Friday, 11 June 2004

You Expect What You Pay For

Recently – a collegue recounted his experience selling a fully-capable product with a price less than half its competitors.

“After the presentation, the customer turned to the sales representative and asked, ‘What’s wrong with it?'”

This, more than 78 years after J. Walter Thompson’s research for Pond’s Cold Cream proved that price and quality are directly correlated in customers’ minds

Compare the potential customer’s – “What’s wrong with it?” – with the following from JWT’s 1926 Pond’s customer research:

“Reasonable in price, used by everyone, many women had begun to think that they could not be as good as creams that were more costly or that were imported.”

This strategy also works in the service industry, illustrated by this exchange between a collegue and an industry leader:

“How to do you get clients to buy into your recommendations?”

“Charge more.”

Tuesday, 1 June 2004

Shopping Goes High-Tech

Wal-Mart’s aggressive efforts to implement RFID makes the news frequently, and you’ve probably noticed an increase in the number of stores offering self-checkout (Home Depot, Rainbow Foods, K-mart, among others). A number of other stores are experimenting other technologies poised to changed the shopping experience.

The Salisbury Post has an excellent article on Bloom, the new store concept from Food Lion.

Consider the technological changes, such as photo printing kiosks, complete with Bluetooth wireless capabilities, and personal scanners that shoppers can use to keep a running tally of what you’re buying.

Other information areas allow you to do things like scan in a cut of meat or piece of seafood and have a variety of recipes pop up that you can print out and take with you.

Their focus is on making grocery shopping better:

“We want people to feel like they’ve had a good experience.” – Robert Canipe, VP Business Stragety

“…take the pain points out of shopping” – Suzy McIntosh-Hinson, Bloom’s IT Design Lead.

A number of the experimental technologies at Bloom can also be found at the Metro Future Store in Rheinberg, Germany.

The last line in the article…

“There will always be certain areas where customers will not accept a high-technology store”.

…leads me to Stores.org’s May 5 cover story, Prada’s Pratfall. The article describes Prada’s retail technology experimentation gone horribly wrong at their very visible Manhanttan flagship store.

RFID, interactive touch screens, liquid crystal changing room doors all back-firing when they’re functional at all.

Made from liquid crystal panels that darken for privacy, the doors were designed to open and close using a foot pedal and shift from clear to opaque with another. But it turns out that some Prada devotees missed the second pedal, revealing more than intended. Others stomped on the pedals in a futile attempt to open doors that frequently jam.

Paula Rosenblum, Director of Retail Research for the Aberdeen Group declares:

“In an attempt to be as chic about technology as they are about heels and handbags, they misjudged the customer’s acceptance as well as the sales associates’ willingness to embrace it.”?

This is an excellent counter to Mr. Canipe’s quote about improving the customer experience. Prada seemed more focused with looking cool than using technology to deepen the customer relationship. Did Prada conduct the depth of customer research described in the grocery store articles? Doubtful. Otherwise they would have realized that customers and sales associates prefer less technology and better service.

Hotel Room as Showroom

Hotels are now leveraging their experience comforting weary travelers and giving their guests the opportunity to take the hotel experience home.

Marginal Revolution points to a Forbes article documenting the Regency in Manhattan’s addition of price tags to their bath mats, pillows, and bath robes.

In a related development, Selelect Comfort recently announced a partnership with Carlson Hotels to replace 90,000 guest beds over the next 2 years with a custom-designed Sleep Number Bed.

As much as it’s a excellent way for “consumers to get a better night’s sleep away from home” it’s also a great way for consumer to have more experience with Select Comfort’s products. With the lifetime of matresses in the decades, capturing one more household is definitely benefical.

Wednesday, 19 May 2004

A Best-ter Buy. Part 2

Updating the stores to appeal to a specific customer segment is great, Best Buy goes the extra mile in this renovation and makes sales more visible to staff.

Employees begin their day by reviewing the previous day’s figures, which are written on a dry-erase board and compared to the previous month. At a Westminster store meeting open to the media, Chris Smith, an operating supervisor, pointed out that the store had $550 in overtime costs the previous day, and asked employees to suggest ways to reduce it.

SF Gate has a great follow up on my earlier Best Buy persona post

Over the next few years, each of Best Buy’s 608 stores will focus on one or two of the five segments, with 110 stores scheduled to make the switch by February.

There are two interesting points here:

  1. Starting each day reviewing sales figures with the staff
  2. Looking for improvement from the people with day-to-day knowledge

Like a page out of James Womack’s Lean Thinking. These two points reinforce Womack’s patterns of “visual controls leading to continuous improvement” and “asking for improvements from the people on the front-line leads to a continued commitment”.

Best of Luck to Best Buy.

Tuesday, 11 May 2004

A Best-ter Buy

Yesterday the Strib announced Best Buy’s new customer personas. According to the article, $50 million is dog-eared for reformatting 100 stores to improve the shopping experience of these 5 archetypes.

It seems to me that Ray, Barry, and Buzz already love shopping at Best Buy. Jill on the other hand, can’t stand the place. Perhaps the biggest win is Best Buy formally acknowledging Jill’s aversion to their stores.

The article reads as if prototype stores will be created to specifically focus on these archetypes. An interesting proposition – a $50,000 facelift per store to focus on developing a better relationship with a handful of customer archetypes. It’s that kind of commitment that will drive customer loyalty.

Customer in Training

While a number of supermarkets and discount stores offer “customer-in-training” shopping cart as their primary method of keeping children occupied while their parents shop, Wegmans – a Woodbridge, N.J. supermarket chain – goes one step further offering W Kids Childcare centers .

The videos, toys, and playground equipment found at these centers is part of a larger effort to improve the parent’s shopping experience. Other initiatives include: check-out aisles without candy and changing booths in both the men’s and women’s restrooms. Because of this, Child magazine declared Wegmans the most ‘Family-Friendly’ chain in America.

Improving the customer experience often has little to do with the primary service or product offering, but more with successfully managing our interpersonal relationships.

UPDATE: Marginal Revolution has an excellent article on the experience of shopping at Wegman’s.