No Such Thing as a Free Lunch...or Free Shipping

Free shipping has become an expectation for most American consumers thanks in large measure to Amazon. Shipping charges are the number one reason why online shoppers abandoned their online carts, according to a 2018 survey by Internet Retailer, further supporting the notion that Americans do not believe they should pay for freight. Other shoppers faced with a minimum for free shipping will make additional purchases, or buy more expensive products, in order to qualify for free freight, claims University of Pennsylvania Wharton School Professor Roy Berman.

Consumer ire caused by having to pay freight for online and other purchases reflects the economic principle known as “pain of paying,” claims Ravi Dhar, director of Yale’s Center for Customer Insights. “The reaction to free shipping goes beyond the normal way of looking at cost and benefit,” explains Dhar. It’s similar to the anger hotel guests have when they have to pay to use the Internet in their rooms. And often the pain of paying is more about the thought of having to pay for something that most of the time is free regardless of how much the consumer is being charged. Offering a discount that has the equivalent value to the shipping costs is not as effective as free shipping. Dhar claims that consumers will pay more for products if there is not a separate charge for freight.

Not all shipping is the same. Smaller retailers pay a higher rate to ship packages than large companies like Amazon, who leverage their scale and volume for lower rates. Similarly, Amazon has convinced consumers that they have a right to return any purchase without charge or consequence.

Amazon has helped offset its free shipping charge through its subscription service Prime. There are more than 100 million consumers who pay Amazon $119 a year for “free shipping.” That is more than $11 BILLION in Prime dues. Amazon’s strategy is to entice Prime members to purchase as much as possible on its site to take advantage of the free two-day shipping offer.

So how can smaller retailers compete with free shipping offers? There are a few different options available for showrooms.

• Reduce the discount offered to cover the cost of freight. This is a way to have the customer covering shipping costs without them feeling like they are. Some dealers do this with incoming freight from manufacturers as well.
• Increase the price of products to cover the cost of freight. This allows customers to feel like they are still getting a full discount, but you are covering any freight costs.
• Require a certain purchase amount to qualify for free freight, similar to what most manufacturers do. You will still be eating the shipping costs, but the larger orders will provide some relief. 
• Instead of itemizing your quotes, provide lump sums for projects. Your new bathroom fixtures are $22,583 and that includes freight. The pain of paying for freight may be alleviated by not seeing it as a separate line item. 

The fact is that shipping, like lunch, is never really free.

The Unique Customer Journey: Thoughts from Fellow Jeff Valles

Your company has been successfully working with this talented designer for years, but today seems a bit different. Do you handle her the same way as in the past? Do you start asking questions to learn what is different or do you simply listen a bit harder and slow down. I vote for the latter, you?

Truth be told, we must always keep in mind that every time a customer visits your showroom, their path on every project is unique. Not only is this meeting unique, but every meeting pertinent to this one job will be unique. Your customer still retains the trust, but time moves on and situations change. Who knows what has happened personally or professionally to any of the players since you last spoke?

In all situations, salespeople must always actively listen. If it is a first meeting, they must discover the pecking order for this particular group on this particular day. Who is the alpha? The client? Designer? Builder? For all we know, this might be the first time all have been in the same space together...what fun!

Your main job is not to expose any issues, but engage them in a way that they know you are there to help, listen and learn. If you start probing and expose issues, you and the group will have to deal with what is exposed. If that happens, the underlying issue is their trust in each other and in you. You are the outsider, therefore, the easy scapegoat.

Am I digging too deep on this? Our DPH industry, on average, closes roughly 35% of bids. We can improve that percentage if we improve the way we engage our customers.

Little things matter. One little flub can throw a monkey wrench into hard won trust and confidence of an old or new customer. I think you will agree that every sale is unique. Understand that each time clients enter your showroom they are on a unique journey. Engage with them to learn all you can.

I suggest taking a few minutes before your next PK to discuss this with your sales team. This simple awareness is important for your new budding sales heroes to understand. New salespeople are wrongly looking for repeatable processes to follow, and that will not play well in the long run. The best salespeople approach each meeting with an open mind. Their experience has them ready to engage each fresh opportunity and the unique collection of issues that job will drop in their laps.

Aesthetic Intelligence

Imagine using your senses to appreciate, elicit and create pleasurable experiences. That is exactly what Pauline Brown, former chairperson of North America for LVMH, describes as aesthetic intelligence.

Aesthetic intelligence touches all five senses. Think about dining at a great restaurant. In addition to fabulous food and an interesting well-executed menu, there also needs to be an ambience and acoustics that enable diners to talk to one another without having to yell. The lighting needs to work in different parts of the restaurant without casting annoying shadows. And don’t ignore the small details – the cutlery, glassware, table and seating and how they interact with the food to deliver the overall experience.

Brown claims that luxury brands and their leaders need to develop aesthetic intelligence in addition to traditional, artificial and emotional intelligence. She points to classic examples of how aesthetic intelligence can take a commodity product and transform it into a luxury experience. Steve Jobs did it at Apple and Howard Schultz did it at Starbucks. Today, Apple is not as much as a technology company as it is a luxury products company. iPhone purchasers pay a 600 to 700% premium for Apple products compared to competitors whose functionality is equal and sometimes superior to Apple’s.

Using aesthetic intelligence enables your showroom to excite and delight your clients. Delight is not quantifiable, and most companies don’t have a clue of its importance. However, an estimated 80 to 90% of product purchasing decisions are based on how the product or service makes a person feel. Most sales and marketing professionals focus on features, functions, costs and benefits. “We really are in a rather unsophisticated marketplace for understanding how people feel, empathizing with it and actually taping into it. And delivering in ways that are genuine and uplifting,” Brown said.

Your clients want to dream. They want to aspire. It’s human nature. What are you doing in your showroom to leverage aesthetic intelligence and how your recommendations for your clients’ new baths will make your clients feel and enable their dreams to become realities?

Looking Forward to a Great 2020

A new year is a time for DPHA members to recharge their batteries and focus, entering the new decade of 2020 filled with optimism and confidence that this new year will be better for themselves and their businesses.

That's easier said than done. The question is: what are you going to do differently to improve the satisfaction that you and your team receive from showing up to work every day and truly improving your performance? Hoping to do better is not a sustainable strategy. The calendar changing from December 31 to January 1 will make little difference unless you ACT.

2020 can only be the best year yet if you commit to doing the same things differently, and look at different things to do. 2020 will be no different than 2019 if you don't set goals and action plans to achieve them. Make sure you have a metric that is easily tracked and milestones for achievement. Identify the resources that you need to reach your goals and where you will find them. What obstacles do you have to overcome and how will you get past the potholes in the road that deter you from achieving them?

DPHA is a valuable resource for goal achievement. Yes, we know that we are biased, but we have a bias for good reason. DPHA offers programs, content and a network that helps solve common problems, makes our members’ lives easier and more professionally rewarding.

We understand that almost every one of our members feels overwhelmed and do not believe there are enough hours in every day to finish one's to-do list. That's the best reason why DPHA should be on your 2020 radar . We simplify life and make being involved in the decorative plumbing and hardware industry less overwhelming. Here's to truly making 2020 the best year yet. Happy New Year DPHA!