The Changing Mindset of Luxury Consumers

In an age where income inequality has painted an unfavorable portrait of the wealthy, showroom customer mindsets are constantly changing and these changes require a shift in marketing and sales approaches.  For decades, luxury marketing was based on selling limited distribution and appealing to one's aspirational needs.  When a woman carried a Hermes Birkin bag, she wanted to make a status statement.  That's not the case in today's world.  Consumers who buy luxury plumbing and hardware have already achieved a certain status.  They are not looking, or necessarily wanting, to become conspicuously consumptive.  Instead, as Pam Danziger points out, today's luxury consumers are looking for inspiration not aspiration.  Luxury marketing has moved from the classic four Ps of product, place, price and promotion to the four Es -experience, everyplace, exchange and evangelism.

Experience for a decorative plumbing and hardware showroom means more than simply providing outstanding customer service.  That is a given for any consumer willing to pay a premium for products.  Savvy showroom professionals understand that they need to focus on the experiences that decorative plumbing and hardware products can deliver.  These experiences may include the ability to wash away the stresses of the day while having a refuge in their home that provides time-only for themselves, devoid of cellphones, texts, emails and other family members or to simply enjoy the aesthetic beauty of a well designed and specified new bath. 

The concept of everyplace means that consumers engage with your showroom's brand on their terms, on their time and with their agenda.  This does not mean though that you have to sell online either on your website, social media or other venues.  Everyplace may involve walking jobs more often, training installers in your showroom and on the job site, better staging of materials, troubleshooting problems instead of passing them on to manufacturers and representatives or allowing customers to trial test different products.  Everyplace also represents opportunities to differentiate your showroom and approaches from others.  To many luxury consumers, their time is more important and valued than their financial resources.  Demonstrate how you save them time, make the purchasing process easier and ensure desired outcomes.  Brainstorm with your teams why you are different and what you can do to serve your clientele on their terms, time and agenda.

Exchange relates to appreciating the value of things, not just the cost. Value involves the premium you bring to their project and the reasons why a customer should buy from your showroom as opposed to online or the discounter you compete with every day.  Value also involves the value of your customers.  What is the value of a customer's attention, engagement and permission to give you their time?  When you answer those questions, you give your showroom competitive advantages.

Evangelism requires creating a mission and brand experience that is so inspiring to consumers that they engage with you - and subsequently share their enthusiasm with others. What makes evangelism so powerful today is how it marries the oldest form of persuasion - word of mouth - and the newest - social networking.  Evangelism requires inspiring customers and team members with your passion. 

Remember, today's luxury is not a price point but a mindset. 

Mother Goose Part 2: Why We Need to Tell Brand Stories

At the 2016 DPHA Annual Conference, Don Miller explained why showrooms need to tell compelling brand stories where the hero is not your company or the products you sell, but the customer.  Bernadette Jiwa points out that most showrooms think of story as a way to create and communicate value.  However, story needs to move beyond a medium for becoming better known, increasing sales or making more profits. Jiwa notes, "the story, not of what is, but what's at stake and what could be is what drives our desire to succeed." 

Story done well explains the differences you make in the lives of your customers and community.  While Macy talks about closing 100 stores because they are no longer economically viable, Jeff Bezos is trying to figure out how to make flying cars.  Elon Musk is not simply selling electronic cars and looking to harness the power of the sun; his goal is to accelerate the use of sustainable energy and reduce America's dependence on Middle Eastern fossil fuels.

Telling your story requires explaining why you exist, where you are headed, the values and beliefs that guide your journey and how you will accomplish your goals without compromising your values.  Great story-driven businesses such as Tesla and Apple have a purpose, vision and values that are the foundation for their success.  What story do you want to tell that will enable you to quickly adapt in times of change?

 

Proving Digital Advertising's ROI

To prove the effectiveness of online advertising, Google plans to use data from billions of credit and debit card transactions to show that online ads drive consumers to brick-and-mortar retailers, reported the Washington Post.

 

Google announced May 23 that it assembles troves of personal data from smart devices and personal computers, including where someone is located via Google Maps and other applications, the search terms that customers use in a Google search and customer web browsing behavior.  Google uses that information to identify individuals when they log into Google services. 

 

Google has applied for patents for newly developed mathematical formulas that protect consumer privacy when the company matches a shopper from online behavior to purchasing at a brick-and-mortar store.  Google claims its formulas convert the consumer's name and other personal information into a string of numbers that make it impossible for Google or anyone else to know the names of shoppers or for storeowners to know the names of Google users.  What Google claims it can prove is that a match has been made between an online search and a brick-and-mortar purchase. Additionally Google does not know what was purchased; it only will know how much was spent.

 

Privacy concerns abound with this new development.  Many consumers most likely did not realize that when they signed up for Gmail, Google Search, Chrome or Google Plan, they gave Google permission to share their data with third parties. Other ways that third parties receive permission to obtain data is through loyalty programs and through location data.  GPS signals from smart phones and smart devices are tracked.

 

Google's goal is to prove online advertising prompts brick-and-mortar purchases so it can capture a much larger share of advertising dollars that are currently dedicated to television.  Stay tuned.

Protect Your Data

Global hacking was front-page news this week, affecting businesses, government agencies and hospitals in at least 150 countries, reported The Wall Street Journal. Disney also claimed that a hacker had kidnapped one of its movies and threatened to release portions of the film online if a ransom was not paid. What can you do to protect your business and personal data from being compromised? A recent article in The New York Times offered how-to guidance.

• Encrypt your data using Signal or WhatsApp to send text messages. Encryption is a fancy computer-geek term for scrambling data. Facebook Messenger and Google Allo provide options to encrypt your messages.

• Use FileVault or BitLocker to protect computer hard drives. Both Apple and Windows offer an automatic encryption option.

• Improve passwords from being easily stolen by using password managers such as LastPass, 1Password or KeePass. You should keep a written record of all your passwords and store the record at your home or at another venue away from the office. When setting passwords, your best bet is to scramble letters, punctuation marks and numbers.

• Use two-factor authentication to protect your email, social media and other accounts. This requires anyone who is using a new device to access your email to have a code in order to gain access to your Inbox.

• Use a browser plug-in that encrypts your connections to websites such as HTTPS Everywhere. Also make sure that your Wi-Fi network is secure.

• Use a Virtual Private Network (VPN) to shield browsing information and hide your location. Three VPN providers are Freedome, TunnelBear and Private Internet Access.

• Don't rely on Incognito to hide your identity. Instead, consider using Tor which enables private web activity, but keep in mind that the program is relatively slow and chunky.

• Consider using alternative search engines other than Google. DuckDuckGo may be a better choice for sensitive searches.

• Cover your webcam to prevent someone who hacks your computer from seeing you through your computer's camera.

Are You Answering The Three Most Important Questions In Business?

Inc. magazine recently wrote a glowing review of the Basecamp app, praising it as a combination of Slack and Microsoft Project. Digging deeper, the review found that the reason for Basecamp's skyrocketing popularity and success as a project management tool is that the app answers the three most important questions in business that every team member asks almost daily.

1. What am I doing? Every team member wants to know the role they play in your showroom, why it is important and how they make a difference. If you fail to provide your team members with the answers to those questions, your team members will tend to lose focus and interest. Great managers constantly reinforce the reasons why team members come to the showroom.
2. Why am I here? Simon Sinek in his seminal work, Start With Why, brilliantly points out that most businesses can describe what they do and how they provide products and services, but few answer the question why businesses do what they do. The "why" for many showrooms is to make a positive difference in their clients' lives. You are not simply creating new baths and kitchens, you are making dreams come true, improving family cohesiveness and improving lifestyles. When you explain the "why" to your team members, they understand the underlying motivation for the jobs they perform.
3. What's the deadline? Inc. claims that the leading cause of stress in the workplace is confusion over due dates on projects. When you set a deadline or milestone, you are establishing priorities for your team.

Brand Lessons From Chipotle

Chipotle was cruising, sitting atop the fast causal food business with a product and business model that was first to market.  The stock soared and everything pointed to a rosy future until the fall of 2015 when 15 of its restaurants were victimized by a supply chain issue that left 55 of its customers suffering from E. coli contamination.  On one hand, Chipotle was punished for being true to its brand of using fresh ingredients to create superior products.  On the other hand, Chipotle had received warning signs of potential contamination problems prior to October 2015.  The E. coli breakout caused the stock to tank by more than 300 points from its previous high, revenue to plummet and perhaps most significantly, the brand's integrity to be compromised.

Chipotle undertook a defined campaign to rebuild customer loyalty. It started by admitting fault and closed every one of its restaurants for a national safety day, viewed via broadcast by 50,000 employees.  To win customer loyalty back, the company offered free meals.  5.3 million customers downloaded the mobile coupon for a free burrito and 3 million people took advantage of the offer.

Chiptole grew from a small chain in Denver to an international powerhouse with more than 5,000 restaurants worldwide because of its core values that included a commitment to serving meat from animals raised humanely and sustainable food practices.  Values combined with both quality of meals and price points made Chipotle phenomenally successful.  Customers connected with the brand and became corporate ambassadors.  And therein lies the lesson for decorative plumbing and hardware showrooms.  To create your own enthusiastic fans who will recommend you to neighbors, peers and friends, you must understand that your business in not transactional.  Your clients are not simply buying a new bath from your showroom, they are trusting you to make their lives more enjoyable and fulfilling.  When a client or customer gives you permission to rip apart their home and inconvenience them for weeks or even months, you are being given an opportunity to create a deep personal connection.  Remember, trust is the hardest thing to earn in the business world.

Almost every project will encounter problems that can compromise the trust you have been given.  Your response can either reinforce or break your relationship with the customer.  Most likely that relationship will break if your problem solving approach is to turn the resolution of the problem over to someone other than your showroom.  Customers purchased their products from you.  If they encounter problems, they don't want to be passed on to a third-party.  While it is perfectly acceptable to involve representatives and manufacturers, your showroom needs to own the problem and the resolution. 

Chipotle learned that human empathy was key to rebuilding its customer relationships.  This was demonstrated by accepting responsibility, taking corrective action and continuing to improve on its core values. Chipotle teaches that brands need to be constantly reengaging and innovating to create and serve loyal customers.

The Power of Adaptability

Our business world continues to change at an alarming pace. Imagine if you were in the automobile industry. Today, shared services ­- Uber and Lyft - represents less than 1% of all driving volume. Several experts predict that self-driving vehicles and shared service will represent 10% of driving volume by 2024. With the auto industry accounting for 15% of gross domestic product (GDP), the anticipated disruption is going to have far-reaching economic and social impact.

 

Our industry continues to be disrupted by the Internet and new competitive players. Many showrooms are successfully combatting online competition by improving customer experiences and demonstrating the value they bring to their customers and their projects. To survive and thrive in a consistently changing retail paradigm you need to be adaptable, writes Rick Houcek in a recent 2-Minute Monday Motivator. If you need an example of successful adaptation, look no further than the wily coyote, suggests Houcek.

 

Throughout time, coyotes have become stronger, more grizzled and in greater numbers than ever before. The reason is adaptability. Houcek points out that while other species have suffered as their natural habitats shrink, the coyote has learned to adapt. They can live in cities as big as Los Angeles, Washington DC and Philadelphia. They can live in all life zones - deserts, grasslands, low valley floors, open plains, foothills, tall mountains and populated neighborhoods. Coyotes, unlike most other breeds of animals, can hunt alone, in pairs or in packs and will eat almost anything. Coyotes do not miss a single opportunity. They are neither nocturnal or daylight foragers. They are 24-hour animals.

 

Coyotes have survived better than almost all other members of the animal kingdom by their ability to adapt. Houcek states the coyote reminds him of an old German proverb, "There's no such thing as bad weather. Only inappropriate clothing."

 

The key to surviving in today's ever-changing world is to have the foresight and ability to change. In your showroom, what adaptations should you make to meet customer demands and improve customer experiences? As the leaders in decorative plumbing and hardware industry nationwide, we all can take advantage of Gandhi's guidance, "Be the change you seek."

 

We know that success is not guaranteed, prosperity is not promised and safety is not ensured. Your ability not only to survive, but thrive is a direct result of life-long learning, constantly improving and most importantly, adapting to whatever life and circumstances throws at you.

Enjoyment Beats Long Term Benefits

What can you do to help your team achieve its performance goals?  Researchers at the University of Chicago answered that question.  They found through multiple studies that goal achievement success is tied directly to the immediate benefit of happiness or enjoyment as opposed to a longer term benefit of better health, grades or diet. 

 

In numerous experiments, it was found that individuals would pursue their goals longer if they enjoyed the process.  Those looking to lose weight ate more vegetables if they liked the taste of vegetables than those who were eating vegetables simply to lose weight. Those who lifted more weights and lifted for longer periods of time did so because they enjoyed lifting weights.  The longer-term benefit of a fitter physique did not have an influence on the amount of weight lifting or number of times a week someone went to the gym.

 

The lessons for decorative plumbing and hardware showrooms are as follows.  First, you can help you team meet personal and corporate objectives by assigning tasks that each team member enjoys.

 

Second, reward top performances as much as you can.  Immediate rewards have a more sustainable impact on goal achievement than waiting until the end of the month, quarter or year.  When you reward immediately or frequently for superior performance, it frames difficult tasks less like work and more like fun. 

 

Third, identify the positive experiences of achieving the goal.  The researchers found that people ate almost 50% more of a healthy food when they liked the taste, compared to another group that ate more for the health benefits.

 

Goal achievement will most likely increase if you offer immediate rewards on the journey to the finish line.

Are You A Victim of Confirmation Bias?

Most hiring processes are not effective due to a concept known as "confirmation bias".  Most people who interview prospects for a position in their firm make a determination of a candidate's fit within five minutes of the start of the interview and then spend the rest of the time affirming what they want to believe based on those first impressions. 

 

That's why most job interviews are not really effective ways to determine if the candidate sitting in front of you can do the job that you are offering, will work with your team and/or will be a good fit with your culture.

 

So how do do you bypass the challenges posed by confirmation bias?   Look to Google for the answer.  The company has its pick of best-in-class talent who want to be associated with a technology superstar.  To avoid confirmation bias, Google uses an extremely structured process that allows apples-to-apples comparisons based on strict criteria that predicts whether or not a candidate will succeed at the company.

 

The main criteria Google uses to determine if a candidate is a fit are:

• General cognitive ability:  Google asks candidates how they solve problems and challenges they might be asked to solve in their position at the company. For a decorative showroom, ask what approach you would take when your client calls and says the plumber says the product does not work.  Ask questions about real life challenges that your team members face every day.

• Leadership:  Google does not have a hierarchy nor do they want team members who are impressed by titles.  They look for team members who can lead at times, but don't have to be the leader all of the time.  They want leaders who also are comfortable being followers.

• Fit within the culture:  Google looks for people who enjoy having fun (who doesn't, after all), a certain amount of intellectual humility (it's hard to learn this if your can't admit you might be wrong), comfort with ambiguity and evidence that the candidate has taken some risks or performed some courageous acts in their life.

Using these criteria will help you overcome the confirmation bias and attract and retain candidates that are the best fit with your showroom.