With over 25 years of frontline experience Tom Shay is America's leading small business
management
expert. He's a "Must Have" for your next event.
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The Value Formula
The Formula For
Successs
When a person is employed, they
continue to work at the option of the employer. So long as there
is a need for the type of work done, and the employee meets or
exceeds the expectations of the employer; the employee is likely
to have a job.
As a participant in the shooting
sports industry, you too have an employer. The employer is giving
consideration to retaining you as an employee every time they walk
through your door, call you on the telephone, or perhaps listen
to your presentation at a gun show. That employer is often referred
to as a customer.
Every time you and the customer
interact, the customer is performing a calculation on your business.
They may do so unknowingly, but never the less, they go through
the steps. The calculation is to consider the price you are charging
with the addition of three factors. Those three additional factors
are the knowledge you share with the customer, the level of service
you provide, and the quality of the product or service.
Added together,
these four factors: price, knowledge, service and quality equal
the value of the experience. As the customer examines the value
of doing business with you, they are asking themselves a question, "Is it worth it?"
When
you successfully answer the question, the customer returns to your
business to make a follow-up purchase. And as you develop customers
that return time and again to your business, you become less dependent
on advertising; itself a gamble at best.
While price is a study
into itself, in this article we will take a look at the other three
factors; items which can and should be more important than price.
After all, any business can attract customers with a low price.
It is the true merchant that cause the other three factors to become
the most important.
KNOWLEDGE - An old adage of
retail is, "Nobody
cares how much you know until they know how much you care." Using
an example from another area of retail, think about the experience
many people have when they go to purchase a computer.
As you
are approached by the salesperson, note how quickly they can be
using terms that you do not understand; ram, rom, gig, CD-RW.
And with many of these salespeople, they fail to ask you what
you are looking for or how much computer knowledge you have.
Shooting
sports shares a similarity with computers and several
other areas of retail in that we are selling products which can
be very technical. We have terms of the trade that many people
do not commonly understand. This does not apply only to the novice
customer. It is not the responsibility of the customer to tell
us we are using terminology they do not understand.
Again, customers
are not so much impressed by the knowledge of the sales person
as they are impressed by the sales person's ability to answer
questions and share information at a level that is comfortable
to the customer. If we are waiting for the customer to ask us
to explain what we have said, we may find he is traveling down
the street to a competitor who is willing to make the effort.
SERVICE
- You may employ a gunsmith on a full or part time basis.
In spite of how much service work your business does, the number
of your customers that have utilized your gunsmith service is
probably a single digit percentage of your total customers. The
point? If service is gauged by the number of customers who use
your gunsmith service, then there are very few customers who are
able to determine how good your service is.
So, how can we provide
service to everyone? As an example, we would expect every customer
to know a gun should be cleaned. But how many times have you examined
the gun of an experienced customer only to find an improperly
cleaned barrel? Being the gunshop that educates the customer in
many aspects of gun usage and maintenance is most definitely providing
service.
How about sending a postcard
to a customer to remind them to renew their hunting license? Or
a card to invite them to attend a private sale on the evening before
a big newspaper ad?
Most customers that leave a
business for another do not leave because
they have become an unhappy customer. They leave because
they believe the store is no longer interested in them.
QUALITY
- When a weapon sold at a competitor is identical to the one on
your shelf, there still remains several ways to differentiate
yourself.
Several years ago at the SHOT
show there was a dealer who asked this writer about the problem
he was having with the arrival of a new competitor.
Many of the
brands that had previously been exclusively his were now on the
shelf of the competitor. He said he did not think he could drop
these brands because customers were used to seeing them on his shelves.
His other concern was that the competition was selling the same
guns for much less than he was. His comment was that he could not
afford to sell for the same dollars because his business would go
bankrupt.
This is where quality, and a
bit of merchandising strategy, come into play. The suggestion given
was that he make two changes in merchandising and one in his sales
techniques. The first is to take the time to identify exactly which
models the competitor carries and advertises. Most likely he will
find there are several models he carries that the competitor does
not. These are models on which he can maintain his current margins.
With the head to head competition,
he would need to match the price. Otherwise, he can expect customers
to identify his business as the high price store.
The second step
is to shop the SHOT show to find one or more new lines to add to
the selection. Hopefully, he will find lines which not only shadow
the head to head items but also are wider in range with regard to
both higher and lower price points.
The change in the sales technique
occurs with the customer who comes in asking for one of the guns on which there
is head to head competition. The change occurs when one of the salespeople
asks the customer why they have selected that particular model.
As they hear the response of the customer, there are two options;
they can offer the gun at the same price as the competition, or
they can offer a more profitable weapon which can provide the customer
with features which are more desirable.
The dealer I spoke with
at the SHOT show is looking for a way to be successful in light
of new competition. To achieve success, there are four key ingredients:
price, knowledge, service and quality. Utilizing the right combination
of these will go a long way toward your being a successful business.
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This article is copyrighted by Tom Shay and Profits Plus Solutions, who can be reached at: PO Box 128, Dardanelle, AR. 72834. Phone 727-823-7205. It may be printed for an individual to read, but not duplicated or distributed without expressed written consent of the copyright owner.
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If there is not something very special about your business, then the only attraction to your businessis that of a low price.
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I do not agree with the concept of "fill in the blank" or "create the plan as you need it" because my experience has been that you do not have as strong as a connection and understanding to your business plan unless you do it yourself and you dedicate the time to create it.
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With over 25 years of frontline experience Tom Shay is America's leading Small Business
Management
Expert. He's a "Must Have" for your next event.
"What's your score"? is the name of the April Small Business Advisory. This provides an introduction to our return on investment calculator. It is a great way to understand how well the investment you have in your small business is working for you.
We believe Thursday, April 25 is an important annual celebration for small businesses. While the name of the celebration has varied over the years, the focus is for us to take kids to work with us.
This is important for the kids to see what it is we do. They definitely are not going to learn about it in school. Reading the April Small Business News you will see an example from community pharmacists that emphasizes it is up to us as small business owners to introduce kids to what we do.
Article of the Month
While titled, "If not price", the April Article of the Month is asking the question about the focus of your small business in attracting and keeping customers.
If there is not something very special about your business, then the only attraction to your businessis that of a low price.
Book of the Month
"The plan as you go business plan" is the April book of the month. The author is Tim Berry who has also created software on the same topic.
I do not agree with the concept of "fill in the blank" or "create the plan as you need it" because my experience has been that you do not have as strong as a connection and understanding to your business plan unless you do it yourself and you dedicate the time to create it.