This guest blog was supplied by Jonathan Elliott, managing director of Make It Cheaper, a company that helps small and medium-sized businesses reduce their overheads and increase their profits. Make It Cheaper is a Gold Sponsor of the ‘Celebrate an Independent Christmas’ campaign.
A big part of our work at Make It Cheaper is advocating small and medium-sized UK businesses and engaging with the issues and challenges they face. We understand that, where independent retail is concerned, a recurring threat is posed by powerful chain stores that set up shop in the local area.
So, we’ve drawn on the experiences of the 5,600 indie retailers we’ve worked with to date and put our heads together to come up with five tips that will help you take on the big boys down the road.
Focus on your strengths and cause some mischief!
Identify the advantages you have over your big competitor and do everything you can to get them across. This is what the major brand is most likely doing by hammering home messages about its cheaper prices.
You probably have higher quality products and you should certainly be offering a more personalised, friendly service. Let the latter speak for itself – but if something needs to be pointed out explicitly, do so through displays, A-boards, packaging, talking – whatever it takes.
There may be an opportunity to cause some mischief and, in marketing terms, position your store in relation to your competitor – in a similar way to how 7-Up once famously branded itself ‘The Uncola’. Differentiate yourself by telling people all the things you’re not and all the things you are. The more you show you’re up for a fight, the more people will talk about your shop and identify with your brand’s values.
Don’t worry about being conspicuous – the big retailer already knows you’re there.
Factor in your indirect costs
Kelly Clifford, author of ‘Profit Rocket’, claims that many small businesses do not factor in their fixed costs when setting their prices. Well, you can bet your bottom dollar that your big competitor does. They will know exactly how much they need to sell in order to generate the profit they want.
In fact, this is even more important for your smaller operation because you don’t benefit from economies of scale in the same way that big stores do – which means that many of your overheads account for a much bigger percentage of your turnover than theirs.
You know what your product costs and you set a margin that gives you the profit you need to make the sale of the product attractive – but have you factored all your overheads into that equation? If not, you could find yourself short of profit even if you hit your targets – so you’ll need to increase your prices (risky) or increase your sales (tricky) to make up the shortfall.
Once you’ve understood the importance of your overheads, you can work on driving them down as low as possible. Make It Cheaper can help you achieve this with a free and impartial saving service – and remember, every pound you save effectively goes straight onto your profit figure.
Customer retention is easier than customer acquisition
When any business is faced with a threat that may result in loss of custom, the temptation is often to advertise or run promotions in an effort to acquire new customers. This can work, but it can also be very expensive – and what’s more your major competitor has a massive marketing budget that allows them to reach your potential customers much more effectively.
You’ll probably get a better return on investment by focusing on the customers you already have. Give them top quality customer service, encourage their loyalty, make them feel like stakeholders in your brand. Get this right, and these customers will become your advocates and effectively do your marketing for you.
Communicate, communicate, communicate
Your communication with customers should not be limited to the outstanding customer service you provide. You can get creative to improve the experience of being in your store, create talking points or, sometimes, encourage customers to do what you want them to do.
Think about signage. It strikes me that the majority of signage we see is either prohibitive or information-based – so when you see something that serves a different purpose it can be very compelling.
I recently saw a TV item about a London greengrocer who filled her walls with blackboards boldly displaying recipes based around fruit and veg. It looked fantastic, made a great talking point and encouraged impulse purchases. This greengrocer seized upon an opportunity to delight her customers in a way that larger retailers usually cannot.
Here’s an idea if you’ve got a great space or attractive display: try a sign that encourages people to take photographs. Every photograph taken prompts future stories whose lead character is your shop – and how many more photographs will be taken if you’re explicitly asking customers to snap away?
One more thought. At WHSmith, staff often wear shirts saying things like ‘Ask me about pre-ordering the new Harry Potter book.’ Maybe you could do something similar. Consider this: how many more turkeys would a butcher sell if he wore an apron throughout October and November saying ‘Ask me about ordering your Christmas bird’?
Another major threat to indie retailers is the rise of online shopping – but even if it’s not viable for you to go down the e-commerce route, that’s no reason to ignore the web. National brands are in the online space – and you should be too. Even if you have a simple website that shows your shop name, some gallery images, your location, your phone number and your opening hours – that’s something for your customers to share. Include a contact form and it’s also a way for customers to get in touch.
Back to those photographs I mentioned in the previous point – if people share them via social media, most will actively want to tag your shop in their posts. If you don’t have a profile, you can’t get tagged.
Some smaller companies are cautious about social media because of the threat of people posting negative content, but this is nothing to fear if 99 out of 100 comments are likely to be positive.
Huge companies are on Twitter and Facebook using the opportunity to promote and interact. Some even offer an additional customer service channel, with Tesco being a notable example. But your business is fun, personal, sociable – so the online social space is one you should be dominating.
Thanks to the team at Make it Cheaper for this guest blog and some useful tips! To find out more about how they can save you money on your bills visit www.makeitcheaper.com or call 0800 316 711.