Long View Retail Consulting

Providing Tools That Make You Money

What is your #1 Obligation to Your Customer?

By: Howard J. Anderson 

Published in Floorcare Professional Magazine and SQE Professional Magazine 

Long View Retail Consulting 

What is your #1 Obligation to your customer? When I ask that question to retailers they generally say, “To provide the best service to our customer,” or “To help the customer get what they want.” or even “To provide an extraordinary experience so they come back.”. While these things are all good and important, I think that there is something even more important.  

Sew and Vac retailers have a tremendous opportunity compared to other retail businesses. Most retailers have one or two revenue streams. We have at least four! Machine sales, service, parts and classes. Depending on what you sell, you may also have two to six subcategories under each of these main categories. Analyzing them individually will enable you to maximize the profits that you are getting from each of them. Saying “I do service to get machine sales.” or “I do warrantee work just to get them in the door.” could be limiting your ability to make better profits in all departments of your business. 

How long have you been in business? Sixteen out of seventeen new business last less than eight years. If you are a new business or established, you need to be innovative and always be looking for ways to make your business more profitable. Notice I didn’t say increase your sales. I said more profitable. There is no reason to grow your business by 20% if your bottom line profit stays the same or goes down. Network with other retailers to see what they are doing. If it works for them it will work for you. Your customer is no different than their’s. Hire a consultant to assist you. If you are doing business the same way that you were five or ten years ago, you need help! 

The natural tendencies are to make the deal no matter what the price. If you don’t sell something you make nothing! It is a great argument but the numbers make it hard to justify. If you are running at 50% gross margins and you deduct $100 of the price of a product, you have to sell an additional $200 in product to make up for that discount.  

Price is always a consideration. However, it is not the #1 reason to buy for most people. Make sure you don’t let the “Price Buyer” set your pricing policies. A price buyer will complain all the time, return every little thing, try not to pay you, tell all your good customers how little they paid and annoy everyone! Every time you have a price buyer in front of you, this is what they are really saying: “You’re not going to make any money on me today or ever.” Instead of being afraid that your price is to high, you should be terrified that your price is too low!

Most Sew & Vac stores that go out of business aren’t maintaining  margins that allow them to operate a thriving and sellable business. You might say “I don’t want to sell my business.” The scary thing is that if you can’t sell your business today, you probably should be working for someone else. The only reason you won’t be able to sell your business at some point is that you are not making enough profit to attract buyers. We all want to retire sometime, don’t we?  

We all sell Premium products and offer premium services. We must sell at Premium prices. You can’t be a discounter and offer premium services. Mercedes does not offer a $19.99 oil change. It costs $100! Why do we pay $1.49 for a 20 oz. Mountain Dew at 7-Eleven when we can buy a 2 liter at the grocery store for 79¢? It is because of a perceived quality or convenience that a customer has for that product or service they are buying. By striving to raise the quality of service and products you will raise the amount of money that customers will be willing to pay for your products and services. However, you need to ask before they will pay you.   

If you lower your prices, or worse yet, don’t raise your prices when you can, you can only blame yourself. Not your perceived competition or customers. If the guy down the street is lower than dirt and can’t fix anything right, why do you feel that you have to lower your prices to that standard. You are a little bit better, aren’t you? If that is true, you deserve to charge more for your products and service, period! 

Back to our opening question. What is your #1 obligation to your customer? I say it is making a strong bottom line profit. If you go out of business, you are not there the next time providing them extraordinary customer service! 

For retail consulting or coaching, go to www.longviewretail.com or contact Howard Anderson at 609-466-0660


Want to Bullet Proof your Business in a “Dying” industry?

By: Howard J. Anderson

Published in Floorcare Professional Magazine and SQE Professional Magazine 

Long View Retail Consulting 

Dying may be a little exaggerated but I have been talking to manufacturers and they are all very concerned with  the shrinking number of vac and sew businesses out there. If they don’t have enough points of purchase to sell their products, you and I are not going to have quality products to sell ourselves. Shop owners are retiring and closing their businesses. I want them to be able to sell them. Others haven’t changed the way they have done business in thirty years and are dying a slow and painful death!  But there are also lots of businesses that are growing and thriving. What do they do that you don’t? or the better question is what do they do that you won’t?

So, I ask the question, Do you want to bullet proof your business? Most of you are saying, “What are you stupid! Of course I want to!” But how do you do that? After 21 years in the business I have concluded that you personally have to become a student of your unique business. There is no advertising agency, manufacturer’s rep or business adviser that is outside our industry that can give you the insite that you have about your business and your customers. 

The number one thing you have to do is what I said in the last article I wrote for VDTA. “You need to make a strong bottom line profit. If you go out of business, you are not there the next time providing them extraordinary customer service!” Your gross sales don’t mean anything without profit to pay your bills. 

Start by finding out where your can raise you prices and do it. Don’t whine, “My customers won’t pay that” until you have tried it! Lets say you sell 10 products for $10.00 and make $5 in profit each , you just grossed $50. You then increase the price by $2.00 or 20%. If everyone buys now you make $70 or a 40% increase in your gross profit. If a customer comes in the door and says “That’s outrageous! I can buy that down the street for $10”. What do you do? You wait until you have tried to sell it at least 10 times. If only 7 out of 10 customers buy at $12, you still made $50 but  statistics I have prove that almost all of them will buy at the higher price.  Forget about the 3 that didn’t buy, try to sell more to the 7 that did. Years ago you could double your cost on products and be OK. Today with the cost of rents, taxes, attracting qualified people, shipping, renovations etc, a 50% margin just isn’t enough to pay the bills. 

Next, you have to advertise where and when it works for you. This is probably one of the hardest things to do. The newspaper or yellow page rep comes in and you’re busy so you run the same ad you ran last time. Again, become a student of your business. The questions you need to ask yourself are: How did it work last year? What type of business did it bring you? Were these customers worth having? What was my Return on Investment? If I spent that money keeping in touch with my existing customers, what type of return would I get?  

Then, you should spend one full day on a regular basis just thinking about your business. Ask: “How can I make my business more efficient.” “What are my goals?” “Who do I need help from to reach my goals?” “What other products or services can I offer my current customers?” Once they have had a good experience with you, they will buy from you again! “Where are my customers coming from?” “Have my customers changed? Have they moved away from me?” “How can I get them back into my store?” 

This is just a beginning. Most of us will need help in bullet proofing our business. Have you ever wished there was somewhere that you could go where people talked your language. Finally help is on the way at the Long View Boot Camp! Most other industries have one; now you will too. This is not a 2 day vacation. It’s not for everyone. This is a hands on event. It is only for business owners and store managers in the Sewing and/or Vacuum business who are concerned with the shrinking of the independent Sew & Vac industry and want to look optimistically into the future and grow their bottom line by at least 20% in 2 years. 

Some of the topics that will be discussed in detail will be: 5 Proven ways to making more money with less effort. Secrets of how, where and when to advertise that the media doesn’t want you to know. How to uncover the gold in your business by understanding what banks and buyers want to see. How words can impact your presentation and make you more money. Easy steps to hire and retain top employees. Get the answers to your biggest challenges. The dates, speakers and the hotel haven’t been finalized yet but it will be in the spring of 2008 at one of the hotels at the Baltimore Airport. Don’t waste your time and money if you are not ready to embrace change. You will go home with a plan and tools to greatly impact your business’s profitability. If you are interested, go to www.longviewretail.com and register to receive more information as it becomes available.  

What will the Vac & Sew industry look like in five to ten years? We have control over that. As an industry, the Independent Vacuum and Sewing Dealers have to become stronger and more profitable to attract more new people into the industry. Are you one of the ones who is going to thrive over the next 5 years or just hang in there? You have a choice. Stop wasting time and make the changes that you know are proven to work. 


 

Would They Vote For You?

 By: Howard J. Anderson

Published in Floorcare Professional Magazine and SQE Professional Magazine 

Long View Retail Consulting

We just had an election in 2006 where many new politicians were voted in because people wanted a change. There wasn’t a real clear reason or picture of what the change was going to be, people just wanted change. In your world, or store, do you want change? Are you looking for reasons and ways to change? Do the reasons and the total plan have to be thought out before you start change? Or … do you keep things running the same because that is the way you always did it, hoping that tomorrow will be better.

Twenty years ago when I first entered the Vacuum Retail Business, I was told by a vacuum store owner that opening a vacuum store was easy. “All you have to do is rent a small store, throw up some vacuum bags on peg board, and you would be in business.”  By the way, he is out of business. Did you ever think that a hardware store, Home Depot or Lowes, would be selling a $500 vacuum? Everyone understands that retail has changed and will continue to change. But as an industry, have we really changed all that much?

I try to visit stores when I am out of town and sometimes I quite frankly am stunned by the condition of some stores and embarrassed to be in the same business. I know that is not your store! I want to say that I have plenty of room for improvement. My stores are far from where I want them to be. When people ask what you do for a living do you proudly say “I own a vacuum store!” Or do you hedge a little and say “ I’m in retail.” Can I dream a little? Could owning a Sew and Vac ever be viewed by the public the same as owning a Hallmark Store or a nice Italian Restaurant if we all just changed a little? It could be like turning a your favorite Pizza Shop into an fine Italian restaurant. The veal parmesan is the same but the service and the ambiance make the customers willing to pay more.

Our customers are people who want better quality products, at a fair price and want to be treated special. Are we positioned to be there for them or do they want to get out as soon as they walk in the door? We need to change our look from a dirty repair shop to a clean, bright, warm Vacuum and/or Sewing Boutique. We need to change our attitude from “I’ll be right with you as soon as I can.” to “Hello! So nice of you to stop in today. Looks like your vacuum needs my help. Let me take a look at it for you”. We need to change from filling their needs on our schedule to making their visit to our store a learning experience in cleaning or sewing that they will tell their friends.

So, how do we change? First, we have to become students of retail. We need to study other retailers in other industries to see what they are doing. Our customers are going there. We need to fit in with other high end retailers so our customers feel good. Second, We need to invest in our business. New floor surfaces, new paint and well dressed and groomed associates. Third, we need to be Demo Ready. Our sales floor should be like a Broadway Stage. Everything in the proper place, current floor models in new condition, demo props ready and add-on sales items close by.  And finally we need to Always Be Selling. We need to invest time and money so our employees make our customers want to come back time after time to spend more money with us. If we do not become more profitable, i.e. more sales, we won’t be able to attract good people to help us grow.

Does anyone want to change? Of course not. Is it easy? Heck no! If we start the process, it becomes easier every day. But you may ask “Is the vacuum and sewing business worth it?” Sure it is! Most retail has one revenue stream, we have at least four! Machine sales, service, parts and classes. Each one of them could and should stand on their own if we tracked them on their own.

Imagine if all the TV stations and newspapers in the country started doing stories about vacuum stores. Just like the politicians, all the stories would be “Negative” on how Vacuum stores operated. People would start looking at us as worse than used car salesmen! At the same time they praise the Big Boxes. They ignore the fact that the Big Box sales staff, if you can find someone, don’t know much and can’t fix anything, Their stories say “They are OPEN!”. This could happen if we don’t change because people are writing the stories themselves. Is your story positive or negative? We need to all help each other to change before the electorate (Our Customers) say “Vote the bums out!” to us, an industry that is killing itself slowly by resisting change. 

For retail consulting or coaching, go to www.longviewretail.com or contact Howard Anderson at 609-466-0660

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