The art of personal retailing, made easy Online

Posted on by Billy Tucker

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Pricing alone will never lead to a long term strategic advantage, only service quality and inspiration can.

I’m saddened by today’s retail landscape in Australia. Shop windows shout lowest price, when what I really need are inspirational gift ideas, good sales advice and the comfort that my dicky gift choices can be returned when they turn out to be just that, dicky!

Pricing is a consideration for sure but only in so much as the chosen item is inside or outside my budget, at which point the role of a retail assistant is to upsell upsell upsell!

At this time of year, the vast majority of retail spending is focused on gift buying. But in this world of consumerism on steroids, friends and family are increasingly hard to buy for – combine this with the paradox of choice we feel and no wonder the shelves remain stacked and the gifts received remain, er, dicky. Pricing, though, is rarely the issue.

The solution is probably right in front of me, a personal shopper! But who knows how to use one of those? In the world of online, a Personal Shopper is only a few clicks away. Punch in my budget, a broad description of the loved ones I’m buying for and bam, inspiration is at hand. Maybe my better-half gets an email with options to choose from that will better narrow the items presented back to the buyer, Buble or Gaga, Block colours or print, ebook or paper? Now I have items to choose from that make me look like the hero I am, and I can pick up in store to boot (time for that all-important upsell and gift wrapping service!)

Clearly these are difficult times, and Christmas is an expensive business, so the price conscious shopper with a gift in mind is looking for the best price available. But I don’t believe that is the whole story. By focusing on lowest price retail I worry that our biggest Branded retailers are on a race to zero, yet they’ll remain unable to compete with online – this is a lose lose for all. Online is the key to harvesting Signals for that personal experience, it’s the opportunity for Big Retail to take “personal retailing” to the next level; training consumers to think Online is all about Lowest price and best discount is to underwrite the death of Big Retail.

“Discount heavily and I will love you right now, inspire me with insights and ideas and great service and I will love you for ever”

Footnote:

Two stories in today’s SMH caught my eye, one announcing that Australia’s Retail legend Myer was launching it’s Boxing day sale today to online customers, and the other covering the Neiman Marcus Christmas catalogue (which has been available since 1926 and growing from strength to strength each year!) interesting contrast between growing retail and contracting retail.

Another story here from ninemsn, Harvey Normal now cannibalising its own revenues through offshore hosted online store, ug.

Why 57 Signals?

Posted on by Billy Tucker

imageEvery business, offline or on, generously receives up to 57 Signals from a prospective client at the point they touch your business, those signals are there to be read and understood allowing your offering to be optimised in real time – maximising the likelihood of purchase.

Find and adjust to just 5 Signals for short term gain, build a strategy to address all 57 to change your business altogether.

Finding and exploiting these signals has contributed greatly to our success at Cudo, and over the coming months I will be talking to retailers across multiple industries about finding this kind of value from their existing data.

More to follow.

How to maximise the impact of Price Discrimination

Posted on by Billy Tucker

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[This post originally appeared on the ADMA blog]

Businesses have been discriminatory since the dawn of time. Recognising that not all customers are equal is essential and provides the key to maximising the effects of supply and demand.

Making the best use of discriminatory pricing means that you need to identify the price sensitivity of each customer group and target them with an appropriate incentive. For example, how willing are they to do work or take risk in exchange for a discount.

Airlines are the masters of price discrimination and there is a lot to be learned from their approach. Granted airlines have the luxury of sophisticated modelling and real time pricing however your business can execute a similar strategy with limited fuss.

Think about airlines’ ticket pricing as a set of incentives and it may become clearer. Imagine the advertising headlines read something like this:

“Book this seat months in advance and we can be sure the flight will sell well. In exchange for that insight and the non-refundable dollars you are willing to give us (that will then sit in our account to earn interest) we will give you a generous discount”

Or

“We are eager to maximise the bums on seats on this flight and as such here is a substantial discount”.

Right now, your business probably has a series of ongoing campaigns designed to incentivise price sensitive customers to purchase. Offers such as “half price Tuesday”, “book early to save”, “book late and save” or “buy one get one free”. These are all effective discriminatory price strategies.

The key is to deeply understand both your “price sensitive customer” and your “marginal cost of sale” i.e. the true incremental cost of servicing one additional customer now that your fixed costs are covered. The likelihood is that each additional customer can be serviced profitably even if they only pay 30% of the full advertised rate. You can profitably take utilisation from 65% (which is the typical breakeven point) to >80% even if each new customer only pays 50% or less of the advertised rate. There is a risk of course. If you broadcast the discount too largely your full paying customers may hear about the lower rate, they may be annoyed or worse still hold back from purchasing, therefore cannibalising your base revenue stream. Learning how to target your “price sensitive customers” is essential to profitable price discrimination.

Data driven marketing solves each of the issues described above. Find ways to identify and reach the “price sensitive audience” (geography, prior buying behaviour, acquisition source) then serve discrete offers designed to encourage acquisition behaviour, such as switching from an existing provider, prepayment, bulk purchase or even to drive
out of the area. The level of incentive you offer should be generous; if your costs have been covered you can afford it. Ensure staff treat all customers equally and focus on providing a great customer experience that will maximise profit, loyalty and word of mouth recommendation.

Remember, “price sensitive customers” are savvy, not cheap. Reward them with great service and you will earn their loyalty, except next time they will pay full price – no discrimination required