The devil is in the detail Part 2

Well I certainly opened up a can of words in my last blog. What a response!

Here is the gist of the responses I got:

1.      Franchisors run national promotions in conjunction with their suppliers with little regard to the franchisee who bears the costs of stock holding at the end of the promotional period

2.      These promotions are supplier driven as opposed to being customer driven

3.      They do not “drive” feet to the door

As regards bank charges – well you can just imagine what owners and managers had to say in this regard. In many ways these charges are scandalous to say the least. But bank charges and costs will be the subject of another blog.

As regards a Bp service station charging me an extra 5% on my fuel transaction – I have since stopped at another three Bp service stations to ask if they take my debit cheque card for fuel – and all said no. From this I infer that the Franchisor along with their franchisees have decided not to accept these cards as a form of payment for fuel.

This should be explained properly  -  at the pumps. There needs to be a sign saying we take all debit cards except – cheque debit cards etc.

However, today I want to look at national franchisor driven promotions in our country in particular.

Let’s go back to basics and revisit why we in fact have promotions at all.

“Generally, a promotion is communicating with the public in an attempt to influence them toward buying our products and/or services.”

So we take a reduced margin in the hope that we will get customers to buy more of that product when they get to our store. We want to drive feet through that door.

So please explain to me how buying two of a product and getting one free – gets me to stop at your service station, when I only know about it when I get to the pay point?

I really can’t see the point of these promotions anymore, can you?

How many of you even bother calculating your breakeven point on each product line before the promotion runs? We used to do that as a matter of normal business some years ago – but when I ask franchisors today, they look at me with a blank face as if I am asking a silly/stupid/ blonde question.

The look says it all – why do I have to even know my breakeven point on each line? If we don’t know our breakeven point – how can we tell if they are profitable or not? If we can’t make money out of them, why do them?

We run promotions to achieve the following:

1.      Increased ATV – to increase our average transaction value

2.      Increase our sales

3.      Keep our primary customers coming back time and again

If we do not achieve these, why do them?

We cannot compete on price with our supermarkets on known value items – so should we be doing these product lines at all? Why take a reduction in margin if our sales do not increase, our ATV does not improve and it does not improve loyalty to our store?

Who is driving these promotions? Whose interest does it serve?

My last questions are the following:

1.      Who decides which products go on promotion? Why put Coke on promotion for example when it remains our number one top seller? And some even run these in the month of December?

2.      Are we pandering to major suppliers?

3.      Where is the imagination in these promotions?

4.      Why can’t we get the displays right?

Can somebody out there please explain to me the benefits of running these non imaginative and repetitive promotions? I just cannot see how they benefit the branded networks as they currently exist.

It is time for us to grow up and be a part of the real world that our customers inhabit!

Take care out there and keep looking at the detail!

Jocelyn Daly

The devil is in the detail – believe you me!

Any of you with children will relate to this first story of mine.
When my kids were younger we used to ask them where they would like to go for a treat. They had a choice between MacDonald’s, KFC, or a Spur meal? The answer they gave us was always dependent on the gift that was on offer from that particular franchise – it had nothing to do with the meal itself! That R10 toy got a family of 4 for dinner that day. Only R10! (probably less if bought in bulk via China!)
The same is true of any convenience outlet – “give” a toy away supposedly for free – and the kids will get you to stop there! Engen are currently running a promotion with the concept of a “free” soft dog toy. A different version of the same sort of thing. Luckily for me they are now old enough to do some math’s of their own – as they worked out they would each need to spend in excess of R1000 to qualify for the supposedly free toy! Not so free after all!
But the point is that this type of marketing is very powerful and works! Time and again! It is the small additional “extra” as a reward for using your services that counts. This was brought home to me again recently by my children who are now in their teens.
Very seldom do I frequent the movie houses whereas my kids seem to live there and recently I took them to watch a movie at a Nu Metro movie house. They were really galled that I would even go there. Want to know why?
They charge an extra R2 for salt on your popcorn! Ster Kinekor do not charge extra for salt – it is inclusive of the price for popcorn and so it should be in my view! I had not noticed that my children only frequent Ster Kinekor movie houses.
I wonder how many kids out there feel the same as mine if it comes out of their allotted pocket monies? R2 for salt? How many “bums in seats” have they lost for just R2? Who thought this one through? Is that R2 really worth it in the long run?
After we had watched the movie, my children then also explained that if we had gone to the competitor’s movie house – our 3D glasses were also for free! We had to pay R5 a pair.
Another thing happened to me on a Bp site recently in Cape Town. I am in the habit of checking with the forecourt attendant that they do in fact take my debit card before I fill up my tank as I hate having to go into the shop to pay for my fuel.
On this occasion I did check and the answer was “we take all debit cards”. Great on that basis I asked him to fill up my tank.
I handed him my debit card to pay for the transaction and was told that type of debit card needed to be swiped at the shop terminal. So I was annoyed to say the least. Anyway once I got to the shop terminal the manager was called who explained to me that yes they take debit cards – but not one like mine!
Mine was a cheque debit card and that was not acceptable as a form of payment for fuel! Now I was really getting fed up! Look I am just a mere customer here – what the heck is the difference? I refused to back down as I had asked if they took debit cards and the answer was yes.
Guess what the manager did – he added 5% to the overall cost of the fuel transaction to cover the costs of swiping my debit card! Really customer friendly indeed!
I wonder how many clients are lost due to these stupid decisions.
I ask you; R2 for salt, advertise that you take debit cards – only to be told that your one is not acceptable – and make the customer pay an additional 5% on the transaction! Is this good customer relationship building?
No these are not endearing to the most resolute of customers, even for me who was an avid Wild Bean coffee purchaser! Will I go there again? Absolutely not!
Ok so here is the message for this week – look at the little things – the details that the customer sees in each transaction. Is it encouraging – does it entice me to come back time and time again?
Are we building customer relationships or protecting our potential losses and costs? Our business is service, who keeps our door open?

Take care out there

Jocelyn Daly

Promotions

Hello to all of you once again!

After my last note I thought it would be appropriate to look and compare various current promotional activities out there in the industry. Put them up on a spreadsheet and look and test how each one of us are doing in terms of addressing our customers. Boy was I in for a surprise…

So here is a list of the stores I visited:

2 Engens with a Woolworths offering
2 Caltex sites – none with the new offering of a Fresh Stop
2 Bp’s – one with a P&P offering and one without
1 Shell Select
No Totals
No Sasols

And the outcome? I shake my head as I write this. Not one store besides the Shell Select which had a pamphlet – could tell me what was on special. On the Engen sites – a supervisor was called each time – and they could not tell me what was on special. In fact they said they had none running at the time.

On all the other sites – the cashiers conferred with one another to check if in fact there were any specials – only to tell me there were not any running!!. I ask you with tears in my eyes…..because most did in fact have specials on promotion!!

And I walked each store before I asked the question at the tills! So before I got there I found one or two items on special – and the cashiers did not know about them. Yes they were not well marked – nor was there any special attention given to them on the floor – but they existed none the less.

One store – the P&P Express – which also called a supervisor who pronounced that there were no specials running at the time – when I walked out of the store – I saw a notice at the entrance to the store that both white bread and fresh milk were on special. But both staff and supervisors did not know about it? And as a customer I did not notice it going in – even though I was specifically looking for specials??

So I failed in my personal objective this week – but perhaps I did not? If the staff do not know what is going on in the store – how will your customers know?? And therein lies the nub of the question.

Take care out there

Jocelyn Daly

Promotions – my pet hate!

OK so what promotions will work? I like the value add promotions that are linked to high turnover products as they make both financial and emotive sense to me as a consumer. As an owner of a store they also make sense as I get to make some extra margin at the end of the promotion, knowing that these are high turnover items. Basically I get to buy the Coke in at the promotional cost price just before the promotion ends and then sell it at the normal retail selling price.  Extra margin on a high turnover product! Win win all round.

For example, a promotion linking a pie and a Coke on sale for under R10. Now that sounds like value for money to me as a consumer. A free newspaper with my coffee! That sounds like a really great offer to me. What do you think? Compare that to the buy two Milo drinks for R9.95. How does it sound to you just reading this?

BUT now comes the challenge. How do we tell our customers about these promotions?

I stood in a store recently which had a promotion of a coke and pie for under R10 running at the time.  Now here is the nub.  The customer walks into the store and moves straight to the Coke fridge and takes one off the shelf. He then grabs a packet of crisps which are merchandised directly opposite the Coke fridge section. There is no signage to tell him about the promotion anywhere near the Coke!  So no pie sale!

On his way to the fridge he has passed a so called promotional stand. On it are lots and lots of cans of Coke.  He does not even see this display at all as he knows that Coke can always be found in the fridges.  After all who sells warm Coke?

He walks to the till point and pays for his goods.  The cashier says nothing about the promotion to him and out he walks none the wiser!  That is criminal to me. But my guess is that the cashier has no interest in telling the customer about the promotion. Why? Because I bet you she rang the transaction up as a promotion, she put in the R2.50 difference and got herself (or a colleague) a pie for R2.50.   As easy as that.

Even if she did not personally gain, why should she tell the customer about the promotion? That would mean she will have to do a refund for the chips, call her supervisor to process the refund – and then get called in at month end – for having too many refunds processed on her shifts during the month!

And all because the ticketing, selling the promotion, is just so bad – it is plain awful to say the least. There is a pamphlet at the till counter with an array of items on promotion – and here I get to the fact again that we have so many line items on promotion at any given time – it looks like hard work to try and make sense out of them on the pamphlet! So the customer does not even try to understand how they all work… out he walks.

If you see a customer walk out of a store with one of the promotional items in his hands – and he has not bought into the whole promotion at the store – you don’t deserve to be in business. Harsh words, but that is how I see it.

The oil companies measure their store staff performance using Mystery Shoppers.  A waste of time as far as I am concerned. The cashiers can see them a mile away and do all the right things – like tell them about the promotion, when they get to the till. And then tell nobody else thereafter. As an owner, I want to ensure that my customers get the message.

The measurement for the Mystery Shopper is, “did the cashier tell you about the promotion?”   Answer dead easy – yes or no.  Is this useful information?  Absolutely not!  A waste of time and money in my view.  If I buy still water and a yoghurt – would I be interested in a pie and Coke special?  Go figure…

BUT if I buy a Coke – and the cashier does not tell me,  the customer,  about the special – she should be fired.  Quite simple in my eyes!

So measure what makes sense to the customer. Promote items that add value to the customer.    And be creative ….

Convenience Store Promotions

Those of you that have worked with me in this industry will know that I am passionate about convenience stores – to the extreme in many instances! And the one thing above all that absolutely gets me – is the way in which so called promotions – are applied at store level within this industry.

I have no clue why they bother even having these promotions. It must drive the retailer/franchisee nuts on a monthly basis! Here are some priceless ones that I picked up today.

Buy either a packet of Tennis or Eet Sum Mor biscuits for R9.95. Now I ask you with tears in my eyes – does that sound like a bargain to you? Are you going to drive your car to this store to buy either of these products? I would hazard a guess that any biscuits sold in our stores equates to less than .05% of our sales. So why promote it, knowing that I as a customer can buy it cheaper at my local supermarket?

How does that build feet into my store? It is not a product that my customers are looking for?
Here is another one: Buy two Milo drinks for R9.95. Does that sound good value to you? Again I bet you could buy them off the shelf for cheaper at the local supermarket.
There are other applications for so called promotions – like buy 2 of this product and enter into a draw to win tickets to a confederation soccer game or even better win a diamond! Do you know anybody who actually won one of these diamonds? It was smaller than the head of a sewing pin! I am still waiting to hear how they suggest I set this diamond?
And I bet you the small print around winning a trip to a soccer game will exclude flights! So if I win a ticket or two in a region that I do not live in – even if it advertises a ticket to the final – will mean that I actually cannot use it anyway!

So why do the oil companies in particular persist with these non-sensical “non value add” promotions? Well here are some of my guesses as to why they just do not get “it’ when it comes to promotions.

1. The supplier is paying a “kick back” to the oil company for the privilege of getting their product onto the best shelf space in the stores, advertising on glossy pamphlets – and free advertising on the oil company website to boot! How does it add value to the oil company- well it doesn’t quite frankly. I wonder how many retailers or franchisees actually know their breakeven point on a given product on promotion? Does the oil company care about the success of each product on a promotion? I wonder how many of the buyers are made to calculate the success rate of each product on promotion?

2. The buyer has a KPI (key performance indicator) which says – thou shalt deliver 5 product promotions per month. So quantity and not quality are the key to his success or failure in his position. I doubt he gets measured on increased number of feet in the store, increased margin for the retailer et al. Why do we need to have so many products on promotion at any given time?

3. This industry remains subservient to the supermarket industry. Now what do I mean by that? And here I blame the suppliers as well as the buyers within this industry. In the supermarket world, I as a supplier pay for the privilege of getting exclusive rights to a gondola end for a particular period of time. So in turn this same type of principle has been applied to this industry except that the mechanics and purchasing habits are distinctly different. And yes I know we as customers buy in the same way no matter where we are shopping BUT I stop at a convenience store for a very different shopping experience to that of a supermarket shopping trip. My planned purchase is different to the one I have when stopping at a supermarket – and we know for a fact that price is not the priority when considering where to stop at! I want to see this industry “grow up” to take its own identity separate to that of the supermarket market. And here the suppliers also have to rethink their strategies on how to work this market to their benefit going forward.

Suppliers and retailers need to step back and re-evaluate their reasons for running national promotions. What is the primary purpose that drives our selection for a good promotion? Please do not tell me that in this industry that “Price” is a driver. The first example I listed is based on price – the second one is based on value add.

Neither work.

Why not?

Well to the average customer R9.95 for a packet of ordinary biscuits sounds about the normal price – in other words I do not perceive any price saving. As regards the tickets for a soccer game – and I might be wrong about the small print here – (but that is based on the pathetic diamond campaign a few months back) – so I win a ticket to the final and I live in Cape Town – how on earth am I going to get there?

Does that add real value to me?