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Do You Hear What I Hear? [Part 2]

During this cycle of posts I’ve been writing about the need to stay competitive to survive in the retail world.  In the last post I started on the need to listen to a specific group of constituents  – customers, employees, and competitors – to determine what you need to do to stay competitive.  We’ve started on listening to customers and I’ve posited that there are two ways to do this.  The first was asking them what they want and listening to the answer.

The second method to determine what your customer wants is to listen to what they are actually buying.  Surprisingly, customers don’t always buy what they say they are going into the store to buy.  There are a couple of reasons for this.  The first is that customers will tell you what they think that you want to hear.  That, obviously, doesn’t do us any good in trying to meet their needs.  We need to know what they really want.  The second reason is that buying decisions are heavily influence at the moment of selection by various factors – promotions, color, flavor offering, and other impulse reactions.  Therefore, the bag of things that the customer leaves the store with is very different from the mental shopping list that they went into the store with (as a side note – people are much more likely to buy what they thought they were going to buy when working from a printed shopping list rather than a mental one.  You may want to keep this in mind the next time you go to the grocery store and find yourself impulsively staring at the ice cream freezer door.).

The best observation tool is to see what the customer actually bought.  You can do this through customer intercepts after the purchase or by reviewing sales transaction information if you scan sales at the register.  By looking at the actual purchase you can see what items the customers want and what they combine the purchases with.  For example, a purchase of milk and chocolate sauce might present an opportunity for chocolate milk.  Purchases of fruit or vegetables could lead to a wider selection of those types of products.  Selling high-end craft beers? Maybe you should look at putting in a growler station (draft beer).

The purchase basket can give you an insight into demographics such as economics, ethnic, and cultural trends.  However, the key is that you act upon the information that you glean.  Once you have found some opportunities you need to come up with a trial promotion.  Source the product you need, get the best value product that you can, and put it into an introductory promotion.

And just putting the product on the shelf is not enough.  You need to publicize it with signage.  Plus sell it at the register.  Offer coupons.  You can even try a sampling program to introduce it to your customers.  After all, who can resist a free sample?

Finally, you need to track the sales information to see if there is truly an opportunity.  Did the product sell?  Does it look like it cannibalized the sale of another product in the category?  Did it add enough new sales dollars to make it a permanent part of your offer?  If it did – great! Add it in.  If it didn’t – no worries.  See if you can figure out why it wasn’t successful and what changes you would need to tweak to make it successful.

In either case, start the experiment over so that you are constantly looking for the next thing.