By Jane and Larry McGrath
In order to stay on the cutting edge, business owners often need to update their thinking. Certain business tenets are tried and true, but sometimes assumptions become standards that could hurt a business. Here are some common myths to avoid to help keep your business running smoothly year-round.
REALITY: While it’s true that customers know about the things they have bought from you, they are probably unaware of all the products and services you offer. For example, let’s say your best customer is buying a whopping 60 percent of your products and services. That still leaves as much as 40 percent of the things you offer that may be new to that customer.
In addition, how much is unfamiliar to the customer who spent 10 minutes in the store six months ago picking up an air filter? And, what about the racer who’s only shopped your competition?
REALITY: The most reliable way to increase your profits is to take good care of your current customers. In fact, most calculations show that a five percent increase in customer retention will increase your profits 50 percent.
Profits increase because it costs significantly less to service a regular customer than attract and establish a new one. Continuing customers typically spend more than new ones. And, satisfied customers are a fantastic marketing tool: They sell you and your quality service to other racers, their family, and friends.
REALITY: While it’s true that your stock is important, you have to draw customers in the door and make it easy for them to buy it. If your window displays are old and faded, the stock is dusty, or the aisles are cluttered with last season’s leftovers, customers may decide you and your merchandise are too out-of-date to help them win. Everything connected with the store—signage, décor, fixtures, lighting, and displays—must assure racers you are on the cutting edge with current products and up-to-date, knowledgeable service.
REALITY: In today’s battle for profits, you have to consistently maximize sales per square foot without overcrowding shelves and displays and spoiling the look of the store. Your best weapons are things like point-of-purchase (POP) displays, wobblers, danglers, and shelf talkers. If you don’t know how to use these and other display aids, speak to a manufacturer’s rep. They can often provide these promotional aids plus offer advice about how to best use these tools.
For example, a good POP can communicate what makes a product different and better or make an irresistible offer, such as a two-for-one deal, in a matter of seconds. Which POP will work in an area—from a simple display stand to an interactive motion display—depends on the product, your layout and traffic patterns, shelf configurations, viewing angles, and the image you want to project. But there’s no doubt that judiciously using POPs and other display aids can increase sales.
REALITY: Effective salespeople absolutely need to know a product’s technical specifications, features, and applications. But equally important is their ability to translate all that general product information into how it will improve the way the customer’s car will run in Friday night’s race.
Salespeople also need excellent communication and selling skills. For example, they need to know how to ask good questions and listen for—not anticipate—the customer’s response. When they can hear what the customer is really saying—what his or her needs are—they can sell good solutions.
REALITY: It’s important to talk about last week’s race. It’s helpful to talk about who is running what products. It’s also good to give suggestions and advice. But if you walk away from a customer without asking for the sale, you won’t make as many sales as you could.
Develop a set of “closing” strategies that work for you. For example, ask questions such as “Does this seem as if it would solve your problem?” or “Don’t you think this will make a difference?” Or, be more direct with queries like “Can I write this up for you?” or “Is there anything else you want to get today?”
REALITY: To maintain profitability don’t build your pricing strategy on just undercutting the competition’s prices. Base it on a thorough understanding of the racing market, your customers, and what it costs to operate your business. Be creative. Bundle products, for example, to provide values without resorting to direct price comparisons.
REALITY: It only takes a minute to ask your customers if they are interested in receiving special coupons and notifications of upcoming events via email and write that information down in a specific place, such as in a log or notebook. After that, it only takes a few more minutes to enter their information into a data base, and those extra minutes can become very profitable down the road.
To make sure your list stays profitable, be sure to keep your list current by deleting any bounced back emails throughout the year, possibly monthly or quarterly if you email often.
REALITY: Even though joint ventures require skillful coordination and organization, partnering with a friendly, positive-image business can increase your sales, reduce your advertising expenses, and enhance your company’s image. In addition, cross-promotions with local non-race related businesses such as restaurants, gas stations, shopping malls, and movie theaters can introduce an entirely new segment of customers to your store.
For example, you could offer a store-logo keychain to customers showing a movie ticket stub and the theater could give free popcorn to customers wearing one of your logo T-shirts.
REALITY: Just because there aren’t any customers in the store at the moment doesn’t mean there isn’t any work to do or money to be made. Build goodwill and profits with activities such as:
- Calling customers to make sure the product they bought installed and performs the way they hoped.
- Calling customers who were undecided about a purchase with additional technical information.
- Calling or emailing information about new products to customers who might be interested in them.
- Calling or emailing notes to congratulate customers who performed well last weekend.
- Calling or sending a note of thanks to new customers or customers who made large purchases.
Downtime is also important to tidy up the showroom, such as dusting off products, straightening up or rearranging displays, change light bulbs, take inventory, basically use the time to benefit your store’s appearance.
REALITY: You can reduce the severity of the slow season with some planning and creativity. First and foremost is financial planning. For example, make most of your inventory purchases during the high periods and cut off orders in the fall so you won’t have to pay big bills when revenues are thin. In addition, think about setting aside money for a marketing campaign in the winter to bring in street business.
Also, use the off-season to catch up on all the things you’re too busy to do during the rest of the year: clean and brighten shelves, design new displays, do store repairs, update your mailing list, plan and organize an informative seminar for your customers, develop a presentation for community groups, visit other retailers looking for merchandising and display ideas.
REALITY: Making a business plan—especially the marketing plan section—is not a one-time task. To be part of the 50 percent of small retailers who stay in business more than seven years, reevaluate and update your plan yearly; evaluate progress, make adjustments and chart future directions. Like a road map, a good business and marketing plan can help you keep your business on course.