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How to Implement an 80/20 Customer Service Program and More of Your Questions for January

Plus creating quality signage, dealing with late employees and more.

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You guys regularly mention the 80/20 rule. But how do you actually put it into practice when it comes to your customers? My policy is to treat everyone equally.

In the Big Survey 2010 we asked jewelers what share of sales their top 5 percent of customers contributed, and well over half said it was between 20-30 percent. That doesn’t validate the 80/20 rule (also known as the Pareto Principle) in the jewelry industry, but it goes close. “Jewelers should know who those top 5 to 10 percent of their customers are, and they should be constantly in touch with them,” industry analyst Ken Gassman says. Betsy Kruger, who owns marketing consultancy Strategic Power, urges an even more aggressive approach: Ignore the bottom 80 percent of your customers. “They cause more problems than they’re worth,” she says. Her approach, outlined in her book, Top Marketing Strategy: Applying The 80/20 Rule, is to identify the most profitable 20 percent of your customers and then allocate one day a week to serving them, based on your research into what they really want from a jewelry store (from surveys, chats, your sales data) and what makes them tick. The rest of your time, she says, you should be targeting similar prospects with tailored marketing campaigns. “Anticipate that your profits will quadruple.”

SIGNS

Where can I get quality signs made?

If your display vendor doesn’t have what you need, go ahead and make your own, recommends Larry Johnson, senior VP of Pacific Northern and author of The Complete Guide To Effective Jewelry Display. “Keep your signs simple and informative,” he says, adding they should serve one of two main aims: Direct clients to your goods, or reinforce your selling points.

CONSEQUENCES

If an employee is consistently late for work (usually 30 minutes at a time), can I dock his pay?

From a legal standpoint, it typically depends whether he is a salaried or an hourly employee. If it’s the latter, he should be punching a clock, which will automatically deduct his time. If he is a salaried employee, you have to pay him, late or not, says Suzanne DeVries, president of Diamond Staffing Solutions, adding that you should, however, have the issue — and the consequences (such as three strikes and you’re out) — covered in your employee manual. “It’s never a good idea to let any one employee get away with such behavior. It sets a bad example for those who are always on time — and you are setting yourself up to be accused of favoritism,” says DeVries.

GEMOLOGY

My gemologist is a great diamond grader, but he isn’t able to identify some of the colored gemstone materials that come in my store for appraising. Do I need a new gemologist?

Probably not. Indeed, your gemologist should be commended for not signing off on a guess. While there are few new gem materials coming out of the earth, there are far more in use as gemstones than there once were, says Cara Williams, senior gemologist at Stone Group Labs in Jefferson City, MO. “We regularly see materials that challenge a lab with advanced equipment; sometimes we have to use every piece of advanced equipment at our disposal,” she says. Many of these materials may be opaque or cabbed or set in jewelry, limiting the number of tests a traditional gemologist can perform. And in an era where many stones can be made to imitate other stones — or treated to look more valuable — it is important to know when to say, “I don’t know.” It is often a sign of a seasoned and experienced gemologist, Williams says.

Over the years, INSTORE has won 80 international journalism awards for its publication and website. Contact INSTORE's editors at [email protected].

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