NEVER TAKE YOUR CUSTOMER COMPLAINTS LIGHTLY !!

To be a successful organisation, we should never take our customer suggestions and complaints lightly. In fact we can study our company's performance and gaps from  customer complaints and suggestions. Below two examples will throw light on the same :

1. GENERAL MOTORS MIFFED WITH PURCHASE OF VANILLA ICE CREAM !!

Never underestimate your Clients' Complaint, no matter how funny it might seem!

This is a real story that happened between the customer of General Motors and its Customer-Care Executive. Please read on.....

A complaint was received by the Pontiac Division of General Motors:

'This is the second time I have written to you, and I don't blame you for not answering me, because I sounded crazy, but it is a fact that we have a tradition in our family of Ice-Cream for dessert after dinner each night, but the kind of ice cream varies so, every night, after we've eaten, the whole family votes on which kind of ice cream we should have and I drive
down to the store to get it. It's also a fact that I recently purchased a new Pontiac and since then my trips to the store have created a problem.....

You see, every time I buy a vanilla ice-cream, when I start back from the store my car won't start. If I get any other kind of ice cream, the car starts just fine. I want you to know I'm serious about this question, no matter how silly it sounds "What is there about a Pontiac that makes it not start when I get vanilla ice cream, and easy to start whenever I get any other kind?" The Pontiac President was understandably sceptical about the letter, but sent an Engineer to check it out anyway.

The latter was surprised to be greeted by a successful, obviously well educated man in a fine neighbourhood. He had arranged to meet the man just after dinner time, so the two hopped into the car and drove to the ice cream store. It was vanilla ice cream that night and, sure enough, after they came back to the car, it wouldn't start.

The Engineer returned for three more nights. The first night, they got chocolate. The car started. The second night, he got strawberry. The car started. The third night he ordered vanilla. The car failed to start.

Now the engineer, being a logical man, refused to believe that this man's car was allergic to vanilla ice cream. He arranged, therefore, to continue his visits for as long as it took to solve the problem. And toward this end he began to take notes: He jotted down all sorts of data: time of day, type of gas uses, time to drive back and forth etc.

In a short time, he had a clue: the man took less time to buy vanilla than any other flavour. Why? The answer was in the layout of the store. Vanilla, being the most popular flavour, was in a separate case at the front of the store for quick pickup. All the other flavours were kept in the back of the store at a different counter where it took considerably longer to check out the flavour.

Now, the question for the Engineer was why the car wouldn't start when it took less time. Eureka - Time was now the problem - not the vanilla ice cream!!!! The engineer quickly came up with the answer: "vapour lock".

It was happening every night; but the extra time taken to get the other flavours allowed the engine to cool down sufficiently to start. When the man got vanilla, the engine was still too hot for the vapour lock to dissipate.

Even crazy looking problems are sometimes real and all problems seem to be simple only when we find the solution with clear and logical thinking.

Don't just say it is " IMPOSSIBLE" without putting a sincere effort....
What really matters is your attitude and your perception.


2. SAINSBURY TAKES ADVICE FROM A 3-YEAR OLD - "RENAME YOUR BREAD"

A rigid attitude might just be the antithesis of great customer service. Proving that they’re a company that knows how to have a little fun, this next story from Sainsbury’s supermarket highlights how your support team should spot great opportunities to do things that are quirky and out of the ordinary.
Lily Robinson (who insists that she is three and a half years old) was quite confused by one of Sainsbury’s products called tiger bread. In her eyes, the bread didn’t resemble a tiger at all, and in fact looked very much like a giraffe.
It’s hard to disagree with her!


With a little assistance from mom and dad, she wrote a letter to Sainsbury’s customer service department. To her surprise, customer support manager Chris King (age 27 and one-third) told her that he couldn’t agree more.
He explained the origins of the name:

“I think renaming tiger bread giraffe bread is a brilliant idea – it looks much more like the blotches on a giraffe than the stripes on a tiger, doesn’t it? It is called tiger bread because the first baker who made it a loooong time ago thought it looked stripey like a tiger. Maybe they were a bit silly.”

Lily’s mom enjoyed the letters and ended up posting them on her blog. Before long, this cute correspondence was a viral hit, and the pressure was on for Sainsbury’s to change the name of the product to the much more appropriate giraffe bread.
Knowing the customer was certainly right in this instance—and spotting an unusual opportunity to do something fun—Sainsbury’s changed the name of the bread and put signs around their stores that give a humorous nod to Lily’s original idea.



FOR MORE CUSTOMER SUPPORT TALES FOLLOW THE BELOW LINK :
http://blog.bufferapp.com/great-customer-service-legendary

BUSINESS MODELS

The below are a few examples of Business Models will explain the sales and purchase transactions that happen at various levels in a supply chain :

1. B2B (Business to Business)
2. B2C (Business to Consumer)
3. C2B (Consumer to Business)
4. C2C (Consumer to Consumer)
5. B2G (Business to Government)
6. G2B (Government to Business)
7. G2C (Government to Citizen)

1. BUSINESS to BUSINESS

This involves transaction between two business organisations and it will not involve the end customer. A good example will be procurement of raw material by a Manufacturer from the source/supplier. Another example in Retail supply chain will be purchase of Goods by the Wholesaler from the Manufacturer

2. BUSINESS to CONSUMER

This involves simple sales transactions from a Retailer to the end consumer/customer. With retailers shifting to E-Retailing, this form of business has increased multiple fold over the recent years. Some good examples will be FlipKart, Amazon, etc.

3. CONSUMER to BUSINESS

This is a new form of business which has come into existence majorly due to dotcom boom. It is also known as reverse auctioning where in a consumer can promote or advertise a service provider and be benefitted in money or other means for purchases made through his promotion or for this promotion. A simple example can be, a consumer writes or promotes a company in his Blog or Website and when another consumer uses the link to purchase goods from the service provided, the service provider will pay a promotion charge to the promoter.

4. CONSUMER to CONSUMER

EBAY is a very good example of consumer to consumer business model. This involved tow consumers , one selling a product or service and the other buying and paying for the product or service bought. The third party will be the online portal where the advertisement and the transaction happens. There is huge boom in the used goods market by the advent of such E-commerce sites benefitting both the buyer and the seller

5. BUSINESS to GOVERNMENT

This is a business model in which service providers and product manufacturing advertise or pitch their products/services to the government for present or future use. Private players in defence industry
is a very good example where in new technology and weaponries are presented for trial to the defence ministry and these players sell both product and services to the government upon signing the respective deal.

6. GOVERNMENT to BUSINESS

In this form of business is used in E-Governance wherein the government will have its official website which will act as a one stop access between the service providers and the government. The respective service provider will touch base with the respective government organisation to pitch their bid and finalise a deal to execute the projects.

7. GOVERNMENT to CITIZEN

This is usually a non-profit business model where in government will sell products to citizens at reduced or highly subsidised prices. This model is widely used by government of India to provide relief material and basic food supply to the needy and poor people.

PEST AND PESTEL ANALYSIS

PEST analysis is a very effective tool used to analyse the catchment and other external environmental factors that will influence your business. This study is usually done by retailers before they setup a Business Unit or a Store in a location. Some retailers call it Catchment Study. PEST analysis analyses the below factors :

- Political Factor
- Economic Factor
- Social Factor
- Technological Factor

Recent studies and analysis required further addition of 2 more factors relating to Law and environment for better analysis and understanding of the areas impacting or affected by the business

- Environmental Factor
- Legal Factor

1. Political Factor :

This is one of the primary factors that you need to look at even before laying a  road map for your
business in that catchment.  You need analyse the stability of the ruling government, how encouraging are the government policies towards corporates, labour laws and subsidies on goods provided by the state and the central government

2. Economic Factor :

The economy condition of the country should be considered, for example when there is a recession and people are not willing to spend, we cannot launch new stores and expect business to double. Economic factors impact a grocery retailer when there is high inflation, so before setting a business unit we need to analyse the inflation for the last few years. We also need to understand the economic
condition of the catchment the store will cater to based on which the pricing and margin can be decided for the products sold at the store and also the class of product to be sold.
This also includes interests at which banks offer loans and exchange rate of the local currency.

3. Social Factor :

Social factors include the age, culture and behaviour of the people living in the country or state.
Due to high cost of living even the labour cost will be high in such areas. Sometimes it is also advisable to consult a local anthropologist to understand the clients or customers we will cater to. This is more particularly applicable when we open a fashion store or a restaurant, we must ensure we have the fashion and cuisine that is preferred by the locals apart from our signature products.

4. Technological Factor :

The technological development of the environment. For example we cannot launch in store promotions on mobiles for loyalty customers or launch RFID unless the customer or the staffs are
ready to embrace the technological change. With India having more villages than developed Urban areas, while planning for a chain of stores the sales and marketing strategy should be designed to accommodate both areas with technological advantage and rural areas with less technological advancement

5. Environmental Factor :

This includes the factors such as weather, climate change and the awareness the people have about the environment. Change is climate through the years will also lead to change in products required by the customers. For example, in India winters are getting colder and summer are getting hotter leading to extreme heat and cold in areas which were having milder weather. This change has led to new requirements such as winter clothing during winters and Air conditioners during summers in these areas.


6. Legal Factor :

Legal factors include the various laws enforced by the government and the impact of the same on our business. For example labour laws, food safety laws, customer law, establishment certificates, etc. which have direct impact on the way we will set our business practises. Frequent changes in legal structure due to change in political environment will lead to loss in business.

SALES MARGIN CALCULATION

I have asked this question to my seniors and have been asked this question by my colleagues. I thought I can share my knowledge on the same in this forum, so that it can serve the people looking for knowledge in fundamentals of Retail :

What is Sales Margin ?

It is the gross profit acquired from sales after VAT, in short terms it is earnings before interest, taxes (other taxes incurred by organisation apart from taxes on sale of goods), depreciation, amortisation (EBIDTA) and OPEX (operational expenses)

At times retailers do add their OPEX and other over head expenses as a percentage to the landed cost of the product , thereby leading to higher UNIT COST. So the margin in this case will be NET MARGIN i.e. sales margin after Tax

Sales Margin is always represented in percentage (%)

Below formula will help you understand the calculation of NET MARGIN :

NET MARGIN % = { (NET SALES - COGS) / (NET SALES) } x 100

Where NET SALES = Selling Retail / (1+(vat rate/100))

COGS is cost of goods sold i.e. the unit cost at which the product is being sold

SELLING UNIT RETAIL CALCULATION FROM UNIT COST

Though it is simple, it seemed pretty confusing at first to me. It took a while for me to understand the method to calculate retail price from cost price, in fact when I did Google for the answer I found a lot of wrong answers or formulae online and sadly I did not find the answer I was looking for. Then I used the oracle retail calculation engine to understand how the same is being calculated.

Before going for the complete formula lets understand it step by step. I will explain you the way I understood it, hoping it will provide better clarity on the calculation :

Lets assume :

V - Vat rate 

C - Unit Cost

R - Selling Unit Retail 

NR - Net Retail i.e. selling retail before adding vat rate

M - Net Sales Margin 

Every merchandiser will set a fixed Margin percentage for each category which he would like to attain through sales. For example a buyer has procured a merchandise , lets say Disney soft toy for 1500 Rs. at landed cost. Now the merchandiser while doing the budgeting was to attain a margin of 35% , so he will use the below formula to calculate the Net Retail ;

C = NR -  (NR x M/100)

C = NR{1-(M/100)}

C / {1-(M/100)} = NR    

                      NR = C / {1-(M/100)}           --- this is the formula to calculate Net Retail ---

NR = 1500 / {1-(25/100)} 

      = 1500 / {1-0.25}

      = 1500 / 0.75

      = 2000 

So from the above , we can understand that to the merchandiser will set the Net Retail at 2000 for him to achieve a margin of 25% we can verify the same using the below formula 

             M % = { ( NR - C ) / NR } x 100    --- this is the formula to calculate Net sales Margin ---

M = { (2000 - 1500 ) / 2000 } * 100

    = { 500 / 2000 } * 100

    = 0.25 * 100

    = 25 %

 Now that we have the Unit Cost, Net Margin, Net Retail and Vat Rate we can easily calculate the 

selling unit retail 

R = NR + (NR * V/100) 

   = NR x ( 1+V/100)  

   = 2000 x (1+0.16)

   = 2000 x 1.16

   = 2320 

                        R = NR x ( 1+V/100)           --- this is the formula to calculate Selling Unit Retail ---

The consolidated formula to arrive at the selling unit retail from cost will be below 

                      R = {C x ( 1+V/100)} / (1-M/100)   

   

R = {1500 x (1+16/100)} / (1-25/100)

   = {1500 x (1 + 0.16)} / (1 - 0.25)

   = ( 1500 x 1.16) / 0.75

   = 2320 Rs. 

 

6Ps OF RETAIL MARKETING

I attended my first off campus interview with an experience of 1 year. I was asked this question by the interviewer. I was baffled by the question WHAT ARE THE 6Ps of RETAIL !!
But the interviewer did not give a sarcastic laugh , like most interviewers do when the interviewee cuts a blank face. He instead explained me the 6Ps in brief and I thank him for that till date because I never had to learn it more than once in detail to remember it. I hope the below section will help you to understand what I have understood and learnt so far about the 6Ps of Retail

THE 6Ps of RETAIL MARKETING :

1. Product
2. Placement
3. Price
4. Promotion
5. People
6. Pixel

Each of these 6 Ps have equal importance in running a successful business and contributes to higher turnover when kept in check and analysed for improvisations on regular basis. Now lets discuss the same in detail :

1. PRODUCT :

A product is anything in a tangible or intangible form sold by an organisation to a client for profits. It is the assortment of product sold by an organisation that defines the purpose of the organisation and its existence in the market. Simple examples for intangible Products can be Insurance policies, BPO services and for tangible products will be Fruits, grocery items, clothing, etc.
All retailers will categorise the products based on Manufacturing, Procurement, sales and seasonality


CLASSIFICATION BASED ON MANUFACTURING (applicable for "in-house products")

1. Core or Flagship products
2. Basics

CLASSIFICATION BASED ON PROCUREMENT

1. Consignment
2. Concession
3. Regular
4. Deposit
5. Non-Trading
 
CLASSIFICATION BASED ON SALES

1. Top Selling
2. A Class , B Class and C Class products based on average sales in descending
3. Clearance goods

CLASSIFICATION BASED ON SEASONALITY

1. New Launch
2. Continued Products

We will discuss the above in detail when we discuss Product classification in upcoming chapters


2. PLACEMENT :

Placement can be subdivided into two types in case of a brick and mortar store :
- Visual Merchandising
- Store location

Visual Merchandising is the art of placement of your products at the right place in the shop floor, which will in turn act as silent salesmen to your customers improving both your sales and your customers' shopping experience. Visual Merchandising covers effective signage placement, cross merchandising, floor plan, gondola placements, aisle spacing, television placement, window displays, etc. We will discuss visual merchandising in detail in the future chapter on the same.

Store Location plays a vital role in attracting walk-ins i.e. number of customers visiting the store. A store placed in a mall's ground floor, a store well connected by public transport, a store with good parking space will attract more customers than a store failing in these criteria. Type of customers and customer needs in the store's catchment area should be studied before finalising the location. A very simple example can be, we cannot open a jewellery store in a high security risk area even if the area is well connected by public transport which will in turn cascade to higher walk-ins.


3. PRICING STRATEGY :

Pricing strategy is the art of pricing your products, yes its not just a job of fixing margins. It involved very niche expertise of understanding the customers, catchment and the product life cycle. For example a merchandiser while maintaining the price of a product would consider the below points:
- introductory products
- standard product or a regular buy product
- flagship products
- non selling products
- out of fashion
- clearance
- off sale season
- competitor's pricing
- budgeted margin percentage for the product category
Based on the above a merchandiser will decide whether he has to go with a promotion strategy or mark-up strategy or mark-down strategy or clearance pricing strategy.


4. PROMOTION : 

Promotion involves the various steps or measures you take to ensure your message reaches your customer. The message can be brand image , merchandise, loyalty program or your presence in the market. Promotion can be divided into two simple types :
- Above the line Promotion
- In-store Promotion
The first being promotions done outside the store premises like hoardings, flyers, etc and latter being in-store signage, window displays, visual merchandising, freebies, etc.
The purpose of every promotion will be to increase the following :
- Sales
- Customer Walk-in
- Customer Conversion
- Average Bill Value
- Brand Image

5. PEOPLE : 

People are the face of any organisation or retail brand. It is its people who define the success of an organisation. With retail still being people oriented industry unlike manufacturing, having well groomed and trained people will help your organisation achieve its goals and mission.
Therefore recruitment and training of employees is of high priority and importance in a retail environment. Skilled sales staff can enhance your sales and customer loyalty multiple folds. Ensuring high morale in team members and management staff will ensure very high return on investment for the higher management. Human resource department plays a very vital part in people management.


6. PIXEL : 

Pixel covers the technological front which are used for promoting our products.
We are in the age of Internet and people spend a lot of time online to connect and communicate with one another. This window provides us a huge opportunity to communicate and promote our products and brand image. Online marketing has a faster reach and with Facebook, Blogging gaining huge popularity they can be utilised as good marketing instruments to reach out to our customers.
Other ways of marketing can be done through bulk messaging to loyalty customers, emails and on our official website and pages.