In a prior article I explained how the phrase “to economize” points to the internal steps a business should follow to become prosperous in the new economy. But that’s for internal operations; what actions should be done outwardly?
For businesses dependent on discretionary spending (hotels, jewelry stores, golf shops, restaurants, etc.) advisors often recommend “adding value.” In fact the Public Record recently highlighted what Fantasy Springs had done to “add value” which I personally think was a wonderful example of how to do it. My only question is this. Is the phrase “adding value” descriptive enough so that if a business started designing a campaign today, they would find the right program for maximum income? I don’t think it is; I think that’s found by looking a little deeper. Let me explain.
What’s the concept behind “adding value?” It’s that consumers have reduced their spending and are more discerning when they do spend. If you offer them more value for the same dollar they will respond. The challenge for any business is to find the best ways to “add value.” You want a way that achieves the greatest consumer response at the smallest cost to the business. But there is more to this.
Implementing a “added value” program involves another step (it’s really two steps but that’s later). Once you decide how you’re going to “add value”, you must notify potential customers about it; it must be promoted or advertised. So critical to the success of any “value added” program is both the effectiveness and the cost to advertise it.
The Last Door OpensBut it’s understanding why there is one additional step which opens the door a little wider on how to design a good program. Consider this question. Are sales down because fewer people are coming to the store or because they aren’t buying as much when they are there?
Although there is no general rule the answer is usually more the first than the second. In fact owners often say, “Just get people to my store; I’ll accomplish the rest with my selling skills.” This is very true of the casino business. A casino’s problem isn’t that people won’t gamble; it’s getting them to the Casino so they can and will gamble. Although their solutions are usually many faceted, the core element involves getting as many people to the “casino store” as possible. It is also important that the formula be repeatable – that it can be done again and again with variation. This is also true, in varying degrees, with most businesses.
So we now see that the phrase “adding value” is really an ingenious effort to single handedly solve two separate problems: how to get customers to the store and also how get them to buy things once they are there. When you are designing a program, however, it’s better to address each problem separately then as one problem. First, discover the best way to get customers to the store. Then solve, “How do I get maximum sales from a customer once he is there?” Sometimes one idea does both, just as often it doesn’t.
A special note: It is vitally important that the customer is kept in mind at all times. Are they happy with everything? Was it a good experience and are they willing to come back? If things are done right it should always be a positive experience. Make sure it is.
The Owner Knows BestGetting customers to a store is usually done by making an offer they can’t refuse or offering an event they have to see. Sometimes it has a time limit associate with it. To produce big results it has to be something significant. Maybe it’s through periodic raffles. Corny? Yes, but remember the goal. I have found that the person who almost always knows best is the owner himself. You ask any owner, “Think of something you are sure will get every customer to your store tomorrow if you could only make it known to them” and they’ll know what that is. Regarding the idea, it’s important to know how much of the cost of that idea could be shared with a wholesaler or sponsors. With that included, the top candidate is the idea that costs the least per projected customer when you also include the cost to advertise it.
This brings us back to the last step, that of promoting the program. You’ll be surprised at how advertising costs have changed in the different media because of the recession and technology. Become creative. It’s my opinion that at this time business owners and advertising people must be willing to try new ideas, even ideas often considered out of bounds. Start from scratch. Get the latest ad costs and rethink everything. You must be willing to test ideas. Which brings up something that’s been on my mind awhile; I think companies which are running local TV commercials have a special advantage in this.
Local TV commercials usually run thirty seconds and basically say, “We’re here and we’re nice people.” Few offer a specific reason to visit the store tomorrow. There is a general reason for this. Video production costs are high and to produce a commercial for a limited purpose or to test an idea usually doesn’t make economic sense unless it is a really big event. However, after a commercial has been produced it’s possible to then insert “donuts.”
A donut is a video file that can be inserted into the body of the commercial which changes the content. Therefore, try adding 10 or 15 second donuts that announce events or special reasons to come to the store. The cost to produce a donut, which can be just a voice over, is usually only a few hundred dollars. This low cost allows some experimentation - so experiment! There is also no damage to the original commercial; it can be run anytime without the donut.
Summarizing, the steps to follow that help create an effective program that will increase sales are:
1) Think of reason that will get people to your store i.e. a special product, some event, etc.
2) Work on selling methods to optimize sales once people are there.
3) Become creative and design a cost effective advertising program to promote the whole thing.
4) Conceive it with the idea that, if successful, it can be repeated with variations.
And finally, as I mentioned in the last article, make sure the results of any program are measurable. A numerical answer must be give as to whether it was successful and by exactly how much? |