5 Lessons For Web Companies From Brick And Mortar Retailers – with Herb Sorensen
on Jul 20, 2009 - 12:40 PM PSTWhile everyone else who’s building an internet company over-analyzes the successes of the same small group of dotcoms (Twitter, Facebook, Google, etc), I think Mixergy readers want to diversify their education. Maybe even learn from companies that have been around for a few decades.
I invited Herb Sorensen here to teach us what he learned in his 40 years of talking to and watching customers as walk through stores and make their buying decisions.
The FULL program
Video excerpts
About Herb Sorensen
Herb Sorensen, Ph.D. is the author of Inside The Mind Of The Shopper. He is the CEO and President of TNS Sorensen, and a preeminent authority on observing and measuring shopping behavior and attitudes within the walls of a store. He has worked with Fortune 100 retailers and consumer packaged-goods manufacturers for more than 40 years.
The 5 Lessons
The program covered more than these 5 points, but I singled them out because I think they’re the most valuable to online companies.
1: Don’t try to get customers to stay longer
Some retailers assume more time in the store means more money in the cash register. “If we hide the milk in the back of the store,” they think, “then customers might pick up a few other items they didn’t realize they wanted.”
But Herb’s research shows that closing sales faster leads to more sales. That’s because customers pay with three things: money, time and angst. The more time a retailer wastes, the more expensive the trip feels to them.
2: Forget aisle 10!
Herb told us how one retailer did everything in its power to try to grow traffic to an aisle that customers neglected. They handed out coupons, installed a flashing red “police light,” had greeters point customers to the aisle, etc. At the end of it all, they were able to grow that aisle’s traffic by just 2%!
Don’t we all have a section of our business that’s as neglected by customers as that aisle was? So I asked Herb what should be done about it. His response was FORGET ABOUT AISLE 10! You’re better off looking at what’s working and growing it by 10% than moving heaven and earth trying to get the part that’s not working to take off.
3. Forget about what YOU want customers to do
Herb told a story of an award-winning store that wanted its customers to come in from the left, so they made their right door hard to reach. When the store opened, customers were so determined to proceed the way they were comfortable, that even though they entered from the left, they cut through the front of the store to shop the way they wanted.
That was unacceptable to the store’s managers, so they put several pallet displays in the front to keep customers from going right and force them in the direction the store envisioned. Instead of changing course, customers started struggling to maneuver their carts around the pallets.
Successful retailers don’t try to direct traffic. They design stores to fit customers’ existing behavior.
4. Watch your customers shop
I asked Herb why his company watches customers as they shop instead of simply testing promotions and measuring their results on the bottom line. He gave me an example of a lady that his company watched struggle to get an item off the top shelf of a store. The revenues for the day might show that as a successful sale, since she bought the item, but to her, the experience was a failure. And if it’s not fixed, she might not return to the store. And others, who might not be willing to struggle, won’t buy the item.
5. If they buy virtue, offer vice
In the program, Herb talked about “licensing” behavior, where a customer who added a virtuous product to her shopping cart — like broccoli or tofu — might feel she has license to add a vice product — like ice cream or cake. This has tremendous implications for how products are placed along the path a customer takes through the store.
To sell items customers might feel guilty buying, retailers might offer virtuous items first.
Full program includes
- Where supermarkets make their real money. (It’s not what you expect.) And what that can teach YOU about diversifying your company’s revenue.
- How YOU can profit from “the long tail” and “the big head.”
- Why giving your customers more, might mean YOU will earn less.
Suggested comments
- How could I have made this program more helpful to you?
- Did you mind that this program didn’t have video?
- How was the audio quality of this interview?
View Comments to “5 Lessons For Web Companies From Brick And Mortar Retailers – with Herb Sorensen”
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July 20th, 2009 at 1:31 pm
Andy,
I don't care about the video, but quality of audio is very important.
(I didn't listen to this audio yet).
July 20th, 2009 at 1:38 pm
Audio-Link gives 404
July 20th, 2009 at 2:03 pm
Thanks for the
feedback. For a long time, I didn't even think to add video because,
like you, I only care about audio. It wasn't until I got feedback from
others that I started adding video.
Thanks for the help.
July 20th, 2009 at 2:05 pm
Thanks for telling me. I'm re-uploading it now. It should work in about 9
minutes.
July 20th, 2009 at 5:01 pm
Andrew — great interview.
Very good audio quality and great content from Herb Sorensen. He definitely knows what he's talking about (optimization of retail sales).
I also liked how you grilled Herb on his controversial recommendations “don't control shoppers” vs “but you can control doors and shoppers flow”. :-)
July 20th, 2009 at 5:50 pm
Great interview, thanks Andrew / Herb.
I love this kind of stuff. You can always find parallels to your online work because at the end of the day it's all about people and their psychology.
I'm also a big fan of Paco Underhill, who is also in this very same field.
People don't realize how often their shopping is being observed LIVE by one of these retail scientists. As well as seeing how people behave in a store, you also get to hear how they behave, which gives lots of clues to what they are thinking.
Again that is super useful for being able to understand a shopper and apply the same lessons to online commerce.
I've done quite a bit of work in the field of online sales to children and teenagers, where the sales process has to appeal to both the child and the adult who will pay.
Whilst working on that, I learned a lot from studying how breakfast cereal companies get kids to persuade their parents to make certain cereal purchases in real stores.
The one point I don't understand, is the fact Herb mentioned about real estate being the 3rd biggest source of income.
I've heard Ray Kroc say that this is the real secret to McDonalds wealth, that they are actually one of the worlds biggest real estate owners.
I can see how they can develop land and turn an out of town location into a prime shopping site. On paper the value of the land goes up. But I don't see how that becomes revenue, as they never sell the store or the land?
I also love that Herb seems like a real scientist. I have a lot more respect for the guys who write their books based on the facts they have observed through years of careful testing, than just a bunch of spare of the moment opinions.
The “licensing” concept is interesting. Sounds very much like a food related thing as that's something a lot of people have strong guilt based issues around. I think it's a bit advanced for most online sellers. From my experience, most online retailers don't even pay attention to more basic up-selling, which is a huge part of any successful store.
I'd say, any retailer that allows the majority of their customers to only buy 1 item, isn't up-selling and cross selling properly.
I'd love to hear how other people are applying retail intelligence to their website / stores.
July 20th, 2009 at 6:26 pm
I'm working on improving the audio quality. I know it's been a big issue for
some listeners.
Yeah, I saw that inconsistency. I don't think he was contradicting himself,
but I couldn't articulate a question that would clear the point up
completely.
I appreciate the feedback.
July 20th, 2009 at 6:34 pm
- I love Paco's work too.
- Herb has pictures in his book of what the recording equipment his people
use. It's a layer of scientific research that I really admire.
July 20th, 2009 at 7:34 pm
It sounded like you wanted to finish interview like you were in a hurry. Why was that? I think Herb was ready to share a little bit more.
July 20th, 2009 at 8:58 pm
That was just bad editing on my part. At the end of the interview I went on
a promotion rant for the book. When I heard it back as I edited, I realized
it was way too long and my points weren't clearly expressed. It wasn't
interesting to hear and it wasn't an effective pitch. So I deleted it. Can't
believe you caught that.
July 21st, 2009 at 5:46 am
Loved the interview Andrew. I found Herb a very “open” person which is really rare for successful businessmen his age. Here's my suggestion for another interview that I think would be cool if you could host:
- An interview with one of the founders of YouTube.
Well that's what I think would be really useful for us, the mixergy addicts :P.
Cheers,
Emil Hajric.
July 21st, 2009 at 7:09 am
I haven't watched the entire interview yet, but the 5 lessons excerpt is cool.
July 21st, 2009 at 11:03 am
“Successful retailers don’t try to direct traffic. They design stores to fit customers’ existing behavior.”
- Seems like a life lesson here.
July 21st, 2009 at 12:37 pm
I've been trying to get an interview with Jawed Karim, the third YouTube
founder. I'm talking to a friend of a friend now.
I don't think age is an issue with openness. I've done interview with guys
in their 20s who weren't comfortable with me publishing what they said
because they felt they were too open. Took me by surprise. I figured the
Facebook generation was open about everything.
July 21st, 2009 at 12:38 pm
I was wondering about that. I wasn't sure if it would be confusing for me to
pull out just 5 points. I was concerned that it might seem like that's all
we talked about.
July 21st, 2009 at 12:38 pm
One of the big points Andy. Thanks.
July 21st, 2009 at 12:43 pm
Oh, I see. I've made a terrible mistake there then. Well I'm looking forward to the interview! :)
Good luck man!
July 21st, 2009 at 3:35 pm
Oh No. What I'm saying is that I'm glad you posted that. I don't think you were wrong. Any way, thanks for the comment.
July 21st, 2009 at 3:36 pm
That was awesome. So interesting. And I love that you both threw in there that we should concentrate on strengths! Marcus Buckingham rules…
Great interview Andrew. Herb has so much knowledge.
July 21st, 2009 at 3:51 pm
Thanks Rosie. I love Marcus's work. I'll have to have him on Mixergy
sometime.
August 3rd, 2009 at 11:42 am
Wonderful! This interview is a great addition to my venture. It sure helped me open up my mind on the two-ecommerce brands that I am building. I already listened to it twice.
Love the concept of “forget aisle 10″ methodology. Just concentrate with what's working and go with it.
I already have been working on bringing “valuable” traffic to my sites, and Herb’s suggestion of closing sales faster leads to more sales research nailed it on the head. I’ve been trying to work with my sites’ layout to achieve the proper “traffic flow” and help shoppers find the products they’re looking for, purchase them, and exit knowing that they shopped at a reputable site.
I’ve been trying not to clutter my site and add proper up-selling and cross-selling products to increase sales. Hoping to better serve the shopper, I’m already working on a new layout of my first site; monogiggle.com, even though it was just launched in May of this year.
Will definitely listen to this interview again to make sure I better understand some of the concepts and research results that Herb was sharing. Also will be looking into his book.
Thanks Andrew and Herb for a wonderful interview.
August 3rd, 2009 at 6:42 pm
Wonderful! This interview is a great addition to my venture. It sure helped me open up my mind on the two-ecommerce brands that I am building. I already listened to it twice.
Love the concept of “forget aisle 10″ methodology. Just concentrate with what's working and go with it.
I already have been working on bringing “valuable” traffic to my sites, and Herb’s suggestion of closing sales faster leads to more sales research nailed it on the head. I’ve been trying to work with my sites’ layout to achieve the proper “traffic flow” and help shoppers find the products they’re looking for, purchase them, and exit knowing that they shopped at a reputable site.
I’ve been trying not to clutter my site and add proper up-selling and cross-selling products to increase sales. Hoping to better serve the shopper, I’m already working on a new layout of my first site; monogiggle.com, even though it was just launched in May of this year.
Will definitely listen to this interview again to make sure I better understand some of the concepts and research results that Herb was sharing. Also will be looking into his book.
Thanks Andrew and Herb for a wonderful interview.