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Why Do Customers Shop at Your Store – the Secret Behind Business Sales

Mike Mack


Today, customers decide everything – they decide whether your business/service/product/software is good or bad, whether it’s worth spending time on, whether they would like to recommend you to a friend, and ultimately, whether you are going to be profitable, just on the verge or survival/defeat or are destined to fail even before you get anywhere.

If you take a look back at 90s and even 00s, the whole picture was dramatically different. Back then, with very little information being available to the public, companies and salespeople had all the strength in the world – if a reputable company or salesperson said a product is good on TV, how could you question it?

The business world has basically turned upside down in just a matter of a decade, and with so much talk and focus on how customers make or break your business, companies, even some of the very best, even some of the most successful ones, struggle to answer the fundamental question “why do customers choose you, over hundreds of others, specifically?

Yes, good marketing, proper service and high quality products can go a long way, but is it enough to keep customers coming? Is it enough to retain your existing customers?

Let me put it another way – If you own a business (say, a coffee shop) and have very high standards for quality and service, can you be sure that a new, competitor coffee shop with the same high standards, just around the corner, will not take your customers away?

The answer is simple – If you are banking on intuition, experience, high quality service, innovations, etc. (which are all very important and formidable choices, don’t get me wrong here) then it’s a no, but if you are looking for the answer inside your own sales data, then it’s a resounding yes.

The secret behind business sales

Every business that is, more or less, successful nowadays has a number of loyal, returning customers that keep them profitable. In case you didn’t know, existing customers are responsible for 40% of your store’s profitability. On top of that, existing customers are 9 times more likely to make a repeat purchase than a new customer, and the amount of money they spend at your store rises proportionally to how long they have been a customer.

A research conducted by Forrester, one of the leading market and technology research companies in the world, revealed that in 2016, customer retention rate was the #1 key metric for determining the effectiveness of customer loyalty programs among U.S. companies, much higher than customer acquisition, satisfaction and sales

All of this technically means that while customer acquisition is important to grow your business, to really be profitable and successful you need to understand what makes your customers come back to you, again and again, with every time being ready to spend more.

The answer is hidden in your sales data, and can vary greatly from business to business, depending on factors which we call business assets that influence sales.

A business asset that influences sales can be anything from the physical location and interior design elements of your store (art, decorations, colors, etc.) to the color of light bulbs and the amount of light you have inside.

Every business is unique in its own way, and while high quality products and service are very important, when it comes to the actual sales, there are a few key business assets that directly correlate to sales and continuously feed your sales engine. And the important part is that these business assets are, most of the times, completely hidden from sight, buried deep inside sales data.

Let’s take an example – the Dollar Store.

What makes the dollar store special?

Ask anybody who doesn’t own a successful dollar store and they will tell you things like cheap price, availability of products, strong focus on low to middle income population, and all other sorts of logical criteria they can think of.

The truth is though, the sales of a dollar store are correlated to none of those. The four business assets that influence the sales of a dollar store are:

1. Being located near busy crossroads/highways – A place where a lot of people drive by when returning home from work.

2. The slow flow of traffic – The speed of traffic is inversely correlated to sales. Slow traffic flow gets the dollar store more visibility (drivers can’t help noticing it) and more customers drive in.The slower the traffic flow near the dollar store’s location, the more customers it gets.

3. Open and accessible parking directly in front of the store – store/parking lot availability – You can literally see the way you need to drive to an empty parking slot, right near the entrance.

4. Big yellow sign – It’s easy to spot when the drivers are caught in the slow traffic lanes, and can’t really be confused with anything.

Here is a typical dollar store purchase story.

A man is driving home from a very busy and hard day from the office, and while stuck in traffic, he suddenly remembers about his kid’s birthday party that he promised to hold a week ago. His wife had reminded him about the party coming up like a hundred times, but he had forgotten since he is so busy at work.

Even then, he knows that it’s a shitty excuse and when he arrives home with no party related stuff (decorations, funny hats, festive clothing, etc.) in a couple of hours, his wife is going to kill him, while his kid and all the guests will have the saddest birthday party in their lives, which will probably be remembered forever. Nightmare.

And then, right when he thought it was all over for him, he spots the big yellow sign of the dollar store, not too far from the road. Since the traffic is going really slow, he won’t be too late if he jumps in quick to buy some party related stuff, and he can literally see the available parking slot and how easy it is to get to the entrance of the store. Just like that, his mind has already decided on the purchase. He goes in, buys all the party stuff that he needs for around $20, comes home and voila, he is a hero!

Knowing and understanding the business assets that influence your sales are critical for every business, particularly if you plan on growing and expanding. If you operate a profitable business at your current location, you need to understand why it is profitable to retain the same key elements in all your other stores that you plan to open in new locations. Without this information, it is easy to get lost and you might end up losing a lot of money, or closing 600 stores around the US, which is exactly what happened to Starbucks in 2008.

Conclusion – Your own sales data is your best business friend

It’s important to understand that every business is unique and has its own story. Explore that story, from top to bottom, and you will find all the answers you need to succeed, and the best part is – you don’t need to go further than your own sales history.

Knowing your customers (their demographics and psychographics) is great, however, understanding why they choose you makes all the difference between great and being at the very top.

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