Patty Burger

Yesterday I enjoyed a great hamburger at Patty Burger, but I’m not sure it’s make-10-trips-for-a-free-one great:

Patty Burger punch card
Patty Burger punch card

The idea of a punch card is to build loyalty.  The business is placing a carrot of a free burger for any customer willing to make 10 trips.  A new customer who makes 10 trips should be counted as a convert, so the strategy is great.  The problem I have is that 10 is too big a commitment.  I think make-five-trips-for-a-free-one would have the same financial impact while encouraging higher participation.  As a company new to the Chicago market early customer participation could be the difference between huge buzz and no buzz.

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Tale Of Two Barber Shops

For years I’ve been going to the same barber shop and getting my hair cut by the same person, Dana.  Their service has never been complaint worthy but I’ve always found them a little expensive.  The accountant looking over my transaction history has no way to knowing I am dissatisfied, all he sees are monthly transactions of $25 through a card ending in 6849.

But then, one day, I didn’t go.  On my morning walk I discovered another shop (a few blocks away) with a neon light advertising a $16 cut.  When I walked in I definitely noticed a different vibe; it was a first-come-first-serve model and people were walking in and out pretty quick.  Their staff of six was bigger than the other place that had two people.  I was also used to a little bit of chit chat and the customary question, “So how’s your wife doing?”  After the cut I walked to the counter and paid.  When I tried to add a tip the owner said “ah, no need for tip”.  At first I felt guilty but then realized tips were not part of this new place’s business model.  In effect, the new place works out to be 46% cheaper.  The question is, what is Dana thinking?

I bet she’s not worried.  Here’s way, she probably surveyed the new place and said “nothing to worry about here.  They are cheaper but their shop looks horrible with gaudy designs.  They run the place like a factory and don’t assign stylists to customers.  Factoring in for our nice clean shop, superior products and personalized service anyone should understand why our price is a real bargain.”  Dana is right, all the added elements to her business certainly justify why she charges $30 but Dana would do herself a huge favor if she had a few steepness nights.  I don’t know the owner’s name (let’s call him Steve) of the new place but he’s a brilliant man.  He has managed to slash his price without eliminating a single item that I care about.  I don’t care about having the same barber cut my hair, I don’t care the store does high volume as long as I don’t have to wait and I certainly don’t care about chit chat.  Dana and Steve are price engineering from two entirely different perspectives.  Dana is looking at her price and then justifying it and Steve is reading external market needs to determine pricing.  In downtown Chicago most office people come down for a quick trim so they can go back and continue work.  And Steve gets that.

Engineering price-points based on ever changing customer dynamics is a key strategy for a retailer.  Only if you base your price-point on what’s going on at the customer’s end can you get a reading of trends.  Dana’s rent, two person cost of operation and shampoos are fixed numbers and since they determine pricing she will never know when a tectonic shift takes place, until it’s too late.

If a retailer can figure out a way to reduce price without diluting the customer experience they must either tweak their pricing or add to the customer experience.

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First-Time Buyer Free Shipping

For me, generating the first-time sale trumps all metrics.  Therefore I’d expect First-Time Buyer free shipping (or discount) to be a popular strategy.  Unfortunately, I’ve never found a retailer that offers this.  Now, let me qualify, I typically spend 7-10 seconds on a store (this is what most first time visitors do, thus the title of my blog) so if free shipping is buried chances are I wouldn’t find it.  Backroad Hobbies Primitive Decor is an exception.

Backroad Hobbies Primitive Decor

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Making The Most Of “Out Of Stock”

It sucks when an interested customer stumbles on your site only to discover that the item they were just about to buy is out to stock.

This morning I was reading the hugely popular Outblush blog where they profiled Karacoma Sofa.  After reading the article I visited conranusa.com and realized the product was “Temporarily out of stock”.

outblush.com

conranusa.com

I wish the message would have said “Temporarily out of stock — drop your email address and be the first to be notified upon availability”.

This would be a win win for the retailer, either they would get a future sale or walk away with the consolation price of my contact information.

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Fine Tuning The Wrong Channel

Back in the day radios had two dials, one which moved quickly between channels and another which was used to fine tune a channel.

For years I have been hearing about the magic of testing and how retailers like organize.com are seeing improvements in conversion rates by simply changing Buy Now to Add to Cart.  These amazing stories emphasize the power of the fine tune dial.  There has been so much buzz about testing that retail CEO’s who’ve picked up the gossip in magazines and conferences believe that by simply changing their site’s head banner from blue to orange will somehow make more people convert.  Look, I am a huge fan of testing, testing is critically important but sometimes you have to look at the main dial before fiddling with the fine tune.

As a small retailer you have to resist the temptation of playing with the fine tune dial till you’ve crisply articulated your unique value proposition and defined core strategy.

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Six Dimensions Of Ecommerce

If you are an online retailer make sure your store stands out on at least one of the following dimensions:

— unique product (that is very very hard to find elsewhere)
— lowest price (biggest discount)
— largest selection
— friendliest policies (shipping, return, membership discount etc)
— uniquest content (heartfelt editorial, video, superb product photography etc)
— most innovative features (filter options, in stock reminder, gift finder, return-o-meter etc)

If your store has none of these qualities I guarantee you’ll never pay off that loan you took to build the estore.

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A Personal Note

As a multichannel retail strategist I am genuinely excited about online commerce.  One could even say I’m obsessed.  Reviewing ecommerce sites and reading latest ecommerce trends, stats and best practices can be quite boring for someone lacking natural interest in the subject.  Now, by no way should one confuse enthusiasm with erudition.

This wide-eyed enthusiasm is what I use to reach out to the long tail of retailing.  I see huge unrealized potential in this segment and when I make a pitch I try and give personalized recommendations and share as much as is possible without a contract.  But not everyone talks back.  This makes me believe that either retailers are on top of their game and have already tried my recommendations and seen that they did not work or they are clueless about the paradigm shift in the marketplace.  A few days ago AdAge reported Procter & Gamble had a “supplier summit” where it also invited 40 media companies to tap for ideas ranging from new products to new ways of marketing them.  If ginormus companies like P&G are listening to ideas from outsiders, shouldn’t you?

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Are You An Amazon Or A Zappos?

Amazon and Zappos are two wildly successful, yet characteristically different companies.

Amazon is an engineering company with solid focus on measurement.  This is great for incremental improvement (even very rapid paced improvement) but means they have had few paradigm shifting moments.  Akin to an awesomely efficient Supercomputer Amazon knows how to squeeze efficiency when a set of variables is presented but lacks the ability to question and test the input variables themselves.

For a long time now I have wondered why Amazon didn’t have author interviews (video or audio).  I imagined a format where after book launch an author would be interviewed and describe the book etc etc.  I’ve seen authors talk about their books at conferences and this has greatly influenced my buying decision.  But this concept was not implemented by Amazon, and now I understand why.  Engineers at Amazon are so focused on improving throughput (like maximizing number of books sold) that the ideation process needed for author interviews is simply not there.

Zappos, on the other hand, is a marketing company.  Founded on the backbone of customer service Zappos aggressively identifies areas of growth and then uses marketing to get there.  A great example of this is the “Vegetarian” shoes section on Zappos.  The idea of “Vegetarian” shoes was picked up by a marketer within Zappos who realized untapped potential.  This innovation could not have come about by tweaking dials.

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