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SELLING AND SERVICE

4

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Objectives

The objectives in this unit are based on the skills standards for the National Retail Federation Advanced Customer Service and Sales Certification.

Students will be prepared to:

4.1 Prepare for Selling by:

l Identifying the needs and characteristics of customers within the target market and customizing a sales approach accordingly.

l Serving as an expert regarding relevant company and industry pricing strategies, company policy, regulatory compliance, product knowledge and company services.

l Supporting the development and execution of strategies for selling products and/or services.

l Remaining knowledgeable of sales goals, their implications and how they are based on current and past performance.

4.2 Gain Customer Commitment and Close the Sale by:

l Listening and/or observing customers for verbal or nonverbal cues indicating purchase intent.

l Identifying and suggesting additional products and services to the customer that complement the sale.

l Discussing the specifics of the sale (e.g., delivery and/or installation date, financing, warranties and product protection plan).

l Confirming sale information with the customer.

l Completing sales transaction with the customer.

4.3 Develop and Implement a Sales Follow-Up Plan by:

l Following up with customers regarding suggestions for future purchases.

l Suggesting alternative products/services in lieu of return.

l Evaluating the effectiveness of sales and marketing strategies and taking appropriate action.

l Evaluating the effectiveness of merchandising plans and taking appropriate action.

Chapter 4 Answer Key

Answer Keys for Exercises in Chapter 4 can be found on pages 296-307

NOTE: Calculators will be used during this chapter.

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OBJECTIVES

4.1 Prepare For Selling

l Identify the needs and characteristics of customers within the target market and customize sales approach accordingly.

l Serve as an expert regarding relevant company and industry pricing strategies, company policy, regulatory compliance, product knowledge and company services.

l Support the development and execution of strategies for selling products and/or services.

l Remain knowledgeable of sales goals, their implications and how they are based on current and past performance.

Many people believe that the ability to sell is a personality trait - you either have it or you don’t. In reality, selling begins with offering quality customer service, a skill that can easily be learned. You don’t have to be a fast talker or push people into a sale. What is important, however, is that you listen to your customers’ needs to ensure you’ve matched them with the right products and services. Products are meant to enhance a customer’s lifestyle, so a sharp sales associate uses this idea to find personalized ways to offer superior customer service.

Important Note: Sales roles vary greatly based on the organization. A sales associate at a small specialty store might play a big role in developing sales goals, strategies and promotions, while an associate at a major department store might not be personally responsible for any of those tasks. Since not all retail employees work in large, corporate stores, it is important to discuss all aspects of the business.

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Most retailers realize that their customers differ in terms of their profitability. In particular, they know that a relatively small number of customers account for the majority of their profits. This is called the 80-20 Rule: 80% of the sales or profits come from 20% of the customers. These customers can be divided

into four segments. Retailers develop appropriate strategies for each segment.

Platinum Segment

This segment is composed of the retailer’s most loyal customers. They typically place more value on customer service than low price.

Gold Segment

The next 20% of customers make up the gold segment. These customers have a lower lifetime value than platinum customers because they are more price-sensitive. Even though they buy a significant amount of merchandise from the retailer, they are not as loyal as platinum customers and probably patronize some of the retailer’s competitors.

Iron Segment

Customers in this third tier are extremely price conscious and therefore not as loyal to a particular store or brand.

Lead Segment

Customers in the lowest segment can actually cost the company money. They often demand a lot of attention but do not buy much from the retailer. For example, real estate agents often encounter this with people who want to spend their weekends looking at houses but are not really interested in buying one

Customer Records

Few salespeople can instantly recall everything they need to know about a customer when he walks back into a store—even if he’s a frequent shopper. If you want to succeed in offering great personal service to customers, you will rely on maintaining a record of needs, preferences and other information that customers willingly share with you.

Let’s say you have a customer who buys large quantities of a high-priced brand of neckties twice a year. You will become his favorite sales associate and someone he depends upon when you call, send a postcard or email him to let him know when there’s a sale on that brand.

Your client record system is probably digital, but if you work for a smaller store or in independent sales, your record system could be as simple as a notepad or a three-ring binder. Use the system that your store recommends or that works best for your needs. Most large retailers now have sophisticated electronic customer relationship management programs to track their customers. The important thing is to collect information and keep it up to date. The record system will contain basic information that helps you deliver personalized assistance, such as notifying your customer when the store receives a new item that might be of interest to him or her.

Identifying And Prioritizing Potential Customers

PLATINUM

GOLD

IRON

LEAD

CUSTOMER PROFITABILITY

CUSTOMER PYRAMID

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Basic Ingredients of a Customer Record

You can begin by recording information about potential customers, such as friends and family or even people who come into your store but don’t buy anything. If they are looking for a specific item but don’t find it, make a note about their request in case you can help them later. Record any purchases your customers make so you can begin to understand their shopping habits. In addition, use this record to keep track of your follow-up activities. Include notes about any sale notices, coupons, thank-you cards, promotional announcements, invitations to demonstrations or workshops, etc., that you’ve sent to each customer. If you know certain customers have responded to your special notices, make a note of that as well so you can include them in future special activities. Some professional sales associates try to recognize special dates in the lives of their customers, such as birthdays and anniversaries, with a card or special offer. Your client records should contain the following basic information for each customer:

l Name.

l Email Address.

l Address.

l Telephone Number(s).

l Occupation (or hobbies, collections, activities, projects or other interests that influence buying preferences).

Next, add information that will help you maintain a current profile of the customer’s personal preferences and needs.

l Date and type of first purchase or contact: What was the customer shopping for? What, if anything, did he or she purchase?

l Preferences or specifications: Do the customer’s size selections vary by brand name or type of item? Does she have color or style preferences? Label or brand-name preferences?

l Special considerations: Is your customer allergic to certain fibers? Does she travel a lot? Does he work the night shift?

l Other considerations: Does your customer prefer to have products delivered? Assembled? Regularly serviced?

Manage Your Customer Data

Your collection of customer information is a “living” record. A customer’s preference, needs, sizes, etc., might change considerably over time. Just as you keep up with friends and family, it will be vital for you to keep up with your loyal customers. Record every new bit of information you receive—whether it’s that Allison has moved from the city to the suburbs, Robin is now self-employed, or Angela is into yoga.

You will want to review the information in your client records regularly. New opportunities might suddenly arise. For instance, your notes say that Rhoda Nelson has been looking for a leather office chair that won’t take up a lot of space in her living room. One has just arrived in your department. This is your opportunity to shine as the most thoughtful salesperson she’s encountered. You might also have new ideas to help improve the efficiency of the home office she is setting up—a new shelving system, a more powerful surge protector, a new all-in-one printer, etc.

Privacy is important to everyone. As a sales associate, you might learn some very personal information about your customers. Be careful about what you say to others. Even such information as dress size or birthdate is very personal. Never leave your client records where others might see them. Check with your manager to learn what the store policy is about storing this information, whether the records are on paper or stored electronically.

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Loyalty Programs

Many retailers and service providers, such as hotels and airlines, offer loyalty programs for their best customers. Customers receive special offers or rewards by shopping at their store, staying at their hotels or fl ying their airlines.

Loyalty programs utilize customer data gleaned from their past purchases as well as any information you input regarding their preferences. These programs have become popular across the retail industry, from pizza shops to department stores and electronics retailers to fl orists. Retailers use the customer data to tailor their product offerings and promotions to better meet the needs of their loyal customers.

When customers enroll in these programs, they provide some descriptive information about themselves or their household. The customers are then offered incentives to use a special card or account number when they make purchases at that retailer. For example, Neiman Marcus department stores award points for every dollar spent. The customer can then redeem these points for special gifts.

Restaurants also offer frequent shopping cards. For instance, the customer presents her card each time she buys a sandwich at her favorite deli. The cashier scans the card, and the database stores this information. Based on the customer’s purchases, the deli can offer special incentives—for example, after buying 10 sandwiches, the 11th sandwich is free. Or the deli can send the customer a coupon for a free sandwich on the customer’s birthday.

From the retailer’s perspective, frequent shopper or loyalty programs offer two benefi ts:

1. Customers provide useful information when they sign up for programs that help the retailer treat each customer uniquely.

2. Customers are motivated by the rewards to increase the number of visits and the amount purchased on each visit to the retailer.

Feature Average Sale Visits per Year Uses Coupons Date of fi rst purchase Has Store Loyalty Card

Customer A $22 3 Yes 04/03/2007 Yes

Customer B $156 2 No 05/07/2010 No

Customer C $87 10 Yes 03/24/2009 Yes

Look at the chart and identify the following:

1. Which customer has the largest average sale?

2. Which customer has the highest lifetime sales volume?

3. Which customer has been shopping at your store the longest?

4. What customer would be the best choice for your store’s loyalty program?

EXERCISE 1: Sorting and prioritizing customers

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Referrals

A referral is when a person recommends a store or sales person based on his or her experience.

A great way to increase your customer base is through referrals. You can get referrals from your friends, family members, business associates or other customers. If you are serious about building your clientele, you must be serious about asking for referrals. In the retail environment, salespeople rarely use this approach consistently. The most common excuses they give include:

l “I’m not comfortable doing that.” The primary reason we might feel uncomfortable is that we remember situations when a salesperson approached us for a referral, and the experience left a bitter taste in our mouth. This means we will hesitate to ask a customer for additional business ourselves.

l “My customers will think I’m pushy.” If you have done everything effectively during the entire sales process and you then ask for a referral in a nonthreatening, nonaggressive manner, your customer will not view you as pushy. In fact, in most cases, he will be happy to recommend you to a friend because he will want to share his positive experience with others. When people buy something, especially a major purchase, they are usually in a highly charged emotional state and want to share that experience with others. Asking for a referral will enable you to help them achieve that goal.

l “If I do my job properly, my customer will automatically recommend me.” This is partially true. However, this perception lacks one small detail. Let’s assume I have just bought a new TV from you. I invite some friends over to watch a movie and one of them comments on the television. A typical response sounds something like, “I got it at ABC Electronics. They were really helpful there. In fact, I recommend them to anyone looking for a TV.” Although I did recommend the store, I didn’t mention your name, which means my friends won’t ask for you specifically. That is why it is critical to ask your customers to recommend you, especially if you are paid on commission.

A simple, effective way to ask for referrals that doesn’t sound pushy or rude is: “If you’ve been happy with the service I’ve provided and know someone who could benefit, have them give me a call.” This gentle method of asking for business differs greatly from experiences your customers might have had with financial planners or insurance representatives thrusting a blank sheet of paper at them and demanding the names of 10 relatives or friends. Once the referrals start to show up at your store, you need to take care of the new prospective customers at least as well as you did your original customer. It is also important to show gratitude to the person who referred the new client to you. Here are some things to consider:

l At the very least, call the customer who referred the new customer to you, regardless of whether the new prospect actually purchased anything. Thank him for thinking of you, and let him know you appreciate his referral.

l For a stronger impact, send a thank you card to your original customer. You can write something like, “Dear Mrs. Mims: Thank you for sending Diana Davis in to see me. I appreciate your thinking of me, and I look forward to doing business with you again soon.” Because so few people make the effort to thank their customers in writing, this gesture is incredibly powerful.

l If your original customer continues to send in more prospects, consider rewarding her with a coupon for a percentage off her next purchase or a gift card for a certain monetary amount—assuming this does not go against any company policies.

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Referrals can make a huge difference in your overall sales during the year. Consider the impact of being able to generate just one referral each week. This works out to 50 new clients each year, assuming you take two weeks’ vacation. If the average sale in your store is $200, this could mean $10,000 in extra sales. If you are paid on commission, your pay would increase considerably. Even if you are paid a fl at hourly rate, the store is still bringing in more business, which means you will continue to get scheduled, and perhaps even get more shifts. If your manager is aware that you are generating all of these referrals, it is likely that you will be considered for more raises or promotions than a salesperson who does not bring in referrals.

Since you will enjoy a certain level of trust with your new prospects, your closing ratio will also be much higher with referrals. Customers will be more likely to accept your feedback, suggestions, and ideas if one of their friends has recommended you.

Word-of-mouth recommendations are the best means of advertising. Recommendations by other people infl uence our purchasing decisions. Consider these examples:

When you need a real estate agent or lawyer, how do you go about fi nding one?

How often do you ask friends to recommend a restaurant?

How do you know where to buy or repair a computer?

Caterers, hairstylists, consultants, trainers, architects, contractors, electricians, plumbers and carpenters all rely on referrals to stay in business. There is nothing inappropriate about asking for a referral to generate more business. In fact, the more referrals you ask for, the more business you will get.

Identifying And Prioritizing Potential Customers

New customer service and sales associates are simply expected to learn about the products and services offered in their store. Experienced associates are expected to become experts on the products in their department, related services, company policies and even relevant industry issues. New associates will seek out those with more experience when they run into complex issues or when they don’t have the expertise to answer a diffi cult question. Becoming a

knowledgeable, capable salesperson with a modest and courteous attitude will gain admiration and respect from your customers and your colleagues.

Inexperienced associates tend to focus their learning on answering the questions “what” and “where,” while experienced associates have moved on to answering “why” and “how.”

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Determine which questions could only be answered by an expert and which are best for a novice (or newer associate). Then, mark each question with an E (expert) or an N (novice).

Where can I fi nd the shampoo?

Have any of these car seat companies had recent product recalls?

Which kitchen towels should I purchase for my restaurant?

How much is this dog food?

Which of your delivery options should I choose?

Do you offer price matching?

Identifying And Prioritizing Potential Customers

Unique Selling Propositions

Retailers apply a strategy called “Unique Selling Proposition.” It is what they offer that differentiates them from other retailers who offer the same or similar products or services. For instance, Domino’s Pizza used to promise to deliver your pizza within 30 minutes or it would be free. Their unique selling proposition was not great pizza; it was fast service.

Once a retailer identifi es its unique selling proposition and has set some business goals and strategies, the retailer must decide what sort of selling model it will use.

Selling and Service Models

Perhaps, without even realizing it, you are already familiar with the various selling and service models through your experiences as a customer. Every retail company has an established selling strategy to generate sales and an approach to customer service. The service provided at a retail store is aligned with the retailer’s business model.

There are two main models for selling and service: self-service and relationship building. Depending on the type and complexity of the store’s merchandise and how much assistance the customer will need to make a buying decision, a retailer might use both approaches.

Self-Service: Customers expect limited interaction with associates. Retailers with self-service checkout lines and online shopping are examples of self-service models.

Relationship Building: Customers expect to interact with associates and receive recommendations, information and answers to their questions. They expect the salesperson to help them make buying decisions. Examples of this include stores selling furniture, jewelry or electronics

In many department and upper-end stores, the salesperson might act as the customer’s personal shopping assistant. The store’s approach here is to build a client relationship so that customers are not only loyal shoppers at the store, but they return to shop with a specifi c salesperson. In either model, customers always expect a store with friendly, respectful and effi cient employees.

EXERCISE 2: Expert vs. Novice

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Promotions

As a salesperson, you should always be on the lookout for promotional opportunities in your store. As the expert on your customers and the products you sell, you can be a great source of ideas on how to move slow-selling items or feature new merchandise in a way that will attract customer attention.

Of course, you would always consult with your manager before creating a promotion. In larger retail stores, the promotions will be set by the corporate marketing department. Although you might not play a role in creating promotions, it is important that you understand the impact they have on sales and fi nancial goals.

Jeni works at a small boutique near the beach. Each day before the store opens, Jeni looks around the store for ideas on how to generate more sales. She then shares her ideas with the shop owner. For example, when Jeni noticed that some boxes of specialty candies were nearing their “guaranteed fresh” date, she suggested reducing the price and making a sign that said, “Priced for Quick Sale.” When she realized that they had not sold any of the sports-themed beach towels, Jeni suggested putting them in the window display with a sign saying, “This Week’s Special: Select Beach Towels 25% off.”

On this day, Jeni notes that the skies are overcast. Cloudy skies usually bring in lots of customers off the beach. She realizes that few people would think to pack an umbrella when they head to the beach, but they just might need one today. She suggests moving the umbrellas to a prominent location near the store entrance as a subtle reminder to customers that sometimes it rains, even at the seashore.

1. In this scenario, what did Jeni notice that led her to develop promotions?

2. What other ideas could you use to develop special promotions that will bring more customers into your store and drive revenue?

3. What role do promotions play in making or missing your store’s goals?

EXERCISE 3: Creating promotions that support goals

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EXERCISE 3 continued ...

PROMOTIONAL STRATEGIESFor the following items, think of some ways to increase sales. Try not to use the same idea twice.

Product PromotionExample: Too many hats in stock Buy One Get One Half Off

4. Swim suits need to go at end of summer

5. Out-of-season holiday ornaments

6. New fl avor of candy arrives

7. New video game is to be released on Tuesday

8. New line of perfume—available only in your store

9. Graduation party supplies have arrived

Advertising and Promotions

People are attracted to stores for a variety of reasons. Some customers are drawn to stores that offer a wide selection of goods, well-known or high-quality brands, or the latest models or fashions. Some customers simply shop where it is most convenient or where they can get the services that are important to them. Other people shop where they feel they can get the best value for their money. These people might be attracted by special sales or discount offers. Advertisements for sales and clearance are sure ways of bringing value-conscious customers into stores. Retailers use advertising media such as newspapers, radio, television, email and social media to tell customers about special events or offers.

What’s in an ad?

l Regular-Priced Merchandise: Often this is new merchandise that has recently arrived in the store. The ads usually promote the latest trends, an extensive assortment or new product features.

l Sale Merchandise: Sometimes called promotional merchandise, sale merchandise is offered at a lower-than-typical price. Retailers run sales as a way of drawing customers to the store, hoping that while they are there, they will also purchase unadvertised items, which are more profi table.

l Clearance Merchandise: These are reduced- price items that the retailer no longer wants to carry in the store. For instance, at the end of the winter season, retailers “clear” cold-weather merchandise such as sleds, snow blowers, scarves and gloves.

Ads can cover a single item or many items. For instance, a retailer might offer 20% off a particular brand or model of television, or the retailer might offer 20% off all televisions in the store.

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How do retailers tell their customers about their sales and promotions?

l Coupons often give customers a percentage or dollar amount off of a certain item or group of items. Retailers also honor coupons sponsored by manufacturers to promote their own products. Coupons are often found in magazines and newspapers, posted in stores, mailed/emailed directly to customers or available online via a store’s website or social media. Coupons are especially common on grocery items.

l Newspaper ads are used to tell customers about weekly promotions and the arrival of new merchandise.

l Flyers or circulars are often used to advertise sales and special events. Flyers can be mailed directly to customers, or they may be distributed as newspaper inserts.

l Television or radio ads are popular because they are short in duration and reach a large number of consumers. These ads are more likely to inform customers about promotional events, such as sales, than individual items. They are also expensive for the retailer to produce and run on the air.

l Special events, including product demonstrations, contests and classes or workshops, are used to draw customers into the store and encourage them to purchase the featured product.

l Online ads and sales cover a variety of techniques. Retailers send emails to customers on their mailing lists, run online-only promotions on their website and use social media sites to alert customers of new products, promotions or coupons.

Sometimes only certain styles or models are included in a promotion. A sales associate must be prepared to explain to customers what each sale includes so they can help customers avoid being disappointed by choosing an item that is not included in the sale. Some advertised specials might have unique features that need to be explained to customers.

Customer: “Is this dining table included in your 20% off sale?”

Salesperson: “Only our oak furniture is offered for 20% off this week. This glass table is still full price. Would you like to see the oak dining tables?”

You can also use the technique of suggesting additional merchandise to inform customers of special promotions.

“Did you know that all clothing for this doll is 50% off right now?”

“These towels are specially priced. If you buy three, you get a fourth one free. Would you like me to help you pick out one more?”

“I don’t know if you noticed our ad in the newspaper, but all of our gold jewelry is 25% off this week. Do you have any gifts to buy in the near future?”

It is also a good idea to link advertised items to the customer’s purchase. This might remind the customer of items that weren’t on her mind when she came into your store.

“Did you get a chance to look at our new autumn arrivals that were featured in the Sunday paper?”

“Just in case you have any other athletes in the family, I want to mention that our entire stock of running shoes is 30% off this week. It’s a great special that we only run twice a year.”

“I see that you’ve selected a lot of seeds. Did you know that all gardening supplies in the store are discounted through the end of the month?”

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Saving money is the obvious customer benefi t from promotional strategies. But for those customers who may need more encouragement, consider other reasons, they might want to take advantage of these promotions.

Read the promotional examples, and consider the customer benefi ts associated with the various promotions. Identify ways the retailer benefi ts from the promotions.

Example: 25% Off All Girls’ Separates

Customer Benefi ts: The lower cost allows the customer to buy more items than she might otherwise. This might mean less frequent laundering, longer wear, and more opportunities to “mix and match.”

Retailer Benefi ts: Since clothes tend to be a highly seasonal item, a sale that includes all girls’ separates can help move that merchandise more quickly.

1. Early Bird Special: Additional 10% Discount between 7:30 and 9 a.m

Customer Benefi ts:

Retailer Benefi ts:

Make it a priority to know your store’s weekly promotions so you can offer the best value to your customers. It is also important to be aware of your competitor’s ads. Many customers do comparison shopping. If your store has nearby competitors, you should know about their major promotions

too. Many stores will post competitor ads in the break room so you can get a close look at what others in the area are promoting. A “best practice” is to check your store’s ad and your competitors’ ads before reporting to the sales fl oor.

EXERCISE 4: Promotional strategy benefits