspects. Firstly, when you sprint, you gotta win the race. It lasts about 10 seconds, and one minor stumble can cost you dearly. Just getting off to an average start could easily see you finish last. Or worse, third.

This may seem unfair. Especially if you are training to qualify for the Olympics and one bad race sets you back four years. But that is how it is.

The other facet of success is the work that you do in between the dashes; your training, your discipline, your diet. Not going to the parties. You know - the grind. The grind that gets you to the race.

If you don’t do this part well, you will lose the race. But doing this part well doesn’t guarantee that you win the race. If you want success, you still have to win the race – and your opportunities are few and far between. You get judged on your performance in that sprint. And you get rewarded for your performance. Everything is based on the outcome. The moment of truth, so to speak. I call this the ‘grunt’ – when it is about putting everything on the line.

So, success comes down to the grind and the grunt. And you need to excel at both if you want to taste success. The whingers will bemoan their lack of opportunity. They moan about the fickleness of the judges who make split-second decisions and how they keep such little mistakes against you. But life is like that.

And sometimes you get the flashy performer who arrives at the race; all mouth and shiny tracksuit. They talk the talk. But when the gun goes, their lack of grind shows through. They might win a few easier races early in their career when the competition is light, but they don’t go the distance.

There are two possibilities to explain your lack of success:

Option 1: The business is weak because; at the grunt (‘the moment of truth’) it just doesn’t perform.

This is every touchpoint with the customer. Your hygiene factors, the quality of the service, fairness of the price, convenience and value for money.

Option 2: You lack success because you are not prepared to suffer through the grind.

How well you are managing your risk. Are you planning your strategy? Are you constantly looking out for innovative ideas? You are managing your cash flow.

So the question is this, if you were honest with yourself, is your lack of success because you don’t grunt when it counts, or because you don’t grind through it? Any examples of grunt and grind in your business?

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How to waste money and feel good about it.

YOU SPEND IT ON TRAINING.

Would I succeed if I tried to motivate you?

Of course not!

And here is the kicker:

If I tried to train you will you learn?

Of course not!

Spending money on training is a sure-fire way to win votes. And it is true that when you evaluate and analyse the reason why people can’t do something is because they don’t know how.

If almost all the training you could possibly want is out there and it is free, then 'training' is no more a solution than oxygen is the solution to a happy life: you need it to live, but it won't make one life happier than another.

Most people think it stands to reason that we should spend more money on training. Right?

Wrong.

Very little learning actually happens in a training interaction. Only about 10% in fact.

Think back to your own school days:

How many days did you arrive home thinking you learned a lot that day? Think of how many hours you doodled or gazed through the window while the teacher was talking and chalking?

When kids ask: ‘where am I ever going to use this?’ they are dismissed as not ‘understanding the importance of an education’ but we are dismissing their intuitive grasp of what it means to be fed redundant knowledge.

People who complete TAFE qualifications increase their lifetime earnings by nearly $325,000. The question is what does it cost the state – and is it worth it? Presumably society will get a third back in taxes over a 40-year period. It costs about $14 p/h per student in the TAFE system. In my estimates that mean we will spend $45K to train one person and get a $100K return over 40 years. About 5% p.a. Not great if you ask me. And comparing the TAFE cohort to the non-TAFE cohort is fraught with selection bias. Arguably the person who is ambitious enough and disciplined enough to go to TAFE would have earned more than the non-student anyway

Think about your experience with corporate training:

How much time in a 7-hr workshop do you spend learning? How did you get decide whether that workshop was exactly right for you? After attending it, how many notes did you take and how much do you remember afterwards and how much of it actually results in changed behaviour?

You’d be lucky to get an hour’s worth of learning. The rest is listening to other people show off or ask stupid questions. A good chunk is spent ‘getting to know each other’ in order to create an environment that is ‘safe’ for learning.

People attend training programs and seminars and then go back to the office and ask Nellie how to do something anyway.

Training that happens in classrooms play a role in fostering a certain culture and encouraging bonding. But so does any meeting of a group of people who engage for any the purpose.

In learning and development circles there are a few brave souls who are now advocating informal learning or social learning. Simply put, this is learning by doing – outside the structure of a class room. The general rule of thumb is that this accounts for 70% of all learning. Another 20% of knowledge/skills are acquired by coaching/mentoring (sitting-next-to-Nellie) and only 10% of learning happens in a formal environment.

This paper by Deakin University does a good job of bringing all the thoughts about informal learning together.

In practice this means that of the roughly 2400 days spent at school, you only experienced 240 days of actual learning. Arguably the other ‘skills’ you acquired at school (socialisation, self-esteem etc) and the connections/friends that you made has some value, but could equally also be acquired in a different setting.

Australian workplaces spend about half the amount on training compared to the US (1.5% vs 3%). This means that Australians are smarter than Americans (they know not to waste their money) or that the Government takes too large a role in provision of training. The Government spends about 8% of its budget on training and education (not counting economic participation expenditures).

Would you like to live in ANY of the Top 5 countries in terms of education spend as percentage of GDP? How would you like to live in:

(This is not a % of Budget but % of GDP. If you study the list you will see there is NO correlation between economic status and eagerness to blow money on education.)

The bottom line: Training (the way it is most often done) is NOT the panacea people think it is.

I see learning like I see motivation.

Motivation is intrinsic and the best you can do as a manager/leader/coach is to create an environment that is conducive to achievement. You cannot motivate anyone.

In the same way you cannot train someone; but people can learn. Your job as manager/leader/coach is to create an environment that is conducive to learning.

The training industry is being challenged by flipped classrooms and (free) MOOCs. And so it should. This is an environment that is geared for the true learners (autodidacts) and they are the ones shaping our future.

Classrooms are hotbeds of mediocrity as teachers serve the lowest common denominators.

The stuff you need to learn is out there, and you don’t need a teacher if you are really motivated.

Many people hold Zuckerberg/Gates up as examples of not needing a college/university education. That is ridiculous. For every dropout who has been successful there are hundreds of graduates who are successful. Warren Buffet for one. The percentage of successful dropouts is most likely much lower than the percentage of successful graduates.

University may provide the context for learning - or not. It depends on the individual’s commitment to learning. Wozniak (Apple co-founder) describes his experience like this:

One accident that happened to me was that I taught myself, with no books, how to design computers in high school. I loved doing it and designed computers all the time, from descriptions of them in manuals by the companies that made them. I designed the same computers over and over and made a game out of trying to use fewer and fewer parts, coming up with tricks to accomplish my task that could never be in a book. They were ’tricks‘ in my own head. I felt that some of these tricks would be used by probably no other computer designer in the world. In my game world, on paper, where I could never afford to build my designs, I felt I was one of the best in the world.

The best things I did in my young years leading up to the early Apple computers were done because I had little money and had to think deeply to achieve the impossible. Also, I had never done those technologies or studied them. I had to write the book myself. Being self-taught, figuring out how to design computers with pencil and paper, made me skilled at finding solutions that I had not been taught.

Read this article on how Richard Branson thinks training will happen, and you will not there is no reference to classrooms.

Training should be a trigger for learning and is the starting point for change and growth in a high-performance retail environment.

People, who want to learn, will - whether the training is offered or not.

Success is 0% training and 100% learning. That should be our aim. If you treat ‘more training’ as the whole solution, you are guaranteed to fail. Save your money or do it right.

Mark Twain is quoted as follows:

They Didn’t Know It Was Impossible, So They Did It’

Too much training is about conforming to what is known and the world does not need more of that right now. Too much training is offered as the solution when people don’t know what else to do.

NOTE: Compliance training required by Law may be equally stupid exercise in CYA, but that is an unavoidable fact of corporate life

Success is not sexy

I read a blog recently where someone answered that old chestnut: what does it take to be successful. (Jennifer Arrache: How to be an overnight success in 7 years.) More about that soon.

For the moment let’s assume the traditional definition of success is money, fame, power etc in some quantity.

The usual bromides about achieving success are:

• Follow your dream.
• Be passionate.
• Persevere.
• Make every moment count.
• Become an expert.
• Get a qualification.
• Take a chance – be brave.

I could go on.

The one thing that all of this advice has in common is the fact that it makes the giver-of-the-advice look good.

They had a skill or a special ability that most of the population don’t share and they are special and they are different and that is why they are successful.

The real truth is a lot more mundane than that.

1.               It is a given that you must actually be doing something; be engaged in some sort of labour or activity that has the potential to make you successful.

In my own case I have pursued ‘people development’ in the retail supply chain. I love retail. I am life-long learner and a teacher. No real ‘strategy’ behind that decision; just following the age-old wisdom that we should do what we love and success will follow.

Of course we do get strategic in our business. We have been implementing neuroscience principles in the retail selling environment for 4 years – it is not a bandwagon for us. We have a heavy focus on technology and we apply the latest principles of informal and social learning to improve productivity.

It would be stupid to think you can run a ‘training’ business that relies on rolling contract lecturers into classrooms and workshops presenting out of dated manuals.

2.               For success to come your way you need a measure of luck. (I am leaving God out of this for the moment too.) Now, you can’t control your luck – obviously; except that unless you are engaged in something where the luck can be meaningful (see #1 above) then the lucky event may mean nothing of course.

In my own case, when I started out, I applied for and was appointed and an Adjunct Lecturer at MGSM (and later MGSM). I thought that  (a) it would be helpful to associate myself with a serious brand and (b) force myself to stay at the cutting edge and (c) expose me to people from the industry that were on the up and up, leading to potential future work, and also to (d) give something back. Of course being paid to do it was nice, it paid the expenses at least, but I thought I was very clever that I could be paid by someone else to market my business.

None of that happened. But I did win a major international blue chip media company as a client and they wanted to see me in action before engaging me. That would be awkward to arrange if I wanted to have a potential client sit in on a session with an existing client. But no such trouble to attend a lecture on campus.

I never thought about that benefit – and the fact that it happened was sheer luck and had nothing to do with smarts. Of course hanging on to them for the next 5 years took more than luck, but luck gave me the opportunity.

3.               The final, and most important, piece of the success puzzle is contained in the blog I read earlier: PATIENCE.

The latter is obviously related to discipline, focus and perseverance. But the core issue here is patience.

It is not sexy. It does not make for good PR and it especially does not make for good speeches at conferences.

Patience is a virtue – not a skill.

Having patience is somehow not ‘special’ or ‘different’ – anybody could practice patience. When was the last time you heard someone say their greatest strength was ‘patience’?

Patience isn’t mucho – it is more Mother Theresa. It somehow does not fit the cut-and-thrust of entrepreneurship; but I have learned personally that it takes years to get somewhere.

It took over 4 years before any of my social media connections offered up a potential opportunity. It was almost 5 years before it resulted in a speaking engagement.

I have been writing an almost monthly) newsletter for 6 years or more. Whilst it is not designed to be a sales tool – we don’t offer products for sale – it took 6 years before it resulted in the first enquiry that led to actual work. My open rates are significantly higher than industry averages, but it does get disheartening when fewer than 40% even open the email. I came close to quitting the newsletter many times.

It took many years before we did work that was initiated by a client and did not come as a direct result of me picking up the phone or physically meeting someone. Only in the last few years have we been able to ease off on the cold-calling because more work was finding us.

Are we successful?

I suppose it depends on your definition of success. An amazing wife. Super kids. Enough of everything else to allow for discretionary time to read, write and work on amazing projects. It is not Instagram or Facebook. It is not Seth Godin or Tom Peters – but I can live with it because I know that…

… true success does not come from any special talents. You only have to do your thing, and do your thing as well as you possibly can. If you have a little bit of luck, you will have prepared the soil for it to flourish.

You can’t make the flower of success grow any faster with impatience. Just keep doing your thing and everything else will work out the way it does.

Dennis Price

• GANADOR: Architects of high-performance retail environments.
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The secret behind the secret recipe to…

… success is that there isn’t one. Unlike a magician I did not sign up for a code of silence. Many authors/gurus would want you to believe differently so that they can take your money.

There as many ways to success as there are people.

Find your own way. The only thing that they all have in common is that people walking their way – i.e. doing something …

Taking ACTION is not a secret – it is just hard. And we hide behind the excuses that we don’t know what to do or how to do it and we postpone taking action.

There is no one way.

There are no secrets.

There is only one choice:

Action or Excuses.

And your choice is?

Carrots and Sticks – the 7 deadly flaws

This list from Daniel Pink’s book is well worth the read. (Get your copy of DRIVE here.) Of course there are situations when these ‘rules’ don’t apply; because like most rules these are somewhat of a generalisation. The point is that ‘intrinsic motivation’ is generally the best way to tap into the best efforts of people – and that ‘bribes’ are usually not effective.

1. They can extinguish intrinsic motivation
2. They can diminish performance
3. The can crush creativity
4. They can crowd out good behaviour
5. They can encourage cheating, shortcuts and unethical behaviour
6. They can become addictive
7. They can foster short-term thinking.

When you think about motivation. and especially the power & prevalence of intrinsic motivation, you must accept that one person cannot 'motivate' another. You can cajole, threaten, bribe and bully - but you can't motivate.

Any objectives that you have that include reference to team motivation should be re-thought. Instead, think about how you create a culture (and environment) that is conducive to high-performing environments.

Making big things happen with a litte bit of attitude

This article by Moonyeen Price was published in the August 2012 Issue of the National Newsagent (magazine.)

“Attitude is a little thing that makes a big difference” (Winston Churchill.)

My dad was a general in the South African Army and faced many situations where he had to make split-second, life-and-death decisions. Usually there was no choice; they had to do what they had to do to stay alive.  He never allowed himself to think that something was too big, wouldn’t work, or that he could not do it.

To stay alive you have to take those decisions; and the same applies in our newsagencies today.

Martin and Mary from Quakers Hill Newsagency decided to put themselves out there and learn how they can create a better customer experience. Martin was somewhat upset at first when Mary nominated their newsagency for News Limited’s NewsPartners Retail Remedy program because they were so busy, having taken an additional territory not so long ago.

Soon he got into the swing of things and found himself still in the shop at 2am helping with the tiling. Having decided to stretch the budget by doing most of the work themselves, they somehow managed to find the time. What looked impossible at first became possible by simply chipping away at the tasks one after the other.

So, what did they do?

• They communicated their proposition clearly to their customers by painting the outside half of the shop front post-office red and the other part newspaper blue.

• Changed the cash desk to make it easier to serve their customers and also to promote more lollies and impulse items. 

• The new newspaper stand was relocated to the left of the store in order to expose the newspaper customers to more touch points and products.

• The landing space opened up and customers are not pressured in making quick decisions because of the crowded space they have to buy in. 

• The chips were moved closer to the cash desk to consolidate confectionery.

• The red post office theme was extended on the left hand wall to the back of the shop (visually connecting the outside with the inside) and a red rear wall to draw the customer’s eye into the shop.

• Martin extended the magazine shelves in order to consolidate all titles in one location and reduce the space required. This made it easier for customers to shop and to expose them to more titles.

• A space opened against the one wall to merchandise all Excel books open faced- easier shopping than the traditional spinners it was merchandise on.

• The stationery category was relayed according to GNS planograms.

• Mary involved her suppliers for assistance and relayed the pen category and also created an attractive paper display at the back of the store. 

• A gift area opened up next to the post office area and boosted toy sales that way by capturing customers waiting to pick up a parcel.

Results

Although it has been only a month after completion, they had received extremely positive feedback from customers and early indicators are very positive.

Newsagent Mag

(Month on Month)                

• Cards +4%

• Magazines +7%

• Stationery +1%

• Confectionery - 6%

• Books+21%

• Toys +20%

Most importantly, Martin and Mary re-discovered energy and passion for the job. Thus begins the virtuous circle. They are already planning more changes and they have some grand ideas.

Revitalising Factor +200%

Mary said she could not even remember the old shop, and looking back at the old pictures, said: “I can’t believe the shop looked like that. News Limited really made a difference to the business.’

Top 10 mistakes made by independent retailers

US Retail Consultant Bob Phibbs has come up with his list of 10 mistakes independent retailers make. How do you stack up?

1. They hire the exact same person as themselves. This works if all you want to talk to is people like you, but having a balanced crew lets you speak to all four of the personality types.
2. They fill their stores with merchandise based on "gut feeling." Rather than having a system to replace the sellers as well as remove the dogs, their floor is littered with duplicates that leads to the merchandise being dated, shopworn and inhibits their ability to repurchase best sellers.
3. They have no sales process. This leads to customers doing all the work and employees that become slackers.
4. They display their merchandise with no flare, creativity or system. Stack it on the shelves and hope it sells - or at best a handwritten starburst sign with a price. Remember: just because it's cheap doesn't make it want-able.
5. If they have a website, it frequently is lacking in the most crucial details - rendering it invisible to potential customers. Because owners don't understand the Internet, many throw up their arms and settle or tell themselves its great, when it misses on the most basic of criteria.
6. They train by crisis, instead of logic. This often means the best employees leave quickly and the worst are rewarded.
7. They do not review employees to high standards. This allows the weak to thrive on the owner's dime.
8. The only quiver in their bow is to discount their merchandise, price match and participate in multiple discount programs in a wrong-headed belief it will grow sales. This robs profits and often means they're putting money into the business, instead of taking it out.
9. They have little or no presence on social media, which means they are unaware of what customers are saying about their business.
10. They whine that it's the economy, government, or their online competitors who are ruining them - never taking responsibility that it's up to them to make a profit.

I like the list - probably because I concur. Having said that, these are all operational errors - easily fixed.

A bigger question may be - what are the strategic errors made by independent retailers? (Besides not hiring us as consultants of course ;-)

Your Reward

Apologies once again for the numerous re-posts. I have been on the receiving end of those before and now I know why: Feedburner going nuts.

Your reward is 20 minutes with Neil Gaiman. I promise it is worth it.

Training - as you never think about it

Every business achieves results when people do things.

How is that for stating the bleeding obvious?

This topic may initially seem to have limited appeal if your job does not involve training.  But whether you are a buyer, a marketer, an operations manager or a supplier – training is relevant to all of us because we all can only achieve results through people – even though your role may not require you to think about training directly much.

If that is not enough incentive, I will show how you can save money (most organisations are wasting money with common training approaches) and if that is not sufficient, I will link you to some freebies as a reward for sticking with me. It is that important!

Training is seen as the panacea for many organisational ills. It could be, but it isn’t.

Training does not always work very well. Here is a study to prove it to you.

According to the American Society for Training and Development (2008), US companies spent about $1103 per employee and $134.39 billion in total in 2007 to enhance their employees' skills and competencies. However, approximately 40 percent of participants of job-related training programs fail to transfer newly acquired knowledge and skills to the job context immediately after training, and altogether only 50 percent of training investments result in organizational or individual improvements (Saks, 2002). 

It is generally accepted amongst L&D professionals that the 70-20-10 philosophy applies when it comes to training efficiency. (See diagram below.)

• 70%
• 20%
• 10% from formal training.

The idea originated at Princeton University and although this ‘rule’ has not been substantiated by any formal research, it makes intuitive sense when you consider how much time the employee spends in formal training versus on-the-job training.

Even if it not 70% but only 50%, it is reminiscent of Lord Leverhulme’s (founder of Lever Brothers) famous quip:

I know that half of my advertising budget is wasted, but I don’t know which half.

The same can often be said for training, and if we are wasting ‘only’ half our training budget, that could be a substantial amount of money.

OK, so what does all that mean? What should I do with this information?

ONE: Make the FORMAL learning more effective.

Organisations should really (re-)think training and align training expenditure with where/how the learning actually takes place.

1.            Make it relevant

There is a time and place for ‘chalk-and-talk’, but because that is so difficult to scale there is less and less of that. eLearning is not a panacea either, but it is extremely cost-effective (and therefore attractive) for the right types of training, such as:

• some compliance training
• employee inductions
• franchise manuals/ standard operating procedures
• supplementary/ reinforcement training as part of a blended learning program

To give you an idea, after setup/development costs ALL the online training in your organisation can be conducted for under $100 per employee per year.

Imagine being a 100-store Franchisor that only needs to spend $10,000 annually on training!

2.            Be positive – make it fun

Research has proven that two things play a major role in the development and retention of skills and knowledge.

The biggest drivers of training efficiency are motivated, satisfied employees. Training is by itself not the ‘motivator’ and neither is it a sustainable ‘reward’. There are many more factors that make a workplace ‘satisfying’ and getting a small improvement in this area will have a multiplier effect on your training dollars.

In tough times like these employees can be apprehensive about the security of their job (even part timers and casuals) and they take their cues from the owners/managers/leaders in the business. If you are negative about economic conditions, and are constantly harping on the impact of the economic climate, the online threat etc., it does not make much sense to spend money on training because it won’t stick anyway. Even the ‘free’ training sponsored by the Government may be a waste of time because there is a real opportunity cost to consider.

TWO: Make INFORMAL learning more effective

People have always learned most of what they know through a process of experiential osmosis. (We call it Social Learning.)

Technology has now caught up and we are able to offer solutions that actually work effectively as social learning platforms and importantly, people have become used to some of the practices and protocols that apply on sites like LinkedIn Groups, Facebook etc.

1.            Make it Social

Organisations are attempting to harness the learning that happens anyway in the workplace to be better organised, to be recognised and be valued internally, and to be more effective. (Some thoughts from a leading thinker can be found here if you are interested in training matters.)

An Accenture study has found that:

The majority of workers surveyed (55%) report that they are under pressure to develop additional skills to succeed in their current and future jobs. But only 21% say they have acquired new skills through formal, company-provided training during the past five years; only 6% have participated in training through podcasts and other informal mechanisms.

(Another related Accenture article in HBR can be found here.)

2.            Make it continuous.

Learning is a lifelong journey and that is not just a cliché. It is obvious in a 24/7 world – and a world that is constantly changing (as we all experience) that learn-as-you go is the only solution that is viable. But this learning must still be ‘managed’ and guided to ensure it is relevant (not fun for fun’s sake) and that risks are appropriately managed.

It may be obvious. It may be cost-effective. It may be necessary. But how DO you make learning social?

There is no easy answer because it is not an easy process. Most organisations will still need a progressive L&D professional to help manage the processes and to implement a non-training approach to workplace learning.

We know it works, and TOMORROW we will reveal what we are doing about it...

Stay tuned.

The REAL value of a customer

What is a customer REALLY worth?

Have you ever thought about the MONETARY value of your customer?

Calculating that number can quickly become a tricky exercise involving the discount rates and sometimes silly debates about technicalities.

The purpose of this post is to raise a simple idea, not to debate the relative merits and demerits of the various approaches.

• If you are interested in a more detailed description, read about it here
• If you are interested in a seeing the Harvard’s CLTV calculator, you can see that here.  

For the purposes of this post, I want use the simple version, where:

CLTV = Average Sale x No. of Transactions per Annum x No. of Years they remain a Customer

For example, for a hairdresser, it may look something like this:

$120 x 8 x 10 years = $9,600

The average Starbucks customer is said to be worth approximately $14,000.

If the typical customer is easily worth $10k – and one customer can, over its lifetime influence a few friends and family members too – that number can quickly turn into a $100,000!

When you think about it that way, it is a staggering amount.

The obvious point that you will immediately consider is the impact on a business when you fail to resolve a complaint or simply just deliver poor service?

The point I want to raise is that it would make sense if you had a specific strategy to increase each of the three factors that determine the total value.

That is:

• Increasing the average sale
• Increasing the frequency of visit
• Increasing their loyalty

In addition, of course there is the impact of referrals – and whether you have a strategy for that.

Sometimes marketers focus on customer acquisition because it is the glamorous aspect of marketing – who doesn’t want to shoot a TVC?

But more powerful and more effective than most TVC campaigns can be a simple matter of setting a sales target for your employees.

The wrong way of setting a sales target for your store would be to encourage the team to strive for your daily target of $5000.

Instead, ask them to strive for an average sale of $10 instead of your current $7.50

Why do like the Acverage Sale so much? It is a customer-centric measurement.

This example seems simple – but if they achieve that, you will have increased your sales by 33%!

Create specific strategies for the things that are important and have a big impact – and make sure you measure the outcome because not everything will work. (“What gets measured gets done.”)

NOTE: We are still trying to build the smart community (announced here) called Retail MasterMind. If you have put your name down, I will get back to you when we approach the deadline (1 April). If you haven’t checked it out yet, HERE is your invitation…