In our dealings with retailers on a daily basis we are confronted with the conundrum: “I don’t want to run a sale, but I don’t want to lose a potential sale. Can you help us accomplish this?”
If we wanted to land every piece of business (temporarily) our answer would be “Yes, we most certainly can!” However, we would be misleading the notion that is an impossible outcome. So, our answer is, “Yes, we can, but you cannot afford to spend enough to out shine the noise of ‘sale, sale, sale’ that dominates the retail landscape”.
How do we know this? It is a simple formula.
First, we have to identify the concept of value as it relates to the consumer. Once a customer determines to make a purchase Valuable in their mind will only be established if the Personal Experience (PE) is greater than the Price (P) of the product or if Price (P) is less than Personal Experience (PE).
PE>P=V or P<PE=V
Whether you spend $1,000 p/month or if you spend $1,000,000 p/month on advertising this formula is universal upon the decision of a customer. The hardest part of this formula is not executing on it (although some retailers do struggle with it). The hardest part is figuring out a way to market it to help increase sales.
Second, we have to identify the variables directly related to advertising that separates the mighty from the many.
MPo = Market Potential
SoV = Share of Voice
IQ = Impact Quotient
PE = Personal Experience
MPo Factor: How big is your universe? Any trading area has limited potential.
SoV Factor: What can you economically spend to advertise your store that allows you to remain profitable? 5-7% of top line sales are acceptable and proven.
IQ Factor: What and how are you
willing to say about your store? Is it authentic? Is it real? Does the consumer get it without thinking about it or researching it?
What are you willing to say affects the volume of sales you want to get.
PE Factor: How do you take care of the consumer? MPo, SoV, IQ can all be great but if you don’t take care of the consumer then it all goes for not.
MPo x SoV x IQ x PE = Sales Volume
If you take these considerations to be true, which in two plus decades in advertising we have found to be true in retail advertising, then retailers today are faced with the fact that very few (large retailers) are dictating how value is equated.
Look around at every major retailer and there is a sale everyday. As a result, the concept of price has been substituted for discount and offer. Also, big retailers have the ability to spend and spend big which expands their universe. As big retailers expand their spending it causes true, differentiated messages to be lost in the shuffle.
Even with offering the right PE the MPo and SoV is too much to overcome for smaller retailers in today’s marketing mix.
How to survive then? Three simple concepts with committed execution:
- You will not outspend the big boys. And, as long as they are willing to play the game, you need to play the game with them. Evaluate how you can stock items, buy as competitively as you can and give the consumer an offer, which drives them into the store.
- Maintain the same personal experience that you currently have now. Add in the offer but deliver the value that today’s consumer is not used to consuming. Once that happens, encourage your buyers to write positive comments about you on Facebook, Yelp, Google Places, Twitter and anywhere else you can have the consumer learn about you.
- Sell your product online. All retail is local—even online. The search engine’s job is to satisfy their consumer which is the person conducting a search. As a result, if a search is queried relating to your vertical then a search engine is going to give you an opportunity to come up. Once a consumer lands on your site then you have the opportunity to sell to them, which can bring you incremental sales.
Our goal is only one thing—grow sales and keep retailers in business. Let’s not try and reinvent the wheel of advertising that is out there right now. Rather let’s refine our place in the wheel to get us success and differentiate us from the norm.