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Ask INSTORE: November 2006

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Calculating your ad budget, handling unclaimed watch repairs, assembling your full staff for meetings, and more.

[h3]Think in Terms of Exposure When Calculating Ad Budget[/h3]

[dropcap cap=Q.][h4][b]How do I calculate my ad budget?[/b][/h4][/dropcap]

[dropcap cap=A.]Advertising guru Roy Williams suggests it’s better to think in terms of “total cost of exposure”, which is your “cost of occupancy” (usually rent) plus your advertising budget. This means a business owner who saves money by investing in a weak location will have to spend much more on advertising, he says, adding that a high cost of occupancy, such as a landmark location, is often the least expensive advertising you can buy.[/dropcap]

How then to work out the numbers? Williams recommends you use this formula: Budget 10-12% of projected sales for “total cost of exposure” and then adjust the figure by the store’s average markup (not profit margin). Say, for example, you are projecting sales of $1 million (10% = $100,000) and your average markup is 91%, you’d thus have a figure of $91,000. Finally, deduct your cost of occupancy (let’s say $60,000) and voila! you have it — a $31,000 ad budget.

[componentheading]POLICIES[/componentheading]

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[contentheading]Unclaimed Melody[/contentheading]

[h4][b]We’ve been in the same store for 25 years and have accumulated many unclaimed watch and jewelry repairs. How long do we have to keep them?[/b][/h4]

The laws governing abandoned goods are determined by each state, and sure enough, vary widely. In some states, 60 days is considered long enough for the owner to forfeit his or her right to it, in others they never really lose the right to claim it back (as long as they pay the repair cost). Trainer David Geller notes that in Georgia, where he ran his store, storeowners were required to keep unclaimed goods for a year and then make an effort to notify the owner.

After that they could sell the item, although the original owner could at a later date still claim the difference in the repair/resale price. Geller suggests spending $200 to get your attorney’s help in coming up with a procedure to handle such situations. He also advises that on cheap stuff, you ask for the bill to be prepaid. On watch repairs, Geller asked for a $20 deposit (refundable if not fixed). “That ensured the customer would pick up the watch just to get their money back,” he says.

[componentheading]MARKETING[/componentheading]

[contentheading]Bucket Shoppers[/contentheading]

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[h4][b]How can I get the most out of my direct marketing efforts this holiday season?[/b][/h4]

Don’t treat all customers equally, says Ellen Fruchtman of Fruchtman Marketing. “Do all of your customers deserve the same value gift card or special offers during the holidays? The answer is no,” says Fruchtman. “The object is to separate your customers into different buying ‘buckets’ and create incentives and offers that will move them up the ladder to a higher bucket.”

One example might be a $25 gift certificate on any purchase of $200 or more, sent to a customer “bucket” that is historically and consistently purchasing below $200. Another good example would be targeting the “win-back” bucket (customers with no purchases in the past two years) with a message that should encourage them to get back into the store during the holidays (e.g., “we miss you and here’s a special gift card to welcome you back”).

[componentheading]MANAGEMENT[/componentheading]

[contentheading]Meeting Fatigue[/contentheading]

[h4][b]I have a small sales staff. But every time I try to set up a staff meeting someone’s “kid has an appointment” or “it’s not my day and I don’t want to drive over”. What should I do?[/b][/h4]

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Yes, meetings need to be mandatory — and weekly — for at least 40 minutes, says Kate Peterson, president of industry consultants Performance Concepts. Have your group agree on a day and time and stick to it each week. If there’s not one day when everyone is in, consider rotating the day each week so that everyone has to take a turn coming in on a day off every six weeks or so.

And yes, you need to pay people for training time — both in-store and at home (if you make the home study a mandatory part of the job). Feeding them is a smart touch — and might help make the whole event more “social”.  

[componentheading]SERVICE[/componentheading]

[contentheading]Face Time[/contentheading]

[h4][b]Where’s the best place to position impulse items?[/b][/h4]

Right in customers’ faces! Retailers have long thought shoppers are most wary when they enter a store, becoming more impulsive the longer they shop. Thus, the classic positioning for an impulse buy was near the cash register. But a team of Rice University researchers found shoppers are actually likely to behave less and less impulsively as they are confronted with more choices. That suggests you want to get those silver pendants, charm bracelets and hot-selling Trollbeads in a prominent position where they’ll be seen early on by your customers.

[span class=note]This story is from the November 2006 edition of INSTORE[/span]

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