‘Bringing Business to Retail’ Podcast

I was invited to appear on Salena Knight’s podcast, ‘Bringing Business to Retail’, which is where this was first published.

Timestamps:

0:00:00 “Uncovering Strategies to Find and Attract Customers in a Challenging Retail Environment”

0:02:37 Conversation on Digital Marketing Strategies for Ecommerce Clients

0:04:02 Conversation on ANZ Bank vs. Converse: Exploring Financial Security and Consumer Spending Habits

0:05:44 Conversation on Investing in Physical and Mental Health for Improved Performance and Well-Being

0:07:27 Discussion on Value Propositions and Gym Memberships

0:09:04 Heading: Gym Membership Price Increase Discussion

0:10:56 The Value of a Good Gym: Exploring the Drivers of Loyalty

0:14:41 Discussion on the Conundrum of Paying for a Higher Priced Product in the Fitness Industry During COVID-19

0:16:20 “The Benefits of Personal Training: A Discussion on Accountability and Motivation”

0:20:17 Exploring Differentiated Communication Strategies to Increase Customer Engagement

0:21:45 Analysis of Consumer Spending Habits During the Pandemic

0:25:32 Exploring the Impact of COVID-19 on Consumer Spending Habits

0:27:15 Exploring the Impact of Financial Priorities in the Post-Pandemic World

0:28:57 The Lipstick Effect: Exploring the Psychology of Consumer Spending During Economic Uncertainty

0:34:22 “The Role of Value in Capturing and Converting Customers”

0:36:52 Exploring How Value is Determined in Ecommerce and Retail Stores

0:38:20 Advice on How to Identify Customer Values: Survey Strategies and Hotjar Pop-Ups

0:40:24 Heading: Gathering Customer Feedback in Physical Stores

0:43:20 Heading: The Importance of Psychographic Profiling in Customer Communication

0:45:07 Exploring Primary Drivers and Motivators for Consumer Purchasing Decisions

0:46:52 Conversation on Representing the Voice of the Customer in Decision Making Rooms

0:48:33 Discussion on the Impact of the Changing Customer Expectations in the Digital Age

0:52:06 Heading: Strategies for Communicating Value in a Challenging Market

0:53:46 Conversation with Michael Laps: Business Advisory and Marketing Strategy

Transcript

0:00:02 B: Hey there, and welcome to the Bringing Business to retail podcast. If you’re looking to get more sales, more customers, master your marketing, and ultimately take control of your retail or ecommerce business, then you’re in the right place. I’m Selena Knight, a retail growth strategist and multi award winning store owner whose superpower is uncovering exactly what your business requires to move to the next level.

0:00:33 B: I’ll provide you with the strategies, the tools, and the insight you need to scale your store. All you need to do is take action. Ready to get started? Hey, there, and welcome to the Bringing Business to retail podcast. Now, just before I jumped on to record this podcast with Michael, I’ll admit I did some online shopping. Yes. If you follow me for a while, you know that my favorite Australian designer just released a brand new print. But I haven’t pressed the buy button yet because not because I don’t want it, because I can’t decide, do I want the knee length dress or do I want the maxi dress, or do I want them both?

0:01:18 B: And like you and probably like your customers, I’m sitting here trying to justify, once upon a time, I would have bought both. And if you come into my wardrobe, you will see I have the short and the long version of many of her dresses. But just like you, I’m being a little bit more critical, I guess, of where I’m spending my money. Not that I don’t have money to spend, but I’m thinking twice about where I have to spend my money. So today on the show, we’re going to have a good old chin wag, as we say here in Australia. Michael and I are going to talk about, are there people out there shopping?

0:01:56 B: And if they are, how do we find them? So welcome to the show, Michael.

0:02:01 A: Hi. So glad to be here. Thanks for having me.

0:02:04 B: Look, before we even jump in, before we started this conversation, you and I both were talking about working out at the gym. So clearly, you and I are still spending money in the things that we value. So before we jump into the conversation, I just kind of wanted to point that out. Maybe you should introduce yourself, because we’ve been talking for 10 minutes before we got on. So I’m ready to continue the conversation, but the people who are listening haven’t heard all the intro stuff. So tell the lovely listeners who you are, and then let’s talk about why you and I are spending money at the gym.

0:02:37 A: Sure. Sounds good. So, for the better part of the last decade, I’ve been building a digital marketing agency here in Australia. It was called Yogurt, or is called Yogurt, I say in past tense, because I exited the business last year. We built it into a team of about 35 staff in three countries, and we worked with a lot of ecommerce clients. Everyone from Converse to Adairs, to some non e-commerce clients like the NRL, P&O Cruises, ANZ bank.

0:03:03 A: So we’ve worked with quite a mishmash of different types of clients in different industries. And a lot of what we did was around performance marketing, so covering SEO, content marketing, google Ads, and paid social and also UX and conversion optimisation. So very much about how do we attract customers and then convert them. So this is an area that I’ve been spending a lot of time on, both pre COVID, during COVID and post COVID.

0:03:28 A: So, yeah, I’m really excited for this.

0:03:30 B: Topic and I guess that range of product and client base like someone like ANZ, which is one of the big four banks here in Australia, that’s a service most people need. And you kind of think, okay, you got a choice of banks. Realistically, do they need to do an awful lot of marketing, or do they need to attract they’re not out necessarily attracting high net worth customers, whereas some of the other brands that you work with are and sort of, I guess, conversely, Converse, they’re kind of that mid tier bracket, aren’t they?

0:04:02 B: They’re not your luxury kicks that are out there costing two grand, but they’re also not the things that you buy at Target for 20. Do they even have like that? Do they have a low price point like that $29 or something?

0:04:13 A: Not really. I think that their kids shoes are probably more expensive than that. But AInstead Bank is not like an aspirational brand, right, people? It’s a practical brand. It’s something that you have to have. It’s something you have to engage with even if you don’t want to. The alternative is keeping money in your mattress, which is just like not recommended with inflation as it is. So ANZ bank are reasonably protected. Their biggest concerns are everyone running to the bank and trying to withdraw money at the same time. Like, that’s their biggest concern.

0:04:46 A: Someone like Converse, their biggest concern is that it’s actually not a critical item. There is no reason for somebody to buy it now if they are struggling to make ends meet versus buying it in two or three years from now when their personal financial circumstances have changed. So how do they convince someone to buy a pair of shoes that they don’t need right now? They could probably get their existing Kicks to last an extra six months.

0:05:11 B: And also there’s a lot of competition in, say, the like, look, let’s be honest, any market, but especially in that fashion, beauty, like all those not necessarily fast moving consumer goods, but the things that the markets are saturated in. So your fashion, your shoes, your jewelry, your beauty, your skincare, homewares, those sorts of things, there’s so many people out there selling it that you need to be able to stand out. But let’s go back to the conversation, which is why are you still spending money to go to the gym? I’d love to hear your thoughts.

0:05:44 A: Yeah. For me, it helps me with my mental space. It gives me clarity. I think the way that I look and feel physically affects my performance at work. It affects the way that I am in my relationship. And so it’s a really critical thing for me because I think that it makes me feel good about me. And when I feel good about me, I am better in all of the other aspects of my life. And so that doesn’t feel like a sunk cost. That feels like an investment. It feels like an investment in my career, it feels like an investment in my relationship, an investment in myself.

0:06:21 A: And so I don’t really think twice about spending that money, whereas other things are perhaps more things that I like to spend money on, but don’t necessarily might also make me feel good in that moment, but don’t necessarily have the long term benefits. I think, for me, also, going to the gym is important. I became a dad late last year, and so there’s also the aspect of me wanting to be healthy so that I live a long time and get to see grandkids and all that kind of stuff. So there’s that little element that makes a difference as well.

0:06:52 B: Now, congratulations on your beautiful was it a son? And I’m very similar to me. We talked about the fact that for me, I’m really lucky. My gym is a three minute drive away, so I can do a class, or if I’m feeling really stressed out, I can just go and go up for half an hour and come home and my work day is not impacted. I would love to know for you, given that we both feel that this is a critical part, like a critical investment in our lives, what be the motivator?

0:07:27 B: That would be the point where you left. Is it if they increase the price? 10%, 20%, 30%, 40%, 50%, 100%. This is just a conversation, guys. I have no questions. Michael. So if he takes a moment to reply, it’s because we’re just literally going off the cuff here.

0:07:45 A: Yeah. So I actually don’t think that it’s a price thing. I think it’s a value thing. I think that is what Jim is. And I think that that applies to actually a huge amount of what we purchase, is that most people will pay for something if there’s the right associated value, which is extremely personal to every individual. For example, some people Might Be Willing to Pay $100 A month to go to A gym or even $500 A month to go to A Gym that is maybe more exclusive but has A Sauna and A pool and an onsite physio who does dry needling and cupping and remedial massage and that has More advanced equipment and the best trainers. Maybe there’s some people out there who are willing to pay for that because that value proposition is strong enough to warrant the extra money.

0:08:30 B: I’m guessing that’s not you though.

0:08:33 A: No, it’s not because a lot of those things I am the type of person where if I need something, I’ll go and find an expert. And I don’t need an all in one solution. I’m happy to go and find the niche experts and everything for what I need at any given point in time. But I think for a lot of people, a gym is four walls with equipment in it. And so they don’t want to go and pay that much money. They just want a safe place to go and lift weights or do cardio or whatever it is, strength training and then go home and go about their day in their life.

0:09:04 A: So to double the price is probably not sustainable in the current economic climate for a lot of people. But at the top end of town, those price differences don’t make as much of a difference. They are incredibly value driven and sometimes perception driven too.

0:09:24 B: You can say, don’t feel comfortable talking about that. I’m happy to tell you what I pay to go to the gym and let’s talk about necessarily what you pay, what’s included in what you get, and can we talk about what would you give up or what would they have to add to make you stay? Can we talk about that?

0:09:41 A: Yeah, sure.

0:09:42 B: Okay. So my gym, they just put the price up. So this is price goes up in two weeks. The price I pay for the gym I think is $25 a week. And then I pay $50 a week for one PT session. So $75 a week, that price is going up by $30 a month. I don’t know what that works out to be. I can’t do maths in my head that quick. $30 a month in two weeks. And I have obviously the opportunity to change the level of this that I have.

0:10:16 B: I have a pretty no frills gym. It doesn’t have a spa, it doesn’t have a sauna. It does have an onsite physio. But I’m like you. I have my own physio, I have my own massage. Guy does have personal trainer. If that personal trainer left, I would go to like I wouldn’t necessarily stay. So for me the value is in that trainer. Correct. And then probably next door is an Anytime Fitness, which is that you come and go whenever you like. So no personal trainers, maybe a two minute walk away. We have a Vision PT, which is much more exclusive. It’s probably in the month, but fully one on one sessions.

0:10:56 B: And then I have a Virgin Active about 10 minutes away. So I got a lot of choices in terms of going to the gym. This one, it just kind of works for me. Mainly because of the trainer. As I said, if she left, I would decide whether I would probably just go to Anytime Fitness where I can just come and go when I want it’s maybe like $18 a week. So down from my 25. Yeah, that would be to me, the value is that customer experience.

0:11:25 B: It’s a pretty boring gym. They’re putting some paint in, but the equipment is not brand new. There’s not the extensity of the extensity. That’s such a made up word. There’s not the range of classes that there was pre COVID. And I can’t make a lot of those classes now because they’re just not at times that work for me. So yeah, for me, my value driver would be if that one critical person left, I potentially would go to.

0:11:51 B: So what is your value driver for going to the gym?

0:11:56 A: Isn’t that so true of so many businesses though, that there’s just one person there that really builds loyalty or one.

0:12:03 B: Product, or just one crucial component? It doesn’t even have to be a person, right? It could be a thing. It could be the emails, it could be how quick you get shipping out, it could be your customer service. But it’s that one crucial thing that if it breaks, that’s it.

0:12:20 A: Yeah. And most businesses don’t know what that one thing is. They haven’t spent the time on that. I can’t tell you how many businesses I’ve worked with and I will come back and answer your question, but I will just say anecdotally like, I can’t tell you how many businesses I’ve worked with that don’t know their numbers and don’t know their customers, or they think that they know their customers. But then when you ask them for the data that supports what they’re telling you, they’re like, oh no, I’ve just been in this business for a long time.

0:12:47 A: Yeah, I’ve been in finance. You’re like, well, it just feels like the term hippo, highest paid person’s opinion. It just has that kind of element to it that’s actually just not going to cut it in today’s marketing environment. But to answer your question, so at my old gym, I was probably paying maybe like 40, $50 a week. And then on top of that, I was doing two kickboxing classes a week at a kick, but like a my Tide Gym.

0:13:16 A: My Tide gym. And that was about $70 a class, one on one. So I was spending a fair amount on physical fitness for myself. But again, what it gave me in terms of stress relief, reducing anxiety, mental clarity, like actually using my brain as well as the physical activity at the same time, I’m a strategist by trade and so even when my physical activity, I need strategy. But that for me was money really well spent. And so my primary drivers were number one. The coach is someone that I’d been going to for a few years in terms of the kickboxing. And so those classes was I could see my own progression in terms of my skill level and my ability, which being a competitive person, having the gamified component was really valuable. But in terms of the gym, there’s not a lot of value that I get out of the gym apart from the four walls. So I usually just pick the gym that is closest and even if it is a little bit more expensive, if I can walk over drive, I’m there.

0:14:18 A: And so my primary driver is actually distance and having to spend less time commuting and traveling to and from. And I’m willing to pay a little bit more every week. Because if I calculate my hourly rate in terms of what I do for work and then I apply how much extra time I have to spend traveling versus what I could be working with clients, it makes much more sense for me to pay a little bit extra, but be a lot closer.

0:14:41 B: So you and I are pretty much the same then in the sense that we’re paying for this extra service. Yours is the kickboxing minus the personal training and if that person left, we would be seriously thinking what do I do now? But the base product, which is the gym, I’m like you four walls 3 minutes away. The next one is another 2 minutes further. The next one is then we get into a monetary thing. We go from $25 a week, which is $100 a month ish to $1,500 a month. And I don’t need that and I don’t want that.

0:15:15 B: So here we are, this conundrum which is on one side of the thing. We’re happy to pay a little bit more for something base, but we are prepared to pay more and stick around for a higher priced product. That one on one customized bespoke thing that a lot of people would just be getting rid of in this day and age. Because if you’re tightening your belt, it’s a luxury. Like, let’s be honest, you and I, we’re lucky enough to be able to do this correct? But for a lot of people it’s a luxury and maybe they would get rid of the personal training just to keep the gym. But you and I are like yeah, the gym, whatever. I’d probably go somewhere cheaper if I had a choice, if it was closer or if I was really tightening it. But I’m not prepared to give up the more expensive thing.

0:15:59 B: It’s a bit weird, isn’t it?

0:16:01 A: Well, I mean, COVID I think really changed up, especially for gyms, changed so much. If you remember fitness first for a long time you would read news articles about what they were doing in terms of keeping people in on contracts and the exit fees and all of that hyper shenanigans. All of that is gone now.

0:16:20 B: Gone.

0:16:20 A: Right? All gyms are just month to month cancel anytime, no problems, because they’re just grateful that people are like back and showing up and giving the money. And so I think a lot of people have realized that home workouts are actually extremely accessible now with mobile phones and smart TVs and YouTube, all the rest of it and YouTube or you’ve got what was his name? One of the Chris Hemsworth had his released his training app and there’s probably about 50 or 60 of them in market now.

0:16:52 A: Everything from yoga to pilates, to strength training to bodybuilding.

0:16:57 B: My meal planning app comes with built in fitness sessions, but yet I’m still choosing to pay someone $50 soon to be more to go and see someone one on one.

0:17:09 A: But are you the type of person that needs someone there pushing you a little bit harder in person? Are you self motivated enough to, at home be like, right, I’m going to get up and I’m going to open the app and I’m just going to do this thing.

0:17:22 B: During COVID 100%, I still trained, and I still trained with my trainer virtually in the garage, which is very hilarious because our garage floor is not flat. So things would, like, roll down the drive. I think I go for two reasons. One is I love the validation of going there and someone saying pushing you to do that bit extra. And sometimes I’ll do ten of something, she’ll be like, it’s not ten today, it’s twelve, baby. Like, get it going or get a stronger weight. So I love I’m an extrovert, I get my energy from people.

0:17:56 B: So just being around people and having that conversation energizes me, which is why I like going to the gym in the first place. But I think more so conversation is one, getting my energy from other people. Having just a conversation with someone who is not related to you, it’s like going to the hairdresser, right? She’s kind of therapist in disguise, but more for me it is the bespoke not having to think. I don’t have to go there and think.

0:18:23 B: She makes a plan up for me and just do what she says. I have to think every minute of the day like you. I have to think for my clients, I have to think for my family. I got to think about what’s in the fridge, what are we having for dinner? The dog’s got to be walked. Is there dog bob, Walter in the dog? All those things are things I have to think about. It’s the one place I don’t have to think, right?

0:18:44 A: Whereas for me it’s account ability. If I know that I have to be somewhere at a certain time, I can’t be like, I’m a little bit tired or I’ve got so much stuff on, I can’t deprioritize it because I’ve made a commitment to someone. I’m the type of person where if I say something, I do it. And so I need to be there. And that is important for me because I am a little bit of a workaholic. My wife would say I’m a very large workaholic. Yeah, I’m a lot of workaholic.

0:19:11 A: And so having that time set aside and having that committed to my physical well being is really important for me and that’s why I need it. And I think that that’s where a lot, like we talk about, you said it yourself, there’s so many products that are in market, in super competitive spaces that have very differing price points and seemingly very like the USPS are not particularly differentiated. Beauty is a particular one. Like back even just thinking like five, six years ago saying that you were cruelty free and that you were vegan.

0:19:48 B: And all of those Australian made or US made correct.

0:19:54 A: Some of those. Not everyone could say that they were vegan. Right. But now if you don’t have that there, it’s just assumed that you’re vegan.

0:20:05 B: I was going to say it’s not even that you don’t have it there. There’s just this assumption that you will be all those things and I might buy your product, but if I find out you’re not, I’d be like, okay, I don’t know if I’m going to buy this again.

0:20:17 A: That’s right. And so how do you then whether it’s gyms or beauty or a white T shirt that 19 people are selling, the unique selling propositions are not particularly differentiated. So if customers aren’t buying, how are you communicating to so many different persona profiles and actually getting them to buy from you? Because even you and me, who you would say are demographically probably the same in terms of just the gym. The psychographics around why we go are.

0:20:48 B: Actually very different, very different.

0:20:50 A: But you have to communicate to both of us. I think it’s an interesting time for marketers to try and to try and get all of these people through the door and get them to buy, when actually a lot of people don’t want to buy. It’s a necessity versus a want.

0:21:02 B: All right, let’s talk about that because I think when you and I talked last time, I talked about how I had gone to the vet again. Here I am. I’ll be clear, guys. I am such a tightass. Like, you have no idea. I am the complete bargain hunter tightass. So I talk about how I spend money on the show, which makes me sound like I’m actually very frivolous. But no, I’m the kind of person who will go to Facebook Marketplace first. I need to buy a new mitosaur to take down to the beach house to do some work. And I’m like, I’m not going to the hardware store. I will check out Marketplace and see if I can save $50 1st. So so just be clear about that as we talk about the fact that Michael and I are spending money.

0:21:45 B: So I have two dogs, two greyhounds asleep right here beside me. One of them has this thing called cups, which means she’s allergic to plaque in her teeth, which means her breath is absolutely rank. Most of the time we have to brush her teeth and then I was at the vet the other day, and the lady at the counter said, oh, we just got this new stuff in. You just put it in the water that they drink, and apparently it’s amazing and it probably would help with her.

0:22:13 B: And so I was like, how much is it? It’s $27. All right, give it a go. Yeah, whatever. I trust the vet. To be fair, the Vet didn’t actually know if it worked anyway. That stuff is amazing. I can’t even tell you what it’s called, but it’s so amazing that the minute we stop using it, the dog’s breath absolutely gets disgusting. But the point here being, I went back to the Vets to get long story short, long story long, I went back to the Vets to get the next bottle because we’d run out and I had to fight through three cafes of tables on the street to get to the Vet.

0:22:47 B: The cafes in this little beachside suburb were absolutely heaving. There were queues waiting to get in the door. Every table was full. It was a Saturday. Let’s be honest. It was a bit of a hipster place. No one’s walking out of that cafe for less than $30 ahead, probably 50. And yet the places were ramped. Who’s spending money right now? Who do you think? Like, we’re not economists. We’re just talking about we know people, we know our customers.

0:23:16 B: Who’s spending money? And why are some people out there dropping $80 to $150 for husband and wife to go to breakfast on a Saturday morning?

0:23:24 A: Yeah. So I think there’s different groups that spend money in different ways. So, for example, at the very top end of town, when you talk about the wealthiest Australians, a lot of high end brands, whether that be fashion or jewelry or cars, are out of product. They actually can’t get enough products into Australia.

0:23:52 B: Get a new car. Like, you wait, my sister for a new Land cruiser.

0:23:56 A: Yeah. Lamborghini is out of cars until 2024. 2025. Porsche is. Now, I heard a story that one of the Porsche dealerships in Australia sold one of their nine on one turbos, which, for anyone who isn’t into cars, is an extremely expensive car. You’re probably talking about, like, a half a million dollar car. And they are now paying that customer to leave the car on the showroom floor because there’s no other stock. And in order for them to be able to continue to sell it, they need to be able to show something.

0:24:29 A: So it was like their last one for the next 18 months to two years. And so they’re so out of even their higher end cars. So people are still spending money.

0:24:38 B: You can’t get a rolex. I’m in a business networking group, and people have been asking for the last two years to get on the waitlist to buy a Rolex. And we’re talking, like, starting baseline 20K bloody watch.

0:24:52 A: Well, secondhand Rolex is now more expensive than new Rolex. So if you want a Rolex, that’s called a hulk. It’s a green one. They stopped making them. The second hand ones are now almost double the price of a brand new one because, well, you can’t even get the brand new ones anymore. But when you could, they would almost double the price because people just loved them. And there was a shortage in market. So during COVID actually, those prices went even further up. When they started dropping is actually when crypto collapsed. And a lot of the people that needed to, not even joking, like watchers, started flooding the market because people needed to start offsetting some of their losses.

0:25:32 B: Liquidated.

0:25:33 A: Yeah. So at the top end of town, there’s a lot of people who are still spending a lot of money because they have the money to spend. They’re probably more educated in terms of financially investments, where to put their money, how to make money. They’ve got more to play with. And so money makes money.

0:25:49 B: They got a buffer. And they’ve got a buffer.

0:25:51 A: Correct. That’s correct. They have assets to sell down and to protect themselves. There’s a safety net there. Once you start moving into middle class, the spending habits change quite a lot because you’ve got upper middle class, lower middle class and middle middle class. At lower middle class, especially what’s happening with what we’re seeing with interest rates now, their purse strings are tightening a lot.

0:26:14 A: We’ve got people in our circle. They’ve seen some of their home loans like what they’re paying. Those loans go up like $500 to $1,000 a month rises.

0:26:27 B: It is if you don’t have the buffer.

0:26:29 A: That’s correct. And so are people still going to go and eat at cafes? Absolutely. But the costs are going to be saved somewhere else because after, and I have no data to prove this, but.

0:26:43 B: We are not coming with data. This is just a conversation.

0:26:45 A: This is just a conversation. But I think that after, particularly in Melbourne, I think after a few years of lockdowns, very, very difficult lockdowns, I think that going out for food and getting out of the house is such a critical component for mental health. I don’t know that people are willing to give that up permanently again. Whereas something like, do I need another blazer for work or another pair of Converse shoes? Or do I go to Europe? Or do we go to Bali instead?

0:27:15 A: Those types of conversations, where are the other places where you can save money? Or do we go on holiday at all? Are probably where the counterbalance comes in. Because some things that are so important for your mental health, like the gym, like going and seeing your friends for a coffee, are for a lot of people, I think, now non negotiable in the new world that we live in.

0:27:37 B: Isn’t that funny? Because I’ve been in this industry for 1517 years and seeing. Those priorities change. And seeing how I was in the eco baby market and it was difficult 15 years ago, it wasn’t the like now it’s the baseline. The things I used to sell, you can buy in Kmart and Target. We were importing them from America or manufacturing them because they didn’t exist. And so what we sold, as I guess, kind of a luxury, ish item. Upper middle class is now the baseline. It’s like the cruelty free and the vegan. And I think we have to be on top of what our customers consider that baseline to be giving them any type of value. And I think I totally agree with you in terms of I know people who are doing it tough. Like you said, it’s the people who don’t have the buffer. And if you have the customers who don’t have the buffer, you’re the one who’s going to be struggling because they’re the purse strings that go immediately. Like whatever you’re selling, if it’s not an essential, then it’s probably going to be the first thing to go. I’ll get secondhand kids clothes, I’ll get handmedowns, I’ll get things on from my friends.

0:28:57 B: I won’t buy the $100 moisturizer I was buying. I’ll just pick up something, $20, from the supermarket when it’s on sale, half price, just to get us through. We’re not even talking like I’m not buying moisturizer. We’re talking that kind of middle class, which is making those valuable decisions of wet. But have you ever heard of the Lipstick Effect? I don’t know if it’s a thing or if I heard this or if I just made it up. So I think I heard this on a podcast somewhere and it was called The Lipstick Effect. Let me explain it to you, which is kind of the summary is the theory is when people are tightening their belts, they will have a thing that they like to indulge in. And so for women, it might be something like lipstick.

0:29:44 B: And so it might be a $50 thing, but it’s kind of small enough, and I say small in air quote, small enough in value to not affect the overall budget, but luxury enough to feel like I’m giving my yeah, okay, I’m going to go out and buy myself a nice new lipstick. I feel like food runs in there too, that going out and having the $5000 breakfast at the cafe, it’s not a necessity, but it’s that thing that makes you feel okay about life.

0:30:15 B: It’s like, okay, there’s shit happening in the world. Yes, we’ve had to tighten our belts, but this is the thing I’m going to give to myself to make me know it’s going to be okay. Does that make sense?

0:30:27 A: It does. And you could actually argue whether or not it is a necessity, because necessity is going to be defined person to person. And for some people, it’s mental health. It is absolutely. Just like you going to the gym or someone buying a Porsche, I guess maybe not that example, but for us, going to the gym is a necessity, right? And it’s a lot more expensive than going for a meal once a week, once a fortnight, once a month.

0:30:58 A: But the mental health effect of those things is really important. And you’re absolutely right. And I didn’t know that it was called the lipstick effect.

0:31:05 B: It may not be. I could have just made that up.

0:31:07 A: Well, I mean, if you did, it sounds great. But again, talking about during COVID which companies did the best when everyone was locked down? Skincare food. So well, we bought food. Yeah, and alcohol. People bought a lot of alcohol. But talking about well being, people started buying more skincare at home because it’s how they could make themselves feel good without actually leaving the house. And this is more data driven, but there was a study that was done by one of the conferences that it’s an ecommerce conference, and they did a study of all of their clients and attendees.

0:31:52 A: And what they found during COVID is that about 70% to 80% of consumers were willing to try new brands, the highest number that they’d ever seen. Right. Most people are reasonably brand loyal when it comes to skincare. They find something that they like and then they just want to stick to that because it fits into their routine. They know that they’re not going to have any adverse side effects. But what they found is that more people were trying whatever else is out there just because they didn’t have anything else to do. So they’re like, well, let’s just give it a go and see what’s going on.

0:32:27 B: And now almost a game, though, wasn’t it? It’s the fun, the dopamine hits that are like, oh, something new, something exciting. Is this going to work? Like the mystery that the suspense that comes with it. All this stuff is psychological, but the simple fact is, trying something new does something in our brains and it’s either going to work or it’s not. So you’ve got that anticipation. Is it going to work?

0:32:50 B: Is this going to be my new favorite thing? Have I found a new brand? Am I going to tell everyone about it? All those sorts of things go on.

0:32:55 A: Well, I think a lot of people underestimate the importance of psychology and marketing and I think that they just assume that if you throw something on Facebook that it will sell. And in some cases that’s absolutely true. But there’s still a psychology behind why that product is doing well, and particularly through that channel. In this current economic climate, the psychology becomes ten times as more important. Again, that’s not a database number, but whatever it is, it’s significantly more important.

0:33:24 B: It’s great.

0:33:24 A: Absolutely. Because how you communicate the value of your product is now more than ever important. And the companies that you see doing really well consistently, even during these times have a very clear message about why you should buy this product and more importantly, why you should buy from them. And I mean, there are still companies that do that well that are doing it tough just because their general industry is doing it tough and people are just going, well, this is just not a necessity for me right now. And if I have to decide between paying my mortgage and putting food on the table for my kid and buying this product, bit of a no brainer.

0:34:01 B: Do you think one of the things we want to talk about is when we keep saying the word value, value, value. And you and I have already said that our values are different, but we buy the same product to a degree. And so do you think that value is the key to catching customers and converting customers?

0:34:22 A: I think it would have to be one of the most important things because within value you’ve got communication, you’ve got price, you’ve got timing, you’ve got an understanding of the customer. So much goes into what is value and because it’s different to every single person on earth. There’s a very famous quote, if you don’t understand the price of something, it probably wasn’t meant for you. And I think, why do some people go and buy the same white T shirt from a company that charges $100 versus going somewhere and buying it for $10?

0:34:59 B: We had this conversation with my coaches inside. So one of our clients sells $70 white t shirts and one of our coaches sent me a message on Facebook and she’s like, who the heck pays $70 for a white T shirt? And then I sent her a picture and I said, well, one of my one on one clients bought this white T shirt that just had a little tiny letter at the top for $150. And she’s like, that’s just stupid.

0:35:27 A: Yeah, right. And so it just comes down to that individual person’s preferences and values. And so, yeah, I do think that value is one of the biggest drivers. And the higher the price point, the more that value becomes important because if I’m buying, I don’t know, a pen, the difference between a dollar 50 and a dollar 60 is probably not a tipping point for me.

0:35:50 B: But even the difference between a dollar $55, like if it’s a nice pen that you like to write with versus a scratchy pen is probably a bad.

0:36:00 A: Example because I can’t remember the last time I used one.

0:36:05 B: So I’m going to say even if you’re paying three times more at that level, it’s like, okay, I value the writing experience, comfort and the comfort and the quality. That the thing that’s creating. I will pay three times more, but it’s $5.

0:36:20 A: So this is the interesting point, right? Whereas I know so many people, why do some people shop at Costco versus Woolies? Why do some people buy in bulk? Versus going and buying the individual products and paying so much more. Why go and pay $5 a pen versus a dollar 50? Because how you were brought up, the friends that you have, the family that you have, the partner that you have, your personal financial situation, your career, all of that plays into the decision that you made to pay $5 for a pen versus a dollar 50.

0:36:52 A: And so how value is determined is put into someone’s brain, not at the point of purchase. It’s years, in some people’s cases decades of preconditioning and conversations before they go, why would I pay $5 for a pen?

0:37:11 B: So I’m going to jump in. How do you work out a customer’s value?

0:37:17 A: I ask them.

0:37:21 B: How does an ecommerce or retail store owner? And I’m going to say we actually cover this inside of our programs. We have we call it the customers currency marketing. It’s actually called marketing currency. What are the leverage points that your customers have? And I think we’ve got five or six of them. They kind of fall into five or six buckets. And if you know which one your customer has, like you and I keep talking about value, but there are other things in there too, like aspiration.

0:37:50 B: And if you know what that thing is, then you can easily charge more because you can change your messaging to suit that’s correct thing. So if you were consulting to a retailer ecommerce store owner and they’re like, oh, people aren’t buying like they used to. We used to sell loads of these white T shirts. Now no one’s buying them. I think I’m going to have to lower the price. But you know, because you’ve got another client who’s selling that exact same white T shirt for $10 more, you know, it’s not a product issue.

0:38:20 B: What kind of advice would you give them on how to work out what their customers value?

0:38:28 A: Yeah, I’m going to go back and say ask them again because this is kind of coming back to what I was saying in the very beginning where most people don’t know their customer and they just make a whole bunch of assumptions and there’s so many different ways that you can reach out to customers. So first of all, you’ve got an email marketing database. The simplest place to start is to set up a really simple survey. No more than ten questions, purely open ended questions as well. If you give someone multiple choice, you’re actually missing the golden nuggets.

0:39:03 A: You want someone to be verbose. You want them to type in a really long considered message because there’ll be one word or one line in there that you’re like. That is the golden key. So you can send out a survey. You can segment your email database by lapsed customers versus regular purchased customers versus your kind of fanboys. And fan girls ask them different questions, you will get different answers.

0:39:34 A: And that’s one really easy way you can use tools like Hotjar and get, like, a little pop up survey on your website. You can prompt people to answer, again, open ended questions on various pages. If it looks like they’re going to leave or if they’ve been spending a very long time on your website, you can prompt them to ask them, if everything is okay, what’s going wrong? Does the page? Is content missing? Is there a usability issue?

0:40:01 A: What’s stopping them from purchasing today? One of the most powerful questions, actually, that you can ask someone is, what almost stopped you from purchasing today? And so those are two really quick and easy ways. But if you have physical stores, if you’re bricks and mortar, get someone to go in store and ask people questions on the spot while they’re there.

0:40:24 B: Excuse me, I’m only sitting here laughing in the background because I used to make my team do that.

0:40:30 A: Yeah, but so many people think, well, why would we do that? We don’t want to interrupt the shopping experience. You’d be shocked at how many people are willing to give you feedback because they want their experience to be better. They respect brands that are actually out there trying to create better experiences for their customers.

0:40:48 B: And people love to wind, like, let’s be honest.

0:40:51 A: Totally.

0:40:52 B: If you’re pushing someone to find a problem because it’s quite easy for us to go. It’s like when someone says, oh, hey, how are you? And you’re like, I’m fine, actually. You feel like shit. People go, oh, if you ask these questions, maybe give us an example. If you were going into a store, if we hired you to come in, this is not what you do, but if we hired you to come into a store and say, I need you to get some feedback from my customers, what kind of questions would you ask the people who in the store?

0:41:18 A: In store even versus online?

0:41:20 B: Yeah, let’s go with in store to begin with.

0:41:22 A: Yeah. So in store, you would probably ask them, first of all, what has brought them to the store? Like, what was the actual trigger, the motivator, to get them to come into store? I would ask them why in store is more important than online?

0:41:37 B: That’s a good question.

0:41:39 A: I would ask them about the store layout, if everything made sense, or if there were things that they would change, if anything there was confusing for them. I would ask them about product range. I would ask them about pricing. If there’s any products that you feel are missing in the store, how they feel about the price point. I would ask them about are there any other competitors that you would go to? So you’ve come to our store, but are we the first store that you visited, or have you already visited, or are you planning to visit competitor stores? And if so, which ones?

0:42:09 A: I would ask them what their primary driver is for purchase. Right? What’s the most important thing for you to purchase today? Is it price, is it selection, is it availability? Or whatever else it may be? I would give them options.

0:42:22 B: No, but that’s such an important question. I went live on Instagram, I think last week about why I paid 30% more for these tiles. And it was simply because the Tyler rang me and he said actually something fell through. I can do it this weekend, but you need to get me the tiles today. And I could have driven. I usually go to this place where everything is in stock and they’ve got the best range and they’re really cheap because I’m a tight ass, but that would mean like an hour drive one way, an hour wait while they pick it and then an hour back. Or I can drive 12 minutes away. They’re sitting there waiting for me and I’d be back in an hour.

0:43:02 B: And to me that was worth 30% more than the 3 hours it would take. And so that question that you just asked, which is like, what’s the thing that brought you here and what is it that would make you purchase that’s gold? That question, because sometimes the title is prepared to pay more money.

0:43:20 A: And I think where a lot of companies go wrong, I mean, there’s a lot of places where a lot of companies go wrong. But when we talk about customer and people talk about persona profiles, one of the biggest mistakes that we see made is that everyone assumes that persona profiles should be based on demographics. And I actually really disagree with that because someone who is 45 and male and single could have the same psychographic profile and be purchasing the same product for the same reasons as a 24 year old married female and they could be buying a product for the same reason.

0:44:05 A: So they need to be communicated to in the same way. But because their demographics are different, they would be put into completely different groups.

0:44:15 B: I just put you up there, you said psychographics in the middle, but I think you meant demographics because what you’re saying is sorry, if we look at psychographics, that’s the thing that we should be looking at.

0:44:23 A: That’s correct. So I’m saying demographically they look differently, but psychographically, they could actually have the same reason for purchasing the product is what I meant to say.

0:44:30 B: Yeah, just in case people listening. And it’s like, hold on, he just said I got what you meant.

0:44:35 A: And so I saw a really great meme the other day that said that demographically, Ozzy Osborne and now King Charles demographically are the exact same. But psychographically, they’d be very different. So if you put them both into the same demographic profile and went let’s just market to these guys with the same message, you would fail. But where a lot of companies need to go and why this type of customer communication is so important is that they should be building persona profiles based on psychographics.

0:45:07 A: What are the primary drivers and motivators? What are their paint points, what are the friction points that are getting them to purchase? That is how you should be communicating to people and how you should be grouping people together, because people from very different walks of life often have the same challenges.

0:45:28 B: I quite often relate this this is why I don’t teach anything about, like, in our marketing pillar. I don’t teach anything about how to post on social media. What I teach you is exactly this. It’s like, what are the motivators? What do you put in your messaging? And then how do you build a marketing plan and how much is it going to cost you? Because if you know those things, it doesn’t matter what platform, it doesn’t matter what the algorithm is doing.

0:45:51 B: You understand why your customers are buying. So you can write some stuff to speak to them. You can give them the offer that they want. But I often relate this to I like Coke Zero. I don’t drink coffee. It’s my caffeine. And the people who drink Coca Cola, it’s everything from a ten year old kid to a 90 year old person. But the people who are prepared to spend $5 or $6 a bottle at the convenience store versus $3 a bottle in the supermarket, they’re different, right? And not everyone will pay the $6, but some people will.

0:46:25 B: And so even that Motivator, if you’re the convenience store, you can charge more, because I can walk in and get it. I don’t have to line up. I don’t have to go through the shopping center, go through the queue of to me, the $3 is not worth it. But once upon a time in my life, it was so knowing that, not letting our own biases get in the way, which do you see that a lot? Like, we go, Well, I wouldn’t pay for that, so no one else is going to pay for that.

0:46:52 A: Well, this is like, been saying this for a very long time now. It’s a rehearsed statement. But in most decision making rooms, the voice that is most underrepresented is that of the customer. And in a lot of rooms, it’s not represented at all, right? Because people do bring their personal biases. And when you’re having these conversations, the things to look out for, if you’re saying, in my experience, I think I believe anything that has those phrases in it. The second that you hear that, you know that you’re in trouble.

0:47:25 A: What it should be is our customers have told us, the data shows the research has all of that type of communication which needs to start from the top down. It’s not a bottom up thing. Leaders need to be the ones that are moving out of the way of, I know everything. I think I’m right. I have the experience. I’m paid the most. Therefore do what I say and get out of the way and actually show some leadership and show that the only voice that should be represented in any room is that of the customer.

0:47:57 A: Every decision should be around, how are we making this better for the customer? I get that the business has goals as well, and they have to be integrated, and you can’t do what’s best for the customer just and completely destroy the business. That also doesn’t work. But you’ll find that in a lot of situations, the goals are in alignment. And so psychographics change over time. Your psychographics, you’re 100% on the money when you said that $3 now versus that $3 2030 years ago changes.

0:48:27 A: So you need to keep doing the research and keep doing that level of analysis to stay on top of your customers.

0:48:33 B: But also the baseline we’ve said it over and over again, the baseline has changed for selling what customers expect as the minimum is so much higher. Like, customers expect that if they buy something, especially in ecommerce customers, they buy something, you’re going to ship it the same, if not next day. And I know that I’ve been really annoyed when it’s like three days later, it still hasn’t been shipped. I’m like, Come on, guys, this is 2023.

0:48:59 A: Customers are fickle. Customers are fickle. One of our clients, during COVID during the pandemic, when you couldn’t get product, when everyone was overworked, stressed out, whatever else, they were getting complaints because they weren’t getting product out fast enough. Like there was no empathy at all. Like they didn’t care about the fact that businesses were really struggling, couldn’t get staff, had to lay people off, struggles with supply chain profitability, was did not care.

0:49:31 A: I bought my product and I want it. And when you think about how customers operate, if you’re selling machinery, people are not going to compare you to other machinery businesses. They’re still going to compare you to Qantas and Expedia and Apple and Adore Beauty and whoever else. They’re going to just compare you to whatever it is that the best website that they used most recently was they don’t care that you’re in a different industry.

0:50:02 B: They don’t care that you’re independent, even. I don’t care if you’re using a fulfillment house or not. The fact is, I want that thing shipped out, like, today. And it was not today. I want it to be tomorrow.

0:50:15 A: Correct. I use this website and the experience was fantastic. Why can’t you deliver the same thing? And so if your benchmark is your competitors and your competitors are also not doing that well, you set an extremely low bar that customers neither know about nor care about. And so, yeah, I think the customers are fickle. I think that the way that a lot of brands talk internally affects what you see in terms of their external marketing, their strategy, their execution. And as a result of that, their performance, like, know thy customers kind of.

0:50:48 A: Rule 101.

0:50:50 B: All Right. I feel like we have to wrap this up because you and I could talk for a very long time about this. So I’m going to wrap up by saying tightass. People like myself are still spending money. But I am also extremely grateful that I’m in a position to have the buffer. And I feel the pinch too, because the people who I’m selling to, they’re retail and ecommerce store owners. And if they’re feeling the pinch, they don’t have the money to spend, so it flows up. Don’t you worry.

0:51:20 B: But I’m still spending money. And to me, and I’ve said this, I think, since the beginning of time, you have to find a market that isn’t where the purse strings aren’t so tight when there’s an economic crunch. Because I started my first business at the beginning of the GFC, so I went with Fire, and I quickly worked out that I needed that upper middle class because the things I was selling were value driven and you couldn’t buy them anywhere else. So I could charge that little bit more, but they had the money to spend. And look, I don’t even know how to operate in the Louis Vuitton section because those people I grew up dirt poor, so I don’t even know what those people are thinking.

0:52:06 B: The idea of a $10,000 handbag doesn’t go into my head. So I think for me it is just about picking a market that isn’t going to be hamstrung when things get a little bit tighter. So to me, that’s one of the biggest ways that you can ensure that you continue to stay in business when things get a little bit tough and you can continue to catch those customers. And if you are using the words affordable or value in your USP, then you are probably really feeling the pinch right now.

0:52:46 A: Yeah. And if you do fall into one of those categories, if you’ve already started your business and you’re well on your way, the next question is how do you communicate value? Rather than saying value, how do you actually communicate it and make people feel it so that they are still willing to purchase your product? What is actually your positioning in market. Because there’s a lot of companies out there that they’re already knee deep into this. So you can’t go and start a new business. So what do you do with the one that you’ve got cheap?

0:53:19 B: Like I think we told everybody here today. Value does not mean cheap.

0:53:24 A: No, it just means go and speak to your customers and find out what’s important to them and then do that.

0:53:30 B: I think that is the perfect wrap up sentence. Michael. Thank you so much. If people want to hang out with you a little bit more, where can they find you?

0:53:37 A: So my website is currently under construction. But there is a contact form there, so you can reach out to me. It’s michaellaps.com and would love to.

0:53:46 B: Have a chat to anyone on LinkedIn. Facebook.

0:53:49 A: I definitely hang out on LinkedIn. Not so much Facebook, but you can find me on LinkedIn as well. My name is Michael Laps, and anything from business advisory to marketing strategy, I’m more than happy to have those types of conversations.

0:54:03 B: Awesome. Thank you. Thank you for being such a generous person with your I’m trying to think of the right word, but a generous person with your opinions, because we’ve kind of agreed with a lot of things here, but there were some things we didn’t agree with in our previous conversation. So I love that you were actually prepared to kind of not just go, I don’t like necessarily yes. People like I like people who like to get in and have a conversation and show their point of view.

0:54:31 A: Yeah. And I really appreciate you bringing me on and letting me say a couple of things.

0:54:36 B: Thanks so much, Michael.

0:54:38 A: Thank you so much.

0:54:40 B: So that’s a wrap. I’d love to hear what insight you’ve gotten from this episode and how you’re going to put it into action. If you’re a social kind of person, follow me at the Selena Knight and make sure to leave a comment and let me know. And if this episode made you think a little bit differently or gave you some inspiration or perhaps gave you the kick that you needed to take action, then please take a couple of minutes to leave me a review.

0:55:09 B: On your platform of choice. Because the more reviews the show gets, the more independent retail and ecommerce stores just like yours, that we can help to scale. And when that happens, it’s a win for you, a win for your community, and a win for your customers. I’ll see you on the next episode.