Hello, Mike Major here with a valuable interview for Instant Retail Results: tips for small business owners from world-renowned retail experts. And today I’m excited to be speaking with Bob Negen, who is indeed a world-renowned retail expert.
Bob is a highly sought-after public speaker, retail expert, and author of the bestselling book, “Marketing Your Retail Store in the Internet Age.”
Perhaps he’s best known as the co-creator, with his wife Susan – also an accomplished retailer – of the acclaimed Retail Mastery System. It’s been referred to as the most comprehensive training resource ever created for independent retailers and teaches all eleven critical business skills that store owners need, to be successful.
Bob is recognized as one of the most innovative retail marketers in the world today. He’s an expert on retail staff development, on-the-floor selling, store operations and developing a customer-focused, service-driven store culture.
Bob’s expertise comes from his real world experience as an independent store owner. When he opened his first store, the Mackinaw Kite Company, he was only 23 years old and just out of college. Like most store owners, he started with a lot of enthusiasm and passion for his product, but almost no retail-specific business skills. He quickly learned that passion does not lead directly to profit!
Over the next 20 years Bob developed the critical business skills he needed to turn the Mackinaw Kite Co. into a successful multi-million-dollar business.
In 1999, Bob and Susan formed WhizBang! Training and now share their hard-won knowledge so that other retail store owners can more quickly and easily turn their passion into profit.
So Bob, welcome, and thanks for making your time available, today.
Well thank you Mike, it’s an honor to be here today.
Bob, I’ve got a question for you, to launch straight in. If ever there was a golden age of retail, I’m not sure that this is it. How would you describe the current environment for retail?
Well, you know, that’s a great question Mike, because actually, I don’t know that this is the golden age for retail but, I do know for a fact, not for a fact, but I feel it in my bones and I believe it in my heart that, if today’s independent retailer really gets serious about serving their customers, and gets serious about building the skills they need, they’re going to be successful.
When I look across our community of independent retailers – all we do is work with small independent retailers, by the way – when I look across our community, I see many, many, people who are enormously successful in industries that are considered vulnerable.
And the reason that they’re successful is because they’re not sitting around and blaming the economy. They’re not finding excuses for their lack of success, they’re being incredibly proactive about the way they run the business, their marketing, their service. They’re on the job. They’re on the ball. They’re focused on their business. They’re doing great things, and their customers are responding.
If you look at, sort of another segment of that world, our world, independent retailers, there is a whole other group. They’re afraid. They’re timid. They’re blaming the economy, they’re blaming everyone but themselves, when in actuality, the real blame lies with themselves, with their lack of activity, with their lack of skill development, with their lack of customer focus.
So, your statement could be correct, that it’s not the golden age of retail. But I’m saying that, you know, there are people out there right now who are just crushing it, and it’s because they’re really on the ball and they’re really proactive and they’re making things happen.
So, in other words, you can make the golden age any moment you want, if you have a focus on the basics and you’re prepared to knuckle down and turn, as I said in the introduction, the passion into a profit.
That’s exactly right, you know, your golden age is what you make of it. So, in going back to your introduction, that’s exactly my story and I think that the reason that we, meaning WhizBang! Training, are successful as a business is because I know exactly how an independent retailer thinks and feels and lives. Because, you know, for nineteen years I did that. I loved flying kites and I just thought that if I just, man oh man… if people come into my store they are going feel how much… they’re going to see my kites, they’re going to love my kites, they’re going to buy my kites. That I am going to be successful.
It wasn’t very long, in fact it was really about the beginning of the second year that I had this giant “oh no” moment, where it was like, wait a second, my passion for my product is not enough to make me profitable. That’s when I started to get serious about becoming a business person. To your point, that’s exactly what it is.
You know, the people who are serious about being business people, I run into this, I remember having a conversation with another kite store owner, this is years ago. And his wife was, you know… so the husband was the kite flyer and he talked his wife into coming along and opening this store. I remember her saying to me, you know Bob, how can you sell your five hundred thousandth 6ft delta and still have that enthusiasm for it? And it really prompted a lot of self conversation.
What I realised, and what I teach, and what I talk to retailers about all the time is, I had to make this shift from just being passionate about my products to a shift to two other sort of equally important passions. And one was a passion for professionalism and that I was going to be good and my team was going to be good and our merchandising, and that we were going to be good, so that when people came into our store, they got a certain kind of experience.
And then that third passion, and I think that this is really where great independent retailers excel, is a passion for your customers. I have a statement that I say: ‘love your customers, the money will follow.’ And when you put all three of those together, you have people who love what they do, who love who they serve and love what they’re doing. It’s an unbeatable combination.
I’ll bet it is, but you know Bob, you’re heading in a direction that I’m finding really interesting, because what you’re pointing out is that the passion is not enough, you need a skill base as well. I saw you in a video you had last year where you had a great comment about some research by Dun & Bradstreet into the success of small businesses and how that is, in fact, based on serious skills.
Yes, you know, I don’t remember the exact number, I think it’s 96% though. Dun & Bradstreet, did a survey of small businesses, not just retailers, and it was published in the Harvard Business Review but I’m pretty sure it was 96% of all the small businesses that fail, do so because of a lack of skill and knowledge on the part of the owner. I read that and I read that, fairly… when I still had my retail business, I had the Mackinaw Kite Company for nineteen years and I just remember thinking wow, if you think about that, that’s why everybody is failing. It’s not because they don’t love their product, it’s not because of location, it’s not because of the capitalization, it’s not because of the economy, it’s because they don’t know what they are doing.
So, that was really my incentive to buckle down and figure out what I needed to know and go out and learn it. And this was before the internet. I know it seems hard to believe it, before the internet. You know, it was hard. There weren’t books written on running a successful retail store. I just sort of had to figure it out and work hard at it and talk to people.
Fortunately, and this is kind of interesting, when I met my wife and now my partner, Susan, I mean she’s still my wife but she’s my business partner, she was a department store executive. I just remember having these conversations with her and just being sort of flabbergasted, it was beyond my comprehension that someone actually trained her how to do these things.
It was this Aha! moment. Oh, someone’s figured this out already. I just need to tap into that. That’s what we do here at Whizbang, Training, and I know that your other experts, that are a part of this series, that’s what we do, we help independent retailers become more successful.
Yes, and they need a certain set of skills to do that. I mean if you don’t possess them, well you’d better learn them, or else hire them, otherwise you’re not going to be successful, right?
Sure, and the interesting thing for me, when I look back at sort of my evolution as a retailer, from year one just as knucklehead, twenty-three year old guy who loves flying kites to, you know, when I sold the Mackinaw Kite Company to my brother in 1999, our business ran incredibly well. We were on rails, I can honestly say that. It was profitable. There was a consistently excellent customer experience, but when I look back at it, when I look back at sort of, the process, one thing that I see is that, as you grow your business, and I am going to assume that, as a for instance, somebody starts an independent retail business because they’ve got a passion for their product and as they grow, their passion for their product…
No, I’ll back it up and make it my story.
My brother, Steve and I, we were great marketers and we were great sales people and that helped us to grow but then as we grew, the first thing that happened was, all of a sudden we’re growing, so we hired people. We needed to develop another set of skills, which was managing people, staff development. So we figured that out, and then we continued to grow and then we needed to learn another set of skills, which was inventory management and that process continued, until really we had mastered it all.
The point here Mike, was that as a retailer grows, the skills they don’t have emerge and when that skill set that they don’t have emerges, that person has a choice. They can either go out and find it or they can sort of settle, because if you don’t know how to manage your inventory, you’re only going to be able to grow to a certain level. If you don’t know how to manage your people, you’re only going to be able to grow to a certain level.
If your listeners and your readers really want to fulfill their potential as retailers, they have to understand that there’s eleven skills and they need to master them all because if they don’t master them all, one of them will eventually trip them up.
That’s exactly why we created the Retail Mastery System, because I went through the process of being tripped up by my lack of each of these skills. So we said okay, if an independent retailer wants to get serious, it’s our job, it’s our obligation, as somebody who cares about their success to make this product and have it available to them.
It’s kind of like the weakest link in the chain. It’s the skill that you have the least facility with is going to be the problem and you’ve mentioned people, you’ve mentioned inventory but you’ve also said, as I’ve referred to earlier, the Retail Mastery System teaches eleven skills. Would you consider people and inventory the two key ones? What would you regard as the handful of essential skills for any successful business?
That’s a great question. In the beginning, the most important skills, I believe, is marketing, because, especially when you’re new, generating cash is so important. The next, it sort of goes hand in hand, is sales training and customer service because that’s three set of skills that have to do with getting people into the store and showing them the love and selling skills is actually taking that foot traffic and turning it into money.
The next sort of crucial piece, when I look at it, is inventory management and financial management because both of those have to do with keeping an eye on your assets and most of your assets are your cash and your inventory. So, that’s another set of skills that goes in there.
If you can do those five things, if you’ve got marketing, customer service, selling, inventory management and financial management. Those are sort of, the five foundational skills and then you can start layering on top of that. Personal business skills, how you manage your time and your energy and things like that. Store operations becomes really important, because as you get better, your store needs to run better. And so then there is sort of a series of skills on top of that: assortment planning, visual merchandising, things like that. Those are my favorites.
Great, if you were to take those skills, once you have accomplished them, then you can start moving forward with the strategies that will actually set your business apart from others or, if you were to look at it another way, you’ll develop strategies which will lead to success.
Bob, here, let me put you on the spot. If you had to recommend one strategy, that would make an immediate difference to a retail business, what would it be?
Ah, I’m going to recommend two, but they are so close, they’re different but they’re so close that I think we can put them together. The ‘most liked’ and the ‘most trusted’. When I work with retailers, so, for instance, we just had our Retail Success Summit last week. Five hundred people from all over the world came to Michigan, all independent retailers. In the very first session, we always do, is on strategy, where we tell people, of course we we spend about an hour.
So the question is really, what are two, maybe three, possibly four things that you can hang your hat on? Everything else follows from that and for most independent retailers, if you can be liked and trusted, you are 90% of the way home. So, “Like” – how would you get people to like you? Well, you get people to like you, the tactics that follow, “liked” as a strategy would be: you hire likable people, you train them in customer service, so that your customers get a great experience. The tone of your email marketing is very friendly and likeable. Your Facebook posts and your tweets, they make people feel a particular way about you.
And “trusted” is the same thing. You want your people to trust you so that when they walk into your store, and ask you about something, they know that you’re going to. . . that their best interest is what you’re looking out for.
So, if I had to pick two strategies for any independent retailer, I would say, do everything you can to make yourself the “most liked” and the “most trusted.” If you can get people to feel that way about you, you’re golden. Now, of course, there’s a lot of behind the scene work that needs to be done to make people feel that way, but those are the strategies, those are the big picture directions that I would recommend.
Fantastic. Before we finish, some of the people that are with us are probably thinking great, but how can I turn that into money, or what can I do to increase my turnover. Is there a tactic that you can apply that will flow from those strategies?
Sure! Of course there is, Mike! There’s a couple things that I’ll recommend here:
- Sales Training – Training your people how to sell effectively. I’m not talking about being pushy. I’m not talking about the double-triple, behind-the-back, fancy-dancy close, top secret close, I’m talking about teaching people how to go out on the floor and ask the right questions and be truly concerned about this. I call it the ‘perfect purchase’. You’re not trying to make a sale, you’re trying to get your customer to the perfect purchase, so that when they leave, they feel really good about what they’ve bought. So, sales training, when we talk about really, really maximizing our sales potential, training people how to sell so that you do the most, with the traffic you have. That’s the lowest of the low-hanging fruit.
- After that, one of my favorite tactics to get new customers is to give away gift certificates. Now, a lot of people give away coupons, but if you replace your coupons with gift certificates, you’re going to have a significantly, significantly, better response. I like to say that people treat coupons like trash, they treat gift certificates like cash. So what you want to do is, you want to get gift certificates into the hands of your hottest prospects, the people who you want as customers, and make it a denomination that’s big enough to get them into the store, and then show them a great experience.
When you give somebody a gift, you put the Rule of Reciprocity into play and you want people to like you. Remember “liked and trusted?” The best way to start a relationship is to say, here, here’s $5, here’s $10, it’s yours. Just come into my store, I’d love to show you around, I’d love to show you what we do. No, there’s no strings attached. You don’t have to spend $20 or $30, you come into my store and I’m sure you will love what you see, enough that it will all take care of itself.
Fantastic. As you say, it’s equivalent to cash. You see so many of those offers that are “buy one get one free”, or $5 off a $30 purchase. Yours has a stronger currency to it provided, I guess, it’s on the next visit, right? You don’t want somebody getting the certificate on the day and wanting to spend it.
Yes, precisely Mike, you would give it to them when you… so we have a whole suite of distribution channels to choose from, but perhaps the most effective is, so Mike I meet you at a party and you say Bob, what do you do and I say oh, I own a bicycle store, and you say, I’ve been thinking about it, I love to bike and I’ve got a couple of young kids whose bikes are kind of wearing out, you know, that’s interesting. And so, instead of me giving you a business card or giving you a coupon, I say Mike, I tell you what, here’s a $10 gift certificate. Come in, spend it. You can spend it, you can use it for whatever you want. I would just love to have the opportunity to serve you. That’s starting the relationship the right way. You’re like wow, he’s a nice guy, got to go to his store and see what’s going on.
There’s your reciprocity as you’re saying.
That’s exactly right. Here’s another little trick that works incredibly well. I know your readers get tired of being asked for donations. I call it the ‘Donation Dilemma’. You want to do good things and you want to be generous but you feel like you’re not getting any returns. There’s no reciprocity on the other end, you don’t feel like you’re getting anything back from all the donations that you give.
So when somebody comes in and asks for a donation, you say look, I tell you what, I’m no longer giving cash donations but I’d love to help you raise a lot of money.
So, let’s say this organization has got a hundred members. You say, I tell you what, I’ll create a hundred special gift certificates that have on the gift certificate, please spend a lot of money because your purchase, 10, 15, 20, (whatever you choose) percent of your purchase will go back to XYZ organization.
So, then what happens is that the organization goes and gives the gift certificates to all of their members. When their members come in and shop, you give the donation in proportion to the amount of money that their members spend. So, if their members don’t come in and spend anything, there’s no donation, you’re out slips of paper. If they come in and spend big, you’ve acquired a lot of new customers, you’ve generated a lot of cash.
Yes, I know, you’re taking a hit on margin, on that first transaction, but one of the biggest mistakes I see independent retailers, specifically inexperienced independent retailers make, is they focus too much on the margin from the individual transaction and not enough on Lifetime Value of a customer.
So, you’re not making full margin on that first sale, but if you do a great job with them, they’re going to come back again and again and again for lots and lots of full margin purchases.
So, another concept here is break even on the first sale, to break the bank on the backend.
Hey Bob, this has been golden. Just looking back at my notes here, you’ve given us five key skills for success in small business, two great strategies that people can implement to be likeable, to be trusted and some ideas on the direction to head with that. Some great ideas to grow your business and focus on sales training, using gift certificates, and I just love that solution to the ‘Donation Dilemma’. I mean, every business person faces that and, as you say, they feel on the spot, but you can’t just be leaking out of your till to be giving cash. What a great idea.
Bob, look, thank you for the great stuff you’ve given us and just one last question. If there is any of area of retailing that you feel you is overlooked – you’ve just had your Retail Summit – did anything come up? Is there any area of retailing that you feel is being overlooked at the moment?
Bob:Yes, if there was one other piece of advice, that I see people incorrectly, not ‘doing’, but… here’s an important piece of advice, in my humble opinion. Never let an incident create a ‘customer unfriendly’ policy that punishes the many for the behavior of the few. And I see this happen all the time, somebody, one check gets bounced and then there’s all sorts of signs around the counter. Or somebody returned something that stretches the boundaries of what’s acceptable and all of a sudden there’s this prohibitive return policy.
Let your customers control the relationship. Love your customers, the money will follow.
Well folks, we’ve had the good fortune to get some great information from Bob Negen today. You can learn more about how Bob can help your business, or book him for a speaking engagement, at whizbangtraining.com. You can subscribe to the WhizBang! tip of the week, a free business-building tip for retailers at whizbangtips.com and you should also look very carefully at the Retail Mastery System.
Bob, I’d like to thank you for your time. I’m sure that, tomorrow, somebody will already be using the ideas that you shared with us, today.
Wonderful, Mike. Like I said, it’s been my honor. Helping retailers is what we do and if anybody who is listening to this gets something from this interview, it’ll be time well spent for me.
Click here to listen to the interview: Bob Negen – WhizBang! Training