Title: Building sales through better customer understanding
Sub-title: CStore operators can boost their performance by modeling market segmentation techniques of top advertisers and the profiling techniques of law enforcement officials.
Marché Pine Beach in Dorval Quebec often gets busy around lunch time. That’s when students from nearby Jean XXX III High School trudge over to spend their allowances on pop, confectionaries and other stuff kids love. Often so many teenagers come that Lilly Kim, one of the store managers, asks them to line up, and enter in groups of four or five, so that she can serve them better … and keep an eye out on potential shoplifters.
However interestingly, on the other side of town, Tasso Koutsoukos, who runs the Dépanneur Beau-Soir, which is located right across the street from Queen of Angels Academy, takes no special action when its students stop by at the end of their school day.
That’s because students from the two schools have somewhat different profiles. Jean XXXIII is a mid-level Quebec public educational facility, which serves a high proportion of visible minorities. Average family incomes are far lower there than at Queen of Angels. And although the school has many wonderful attributes including an excellent music program, many of its students dress in “gangsta” style - which can make older folk nervous. Some look desperate enough that they might shoplift an item or two if they could.
Queen of Angels Academy on the other hand is a private, girls-only, Catholic school. That average incomes of students’ families is high enough to pay their $6,000 a year tuition, plus assorted fees. Q-of-A teenie-bopper students in their maroon, checkered skirts and clean white blouses resemble little saints, who look like they would happily volunteer their time at animal shelters or soup kitchens. It rarely occurs to Koutsoukos that one of them might actually steal something. “The kids there are watched over carefully,” says Koutsoukos. “So when they stop by after school, I rarely worry.”
Profiling or segmenting your market
Koutsoukos and Kim’s differing treatments of clients from the two respective high schools, is known in law enforcement circles as “profiling.” Profiling is a behavioral tool that enables users to make rough generalizations about how criminals may look and act. Profiling gained significant public notoriety after publication of Thomas Harris’s 1988 thriller Silence of the Lambs in which detectives use such techniques to track down a serial killer.
Profiling has been getting a rougher ride more recently, when overzealous US law enforcement officials abused the civil rights, (including committing rendition, torture and suspension of the right of habeas corpus) of many Arabs and Muslims because profilers suspected that they might be terrorists. The idea of convenience store owners using profiling methods to identify potential shoplifters may seem excessive, however most long time industry workers do so, whether or not they are aware of it.
However profiling isn’t limited to identifying possible criminals. Marketers also use profiling techniques to help build sales and profitability. Businesses that understand their current and potential customers’ attributes and demands have a strong leg up on the competition says one industry professional.
“I am a big believer of “inside the four walls marketing,” which means taking the time to find out more about your customers,” says Chris Wilcox, Vice-President (General Manager) at Quickie Convenience Stores. “For example if you can identify repeat customers, you can develop strategies to make their shopping experience more attractive to them.”
Identifying repeat customers
Advertisers have been using sophisticated strategies to identify and categorize customer attributes for decades. Such techniques – known as “market segmentation,” - involve identifying customer needs based on factors such as their age, race, education levels, family incomes, the neighborhoods they live in, employment, interests and so on.
For example Wilcox, has been working closely with convenience store sector stakeholders in the anti-contraband tobacco campaign, because of his belief that tobacco products, along with lottery tickets, foodservice items and alcohol sales (in provinces where there are permitted) are key attractions for repeat customers.
“If you take a key element that is bringing clients into the store on a regular basis out of the mix, then you miss out not only on sales of that product, but also any other ancillary products that those customers might buy while they are there,” says Wilcox. “That’s why I firmly believe that fighting contraband tobacco is such a big priority for our industry.”
Don’t mis-categorize immigrants!
Another often easy-to-identify group that provides a major income source for convenience stores is recent immigrants and visible minorities. Sadly immigrants are often associated with significant negative stereotypes; they are often said to be poor, to have lower rates of education and to be more susceptible to criminal activity. Many of those perceptions flow here to Canada through US media coverage of America’s challenges in dealing with illegal Mexican immigrants.
However unlike in the United States, the vast majority of immigrants here in Canada are here legally, and have gone through a rigorous selection process before they were allowed into the country. Known criminals are almost always automatically excluded and a significant percentage of immigrants are well-educated and highly-motivated individuals. Convenience stores that adapt their product offerings and services to appeal to the tastes of newer Canadians stand to gain a strong and loyal client base.
Seniors: steady income and profits
Another easily identifiable group that can provide convenience stores with an excellent and growing source of sales and profits is senior citizens. Seniors have been particularly badly treated by Canada’s grocery store retailers in recent years, who have in many cases been vastly increasing average stores sizes.
However large stores with endlessly long halls can be problematic for seniors. Many ageing Canadians (particularly those in their seventies and eighties) no longer have the strength and endurance to navigate long distances while lugging around huge grocery carts. As a result seniors are natural new and lucrative target market for convenience store owners to tackle.
Furthermore unlike seniors in past generations, today’s crop is far more affluent and has significant levels of disposable income. Many retirees, such as ex-government employees stop working in their fifties, and have lucrative pensions, often approaching a significant portion of their full salaries. Furthermore, due to increasing life expectancies, today’s seniors will collect those pensions for several decades, and will thus have a significant amount of free time to enjoy that wealth.
Seniors are thus generally far less rushed and have plenty of time to provide CStore operators feedback about their needs. Those that do (say for example by stocking a few items that older folk can’t be bothered to make a special trip to their grocers to pick up) will benefit in a big way. That’s because seniors tend to be loyal. Once they enter a consumption pattern, they tend to stick with it.
No set rules
There are no set rules or research as to all of the major market segments that any particular CStore operator has to deal with. For example many of a particular stores’ client’s attributes will vary based on its location. As a result, most CStore owners will need to do that research on their own through watching and talking with existing clients.
According to Koutsoukos it is not always easy to understand what customers want just by looking at them. “For example, over the years I finally figured out that the big surge we get in alcohol sales at the start of each month is related to the fact that that is when some clients get their welfare checks,” says Koutsoukos. “Knowing this made me track one particular lady a little more closely, and sure enough, I caught her shoplifting several times. I was finally forced to banish her from the store.”
According to Wilcox from Quickie Convenience Stores, employees play a key role in understanding various types of customers. “They need to get lines of communication open,” says Wilcox. “Naturally you cannot have clerks getting into long discussions with each client, particularly when there are long line-ups and others are waiting. But doing simple things such as making eye contact, smiling or saying hello can help set the stage.”
Often the differences between customers can be quite subtle and hard to identify. For example Koutsoukos, who rarely has problems with students from the Catholic girls’ school across the street from his store, hasn’t been as lucky with students from Lakeside Academy a nearby public school. “I catch at least one shoplifting here each week,” says Koutsoukos. “If this continues I am going to have to start pressing charges.”
Of course long-time experts say that one of the most important, and undervalued, profiling techniques is to use our instincts. Humans have built up over hundreds of years a certain “second sense” that tells them whether others are friendly, cooperative, potentially unfriendly or even dangerous. Shrewd businessmen have long learned to listen to their gut feelings when dealing with clients. Convenience store owners ought to do more of that too.
Sidebar: Segmentation and profiling tips
- Understand the neighborhood that you operate in and the clients that live there.
- Try to break down your customers’ consumption patterns based on their ages, sex, affluence and other criteria.
- Trust your instincts. If a client worries you, it may be because he is giving of subtle signals that are hard to detect.
- Smile and be friendly to everyone. But at the same time use your eyes, and your ears to watch and listen to what customers want to say.
- Get your employees involved. Help them understand the major groups of people that come into the store and to identify threats and opportunities.
Peter Diekmeyer (firstname.lastname@example.org) is a Montreal-based freelance business writer.
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