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Lisbiz strategies: Lessons learned from my focus group

July 31/Aug. 7: Volume 31, Issue 4

By Lisbeth Calandrino

 

Lisbeth CalandrinoWhen it comes to selling flooring we keep hearing the big box is clobbering the independent retailer. I find this hard to believe, so I decided to hold my own mini-focus group to get a clearer understanding of the issues. I recently convened a panel of 21 women—ages 25 to 65—at a small restaurant near my house. I asked the participants to provide thoughts on their shopping experiences relative to home centers vs. independent retailers. I asked a friend of mine to take notes so I could collect my own data.

Following are some takeaways based on the comments of the participants.

Lesson No. 1: With customer service, perception is reality. “Customer service in retail today is worse than ever.” This isn’t the first time I’ve heard this sentiment. If you have a problem with a product or service, according to my focus group, the independent store is the worst place to get satisfaction. This seems to be due to a couple of things. The big boxes have more money, so they are more likely to solve a consumer’s problem quicker. The more a consumer presses them, the faster her problem will get resolved. Furthermore, it’s hard to find anyone in charge in the independent business. The big boxes often have a customer service department to handle problems, while associates in the independent stores have very little power to solve problems.

For many who have closely followed this industry, this flies in the face of conventional wisdom. It is a long-held belief that home centers and big discount merchandisers lack the skilled work force to provide personal, specialized attention—the hallmarks of the independent specialty retailer. Furthermore, there are countless stories of specialty flooring retailers who operate in the shadow of large home centers and still have managed to not only survive but thrive. And now with the big boxes dramatically scaling back the pace of new store openings, there’s an opportunity for specialty retailers to recoup some share.

My advice: Invest in a customer service department with a different phone number and have the calls go directly to the owner.

Lesson No. 2: Installation is critical. My focus group experiment proved consumers are indeed interested in the installation process and believe certified installers are the way to go. (Another plus in the column for specialty retailers.) They all seem to be aware the big boxes sub-contract their installation and feel that is a bad policy. It signifies that the home center has little control over the process and the warranty is confusing. Furthermore, many home centers continue to de-value the importance of professional services by promoting “free” installation, which is often misleading.

Thankfully, specialty retailers understand the importance of installation, as installers often have the last word when it comes to warranties.

My advice: Look for opportunities to get your installers certified. This will bring credibility to your business and instill greater confidence in the consumer.

Lesson No. 3: More consumers are utilizing technology. In working with my focus group, I learned people utilize technology in different ways. When it comes to ordering online, most prefer to use their computers rather than their phones. In addition, many enjoyed using YouTube to get information on how things work.

My advice: Create a YouTube channel to show your customers how to choose flooring and explain the installation process.

 

Lisbeth Calandrino has been promoting retail strategies for the last 20 years. To have her speak at your business or to schedule a consultation, contact her at lcalandrino@nycap.rr.com.

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Lisbiz strategies: Drive more traffic by creating a destination

May 22/29, 2017: Volume 31, Issue 25

By Lisbeth Calandrino

 

Lisbeth CalandrinoRecently, my friend Barb introduced me to her new friend, Alexa. Alexa is the kind of friend we’d all like to have. She knows your favorite music, can tell time and predict the weather, and she can even automatically turn the lights in your house on and off. She’s like Siri, only smarter and comes with better connections.

Once Alexa gets to know your favorite music, she will create a personalized playlist. I was familiar with Siri but Alexa was new to me, so I did some research. Eventually, Alexa will even be able to call 911 for you. There are endless security possibilities.

It’s likely that Alexa will be used to automatically order things. Suppose you asked Alexa to call the drug store for you and order paper towels. All you have to do is ask Alexa to order the same ones you did the previous time and it’s done. The more things you program into Alexa, the less you will have to do.

For retailers or manufacturers, getting programmed into Alexa is the next big thing. Will retailers be vying for “Alexa space” similar to “shelf space” in supermarkets? The more things programmed into Alexa the less there is to think about. It remains to be seen how this will affect retailers, but the implications for manufacturers have already started. Ford Motor Co. recently announced that its Sync 3 infotainment systems will enable in-vehicle applications.

We’ve already seen the effects disruptive trends have had on store closings. Let’s face it, shopping just isn’t the national pastime it used to be. Shopping malls are changing because buyers have changed. Malls are being transformed into destinations for possible buyers.

As the population ages, living closer to conveniences such as grocery stores, the gym and doctors becomes ever more important. In 2014, José de Jesús Legaspi, a Mexican-American commercial developer, bought several defunct malls and turned them into destinations for the Latino community. “I try to create a sense of community, a sense of culture,” Legaspi said. These malls are now thriving.

The malls that are successful are those with mixed occupancy, including health clubs and travel agencies. Why are some malls having such a hard time? A big problem is lack of differentiation. If you’ve been in one Macy’s, you’ve seen everything there is to see and probably know its sales discount cycle. No one wants to pay full price and then find the same items on sale two weeks later.

In today’s marketplace, it’s all about experiences for the customers. What does this mean for your store?

Start thinking about your customers and their lifestyles. Bloomingdales shows yoga movies and invites customers to yoga classes; afterwards shoppers are invited to pick up a pair of leggings. Why not do something similar in your store?

What about this? “Monica Bill Barnes & Co. has reimagined the museum tour, creating a physical way for audiences to relate to the finest art in the world.” Tours are booked through December, with a price tag of $75.

Can you see your store as a destination? Is your parking lot big enough to host a farmer’s market this summer? Can you co-market with a plant nursery? What about having cooking classes, music classes or even a cigar night?

How can you make your store or buying more convenient for the customer? Can customers book appointments with your staff? How about offering design workshops and color classes for your customers?

Remember, it’s all about convenience, entertainment and making your store a destination.

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Lisbiz strategies: Taking shortcuts can hurt your business

May 8/15, 2017: Volume 31, Issue 24

By Lisbeth Calandrino

 

Lisbeth CalandrinoWhen you first opened your business you most likely did everything by the book. You took your time completing tasks to make sure everything ran properly. Fast forward a year or two and the corners of that book were probably cut to save time and money.

Why do we take risky shortcuts in business, and where do these shortcuts usually happen? Do we only “fess up” when we are caught?

Here are five areas where we should stop taking shortcuts:

1. We pretend that social media doesn’t matter. I recently spoke at the Chicago Floorcovering Association’s product show. Most of the attendees were aware of social media and looking to learn new tips that would improve their relationships with their customers. For the “smart” businesses, there is no more pretending that putting up a social media site is all you have to do to have a successful site. You need a social media marketing strategy so you know what you want to achieve.

At the show, the audience shared some great experiences they had with social media and their customers. Social media matters if you are interested in building important connections with your customers.

2. Do you show a customer a cheaper product because you think she can’t afford the one she wants? How many times have we prejudged a customer because she didn’t look like she had enough money? The more experience we have, the more likely we are to prejudge.

Prejudging gives us a shortcut. Sometimes we are right and other times we’re wrong. For example, you are in the supermarket and there are four lines to the cashier. You decide to take the shorter one because you think it’s the quicker line. All of a sudden you notice the customer in front of you has about $500 worth of groceries. In this instance you assumed wrong; you’re now in the longer line.

3. We don’t believe in warranties so we don’t explain them to the customer. I cannot tell you how many times sales people have said, “Warranties don’t really matter, and they’re all lies.” As a certified carpet inspector, when we look at a complaint we look at the manufacturer’s warranty to see if the customer has followed the specified guidelines. If she hasn’t, the claim can be denied.

4. How many things do you put off until tomorrow? This is something we’ve all done. Putting things off only makes them worse, especially if we think it is going to make the other person unhappy or angry. While we’re antagonizing, our blood pressure soars and our stomach rumbles. Over the years, procrastinating only escalates the problem. When we put something unpleasant off we’re saying, “I can’t do it or I don’t want to do it.” This doesn’t raise your self-esteem—it just makes you feel more helpless. How about making a list and tackling those tough problems? In fact, make a list for the year and get at it. If you’re like most people, you probably have a list a mile long with things left over from last year.

5. Do you spend your time preserving the status quo? Nietzsche called this “amour fati”—loving one’s fate. In his final book Nietzche wrote, “One wants nothing to be different, not forward, not backward, not in all eternity.”

Taking shortcuts might seem like a quick fix, but it can ultimately hurt your business. Avoid the pitfalls and prosper.

 

Lisbeth Calandrino has been promoting retail strategies for the last 20 years. To have her speak at your business or to schedule a consultation, contact her at lcalandrino@nycap.rr.com.

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Lisbiz Strategies: Stop breaking promises, disappointing customers

April 24/May 1, 2017: Volume 31, Issue 23

By Lisbeth Calandrino

 

Lisbeth CalandrinoEmployees make promises to customers they can’t keep. When they do this it kills their relationship with the customer.

I recently read a story about a man who refused to break a promise to his wife to buy a bigger house within 10 years. When the time was up, he just didn’t have the money. To avoid disappointing her, he put his business in a precarious position to obtain the needed financing. After all, a promise is a promise.

Life happens, we can’t always do what we intend. We promise our children that when they’re ready to go to college we’ll be there to pay the fare. But sometimes we can’t follow through. Maybe we wouldn’t have made the promise, if we had thought it out.

Sounds a bit like a plot to a crime movie, doesn’t it? (“I just had to steal the money to buy the car I promised.”)

Instead of the promise being just a promise, it often reflects the relationship. You can just hear someone in the background wailing, “But you promised. Why can’t you?”

Do you remember how you felt when you were a child? When I was a kid, my mom promised to take me to New York City to visit my cousins. Unfortunately, the morning we were supposed to leave I woke up covered with the measles rash. I cried and screamed, “You promised we could go.” Mom said it didn’t matter what she promised, the measles was a deal breaker.

No matter what she said, I couldn’t understand why the measles had anything to do with why we weren’t going. I believed a promise is a promise, which meant promises were not to be broken.

In reality, breaking a promise can damage our integrity and ultimately determines whether people will continue to trust us. Customer service is about keeping your word.

Here are five ways to stop breaking promises.

Stop making promises. Simply put, just learn to say no. We often promise because we’re worrying about what others will think of us. It seemed like a good idea when the promise was made, but now we’re over extended and can’t keep all of the promises we’ve made. Sometimes you have to say no; it’s better than promising what you can’t deliver.

Don’t agree to everything. Be very clear to what you’ve agreed to and how the promise will be kept. It’s likely your customer will only hear the part about how you’re going to fix the problem. When it comes to the conditions, it’s doubtful they will listen.

Put it in writing. When dealing with an unhappy customer, are you writing down what you intend to do and ask the customer to sign it?

If things aren’t going to work out, call early. When we have to deliver bad news, we often wait until the last minute. Unfortunately, this is when it’s the most painful for everyone involved. It’s just as hard to deliver bad news as it is to listen to it. Get bad news out of the way.

The best thing to do is turn our promises into goals. Goals are promises with accountability. A promise can make a goal even stronger, but without accountability it’s not likely to happen. If you can’t figure out how to keep your promises you will be in big trouble with yourself and the customer. Turning promises into goals will help you find the way to make them happen. Once you turn your promises into goals, you can define the steps to reach your destination. This will make it clearer for you and the customer.

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Lisbiz strategies: If you have to fall, it’s better to fall forward

March 13/20, 2017: Volume 31, Issue 20

By Lisbeth Calandrino

 

Lisbeth CalandrinoNelson Mandela said, “There’s no passion to be found playing it small—in settling for a life that’s less than you’re capable of living.” Social media gives us an opportunity to play large. We used to talk about “word of mouth” but it’s now “world of mouth.” So how far are you willing to go? Are you afraid to step out of your comfort zone, afraid you will make some terrible mistake? I doubt it.

What happens if you fall? You might as well fall forward. What’s the point of holding on to the past and things that no longer work?

Casey Affleck is someone who is trying to live it large and is willing to fall. I was watching the Oscars recently and was a bit surprised when Casey Affleck won Best Actor for “Manchester by the Sea.” I had seen the movie and found it to be very dark, but I thought Affleck was outstanding. It was as though the part was made just for him.

After researching his background, I really do think it was made for him. His past has been somewhat checkered but he continues to move forward.

But who is Casey Affleck? He is Ben Affleck’s brother. My sister and I both suffered from that designation—the one of having a sister who everyone knew.

According to Casey Affleck, that’s what everyone says. Sometimes it works in his favor and other times it does not. Both brothers are quite different with different skill sets. But how does anyone know who you really are when your brother is larger than life and your biggest fear is you’re not up for it?

Casey Affleck has been in a lot of movies, including the “Ocean’s Eleven” series. It appears he has had several opportunities but just hasn’t had the right part until now. Interestingly, “Manchester by the Sea” almost wasn’t that part for him. John Krasinski was the first choice, but he didn’t have room in his schedule. Second in line was Matt Damon, but he also turned out to be too busy. Affleck was the third string.

Even though he was not the first choice for “Manchester,” he was willing to go for it anyway. Affleck decided if he fell he would still learn something.

Boy, do I get this. There were also two of us in my family—my sister, Sonna, and myself. We both had the same last name, high ambitions and were very different. My sister was larger than life and was even inducted into the WFCA Hall of Fame. Everyone knew Sonna. I was known but not as well, and then my turn came. My sister had a very prominent speaking gig and the last minute fell ill. She asked if I would fill in for her. At first I worried people wouldn’t want me. Not only do they not know me, but I also don’t do what she does. What if I failed?

I decided I wasn’t going to flop and said I would do it. Sonna called and they said they did know me and were happy to have me. As the story goes, my sister became very ill and was unable to speak at future gigs. It was then that I took over. These gigs introduced me to another part of the industry, gave me new connections and helped me grow.

How are you willing to fall? Do you want to continue to play it small or are you willing to play large and fall wherever? It’s up to you.

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Lisbiz Strategies: Learning how to adapt to millennial customers

February 13/20, 2017: Volume 31, Number 18

By Lisbeth Calandrino

 

Lisbeth CalandrinoEveryone wants to know who exactly are the millennials and what type of customers they represent.

Everything I read says they’re a new type of customer. They don’t want to be sold anything and are armed with the Internet and every device possible.

Social media has changed how customers get information and who they listen to. Our new customers have stopped listening to salespeople and are instead consulting online friends. What does that mean to RSAs? It means we belong online. Where do the RSAs fit? Their place is providing great customer service. The new consumers want service and they want it fast. They are willing to do all of the research and want us to help them make the right decision.

Social media is the place to build connections, but many stores use it to only show products. They need to have RSAs interacting with customers online. Facebook and LinkedIn are good places to start.

Millennials are comfortable with the online process and don’t mind doing their own research. When the customer comes into the store, RSAs should talk with her about what products she has found. Then they can help the customer make sure she has the right products. Instead of selling features and benefits, salespeople should be selling solutions, answering questions and demonstrating the value of the products.

I know what you’re thinking, “We already do that.” My experience tells me it isn’t true. RSAs are still spending inordinate amounts of time studying features and benefits of products and then telling the customer what to do. Of course they need to know these things but remember the customer has already searched the Internet for the right products. Features and benefits are worthless unless they provide an explanation to a customer’s concerns. The old adage still matters: They don’t care how much you know until they know how much you care.

Technology allows you to stop selling your customer and focus on the relationship. Does your website have products and ideas about color and design? Do you have a blog that provides useful information for your customer? Your blog can help her determine what to look for in a flooring store as well as how to find the salesperson. Communication used to be one-to-one but now it’s one-to-many. If you don’t have an online presence, you are likely to fade into the background behind your competitors. It’s impossible to talk about your competitors online; offline is the only place where you can show the customer you are better. The key is to get them into your store. Social media allows you to develop networks where you can share common interests with your potential customer. MeetUps are a wonderful way to build new customers and get closer to the ones you know.

Why don’t we understand customers come from building positive connections to other people? We can’t tell who is ready to buy, but we can get to know them before they buy and build communications. An online friendship is a great way to build trust, which is an essential factor in the buying process.

This new customer doesn’t need any selling; she needs experts who will help her make the right decisions. Customer service is more important today than ever.

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Lisbiz Strategies: Young business owners share ideas at Surfaces

January 30/February 6, 2017: Volume 31, Number 17

By Lisbeth Calandrino

Lisbeth CalandrinoWhen I agreed to moderate a retailer forum, ‘Work, Life Balance,’ my thought was the attendees would be older business owners asking lots of questions. Much to my surprise, the audience of about 50, mostly men, was filled with a majority of owners ages 30-45. It was a lively group that was ready to chat at 8 a.m. Not only were they participating but at least 10 stayed after and wanted to talk with the panel.

My panel consisted of three principals: Fred Scharm, Scharm Floor Covering; Barbara Clements, Al’s Carpet Floor Covering and Design Services; and Catherine Buchanan, Independent Carpet One Floor and Home. All have served on various advisory boards within the industry and are noted for their forward-thinking management styles. We covered several topics: hiring, the installation crisis, millennials and social media. The topic that had the most conversation was by far social media and how to use it to grow your business. Most of the questions came from the millennials; it is obvious they are knowledgeable and very engaged in the topic.

Buchanan asked several questions of the audience. She does a great job with her social media and polled the audience numerous times. Again, the younger owners took the lead talking about more than just Facebook. We’ve all read that Facebook is for old people; this group is using new tools such as Instagram and Snapseed to convert consumers into customers. Like the audience, I took plenty of notes. One of the tools was called Buffer, a social media scheduling tool.

“I left with quite a bit of information for my store,” Buchanan said. “The audience and the other speakers were filled with information. I have so many things to implement.”

Clements was amazed at how well educated the younger business owners were. “Their ideas are quite forward thinking,” she said. “One of the young owners focused on a minimalist design for his brick and mortar store. It really is a departure from what most of our stores look like. It not only focuses on the clean lines and unusual sample racks but on functionality and the user experience. Things are changing in retail.”

Before the seminar, I spoke with Scharm about his experience with millennials. He said he had done research about the group when he started hiring. “I am amazed at how talented my new employee is in a different way. He’s quick and gets things done. This group of young business owners has given me some fresh ideas. I’m happy to be able to share my experiences with them.”

Much of the audience’s conversation was dominated by the millennials. They shared information about their experiences working in the industry; what works vs. what doesn’t work so well.

What I was most impressed with was the group’s willingness to share ideas and express their concerns.

Ginger Belilove from Creative Edge Master Shop was one of the participants. “It was great listening to new ideas that can be used in any business, not just retail,” she said.

These conversations are important and I think Buchanan summed it up the best when she said, “We need forums like this for networking and feedback. As retailers, we learn from each other and knowing we are all experiencing similar situations with media, marketing, selling and hiring helps us share and learn from each other.”

Thank you to my great panel for their commitment to share their ideas.

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Lisbiz Strategies: Does your commission system inspire losers?

January 16/23, 2017: Volume 31, Number 16
By Lisbeth Calandrino

Lisbeth CalandrinoLet’s face it; salespeople lose more customers than they sell. Let’s not pretend they don’t. Businesses keep mediocre salespeople and expect them to motivate themselves to get better. Finding salespeople isn’t hard but finding the right ones and inspiring them to become the best is a different story. Businesses are always trying to figure out how to build exceptional salespeople without breaking the bank. Here are some thoughts to consider.

First of all, everyone is different. What motivates you probably doesn’t motivate me. When it comes to motivation, there isn’t a one-size-fits-all solution. Think about how your parents used to motivate you to take on challenges. Did you have a choice or were you told, “This is what you need to do.” It’s likely you do it the same way. Inspiring people is different than telling them what to do.

Do you set quotas for your salespeople and get the same outcome all the time? The good salespeople win and the bad ones lose. What do you do with the losers? Are they worth inspiring or should you fire them?

Do you use the same commission system for everyone? I get lots of calls asking about the best types of commission systems. The truth is there isn’t a commission system in the world that will work for everyone on your sales team. The real question should be, “How do I motivate each of my staff to sell higher?”

Does your commission system encourage losers? Here’s how this works: You set a quota for the top producers. You’re only willing to pay out so much commission so the top producers stop producing. The low producers don’t work very hard because they know they can’t outsell the top ones. It’s called a “lose-lose” system.

Instead of setting goals for everyone, ask your salespeople about their goals and what you can do to help them reach them. Ask them, “What works for you?” Usually only the peak performers meet and exceed their quotas.

Change the end goal; make it possible for everyone to win something. Ask your salespeople what they are reaching for; what makes them want to compete? Do they want a fishing trip or an extra day off? What quotas can they set for themselves? Would they like to go to a special workshop? Are they saving money to help their kids get to college or do they want to take some classes?

Let salespeople compete against themselves. You know they can’t beat the top guy, but what can they do to reach their own goals and move closer to your goals? Let’s say you want them to sell $1 million and they’re selling $600,000. Determine what it would take for them to sell $650,000 and and reward them for reaching that goal. Once they reach that goal you can up the numbers.

What skills do your salespeople need? When I get calls about training, it usually includes what the owner wants. However, it is better to ask the salespeople what skills they think they are lacking to close more sales. Once you know what those skills are, you can devise a training program that provides each person with the right coaching. Let’s not bore the peak performers or overburden the under performers. It’s up to you and your managers to design an appropriate training program.

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Lisbiz Strategies: It’s time to develop your 2017 email campaign

January 2/9, 2017: Volume 31, Number 15

By Lisbeth Calandrino

Screen Shot 2016-08-29 at 3.56.12 PMWith the new year in full swing, it’s time to develop your 2017 marketing plan. For savvy business people this should include carefully timed email messaging. Even if you don’t plan anything else, plan your email marketing campaign now.

Here are important tips for maximizing your email campaigns:

Write it down. Develop a strategy and review it weekly. Take some time and discuss the plan with your employees, ask for their input on past efforts. What did they find successful? What didn’t seem to work?

One size doesn’t fit all; make sure you segment your emails. According to a MarketingSherpa report, 32% of marketing professionals plan to segment their database this year. Not segmenting your database is tantamount to assuming everyone likes sushi, and if they don’t they should. Don’t try to convert your buyers. Pay attention to their needs.

Take note of and utilize special occasions. Are there events you want to highlight? Holidays that are meaningful to you, your customers and your business? Get on top of it so you don’t miss out. February is just around the corner and it’s filled with great possibilities and tie-in opportunities.

Commit to reading (and re-reading) your emails before they’re sent to your customers. How many of you give just a casual look over your emails? This year decide to take a good look at what you’re writing. Does it make sense? Would you want to read it? Does it include a call to action? If it’s boring to you, just imagine what the customer thinks.

Don’t make it difficult. Review each month separately. You can even use a paper wall calendar to plot out your plan.

Review your stats from 2016. What emails got the most responses from your customers? Can you determine why these worked? Can they be repurposed? What are your competitors doing? Is there anything you can replicate?

Incorporate significant projects. Is there a project you’ve been meaning to share? If you’re in the home improvement industry, have you wanted to write about how to choose the right flooring store, or the importance of good warrantees?

Clean up your email list. You’ve probably been meaning to do this but never seem to get around to it. How many of your customers are getting numerous emails? How many have told you to eliminate one of their addresses? Is the end effect really affecting the way your message is received? It could be.

Improve your skills. Is there an email webinar you’ve been meaning to attend? It’s time. Make sure you sign up.

Pay attention to your customers. Do you really know who your customers are? What are their shopping habits? Are you doing surveys to ask about their social media habits? Do you know where they hang out? Is your email marketing connecting with your social media hangouts? It’s time to connect the dots.

And finally, do one thing different with your emails this year. What have you seen that you would like to try? Did you send out a newsletter last year? Are you attending an industry conference you always forget to write about?

Email marketing is cost efficient, but even small improvements can make a huge difference in your customer response. Why not invest in a business tool that will definitely improve your customer acquisition and retention. Email marketing is something you can control.

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Lisbiz Strategies: Use behavioral economics to your advantage

December 19/26, 2016: Volume 31, Issue 14

By Lisbeth Calandrino

Screen Shot 2016-08-29 at 3.56.12 PMSimply put, behavioral economics provides a framework to understand the real-world, decision-making process. We’d like to believe we are all rational human beings and, therefore, make logical decisions. In reality, nothing could be farther from the truth.

So how can behavioral economics help you improve your profit margin? A better understanding of how and why consumers spend their money can help you persuade them to spend it on your products or service.

Everyone loves the word “free” (even though everyone knows nothing is really free). Have you noticed how consumers react to the prospect of “free carpet installation” or how quickly they walk out the door when they learn it’s not offered? It’s a fact that dopamine levels in our brain are actually measurably enhanced by the word free. When dopamine levels are raised, we feel good and tend to act irrationally. This could be why consumers flock to take advantage of free items no matter how ridiculous the actual purchase terms seem to be.

For many people, instant gratification is more important than their own future. Feeling good now is more important than paying attention to their budget or actual cost vs. value. People overspend when they are feeling depressed, i.e., “This will make me feel better.”

Following are some key points about behavioral economics to remember:

  1. Not all money is equal. This explains why 70% of lottery winners go broke in seven years. Since they didn’t work to earn the money and never actually felt the money in their hands, they are willing to spend frivolously. This may also explain why people are apt to spend their income tax rebate checks on unneeded items. It’s not really “free” money; it’s actually their own hard-earned dollars.
  2. Financing takes the sting out of the price. In fact, consumers are willing to pay more money for items when they can delay the pain. Financing may actually increase costs in the long run, but consumers tend to not worry about the future when they can have the pleasure of using the merchandise now.
  3. We gain more pleasure from a loss than a gain. Consumers give more weight to a cell phone carrier’s plan that states “unused minutes will be lost” vs. a plan with “unlimited minutes” available.
  4. Each of us has a price we will pay. Why did JC Penney lose market share when it changed to whole dollar pricing? The brain encodes numbers so quickly it rarely includes the second number. The number 2.99 is actually registered as “2” and 3.00 is encoded as 3. While it is true the actual difference is only one cent, the brain translates it as a difference of one dollar.
  5. Higher prices usually signify higher quality. If you are selling better merchandise, show the products first and then the price. Tiffany’s displays items with large photos and uses very small fonts for pricing.
  6. Remove the comma and the price becomes less expensive. Phonetic length of your price actually affects buyer perception of cost. For example, $1,499: one-thousand four hundred and ninety-nine (10 syllables) vs. 1499: fourteen ninety-nine (5 syllables).
  7. We prefer bundling to individual pricing even if it costs more. Car dealers offer packages to new car buyers. Adding $300 for leather seats is considered frivolous when compared to dealer packages—even when those packages include less-desirable options.