People Don’t Like Retailers. Not really. Not when it comes right down to it. They tolerate – at best.
Let’s take the UK retail car industry again for the illustrative example industry in this series. You okay with that?
Let’s not kid ourselves, people generally speaking don’t like doing business with car dealers. Their perception of that industry isn’t particularly high. Many take the view that the purchase of the car is not on the whole an enjoyable experience. Now at this point for illustrative purposes I’ll discuss how I built up my own business selling ludicrously overpriced hi-fi.
I speak from experience, having faced many of the same dilemmas that ambitious car retailers face today. At first sight there may not appear to be too many parallels between hi-fi and cars – but look behind the facade.
More money than sense?
The systems I was selling started at round about £30,000 and increased progressively. Like a car, they were a major purchase. Like some of you, my business was plagued with poor reliability; manufacturers who didn’t keep an appropriate parts inventory; customers who preferred an argument rather than a solution – and so on and so forth. All this in addition to fixed costs that were out of step with the overall margin – and competitors who sold only on price.
Speculative but potentially lucrative
Back in 1976 when I decided there was a market niche for selling up-market hi-fi, I was anxious not to move from my established successful business into this speculative but potentially lucrative new venture. My hi-fi business was run in the evening from the front room of my home.
There was no passing trade and I had to rely on innovative and low cost advertising.
In those days of course the average value of the system was far lower than the £30,000 I’ve previously mentioned. There was no backlog of happy customers to gain referrals and no supplier endorsement. They felt that my method of operation was at best eccentric and at worst, foolhardy.
Business was tough
Payments to my suppliers were on a proforma basis for some considerable while. Business was tough. After my first year having generated a small but worthwhile profit I had a feel for the supply side of the industry – but I wasn’t too clear about the customer side.
I took the unusual step of asking customers what they did and didn’t like about doing business with me. They told me – sometimes in quite painful language. I discovered two key rules which older and wiser businessmen had probably known for years – but came as a revelation to me.
- If you ask customers in a non-aggressive way what they truly feel and you give them an environment in which they can reveal their feelings, the majority of them will choose to do. The information they give you is golden, however painful it may be.
- When receiving that information, be entirely and utterly ego-less. They are criticising your Company rather than you personally. It’s not helpful to be defensive in the face of criticism be it valid or otherwise.
That crucial first suggestion
The first suggestion was that our opening hours were somewhat inconvenient in that we opened at 6 pm to 10 pm – because I was still running my original business. My perception was that this was convenient for business people who after hours would like to choose their hi-fi away from shop hours.
It was true, but it wasn’t the whole truth
What I hadn’t realised of course was that there was a far larger market who were quite happy to do their ‘shopping’ in conventional daytime hours.
So, I had to reconcile how I could run my two businesses together. The decision was made to sell business No. 1 and go into the hi-fi business full time. I opened conventional working hours of 9 am-6 pm which of course was entirely convenient for the new category of customer – but somewhat less convenient for our original customers who had got quite used to choosing their hi-fi at night.
Had I been less ambitious, I would probably have thought as so many British retailers do and struck an attitude of ‘I’m here for my convenience, not yours’ – but I didn’t. I opened from 10 am to 10 pm. That was the solution, or so I thought . . .
Mr X
Twelve hours a day, five days a week made me disinclined to open Saturdays however, it just so happened that I received a referral from Mr X for his close friend, a business man who was flying in from Canada en route to Sweden. His employers were going to buy him an audio system as a reward for a spectacular achievement in his home country. His flight arrived at Heathrow at 6.30 am. on a Saturday.
It was suggested by Mr X that it would be an act of extraordinary courtesy and efficiency to collect his friend from Heathrow instead of the traditional black cab, give him breakfast, take him back to my showroom (still my living room) and do a demonstration. Note: there was no mention of a potential purchase. All this because his connecting flight to Sweden was at 1.00 pm the same day.
Being commercially immature and not seeing the wood for the trees, I was reluctant to do this. Mr X, being older and wiser patiently explained to me that I was privileged to be offered this opportunity. In short, I’d be VERY I’d be wise to accept it – and an idiot to ignore it.
Embarrassed? Oh yes
I have to say with some embarrassment that I quizzed Mr X as to whether his friend was likely to make a purchase there and then. I was displaying many of the attitudes of the unprofessional salesman. Again, wise council suggested that offering good service, albeit exceptional service, would pay dividends.
Sceptical, I collected the Canadian from the airport – and he insisted on buying me breakfast! He spent just under one hour in my living room, having previously told me that his bank had given him the go-ahead to spend $50,000 (equivalent of about £35,000 at that time) on an audio system. He was quite prepared to accept any reasonable recommendation I made that fitted within that budget. The sale was made – but more importantly, I learnt an invaluable lesson.
