Guess what? In order for you to succeed in business you need to make sales. Our firm helped over 150 individuals open their ‘bricks and mortar’ business with over an 80% success rate after five years of being in business. Our success rate was predicated on two factors: we did a lot of screening of people who wanted to establish a business; and those who went on to open their business we provided small business training and then coached them through their ups and downs.
During the review process we screened out more people than we accepted. One factor we considered was their ability to sell. More than one of those individuals said that they wanted to start a business but didn’t want to sell. That was o.k. if they could hire salespeople, but if they couldn’t they needed to put their salesperson hat on. We found the comment “I don’t want to sell” a red flag because the lifeblood of any business is all about attracting and retaining customers.
Over the past couple of years I have been moving my successful face-to-face consulting and training business to an on-line business.
Common to both internet and face-to-face businesses is the ability to market and sell. There is a difference though between marketing and selling. Marketing is about informing your community or potential customers about your business and what it has to offer. Selling is about closing the deal once you have a customer or potential customer in front of you.
Marketing for both businesses most often deals with potential customers who you don’t normally see. It is about attracting leads to your business through all matter of ways, such as advertising, public relations, providing good information, promotion, attending trade shows and more.
There is a difference, however, when it comes to selling. In a bricks and mortar business the sale most often occurs during face-to-face encounters but in an internet business the sale most often is faceless. During an internet sale you need to help people decide to buy your product or service without actually seeing them. However, there are aids to this. Most successful Internet Marketers call upon the visuals of You Tube, and keep in touch through Skype, Zoom or Facetime. So although not physically present, we can make a virtual presence.
The essential key for both businesses to making sales and maintaining customers is the ability to develop long-term relationships.
I still regard myself as a newbie in the internet marketing world, but I have learned some valuable lessons along the way. Here are some of them.
1. Email those on your email list on a regular basis with something of value outside of selling a product. Most emails I get from internet marketers are about products they are promoting (read, selling). Rarely do I receive anything from them outside of product promotion. Yes, they do offer “bonuses” if you buy, but that is a promotional element as an enticement to buy.
2. Send emails to all those who send emails to you. Share one of your best practices with them. Don’t sell anything with this strategy, just build a relationship and add value.
3. Pick out 10 people on your list every week and email them a relevant PDF, eBook or article with a note that you are thinking of them.
4. Blast out a ‘Thank You’ to all those on your list. They are helping you become successful. Don’t wait until you’ve made it as they are helping you today along your journey.
5. Check your marketing strategy and ask yourself whether you are selling stuff or asking how you can help others. Make sure your strategies are about adding value.
6. Find out what your internet marketing associates need, both those who market and sell to you as well as those who you consider your mentors and support system. Be bold and ask them what you can do for them or what they need. You may be surprised when you hear their answer.
7. Strengthen distant relationships by telling stories on YouTube or in emails about your experiences such as what’s working for you and how it may help others. For instance, I often tell stories about my consulting experiences and how it relates to my new internet marketing venture; others tell stories about how they have risen from the brink of bankruptcy to a successful on-line business.
8. Start a Facebook group to share information and learn from each other. I found you don’t have to be an internet marketing guru to share information. You just have to be honest, forthright and ethical. And join Facebook groups where you offer suggestions and respond to other requests, rather than joining only to mine new contacts for your own marketing and selling benefit.
9. Coordinate a webinar where you and others share information about what is working and discuss how to resolve specific marketing issues.
10. Communicate regularly through social media such as Facebook, Pinterest, Instagram and others.
11. Provide freebies to those on your list. They could be copies of your own blog posts, PLR articles or eBooks you think will help them. Don’t expect something in return and be surprised because the return will come. It’s a very simple strategy, ‘give to get’.
12. Simplify, Simplify, Simplify. The genius in us makes the complex simple. I find there is too much complexity in the internet marketing world. I’ve learned most from those who explain the complex in simple terms – it tells me they understand. Often when we explain things in complex terms it makes us feel important, but when we do it with simplicity it humbles us.
13. Join an internet make money online training program such as Breakthrough (I’m a member).
14. Keep learning. There is a wealth of information on YouTube about internet marketing and selling. Here are a few I pay close attention to: Trevor Carr, John Chrestani, Caffienated Blogger, Jonas Lindgren, Jono Armstrong, Richard Fairburn, Paul O’Keef, ODI productions, Project Life Mastery, and Paul Nichols.
15. Just like ‘bricks and mortar’ businesses, internet marketers have national and international conferences where they learn, socialize and expand their business acumen. If you can take advantage of these, and if you can’t I found that at least the learning is often posted. You can find out about them through your network of internet marketers.
16. Leads, Leads and Leads. Making money online is in your list building capacity. Many of us when starting out don’t have a list – or have a list from another life.
17. And, don’t forget the importance of face-to-face encounters. Remember your professional associates and personal network and ask them how you can add value to what they do.
18. Just as you are an internet marketer and seller, you are also a buyer. Here are a few cautions about products you purchase:
These 18 marketing and selling strategies boil down to: Learn from others: simplify the complex; add value without expecting a return; communicate consistently; continually search for leads; do everything with integrity; keep grounded; and always say thank you.
Thank you to all those who are helping me along my journey and thank you for reading.
Last year I wrote an article on the ‘Five Essentials for Home-based Business Operators’. Little did I know then about what we are experiencing today. I'm referring of course to the Coronavirus (COVID-19) that is spreading throughout the world. Governments and companies of all stripes are taking drastic action to curtail this ugly and deadly contagion.
As offices and business close down there is a resurgence of ‘working from home.’
Four years ago I moved my consulting and training business from an office located in the centre of our city to my home. That was my choice.
What we are witnessing today is how businesses are responding to this global health crises. From their perspective business must go on and one way to make this happen is to have employees work from home. So, not by personal choice, like mine was, employees are needing to establish home-based offices.
This shift in the ‘way we do business,’ also provides opportunity. It may give employees, who once thought of establishing a business, a chance to test out a home-based business. A business that doesn’t rely on someone else or having to travel to an outside office located within a company or government complex.
To help those who are now having to adjust to their new-found freedom from office politics and such, I’m updating the article of April 2019 to reflect this new reality. Please read on…
Over the years I have assisted over a 100 budding entrepreneurs as they ventured out into the marketplace using their home office as their first base. Those were heady and exciting times, both for me as I learned about their business and for them as they ventured out into the marketplace with their products and services. There were five essentials we discussed as foundational to helping them adjust to their home office. They were important then and they are just as important today as many are now having to work from home.
I encourage you to review your disciplinary practices. Just as there are distractions at an office setting – people interrupting you, office politics, desktop messes, noise, emails, shifting priorities, you get the picture – there are distractions in the home setting – television programs, social media, friendly telephone calls, neighbors dropping by, poor priority setting, and desktop messes to name a few.
I have often said that it takes more discipline to operate a business from home than from an external office. At home there are no supervisors or minders watching over you and urging you on to better perform. At home you are the leader-manager in charge. It is completely up to you. Your performance or lack thereof falls completely on your shoulders. The locus of control moves from outside yourself, to inside yourself.
To perform well you need discipline to:
Keep to your knitting
Avoid facetime, LinkedIn, Snapchat, Instagram, Twitter and others, unless of course they are essential for your business, and if that is the case then set time aside to deal with them appropriately. Don’t let them interrupt your knitting.
You can get lost in your work especially if you feel you are on a roll and ideas are flowing and tasks are getting accomplished. However, a huge mistake that home-office practitioners make is not taking nutrition or energy producing breaks. What I mean by ‘energy producing breaks’ are breaks that take you away from what you are doing at the moment and giving your mind some rest time.
Energy producing breaks include going for a quick walk, tending to a household chore, taking a five-minute meditation break, or fuelling up with an energy bar or a dish of fruit. The point here is the need to break from your office work and focus on something else for short periods of time. This gives your brain rest and up ticks your over all energy.
Research suggests that 90 minutes of concentrated effort and then a ten or fifteen break produces more in the long run and contributes to alleviating burnout.
Separate Office Space
It’s important that you find office space for yourself and your business. This is somewhere in the home or apartment that you can call your office. For some this is initially on the dining table or in a bedroom. The point here is that you need a space to conduct your responsibilities or your business, someplace where you can keep all the important stuff.
For some that means a place for your computer, paper, envelopes, books and whatever else is needed; for those who claim that they are completely mobile - everything they need is on their mobile device – will also need someplace within their home to call their specific office space. I have yet to find a serious businessperson who has everything on their mobile.
A good practice is also to dress as if you are going to the office. If your office culture is one where the dress code is casual, then dress casually; if it is one where more formal attire is the practice, then dress appropriately. When we are transitioning to a home-based office setting our findings suggest that you keep to the same or similar routines until you have built up the resistance to your new-found distractions, or as some people like to call them – temptations.
Working from home can be a lonely and isolating experience. We know that businesses grow based on relationships. In order to build relationships we need to be in contact with people. Simply stated we do this is by getting out of the house or apartment and meeting customers and colleagues in the field. It is important to expand relationship building reach by joining a professional association, a business network association such as Chamber of Commerce, a women or men’s business network, a service association such as Rotary and Kiwanis International, or becoming active in your faith-based community. Getting involved in outside activity helps you build necessary relationships and provides a social outlet that you would not experience by keeping yourself isolated in your home office.
Of course the above applies to those who have or are establishing a home-based business and doesn’t necessarily reflect the temporary nature of home-based operations. However, the importance of getting out of the home still applies. It just means that you need to avoid crowded places and follow the advice of the health professionals. If you have been quarantined because of the virus that is another matter. You will need to find other ways to network such as using the telephone, email, Skype or Facetime
One of the things I heard most often from home-based business owners was their pushback on administrative tasks. This is one area where procrastination was the word of the hour. Administration is often seen as an afterthought, but not paying attention to the detail that administration asks of you, may cause serious difficulties in the long run. Take for example not paying attention to outstanding bills, up-dating client information, attending to customer invoicing, or submitting due taxes. In the long run not doing due diligence on these matters costs you money, affect your cash-flow or impact your customer relations. So before procrastinating on administrative tasks think about the loss of income, customers and cash-flow. Three important ingredients for a successful business.
In the case of a temporary home-based office, you may still be required to keep on top of your administrative tasks. These will most likely be determined by your employer. Whatever they may be, set aside time to get them done.
Yes, these are anxious times primarily because of the ambiguity of what the future holds. We do not know the full extent of the impact of the Coronavirus. It may well turn out to be a very bumpy ride. We already know that it is causing serious disruptions in the way we relate, do commerce and plan for the future.
In some respects the virus may be a blessing as it is forcing us to step back from a world that was spinning out of control causing tremendous anxiety and stress. It may be giving us time to step back and breathe. We need to hold on and keep calm as life teaches us that this too shall pass. It’s worthwhile to keep in mind the words of Steve Maraboli:
"Incredible change happens in your life when you decide to take control of what you have power over instead of craving control over what you don't."
Thank you for reading
Richard P. Fontanie
Note: Steve Maraboli is a motivational speaker, behavioral scientist and best-selling author.
To truly understand the entrepreneurial spirit we need to get into the minds of successful entrepreneur. It is here where we find the 5 characteristics of an entrepreneur. And it is here where we learn that the entrepreneurial spirit isn't something that can be taught, but instead, it is something that is developed from within.
A person with an entrepreneurial spirit shifts the locus of control from outside him or herself to inside themselves. They drive themselves to succeed and are highly motivated to achieve something when others are afraid to take a risk. They don’t wait for someone else to start. They are self-starters. However, contrary to popular opinion they just don’t jump at things that fancy them. They are calculated risk takers.
An entrepreneurial spirit develops in those individuals who can demonstrate a genuine passion for building something great and those who are willing to push themselves to the limit to achieve their goals. Here are five characteristics that represent those with an entrepreneurial spirit.
1. They Are Deeply Passionate
Passionate people know what it's like to completely understand a subject and are willing to dive deep into their understanding of the subject. People with an entrepreneurial spirit are genuinely passionate about the problems they are trying to solve and are energized by any challenges they face in their pursuit.
2. They Are Always Questioning
The average individual hardly ever considers how ordinary, everyday things can be improved. Those who have an entrepreneurial spirit can't help but try and find ways to improve the ordinary. They continually question why things are done the way they are and enjoy bucking the system to make necessary changes to succeed.
3. They Are Optimistic
To be entrepreneurial is, by nature, to be optimistic. People who possess an entrepreneurial spirit don't waste their time thinking about what they aren't able to do, but instead, see the possibilities in everything. When you are first starting a business, the odds are strongly against you becoming successful, but by remaining optimistic, you can overcome challenges and survive setbacks along the way.
4. They Take Calculated Risks
Along with being optimistic, entrepreneurs are predisposed to a high tolerance for risk. Rather than jumping blindly into action, those with an entrepreneurial spirit make calculated moves while understanding that they don’t have a guarantee of succeeding. Successful entrepreneurs also can work autonomously and can be decisive. The entrepreneurial path isn’t always clear, so you have to be able to stay agile and adept in a high degree of ambiguity.
5. They Take Action
Above any other characteristic, those with an entrepreneurial spirit know when to execute on their ideas. You have to be able to go out and act on your plans to get real, honest feedback. This is because your ideas are meaningless until they are acted on. If you have an entrepreneurial spirit, you realize that the execution of your ideas is everything when it comes down to your success.
Not everyone will be successful as an entrepreneur. It is essential to possess these five characteristics of an entrepreneurial spirit if you want to succeed in your business.
The flip side of being entrepreneurial is ensuring that systems and processes are in place to get the job done. Often the entrepreneur isn’t the person to wear both of these hats. If your strength is one of an entrepreneur and not a manager, then I highly recommend you hire a manager and delegate the managerial tasks to her. Then let her manage, while you provide the entrepreneurial leadership.
Thank you for reading,
When it comes to business and sales, building a strong relationship is critical. The stronger your relationship is with your customer, the more likely they will refer others to your business.
Every day we have an opportunity to connect on a human level with our customers. We live in an age where efficiency is the byword. Our communication boils down to a text message, a quick email or a telephone message. Human contact is put on the back burner. So how do we keep the human contact with our customers alive in today’s fast paced marketplace?
The last thing you want to do is make your customers feel like a statistic.
When given the chance show them that their business is appreciated. Talk to them, strike up a non-business conversation with them. It could involve just about anything, such as the weather, sports, a movie, and pets. This doesn’t need to be a long conversation. You can make it ‘short and sweet’ as they say. The key here is that you are making a human connection and not acting like a robot.
Non-business conversation puts your customer at ease and gets them talking. The more they talk to you, the more they will open up to you. This gives you a bit of a window into their lives allowing you to understand them better. The end result may be an opportunity for you to make more sales. My cautionary point here is for you to be genuine and not seen as manipulative. Customers seek genuine interactions and they can see through manipulative communications.
Keep your conversations simple. For starters, get to know your customers by name, then address them by name. Say things such as, “how’s it going today Bill?” Or “how was your weekend Wendy?” Or “is there anything I can help you with today George?” Make your presence known and felt.
You can use the same tactic when communicating by email, text message or telephone message. Use your customer’s name. Their name is important and is tied to their identify.
Your customer wants to feel appreciated, so take a few minutes of your time to show them that you care about them as a person.
Another way to strengthen your relationship with your customer is to keep a Rolodex or digital address book handy with a list of all of your customers birthdays, anniversaries, and special events. Keep your eyes and ears open for when customers talk about upcoming events in their lives. Such as children’s birthdays and graduations.
When the appropriate date approaches, send your customer a card, whether it is a holiday card, a birthday card, a graduation card, or a congratulatory card. Just send it.
Your customers will appreciate the fact that you remembered them on their special day. This will only strengthen the relationship you already have with them.
By the way personal cards, via snail mail, is appreciated a lot more by the elderly than emails. This is an important factor once you recognize that the elderly population comprises over ten percent of your customers and depending on the products and services of your business perhaps an even greater percentage. The elderly comprise a significant number of people, often forgotten, in the age of push button communications.
There are many reasons to build a strong relationship with your customers. I suggest two of them:
One main reason is that customers value and appreciate good customer service. They want the peace of mind of knowing that if something ever happened with their product or service, that they would have you to turn to as their go to person.
This is significant because your customer will have this in mind when your competition moves in to take them away.
And believe me, your competition will try to take them away. As long as you provide excellent customer service, you have a much greater chance that your customer will stick with you.
There is no substitute for excellent customer service.
Customer service is the most important thing to a customers, even more important than what they pay for goods or service.
The second reason building relationships are so important is because of the referral process.
A customer that is treated with respect and provided excellent customer service will most assuredly refer their family and friends to you. Why wouldn’t they?
Your most important asset is your customer, so build and strengthen the foundations you have with them. By building strong relationships, you will be building your sales.
Thank you for reading,
Richard P. Fontanie
For more than 25 years, I've dealt with bankers that have supported my clients' growth and successes
Therefore, I feel highly qualified to know a great banker when I see one. And I've had the pleasure of working with many great bankers, and continue to meet dynamic new bankers who will definitely help my clients—and their clients—grow.
You know you've got a great banker when your banker:
A great banker can help you grow your business and build your business wealth as much if not more than your best customer. They provide the fuel that helps you go fast and far!
Phil Symchych, The Business Wealth Builder. Printed with permission.
Entrepreneurs and business owners are the modern-day heroes in our economy.
However, they don't have a government pension. They don't get two months off in the summer. They aren't guaranteed a paycheque. They sign unlimited personal guarantees to the banks. They take risks that most people are unaware of and unequipped to handle. But it's all part of a normal day for an entrepreneur.
Globally, entrepreneurs support 54% of the gross domestic product in the top 17 economies, according to the World Bank. They create the most net new jobs. And they employ a lot of people that enhance the quality of our lives.
To help my clients and entrepreneurs, and owners of mid-market companies everywhere, I recommend they develop structures that enhance the creation and protection of their business wealth. Because, if they don't, they could lose everything.
As always, consult with qualified professionals including financial planners, accountants, lawyers, and tax advisors to ensure your structure is optimized for your unique situation and your goals. Be careful when using advisors who are not compensated directly by you and only receive commissions from products they sell. When in doubt, take a commissioned advisor's advice to an independent professional for assessment.
Figure 32.1 Structures to Create and Protect Business Wealth
Savings and Pensions
First, pay yourself first. We can all take advantage of government supported savings programs like Registered Retirement Savings Plans, or RRSPs in Canada, and 401Ks in the US. In Canada, RRSPs are protected from business and personal creditors. If you're not maximizing your RRSP savings or other type of company pensions, then you're not optimizing your wealth.
Second, utilize legal structures that allow you to hold assets in one company, such as a holding company that owns the land and buildings necessary for your business. Then, your operating company pays fair market value rent to your holding company. Your holding company can be a long-term revenue stream from rental revenue, even if you sell your operating company or move it to a different location. This also protects the assets in the holding company from actions of unhappy people who deal with the operating company.
Third, develop tax efficiency among the entities in order to maximize your after-tax cash flow and build your wealth. Tax efficiency includes the use of dividends between companies and to shareholders (by class of shares held), income splitting using fair market value salaries, and many other fine points of tax planning and legitimate deductions beyond the scope of this article.
Do not minimize your taxes in your operating company. This is a common and serious mistake that is advised by many short-sighted accountants.
Minimizing taxes hurts your operating company's balance sheet because you don't build up equity in the form of retained earnings. A lack of retained earnings limits how much you can borrow to fund and accelerate growth. That hurts your wealth. I've calculated that paying taxes can, with an inventory turnover of four times and a gross margin of 40%, generate an ROI of over 1,000% to your wealth.
If you're planning on selling your business, you need to have a proper tax structure in place for at least two years, or you could lose out on the capital gains exemption and pay hundreds of thousands of dollars in tax, unnecessarily.
Good Debt and Security
Finally, borrow wisely. When you're a small business (under ten million dollars in annual revenues), the bankers will demand that you sign unlimited personal guarantees as security. That's because often the business lacks the retained earnings and stable cash flows to give high levels of comfort, so the bank improves their security position by taking everything you own as backup collateral. That's normal and often unavoidable when you're a small business.
The goal is to provide only enough security for the borrowing, and no more. Mid-market companies often grow beyond the capacity of a personal guarantee and the company can support the debt. That's a good thing.
Always protect yourself first. That's the only way you will be able to grow and control your future. Otherwise, everyone else will take as much as they can get and you might be left with nothing, despite taking the most risks.
From Phil’s Vault:
The basic structures to build your wealth include:
1. Protected personal savings
2. Legal structures to minimize risk and increase flexibility
3. Tax efficient planning that does not minimize short term taxes, and
4. Smart borrowing where security is balanced to the debt.
Are you using all of these structures to create and protect your business wealth?
If you're a business owner and you'd like to discuss how to optimize your business wealth structures, give me a call. We'll have a half-hour complimentary conversation that is guaranteed to give you some ideas that you can discuss with your professional advisors.
Phil Symchych, The Business Wealth Builder. Printed with permission.
Last Month Phil Symchych outlined his Financial Manifesto, this month he outlines his Manifesto For Business Growth. Copied with Permission with some minor format changes..
Achieving profitable business growth to build your wealth is neither simple nor easy. However, by keeping focused on critical factors that ensure profits and growth, you can be successful in growing your business and building your wealth.
Here is my Growth Manifesto
Part I: Performance and Growth
Part III: Living and Leaving a Legacy
My colleague Phil Symchych in his newsletter #27 "Cash Isn't King, It's the Ace - The Financial Manifesto" writes "after 25 years as a management consultant and CPA advising private companies on growth and building business wealth, I have developed these 12 financial philosophies and strategies that help clients to accelerate profitable growth, maximize the valuation of their companies, and dramatically increase their personal wealth.
Over the years I have assisted over a 100 budding entrepreneurs as they developed their businesses using their home office as their first base. Those were heady and exciting times, both for me as I learned about their businesses and for them as they ventured out into the marketplace with their products and services. We discussed five essentials, among others, as foundational for adjusting to their home office. They were important then and they are just as important now if you are thinking about establishing or have already established a home-based business.
Discipline: I encourage you to review your disciplinary practices. Just as there are distractions at a external office setting – people interrupting you, desktop messes, noise, emails, shifting priorities, you get the picture – there are distractions in the home setting – television programs, social media, friendly telephone calls, poor priority setting, a neighbor dropping by for a coffee, and desktop messes to name a few. I have often said that sometimes it takes more discipline to operate a business from home than from an external office. At home there are no supervisors or minders watching you and urging you on to better perform. At home you are the leader-manager in charge. It is completely up to you. Your performance or lack there of falls completely on your shoulders. And to perform well you need discipline to:
Take Breaks: You can get lost in your work especially if you feel you are on a roll and ideas are flowing and tasks are getting accomplished. However, a huge mistake that home-office practitioners make is not taking nutrition or energy producing breaks. What I mean by ‘energy producing breaks’ are breaks that take you away from what you are doing at the moment and giving your mind some rest time. Energy producing breaks include going for a quick walk, tending to a household chore, taking a five-minute meditation break, or fueling up with an energy bar or a dish of fruit. The point here is the need to break from your office work and focus on something else for short periods of time. This gives your brain rest and up ticks your over all energy. Research suggests that 90 minutes of concentrated effort and then a ten or fifteen break produces more in the long run and contributes to alleviating burnout.
Separate Office: It’s important that you find office space for yourself and your business. This is somewhere in the home or apartment that you can call your office. For some this is initially on the dining table or in a bedroom. The point here is that you need a space to conduct your business, where you can keep all the important stuff related to your business. For some that means a place for your computer, paper, envelopes, books and whatever else is needed; for others who claim they are completely mobile - everything they need is on their mobile device – that means they also need someplace within their home to call their specific office space. To those who fall into the latter category I have yet to find a serious business person who has everything on their mobile. If you cannot find a space within your home, consider the growing number of co-op offices that are popping up where business owners can rent a desk or small office at a reasonable rate.
Network: Working from home can be a lonely and isolating experience. We know that business grow based on relationships. In order to build relationships we need to be in contact with people. Simply stated we do this is by getting out of the house or apartment and meeting customers and colleagues in the field. It is important to expand relationship building reach by joining a professional association, a business network association such as Chamber of Commerce, a women or men’s business network, a service association such as Rotary and Kiwanis International, or becoming active in your faith-based community. Getting involved in outside activity helps you build necessary relationships and provides a social outlet that you would not experience by keeping yourself isolated in your home office.
Administration: One of the things I heard most often from home-based business owners was their push-back on administrative tasks. This is one area where procrastination was the word of the hour. Administration is often seen as an afterthought, but not paying attention to the detail that administration asks of you, may cause serious difficulties in the long run. Take for example not paying attention to outstanding bills, up-dating client information, attending to customer invoicing, or submitting due taxes. In the long run not doing due diligence on these matters costs you money, affects your cash-flow or impacts your customer relations. So before procrastinating on administrative tasks think about the loss of income, customers and cash-flow. Three important ingredients for a successful business.
Thank you for reading
Richard P. Fontanie
Since the advent of on-line shopping I have been interested in its impact on in-store retail outlets. During the past ten years I have noticed two significant shifts: 1) Big Box retail outlets keep closing their doors or reducing the number of stores they operate; and 2) Small Box retail outlets are refining the customer experience.
The "click and buy" internet experience tends to be impersonal and cold, however, it is balanced with convenience and timeliness. We can purchase items, any time of the day or night, pay for them with a click, and receive them at our door step within a day or two. But, the experience lacks the social aspect of the shopping experience. That may not be important for the harried professional and time pressured young family, but it is important for those who want and need attention for a special purchase or the meet-and-greet of neighbors and acquaintances in an ever-disintegrating community fabric.
Big Box Resizing
The "click and buy" internet experience has had a significant impact on the "Big Box" stores. Often sheer size alone makes them less flexible to meet changing demands. In the past five years we have witnessed retail outlets that have either closed their doors or in the process of significantly reducing the number of their outlets throughout North America. Here are just a few “Big Box” stores that had strong brand power in the not too distant past and are now closed or reduced in numbers: Eatons, Sears, Radio Shack, JC Penny, Payless Shoesource, K-Mart, Zellers, Ben Moss, Danier, Guess, Chapters-Indigo, The Gap, Hudson Bay, and Macys. Who would have thought that these household retail names would disappear or find themselves in such economic straits that they need to close hundreds of stores, placing thousands of people out of work? (Read more: "over 5000 stores closed in 2017" ; "Major US Retailers Are Closing More than 6000 Stores" ; Canadian Retail Continues to Polarize as Stores Close
There are several reasons why stores close their doors or downsize besides an inability to keep pace with on-line shopping. These may relate to: an inability to keep up with consumer trends; old management processes, systems and technology; a response to economic downturns within their local marketplace; and the fluctuation of taxes and the Canadian dollar.
Another major factor may relate to the 'big box experience.' The 'big box experience’ is one that often overwhelms customers by the: size of the store, expansiveness of the merchandise, sparsity of customer service personnel, quality of products, pressure to push them through the payment line-up, and intrusiveness of security mechanisms. All of which take away from a ‘positive customer experience’.
We do see, however, "Big Box" stores attempting to keep pace with the changing customer needs. Walmart has realized that their personnel need customer service training and improved wages. They are also gearing up to give Amazon a run at on-line shopping. I have also noticed that many of the "Big Box" stores are re-designing their expansiveness by developing specialty stores within their stores. These includes everything from coffee shops to banking outlets. They are trying to turn themselves into ‘customer convenience stores’, or a concept of a mini-mall within their store. And, most of the "Big Box" stores that have downsized are frantically trying to catch up with the "click and buy" phenomenon. The question is, is it too late for them?
Small Box Refinement.
What the "Big Boxes" and "click and buy" lack, the "Small Boxes" replenish. The owners and service personnel of small boxes were always close to the customer. They knew the regulars by name, their sizes, preferences, and in many instances their family members. They connected both on a social and an emotional level. They couldn't compete with the Big Box stores on price and quantity, but they could outwit them with service and quality.
The "Small Box" stores are finding unique ways to draw new customers. They are combining their customer service strength with new approaches to further advance the customer experience. They are not "pushing the sale," but guiding the customer in making decisions and offering opportunities for them to test products. They are creating convenience, ambiance and activity to attract customers. They encourage, what may be called ‘encounters over the counter’, such as: special tasting times in bake shops and coffee outlets; come and go evenings to try on new clothing coupled with refreshments and meet designers and tailors; or, enjoyable conversation and a free cup of brew while you browse.
Although they don’t have the selection and quantity of merchandise they do have access to the manufacturers and can bring a product in within a few days, or have it delivered to the customer's door - just like their big brother counterparts. Price may be a different matter. Often their limited purchasing power doesn’t allow them to compete on price, so they scale up on product knowledge, quality and service.
Employees find a greater sense of purpose working in the "Small Boxes" because the relationships are more meaningful. They are not hired just to stock shelves. They are there to build relationships and create a "Cheers-like" culture where "Everybody knows your name." Their face-to-face encounter is further enhanced through social media and email follow-up. The result is that the employee retention rate for the "Small Boxes" is much higher and customer loyalty is strengthened when compared to the "Big Boxes". (Want to know more: Money Magazine, Kristen Behler, "The Future of Shopping" December 2017; Carl Sewell and Paul B. Brown, "Customers for Life" How to turn that One-Time Buyer into a Lifetime Customer; Darrell Rigby, Harvard Business Review, article https://hbr.org/2011/12/the-future-of-shopping
Where Do Customers Really Shop?
Although there is an increase in the number of people shopping on-line one recent Global study by GfK (Growth from Knowledge) found that people still want to shop in-store. The research pointed out that yes customer's felt that on-line shopping, saves money, is easier, has better selection and shopping is faster; but, in store shopping allows customers to feel and see the products before they buy, is also easier, and makes it easier to return products. The interesting finding from my perspective was that: getting information about a product or service and better pricing or saving money was about equal between the two choices for shopping.
The implications for retailers are two-fold: a) "it is imperative that retailers (and their manufacturer partners) innovate to create reasons to visit, to increase propensity to buy your store, category or brand…and that retail touch points will become more important than ever." and the "second implication is that, to succeed in the future, retail needs to create synergy between on and offline, not diversity. …In future there will be less debate about on and offline, and renewed focus on the fundamentals of choice, price, convenience and experience, and how to meet and exceed shopper expectations in each and across all."
Here Comes the Future
Retail outlets, from my way of thinking, will always struggle to find the balance among the pressures of quality, quantity and price. "Big Box" stores often sacrifice quality in the interest of quantity and price; and "Small Box" stores sacrifice quantity and price in place of quality. Both are continuing to search for ways to attract and retain customers by providing an improved customer experience and timely service.
However, today's retail businesses are not waiting for the future, for them the future has already dawned. Here are just a few examples:
Drone delivery. Drone Delivery Canada has a developed a drone that can deliver goods, food, medicine, bulk mail, and emergency aid. Amazon is testing merchandise delivery via drones.
Robotic service. The Japanese are experimenting with robotic service within the hotel industry, and China is experimenting with robotics in the restaurant business.
3D printing. Home grown manufacturing with 3D printing is well underway. We can now replace parts, make new objects, tools and even medical devices. Go to Youtube.com and type in 3D printing and you will be able to view several examples of the technology.
Augmented Virtual Reality. With virtual reality we will be able to: try on clothing in the style and color we want without leaving our home, test drive vehicles, and purchase virtually anything we want.
Facial recognition. Many countries and major outlets are now experimenting with facial recognition, not only to control fraudulent behavior but also to track customer data. This is still fraught with privacy issues, but the technology is available and being used today.
Driverless Delivery trucks. Europe, United States and Canada are experimenting with driverless delivery trucks, which may shorten delivery time, reduce traffic accident deaths and put thousands of truck drivers out of business. There is still some time to go for this to happen. Some futurists see the requirement for drivers in the city, while hubs will emerge on the outside of the city where driverless trucks take over. Read more
Omnichannel retailing: The name reflects the fact that retailers will be able to interact with customers through countless channels – websites, physical stores, kiosks, direct mail and catalogs, call centers, social media, mobile devices, gaming consoles, televisions, networked appliances, home services and more. Conventional merchants will need to adopt a new perspective – seamless. Read more omnichannel experience.
Author: Richard P. Fontanie