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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 1577, St. Petersburg, Fl. 33731. Phone 727-464-2182. It may be printed for an individual to read, but not duplicated or distributed without expressed written consent of the copyright owner.
Profits Plus Solutions, Inc.