By Tom Demerly.

Slow checkouts and invasive information gathering keep customers from their most important activity; buying.

“No, I don’t want a membership card, I don’t want to be in your buying club, I’m not giving you my name, you can’t have my e-mail, I’m not interested in earning points. I just want to buy something. And I don’t want to stand at the register more than 120 seconds. “

During  the last three decades buying at stores has become a hassle. Checkout takes longer. Retailers collect personal information with invasive questions. Add marginal Point of Sale software with frequent errors creating more delays and the “service” in customer service is largely forgotten.  It’s a missed opportunity for retailers.

To understand the problem I timed my checkouts at retailers for over a year. The better retailers, usually grocers, chains and small specialties, had me out in under two minutes regardless of how many items. The bad ones took up to eight minutes to process a straightforward sale.

Interaction at the point of purchase is often the only interface a retailer has with a customer. The customers’ opinion relies on that experience. It’s an opportunity to win fans but more often a reason for people to use Amazon 1-Click. It’s also why Walmart is experimenting with iPhone based “Scan & Go” in Rogers, Arkansas. This is a movement to the opposite extreme at Point of Purchase; from too much to too little. The best experience is somewhere in the middle.

How valuable is quick check out? Amazon has a patent on their “1-Click” checkout technology and there is a $10,000 bounty to contest it. No one has.

We develop systems before we create the social conventions for using them. Gadgets before manners. Point of Purchase routines are rarely tested with live customers. Few retailers take the time to adequately train their staff before they have contact with a customer. It shows in the number of “excuse me’s” and “I’m sorry, this will just take a second” at the register.

There are retailers who get it right. Summit Hut in Tucson, Arizona is a specialty outdoor retailer with an online sales component. Checking out in their stores is quick and dignified.  More importantly for the retailer, Summit Hut staff frequently add to the sale during checkout. It’s good, old fashioned customer service; respectful of the customer’s time and attendant to the sales motive without being too invasive. Key components to Summit Hut’s efficiency are a large, uncluttered cash wrap area, employees who know what they sell and sensitivity to the customer’s time and buying behavior. The store isn’t reliant on cookie-cutter systems for good customer service. They use good employees instead. The challenge for retailers is reproducing this behavior.

Summit Hut competes directly with the largest chain of outdoor retailers in the U.S. in Tucson. That chain sells memberships that return a dividend and provide member pricing. Summit Hut still competes because not every consumer wants a membership shopping experience. A component of membership shopping is non-members are penalized and even alienated at the register when the sales associate asks, “Are you a member?” and tells them, “You would have saved $XX today if you were a member.” Data suggests strongly that customer memberships do foster repeat purchases, but they also alienate non-members when skilled customer service can achieve the same loyalty without the negative reinforcement to non-members and the costs and delays associated with membership buying.

The principles of great customer service were born with the earliest retailers and haven’t changed even with new technology.

Key components to a great customer experience at checkout include streamlined, proven POS software, absolute proficiency of the checkout person, respect for private information, the ability to interact sincerely with the customer, expert product knowledge, strong sales motive, separate return and exchange facilities and a well designed check out area. One at a time:

1. Point of Sale software needs to work perfectly. Customers should not be penalized with longer waits if it fails. There is only one remedy for a defect during checkout. Give whatever the customer is buying to them free or cheap and quickly move on with a sincere apology. After a store gives away enough stuff they’ll get this right. There are laws governing errors at checkout with bar-coding. One set of widely drafted state statutes “requires sellers using UPC’s [barcodes] to mark each item with its price” (CGS § 21a-79(b)(4)) as a back-up to software. If a retailer’s  price scanning doesn’t work instantly at checkout it isn’t the customer’s problem.

2. Checkout staff should be highly proficient in the process. Checkout is often the only live contact a customer has with a brand. A few retailers respect this enough to train and test their employees up to six months before they service a live customer. Some retailers separate customer service staff with checkout specialists. The key things with the checkout are expedience, respect, gratitude and service through sales. Retailers should respect the customer’s time by getting it right and moving quickly.

3. No inquiries for contact info. Retailers have confused checkout with an opportunity to gather marketing data. It isn’t. It takes additional time and has no place at the cash wrap. Collecting personal information at the checkout is awkward because of privacy concerns and delays. Customers are sensitive about revealing e-mails and phone numbers or showing ID’s with other customers close by and to a store employee they don’t know. It isn’t appropriate to ask for personal information at the checkout. An alternative is providing customers with a kiosk separate from the cash wrap where they can share that marketing data if they desire in exchange for a one-time gift certificate (but not a percentage discount).

4. People at checkout should have a personality. This requires judgment since not every customer wants to chat. A good customer service person can sense what level of interaction is right. The best customer service people use their proficiency in the sales systems to move quickly and make the customer feel good about their choices. This is an opportunity for add-on sales if the interaction feels right. It requires training, experience and judgment.  It is difficult to quickly process a sale and assess the right kind of interaction with the customer but this talent is what keeps people coming back- and buying.

5. Expert product knowledge keeps customers. At the checkout it can avoid mistakes and add to the sale. It’s takes time and genuine interest to develop, but it’s a strong asset when combined with good judgment. The axiom “shut up and sell” applies as does the motive to move quickly, but a good catch from a checkout person on a sizing issue, product compatibility or other technical point reinforces why a customer should come back and can add to the sale.

6. The best reason to move quickly at checkout is to sell more. The longer it takes to process a customer at the cash wrap the less time is available to sell on the floor. Staff that are incentivized with attainable sales bonuses learn this quickly. They use their time wisely, respect the customers’ time and focus on sales and service.

7. Separate return area. You don’t want buying customers interacting with returning customers. They need to be separated for logistical and sales reasons. A buying customer should never be delayed by anything, worst of all a potentially unhappy customer with a return. Customer service staff should be proficient and expedient in returns processing, remembering it is another opportunity to win or retain customers and even to provide sales ideas. People working in the returns area should have the authority to grant refunds and adjustments without delays or assistance.

By Tom Demerly.

Over the last three decades a new set of business clichés has surfaced. They’re used by small companies trying to act big and big companies on the way to bureaucratic gridlock and subsequent meltdown. Never use these terms. They make you look like an idiotic lamb on the way to the recessionary slaughter of unoriginal thought.

One of my favorite business writers, Seth Godin, said it best: “Clichés make it easy to talk without really saying anything. Clichés make it easy to hide and to lie.”

People resort to clichés for three reasons: They don’t know what to say and clichés are convenient, fashionable and convincing to the dim-witted, everybody else is using them so they must be relevant and cool and they make you sound associated with the codified language of business insiders- but only to the uninitiated. As Godin mentions you can burn hours in meetings by just using these clichés and some Power Point as your business does ever shrinking laps around the drain. Throw in some Excel and you have most of what is big trouble with business both large and small.

Here are the most common business terms and trends to avoid:

1. Best Practice:

The most obnoxious business colloquialism. A best practice is neither. Best practices are what someone talks about when they have no original thought and steal obsolete ideas from other companies, often as not, bankrupt ones. They aren’t the “best” of anything and usually don’t stay in “practice” since hashed over old ideas don’t work. Except in pointed sarcasm or abject mockery, never use this term. If people above you in your company use it, update your resume. If people below you use it, replace them.

2. Spreadsheet:

Spreadsheets are more commonly collections of irrelevant statistics than meaningful tabulations. They are compiled in a manner that feigns logic to support some innocuous conclusion by someone with an agenda.  While the Microsoft Excel application used to craft most of these interpretive works of fiction does have useful applications, like finding Saddam Hussein (they did it with a spreadsheet) it is a lot like a paintbrush and an easel: just because you know how to use them doesn’t mean what you produce is useful. Spreadsheets support the useful business axiom: G.I.G.O., Garbage In, Garbage Out. In fact, the spreadsheet is every bit as interpretive as the brush and canvas but more dangerous since so many people accept a sort of “spread sheet truth”. Beware of people who boast about proficiency with spreadsheets. They wield a mighty ability to manipulate reality and bend it into some statistically supportable fable, generally to their favor. The spreadsheet disproves a time-honored axiom; sometimes numbers do lie.

“Yeah…. I’m gonna need you to go ahead and get those best practices into a PowerPoint along with our latest metrics in a spreadsheet by tomorrow.”

3. Metric:

Metrics come from and go into spreadsheets. That itself makes them evil. They usually wind up in a Power Point presentation from there. Even worse. The people using this term usually have no idea what it means. They are office Mina birds regurgitating some important sounding dribble their ineffectual boss or webinar dweeb spouted. Metrics are supposed to be a measure of something relevant. They’re usually the trees that keep you from seeing the forest, and produce a kind of entrepreneurial nearsightedness  that precedes things like GM’s bankruptcy and the Apple trouncing of Microsoft. The problem with the term “metric” is there are any number of better synonyms for the same thing. It is a term that is more fashion than function. Its adoption by the “Office Space” demographic has doomed it. Unless your goal is to look purposely unoriginal or suggest you lack insight, don’t use the term “metric” to describe any relevant set of business statistics. Pick another word, or better yet, take a tip from fast advancing middle managers everywhere; don’t say anything.

4. Webinar:

Definition; waste of time. The webinar is roughly traceable to the first espousing of calibrated ignorance under the guise of information by the Ancient Greeks and Romans. They called it satire. As with the Greeks, the audience often doesn’t realize they are being played. Webinars usually espouse best practices using metrics from spreadsheets. The perfect storm of commercial cretinism. In general you will know less after a webinar than before. They are sort of a virtual lobotomy. Enough of them and you may actually believe the company you work for has a chance of lasting another year. It doesn’t though, because instead of working, you’re wasting time making some buzzword huckster rich over the Internet listening to their webinar instead of selling anything.

The President was not entertained by another delay in the PowerPoint presentation.

5. “A/B” Testing:

When companies find themselves flummoxed on the edge of a fiscal precipice they will often announce an “A,B Test” to generate “metrics” to put in a spread sheet so they can determine their “best practices” and display them in a Power Point.  They learned this during a webinar last week. These are the death throes of the decreasingly competent. It’s like animals on the plains in Africa walking in ever tightening circles until they die of a brain worm or something bigger with more teeth eats them. Businesses that attempt this don’t know what or how to test. Usually they try to learn from a webinar. We all know the result of that. The danger with this term is it suggests some orderly and sentient analysis. There is seldom a correlation between the use of this term and execution of an orderly and empirical investigation. It’s just another thing companies do before they file.

Here’s a PowerPoint slide about bad PowerPoints.

6. PowerPoint:

The PowerPoint application would have been a useful presentation tool prior to the 1930’s when people were still amazed by anything big on a screen. Prior to PowerPoint there was the overhead projector.  PowerPoint is somehow worse than the overhead because it seems so easy to use. People rely on it too much and it has compromised the art and practice of delivering convincing and skilled presentations. Just throw up a PowerPoint, after all, when people are sleeping they can’t tell how stupid you really are. Putting any content into a Power Point slide lowers its “punch” by a massive factor. People have simply seen too much Power Point, and too much of it is bad Power Point. When the slides go up, people tune out. It is the crutch of the weak presenter. The bane of Power Point is it rarely works on the first attempt. Power Point would be better software if it electrocuted the presenter with increasing voltage for every second their stupid slide show doesn’t work before a live audience. Then the problem would fix itself, and be more entertaining.

7. Reach Out:

This is another truly awful one. My skin crawls when I hear this. It smacks of desperation. No one wants to be “reached out” to. Drowning people and zombies “reach out”. Worst of all, there is a better word for this concept. It’s called: “Ask”. Don’t make yourself look foolish and trendy by using two ambiguous, trendy words when one will do. Just ask. Don’t reach. It’s not polite.

8. Mission Statement:

If your company has mission statements plastered on walls it’s likely they are so far away from their original area of competence they need written reminders of why they are there. Businesses write mission statements for one reason: No one knows what the company is really supposed to be doing. The irony is most businesses need a two-word mission statement: “Sell something”. That sums up the purpose of most commercial enterprise. When businesses get so distracted from that central purpose they need constant reminders of what they actually do a sign on a wall won’t pull them back.

By Tom Demerly.

Poorly administered sponsorships are like showing too much cleavage at a dinner party. They attract plenty of attention, but not the right kind of attention.

Earning a net profit in the bicycle industry is extremely hard.  Poorly managed  sponsorships, mostly at the dealer level, contribute to making it harder.  They create a damaging subculture of “sponsored consumers” who expect to pay less than retail,  are trained to resist MSRP’s, set an example for others to expect discounts and return almost nothing measurable – except red ink. Worse yet, through unprofessional use of social media some amateur sponsored athletes have created the impression that if you are paying full price, you are somebody’s fool, and you’re not one of the cool kids.

It’s a tough thesis, but one the specialty bike retailer needs to own. Low level “sponsorship” discounting isn’t all that is wrong with bicycle retail, but it is one of the many small wounds that has bled the dealer network dry in a sort of financial “death by a thousand cuts”.

The National Bicycle Retailer Association, the NBDA, reports a significant contraction in the number of independent bicycle dealers over the previous two decades.

The NBDA, National Bicycle Dealer’s Association, reports that the “number of bicycle retailers is dropping” from a high of about 8,000 independent bike shops in the early 1980’s to about 5,000 in early 2004. In 2011 the NBDA reported 4,100 independent bicycle retailers, a loss of nearly 50% since the 1980’s. This is contrasted by significant growth in the number of USA Triathlon licenses sold, the number of triathlon events and the growth in popularity of cycling during the Armstrong era prior to the loss of his titles. It doesn’t make sense that there are less bicycle retailers today than there were before the triathlon boom and the Armstrong era. If we had seen similar expansion in any other specialty consumer population we would have seen growth in the number of retailers servicing them. We haven’t. In fact it has been the opposite.

Business owners driven by personal involvement in the sport and not  focused on the bottom line have created a subculture of amateur “sponsored athletes” that don’t generate additional net profits at all. These “sponsored athletes” have full-time jobs outside of endurance sports, earn middle class or greater incomes in their full-time careers and don’t devote a significant amount of hours returning anything to their so-called sponsors. They are hobbyists. Worse yet, if they weren’t “sponsored” most of them would still be buying at full retail. Retailers have, in many cases, “sponsored away” their best customers.  Many of these customers are very good athletes but they aren’t in the business of sports marketing to return a profit to their sponsors. They are consumers turned bad, ruined by a bike retail industry not focused on the bottom line and looking for quick popularity from customers looking for a quick deal. It’s like buying votes rather than earning them, or showing a little too much cleavage too early and risking a bad reputation.

Sponsorships work to drive full margin sales in professional sports through top level media exposure. That promotional loop seldom succeeds with lower level sponsorships.

Consumer level athletes aren’t the ones to blame for the sponsorship dilemma. Undisciplined retailers are. I should know, I’ve been one, and the last four years have been a cathartic process of trying to learn something from my own mistakes and teach others as well. Teaching bike dealers anything is tough since, like most entrepreneurs, they believe they know everything. I did. Before I failed. Many dealers are impervious to business education. Before their nearly inevitable failure though, they are unrepentant champions of knowing everything about how to run a small retail business. Right into the ground.

Another obstacle is that once local bike dealers launch their sponsored athletes and teams they do almost nothing to broadcast the message about it. There are proven axioms in professional sponsorship that, for every one dollar a sponsor spends on sponsorship they need to spend eight to ten dollars talking about it. Big brands can afford this. Bike dealers can’t. As a result the effectiveness of local club and individual sponsorship programs erodes to nothing with no real return at full margin for the dealer. Once the discounts and schwag are given out the dealer sees little in return, except more sponsorship requests as savvy consumers learn to “never pay retail” when they can easily negotiate a sponsorship discount instead. It begins a death spiral of increasing expectation for discounts that the retailer has a difficult time reversing.

The quandary of this phenomenon is that, if bicycle dealers offering sponsorships had a higher degree of attentiveness to the bottom line they would realize a series of elegant solutions to the dilemma. Realizing that giving the local hot shots a discount hasn’t sold much (or anything) at full margin is step one. Secondly, working with brand-level suppliers to leverage their sponsorship efforts is a better plan than trying to run a local sponsorship/discount program and it preserves the integrity of the local market. Big brands can afford to sponsor big names and pay for the media to talk about it. That is one factor that drives full-price consumers to a brand in an independent bicycle retailer. Thirdly, discounting product to retail consumers through sponsorship sends a bad message; the better you are, the more visible you are in social media, the less you pay. Instead of regular participants becoming better consumers, they are trained by retailers to become discounted/”sponsored” consumers.

An argument the local bike retailer has made for their consumer discount “sponsorship” programs has been that it supports their local market. That’s a good argument, for something else. If the local dealer wants to support the sport locally, build relationships and create additional demand they wouldn’t sponsor local athletes, they would sponsor local events. The difference between sponsoring events and sponsoring athletes locally  is significant. Firstly, price and margin are not eroded and demand is increased. Supporting local events creates more full price consumers on a broader level. Done correctly it can leverage a shop’s brand identity to full price consumers every weekend. Event promoters shoulder the burden of continuing the message on Monday morning with their own website when they report results. The branding message reaches everybody in the event. It reaches them before the event date through promotions to enter the event, during the event and then after the event with results. It also gives local retailers an easy “out” when the inevitable neighborhood hotshots come calling for sponsorship discounts. The retailer simply says, “We support the sport locally through our sponsorship of local triathlons, bike tours, mountain bike series and cyclocross races. If it weren’t for our support, those events couldn’t continue to grow and provide cyclists with events to enjoy.” Everybody wins.

A better use of sponsorship resources by the local dealer is events instead of individual athletes or teams. Sponsoring events benefits every athlete in the community and does not compromise dealer margins.

Like all arguments there are a few exceptions, but only a few. One good example is Fraser Bicycle and Fitness in Fraser, Michigan. Their “Club Fraser” initiative to involve athletes in the sport has created community rather that eroded it. It has benefitted charities and encouraged athletes to participate. It is built on involvement and development rather than discounting and schwag deals. It creates good customers rather than converting them to discount customers. It’s also hard work for Fraser to administer. The program has raised the visibility of Fraser at regional and national events and been recognized in national publications like the USA Triathlon newsletter. Best of all, the program hasn’t eroded the strong business model of Fraser Bicycle. Fraser Bicycle and Fitness is the exception rather than the rule, and few independent dealers have the focus and business discipline the Fraser management team has demonstrated in innovating and administering a sponsorship program.

Poorly conceived and administered sponsorships at the dealer level aren’t the only obstacle to earning a net profit in bicycle retail. There is no single factor to the contraction in specialty bicycle retail over the last two decades. It is an awful conspiracy of recession, changes is how consumers access products and information and ineptitude on the dealers’ part among other factors. The first step to facing the challenges to improving profitability is owning the problems, something independent dealers have had a difficult time with.  Seeing each contributing factor for what it is from the perspective of objective business will help the independent bike dealer mount a comeback. Starting with one problem at a time, like poorly administered shop sponsorships, is part of the solution.