RETAIL STRATEGIES
MAKING UP THE CUSTOMER ’ S MIND
by TOM SHAY
PHOTO CREDIT : © TYLER OLSON - STOCK . ADOBE . COM
Several years ago I had the opportunity to moderate a panel discussion of outstanding jewelers . While each had a fascinating story , the one I remember best is the store in Omaha , Nebraska that is owned by Warren Buffet .
When Buffet ’ s Berkshire Hathaway holds its annual meeting each May , there are more than 30,000 in attendance . As these stockholders descend on Omaha , many decide to shop at the jewelry store . The amounts of drinks and food consumed is astounding , as is the number of terminals necessary to process the bankcard purchases .
While that is challenging , perhaps the biggest challenge is the sales staff understanding the customer . Envision a customer walking in the store to “ just look around ,” and then purchasing a wristwatch for $ 500,000 . The manager of the store said there were employees who would struggle to make a sale like this because they can ’ t envision how someone could spend that much money on a whim .
While this may be a unique situation , understanding the customer in general is a challenge for many businesses .
In the past few weeks I have experienced a similar situation several times : A service center that wanted me to accept the warning lights on the dash of a car as something I can ignore ; a dentist who said a chip on a tooth did not need to be repaired ; a pair of slacks on the sale rack instead of showing the rest of the selection because “ everyone likes a deal .”
This story is not about my spending money . It is about , with each example , a salesperson making a decision for the customer . Of course , the solution lies with the salesperson engaging the customer in conversation and asking questions . I remember reading a report that gave an example of a product with many options of prices available . The example had six price points for the customer to choose from . Research showed that in suggesting a particular price point , if the salesperson was too high or too low by two or more price points , the sale would likely be lost .
The essence of these examples ? We do not all shop alike . Invest some time and read , “ Bobos in Paradise ” by David Brooks . We all have things we buy because of need , and we have items that we spend more on because that is where we want to spend discretionary income . People like the watch purchaser often make a decision because the product or service fascinates them ; money is no object .
We know a retailer with multiple stores selling products that range from hundreds of dollars to $ 20,000 . To help their salespeople understand the customer , at the start of the day , each salesperson is “ given ” $ 1,000 in hundred-dollar bills to hold in their pocket so they can get an idea of what the customer can easily spend . ( Yes , they do give the money back at the end of their shift each day )
At one point , Cadillac moved their headquarters from Detroit to New York City so that their employees could better understand their customers .
The thread that weaves through all these situations ? You may be losing sales — or worse yet , losing customers — because your salespeople are making decisions for your customers .
There is a primary reason why you have so many choices in any product category in your store ; people have different budgets . And if you have salespeople instead of your store being like a self-service mass merchant , you are doing so for another important reason : they are salespeople and not just cashiers .
These two reasons are very important to your business . Are you making the effort in getting those two reasons on the same page with your customer ’ s buying style ? •
Tom Shay is a lifelong small-business owner and manager . He has authored 12 books on small business management ; a college textbook on small business financial management and co-authored a book on retailer / vendor relations .
8 Beverage Dynamics • Winter 2024 www . beveragedynamics . com