My gut has mostly guided me
well over my 30-plus years in the jewelry business. Am I setting myself up for a fall by ignoring what the
data tells me sometimes?
Our intuition says we should look at what the data in this area says. And history is littered with examples of businesspeople who made or lost fortunes because a) they trusted their gut or b) trusted what the data was telling them. But most of these stories are little more than good examples of “survivor bias.” Just because George Soros’ back supposedly played up when he needed to make a different market play doesn’t mean you should try to interpret what that dull ache in your lower lumbar means.
Your best approach is to balance the two, using data to verify and quantify complex issues, and using intuition to complement the numbers by offering alternative perspectives and considering unquantifiable factors. Data is particularly useful for ongoing parts of the business where you can track and make adjustments based on the latest input, such as inventory management. Data analysis provides concrete evidence and mitigates the risks associated with biased or limited intuition.
On the other hand, your gut can complement data by offering alternative perspectives and considering unquantifiable factors. Intuition can also help make decisions quickly when data is unavailable, unreliable, or overwhelming. However, it can also lead to errors and biases, especially when you’re possibly being influenced by emotions or stereotypes. It’s easy, for example, to mistake fear for instinct — and while fear can protect, in many instances it can lead to bad decisions.
The other thing to keep in mind is that data is cheap to gather and access these days. Learn to master your POS system, market benchmarking data, web and social media analytics, customer traffic data and so on, and you will be well positioned to compete in your market — and make those big calls that leverage the instincts you’ve built up over three decades.
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What should I look for in a consultant?
The first thing is someone who is ready to offer a tailored program to your situation. Beware of “formula” peddlers that don’t seem all that interested in the specifics of your situation. Similarly, some consultants will claim to be able to overhaul your entire business, from the sign atop your store down to the very bottom of your bottom line. A better approach is to identify the areas you most need help with and then to look for someone who specializes in those areas, be it staff management and training, store management and finances, marketing, or store design. The other thing to remember is that once they’ve delivered their advice or program, many consultants like to move on. If it’s hands-on, day-to-day help in an area like boosting your sales performance and closing rates you need, you might be better off with a seasoned sales executive hired on an interim basis.
How often should I do in-store promotions?
James Porte of the Porte Marketing Group recommends one a quarter. “In some instances, too many promotions can drain your sales staff, and depending too heavily on promotions can take away some of their punch if they are overdone,” he says. More important than the quantity of the promotions is how well the promotion is communicated, he adds. “Combining social media, telemarketing, e-mail, TV/radio and direct mail is paramount to informing consumers about what you are promoting. You can create the best promotion in the world, but if only you and your staff know about it, what good is it?”
I bought a struggling store eight years ago and have turned it into a thriving business. When I took it over, I didn’t like the name (it was the previous owner’s family name), but people said it had brand value so I didn’t change it. But it still bugs me. Just how big is the downside of rebranding?
It’s big and it’s expensive, especially now that you’ve built up equity in the name. And as soon as you change it, you’ll probably have to start dealing with rumors that you went out of business, says retail expert Rick Segel. The general rule is change the name only when your core business changes or the name takes on negative connotations or is so generic no one can find it online. Segel notes there are plenty of successful companies out there with less-than-snappy corporate monikers that owe their names to their founders (Abercrombie & Fitch, Smuckers, Funk & Wagnalls) and that are now powerful brands. If you must change, try a phase-out. Smith’s Jewelers, for example, could become Smith’s High Plains Jewelers, before eventually dropping the Smith’s altogether.
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How do most jewelers work out what to pay for gold they buy off the street?
This was a question tailor-made for the Brain Squad, whose members answered with an amazing range of formulas. If we could sum up their responses, it would go something like this: Check the spot price at a live market website such as kitco.com or goldprices.com at one of the refiners’ websites. Work out the scrap price — often by using charts supplied by refiners such as Jack Hunt, General Refining or Hoover & Strong — and offer 50 percent of that to the customer to cover shipping and insurance costs, safeguard against price swings and protect a close-to-keystone profit. Others got away with paying much less “without losing too many sales as a result.” Another said he refines customers’ gold and returns the cash to the customer minus 10 percent as a service charge.
Our take on all this? You should join the Brain Squad — there are some great ideas being swapped. E-mail us at brainsquad@instoremag.com