Wednesday, July 15, 2009

*Updated* The Return to “Personal Selling” at Retail

Videoclip Below

Herb Sorensen, Ph.D., Global Scientific Director, Retail & Shopper, TNS SORENSEN

The Return to “Personal Selling” at Retail

Dr. Sorensen starts off this evening discussing “there are those who make it happen,” “those who watch it happen,” and “those who wonder what did happen.” As retailers, we should be the ones that make it happen to move the multi-trillion dollar industry forward.

Moving to the basic human needs of air, water and food (clothing and shelter could be optional) what we have is that people have needs but also people have wants. Retailing actually drives the aspirations of the human race. People learn about these things through retail, and retailing builds upon the wants and needs of humans to drive the industry. If you create something that humans want and need, humans (customers/shoppers) will come and get it.

There are three components to retailing:
1. The mental process (wanting and/or needing a product)
2. Money
3. The actual delivery of the goods to the customer/shopper

Through the centuries retailing has gone from a medieval marketplace, to an outpost for services to merchants selling products (creating a middleman). Historically, retailing was always a personal selling, someone always had something else that an individual wanted. The induction of the mediator (the retailer) is a fairly new construct.

Massification: Going from a cobbler making shoes to a shoe factory making mass quantities of shoes.
Mass production – factories
Mass distribution – supply chain (waterways, airliners, railways, etc)
Mass retailing – self-service (developed about 100 years ago, we don’t have to sell to the shopper, the shopper sells to themselves)

The fundamental thing behind this mass productivity was a huge benefit to not only the retailers but to the shoppers. This massification also drove people’s perception of what they need. Initially shopper’s have a vague idea “a vague wish” that they’d like to have/purchase something. But as shoppers are fed this product, its available, the shopper goes from a vague desire to a need.
Think: “I wish. I want. I need. I got."

Dr. Sorensen shares this quote with us to sum up the historical change of retailing.

“One hundred years ago, retailers ran their stores by watching their customers closely. Somewhere during the last hundred years, spread sheets, slotting allowances, and quarterly performance replaced the basic principles of the business.” Norm Myhr, Group VP Sales Promotions and Marketing, FredMeyer

Passive Retailing: Merchants vs. Salesman
There is a major problem as stores are becoming a “black box,” because retailers/sellers think that because they have all of the data, retailers have all that they need to know about selling and about the customer/shopper. Below, Dr. Sorensen discusses strategies that will not work, but are still in place by many (unnamed) retailers.
Keep shopper prisoner to get a reward of frustrated shoppers
Making items hard to find, means losing profits
No help in making the choices, default to price to “sell”

Massification of Communication
Massification of communication includes advertising to consumers/shoppers outside of the retail space; from roadside signs to TV commercials. This approach really took off about 100 years ago with radio and TV as Proctor and Gamble’s creation of Soap Operas so that they could sell soap. There was an entire industry that grew up focusing on the mind of the shopper.
The mechanism for selling in mass media, the mental states that go on in mass communication are very different than personal selling, but it’s the closest thing that we have to personal selling. Personal selling, in this context refers to connecting two human beings (individuals at the ad agency to the individual shopper).

Mass Media Fragments
In 1995, 3 commercials reached 80% of women 18-49 years of age
In 2000, it takes over 92 commercials to reach the same amount of people
This means that the mass media, as we knew it is gone, replaced with fragments of media.
Now, we’ve realized that the people that retailers should sell to are in the store. There is an increased focus on in-store experience, packaging.

“The number one media in the store is the package.” Dr Sorensen

The ability to sell, the lack of accountability of the ad agencies and marketers not knowing what worked and what did—so throwing money at the situation is not the solution. The people who are selling, out in the mass media, largely, didn’t involve the immediate palpable feedback from the shopper/customer. Most of the people who know the most about personal selling are out there selling. There is a massive intellectual deficit in terms of how to do what it is that we should be doing: selling to shoppers, fulfilling their needs.

The “Amazonification” of Retail
There is a great deal about personal selling that the offline retailers could learn from online retailers, because online retailers are really involved in personal selling. Using to illustrate his point, Dr. Sorensen discusses that Amazon’s first goal is to sell a Kindle but the second goal is to show the shopper’s other items that were purchased by shoppers on Amazon. Also, Amazon is readily available to take your money through one click. Online merchants have learned a lot of the art of personal selling and brick and mortar store could definitely learn from online retailers.

Dr. Sorensen recommends a 1980 report by the Harvard Business Review, “Retailing Without Stores” by Larry J. Rosenberg and Elizabeth C. Hirschman. This kind of thinking, outside of brick and mortar stores has gone on for many years prior to the rise in online shopping.
“Internet” in the Store?

Will retailers succeed by putting the internet in the store? Using carts equipped with internet devices allowing shoppers to have an “Amazon-like” experience in-store could be beneficial to the shopper and to the retailers. Now, with internet enabled phones, customers are able to compare prices on items in-store. How far and how fast will this move the industry?

The single biggest sin that brands and retailers make is failing to tell shoppers what to buy.
Encourage retailers to call out top selling products by using a simple 4x4 inch card that plainly says “top seller.” Busy shoppers, used to Amazon experiences will purchase these items. There was an increase in grocery sales by 4% for the 1st quarter of 2009 over the 4th quarter of 2008.
Ice cream saw a 116% increase in sales.

How can you help return “personal selling” to your store, your brand and to the industry?

Be sure to check out Dr. Sorensen’s book Inside the Mind of the Shopper


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