January.

For retailers, it’s cold not just outside, but indoors when it comes to moving the stock off the shelves. After the Christmas-buying sprees, most shoppers are back at home cooling their heels while retailers try to entice them back out to buy. The one stand-by many local store owners turn to is holding big sales, and they’re finding that in a tough economy it’s necessary to offer deeper and deeper discounts to get folks back and willing to buy. It’s great to have warm bodies in your store again, but it’s not great if your sale ends up making you no profit due to all that deep discounting.

So what’s the method of success that allows you to get the customers back and still make a profit? Is there a way to get both?

There are several methods you can employ to attract business and still maintain a profit margin. See which one of these (or more than one) will work best in your restaurant, retail store, or service-based business and give it a go.

Know Your Bottom Line, and Sell Just Above

This is the method to use with that inventory that needs to move out the door, not with that great new batch of products that just came in for Spring. Calculate your bottom dollar on these items: how low can you go and still make something, even if it’s a small something? Then make your strategy to sell many of these items, each bringing in that small amount of profit, and you’ll end up with a good amount of profit when all is said and done. Plus you’ll have cleared your store of excess, aging inventory.

Create a Loss-Leader

Grocery stores use the loss-leader method just about every week; their circulars advertise a deal that’s “too good to pass up” for their shoppers. In many cases, the grocery stores are taking a loss on this item, but they know that just getting the customers in the store is worth that small loss. How many times have you gone to the grocery store and bought just one item? Most of us don’t shop for groceries that way, and why not? Because in the process of locating and purchasing the loss-leader item, we’re unable to ignore the displays of other great merchandise – some also discounted, some not – that we have to walk past and around to find our goal. Use the same strategy in your store; advertise a huge discount on a popular item, set up a great display for it, and put it smack in the middle of many other great displays with enticing offers of their own.

Offer Package Deals

Another angle on the loss-leader strategy is to offer package deals and discounts; this method allows you to package your items of choice together, being sure that one of them is a cheaper item for you to purchase, which gives you greater wiggle room for a discount. You can offer a greater discount on a combined package, knowing that your combined investment in all the package items is still well below the discounted package price. You might even use a “buy one of these, get one of these other things” free method to sell a costlier item without a discount while taking the “loss” on your cheaper, freebie item. It’s the same method beauty product companies’ use when they offer a “special gift” with a purchase.

Add Value that Doesn’t Cost You Cash

What can you offer your customers that doesn’t come with any cash cost to you? Look beyond the basic inventory, and think about subscriptions, memberships, special discount or dining clubs, consultations, or other perks that offer a huge incentive for customers thinking about a purchase. The value is still there for the customer, who would otherwise have to pay to get the subscription or membership or consultation; but the value-added item isn’t costing you cash that you can’t afford to lose. Use these value-added items to upsell; offer them as freebies or part of a package, which allows you to give your customers an increased value for the same cost without decreasing your profit margin.

What method sounds best for your business?

Image by Alan Cleaver2000.

As we explained in a previous article , the key to locally owned businesses surviving and thriving in a competitive, online marketplace and tight economy is to find and dominate a niche of their own.

Small businesses can’t compete with the advertising dollars and inventory numbers of huge national chains; they can establish themselves by finding a specialty and being the best in it.

You Can’t Please All the People

The toughest part of becoming a successful niche business is realizing that you simply won’t be able to make everybody happy. If you choose to specialize your small business in science fiction, for example, then you won’t gain a following of classic literature lovers. But you will gain science fiction fans. If you choose to specialize your locally owned restaurant in a specific type of cuisine, perhaps Italian, then you’ll lose the people who don’t like pasta. But you’ll have fervent and loyal customers in the pasta lovers.

The Trade Off

For a business to succeed in a specialty or niche, it has to make a trade-off. You trade the complacent, so-so, average customers for the fervent, dedicated, enthusiastic ones. Sounds like a good trade, right? It is, because a few enthusiastic customers will give you more in lifetime value and passionate referrals to their peers than many average customers.

Finding Your Enthusiastic Fans

The first step to identifying those customers you want to find and keep for the life of your business is to clearly define your specialty. What are you offering that’s different, better, or more unique than your competitors? Once you’ve identified your own niche – your special offering – you’re in the right position to find the people who will be interested in what you have to offer.

The second step is just a bit of simple brainstorming: who is going to be the most interested and the most enthusiastic about your specialty, your niche? Don’t focus on the people who might be interested. Focus on the people who will love what you offer. If you’re selling science fiction books, you need to be at the sci-fi gatherings, clubs, and conferences, and partnering up with the local theater when the next sci-fi movie opens. Market yourself to the most passionate people in the particular niche; they, in turn, will market you to the people they know. When you find and convert enthusiastic customers, they do the advertising for you.

Places to Look for your Niche Customers

• Specialized online communities and groups
• Local clubs and meetings
• Conferences
• Meet-up groups
• Fan clubs
• Organizations and associations
• Trade shows

Note: If your “niche” is too big to define and go find in groups like these… then your “niche” isn’t a niche at all – and you need to work harder to find your small business’ niche – a truly narrow scope or specialty that will create a winning formula for your business in a difficult economic time.

Where would your ideal customers hang out? Where do they gather? That’s where you need to be.

Image by Rachel Voorhees.

Note: I got an e-mail a while back that challenged me on my inclusion of an Amazon link in one of my e-mail campaigns. This and the following post (and probably a few more beyond that into the future) will be my long-considered answer to the seeming “crisis” presenting itself to local brick-and-mortars… the invasion of big boxes and big-box style on-line competition. Here’s my first stab at how small businesses can beat Goliath.

Small businesses face a double challenge in the new economy; not only are we in the midst of recession like times, with everybody tightening belts and spending less, we’re also transitioning from store-front shopping on Main Street to isolated shopping via the Internet. Location is not the factor it used to be in shopping choices; anyone with Internet access (which seems to be practically everyone) can shop at any store online. The options have opened up, and for the most part, consumers seem to love the choices.

Locally owned small businesses can thrive in the new economy – and love it – but it requires a different approach. When your competition expands from being the other small retail shop two streets over to being the biggest national box stores plus the on-line retailers… it’s time to think of a new angle.

Independent bookstores are a good example, because the ones that have survived and thrive despite competition from Amazon.com have learned to work the new economic angle successfully.

The angle is this: you must create your own niche position and dominate it in order to compete with huge brands and online options.

It’s not enough to be an average bookstore, or an average retail shop, or an average restaurant. When customers have limitless options, average is not going to bring them back.

But you can bring them back.

Niche Examples from Independent Bookstores

An article in the New York Times highlighted how the niche angle has helped independent bookstores to survive. “Being a specialty store gave us something that would distinguish us,” said Alan Beatts, owner of Borderlands, which focuses on science fiction. “We are serving a special demographic, and we receive customer loyalty in return” For a locally owned bookstore, a niche could include

• Selling signed first edition books (and holding regular author events)
• Selling, trading, and assisting customers in rare books
• Covering niche topics (stocking and special-ordering specialized books, magazines, newspapers, and trade journals)
• Establishing expert status in book-related topics or specialized topics
• Engaging an active online community and having stellar e-commerce options

So, if you’re a bookstore, a retail store, a service-oriented business, or a restaurant, how can you find your niche, establish yourself in it, and thrive in this new economy?

“It’s entirely possible that you will choose a niche that’s too small. It’s much more likely you’ll shoot for something too big and become overwhelmed. When in doubt, overwhelm a small niche.” -Seth Godin, business & marketing expert.

Want more ideas from the local book store angle? Here’s a post from USA Today on a similar subject showcasing ways that small local brick and mortar bookstores are competing with the Kindle, Nook and similar book technology…

Image by ReneS.

The good news for retailers this Valentine’s Day is that consumer spending is on the rise. An annual Valentine’s Day survey, conducted by the National Retail Federation, suggests an 11% increase in spending on Valentine’s Day purchases. The expected total spending on all the romance is in the neighborhood of $15 billion dollars.

If you’re a retail store or restaurant owner, you should definitely be reaping some of those benefits from increased consumer spending.

And if you’re a retail store or restaurant owner, you should definitely be planning how you will attract those sales. Throwing a few paper hearts in the window is great, but come on: you can do better than that.

Even though we are less than one week to V-Day, you can still make the time count.

10 Last-Minute V-Day Marketing Ideas

1. Market to the ladies! Though men traditionally spend more on their Valentines than the other way around, women still comprise a large chunk of Valentine’s change, with the average female consumer expecting to spend around $80 on Valentine’s purchases this year. So clear out some of that lacey, heart-shaped stuff and put together some gift packages and product promotions that any red-blooded male would be happy to receive as a gift.

2. Put together a last-minute shopper’s package. Or several. There will be many who delay shopping until the last minute, and if you can present options that are thoughtful, creative, beautifully packaged, and good for several price points, you can get their business.

3. Hold extended hours on the weekend before Valentine’s Day. If you’re not usually open on the weekend, make an exception. Stay open late on Saturday night. Open up for a few hours on Sunday afternoon. Advertise your additional hours, of course, as a special time for Valentine’s shoppers.

4. Offer Early Bird Specials on V-Day itself. This year Valentine’s Day falls on a Monday; open up a couple of hours early for those wanting to grab a gift on their way to work. Put together a special discount for the Early Bird Shoppers. Have some piping hot coffee available, too. Donuts wouldn’t hurt.

5. Offer free delivery. Of course, not every business is set up for this, but if you are, then capitalize on it. Restaurants could offer pre-made romantic dinners to be delivered the day of (or a day ahead) with instructions on cooking or reheating as needed. Retail shops (beyond florists!) could offer beautiful wrapping and timely delivery of any Valentine’s gift purchased. It doesn’t have to be free, either.

6. Offer a custom shopping service. If you have some talented sales staff, offer to assist shoppers; uncertain or time-crunched spouses can call in with a price point, a few details about their significant other’s tastes, and then have you pick out, wrap (and deliver?) and charge them for a great, custom-selected gift.

7. Appeal to the rebels and creatives. Break out of the traditional Valentine’s Day flowers-candy-chocolates-dining gift list. What do you have that is quirky, funny, creative, off the cuff, special in a non-sappy way? There are plenty of people who are tired of the same old options. Give them something refreshing for a change.

8. Go with a red-and-white color theme. Help yourself think out of the box by promoting anything that fits into your red-and-white criteria as potential Valentine’s material. You could even offer a discount on any red or white items purchased between now and February 14th.

9. Offer an incentive with a future deal. Give a coupon towards 20% off future purchases with any purchase made for Valentine’s Day. Designate amounts if you want. Or make it for a specific product or service.

10. Extend your great offers through “Valentine’s Week.” Offer deals for the dudes in the doghouse (“Forgot Valentine’s Day? We can help!”) or the gals who didn’t get what they wanted (“Not loving your Valentine’s gift? Come pick out your own!”). Hey, when love is in the air, don’t just leave it hanging!

Image: Samantha Marx.

In this week’s marketing strategy, we’re going to explore how to give customer rewards (customer loyalty rewards) in return for customers sharing your business on popular social media sites.

iMingle is a fairly new player in the social networking scene, and it brings in an element most people don’t associate with social networking: insurance. It works by rewarding people for networking and purchasing insurance; when individuals network, and get a group together to purchase insurance, they can get a multi-policy deal and garner big discounts that otherwise they’d have no way to access. The insurance companies get more customers, and the purchasers get a better bargain on what they pay.

So far it’s working pretty well, and it’s a new concept that small businesses can grab onto and use in their own way. Here’s how:

Putting the Strategy to Work in Your Locally-Owned Business

To apply this strategy to your own small business, ask yourself two questions: what do customers want most from you (what can you provide) and how can you give your customers what they want with your social networks? Let’s break that down a little bit by looking at a hypothetical case: a small-town restaurant owner with a good business and the desire to expand with online sales.

So our restaurant owner – let’s call him Jerry – thinks about what his customers want most from him. That means both his local customers and his (potential) online customers. Jerry wants to use his online presence to connect with local people and to increase his customer base for Internet sales of his packaged gourmet foods. He knows what his local customers want: they want to get great deals and discounts on meals at the restaurant. He’s asked them in various ways, and that’s always the most popular response.

Jerry’s not so sure about his Internet customers, because he’s still getting into that world of online sales. So he takes a guess that they probably want great deals on the stuff they’re going to buy from him, too. They want high-quality, unique gourmet food items and they want to get deals and discounts on those items.

In both cases, what Jerry needs to provide is a better deal or the opportunity for a discount: a way for his customers to get an insider’s bargain on his meals and gourmet items. The second question he thinks about is this: how can he use his online presence to give his customers what they want, in a way that rewards them for interacting with him (i.e. his restaurant) online?

Jerry comes up with these ideas:

• He can give a coupon every time someone refers a friend who becomes a fan of the restaurant’s Facebook page or a follower of the restaurant on Twitter.
• He can offer group discounts; when a fan or follower gets X number of people to make a purchase (in the restaurant or via the online store) they all get a certain discount. He can use coupon codes for this.
• He can give a coupon for any type of social interaction online which promotes his restaurant; customers can “earn” a discount by sharing a link to his webpage, his Facebook page, or his Twitter account, or by blogging about his restaurant, reviewing his products, or getting a friend to sign up for his e-newsletter.

What ideas do you have for your business to expand your reach to new customers while rewarding the loyalty of existing customers?

Image: One Laptop per Child

A customer loyalty program, sometimes known as a rewards program, gives your small business an easy way to reward your customers for doing what you want them to do: coming back and giving you repeat business. You already have a base of loyal customers, and creating a customer loyalty program helps you strengthen those relationships. For newer customers, or those who are still deciding how much they like you, a loyalty program can be just the right incentive to keep you front of mind and keep them coming back to your brick-and-mortar store.

Need convincing that customer loyalty is critical to your business? Try reading these posts on customer loyalty and the value of customer retention.

Elements of a Customer Loyalty Program

Implementing a customer loyalty program is a pretty simple matter. You need to make it easy for people to sign up, preferably in several ways: a short form to fill out when they’re shopping or checking out in the store, an easy form to fill out online via your Facebook page, blog, and/or website. (You can do it in conjunction with growing your e-mail list – we explain step by step how to do this here.) Once people sign up, you need to have a system for keeping track of those in your loyalty program; you want a single place with all the information on each customer who has opted in. That way, when you do special mailings or offers, you have your mailing list right there.

The third element of a successful customer loyalty program is the rewards that customers can “earn” by continuing to give you repeat business. Rewards programs can be simple, and are usually very low cost to the business, but they need to be measurable and tangible. Your customers need a tangible reason to opt in to the loyalty program, and you need a measurable way to see what you’re investing in the loyalty program and what kind of return you’re getting on it.

Types of Customer Loyalty Programs

Points system: this is what airlines and credit card companies use. In simplest terms, a point is awarded for every dollar spent, though the ratio may vary (1 point for every 1.50 dollars, for example). When a customer accrues a certain number of points, they can be redeemed for a product or service offered by the company or, often, by a partner company.

For small businesses: this system is simple in theory but can get a little complex to keep track of without an electronic system. Be sure you have an accurate way to track the points earned by your customers and to track when those points are used for rewards. You’ll also need to set up a rewards scale with specific prizes or options for certain amounts of points.

Discount system: many retail businesses use a discount system for loyalty programs. This works well for both retail shops and restaurants. For every purchase or for every dollar amount spent (could be $10 or $20 or whatever level you choose to set), the customer receives a credit. Once the customer has earned a certain number of credits, he gets a discount, perhaps a dollar amount or percent amount off on their next purchase.

For small businesses: this system is easy to implement and track. Generally, businesses use a punch card type system and customers simply show their card when it is full to receive their discount. Another bonus of this system is that the reward actually brings in even more business.

Freebie system: similar to the discount system, the freebie system is often used by cafes and coffee shops. When a customer makes a sufficient number of purchases or spends X amount of dollars, she gets a freebie. A coffee shop might offer one free coffee drink for every ten cups of coffee purchased, or a free pound of coffee for every ten pounds of coffee purchased.

For small businesses: this system is also easy to implement and track using a punch card set-up, and customers love the idea of getting something for free. It’s also easy for small businesses to track the amount of money they’ll invest for each customer, and it’s usually minimal. Retail shops can always offer freebies too, and it’s a good way to get rid of excess inventory.

Image by Easa Shamih.

Twitter can be a powerful marketing and outreach tool for small, brick-and-mortar business. You can reach out to and engage with your local market, and you can also reach further than your local boundaries. But you’ve got to start with a few basics if you want Twitter to promote your business rather than just take up your time! Most Twitter “failure” comes from just not knowing a few basics, and then getting lost in the question of “Okay, now what?”

There are three basic rules of Twitter business use; and these rules define the purpose of your tweeting. Every tweet you send out should accomplish one of these three purposes: to entertain, to educate, or to engage.

Rule 1: Tweet to Entertain

You already know your potential Twitter audience has lots of choices, so don’t bore them with mundane items like “Just drank my 3rd cup of coffee” or “really bored today.” They’re looking for something new, interesting, something they don’t already know or can’t easily find out for themselves.
For example, if you’re a chef or restaurant owner, you can provide endless entertainment by giving people an “insider view” of the kitchen. (Here are more restaurant marketing ideas.) Think about all the reality TV shows, cook-off shows, and celebrity chefs out there; people are nuts about knowing what really happens inside a commercial kitchen. Remember, this stuff may seem mundane to you because you live it every day, but for the average person, this is intriguing, different, and thus, entertaining.

Examples:
“Just cracked 142 eggs for the batter for our fried fish.”
“I’m slicing up the fresh tuna just flown in… will be the chef’s special tonight!”
“Making up 3 gallons of hot fudge sauce for our dessert special.”
“Lettuce just arrived from the produce market; half of it is bad, going to have to redo the night’s menu.”

Rule 2: Tweet to Educate

Think about what the average guy doesn’t know about your business, product, service, or specialty that you do know. Tweet about what you have expertise in; remember, it may be day-to-day stuff for you, but it’s new, interesting, informative, and educational for folks who don’t work and live this subject daily. Get into the educational aspect of your business; maybe you’re a retail shop owner (more retail ideas here), a restaurant owner, or a service-based business. You might not think of yourself as an educator (education-based marketing is a winning strategy), but take time to think about how you would train a new employee, or explain a process to a new contractor. What do people find fascinating about your business? What expertise do you have? Break that knowledge down into bite-sized pieces, and you’ve got educational Twitter material just waiting to be shared.

Examples:
“Just got in a new shipment of linen skirts. Linen is one of the most durable materials out there! Always wash it in cold water for longest life.”
“Picked up some great heirloom tomatoes from the local farmer’s market today. Check the market out – they’re open every Saturday.”
“Best time of year to put a new coat of paint on your home’s exterior is fall. Anybody know why?”

Rule 3: Tweet to Engage

One of the biggest things people fail to use on Twitter is the question mark. Ask questions; lots of questions. And when you see questions related to your topic, answer them! Ask for input, ask for opinions, ask for help. And be ready to offer your professional input, expert opinion, and help whenever you can via Twitter interaction. Answering a question or responding to a direct message on Twitter only takes a few seconds, but it can gain you a fan who will share that information with all their friends… and so on it goes that leads to sales.

Examples:
“Which new dessert should we add? Vanilla bean cheesecake or apple crumble with caramel sauce?”
“Having an open house at the store for Halloween; Anybody know a great bluegrass band for hire?”
“What’s your favorite fall clothing item? Boots, sweaters, scarf, something else?”

Don’t waste other people’s time; stick with tweets that entertain or educate or engage (or all three, even better) and you’ll be using Twitter successfully to build, promote, and expand your local business.

Photo By: Spencer E. Holtaway