Read about different ways of creating brand advocacy

This is a follow up to my last blog entry (see http://mytimeinretail.blogspot.com/2015/10/see-how-converting-loyal-customers-into.html) where I looked at converting customers into loyal customers and then into brand advocates. Today's blog is concerned with different strategies for enacting this conversion. There are many different ways of doing this, and as a retailer you will have to find your own way but I'll look at some examples. It's all about creating that relationship with your customers that transform the way they feel about you and how they shop with you.

Loyalty schemes

These have become more abundant in all forms of retail after the success of the Tesco Clubcard. Every coffee shop, large and small, will give you a free coffee after you buy 6 or 8 or 10 with them. But for me, a loyalty scheme should be about more than just trying to twist someone's arm to come back. Loyalty is one thing, but were looking at brand advocacy as the target here. The next step is to offer your loyal customers something that other customers can get. This can be one-off products that the rest of your customers can't buy, invites to exclusive events, the first chance to see new products or another exclusive that only your very best customers can get hold of. These customers will talk positively about you and some will become advocates.

Events

As I've mentioned above, having an event that gives exclusive content to your best customers creates brand advocacy. A new product launch, products that you just can't get anywhere else or additional benefits to chosen customers promotes advocacy. If you have a guest list of certain customers that gain access to these feature then you're creating the next level of customer. If your best customers get a free cup of tea, a personal shopper, somewhere to store their shopping whilst they browse or extended guarantees as a set of examples then they are more likely to return and to tell their friends,

Exclusives

As unintelligent retailers compete more on price and race to the bottom, the intelligent ones are looking onwards and upwards. Exclusives is a huge area to build your advantage over the competition. If you can sell something that no one else sells then the customers of that product will come to you. Of course this means that your sourcing of the product needs to become a focus. Either it's products you make yourself or you need to have an exclusivity conversation with your supplier. Having an exclusive could mean

• a short-term exclusive (for the first month)
• a different design or packaging of an existing product
• a different size to what is available elsewhere

If you then add a high level of customer service, an event or a loyalty scheme to add to your exclusive then you're heading down the road towards brand advocacy.

See how converting loyal customers into into brand advocates increases your income

I've worked with retailers over the years and a recurrent theme is the question of how to reward customers. I've looked in this blog at different ways of rewarding your team but having ways of rewarding your customers can help to transform a retailer. This is a large subject so I've split it into two blog entries. The first one is today.

A constant theme of my blogs is turning customers into loyal customers into brand advocates, so it's probably best to start here and explain what I mean by these three categories-

Customers

This is simply people who buy something in your shop. They may be passing by and see something in the window, they may be a visitor to your town and come in to have a look around. They may shop with you once and never again. This doesn't mean that these customers are unimportant. You will need one-off customers and irregular visitors to help your sales. They can be attracted to your door by promotions, a great window display or word of mouth. However they arrive is unimportant. The fact that they got to you gives you a chance to impress them and get them coming back time and again. This turns them into the next level, the loyal customer.

Loyal customers

A loyal customer is one that chooses you over another. You may have one or more stores in your town that sell the same thing but your loyal customer will buy from you over your competitors. You can create loyalty with price, promotion or excellent customer service as well as other means. Supermarkets in particular fight for loyalty and this has sparked the loyalty card and the price matching over the years. A loyal customer will return to you over and over again unless something happens in their relationship with you to break the loyalty. It's a well-worn phrase that it costs so much more to win a new customer than to keep an existing one and that's the relationship that loyalty projects attempt to protect. Many businesses stop here. Having a band of loyal customers spending good money with you in a regular basis, plus the odd infrequent customer can be a lucrative proposition. But I propose looking to the next step.

Brand advocates

And I strongly believe that brand advocates are the next step for a retailer to increase success, and in a more interesting way. The ways in which you can achieve this will be the subject is the second part of this topic and my next blog entry. Today I'll describe what a brand advocate is and the effect they can have on your business. A brand advocate is someone who goes out of their way to tell other people about you. It may be one of several ways of doing this-

• Bringing their friends into your store
• Talking about you on their blog
• Positive social media comments about you
• Telling people face-to-face about how great you are

The brand advocate is a marketing tool that you can rely on to bring you more business and all it costs is a great relationship with them. Having several brand advocates starts the cycle off again for the next set of customers. They arrive at your doorstep because of a brand advocate, and you will hopefully turn them into loyal customers and the next brand advocates. How you start this relationship and maintain it can be interesting and fun, and we will take a look at that in the next blog.

See the lessons to be learnt from this week's The Apprentice

I've started watching this series of The Apprentice (against my better judgement) this week. The tasks are interesting, helped by the editing, and the characters are as comical as they have been for the past few series. I applied for the last series of the programme and got through to the audition process - the final few hundred from twenty-something thousand applicants I was told. The opportunity at the end of the process has far more value than the process itself.

The first task was a buying and selling task - go to the market and buy fish, turn it into products and then sell it in the city of London. One team made a profit of £1.87. And this is where the whole process falls down. If this were real business then there would be much more expense to take away from their paltry £1.87 profit-

Wages for eight team members

Production costs

They were given use of a facility to turn their raw fish into saleable products, and this also took energy for the machinery, cookers and lights.

A trading licence to sell food on the street

Purchase or hire if the stall

Hire or purchase of the cooking equipment

All in all, these tasks in isolation mean very little. I'd prefer to see a programme where the team develops a business over the course of the series. Given an amount of money st the start, they have to buy and sell cleverly to increase their money for the following week's task. Lord Sugar can still fire someone every week, but the team can work their way through.

So what's this got to do with me an independent retailer?

Well control of costs underpins every single business. And it's by looking at your costs and the effectiveness of every penny you spend that will allow you to succeed. And for every pound you save, you have three choices - pocket and extra pound of profit, reinvest another pound into area you know succeed or cut your customers prices by another pound.

Looking at all of your expenditure to ensure that it works as hard as you do is a fundamental part of running a business. I'd suggest three ways of ensuring you get this as right as you can.

Regular reviews of your costs

I'd suggest that you look at your expenditure and conduct a full review on a regular basis. Annually at least, every 6 months is better and in some instances quarterly. This ensures that things never get away from you. Having your finger on the cost pulse means that you never get to the point where you look back and think "where has all that money gone?" To be able to look at all the outgoings and see if savings can be made will work out for you in the long run. Going hand-in-hand with this is the expenditure on marketing.

Analysing the success of your marketing spend

If you take nothing else from reading this blog, then take this one piece of information with you. You need to account for what you spend. By this I mean that when you set out a marketing campaign, you need to have an idea of what business that campaign brings. To do this you have to speak to your customer at the first point of contact. It's from there that you will understand how they arrived with you.

For example, you spend £200 per month on advertising on a particular website and £100 per month on newspaper advertising. If the website brings you £2,000 in sales per month then it earns 10 times the spend. If the newspaper brings you £500 per month in sales then it earns 5 times the spend.

You will see that the website is twice as profitable in terms of marketing spend than the newspaper.

Speaking to people when the opportunity arises

I know that it's impossible to respond to every marketing call or email but there will be areas in which it's profitable to listen to people. The areas in which you want to talk to people will be dictated in part by the areas above. If you have identified an area in your cost review then this will prompt you talking to someone who contacts you. If you have an area of marketing success, then you'll want to be able to repeat this success. And in some areas you will just see an idea that you like and decide to investigate.

Avoid being an overspender like the contestants on The Apprentice and have control over your costs.

See why inflation figures heighten your need to compete on things other than price

The latest inflation figures were announced this week and it's not good reading for retailers-

http://www.bbc.co.uk/news/business-34514135

The figures show a fall in the inflation rate to it actually showing a negative. This means that prices are falling.

Why is this bad news for retailers?

This is particularly bad news for retailers of high price items. The fact is, that if consumers see prices falling they will put off their large purchases in the expectation that prices will continue to fall and they can save money. This effect really starts to kick in when prices fall consistently over a longer period of time. It works more on high ticket products - televisions, cars, gadgets and computers. So if you're a retailer of these items what can you do? The first thought when looking for customers is often price but that seems like the wrong idea on this occasion. Further price cuts can only deepen the feeling that prices will continue to fall. And increasing prices at this point will put you at a disadvantage to your competition.

So the best thing to focus on is the quality of what you sell. Having a quality product can sell no matter what the market is doing. Look at Apple - their products sell in times of inflation or deflation. Now, we can't all come up with an ipod, iPhone or iPad idea to help our retail business but you can focus on the quality in your own business.

Finding what makes you different

As a retailer you will probably already have an idea what it is that makes you different. It's what sets you apart from other retailers and it could be one of many things-

• Your loyalty scheme
• Your products
• Your customer service
• Your special offers
• Your events

I've written many, many times in this blog about understanding what you do better than others. And this is what you need to concentrate on. I'll give you a few examples-

Waitrose have high prices but their customers love their absolute quality and great customer service.

Boots are very pricey but focus on their loyalty card and customers return.

Aldi mixes price with availability and customers have loved this balance.

So what is your USP? What can you do better than your competition? What are you capable of that nobody else in your town is? These are the things that will drive you forward.

Communicate this with your team, communicate it with your customers and look away from just dropping your price to compete - there are other, better ways to differentiate yourself.

See why missing prices labels lose you business

I went out shopping to an out of town retail park yesterday and repeatedly faced one of my pet retail peeves - the missing price ticket! I hate this in a shop and I found it in shop after shop - all major retailers.

Out of town retail parks can often encapsulate the best and the worst of retail in one place. The parking is usually horrendous and battles for parking spaces take place regularly. If you've ever worked in one of these "out-of-towners" and had to regularly leave your car there, you'll know the state that they can end up in with bumps and scrapes. Because of the tendency to operate late hours, there are usually operating on skeleton staffing. And there are sometimes the parking enforcement cowboys that want to take money from you if you stay there too long - isn't the point that you stay there and shop?

But yesterday was missing price ticket day. The first place I saw it was an outlet shop for a major international sorts wear brand. There were signs everywhere showing things like-

"50% off lowest marked price"

"Save 25% on ticket price"

"Further reductions"

And time and time again there were no tickets on the products. Whole racks of clothing with 100 items and I looked through half of them and found not a single price label. It wasn't just me that noticed it. I walked past four other shoppers they were complaining about missing prices.

Next stop was a national supermarket chain that had a big display of consumer electronics as soon as you walk through the doors. Around 20 items in total and 5 of them were missing prices. For a display of this nature, price is a major purchase factor. The price of this is sensitive and all the big players watch each other's price movements with great care. So to have a display missing approximately a quarter of it's prices will cause customers to just walk away.

And this is the point. Away from small shops where you are never more than a metre or two away from your customers, pricing is essential. The result of missing prices is either grumbling customers or customers that walk away. And neither is a reaction that a retailer wants to create in customers.

I'm sure that most of my readers will look at this and think "well this doesn't happen in my store." But if this can happen in major retailers in the examples I saw yesterday then it can slip through the net of others. Go out to your store today and check price labels - make sure that you are ready to trade in every way.

Don't cause your customers to grumble or walk away when the solution is so simple.

Not everything can be bought on the High Street-

See how tapping into café culture can reap rewards

There's no doubt that there's a café culture in the UK today. I'm at a large shopping centre today before 10am when the shops open and every café is almost full of people drinking and chatting before embarking on the days shopping. Costa, Starbucks and Nero are the main three chain coffee shops and there are a staggering 3 Starbucks, 2 Caffé Nero and 6 Costa Coffee (yes, six as the vidiprinter used to confirm on the football scores.) Andcthats before you start to add up the Greggs.

And, as usual, this gets me thinking about retail and how all of these things knit together. For instance, there's two stand-alone Costa and the others are situated within other shops-

• Debenhams
• Namco
• Odeon
• WH Smith

And this is where I think that the angle is - using a coffee shop offering to get customers into your store. Of course the big retail players can look at strategic partnerships with the likes of Costa to make this happen but what about independent retailers. Most of my readers are independent retailers and I think that for some businesses, a coffee shop offering could really help their business. By having a quality, well-respected destination for the coffee drinkers you can have a ready-made custom for your store. I visited Lincoln recently and the coffee shop that really caught my eye was upstairs in an art and craft shop. In a quiet early morning when any large numbers of customer traffic was up at the castle and cathedral, this set and craft shop had 20 people browsing and a further 20 in the café - all of whom had walked through the arts and crafts to get there and would walk back through the arts and crafts to leave. In addition, there were art classes advertised on the tables and the café itself was decorated subtlety with arty type things. It was a great way of getting people through the door and spending.

This isn't the solution to all retail woes, but for some retailers with the space and the vision to create this, there's definitely something in this.

Not everything can be bought on the High Street-

See how a diary of events can help you to plan for next year

I've been around and about shops over the last few weeks and there's a lot of shops trying to make the most of things in what's traditionally a bit of a lull between Back To School and Christmas.

There's a lot of retailers stocking rugby-related products with the World Cup being played presently. I shopped in Durham today and there's an ancillary Back To Uni trade here, as in many university towns and cities. And it's these events that I think can make the difference for independent retailers. I think that keeping a diary of events and how they affect your trade and your team can make a huge effect in how you react to these events in the future.

Planning a broad outline of the events and mini-events of the year will provide you with a framework of the year. You will need to ensure that you have prepared something to reflect these events - extra staff, stock that matches the event, dressing up the store, etc.

You'll need to take account of-

• Easter
• Christmas
• Hallowe'en
• Back to school
• Back to university
• New Year
• Mother's Day
• Father's Day
• Sports events (World Cups, Olympics, Wimbledon, etc)
• Valentines day
• Pay day weekends
• Local events

It's by having this set up and making notes of how it all affected you (including notes of what you did differently) that will give you a framework for these events next year.

You can try different things when approaching these events. There are many options, including-

• Changing opening hours
• Bringing more staff in
• Staging an in-store event
• Sending out email reminders to your mailing list
• Giving extra loyalty points or coinciding a sale with the event

It's by trying these different things and having notes to refer back to that you will start to build a picture of what works.

NOT EVERYTHING CAN BE BOUGHT ON THE HIGH STREET

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